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Resources Connection (RECN)
F1Q 2014 Earnings Call
October 01, 2013 5:00 pm ET
Kate W. Duchene - Chief Legal Officer, Executive Vice President of Human Resources and Secretary
Anthony Cherbak - Chief Executive Officer, President and Director
Nathan W. Franke - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Donald B. Murray - Co-Founder and Executive Chairman
Jeffrey M. Silber - BMO Capital Markets U.S.
Andrew C. Steinerman - JP Morgan Chase & Co, Research Division
Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division
Previous Statements by RECN
» Resources Connection, Inc. (RECN) CEO Discusses F4Q 2013 Results - Earnings Call Transcript
» Resources Connection Management Discusses Q3 2013 Results - Earnings Call Transcript
» Resources Connection's Management Presents at Credit Suisse 15th Annual Global Services Conference (Transcript)
Kate W. Duchene
Thank you, operator. Good afternoon, everyone, and thank you for participating today. Joining me on this call are Don Murray, our Executive Chairman; Tony Cherbak, our Chief Executive Officer; Tracy Stephens, our Chief Operating Officer; and Nate Franke, our Chief Financial Officer.
During this call, we will be providing you with comments on our results for the first quarter of fiscal year 2014. By now, you should have a copy of today's press release. If you need a copy and are unable to access via our website, please call Patricia Marquez at (714) 430-6314, and she'll be happy to fax a copy to you.
Before introducing Tony, I'd like to read an important announcement about certain statements that we may make during this call. Specifically, we may make forward-looking statements. In other words, statements regarding future events or future financial performance of the company. We wish to caution you that such statements are just predictions, and actual events or results may differ materially. We refer you to our Form 10-K report for the year ended May 25, 2012, for a discussion of some of the risks, uncertainties and other factors, such as seasonal and economic conditions that may cause our business, results of operations and financial condition to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call. I'll now turn the call over to Tony Cherbak.
Thanks, Kate. Good afternoon, and welcome to Resources first quarter conference call. I'm going to begin by giving you a brief overview of our first quarter operating results. Total revenue for the first quarter of fiscal 2014 was $131.7 million, a 3.8% decrease from the comparable quarter a year ago and a decrease of 6.1% from our fourth quarter revenue of $140.2 million. First quarter gross margin was 37.7%, representing a decrease of 130 basis points from the comparable quarter a year ago and a sequential decline of 120 basis points. The sequential decrease stems primarily from the impact of 2 national holidays in the U.S. during the quarter, higher-than-anticipated self-insured health care cost and a reduction in bill/pay spreads.
During the first quarter, our SG&A cost was $41.6 million, a $500,000 decrease from the comparable quarter a year ago and $700,000 less than last quarter. In Q1, we generated adjusted EBITDA and cash flow from operations of $9.8 million and $5.3 million, respectively. For the quarter, our pretax income was $6.8 million. Our GAAP net income was $3.7 million or approximately $0.09 per share. Our GAAP net income reflects an effective tax rate of 46%, while our cash tax rate remains at approximately 42%, an impact of $0.01 a share. Nate will provide more detail on each of the items later in the call. During the first quarter, we were pleased to announce a 17% increase in our quarterly dividend to $0.07 per share. Now let's talk about revenue trends.
As we reported in July, weekly revenues during the first 6 weeks of the first quarter totaled $60.7 million. During this 6-week period, non-holiday weekly revenues averaged $10.8 million. During the final 7 weeks of the quarter, average weekly revenues declined to 10.1% per week, slightly greater than the 5% decline we expected from summer vacations in Europe and the U.S. As Don discussed in last quarter's call, we knew that several large clients have begun the planning to start some larger-scale initiatives that would involve many of our consultants.
Following Labor Day, we began to ramp up the deployment of our consultants on some of these engagements. During the churn weeks following Labor Day week, our weekly revenue averaged $11.2 million, up 7.7% from the non-holiday weekly average during the first quarter of 1.8% below the comparable 2 weeks last year. We were encouraged by the recent sequential improvement in weekly revenue level that are hopeful to see further traction as we go forward throughout the balance of the year. With that I will now turn the call over to Nate for a detailed review of our financial results.
Nathan W. Franke
Thanks, Tony. As mentioned, revenues for the quarter totaled $131.7 million versus $136.9 million in the first quarter of fiscal 2013, a quarter-over-quarter decrease of 3.8% and a sequential decrease of 6.1%. As anticipated, our first quarter revenues were impacted by summer vacations both in the U.S. and Europe. On a constant currency basis, revenue decreased 3.7% quarter-over-quarter and sequentially by 6%.