Resources Connection, Inc. (NASDAQ:RGP) Q2 2023 Results Conference Call January 4, 2023 5:00 PM ET

Company Participants

Kate Duchene - CEO

Tim Brackney - President and COO

Jenn Ryu - CFO

Conference Call Participants

Andrew Steinerman - JPMorgan Chase

Mark Marcon - Robert W. Baird

Marc Riddick - Sidoti

Operator

Good afternoon, ladies and gentlemen, and welcome to the Resources Connection, Inc. Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.

At this time, I would like to remind everyone that management will be commenting on results for the second quarter ended November 26, 2022. They will also refer to certain non-GAAP financial measures. An explanation of -- and reconciliation of these measures to the most comparable GAAP financial measures are included in the press release issued today. Today’s press release can be viewed in the Investor Relations section of RGP’s website and also filed today with the SEC.

Also during this call, management may make forward-looking statements regarding plans, initiatives and strategies and the anticipated financial performance of the Company. Such statements are predictions, and actual events or results may differ materially. Please see the Risk Factors section in RGP’s report on Form 10-K for the year ended May 28, 2022, for a discussion of risks, uncertainties and other factors that may cause the Company’s business, results of operation and financial condition to differ materially from what is expressed or implied by forward-looking statements made during this call.

I would now like to turn the call over to RGP’s CEO, Kate Duchene.

Kate Duchene

Thank you, operator. Good afternoon, everyone. Thanks for being with us.

We’re pleased to report continued strong financial performance in Q2 despite ambiguity in the macro environment. Q2 revenue on a same day constant currency basis was almost 6% higher than prior year, excluding the taskforce business, which we divested at the end of May. The growth delivered is on top of prior year growth rates, which were significantly into double digits.

Gross margin improved 180 basis points over prior year to 41.1%. Run rate SG&A continues to decline as a percentage of revenue to just over 26% in the quarter. Adjusted EBITDA margin improved 230 basis points over prior year to nearly 15%, representing record performance for a second fiscal quarter. Net income grew to $17.4 million, up from $14.3 million over prior year, which represents the highest level in a decade. These profitability results exceeded our guidance as we grew top line, improved pricing and maintained disciplined cost management.