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G L O B A L P R O F E S S I O N A L S E R V I C E SInvestorPresentation.January 2025
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© 2024 Resources Connection, Inc. Confidential |rgp.com| 2 Within this presentation, we make “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to expectations concerning matters that are not historical facts. Such forward-looking statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,” “should” or “will” or the negative of these terms or other comparable terminology. In this presentation, such statements include statements regarding our operational plans, the expected benefits of our segments and our expectations regarding the demand environment. Such statements and all phases of the Company’s operations are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements.Risks and uncertainties include, but are not limited to, the following: risks related to an economic downturn or the continuation or deterioration of general and ongoing macroeconomic conditions, potential adverse effects to our and our clients’ liquidity and financial performances from bank failures or other events affecting financial institutions, risks arising from epidemic diseases or pandemics, the highly competitive nature of the market for professional services, risks related to the loss of a significant number of our consultants, or an inability to attract and retain new consultants, the possible impact on our business from the loss of the services of one or more key members of our senior management, risks related to potential significant increases in wages or payroll-related costs, our ability to secure new projects from clients, our inability to adapt to a changing competitive landscape including for technological advancements, our ability to achieve or maintain a suitable pay/bill ratio, our ability to compete effectively in the competitive bidding process, risks related to unfavorable provisions in our contracts which may permit our clients to, among other things, terminate the contracts partially or completely at any time prior to completion, our ability to realize the level of benefit that we expect from our restructuring and reorganization initiatives, risks that our digital expansion and technology transformation efforts may not be successful, our ability to build an efficient support structure as our business continues to grow and transform, our ability to grow our business, manage our growth or sustain our current business, our ability to serve clients internationally, additional operational challenges from our international activities, possible disruption of our business from our past and future acquisitions, the possibility that our recent rebranding efforts may not be successful, our potential inability to adequately protect our intellectual property rights, risks that our computer hardware and software and telecommunications systems are damaged, breached or interrupted, risks related to the failure to comply with data privacy laws and regulations and the adverse effect it may have on our reputation, results of operations or financial condition, our ability to comply with governmental, regulatory and legal requirements and company policies, the possible legal liability for damages resulting from the performance of projects by our consultants or for our clients’ mistreatment of our personnel, risks arising from changes in applicable tax laws or adverse results in tax audits or interpretations, the possible adverse effect on our business model from the reclassification of our independent contractors by foreign tax and regulatory authorities, the possible difficulty for a third party to acquire us and resulting depression of our stock price, the operating and financial restrictions from our credit facility, risks related to the variable rate of interest in our credit facility, the possibility that we are unable to or elect not to pay our quarterly dividend payment, and other factors and uncertainties as are identified in our most recent Annual Report on Form 10-K for the year ended May 25, 2024, and our other public filings made with the Securities and Exchange Commission (File No. 0-32113). Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results.You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.The Company does not intend, and undertakes no obligation, to update the forward-looking statements in this presentation to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law to do so.
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$582MLTM Total Revenue 3 $419M10-Yr Return of Capital88%Who We ServeOf Fortune 100 & 78% of Fortune 500 as of August 20241,700+Clients Across RegionsNorth America, Europe, APAC & Latin AmericaYear-To-Date Q2 Fiscal 2025 Revenue by Business Segment 3 On-DemandVeracityCountsy A Proven Partner for Growth.RGP is a global professional services firm with roots in the Big 4, focused on helping businesses thrive without limits. With 30 years of experience and over 2,600 top tier delivery professionals, and a history of partnering with Fortune 500 companies and beyond, we’re redefining how businesses get the support they need at every stage.EU/Asia PacificOther© 2024 Resources Connection, Inc. Confidential |rgp.com|40.9%37.5%13.3%6.7%1.5%
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Investment Highlights.Powerful Long-Term Growth OutlookCapitalizing on favorable secular macro trends for both customer demand and talent supply:New Go-to-Market Strategywith three engagement models enhancing brand clarity and enabling seamless executionExpanding Addressable Marketby evolving service offering catalogDriving Cross-sell Growththroughout extensive enterprise client baseIntroducing Value-based Pricingto further drive the top lineHighly experienced, credentialed and diverse, with a deep bench of management talentStrong Leadership Team Robust cash flow has supported opportunistic share repurchases and an industry-leading dividend yieldReturn of Capital Zero debt and 70% variable cost structure yields superior flexibilityPristine Balance Sheet Recently taken measures to enhance core operating efficiency including a global technology transformation currently underway; pricing opportunity to further expand marginMargin Expansion 4 © 2024 Resources Connection, Inc. Confidential |rgp.com|
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Brands that Co-Deliver.Our new operating model leverages the strengths of each RGP business segment, creating an efficient path to market expansion and revenue growth.This unified approach strengthens our portfolio, enhancing brand clarity for all stakeholders and powering the cross-sell across our extensive client base.Next Generation Consulting Outsourced Services Global Professional ServicesOn-Demand TalentNext Generation ConsultingOutsourced ServicesOn-Demand Talent 5 © 2024 Resources Connection, Inc. Confidential |rgp.com|
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69% of our U.S.-based Consultants are Racially/Ethnically Diverse or WomenDiverse69%In North America, Among our Consultants: 68% Have 16+ Years' Experience & 13% Have 9-15 Years' Experience16+ Yrs. Experience68% A Top Choice for Businesses & Talent. 51% of Consultants have Big 4, Big Consulting or Big Law Experience as of August 2024Big 4 Experience51% Our Expert Consultants Have Been With Us an Average of 5 YearsYear Avg. Tenure6 6© 2024 Resources Connection, Inc. Confidential |rgp.com|
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Access industry expertisein days, not weeks, across finance and accounting, risk assurance, project management and change managementMinimize the risks of a poor culture fit or communication gaps, so every talent resource boosts business performanceAccess smarter solutions like HUGO—RGP's innovative self-service platformfor select financial roles Key Market Factors Driving Business Unit:Flexibility & AgilityProject-Based WorkCost EfficiencyGlobalizationSpecialized SkillsInnovation & Tech© 2024 Resources Connection, Inc. Confidential |rgp.com| 7 Scale effortlesslywith flexible talent solutions On-Demand Helps Organizations:The demand for flexible talent solutions is on the rise, with 50% of businesses adopting a hybrid talent model to add specialized skills that will build more effective teams to tackle complex initiatives (RGP). On-Demand Talent by RGP offers a flexible solution, transforming our legacy services, with AI and technology, into more accessible and dynamic offerings. On-Demand Talent.
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Next Generation Consulting. Key Market Factors Driving Business Unit:Digital TransformationData-Driven Decision MakingBusiness Process OptimizationOperational AgilityWorkforce Transformation8Risk Management© 2024 Resources Connection, Inc. Confidential |rgp.com| In 2024, companies that combine improvements in their operations with digital upgrades see up to a 40% boost in overall performance (Gartner). Veracity by RGP is at the forefront of this approach, connecting people, processes, and technology. We use human-centered methods and strong technology partnerships & expertise to drive total business success. Drive meaningful & effective transformation by bringing together people, process and technology with a human-centered approachThrough tailored solutionsacross finance and accounting, tax, risk assurance, supply chain, customer experience, employee experience, and information technologyStay nimble & innovativewith proven industry methods & award-winning frameworks Veracity Helps Organizations:
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Outsourced Services.Outsourcing enables businesses to scale effortlessly, adjusting to changing demands without the limitations of a full-time, in-house team. This flexibility is especially valuable for startups, growing companies, and divested assets that need to stay agile. Countsy by RGP offers this tailored solution,combining integrated teams with a digital platform to help organizations streamline their back-office operations and adapt to fluctuations with ease. Key Market Factors Driving Business Unit:Operational EfficiencyRisk MitigationImproved ServiceBusiness ContinuityRapid Scaling9Integrated Platforms© 2024 Resources Connection, Inc. Confidential |rgp.com| Streamline back-office operations with integrated accounting and HR teams and a comprehensive platform for startups, scaleups and spinoutsOutsource accounting, HR and equity functionsso they can focus on growing your business with expert back-office supportEfficiently manage business operations with a modern technology platform Countsy Helps Organizations:
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Information TechnologyChange Mgmt. Risk AssuranceResearch, Data, AI & Insights Supply Chain Customer ExperienceEmployee ExperienceProject Mgmt. Finance & Accounting Procurement & Supplier Mgmt.Customer Service & Call Center 10© 2024 Resources Connection, Inc. Confidential |rgp.com| Key Technology Partners: Total Business Impact.Our clients are asking us to help them tackle challenges across various areas of their business—operations, finance, HR, IT and beyond. Whether it's connecting companies with the right talent or optimizing workflows with technology, we bring the right functional expertiseto help clients navigate today’s complex challenges efficiently and effectively.
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Growth Powered by Industry Expertise.Our deep expertise and service offerings transcend industry lines. By understanding a wide range of sectors and applying proven frameworks, we deliver tailored solutions that meet market needs. This breadth of expertise fuels our expansion and creates value for investors. AerospaceEnergy, Oil & GasBusiness & Professional ServicesEducationAutomotiveGaming & EntertainmentG L O B A L R E A C HHealthcare. PharmaceuticalPayersProvidersBiotechMedical DevicesIntegrated Delivery NetworkNonprofitTelecommunications & MediaTravel & TransportationGovernmentCPG & RetailTechnology Financial Services.Banking & Capital MarketsWealth & Asset Mgmt.Alternate InvestmentsPrivate EquityInsurancePaymentsFintech11© 2024 Resources Connection, Inc. Confidential |rgp.com|
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Key Market Segments.Our refined GTM strategy leverages cross-selling across business segments to provide comprehensive solutions tailored to every stage of our clients' growth. The result? Diverse revenue streams, enhanced client retention, and maximized market opportunity, ultimately supporting sustained growth and stronger returns for investors.12© 2024 Resources Connection, Inc. Confidential |rgp.com| C O M P R E H E N S I V E E X P E R T I S E I N T O P M A R K E T S & G R O W T H S T A G E SFortune 10088% Served Fortune 500 & 100077% of Fortune 500 Served Large Mid-Market Companies Government,Public Sector & Non-ProfitStartups, Scaleups & Spinouts
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We Reduced Our Global Real Estate Footprint by Over 30,000 Square Feet During Fiscal Year 2024Square Feet30k+ More Than Half of Our Workforce Is Female as of September 2024Female55%100% of Our CXO Team Is Comprised of Minorities or WomenCXO Minorities100%We Reduced Our Global Real Estate Footprint by 196,000 Square Feet Since Fiscal Year 2021Square Feet196k 13 Corporate Responsibility. © 2024 Resources Connection, Inc. Confidential |rgp.com|
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Our Free Cash Flow allows for a balanced and opportunistic capital allocation strategy Free Cash Flow Our margin expands as our business mix evolves and we continue to realize the impact of cost efficiencies EBITDA Margin Our flexible workforce fluctuates with revenue and reduces utilization risk for our consulting business; a growing base of consulting revenue expected to drive up gross marginGross Margins 14 Our variable cost structure helps us stay nimble by flexing expenses with revenue. This means we remain resilient through economic cycles, quickly responding to market shifts to protect operating margin. Flexible cost structure combined with significant upside for pricing leverage positions us for long-term profitable growth. A Flexible Cost Model to Support Financial Agility. © 2024 Resources Connection, Inc. Confidential |rgp.com| Our flexible incentive compensation model drives performance, while our enhanced tech stack will drive efficiency and scale for profitable growthSG&A
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Strategic Capital Allocation.Global Delivery Centers: We build global delivery centers to expand our capabilities and drive market reach Digital Innovation & AI Development: We continuously invest in digital innovation and AI to create advanced experiences in response to market demandGo-To-Market Clarity: By refreshing our brand architecture and GTM strategy, we’re establishing clarity that makes our service offerings easier to sell and easier to buy15 © 2024 Resources Connection, Inc. Confidential |rgp.com| Strategic Acquisitions: With a strong track record of identifying and integrating accretive opportunities, we focus on acquisitions that add real value to our business & strengthen our position in the market.Growth InvestmentsStrategic & Disciplined M&AReturn of Capital to Shareholders*$166MTotal Dividends Paid$253MTotal Share Repurchases6.7%Industry-leading Dividend Yield**10Yrs.Consistent Quarterly Dividend Payments *Metrics over the last 10 years**Calculated based on the most recent quarter-end stock price
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16 L T M Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2F Y 2 0 2 1$ 582,058$ 632,801$ 775,643$ 805,018$ 629,516Revenue(8.0%)(18.4%)(3.6%)27.9%(10.5%)Revenue Growth Rate38.1%38.9%40.4%39.3%38.3%Gross Margin31.9%30.7%27.5%26.6%30.2%Adjusted SG&A Percentages(1) $ 35,852$ 51,483$ 100,194$ 103,131$ 52,794Adjusted EBITDA(2) 6.2%8.1%12.9%12.8%8.4%Adjusted EBITDA Margin(2) ($ in thousands) (1) Excludes stock-based compensation expense, technology transformation costs, acquisition costs, restructuring costs, contingent consideration adjustments and gain on sale of building. See the Appendix for reconciliations of Non-GAAP measures.(2) Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, goodwill impairment charge, technology transformation costs, acquisition costs, restructuring costs, contingent consideration adjustments, and gain on sale of building. See the Appendix for reconciliations of Non-GAAP Measures. Results of Operations.F I N A N C I A L H I G H L I G H T S © 2024 Resources Connection, Inc. Confidential |rgp.com|
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17 Segment Financial Measures. A L L O T H E RO U T S O U R C E D S E R V I C E SE U / A S I A P A C I F I CC O N S U L T I N GO N - D E M A N D T A L E N T$ 2,396$ 9,426$ 19,701$ 60,643$ 53,452Revenue$ (526)$ 1,546$ 1,480$ 9,723$ 5,605Adjusted EBITDA(1) A L L O T H E RO U T S O U R C E D S E R V I C E SE U / A S I A P A C I F I CC O N S U L T I N GO N - D E M A N D T A L E N T$ 2,252$ 9,066$ 21,802$ 59,058$ 70,949Revenue$ (534)$ 1,778$ 1,701$ 10,928$ 8,662Adjusted EBITDA(1) Q2 FY2025 Q2 FY2024 ($ in thousands) ($ in thousands) F I N A N C I A L H I G H L I G H T S © 2024 Resources Connection, Inc. Confidential |rgp.com|(1) Adjusted EBITDA is a measure of performance used by our Chief Operating Decision Makers to assess the performance of our operating segments. Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation expense, goodwill impairment charge, technology transformation costs, acquisition costs, restructuring costs, contingent consideration adjustments., and gain on sale of building. See Historical Segment Information for additional information.
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18 Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2$ 78,197$ 108,892$ 116,784$104,224Cash $ 201,717240,755$ 264,066$308,541Current Assets$ 424,873$ 510,914$ 531,999$ 581,473Total Assets$ 73,605$ 72,433$ 97,084$ 124,322Current Liabilities$ —$ —$ —$ 54,000Long-term Debt$ 99,196$ 92,151$ 117,479$ 209,024Total Liabilities$ 325,677$ 418,763$ 414,520$ 372,449Equity $ 128,112$ 168,322$ 166,982$ 184,219Working Capital$ 78,197$ 108,892$ 116,784$ 50,224Net Cash* ($ in thousands) *Net Cash is calculated as Cash less Long-term Debt Balance Sheets.F I N A N C I A L H I G H L I G H T S © 2024 Resources Connection, Inc. Confidential |rgp.com|
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19 L T M Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2$ 25.2$ 21.9$ 81.6$ 49.4Cash from Operating Activities$ (2.2)$ (1.1)$ (2.0)$ (3.0)Less: Capital Expenditures$ 23.0$ 20.8$ 79.6$ 46.4Free Cash Flow*$ 4.5$ 11.2$ (2.9)$ 24.6Income Taxes Paid (Refund)$ 27.5$ 32.0$ 76.7$ 71.0Normalized Free Cash Flow*$ 25.5$ 37.2$ 84.7$ 92.5Normalized EBITDA*107.8%86.0%90.6%76.8%Normalized Free Cash Flow Conversion* (Normalized FCF/ Normalized EBITDA) ($ in millions)Cash Flow Generation.F I N A N C I A L H I G H L I G H T S * Normalized EBITDA, Free Cash Flow, Normalized Free Cash Flow and Normalized Free Cash Flow conversion presented are Non-GAAP Measures. Please refer to the Appendix for reconciliations of Non-GAAP Measures.© 2024 Resources Connection, Inc. Confidential |rgp.com| $71 $77 $32 $28 77%91%86%108%-60%-40%-20%0%20%40%60%80%100%120%140% $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100FY22 FY23 FY24 LTM Q2 FY25Normalized Free Cash Flow Conversion* Normalized Free Cash Flow *(in Millions)
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Investment Highlights.Powerful Long-Term Growth OutlookCapitalizing on favorable secular macro trends for both customer demand and talent supply:New Go-to-Market Strategywith three engagement models enhancing brand clarity and enabling seamless executionExpanding Addressable Marketby evolving service offering catalogDriving Cross-sell Growththroughout extensive enterprise client baseIntroducing Value-based Pricingto further drive the top lineHighly experienced, credentialed and diverse, with a deep bench of management talentStrong Leadership Team Robust cash flow has supported opportunistic share repurchases and an industry-leading dividend yieldReturn of Capital Zero debt and 70% variable cost structure yields superior flexibilityPristine Balance Sheet Recently taken measures to enhance core operating efficiency including a global technology transformation currently underway; pricing opportunity to further expand marginMargin Expansion 20 © 2024 Resources Connection, Inc. Confidential |rgp.com |
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Jenn RyuChief Financial OfficerJennifer.Ryu@rgp.com(918) 269.1234 Let's Connect. | rgp.com Pat BurenFinancial ProfilesPburek@finprofiles.com1 (310) 622.8244 21© 2024 Resources Connection, Inc. Confidential |rgp.com|
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22© 2024 Resources Connection, Inc. Confidential |rgp.com|
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23 Historical Segment Information.T H R E E M O N T H S E N D E DN O V E M B E R 2 5 , 2 0 2 3F E B R U A R Y 2 4 , 2 0 2 4M A Y 2 5 , 2 0 2 4A U G U S T 2 4 , 2 0 2 4N O V E M B E R 2 3 , 2 0 2 4Revenue$70,949$64,162$59,515$52,473$53,452On-Demand Talent59,05855,82856,23655,02560,643Consulting21,80219,63119,50717,98319,701Europe & Asia Pacific9,0669,37510,2639,4919,426Outsourced Services2,2522,3112,6771,9632,396Other $163,127$151,307$148,198$136,935$145,618Total ConsolidatedAdjusted EBITDA $8,662$7,341$7,113$2,559$5,605On-Demand Talent10,9288,76910,1947,7539,723Consulting1,7011,3425422271,480Europe & Asia Pacific1,7781,5772,7381,3941,546Outsourced Services(534)(244)32(467)(526)Other (6,474)(7,999)(7,529)(9,146)(8,172)Unallocated items$16,061$10,786$13,090$2,320$9,656Total Consolidated *$4,895$2,550$10,472($5,707)($68,715)Consolidated net (loss) incomeAverage bill rate(1) $122$119$120$118$123Consolidated bill rate$144$143$142$140$140On-Demand Talent$145$141$142$145$154Consulting$61$58$58$56$59Europe & Asia Pacific$137$139$142$139$140Outsourced Services ($ in thousands)(Unaudited) *Information reconciling Adjusted EBITDA to net (loss) income on a consolidated basis is included on slide 24.(1) Average bill rates are calculated by dividing total revenue by the total number of billable hours.© 2024 Resources Connection, Inc. Confidential |rgp.com|
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24 (Unaudited)Segment Reconciling Information.T H R E E M O N T H S E N D E DN O V E M B E R 2 5 , 2 0 2 3F E B R U A R Y 2 4 , 2 0 2 4M A Y 2 5 , 2 0 2 4A U G U S T 2 4 , 2 0 2 4N O V E M B E R 2 3 , 2 0 2 4$4,895$2,550$10,472($5,707)($68,715)Consolidated net (loss) incomeAdjustments:1,3211,4131,3301,4851,569Amortization expense810745618540462Depreciation expense(293)(225)(234)(148)(215)Interest income, net3,7531,9371,0301,054(7,732)Income tax (benefit) expense$10,486$6,420$13,216($2,776)($74,631)Consolidated EBITDA5161,1811,4831,5611,948Stock-based compensation expense1,6781,3861,9141,8582,043Technology transformation costs(1) 1,1261566881,289515Acquisition costs (2) –––3,85579,482Goodwill impairment (3) –––(3,420)–Gain on sale of assets (4) 2,2551,643189(47)299Restructuring costs (5) ––(4,400)––Contingent consideration adjustment$16,061$10,786$13,090$2,320$9,656Consolidated adjusted EBITDA ($ in thousands) © 2024 Resources Connection, Inc. Confidential |rgp.com|(1) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.(2) Acquisition costs primarily represent costs included in net income related to the Company’s business acquisition. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms.(3) Goodwill impairment charges recognized during the three months ended August 24, 2024 and November 23, 2024 were related to the On-Demand Talent and Europe Asia Pacific segments. (4) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.(5) The Company initiated the “U.S. Restructuring Plan” in October 2023 and substantially completed the U.S. Restructuring Plan during fiscal 2024.
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25 Segment Reconciling Information.T H R E E M O N T H S E N D E DN O V E M B E R 2 5 , 2 0 2 3F E B R U A R Y 2 4 , 2 0 2 4M A Y 2 5 , 2 0 2 4A U G U S T 2 4 , 2 0 2 4N O V E M B E R 2 3 , 2 0 2 4Adjusted EBITDA:8,662$7,341$7,113$2,559$5,605$On-Demand Talent10,9288,76910,1947,7539,723Consulting1,7011,3425422271,480Europe & Asia Pacific1,7781,5772,7381,3941,546Outsourced Services(534)(244)32(467)(526)All Other(6,474)(7,999)(7,529)(9,146)(8,172)Unallocated items(1)Adjustments:(516)(1,181)(1,483)(1,561)(1,948)Stock-based compensation expense(1,678)(1,386)(1,914)(1,858)(2,043)Technology transformation costs(2) (1,126)(156)(688)(1,289)(515)Acquisition costs(3) –––(3,855)(79,482)Goodwill impairment(4) –––3,420–Gain on sale of building(5) (2,255)(1,643)(189)47(299)Restructuring costs––4,400––Contingent consideration adjustment(1,321)(1,413)(1,330)(1,485)(1,569)Amortization expense(810)(745)(618)(540)(462)Depreciation expense293225234148215Interest income, net8,6484,48711,502(4,653)(76,447)(Loss) income before income tax expense(3,753)(1,937)(1,030)(1,054)7,732Income tax benefit (expense)4,895$2,550$10,472$(5,707)$(68,715)$Net (loss) income ($ in thousands)(Unaudited) © 2024 Resources Connection, Inc. Confidential |rgp.com| (1) Unallocated items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.(2) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.(3) Acquisition costs primarily represent costs included in net income related to the Company’s business acquisition. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms.(4) Goodwill impairment charges recognized during the three months ended August 24, 2024and November 23, 2024 were related to the On-Demand Talent and Europe Asia Pacific segments.(5) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024.
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26 L T M Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2F Y 2 0 2 1(61,400)$21,034$54,359$67,175$25,229$Net income (loss)Adjustments:5,7975,3785,0184,9085,228Amortization expense2,3653,0503,5393,5753,897Depreciation expense(822)(1,064)5521,0641,600Interest expense, net(3,711)8,79518,25915,793(2,545)Income tax (benefit) expense(57,771)$37,193$81,727$92,515$33,409$EBITDA 6,1735,7329,5218,1686,613Stock-based compensation expense7,2016,9016,3551,449–Technology transformation costs83,337–2,955––Goodwill Impairment2,6481,970–––Acquisition costs2,0844,087(364)8338,260Restructuring costs(4,400)(4,400)–1664,512Contingent consideration adjustment(3,420)––––Gain on Sale of Building35,852$51,483$100,194$103,131$52,794$Adjusted EBITDA582,058$632,801$775,643$805,018$629,516$Revenue(10.5%)3.3%7.0%8.3%4.0%Net Income (Loss) Margin6.2%8.1%12.9%12.8%8.4%Adjusted EBITDA Margin Reconciliation of net income to Adjusted EBITDAReconciliation on Non-GAAP Measures.($ in thousands) © 2024 Resources Connection, Inc. Confidential |rgp.com|
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27 L T M Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2F Y 2 0 2 125.2$21.9$81.6$49.4$39.9$Cash from operating activities(2.2)$(1.1)$(2.0)$(3.0)$(3.8)$Less: Capital expenditures23.0$20.8$79.6$46.4$36.1$Free Cash Flow(57.8)$37.2$81.7$92.5$33.4$EBITDA 83.3$-$3.0$-$-$Add: Goodwill Impairment25.5$37.2$84.7$92.5$33.4$Normalized EBITDA90.2%55.9%94.0%50.2%108.1%Free Cash Flow conversion (Free Cash Flow / Normalized EBITDA)23.0$20.8$79.6$46.4$36.1$Free Cash Flow4.5$11.2$(2.9)$24.6$18.0$Income taxes paid (refund)27.5$32.0$76.7$71.0$54.1$Normalized Free Cash Flow25.5$37.2$84.7$92.5$33.4$Normalized EBITDA107.8%86.0%90.6%76.8%161.9%Normalized Free Cash Flow conversion (Normalized Free Cash Flow / Normalized EBITDA) Reconciliation of cash from operating activities to Free cash Flow and Normalized Free Cash FlowReconciliation on Non-GAAP Measures.($ in millions) © 2024 Resources Connection, Inc. Confidential |rgp.com|
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28 L T M Q 2 F Y 2 0 2 5F Y 2 0 2 4F Y 2 0 2 3F Y 2 0 2 2F Y 2 0 2 1196,154$208,864$228,842$224,721$209,326$GAAP SG&A expenseLess: 6,1735,7329,5218,1686,613Stock-based compensation expense7,2016,9016,3551,449–Technology transformation costs2,6481,970–––Acquisition costs2,0844,087(364)8338,260Restructuring costs(4,400)(4,400)–1664,512Contingent consideration adjustment(3,420)––––Gain on sale of building185,868$194,574$213,330$214,105$189,941$Adjusted SG&A582,058$632,801$775,643$805,018$629,516$Revenue31.9%30.7%27.5%26.6%30.2%Adjusted SG&A leverage Reconciliation of run-rate SG&A leverageReconciliation on Non-GAAP Measures.($ in thousands) © 2024 Resources Connection, Inc. Confidential |rgp.com|
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29 Segment Reconciling Information. % O F R E V E N U E( 1 )N O V E M B E R 2 5 , 2 0 2 3% O F R E V E N U E( 1 )N O V E M B E R 2 3 , 2 0 2 4(Unaudited)(Unaudited)Adjusted EBITDA:12.2%8,662$10.5%5,605$On-Demand Talent18.5%10,92816.0%9,723Consulting7.8%1,7017.5%1,480Europe & Asia Pacific19.6%1,77816.4%1,546Outsourced Services(23.7%)(534)(22.0%)(526)All Other(6,474)(8,172)Unallocated items(2)Adjustments:(516)(1,948)Stock-based compensation expense(1,678)(2,043)Technology transformation costs(3) (1,126)(515)Acquisition costs(4) –(79,482)Goodwill impairment(5) (2,255)(299)Restructuring costs(1,321)(1,569)Amortization expense(810)(462)Depreciation expense293215Interest income, net8,648(76,447)(Loss) income before income tax expense(3,753)7,732Income tax benefit (expense)4,895$(68,715)$Net (loss) income ($ in thousands) © 2024 Resources Connection, Inc. Confidential |rgp.com| (1) Segment Adjusted EBITDA Margin is calculated by dividing segment Adjusted EBITDA by segment revenue. (2) Unallocated items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.(3) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.(4) Acquisition costs primarily represent costs included in net income related to the Company’s business acquisition. These costs include transaction bonuses cash, retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms.(5) Goodwill impairment charge recognized during the three months ended November 23, 2024 was related to the On-Demand Talent and Europe Asia Pacific segments. Three Months Ended