Oct 7, 2026, 4:05 PM ETIndustrials

Resources Connection — First Quarter Fiscal 2027 Earnings Summary

RGPRESOURCES CONNECTION INC

Financial Performance

Revenue was $98.1 million, a decrease from $120.2 million in the prior year quarter; on a same-day constant currency basis, revenue declined 18.4%.
Gross margin was 37.4%, down from 39.5% in the prior year quarter, driven by lower utilization of salaried consultants and a 70 basis point decline in the pay/bill ratio.
GAAP SG&A expenses improved to $43.1 million (43.9% of revenue) from $47.9 million (39.9% of revenue) in the prior year quarter.
Adjusted SG&A expenses improved to $40.3 million from $44.5 million in the prior year quarter.
Net loss was $8.0 million (8.1% loss margin) compared to a net loss of $2.4 million (2.0% loss margin) in the prior year quarter.
Diluted loss per common share was $0.23 compared to $0.07 in the prior year quarter.
Adjusted EBITDA was $(3.6) million (margin of -3.7%) compared to $3.1 million (margin of 2.5%) in the prior year quarter.
Operating cash flow used was $18.9 million, compared to $7.8 million used in the prior year quarter, impacted by annual incentive compensation payouts and restructuring activities.
Cash and cash equivalents totaled $61.2 million as of August 29, 2026, with $24.1 million of borrowing capacity available under the credit agreement.
Average bill rate decreased 5.8% year-over-year to $114, while average pay rate decreased to $54 from $57.

Management stated first-quarter results were within the revenue and gross margin ranges communicated in July, with adjusted SG&A expense better than the outlook.
The company is addressing lower performance by strengthening sales execution, improving Consulting project staffing and utilization, and reducing its cost structure.
Management expressed confidence in long-term demand for the integrated model combining on-demand talent, consulting, and managed services.
The focus is on translating the differentiated model into consistent revenue growth, improved utilization, and stronger profitability, though these efforts are expected to take time to reflect in results.
Positive indicators noted include benefits from disciplined pricing in On-Demand Talent, opportunities in the pipeline, and strong performance in strategic client relationships.

On-Demand Talent: Revenue was $38.6 million, down 13.2% year-over-year, driven by a 16.4% decrease in billable hours; average bill rate increased 4.1%.
Consulting: Revenue was $32.4 million, down 25.8% year-over-year, due to a 27.1% decrease in billable hours caused by cautious client decision-making and delayed project starts; average bill rate increased 2.2%.
Europe & Asia Pacific: Revenue was $17.1 million, down 13.9% year-over-year, primarily due to a 12.2% decrease in average bill rate and a 1.3% decrease in billable hours.
Outsourced Services: Revenue remained flat year-over-year; billable hours increased 4.9% while the average bill rate declined 1.0%.
All Other: Revenue was eliminated following the sale of Sitrick Group, LLC in the fourth quarter of fiscal 2026 and the segment's elimination on May 30, 2026.
Billable hours decreased 13.2% overall, and the average bill rate decreased 5.8% year-over-year.

Client decision-making timelines remain longer, leading to delayed project starts and lower project volume in Consulting.
On-Demand Talent demand remained below prior year levels but showed signs of stabilization, particularly regarding reduced demand for operational accounting roles.
The geographic revenue mix shifted towards regions with lower bill rates, contributing to the decline in the average bill rate.
The company continues to invest in consulting leadership and business development talent to strengthen capabilities as client demand evolves.

Revenue and profitability remained below potential due to lower project volume and utilization in Consulting.
Ongoing caution in client decision-making continues to impact project starts and billable hours.
The decline in gross margin was driven by lower utilization of salaried consultants.
Cash flow from operations was negatively impacted by the payout of annual incentive compensation and payments related to executive transition and restructuring.

Roger Carlile, President and CEO, noted that while results were within communicated ranges, revenue and profitability were below potential, prompting urgent actions to address cost structure and staffing.
Management emphasized a commitment to disciplined execution and building sustainable long-term value despite the current challenging environment.
The tone acknowledged the difficulty of the current quarter but highlighted stabilization in On-Demand Talent and a strong pipeline as positive signs.

No specific analyst questions and answers were included in the provided press release text.

The Company paid a quarterly dividend of $0.07 per share on October 1, 2026, totaling $2.4 million.
The sale of Sitrick Group, LLC occurred in May 2026, resulting in the elimination of the All Other segment and contributing to the shift in geographic revenue mix.
SG&A expense improvements were driven by a $2.5 million reduction in employee compensation and benefits following fiscal 2026 reductions in force, a $0.9 million reduction in stock-based compensation, and a $1.2 million reduction in external/internal consultant usage.
The effective income tax rate was 5.9% in the current quarter compared to 24.7% in the prior year quarter, with losses in certain jurisdictions not resulting in tax benefits due to valuation allowances.
The company serves 90% of the Fortune 100 and operates from approximately 35 physical practice offices and multiple virtual offices globally.