Resources Connection, Inc.

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 first quarter ended August 27, 2022. They will also refer to certain non-GAAP financial measures. An explanation 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 in the anticipated financial performance of the company. Such statements are predictions and actual events or results may differ materially. Please see the risk factor section in RGP's report on Form 10-K for the year ended May 28, 2022, for a discussion of risk, uncertainties, and other factors that may cause the company's business, results of operations, and financial condition to differ materially from what is expressed or implied by forward-looking statements made during this call. I'll now turn the call over to RGP's CEO, Kate Duchesne.

Thank you, operator. Good afternoon, everyone, and thanks for being with us. We're pleased to report sustained robust performance in Q1. Specifically, Q1 revenue was 17% higher than prior year, excluding the task force business, which we divested at the end of May. Growth margin improved 190 basis points over prior year to 40.9%. Growth profit improved almost 17% quarter over quarter. Adjusted EBITDA margin improved 280 basis points over prior year to 15%. These results exceeded our guidance as we grew top line, improved pricing, and maintained disciplined cost management. During our prior call, we outlined the strategic objectives for fiscal year 23. I will briefly comment on technology and digitalization initiatives as we are progressing on all fronts. We've launched our technology modernization project to support continued top line growth and drive greater operational efficiency. This project will take approximately 24 months to complete globally. To remind you, we are replacing our core ERP system, our core talent acquisition and management system, and implementing a contract management product. These technology modernizations will help us automate and provide collaboration tools for the new ways of working. We believe it will allow us to continue to improve our financial performance as we replace manual process with technology-enabled workflows. During the quarter, we also advanced the development of our digital engagement platform, Hugo, by RGP. We have expanded our reach into California and are on track with our strategy. The next regional focus for Hugo will be Texas, which we are planning to launch in the second half of this fiscal year. Google enables us to attract finance and accounting talent who are earlier in their careers and want to pursue their work life through a state-of-the-art professional staffing platform, which allows talent and clients to match skills and opportunity directly. We're pleased with the volume and quality of candidates published on the platform and continue to receive favorable client experience feedback. With respect to our brand development work, and as announced during our investor day in April, we launched several initiatives to refresh our brand's position, including a new tagline, Dare to Work Differently. This tagline speaks to the business model we pioneered in the late 90s when we were first to market offering expert, diverse professionals the ability to control their own career paths. It acknowledges and affirms our consultants' decision to work differently and is a rallying cry encouraging our clients to embrace more agility in their human capital strategy. Most importantly, it challenges us to own our position of strength in today's world of work as we amplify our brand. What you can expect to see in the coming months is a refreshed website as well as thought leadership based on RGT-led market research, offering perspectives on how organizations are managing their most mission-critical projects, particularly in the face of challenging economic times, talent shortages, and a hybrid working world. We have also continued to expand our PR program, garnering earned media coverage in Bloomberg Markets, Yahoo Finance, Chief Executive, News Nation, and other major outlets, as well as appearances on prominent business podcasts. We will continue our efforts throughout the year to build brand recognition through learning opportunities for our clients and consultants. Our brand work could not come at a better time to align to the prevailing trends in the contingent workforce marketplace. Pandemics reorder society. This one is no different and has radically transformed how work gets done. We have been in this pandemic for over 900 days. there is no doubt new habits have formed. Talent is mobile and empowered with career control like never before, and immigration policy and retirement trends warrant that professional talent shortages aren't going to resolve anytime soon. According to a staffing industry analyst July 2022 report, there are 6.7 million more openings in the job market than unemployed individuals available for full-time work. While the jobs report just yesterday from the Bureau of Labor Statistics indicated a 5% drop in job openings August over August, these numbers confirm that there remains a wide gap in talent need and talent supply. Therefore, it's no wonder employers are actively rethinking their talent strategies to compete in this new environment. In fact, many companies recognizing these trends as foundational and generational shifts are embracing a more hybrid talent strategy whereby they allocate an increasing number of positions and roles to contingent rather than traditional permanent workers. According to a recent SIA research report, buyers expect that 22% of their workforce will be contingent by 2024. This is up from 12% in 2009. The trend toward embracing a shift in workforce models is so pronounced FIA has finally given the movement a name, Total Talent Strategy. According to FIA, because of critical talent shortages, many large organizations are actively accelerating workforce planning innovation. While we remain mindful of current macroeconomic conditions and uncertainty, the trends I've just touched upon present continued opportunities for our GPs. Our business model, which prizes mobility, flexibility, and choice, align strongly to today's reordered world of work. We empower expert, diverse professionals with ultimate career control and work with clients every day to deliver support for mission-critical work and transformation initiatives that continue to progress even in the face of recessionary pressures. While we read and hear every day about high inflation, increased interest rates, and growing recessionary pressures, We still see capital improvement and other business transformation work moving forward. These kinds of projects were delayed in COVID and are not being decommissioned, even given market uncertainty. We believe this supports our point of view that the migration to agile talent models is real and will be an increasingly important solution in the evolving world of work. I'll close by highlighting an example of culture and innovation at RGP. In the face of two recent disasters, a serious earthquake in Mexico and the devastating Hurricane Ian in Florida, a creative and caring group of cross-functional employees came together to design and implement a new global disaster protocol. The driving force for the work was to ensure we could connect with our people quickly to offer the right level of response and personal support. Using a survey tool in Workday, this group launched an automated standardized new process that enables us to check on the safety of our people as quickly as possible and deploy support as needed. The protocol has been incredibly well received by our employees and highlights the power of human at work at RGP. I want to recognize and thank this group of self-starters who exemplified the best of RGP. bringing empathy, creativity, and drive to make an impact for each other and the world at large. I'll now turn the call over to Tim for an update on operations.

Thank you, Kate, and good afternoon, everyone. During the first quarter, we saw strong revenue growth, operational metrics, and margin performance. Pipeline build and closed deals were also robust, and the momentum we had noted at the end of the fourth quarter continued in Q1 and through September, despite the return of traditional impacts related to summer vacation. With excluding task force, revenue increased by 17% of the prior year quarter on a same-day constant currency basis, and the demand profile for our services demonstrated strength throughout the quarter. Geographic performance in the quarter was solid across our core business, with strategic accounts, Asia Pacific, North America, healthcare, county, and veracity all performing well. Along with some turbulence related to the macro environment, Europe experienced significant vacation impact as anticipated. While we have performed well in the current economic environment and our operational indicators remain strong, we are cognizant of recessionary trends that could impact our customer base. However, as we have set in the past, as companies continue to shift their focus to co-delivery of important initiatives, we have become more embedded in the fabric of their enterprise workforce plan. Also, as we have learned during the pandemic, the pace of change in our client base is not abating. We remain cautiously optimistic that despite necessary awareness in our client base related to macroeconomic trends, there remains opportunity for RGP as companies continue to fashion flexible solutions to forge ahead on important projects. One favorable trend that is increasingly prevalent is the importance that clients are placing on value, which has long been our hallmark, as RGP provides experts who actually execute the work directly versus leveraging a pyramid structure that is common in big consulting. As an example, a top-tier commercial and investment bank has utilized big consulting over the last couple of years to help them transform. As they evaluated their current and upcoming portfolio of initiatives, two things became increasingly evident. An over-reliance on large consulting firms utilizing junior talent for much of the work product, and the increasingly prohibitive cost of those relationships, particularly as they shifted into the project execution phase. As a result, our account team was given an opportunity to propose on its Google services, and we were successful in shifting several projects to RGP, including work to support a significant divestiture. There is also more opportunity on the horizon to shift work from the wallet share of larger competitors, a process we shorthand as shift share. Another example of shift share occurred in a large pharmaceutical client that was struggling with the user experience their intranet was offering to their employees. The main charter of the site was to be a place where colleagues could quickly find answers so they could get back to the important work of making breakthroughs that changed patients' lives. A larger firm had implemented this new technology, and as stakeholders began to use the platform, the client realized they did not provide the ease and utility they expected. Instead of turning back to the consultancy that had done the initial implementation, the client gave voracity and opportunity to propose on an overall assessment with particular emphasis on user journeys and experience. veracity one-map proposal, and the project has been so well-received that we are proposing on significant additional work. On the candidate side of our business, the first quarter demonstrated continued strength in our ability to attract and retain premium talent to our platform. RGP is increasingly viewed as an attractive alternative to traditional employment, both in professional services and in industry. That talent is more drawn to the flexibility, career ownership, and community that RGP provides. Despite current economic concerns, the labor market continues to be very tight, and our team's task with the attraction, engagement, and deployment of talent are performing with excellence. Attrition has lowered the quality, and strong hiring trends have persisted as we have become the premier destination for professional talent that is daring to work differently. This strong trend continues despite some of the hiring freezes and layoffs that in previous periods of volatility may have created a sense of anxiety and perhaps a flight to traditional employment. In fact, hiring freezes and reductions in workforce help to amplify the increasingly small chasm between traditional and agile employment. This realization, coupled with a shift in the way people desire to live and work, makes RGP a very attractive employment destination. A clear example of this can be seen in the decision of one of our West Coast consultants. Working as an RGP consultant for over a year at a large technology company, he was approached numerous times for a variety of different job opportunities. He had repeatedly declined, noting that he enjoyed the control he had over his schedule and that he was positioned to help his client be successful without having the stress of project ownership. He admitted that the current macro environment made him think harder about a recent offer, but that his desire for flexibility and love of the RGP community, along with headlines about layoffs and other technology companies, cemented his desire to remain an RGPer. We also continued to see boomerangs of alumni who returned to us after leaving to work on other opportunities. These individuals are so important to our company as they are living embodiments of the agility that people seek and the experience that we work hard to provide for them. They are excellent ambassadors and can provide cautionary tales about leaving our platform. They help us cement the culture and community and co-work with new joiners, which is very important, particularly for those who are trying agile employment for the first time. Our recent rumor rank shared that she missed the culture and family environment at RGP and lamented that sometimes you must believe to appreciate what you have. While that is true, we are committed to continuing to build an environment that is hard to leave at all. Now let me turn back to our first quarter operations. During the quarter, we saw pipeline growth fueled by strong overall demand. We continue to make progress with respect to pricing, increasing bill rates by 3% on a constant currency basis compared to prior year quarters. We see pricing leverage as an opportunity across the enterprise, even in a potentially more challenging macro environment, as value is paramount to clients. While we are mindful of potentially broader impacts based on economic conditions, early second quarter revenue and operational trends are in line with Q1 trends. Finally, let me touch on operational leverage. In Q1, we continue to focus on controlling fixed costs and operating efficiency. Adjusted EBITDA margin improved significantly over prior year quarter. We will remain vigilant about discretionary spend and work diligently to continue to improve operating leverage. I will now turn the call over to Jen for a more detailed review of our first quarter results.