Resources Connection, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Resources Connection, Inc. conference call. Currently, 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 fourth quarter ended May 25, 2024. 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 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 factors section in RGP's report on Form 10-K for the year ended May 27, 2023 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. Such discussion will also be included in the risk factors section in RGP's report on Form 10-K for the year ended May 25, 2024, which will be filed on July 19th, 2024.

I'll now turn the call over to RGP CEO, Kate Duchesne.

Thank you, operator. Good afternoon, everyone. And thank you for joining today. I welcome the dress Patel to this call as it is his first as our chief operating officer. Following my remarks address will comment on the execution of our strategy to drive performance with our new operating structure and leadership team in place. Jen Rue, our CFO, will then provide a detailed review of our financial performance for Q4, key operational metrics, and the outlook for Q1 fiscal 25. In Q4, our business stabilized as we exceeded the top end of our revenue and gross margin outlook. On revenue, we performed almost 4% above the top end of our range, while also continuing to deliver strong cash flow conversion. By driving cost discipline and operating efficiency, we also outperformed the favorable end of our run rate SG&A outlook and delivered an 11% decrease in run rate expense from last year. Our balance sheet remains pristine with no outstanding debt. The current outlook on the global economy presents a mix of cautious optimism and challenge, and we're focusing our business pursuits in areas where clients are investing to improve their operating performance and drive transformation. During the quarter, client engagement extensions and retention were strong, with new projects starting to convert more consistently in certain pockets. We see increasing opportunity around ERP cloud migration, preparation for AI adoption, and digital workflow implementations and optimizations. At the same time, our core solutions supporting the operational needs of the CFO and CHRO will stabilize further as talent shortages, automation, and change initiatives present growing opportunities. The summer quarter, which we're in, is always impacted by seasonality due to holidays and project start dates pushing to September. But we remain cautiously optimistic that the macro buying environment, while still choppy, will improve as we move through the current fiscal year and we'll be ready with capabilities aligned to marketplace needs. For fiscal 25, which launched in June, we prioritized the following strategies to propel us forward as the macro environment improves. First, we have evolved our business into three core engagement models, on-demand talent, consulting, and outsourced services. By offering all three within one enterprise, we can more effectively deliver what clients want today, transparency, value, and integrated service solutions. This year, we will clarify and operationalize these models and unlock the cross-sell of our diversified capabilities throughout our blue-chip, loyal, and longstanding client base. The new structure will enable us to better serve our clients where they need us along their transformation journey with a combination of targeted skill sets, high-value consulting services, and outsourced delivery. We bring flexibility, leverage best-of-breed technology, and combine human-centered design with functional subject matter expertise. We will grow our consulting business by leveraging on-demand talent to help us scale with greater financial flexibility and better skill set alignment. With respect to our outsource services business, we've expanded County's total addressable market beyond the startup ecosystem to now serve the finance, accounting, and HR needs around spin-outs or carve-outs. Reorganizing the business for improved clarity and focus ensures that we're strongly positioned to execute and win as the macro environment recovers. Second, for fiscal Q1, we will launch externally our new enterprise brand to better educate all stakeholders on how our offerings and go-to-market approach differentiates us from the competition. We have a superb value proposition for today's marketplace. We're building new websites to launch this fall to reflect this value so stakeholders understand what we do, who we serve, when to call us, and the impact we deliver. We routinely win against the big four, partly because we are purposely built to deliver differently. We believe we can further increase the win rate by ensuring we're better understood, that we can deliver on our clients' needs with lower cost, faster impact, global reach, and greater flexibility. Furthermore, our growing consulting capability provides us with deeper visibility into our clients' transformation agendas to enable us to be part of a larger ecosystem of execution work. Third, we're building and bringing to market more technology, digital, and data capabilities in all we do across the business units. Specifically, we are adding skilled on-demand and consulting professionals in technology migration, cybersecurity, data modernization, and data privacy, and user experience to proactively meet evolving client needs. This is a growth opportunity if today's CFO is not just about the numbers. She must be a technologist, data expert, change agent, and people manager. The increased adoption of digital tools, remote work styles, Gen AI, and globalization is driving new areas of need in our client base, and we are in a superior position to serve. We have approximately 1,700 master service agreements, and can provide services across the many buying centers within our clients. In June, we convened an in-person fiscal 25 kickoff meeting with go-to-market personnel in North America. We rallied around our GP strategy and focused the team on execution. The team fully embraced the strategy, which is grounded in client feedback, prioritizes attracting and retaining A-plus talent, and building exceptional global delivery. Related to the growth of technology data and digital consulting capabilities. I'm pleased to confirm that we close the reference point acquisition earlier this month. As a reminder, reference point is a management consulting firm focused on helping financial services organizations transform and optimize technology infrastructure manage risk and comply with regulations. The financial services industry, which has the largest consulting services spend, was one of the first sectors we invested in and it's been a top three industry vertical for RGP since inception. This highly strategic acquisition will expand our portfolio of high value on trend advisory services. It also aligns well with our strategic path forward of building consulting capabilities that can scale rapidly with on-demand talent. Reference Point has built its business with this blended bench and agile approach. As we introduce the business to RGP's existing and expansive financial services client base, we are well positioned to deliver more for this important client set across diversified buying centers. Before turning the call to Badrash, I'd like to highlight findings from our recent marketplace research. As I've shared in the past, we regularly conduct original research around the macroeconomic factors and labor market trends that are impacting workforce decisions. In this survey, we sought to determine where finance decision makers will invest over the next 12 months when interest rates decline and investment confidence improves. We had more than 200 US-based director level or above respondents. The four key takeaways are as follows. First, 81% of organizations plan to increase overall investment in workforce development, specifically investing in reskilling and upskilling and engaging outside talent for skill set gaps. Second, 80% of organizations are currently executing digital transformation initiatives and our experience widening skill set gaps, which will require blending in external talent. Third, 47% of respondents said that the growing urgency to better leverage AI and automation will have the biggest impact on their organization's investment in workforce development over the next 12 months. And fourth, with respect to the finance function, Respondents across the board said that they will be using more consulting and on-demand support because of the ongoing accountant shortage. This research informs our strategic moves to deepen RGP's digital and technology capabilities, to provide value with on-demand experts by building blended talent teams with our clients, and to create a differentiated professional home for expert talent, especially finance and accounting professionals who want to work in a more flexible, transparent, and choice-driven model. In addition, the key findings affirm that we're well-positioned to grow as budgets open and clients push go. I'll now turn the call over to Badresh.