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 second quarter ended November 29, 2025. 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 31st, 2025, 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, Roger Carlyle.

Thank you and welcome everyone to Resource Connection Q2 earnings call. Before we get into the quarterly earnings discussion, I want to thank our leadership and employees for welcoming me as the company's newly appointed CEO and for supporting a smooth transition. I also want to recognize our teams for maintaining a strong focus on our clients and our business during this time. I mentioned both our clients and our business as focal points because we have employees who serve our clients' needs as well as employees who support the needs of our client service professionals and our business. Both employee groups are critical to our success. For those of you on today's call with whom I have not yet had an opportunity to speak, I look forward to doing so in the near future. I recognize that you have invested time understanding the company, its services, and markets, and we appreciate your interest and effort. Regarding our business, let me start by saying my enthusiasm for the company's future has grown since stepping into this role in November. The deeper I get into our business, the more impressed I am with the talent and capabilities here, but even more so with the commitment and enthusiasm I find when talking with our people. The quality of our people is reflected in the caliber of longstanding and newly activated clients who trust us to assist them with issues they view as important to their success. I also want to say that while the market of our services has been more challenging and uncertain of late for a variety of reasons, I believe there is a sufficiently large market of client needs for which RGP is positioned to serve that will allow us to grow our business and financial results. However, doing so requires that we focus on what gives us a competitive right to win. That is, providing relevant skills and solutions to our clients which satisfy their needs, at a price that brings them better overall value than other providers in the marketplace. Our balance sheet and liquidity are strong, which is a testament to the resilience of our people and client relationships, as well as the flexibility of our business model. However, our quarterly earnings results also reflect a continued lack of positive momentum for our consolidated revenue and adjusted EBITDA. These results underscore the need to take decisive actions to better align our cost structure with our current revenue levels, refocus our on-demand offerings to address the evolving needs of our clients, and scale our consulting business to deliver high-value solutions to both existing and new clients. These three points will form the basis of our strategy going forward. We have already made progress this quarter reducing our cost structure to better align it with our current revenue levels. and we will continue this work in the third quarter. Improving our financial results in the on-demand segment requires that we better understand our clients' current needs and adjust our ability to provide consultants that fit those needs. Scaling our consulting business requires identifying and hiring experienced consulting professionals to grow our ability to deliver value-added solutions to our clients. In the evolving consulting marketplace, we are finding that these types of professionals understand and are excited about the competitive nature of RGP's service offering model and value proposition it offers to clients. We believe this will make us a strong employer choice for such professionals going forward. We also believe that RGP's ability to provide in-demand finance, risk, operational performance, and technology solutions in three differing delivery models, that is on-demand, consulting, and outsourced services at a price point that is competitive to other traditional professional service firms, gives us an opportunity to be uniquely successful in winning and serving clients' needs in the changing landscape for such services. Lastly, no professional services firm can succeed in the present and future market without understanding how artificial intelligence, automation, and other technologies are impacting their clients' businesses and how it impacts the professional services they seek and procure. This is no different for RGP, and we are actively working to understand how our clients' needs are impacted by their own AI and automation strategies. Likewise, at RGP, we are continuing to implement additional AI and automation tools across our business processes to enhance the cost-effectiveness of our client service delivery and internal business support functions. The work we have discussed so far today and the achievement the expected results will certainly require time and disciplined execution. But the path forward is clear, and we are confident these actions will strengthen our business and create long-term value for our clients and shareholders. With that, let me turn the call over to Badresh.

Thank you, Roger, and good afternoon, everyone. Before I begin, I want to welcome Roger as our new Chief Executive Officer. With Roger's leadership and fresh perspective, we are well-positioned to strengthen execution accelerate our strategic priorities, and drive operational discipline across the organization, capitalizing on our inherent strengths. In the second quarter, we exceeded expectations in adjusted EBITDA, despite revenue coming in below consensus, reflecting discipline, cost management, and execution. In North America, expanded go-to-market initiatives across our on-demand and consulting segments, along with stronger cross-practice collaboration, drove improved pipeline activities. Our Europe and Asia PAC segment delivered both year-over-year and sequential growth. While outsourced services revenue remained essentially flat versus the prior year, we achieved meaningful improvement in gross margins. Overall, we remained focused on value-based pricing, targeted investments, and leadership and service capabilities to drive momentum and cost discipline. Jen will provide additional details on our performance and efficiency initiatives shortly. With that, let me turn to our performance by segment. While consulting segment revenue declined year over year, we delivered essentially flat sequential revenue with growth in select areas of CFO advisory and digital transformation. Bill rates continued to improve both sequentially and year over year with higher increases on new projects, reflecting the strong demand for our specialized services. We're also moving up the value chain with existing clients, for example, highlighted in Q2 by a large technology company selecting RGP as a global preferred consulting provider expanding our role from on-demand talent into advisory services on mission-critical work streams. As part of our strategy to grow the consulting segment, we'll complete the integration of ReferencePoint by the end of the fiscal year. Combining ReferencePoint's capabilities with our consulting platform and leadership will enhance collaboration, streamline go-to-market execution, and strengthen our focus on CFO advisory and digital transformation. This positions us to deepen relationships with existing on-demand clients while also expanding our reach to new clients. Finally, on consulting, I want to thank John Bowman as he begins a well-earned retirement. His vision and commitment to both client and employee values leave a lasting impact on RGP. I'm pleased to announce Scott Rotman, who joined RGP in August, will succeed John as president of consulting services, leading our CFO advisory and digital transformation offerings. Under Scott's leadership, we will strengthen our integrated consulting segment and deliver client value across strategy transformation and on-demand talent. Turning to on-demand, revenue declined year over year but continues to show signs of sequential stabilization supported by higher average bill rates compared to both the same period last year and the prior quarter. We remain focused on execution and discipline pipeline management with emphasis on skills for ERP, finance transformation, data, and supply chain. Across North America, several markets delivered sequential revenue growth, and in markets that are lagging, we're in the process of bringing in new leadership. Turning to international, our Europe and Asia PAC segment delivered both year-over-year and sequential revenue growth in the second quarter, supported by higher weekly revenue run rates and improved bill rates versus the prior year, while maintaining stable gross margins. Performance was led by Europe, Japan, India, and the Philippines, underscoring the strength of our client relationships and the effectiveness of our regional strategy. We are committed to deepening multinational client relationships along with expanding our local client base, differentiating through a combination of local delivery and scalable global delivery centers, and maintaining disciplined cost management. Lastly, in outsource services, revenue remains steady year over year and gross margins improve versus the prior year. We continue to add new clients to our platform while also exhibiting strong retention, and bottom-line performance benefited from both operating leverage and efficiency measures. To conclude, we remain focused on disciplined execution and delivering meaningful value to clients across all segments, while continuing to see our strategy take shape and position RGP for sustained growth, profitability, and value creation over time. With that, I'll now turn the call over to Janet.