Resources Connection Inc (NASDAQ:RECN) Q3 2020 Earnings Conference Call - Final Transcript

Apr 02, 2020 • 05:00 pm ET


Resources Connection Inc (NASDAQ:RECN) Q3 2020 Earnings Conference Call - Final Transcript


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Jenn Ryu

$29 million under our revolving credit facility. In the recent weeks events relating to COVID-19 continues to impact the global economy and capital markets. We are actively and closely monitoring all aspects of our liquidity and cash management. In March, out of an abundance of caution, we borrowed $39 million under our credit facility to provide a substantial additional cash reserve, leaving us with $30 million of additional borrowing availability.

RGP has a strong balance sheet, including healthy levels of cash on hand and healthy debt ratio. In addition, our variable operating model further serves to mitigate our risk profile, while I believe we are well positioned to weather through any potential financial crisis that might arise, it is not possible to predict the outcome of COVID-19 and the impact it may have on our business. Our short-term priority is to preserve liquidity. As a result, we expect to refrain from share repurchases in the fourth quarter. In the long-term, we will continue to evaluate our capital allocation strategy and expect to return cash to shareholders through dividends and share repurchases, while balancing debt repayment and the capital requirements of growing our business both organically and strategically. Our shares outstanding at the end of the third quarter were approximately 32.1 million.

Before I turn the call back to Kate, I am pleased to share that we have officially adopted a new stock ticker symbol effective this morning. Our new symbol is simply RGP. We are happy with this change and hope this more intuitive ticker symbol will provide for greater clarity in the marketplace.

Now I would like to turn the call back to Kate for some closing remarks.

Kate Duchene

Thank you, Jenn. Before we turn to questions, as usual, I'll review our client continuity for Q3. Our client continuity does remain strong. We served 48 of our top 50 clients from fiscal 2019 and 47 of the top 50 from 2018. In the quarter we have 274 clients for whom we provide services at a run rate exceeding 500,000 in fees, down from 281 in fiscal 2019. In addition, our top 50 clients for the quarter represented 40% of total revenues, while 50% of our revenues came from 85 clients. Our largest client for the quarter was approximately 3.6% of revenue. At the end of the third quarter, 90% of our top 50 clients have used more than one type of solution. This penetration reflects the diversity of relationships we have within our client organizations, our shift toward clients interest today and this reinforces the opportunity for growth as we improve account planning and penetration.

This concludes our prepared remarks. And we're now happy to answer any questions.