Good day, ladies and gentlemen. And welcome to the Resources Global Professionals Q4 2014 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will be conducting a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to introduce your host for today’s program, Kate Duchene, Chief Legal Officer. You may begin.

Thank you, Operator. Good afternoon, everyone, and thank you for participating today. Joining me on this call are Don Murray, our Executive Chairman; Tony Cherbak, Chief Executive Officer; Tracy Stephens, Chief Operating Officer; and Nate Franke, our Chief Financial Officer. During this call, we will be providing you with comments on our results for the fourth quarter of fiscal year 2014. By now, you should have a copy of today's press release. If you need a copy and are unable to access via our website, please call Patricia Marquez at (714) 430-6314, and she'll be happy to fax a copy to you. Before introducing Tony, I'd like to read an important announcement about certain statements that we may make during this call. Specifically, we may make forward-looking statements. In other words, statements regarding future events or future financial performance of the company. We wish to caution you that such statements are just predictions, and actual events or results may differ materially. We refer you to our 10-K report for the year ended May 25, 2013, for a discussion of some of the risks, uncertainties and other factors, such as seasonal and economic conditions that may cause our business, results of operations and financial condition to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call. I'll now turn the call over to Tony Cherbak, our Chief Executive Officer.

Thanks, Kate. Good afternoon. And welcome to Resources Global fourth quarter conference call. I am going to start by giving you a brief overview of our fourth quarter and year-end operating results. Total revenue for the fourth quarter was $156.8 million, up 11.8% from our fourth quarter a year ago and 18.2% on a sequential basis. As we have previously noted, our fourth quarter was comprised of 14 weeks versus the typical 13 weeks. Excluding the 14th-week revenues, our quarter and sequential growth rates were 4.9% and 10.8%, respectively. For the year, revenue increased 2% to $567.2 million versus $556.3 million last year. Including the extra week in fiscal 2014 revenue was up about $1.1 million in comparison to 2013. During the fourth quarter we recorded a charge of approximately $2 million or $0.05 a share to reduce personnel and certain of our European offices. Of the total, approximately $300,000 was recorded in cost services and $1.7 million in SG&A depending on whether the person impacted was an employee consultant or front office personnel. The $300,000 charge to cost of services reduced our fourth quarter gross margin by 20 basis points. Fourth quarter gross margin including the 20 basis point impact from the European severance charge was 38.9%, representing a 290 basis point improvement from the third quarter and was the same as the fourth quarter a year ago. During the fourth quarter, our SG&A costs were $46.2 million, which includes $1.7 million of the aforementioned severance costs. Excluding this costs, fourth quarter SG&A was $44.5 million or $2.2 million higher than the comparable quarter a year ago. This increase primarily results from the extra week during the fourth quarter of fiscal ’14. As Nate will discuss the portion of the severance charge we anticipated to record in Q4 should…

Thanks, Tony. As mentioned, total revenues for the quarter were $156.8 million, up 11.8% quarter-over-quarter and 18.2%, sequentially. On a constant currency basis, the quarter-over-quarter increase was 11.6% and the sequential increase was 18%. For the 2014 fiscal year, revenues were $567 -- $567.2 million versus $556.3 million in fiscal 2013. Our fiscal 2014 fourth quarter and year consisted a 14 weeks and 53 weeks versus 13 weeks and 52 weeks in fiscal 2013. Revenues during the 14th-week of our fourth quarter, which include the Memorial Day holiday in the U.S. were $9.8 million, split 80% in the U.S. and 20% internationally. The following geographic revenue data utilizes Q4 fiscal 2014 revenues for 14 weeks, compared to the prior quarters comprising 13 weeks. For the fourth quarter, revenues in the U.S. were $124.3 million, up 14.8% quarter-over-quarter and 20.2%, sequentially. For the fourth quarter, total revenues internationally were $32.5 million, up 1.9% quarter-over-quarter and up 10.9%, sequentially. International revenue accounted for approximately 21% of total revenues for the quarter versus 22% in the third quarter of fiscal 2014 and 23% in the prior year quarter. Europe's fourth quarter revenues decreased 6.4% quarter-over-quarter and increased 1.6% sequentially. While the Asia-Pacific region saw fourth quarter revenues increased 9.8% quarter-over-quarter and 26.3%, sequentially. On a constant currency basis, total international revenue increased 0.9% quarter-over-quarter and 9.9%, sequentially. On a quarter-over-quarter basis, the U.S. dollar was weaker against the major currencies in Europe and stronger against the Asia-Pacific currencies. As a result, on a constant currency basis Europe's quarter-over-quarter revenue decrease was 10.3%, while Asia-Pacific quarter-over-quarter revenue would have increased 13%. As Tony detailed, on a comparable quarter-over-quarter 13-week basis U.S. revenue was up 7.7%, Asia-Pacific's revenue increased 2.2% and Europe’s fourth quarter revenue declined 11.8%. Let me now discuss early revenue trends for…

Thank you, Nate. As we’ve commented during the past couple of quarters, we continue to see improving demand for our services in the U.S. And during the fourth quarter, this was reflected in our quarter-over-quarter U.S. growth rate of 7.7% on a comparable 13-week basis. And as we begin fiscal 2015, we continue to see clients commence new initiatives and expand current ones. Let me share a few examples. Recently, we commenced IT security, governance, and vendor risk assessment initiatives at a large healthcare organization. In June, we are engaged by a large financial institution to help them establish a regulatory program office to help manage the regulatory compliance efforts. A global financial system transformation initiative of which we began work in the first half of fiscal 2014 has now grown to approximately 40 consultants globally. We are pleased with our focus on maintaining long-term credit relationship continues to pay off. We will continue to focus efforts to improve our operating results in Europe. Our global platform is a vital importance to us while serving our Fortune 500 client base. For example, we would not have one, the previously mentioned financial system transformation engagement without our global footprint. From our cash generating standpoint, our business remains strong. As Nate detailed, the cash generated from our operations in fiscal 2014 and 2013 allowed us to return over $83.9 million to shareholders during the two-year period. Our Board of Directors will evaluate an increase to our dividend in our upcoming Board meeting. I also anticipate we will continue our trend of share repurchases in fiscal 2015. And as we entered 2015, our clients provide a solid foundation for growth as economic uncertainty continues to abate hopefully. Related to our clients, I'm pleased to report the following statistics for fiscal 2014. Client continuity remains outstanding. During our fiscal 2014, we served all of our top 50 clients from fiscal 2013 and 2012. From fiscal 2014, we served 225 clients exceeding $500,000 in fees compared to 216 served at this level in fiscal 2013. During fiscal 2014, our top 50 clients represented 38% of total revenue and while 50% of our revenues came from 89 clients. Our loyal client following is reflective of our client service approach and the quality of the work performed by our consultants. Our largest client for the year was approximately 1.7% of revenue. And for fiscal 2014, 96% of our top 50 clients used more than one service line, 76% of those top 50 clients used three or more service lines. So this service line penetration reflects the diversity of relationships we have within our current organizations. So this concludes our prepared remarks. We’d be happy to answer your questions at this time.

(Operator Instructions) Our first question comes from the line of Jeff Silber from BMO Capital Markets. Your line is open.

Thank you so much. In looking at your office count, it looks like it’s down about five offices on a year-over-year basis, a couple in the U.S. and three outside the U.S. Are you happy with your office footprint platform as it stands? Do we think we will see any more calling? And then on the flip side as revenues continue to grow, do you think there are any areas that you might be adding offices in? Thanks.

Yes, Jeff, we don’t have any plans to close any other offices. Generally the offices that we closed have been when leases have come up and we have been able to consolidate the operations with an office nearby. I would say like when we have a client need that usually dictates the opening of a new office, but right now, we don't see really any change in that game plan for the time being.

Okay. And then I don’t know if I read this information beforehand, but somebody in other companies in your space gives us some guide in terms of incremental margins when you get incremental revenues. Is there a goal that the company has in mind?

Well, Jeff, longer term, the long-term goal of the company is to continue to work to try to achieve a 15% EBITDA margin. Our view obviously is that that has not changed as a goal. Obviously the timeline to get there from where we were five, six years ago has elongated, but we continue to work towards that goal. There are investments that we will make along the way. We're seeing certain practice offices us really starting to grow at a nice pace. So we’re starting to add people to those, but we don’t necessarily have a definitive quarter-to-quarter margin. We tend to be opportunistic when we find people have the client situations in a particular area.

All right. Are there any areas that are doing better than others, or are you just seeing weakness all across the Board?

No, there is a couple of offices that are doing well, like our U.K. office which we used to have a lot of problems with. That seems to have straightened itself out. We've added some new people, and that has helped. And surprisingly enough, our little Italian office, who is probably operating in the worst economy in all of Europe, is doing quite well. They grew over 60% last year. So, those two offices are doing well. We've got a lot of work to do in front of us for Europe, but we plan to -- we're trying to help them with bringing some of our specialist capabilities to Europe like in IM and supply chain that I talked about a little bit earlier. And we’re looking at a couple of key hires on the business development front. So we're hoping that probably in the latter part of 2015 we will start to see some improvement.

All right. That’s great to hear. And then just a quick numbers question, did you give revenues for Europe and Asia Pac?

I think we gave revenue increases. Let me get those for you. For the 14 weeks, the revenues in Europe were $19 million. In Asia Pac, it was $10.1 million.

Okay, great. Thank you so much.

Thank you. Our next question comes from line of Kevin McVeigh from Macquarie. Your line is open.

Great. Thanks. So it looks like from a gross margin perspective sequentially, you’re going to be flat which if have already, typically steps down. Is there anything -- is it kind of better pricing or better healthcare costs that are driving kind of that flat sequential trend there? Am I just not thinking about that right?

Well, you’re thinking about it right, but I would tell you there is really two components. One, if you look to Q1 that we are currently in versus last year, we do have one less holiday and that is because Memorial Day fell into the quarter. But the other half of the forecast and improvement is the improvement in bill pay spreads.

Indeed. Is that just a better kind of because it sounds like the rates were down year-on-year, is that right?

But there was an improvement and that’s about half of going from Q1 a year ago to Q1 ’15.

Got it. And then just kind of more of a high level question, I mean if I look in the ’16 and I am not looking for a specific guidance, but assuming kind of a $600 million run rate business, we take that close to $800 million back in ’07. As you think about kind of that delta, what’s really driven the lack of kind of meaningful revenue uptick to this cycle? Is it more client-centric or the type of work you’re doing or just what’s driving kind of the lackluster revenue growth over the course of the sub cycle?

So if you look at, what I would tell you if you look at the Fortune 500, as you look back over the last coupe of years, they all remain our clients, but they have all been operating in what I would call a very constrained SG&A, where they have deferred projects, they have been reluctant to spend as they fight with their own top line issues. As I think we commented over the last couple of quarters we are seeing that starting to change, and that’s why I think, especially in the U.S., you are starting to see that growth curve pick up. In many cases, these companies, some of the initiatives they can’t defer forever, that’s especially true in the regulatory environment, but we are seeing that in other initiatives too encompassing some other things. Don had commented just around risk management and those types of things.

Are you seeing anything in terms of meaningful way after the Volcker Rule, I know we talked about that in the past?

I would tell you in our financial services vertical kind of the Volcker Rule or all of the Dodd, the various elements of Dodd-Frank and which we kind of labeled this whole regulatory compliance area. We are seeing good demand in that area.

And there’s really -- and Kevin, there’s really more than just the Dodd-Frank rule as this all regulatory compliance has been a real boom for us. So we expect great things in 2015 from that business.

Got it. And then -- I’m good for now. Okay. Thank you.

Thank you. Our next question comes from the line of Mark Marcon from Robert W. Baird. Your line is open.

Good afternoon. I apologize, I missed a portion of the initial comments. So I can come back offline on these, but would you mind to repeating just what the constant currency growth rates were in the various geographies outside of the U.S.?

Sure. So on a constant currency basis, the international revenue increased nine-tenths of the percent quarter-over-quarter and 9.9% sequentially. Then on a quarter-over-quarter basis, Europe was down 10.3% and Asia Pac was up 13%.

And that Europe being down 10.3%, is that adjusted for the -- is that a ‘13 versus ‘13 or is that the ‘14?

Those are ‘14 versus ‘13 GAAP, not the constant currency’s GAAP, but it’s computed on a GAAP basis. On a 13-week basis, Europe was down 15.8 and Asia Pac would have been 5.4%.

Up 5.4%.

Yeah.

Okay. Thank you.

Sure Mark.

And with regards to, so when we think about the European ops, you’ve have taken some actions over there. What sort of saving should we end up getting from those actions and when we think about the annualized savings?

We put in this in our formal comments. I think in the third quarter, we said that the overall savings will be approximately $4 million. Now there will be some reinvestment there. So it won't be the entire $4 million, but we will have to reinvest some of that into the operations for certain key positions, but it will be the bulk of it.

Okay. Great. And then with regards to the -- just staying on Europe and you made the comment with regards to the U.K. and Italy. Are the other areas, even though they're not showing growth, are they’re showing signs of stabilization?

We would -- I think to some of Europe, we've done the easy work now, which is it's not easy actually doing it, but it’s easier than what we have to do. What we have to do now is grow the practice. And our Chief Operating Officer has been, as I said before, has been working significantly in this area. We’ve done a great evaluation of all of the talent over there. We know that places that we have to fill in with additional talent and that’s where we’re just trying to work on. So it depends, Mark, area by area, but right now we’re in the mode of trying to grow those practices and to help them where we can from the U.S. operations where we can give them advice and loan them some of our expertise in the various different areas like IT and supply chain.

Okay. Great. And then with regards to the U.S., it was nice to see the commentary with regards to the broadening of the revenue trends. Can you talk a little bit about whether that's coming from a few key clients across the country or are you seeing just a much healthier attitude among all of your clients?

I would just tell you just relative to industries, we’re doing really good in healthcare, technology, financials, pharma, energy. It’s across all of those areas. So it’s pretty broad. And just to give you an idea of the magnitude of the U.S. operations, we had 26 clients in Q4 that generated fees of over $1 million. So it's pretty broad-based, it’s very broad industry-based and we’re just very pleased to see the traction across many different initiative.

That’s great. And can you talk about the practices. I know it’s -- we operate as one firm, but when we think about finance and accounting versus RAS versus IM. Can we talk a little bit about how ….

You’re talking about our service lines, right?

Right.

And so every service line in 2014 grew with the exception of accounting and finance. And it was only down by 1%, but since it’s such a big piece of our business. You can see where the increases in the other service lines kind of offset the decrease in finance and accounting so that we didn't have too much growth in 2014. But we're certainly expecting to reverse that trend in 2015.

Can you give us a breakout in terms of the percentage of revenue that’s coming from those service lines at this point, roughly?

Well, as we’ve talked about in the past, finance and accounting is roughly 50% of our business. Information management is about 20%, supply chain and the balance of the service lines range from 4% to 8%.

Great.

Except legal -- legals are little bit smaller, but legal grew significantly in 2014.

How much did that grow?

40%.

And what’s that up to now?

We don’t give out the absolute dollars of the individual practices.

Okay, but that is -- so basically, I mean, 50% of your business is growing quite nicely at this point.

Yes.

And F&A is basically stabilizing?

It’s stabilizing, but we anticipate -- we anticipate one big event that occurred on the regulatory front, being the finalization of the revenue recognition standard could give that a big boost in 2015 and beyond. We've seen a lot -- we’ve seem preliminary interest from a lot of companies wanting to talk to us about how the revenue recognition standards impact their business.

Which specific provision are you referring to there?

Well, there is -- basically we’ve been waiting for a new revenue recognition standard. This prior kind of been in the works for several years and it got finalized in Q4, I believe. So it affects all companies starting in 2017, but the provisions are such that companies might need to retro -- retrospectively restate their results so that they have comparability with the new standards. So you know when a public company has a five-year table of disclosure in its 10-K. So we believe that a lot of these big public companies are starting now to look at it and we’re ready to help them.

Great. And then with regards to the U.S. in terms of that nice growth that you're seeing. Would you say that your competitors are also seeing that growth or do you think there's any market share gains that you might be giving?

Yeah. Mark, I guess it’s hard to say. I mean, I think we’re clearly seeing in each of our clients, the demand environment improving. Maybe we could talk in a couple of weeks as some of our competitors announce their June 30 quarter. We continue to win work. We’ve just in the past three or four weeks, we won several engagements from model. We competed against the big four. But again, it’s always hard to judge on a broad basis.

Great. And then just going to the gross margin, was there any positive impact just in terms of some of the healthcare cost being spread out a little bit in terms of 14 weeks? If I go back to some of the prior years where we’ve had 14 we quarters, we've had some gross margin benefit from that. Is that -- did that impact at all?

Not in the case of healthcare and kind of payroll. Those are almost paid on either biweekly or weekly basis.

Okay. Great. So it sounds like ….

In terms of ‘14 -- in terms of what you’re saying that 14 week leverage, that did come from healthcare?

Okay. Great. Thank you.

Thank you. (Operator Instructions) And I have a question from the line of Jeff Volshteyn, our representative from JP Morgan. Your line is open.

Hi. This is Jeff for Andrew. Just quick on housekeeping question, is there a way to estimate the impact of the 14th week for EBIT and EPS? Just so we have comparable EPS numbers.

What I would -- what you could probably on a broad basis is I think what we said was that 14 week total revenue was $9.8 million. So I think you could just use the percentages of the various line items that would prior get you a -- what I would just label a reasonable approximation. We have not done that.

Okay. Thank you.

You bet.

Thank you. I would now like to turn the call back over to Don for closing remarks.

We’d like to thank you very much our investors and our analyst for their interest in Resources. And we look forward to talking to you with our first quarter results. Thanks.