Good afternoon, ladies and gentlemen, and welcome to the Resources Connections, 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 reviewed in the Investor Relations sections 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 and the anticipated financial performance of the company. Such statements are predictions and actual events or results may differ materially. Please see the Risk Factors sections in RGP's report on Form 10-K for the year ended May 27, 2023 for a discussion of risks, 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 19, 2024. I'll now turn the call over to RGP's CEO, Kate Duchene.

Thank you, operator. Good afternoon, everyone, and thank you for joining today. I welcome Bhadresh Patel to this call as it is his first as our Chief Operating Officer. Following my remarks, Bhadresh will comment on the execution of our strategy to drive performance with our new operating structure and leadership team in place. Jenn Ryu, 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 solution supporting the operational needs of the CFO and CHRO will stabilize further as talent shortages, automation and change initiatives present growing opportunity. 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…

Thank you, Kate, and good afternoon, everyone. I'm excited to be speaking with you in my new role as COO. As Kate outlined in her remarks, we have been evolving our organization over the past several months to simplify our operating model and better align our capabilities to marketplace needs. This work will bring greater clarity to our clients, our people and the market at large and position us to win as our clients' cautious optimism begins to drive more tangible opportunity. Beginning in fiscal year 2025, we've organized our business into three core categories of engagement models, on demand talent, consulting and outsourced services. Our on demand talent engagement model will continue to helping enterprises drive by providing global specialized talent and on demand skillsets to accelerate their transformation initiatives and support operational needs. This area of our business is foundational to our heritage, getting back to our spinoff from Deloitte 20 plus years ago. I am excited to welcome Michael Lane as President of our On-Demand Talent Organization. Michael is a business executive with more than 20 years of diverse industry experience. He brings a wealth of knowledge and a proven track record of success in professional services organizations. He joins us from Eliassen Group, where he served as Chief Revenue Officer and played a key role in transforming the sales and delivery organization. In prior roles, Mike led the efforts to grow sales and delivery muscle for both on demand talent and consulting business models. We're excited that his expertise, leadership and commitment to excellence will greatly contribute to our future success and growth. Our nearly formed consulting services engagement model merges our project consulting services group and our digital consulting services capabilities into a single service offering under the Veracity brand. This unification will allow us…

Thank you, Bhadresh, and good afternoon, everyone. During the fourth quarter, we achieved $148.2 million of revenue and a 40.2% gross margin, both considerably above the high end of the outlook ranges provided in April. Our run rate SG&A of $46.5 million was also significantly better than the favorable end of the outlook range provided. As a result, we generated sequentially improved adjusted EBITDA of $13.1 million or an 8.8% adjusted EBITDA margin during the quarter and delivered $21 million of free cash flow in fiscal 2024. Compared to the fourth quarter of the prior fiscal year, revenue declined by 20% on a same day constant currency basis. Demand in North America and Europe continue to be in a holding pattern as clients await more macroeconomic confidence before reaccelerating staffing and project spending. However, we did see a few bright spots such as Countsy and Veracity. Countsy grew revenue year-over-year and Veracity had the best top line performance in Q4 since joining RGP in 2019. Similarly, we are pleased to see a steady rebound in our Asia Pacific region with 9% growth in revenue year-over-year and 4% growth sequentially from the third quarter on same day constant currency basis. Markets such as India and the Philippines continue to perform well, primarily attributable to project opportunities with our large multinational clients as they establish global centers of excellence in these regions. Operationally, the growth pipeline as of the fourth quarter softened a bit from earlier in the fiscal year, although we are seeing a rebound in recent weeks. The velocity of converting new opportunities to actual engagements has not changed notably from previous quarters. We continue to drive sales productivity to build our growth pipeline and target solution areas where clients are focusing their spend, including ERP and digital transformation projects,…

Thank you. [Operator Instructions] Our first question comes from Joe Gomes with Noble Capital. You may proceed.

Good afternoon and thanks for taking the questions.

Sure. Hi, Joe.

So one thing I wanted to touch on, last call you mentioned you had launched the talent management and the contract management systems in North America. Just wondering how that rollout has gone and do you see it being launched in other geographical areas anytime soon?

Yes. So I'll start and then I'm going to hand it to Bhadresh who's been co-leading Project Phoenix along with Jenn. I would say our launch was outstanding and we've seen a lot of efficiency and I think in our talent acquisition and management function. The team did a great job around change management as well and the strong utilization of our own consultants to play a role in both the implementation and the rollout. I'll let Bhadresh respond to what's our roadmap.

From a road map perspective, we are planning to roll it out to international as well as our additional business units as per our wave two plan. We're focused currently on rolling out our financial management system later this year. And in parallel, we're starting to plan the rollout of bringing the other entities onto the Avature platform as well as our CPI platform.

Okay, great. Thanks for that. And I know the summer obviously is historically a little seasonal there. You ended the year with just under 2,600 consultants, it was down kind of almost 600 from the end of last year. Just wanted to kind of get your view or how well positioned are you if we see this upturn sooner than where customers are expecting?

Yes, so I think, Joe, there are really two main engines, well now three main engines in our business. We have revenue as an engine and that means account development and account pursuit. We have talent acquisition and management as an engine. And now as we're really building consulting in the right way. We had delivery as an engine. And all three of those I think are prime to respond as quickly as we need them to. Our talent organization has always been exceptional at both pipelining talent for needs and we're starting to do a much better job of that with some of our new technology, but also hitting just in time recruiting. And remember that a large contingent of our talent gets referred by existing employees. So we're always mining those relationships and our alumni channels to be ready when the faucet turns.

Okay. And one more for me, if I may. Buyback $3 million I think you said you spent on the buyback in the quarter, still a significant amount available. You've got the cash. Kind of maybe give us what your feelings are about being possibly being a little more aggressive on the buyback?

Yes. Hi, Joe. This is Jenn. Look, we feel that our stock price is very attractive at the current level for buybacks and obviously have ample liquidity to be able to do so. We'll continue to approach buybacks opportunistically, but at this at the current price, as I said, is very attractive and we could very well kick up the buyback pace.

Great. Thanks for taking the questions. I'll get back in queue. Thank you.

Thank you, Joe.

Thank you. Our next question comes from Andrew Steinerman with JPMorgan. You may proceed.

Hi. Two questions. First one is for Jenn. My question is the midpoint of the guide on revenue for first quarter, what's the organic constant currency same day revenue year-over-year? And my second question is, it seems like the company is waiting for a stronger macro. But really over the last two years, '23 and '24, real GDP in the US has actually been pretty good in excess of 2%. And it's really the second half of this calendar year that should slow from a real GDP standpoint. Do you feel like your business is on a different trajectory than US real GDP?

Hi, Andrew. This is Jenn. Yes, I'll address your first question, which is our full quarter guide. At the midpoint of the guide, on a constant currency basis, we're down roughly around 20%. At the high end at 140 at the high end of the range, we're down about 18% year-over-year on the same day basis.

Got it.

Yes. And, Andrew, I'll take the second question. It's Kate. Thank you for your questions. I don't think I mean this has been a very unusual, I think, macro environment with the GDP going one way and the labor market going a different way. And so I think we have really mixed signals out there, and I think clients are experiencing that. In recent discussions with our clients and remember we're serving the Fortune 500 and beyond, they're waiting for interest rate decline. That's going to give them more confidence in capital spend. And we've also seen in our client base because of the uncertainty and it seems like GDP keeps getting revised upward but after the fact. So you have to marry what's happening in real time with decision making with then what gets revised afterwards. And those lenses can be very different. I can tell you, we are doing everything we can to build pipe right now. We are very focused on execution getting in front of clients, getting those in-person meetings in order to drive opportunity for the future. I do feel like activity is increasing and I do feel after we get through we've just gotten through the European elections. There are still clients saying we want to get through this election cycle. I think if the Fed starts reducing interest rates in the fall, we're going to see a little more confidence and that will serve us well in all parts of our business on demand and consulting.

Sounds good, Kate. Thank you.

You're welcome.

Thank you. [Operator Instructions] Our next question comes from Mark Marcon with Baird. You may proceed.

Hey, good afternoon, and thanks for taking my questions. With regards to the outperformance that you had, were there any specific sectors that were that drove the outperformance relative to your guide? And I'm talking about from two components. One would be the revenue side. And then secondly, SG&A was materially better than expected. So wondering what drove that? Thank you.

Hi, Mark. From a Q4 performance standpoint, North America in Q4 reached a level of stabilization in the second half of the quarter, so it performed better than we had forecasted, particularly in healthcare and financial services sectors. And outside of North America, Asia Pac also performed a bit better than we expected. And overall, as I said, I mean, India, Philippines business is pretty strong there. We're also seeing a little bit of a more stabilization in China as well. And China has experienced some challenges since COVID and we're really starting to see that overall region stabilize because we are tapping into local businesses to expanding our target client base outside of just US or multinational clients. So, that's really starting to pay dividends. So that's the revenue side overall performance Q4 compared to what we forecasted. And on the SG&A side, we had as you know, we're a self-insured medical provider to our employees. And Q4, our experience was more favorable than we had expected. And also, we had some attrition in the business that we are very carefully controlling our costs from a fixed cost standpoint. So, that's what's driving the favorability from an SG&A standpoint.

Can you quantify the attrition, Jenn?

I mean, I would say we always have natural attritions in the business. And as attritions happened in Q4, we just didn't, I mean, I probably placed it up in a given quarter probably not overly material. But that's one of the factors why we came in more favorable.

Yes. And Mark, the one thing I'd add, it's Kate, is that we're looking very carefully at leverage in all of our functions in order to drive the return that we want to deliver for shareholders. So as Jenn talked about attrition, then we're not green lighting the replacement, but really carefully evaluating what capacity we currently have.

Mark, also across the board, we're just being very disciplined with our cost and with our spend.

And then just but it does sound like for the first fiscal quarter, the expectation is $49 million to $50 million in SG&A. So what would be the areas where you would increase the spending?

Yes. Sure. I understand your question. So in Q1's SG&A guide, remember in fiscal '24 because of our lower performance compared to some of our variable compensation targets, we are paying out much less variable compensation as a company. So starting in Q1, there's a reset of that bonus accrual. That's what's really driving the increase in terms of run rate from Q1 if you compare that to Q4.

Got it, great. And then with regards to you did make some comments with regards to in recent weeks there was a little bit of a drop off and certainly there are all sorts of things that are occurring from a geopolitical perspective that would drive some uncertainty. But were there specific areas or specific sectors that were more impacted than others? And can you talk a little bit more about the pipeline and the realization cadence that you would expect?

Sure. Growth pipe is a bit softer, as I said, at the end of Q3, I mean, I'm sorry, at the end Q4 compared to last quarter. But we still feel like pipeline is relatively stable compared to our revenue trend. Top of the funnel activities are still intact. As Kate said, we're trying to -- we're driving productivity as much as we can to maintain if not build and build our growth pipeline. But the deals tend to stay in each stage of the pipeline longer until we get to a close. And that trend hasn't really changed notably over the last year, I would say.

I would say something that we've just analyzed there, Mark, is what leakage have we seen from closed one that is moving from Q1 for us into Q2. And that we are seeing that leakage as clients push to start projects in September. Our consultants, some of them are on holiday, clients are on holiday. And I think to get optimum productivity, they're saying let's just launch in September.

Got it. Great. Thank you very much.

You're welcome. Thank you, Mark.

Thank you.

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

Well, I'd just like to thank everyone for your attention and covering our company. I can tell you, we're working very hard and we look forward to talking to you again after we close Q1 of fiscal '25. Thanks very much and enjoy the summer.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.