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1. Company Snapshot

1.a. Company Description

Resources Connection, Inc.provides consulting services to business customers under the Resources Global Professionals name in North America, Europe, and the Asia Pacific.The company offers services in the areas of transactions, including integration and divestitures, bankruptcy/restructuring, going public readiness and support, financial process optimization, and system implementation; and regulations, such as accounting regulations, internal audit and compliance, data privacy and security, healthcare compliance, and regulatory compliance.


It also provides transformations services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics.The company has a strategic alliance with Kotter International, Inc.to accelerate joint business development initiatives.


The company was formerly known as RC Transaction Corp.and changed its name to Resources Connection, Inc.in August 2000.


Resources Connection, Inc.was founded in 1996 and is headquartered in Irvine, California.

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1.b. Last Insights on RGP

The recent 3-month performance of Resources Connection, Inc. was negatively impacted by a decline in revenue, with a 14.5% drop to $129.4 million compared to the prior year quarter. Same-day constant currency revenue also declined by 11.2%, indicating a weakening demand for the company's professional services. Furthermore, the gross margin contracted to 35.1% from 37.0%, suggesting a decrease in pricing power.

1.c. Company Highlights

2. RGP's Q2 Earnings: A Challenging Environment

Resources Connection, Inc. (RGP) reported Q2 earnings, with consolidated revenue at $117.7 million, a decline of 18.4% year-over-year. The company's adjusted EBITDA was $4 million, or a 3.4% margin, exceeding expectations due to disciplined cost management. The actual EPS came out at -$0.38168, relative to estimates at -$0.02. Revenue declines were seen in on-demand and consulting segments. The company's strong balance sheet with $89.8 million in cash and no debt provides a foundation for future investments and returning cash to shareholders.

Publication Date: Jan -08

📋 Highlights
  • Revenue Decline and EBITDA Margin:: Consolidated revenue fell 18.4% to $117.7M YoY, but adjusted EBITDA reached $4M (3.4% margin), exceeding expectations via cost discipline.
  • Segment Performance:: On-Demand and Consulting revenue dropped 18.4% and 28.8% respectively, while Europe/Asia Pac (+0.6%) and Outsourced Services (+0.8%) showed growth.
  • Balance Sheet Strength:: $89.8M in cash with no debt, and $2.3M in quarterly dividend distributions, reflecting a balanced capital allocation strategy.
  • Q3 Guidance:: Revenue projected at $105–$110M, gross margin of 35–36%, and SG&A expenses of $40–$42M (excluding $6–$7M restructuring costs).
  • Healthcare Cost Impact:: Q2 gross margins were negatively affected by 100 basis points due to rising healthcare costs.

Segment Performance

On-Demand revenue was $43 million, down 18.4% year-over-year; Consulting revenue was $42.6 million, down 28.8%; Europe and Asia Pac revenue was $20.1 million, up 0.6%; and Outsourced Services revenue was $9.4 million, up 0.8%. The decline in on-demand and consulting revenues was a significant drag on overall performance, while growth in Europe and Asia Pac and Outsourced Services segments provided some offset.

Operational Efficiency and Cost Management

The company is taking actions to align its cost structure with current revenue levels, refocus on-demand offerings, and scale its consulting business. SG&A expenses were $40-42 million, exclusive of $6-7 million in non-cash restructuring costs. Healthcare costs had a significant impact on gross margins, with a 100-basis-point hit in Q2. CEO Roger Carlisle highlighted the need to focus on providing relevant skills and solutions to clients, at a price that brings them better overall value than other providers.

Guidance and Outlook

Guidance for Q3 is $105 to $110 million in revenue, with a gross margin of 35% to 36%, and run rate SG&A expense of $40 to $42 million. The company is focused on improving sales execution, optimizing talent and consulting solutions, and driving an efficient cost structure. Analysts estimate next year's revenue growth at 5.1%, indicating a potential recovery in the business.

Valuation and Dividend Yield

With a P/S Ratio of 0.35 and an EV/EBITDA of -9.99, the market appears to have priced in significant challenges for the company. However, the Dividend Yield is 6.64%, which may be attractive to income-focused investors. The current valuation metrics suggest that the market is cautious on the company's prospects, but the dividend yield provides a potential upside.

3. NewsRoom

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RGP Recognized by Forbes and Business Insider as Top Employer and Management Consulting Firm

Feb -12

Source: businesswire.com

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RGP Names Jennifer Jones Chief Strategy & Experience Officer (CSxO) to Drive Long-Term Strategic Direction and Revenue Growth

Feb -11

Source: businesswire.com

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Critical Analysis: Insperity (NYSE:NSP) vs. Resources Connection (NASDAQ:RGP)

Feb -02

Source: defenseworld.net

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Resources Connection, Inc. Announces Quarterly Dividend and Dividend Payment Date

Jan -28

Source: businesswire.com

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Here Are 3 Staffing Stocks to Consider Despite Industry Challenges

Jan -20

Source: zacks.com

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Reviewing TCTM Kids IT Education (NASDAQ:VSA) and Resources Connection (NASDAQ:RGP)

Jan -11

Source: defenseworld.net

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Resources Connection: Shares Sink On Poor Q2 Numbers And Encroaching AI

Jan -09

Source: seekingalpha.com

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Resources Connection, Inc. (RGP) Q2 2026 Earnings Call Transcript

Jan -08

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.97%)

6. Segments

Resources Global Professionals

Expected Growth: 4.0%

Resources Global Professionals' 4.0 growth driven by increasing demand for consulting services, expansion into new markets, and strategic acquisitions. Strong relationships with Fortune 500 clients, expertise in finance, risk, and internal audit, and a scalable business model also contribute to growth.

Other

Expected Growth: 2.0%

Resources Connection's 2.0% growth in 'Other' segment is driven by increasing demand for consulting services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation and innovation has led to higher revenue from its proprietary tools and platforms. These factors have contributed to the segment's steady growth, despite intense competition in the consulting industry.

7. Detailed Products

Finance and Accounting

Resources Connection provides financial planning, accounting, and financial reporting services to help clients manage their financial resources effectively.

Human Capital

Resources Connection offers human capital services, including HR consulting, talent management, and benefits administration to help clients manage their workforce effectively.

Information Management

Resources Connection provides information management services, including data analytics, business intelligence, and IT consulting to help clients make informed business decisions.

Legal

Resources Connection offers legal services, including contract management, legal operations, and litigation support to help clients manage their legal functions efficiently.

Supply Chain Management

Resources Connection provides supply chain management services, including procurement, logistics, and operations consulting to help clients optimize their supply chain operations.

Risk and Compliance

Resources Connection offers risk and compliance services, including internal audit, risk management, and compliance consulting to help clients manage risk and ensure regulatory compliance.

8. Resources Connection, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Resources Connection, Inc. operates in a niche market, providing specialized professional services. While there are substitutes available, they are not as comprehensive as the services offered by Resources Connection, Inc. Therefore, the threat of substitutes is medium.

Bargaining Power Of Customers

Resources Connection, Inc. has a diverse customer base, and no single customer accounts for a significant portion of its revenue. This reduces the bargaining power of customers, making it low.

Bargaining Power Of Suppliers

Resources Connection, Inc. relies on a network of independent contractors and consultants to deliver its services. While it has some bargaining power, the availability of skilled professionals in the market limits its negotiating power, making it medium.

Threat Of New Entrants

The professional services industry has high barriers to entry, including the need for specialized skills and expertise. This makes it difficult for new entrants to compete with established players like Resources Connection, Inc., making the threat of new entrants low.

Intensity Of Rivalry

The professional services industry is highly competitive, with many established players competing for market share. Resources Connection, Inc. faces intense competition from rivals, making the intensity of rivalry high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.10%
Debt Cost 4.16%
Equity Weight 95.90%
Equity Cost 7.20%
WACC 7.08%
Leverage 4.28%

11. Quality Control: Resources Connection, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Ennis

A-Score: 6.4/10

Value: 7.1

Growth: 3.9

Quality: 7.2

Yield: 9.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
REV Group

A-Score: 6.1/10

Value: 3.8

Growth: 8.2

Quality: 6.3

Yield: 4.0

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Huron Consulting Group

A-Score: 5.4/10

Value: 3.2

Growth: 7.9

Quality: 5.7

Yield: 0.0

Momentum: 9.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
CRAI

A-Score: 4.8/10

Value: 2.5

Growth: 6.8

Quality: 5.8

Yield: 2.0

Momentum: 4.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Resources Connection

A-Score: 4.3/10

Value: 7.4

Growth: 0.9

Quality: 3.5

Yield: 9.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Franklin Covey

A-Score: 3.2/10

Value: 4.7

Growth: 4.0

Quality: 5.9

Yield: 0.0

Momentum: 0.0

Volatility: 4.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.5$

Current Price

3.5$

Potential

-0.00%

Expected Cash-Flows