Resources Connection Reports Financial Results for First Quarter Fiscal Year 2027 (Form 8-K)

Resources Connection Reports Financial Results for First Quarter Fiscal Year 2027

DALLAS, Texas, October 7, 2026 - Resources Connection, Inc. (Nasdaq: RGP) (the "Company"), a professional services firm, today announced its financial results for its first quarter of fiscal 2027 ended August 29, 2026.

First Quarter Fiscal 2027 Highlights Compared to Prior Year Quarter:

•Revenue of $98.1 million compared to $120.2 million

•Gross margin of 37.4% compared to 39.5%

•Selling, General and Administrative ("SG&A") expenses improved to $43.1 million compared to $47.9 million

•Adjusted SG&A expenses, a non-GAAP measure, improved to $40.3 million compared to $44.5 million

•Net loss of $8.0 million (net loss margin of 8.1%) compared to net loss of $2.4 million (net loss margin of 2.0%)

•Diluted loss per common share of $0.23 compared to $0.07

•Adjusted EBITDA, a non-GAAP measure, of $(3.6) million (Adjusted EBITDA margin of (3.7%)) compared to $3.1 million (Adjusted EBITDA margin of 2.5%)

Management Commentary

"Our first-quarter results were within the revenue and gross margin ranges we communicated in July, with adjusted SG&A expense better than our outlook," said Roger Carlile, President and Chief Executive Officer of RGP. "However, our revenue and profitability remained below our potential, driven primarily by lower project volume and utilization in Consulting and ongoing caution in client decision-making. We are addressing this with urgency by continuing to strengthen sales execution, improving Consulting project staffing and related utilization, and ongoing efforts to reduce our cost structure. At the same time, we are seeing positive indicators in the business, including the benefit from disciplined pricing in On-Demand Talent, opportunities in our pipeline, and strong performance within several strategic client relationships."

"We remain confident in the long-term demand for RGP's integrated model, which combines on-demand talent, consulting, and managed services to help clients move from strategy to execution. Our focus is on translating that differentiated model into more consistent revenue growth, improved utilization, and stronger profitability. While these efforts will take time to be fully reflected in our results, we are committed to disciplined execution and to building sustainable long-term value."

First Quarter Fiscal 2027 Results

Revenue in the first quarter of fiscal 2027 was $98.1 million compared to $120.2 million in the first quarter of fiscal 2026. On a same-day constant currency basis, revenue was down 18.4% compared to the prior year quarter. Billable hours decreased 13.2% year-over-year and the average bill rate for the first quarter of fiscal 2027 decreased 5.8% year over year, or 5.6% on a constant currency basis. The decline in billable hours reflects longer client decision-making timelines, delayed project starts, and lower project volume in Consulting, together with On-Demand Talent demand that remained below prior year levels but continued to show signs of stabilization. The average bill rate reflects a continued shift in the geographic revenue mix towards regions with lower bill rates and the May 2026 sale of Sitrick Group, LLC ("Sitrick").

Gross margin in the first quarter of fiscal 2027 was 37.4% compared to 39.5% in the first quarter of fiscal 2026. The variance was primarily due to lower utilization of salaried consultants, while pay/bill ratio declined 70 basis points.

GAAP SG&A expenses for the first quarter of fiscal 2027 were $43.1 million, or 43.9% of revenue, which improved from $47.9 million, or 39.9% of revenue for the first quarter of fiscal 2026. The $4.8 million improvement in SG&A expenses year-over-year was primarily driven by a $2.5 million reduction in employee compensation and benefits costs following the reductions in force in fiscal 2026, a $0.9 million reduction in stock-based compensation due to executive separations in fiscal 2026 that resulted in equity acceleration expenses, a $1.2 million reduction in the use of external and internal consultants that supported various internal business initiatives, and a $0.5 million reduction in facilities costs as a result of exiting certain offices, together with $0.6 million from other items, variable compensation and acquisition costs. These improvements were partially offset by a $0.6 million increase in business meeting expenses and a $0.4 million increase in restructuring costs related to ongoing activity associated with the Company's efforts to achieve an improved cost structure.

Income tax expense for the first quarter of fiscal 2027 was $0.4 million, or an effective tax rate of 5.9%, compared to income tax expense of $0.5 million, or an effective tax rate of 24.7% for the first quarter of fiscal 2026. The income tax expense in both quarters was primarily attributable to income tax expense from profitable foreign jurisdictions, while losses in certain domestic and foreign jurisdictions did not result in a tax benefit due to the existence of valuation allowances.

Net loss for the first quarter of fiscal 2027 was $8.0 million (net loss margin of 8.1%), compared to net loss of $2.4 million (net loss margin of 2.0%) in the prior year quarter as a result of top line performance, partially offset by considerable improvement in SG&A expenses. Adjusted EBITDA was $(3.6) million (margin of (3.7%) in the first quarter of fiscal 2027 compared to $3.1 million (margin of 2.5%) in the prior year quarter.

First Quarter Fiscal 2027 Segment Revenue Results

On-Demand Talent - Revenue in the On-Demand Talent segment was $38.6 million in the first quarter of fiscal 2027 compared to $44.4 million in the first quarter of fiscal 2026, reflecting a decrease of 13.2% (or 13.4% on a same day constant currency basis) due primarily to a decrease in billable hours of 16.4%, partially offset by a favorable increase in the average bill rate of 4.1% (or 3.9% on a constant currency basis). The change in billable hours reflects reduced demand for operational accounting roles compared to a year ago, although the Company is seeing stabilization. The improvement in average bill rate is the result of the Company's continued pricing discipline.

Consulting - Revenue in the Consulting segment was $32.4 million in the first quarter of fiscal 2027 compared to $43.6 million in the first quarter of fiscal 2026, reflecting a decrease of 25.8% (or 26.2% on a same day constant currency basis) due to a 27.1% decrease in billable hours, partially offset by a favorable 2.2% (or 1.7% on a constant currency basis) increase in the average bill rate. The decline in billable hours was primarily due to lower project activity as clients remained cautious about committing to new projects, which led to longer decision cycles and delayed project starts. The Company continues to invest in consulting leadership and business development talent to strengthen our capabilities and go-to-market execution as client demand evolves.

Europe & Asia Pacific - Revenue in the Europe & Asia Pacific segment was $17.1 million in the first quarter of fiscal 2027 compared to $19.9 million in the first quarter of fiscal 2026, reflecting a 13.9% decrease (or 13.3% on a same day constant currency basis). This was primarily due to a 12.2% decrease in the average bill rate (or 9.8% on a constant currency basis) and a 1.3% decrease in billable hours. The change in the average bill rate was due to a mix shift to lower cost markets in the Asia Pacific region.

Outsourced Services - Revenue in the Outsourced Services segment remained flat year over year. Billable hours increased 4.9%, and the average bill rate declined 1.0%.

All Other - The decline in revenue in the All Other segment in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 reflects the sale of Sitrick during the fourth quarter of fiscal 2026 and the elimination of the All Other segment as of May 30, 2026.

Cash Position and Capital Allocation

As of August 29, 2026, cash and cash equivalents totaled $61.2 million, and the Company had up to $24.1 million of borrowing capacity available under its credit agreement with PNC Bank.

The Company used $18.9 million in cash from operations during the three months ended August 29, 2026 compared to cash used in operations of $7.8 million during the three months ended August 30, 2025. The cash used in operations for the three months ended August 29, 2026 was impacted primarily by the payout of annual incentive compensation in July, our operating results in the first quarter and payments related to executive transition and restructuring activities.

The Company paid a quarterly dividend of $0.07 per share on October 1, 2026, or $2.4 million in the aggregate, to stockholders of record at the close of business on September 3, 2026.

Conference Call Information

RGP will hold a conference call for analysts and investors at 5:00 p.m., ET, today, October 7, 2026. A live webcast of the call will be available on the Events section of the Company's Investor Relations website. To access the call by phone, please go to this link (registration link), and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for 30 days by visiting the Events section of the Company's Investor Relations website.

About RGP

RGP (Nasdaq: RGP) has been redefining professional services for over 30 years by closing the gap between advice and execution. RGP combines the flexibility of on-demand talent, the rigor of consulting, and the accountability of managed services for faster impact, smarter investment, and lower risk. The firm partners with CFOs and other C-suite leaders across finance, digital transformation, data, and cloud-connecting advisory to execution at global scale.

Based in Dallas, Texas, with offices worldwide, RGP annually engages with nearly 1,500 clients around the world from approximately 35 physical practice offices and multiple virtual offices. As of August 2026, RGP is proud to have served 90% percent of the Fortune 100 and has been recognized by U.S. News & World Report (2025-2026 Best Companies to Work For) and Forbes (America's Best Midsize Employers 2026, America's Best Management Consulting Firms 2025, World's Best Management Consulting Firms 2025).

Resources Connection, Inc. (RGP) is listed on the Nasdaq Global Select Market, the exchange's highest tier by listing standards. To learn more about RGP, visit: https://www.rgp.com.