Resources Connection Earnings Call Nuggets: Europe Details and Second Quarter Outlook

Resources Connection Inc (NASDAQ:RECN) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Europe Details

Jeff Silber – BMO Capital Markets: I wanted to focus first a bit on Europe. You’re still seeing obviously some year-over-year declines even though you’re anniversarying pretty (simple) – striking declines last year. Are there any pockets in Europe doing better or worse than others? Can you give us a little bit more color what’s going on there? I’d appreciate it.

Nate Franke – EVP and CFO: Yes. The U.K. is doing fairly well right now, Jeff. Yes, they are profitable and they were up in terms of their revenues. Where we are struggling is still in France and in Norway, and those markets are pretty tough. I would say Netherlands was kind of bottomed out. They were up a couple of percent in terms of growth and Sweden is doing okay, but that’s kind of a summary of Europe.

Jeff Silber – BMO Capital Markets: Any specific vertical doing better or worse than others both in Europe and U.S.?

Tony Cherbak – President and CEO: In the U.S. I would say that information management continues to be one of our big growth areas. It was up double digits for the quarter as we legal and human capital. It’s really our A&F business that is a little bit soft.

Jeff Silber – BMO Capital Markets: Then just one quick follow-up, you mentioned thanksgiving this year is in the current quarter, the fiscal second year quarter. Can you remind us where it fell out last year?

Nate Franke – EVP and CFO: Some of the Thanksgiving will fall in the third quarter. It fell in the second quarter last year.

Jeff Silber – BMO Capital Markets: My mistake. Thank you for clarifying that.

Nate Franke – EVP and CFO: That’s a great question, to make sure that’s clear.

Second Quarter Outlook

Andrew Steinerman – JPMorgan: I appreciate you doing the mathematical exercise of the 142 for the second quarter. When you look at that as a litmus test, in my view that would be up sequentially approximately average for the second quarter, is that management’s view? In other words, yes, the business is picking up sequentially. Yes, it feels more normal, but it doesn’t feel kind of above normal seasonal lift, second quarter always has a strong sequential?

Nate Franke – EVP and CFO: Andrew, I would agree based on that mathematical computation that, we do the business strengthening, but obviously the slope of line, where we perhaps would like it to be.

Andrew Steinerman – JPMorgan: Right, but when you look at in the history of the second quarter I say that the business is being up high single digit sequentially and so my question is that when you think about the 142 wouldn’t you describe that as relatively kind of normal. My second question is could you call out what Sitrick Brincko is doing?

Don Murray – Executive Chairman: Like I said. We are not baking in what I would say in terms of that computation for the second quarter. Like I said sequentially it is up whether that’s the seasonal impact, probably up a little bit above that because at least on those two weeks we are above the 5% impact that we typically have from vacation. Clearly it’s a step in the right direction, but it’s not where we’d like to be. Sitrick Brincko was quarter-over-quarter their business was actually down about 13%.

Tony Cherbak – President and CEO: I would just add Andrew that one of the things that we are encouraged is that we have a lot of these projects that are finally kicking in and even going into the second quarter we still got one that’s probably one of the larger projects that really hasn’t put any meaningful amount of consultants out in the field. But we know that it’s coming. So those are some of the things that we are encouraged by in addition to what Don mentioned about the first software deployments for these.

Andrew Steinerman – JPMorgan: When you talk about larger project, what sized projects just in general not asking you to any specific project, would be a larger project in number of consultants?

Tony Cherbak – President and CEO: I would just leave it at multiple consultants on one engagement.

A Closer Look: Resources Connection Earnings Cheat Sheet>>