Good day, ladies and gentlemen, and welcome to the Resource Global Professionals' Second Quarter Fiscal 2015 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Kate Duchene, Chief Legal Officer for Resources Global Professionals. Please go ahead.

Thank you, operator. At this time I would like to say good afternoon to everyone, and thank you for participating today. Joining me on this call are Don Murray, our Executive Chairman; Tony Cherbak, our 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 second quarter of fiscal year 2015. 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 Form 10-K report for the year ended May 31st, 2014 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.

Thanks, Kate. Good afternoon and welcome to the Resources second quarter conference call. I'm going to start by giving you a brief overview of our second quarter operating results. Total revenue for the second quarter of fiscal 2015 was $151.5 million, our highest 13-week quarterly revenue result since the third quarter of fiscal 2009. Our second quarter revenue represents a 5.6% increase sequentially and a 3.8% increase from our second quarter a year ago. Quarter-over-quarter comparisons, however, are impacted by the fact that Thanksgiving holiday fell in our second quarter this year but was included in the third quarter last year. We estimate the dollar amount of this revenue shift associated with Thanksgiving in the second quarter of fiscal 2015 was about $4 million. After adjusting for this dollar amount, quarter-over-quarter revenue growth would have been 6.5% on a pro forma basis. Second quarter gross margin was 39.2%, the same as last quarter and a decrease of 10 basis points from the prior-year quarter. During the second quarter, our SG&A cost, excluding European severance charges of $500,000, were $43.1 million, the same as the comparable quarter a year ago and down $500,000 from last quarter. In Q2 we generated adjusted EBITDA and cash flow from operations of $17.4 million and $14.3 million, respectively. For the quarter, our pretax income was $14.6 million. Our GAAP net income was $8 million or $0.21 per share. Our GAAP net income includes a $0.01 per share impact of the European severance charges, so, excluding the severance charge, net income per share would have been $0.22. During the second quarter we returned $10.6 million to shareholders as we repurchased approximately 523,000 shares of our common stock at an aggregate cost of $7.6 million and paid our quarterly dividend of $3 million or $0.08 per share.…

Thanks, Tony. As mentioned, revenues were -- for the quarter were $151.5 million, a sequential increase of 5.6% and quarter-over-quarter increase of 3.8% from revenue of $146 million in the second quarter of fiscal 2014. On a constant currency basis, consolidated revenue increased sequentially by 6.7% and 4.9% quarter over quarter. As Tony had mentioned, second quarter revenues are not directly comparable as the prior-year quarter did not include the Thanksgiving holiday. Adjusting for the holiday shift, our pro forma quarter-over-quarter revenue increase was 6.5%. For the second quarter, revenues in the U.S. were $122.2 million, an increase of 5.5% sequentially and 8.2% quarter over quarter. Adjusting for the previously mentioned holiday shift, the shift in the Thanksgiving holiday, pro forma U.S. revenue increased 11.8% quarter over quarter. For the second quarter, total revenues internationally were $29.3 million, up 6.2% sequentially and down 11.5% quarter over quarter. International revenues were $33.1 million in the second quarter a year ago. International revenue accounted for approximately 19% of total revenues for the quarter, the same as in the first quarter. Europe's second quarter revenues increased 8.4% sequentially and decreased 21.5% quarter over quarter, while the Asia Pacific region saw second quarter revenues increase 2.1% sequentially and 5.5% quarter over quarter. On a constant currency basis, total international revenue increased 11.6% sequentially and decreased 6.6% quarter over quarter. On a quarter-over-quarter and sequential basis, the U.S. dollar were stronger against most currencies in Europe and Asia Pacific. As a result, on a constant currency basis, Europe's revenue decline quarter over quarter would have been 16.8% while Asia Pacific's revenue would have increased 9.9%. On a sequential basis, Europe's revenue increased would have been 15.5% and Asia Pacific's increase would have been 5.3%. Let me now discuss early revenue trends for the third quarter…

Thank you, Nate. We are pleased with our operating results for the second quarter. Our second quarter revenue was our highest 13-week quarterly revenue since the third quarter of fiscal 2009. Additionally, our EBITDA margin of 11.5% reflects our ability to convert revenue growth into higher operating margins. While our third quarter revenue will be impacted by the Christmas and New Year's holidays, the demand environment for our services continues to improve as evidenced by the weekly revenue increases experienced in the second quarter. Our revenue growth in the U.S. has been drizzled [ph] from several areas. So, a few examples. Our financial services clients continue to seek our assistance, helping them on numerous Dodd-Frank compliance initiatives as Financial Stability Oversight Council designates additional financial companies, systematically important financial institutions, we believe the demand for assistance with Dodd-Frank initiatives will remain strong. We continue to see growing demand in finance and accounting related services. These initiatives include revenue recognition, IPO readiness and transaction related initiatives. And the increase of M&A activity during 2014 has also increased demand at our clients for the merger integration assistance. During the past couple of months, we commenced several new guidance [ph] in this area. So as we enter 2015, we will continue to focus on revenue growth and improving our European operations. Let me now share some additional statistics which we believe reflect the continuing health and strength of our core business. So, client continuity remains outstanding. During our second quarter, we served all of our top 50 clients in fiscal 2014 and 27 from 2013. In fiscal 2015, we continue to increase the number of clients with a revenue run rate in excess of $500,00 in annual fees. We currently have 242 clients for whom we provided services exceeding $500,000 in fees on a run rate basis [ph], which is up 4% from $233,000 at this time in fiscal 2014. In addition, through the second quarter, our top 50 clients represented 42% of total revenues, and 50% of our revenues came from 77 clients. Our loyal client following is reflective of our client service approach and the quality of the work performed by our consultants. And our largest client for the quarter was approximately 3.7% of revenues. During the second quarter, 96% of our top 50 clients had used more than one practice area. Seventy-two percent of those top 50 clients have used three or more practice area. So this practice area penetration reflects the diversity of relationships we have within our client's organization. Now this concludes our prepared remarks and we'll be happy to answer your questions at this time.

[Operator Instructions] Our first question comes from Jeff Silber with BMO Capital Markets. Your line is now open.

Hi. Good afternoon guys. It's Henry Chien calling in for Jeff.

Hi, Henry.

Hi. What -- if you guys could comment, what is your exposure to the energy sector, and if you could comment there if there's any impact on falling oil prices on your business.

Well, our oil and gas revenues probably make up a little bit less than 7% of total revenues. We anticipate any falloff from the oil and gas sector will be made up for in the consumer sector because obviously there's kind of a nice consumer benefit to the lower gas prices. So I think with the consumer economy being a significant piece of the overall U.S. economy, any falloff from oil and gas will be made up in the consumer sector.

And if you could comment, what was the reason for closing the office in Tokyo, and do you imagine doing --

It was purely just a consolidation. We had an opportunity to get out of an expensive lease without hurting our service capability there. So that's really the whole reason for it.

Got it. Okay, great. Thanks so much. Congratulations.

Our next question comes from Andrew Steinerman with JPMorgan. Your line is now open.

Hi, thanks. You mentioned a few areas of strength within the U.S., Dodd-Frank compliance, revenue rec, IPO preppiness. Is there any area in the U.S. that really hasn't kicked in yet that you think could really percolate in 2015? And also if you can make a comment about revenue recognition in those opportunities in 2015 as well.

Andrew, we got good strength across all of our U.S. operations right now. One of the other areas that you did not mention, we've done a lot of work with M&A integration. So our U.S. operations are doing very well. I would tell you that we have opportunities to increase in all of the geographies. And in terms of revenue recognition, we're still very excited about it. We see a lot of activity in our clients, you know, really trying to understand what it's all about, how it's going to affect them, and we're trying to assist them where we can with that, having a lot of meetings, letting them know what our capabilities are, so that when they get -- when they get ready to implement that standard, we will be there, ready to help them.

Right. When you do think revenue recognition is a big enough kind of implementation that it's moving the revenue needle for Resources?

What I would tell you, Andrew, is the finance and accounting part of our business is now starting to pick up. Some of that is coming from rev rec, but it's still very early stage. I would, you know, my sense is that as we get past the calendar year reporting season for the public companies is when most of them will start making their earnest efforts to start the assessment of the implementation. So the calendar second, third quarter is where I think we'd start seeing more of that.

Thank you. Appreciate it.

Our next question comes from Mark Marcon with Robert W. Baird. Your line is now open.

Good afternoon and congrats. Nice to see the progress particularly in the U.S. I was wondering, can you talk a little bit about the bill rates in the U.S., just to talk about the comparison exclusive of either Philippines or FX?

Yes, Mark. The bill rates, and we don't break out by geography, but what I would tell you is that the bill rates in the U.S. are actually up but they're not up enough to counter really the currency impact both in Asia and Europe. We still have the impact of Philippines, but on a sequential basis it's -- that engagement has grown a little bit, but I would tell you pretty much all of the decline is currency.

Okay. But they are up in the U.S. on a year-over-year basis. And would your -- and your gross margins are obviously where they are. In terms of the -- in terms of the SG&A that you mentioned in terms of the million-dollar pickup, is that inclusive or exclusive of the severance that you ended up incurring in the second quarter?

It's exclusive, so it'd be $1 million above Q2 excluding the $500,000.

Okay. Great. And then with regards to Mark Campbell, he's been in place just for a few months, so I guess it's a little early. But can you give us a little bit of a sense of what the assessment is in terms of changes to improve the performance in Europe?

Tracy?

Sure. Although we continue to struggle with revenue growth in several of our markets in Europe, we are really pleased with the progress of our internal plans and changes. Mark's been with us now only seven weeks, and he's been a real asset so far in helping us with that. We seemingly continue to get news out of Europe reocurringly about their condition. But we feel confident. We hope to reverse these trends in Europe over time and get our European region rolling and performing to our operational standards and expectations. So like you said, very early in the game certainly with what we're doing, but we, like I said last quarter, we feel comfortable with our plan, we're executing what we think is a good plan for those reversals, and hope to continue to see those trends change.

Can you give a little more color with regards to Europe? I mean last quarter the weakness was really concentrated in the Netherlands and Sweden. Is that still the case or is it -- or has that changed?

No, it's primarily that's still the case. Sweden and Netherlands are the two largest operations that are down the most, and so that's what's making the biggest impact. We're, in Europe, in four markets including one of our larger markets in the U.K., but that same information is about the same.

One other thing, Mark, is it appears like our revenue is starting to stabilize in Europe over the last two quarters on an apples to apples basis. It has been, from a volume perspective, relatively stable. Now that's, you know, that could change going forward. Nate mentioned the currency weakness in Europe. But I think as far as volumes go, I think from now on it's going to be -- this is kind of like we've drawn a line in the sand and I think that going forward we have the opportunity to improve on that. But I don't think it's going to go down anymore, other than currency movements, which we can't control.

Right. And then with regards to practice areas, can you talk about the -- you mentioned you're starting to see the growth in the F&A area, you've been experiencing strong growth in some of the other areas. Can you just give a little more color around that?

Yeah, I mean, like Nate said, finance and accounting has been good, and that's, you know, we're up maybe a little over 10% year to date in finance and accounting, and that's really positive because that's over 50% of our business. IM remains strong for us. Supply chain has been really strong. Our legal business under Kate Duchene's leadership has been strong. So I'm very pleased with all of our service lines.

Great to hear. Thank you.

[Operator Instructions] Our next question comes from Kevin McVeigh with Macquarie. Your line is now open.

Great. Thanks. Hey, Tony or Nate, I wonder if you could give us a sense of -- I know last quarter you're starting to see some expansions of existing projects. Has that continued? Has it accelerated? Just any thoughts on just corporate plans overall as it relates to the current outlook?

Kevin, I think what, you know, the things we probably commented on that topic a quarter ago I would say continuing. Obviously you saw the ramp-up in the just week-to-week comparisons during the second quarter. That's a sign of obviously improving demand, it's also a sign of budgets being extended. I think the, you know, as we look out now to January and February, this is the time of the year we see kind of confirmation of those trends extending into 2015. But I'd tell you, the, you know, from what we see, our folks are feeling pretty positive and we continue to see a nice flow of opportunities, so.

Got it. And then in terms of financial services, what percentage of the revenue was it today and how is that trend kind of year on year?

We're a little over 20%, and it's kind of the same. It's -- we're up, say, I think it's a little over 10% year to date in financial services, and it's roughly 22% of our revenues.

Got it. And then Tony, from a competitive perspective amongst the big four, how's the environment kind of today? Are they getting more rationale from pricing perspective, and just any thoughts on that?

We haven't seen irrational pricing from the big four for a while, not to say that they're not capable of it, because if they want, and to a particular client, they're going to make the investment. But I can't say that it's been real evident in the business like it was a couple of years ago.

Got it. And then last one, how much does that -- closing that off save you, in terms of SG&A, that Japanese office?

Not really a significant amount. It was really just a second smaller office that we just decided to consolidate. As you probably remember, over the last several years we did the same thing in London, and kind of as leases come up, but it's nothing that'll move the needle.

Okay, super. Thanks again.

Thank you.

I'm showing no further questions at this time. I would now like to hand the call back to Don Murray for closing remarks.

Yes. We'd like to thank you for your continued support and interest in Resources, and we look forward to our next update for the second quarter. Thank you.