Good day, ladies and gentlemen, and welcome to Resources Global Professionals' Q1 '16 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ms. Kate Duchene, Chief Legal Officer of Resource Connection. Ma'am, you may begin.

Thank you, operator. Good afternoon, everyone and thank you for participating today. Joining me on this call are Tony Cherbak, our Chief Executive Officer; Tracy Stephens, our 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 first quarter of fiscal year 2016. 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 event or results may differ materially. We refer you to our Form 10-K report for the year ended May 30, 2015 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 Resources' first quarter conference call. I'm going to start by giving you a brief overview of our first quarter operating results. Total revenue for the first quarter of fiscal 2016 was $148.3 million, a 3.4% increase from the comparable quarter a year ago. On a constant currency basis, quarter-over-quarter revenue growth was 6.3%. Sequentially, revenue was essentially flat, despite summer vacations taken by our consultants during the mid-July through August timeframe. Our first-quarter gross margin was 38.7%, very close to our expectations, while SG&A expenses of $44 million reflected slightly lower spending levels across a variety of areas. Our first quarter effective tax rate declined to 43.6%, which is indicative of the improving results in our international operations. In Q1, adjusted EBITDA increased over 16% to $15.7 million, or 10.6% of revenues, from $13.5 million, or 9.4% of revenues in the year ago quarter. GAAP net income was $7.1 million, or $0.19 per diluted share, which includes a $0.01 impact from the accelerated vesting of Don Murray's options as part of his transition from Executive Chairman to Chairman of our Board of Directors. In the prior year first quarter, net income per share was $0.14 and included a $0.02 per share impact of European severance charges. During the first quarter, we were pleased to announce a 25% increase in our quarterly dividend to $0.10 per share. This marked the fifth consecutive year we've increased our dividend. Additionally, our Board approved a $150 million share repurchase authorization, which will commence once we exhaust the existing program which has $10.5 million remaining. Now let's talk about revenue trends. As we reported in July, weekly revenues during the first six weeks of the first quarter totaled $68.2 million. During this six week period, weekly revenues averaged $11.4 million. During the final seven weeks of the quarter, average weekly revenues remained at $11.4 million per week. During the quarter, revenues in the US grew 4.6% quarter-over-quarter. Asia-Pacific continued its strong performance with quarter-over-quarter revenue growth of 17%, or about 28% in constant currency. Additionally, we were pleased to see Europe's revenues continue to stabilize. On a constant currency basis, Europe grew revenues 1.9% quarter-over-quarter. While we still have much more to accomplish in Europe, our Q1 results reflect some of the progress we are making. During the first five weeks of our second quarter of fiscal 2016, our weekly revenue totaled $57.2 million, which is approximately 1.1% higher than the comparable weeks a year ago on a GAAP basis, and 3% higher considering constant currency. With that, I will now turn the call over to Nate for a detailed review of our financial results.

Thank you, Tony. As mentioned, revenues for the quarter were $148.3 million versus $143.4 million in the first quarter of fiscal 2015, a quarter-over-quarter increase of 3.4% and a sequential decrease of three tenths of a percent. Our first quarter revenues were moderately impacted by summer vacations, both in the US and in Europe. On a constant currency basis, revenue increased 6.3% quarter-over-quarter and declined sequentially by three tenths of a percent. Now to some discussion about our revenues by geography. In the first quarter, revenues in the US were $121.1 million, an increase of 4.6% quarter-over-quarter and up four tenths of a percent sequentially. For the first quarter, total revenues internationally were $27.2 million versus $27.6 million in the first quarter a year ago, a decrease of 1.4% quarter-over-quarter and 3.5% sequentially. International revenue accounted for approximately 18% of total revenues for the quarter compared to 19% last quarter. Europe's first quarter revenue decreased 14.2% quarter-over-quarter and 1.5% sequentially, while Asia-Pacific region saw first quarter revenues increase 17% quarter-over-quarter and 1.9% sequentially. On a constant currency basis, total international revenue increased 13.4% quarter-over-quarter and declined 3.2% sequentially. On a quarter-over-quarter basis, the US dollar was stronger against most currencies in Europe and Asia-Pacific. As a result, on a constant currency basis, Europe's revenue would have increased quarter-over-quarter by 1.9%, and Asia-Pacific's increase would have been approximately 28%. On a sequential basis, Europe's revenue decrease would have been 3% and Asia-Pacific's increase would have been 3.7%. Let me now discuss early revenue trends for the second quarter of fiscal 2016. Weekly revenues for the first five weeks of the second quarter have averaged $11.4 million and totaled $57.2 million. They were by week, $11.4 million, $10.2 million, which was Labor Day week, $11.7 million, $11.7 million, and last week, $12.2…

Thanks, Nate. As I previously stated I'm pleased to see the continued improvement in our revenue and profitability metrics during the quarter. Historically, our business experiences a ramp-up following the end of summer. For example, in the first four weeks of the second quarter a year ago, weekly revenues averaged $11.1 million and increased in the remaining nine weeks of the quarter to average $11.9 million. Based upon our weekly results for the three weeks subsequent to Labor Day week, we believe that we are currently in the process of the seasonal ramp up. We continue to see new work related to merger integration, data governance, revenue recognition, and regulatory compliance initiatives. We also believe the pipeline of these opportunities extends well into calendar 2016. Offsetting some of this new work, however, demand for our services within our energy clients continues to be pressured. On a quarter-over-quarter basis, our fiscal 2016 first quarter revenues from the energy sector declined by approximately $2.6 million. Despite the pressures facing many of our clients in the energy sector and the macro noise in the business press related to the global economy, I remain very positive about our business through the remainder of fiscal 2016. Let me now share some additional statistics, which we believe reflects the continuing health and strength of our core business. Client continuity remains outstanding. During our first quarter, we served all of our top 50 clients from fiscal 2015 and fiscal 2014. In fiscal 2016, we have 230 clients for whom we provide services exceeding $500,000 in fees on a run rate basis, up from 229 in fiscal 2015. In addition, our top 50 clients represent 42.6% of total revenues, while 50% of our revenues came from 72 clients. Our loyal client following is reflective of our client service approach and the quality of work performed by our consultants. Our largest client for the quarter was approximately 2.2% of revenues, and through the first quarter of 2016, 92% of our top 50 clients have used more than one practice area and 72% of those top 50 clients have used three or more practice areas. This practice area penetration reflects the diversity of relationships we have within our client’s organizations. That concludes our prepared remarks, and we would now be happy to answer any of your questions at this time.

Thank you. [Operator Instructions] Our first question comes from Andrew Steinerman of JPMorgan. Your line is open. Please check your mute button.

Hi, it's Andrew. I'm sorry about the technical problem. Could you hear me now?

No problem, Andrew.

Sorry, okay. Could you just give me a status on the rev-rec type of revenue? Do you feel like this - it's still the same type of market opportunity for resources that you originally thought and timing of when you think it's going to be realized?

Andrew, this is Tony. I think it's a huge opportunity for us. I think that companies are still in the relatively early stages of ramping this up. But I think it's a great opportunity for us. We've helped clients in the past, historically, implement changes in accounting. I don't think that this will be any different. But, to me, its going - we're winning work in this regard right now. And I think that as we get a little bit closer to the deadline, there will be a lot more work to do.

Okay. And is it moving the revenue needle now, or is it more exploratory type of work?

I'd say it's a little bit more exploratory, but we are winning projects from quarter-to-quarter.

Okay. Thank you very much.

Yes.

Thank you. Our next question comes from Kevin McVeigh, Macquarie. Your line is open.

Great, thanks. Hey, Tony, any sense of how much stronger the revenue would have been, if you didn't see kind of some caution out of energy? And then, with all the issues around Volkswagen, do you folks touch that in one way, shape or form?

First of all, I had disclosed, Kevin, the decrement in revenue for energy clients, oil and gas primarily at $2.6 million for the quarter. That said, we're trying to diversify a little bit our practice, especially within Houston, more towards FSI, healthcare, consumer products and petrochemicals to offset that work on an ongoing basis. So hopefully, we'll be able to diversify that a little bit and get a revenue pickup there. But that’s certainly - it's certainly been an issue for us. And with regard to Volkswagen, at least right now, we have not been able to make any inroads with them, although we're trying to do that, we're trying to do so in our European practice. As you know, Germany has not been a real strong point for us. However, we just hired a brand-new managing director. So hopefully he'll be able to somehow break into Volkswagen.

And how about on the restructuring side, in oil and gas, you kind of pivot into that at all, and are you seeing any pickup there?

I wouldn't say we're seeing anything that is moving the needle. We're seeing a little bit more overall and some bankruptcy work. But specifically to your question, in the oil and gas, I would say not that much.

Great. Thank you.

Thank you. [Operator Instructions] Our next question comes from Jeff Silber of BMO Capital Markets. Your line is open.

Thanks so much. I know you talked about billing rate trend, and I know there's some noise in there because of currency. But I was wondering if you can just give us an overview of how pricing did last quarter, how it's doing in the current quarter, major geographic margin?

On an overall basis, Jeff, what I would tell you is that, on a quarter-over-quarter basis, our gross margin, that portion of it improved by about 40 basis points. But it was then impacted by higher healthcare costs. So the bill pay has improved, but it was offset by healthcare. On a - at a higher level, I would tell you I think we continue to push bill rate increases. That's why you're seeing that quarter-over-quarter. But I would also tell you its client-by-client, and you can't do it every place that you go.

And as a follow-up for that, I'm just curious how you're doing on the supply side in terms of sourcing candidates, if that's becoming more of an issue, and if so, you are able to pass through billing rate increases accordingly? Thanks.

That's kind of our plan. It's always competitive on finding talent, and today is really no different. In fact, it's getting a little bit more intense out there. But one of the core competencies of RGP has always been a pretty strong recruiting process and I'm confident in our recruiters to be able to fill any of our opportunities. And I do think we have the ability to increase prices because there is somewhat of a war for talent out there. And if we're seeing it, then our clients are seeing it as well, and they should - we believe we will be able to pass some of that on.

Okay. Thanks so much for the color.

Thanks.

Thank you. [Operator Instructions] Our next question comes from Mark Marcon of Robert W. Baird. Your line is open.

Just on the oil and gas area. How big is your Houston office, and how big is the energy practice as a percentage of total revenue at this point?

Oil and gas is approximately 5%, and - of total revenues. Of Houston, it used to be a much bigger part of their practice at about 70%; it's now about 55% of their practice. They've diversified out into other areas and have seen the fall off in the oil and gas.

And how big are they as an office?

We don't get that granular – we don't get quite that granular, Mark, just relative to sizes of different offices.

Okay. But it would be one of the top five offices though, would it not or?

You know, probably - probably in the top five.

In that ballpark, Mark. That's fair.

Okay. And then, how should we think about just the revenue progression? You mentioned the seasonality and obviously we're getting into a busier time period. Can you just give us a sense for, again, like how much more of a ramp we typically - not just for last year, but over multiple years, that we've typically seen going from the summer into the fall?

Yes. What I would tell you is, again, I think what Tony had commented, we tend to see an ongoing ramp up. There can be, as we said, some noise because of some international holidays. We obviously gave the mathematical computation consistent with our practice. But I think we continue to believe we will see a ramp-up throughout the fall. It's not necessarily a straight line. But I don't think we see anything, and our information from the field, as Tony pointed out, was they feel pretty good about the pipeline. So, I think we continue to believe we'll see the ramp. The actual slope week-to-week is - can be a little bit harder to predict. But I think we've seen that in these first five weeks, and I think we'll continue to see some week-to-week increases.

Yes, this part of the year has always been strong for us because our clients are - they're starting to get into preparing their financial statements for the end of the year, kind of gearing up to do all of their account reconciliations. And it's nice to see the $500,000 pick-up from last week. So like Nate says, I believe that we will continue to see a good solid ramp-up throughout - through the Christmas time frame.

Right. And just to be clear, the mathematical computation that you gave us was - does not take into account a future ramp?

That’s correct.

Okay.

So, Mark, what it really does is just take the last couple of week’s average of about $12 million, and extends it out up until Thanksgiving week. And then we basically remove a couple of days for the Thanksgiving week and that gets you to that 150.

Right. But obviously we're going to end up, I mean, if we have the normal seasonal ramp, we will be higher than that. And then, to what extent has the - in terms of the decrement that you've seen in the energy patch, has that flattened out or is it continuing to get worse?

I think it's pretty much flattened out, because I mean, right now you're seeing actually a little pick-up in the price of oil, just slight. I mean, it's very subtle week-to-week, and anything can happen. But I think that we've seen pretty much the bottom of where we're going to go with our oil and gas clients. And again, we're not sitting around waiting for things to get better. We're trying to diversify that practice, as I previously stated. But I mean, that's kind of where it is.

Okay. Great. Thank you.

Thank you. I'm showing no additional questions. I would like to hand the call back to Tony Cherbak for closing remarks.

Well, appreciate everybody's interest in RGP, and we look forward to talking to you again to go over our second-quarter results. Thank you.