Good afternoon, ladies and gentlemen, and welcome to the Resources Connection Incorporated Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I would like to turn the call over to your host for today's call, Ms. Alice Washington, General Counsel of Resources Connection. Ms. Washington, you may now begin.

Thank you, Operator. Good afternoon, everyone, and thank you for participating on this call. Joining me here today are Kate Duchene, our Chief Executive Officer; Tim Brackney, our Chief Operating Officer; and Jennifer Ryu, our Interim Chief Financial officer. During this call, we will be commenting on our results for the first quarter ended August 24, 2019. By now, you should have a copy of today's press release. If you need a copy and/or unable to access it on our website, please call Shannon McPhee at (714) 430-6363. During this call, we may make forward-looking statements regarding future events or future financial performance of the company. Such statements are predictions and actual events or results may differ materially. Please see our report on the form 10-K for the year ended May 25, 2019 for a discussion of risks, uncertainties and other factors such as seasonal and economic conditions, such factors 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 our CEO, Kate Duchene.

Thank you, Alice. Good afternoon, everyone, and welcome to RGP's first conference call in fiscal '20. I'll start by welcoming Jenn to the call and to her role as our Interim Chief Financial Officer. I am very pleased to be working directly with Jenn, and I'm impressed with the impact she has made in our accounting and finance group. She contributed significantly to the strategic actions we took this quarter, and while Jenn joined RGP in April, it does feel like she's been with us far longer, given her insights, decisiveness, judgment and technical knowledge. Jenn, thank you for your outstanding contributions thus far. We expect to make the Chief Financial Officer decision permanent by the end of the calendar year. Next, I'll turn to briefly discuss our financial performance in the first quarter, given the significant activities we've completed in the past 90 days. These include an acquisition, a divestiture and an office closure. Our total revenues for the first quarter of fiscal '20 were $172.2 million. This represents a 3.6% decline over Q1 of fiscal '19, primarily because of a continued slowdown in Europe. The expected decline in our technical accounting revenue in North America, given project completion, and some slowing of client decision-making related to revenue opportunities in our largest markets. As we pivot to higher level project and advisory work, we are also experiencing longer sales cycles. Tim will provide more color on the actions we're taking to strengthen pipeline and momentum in Q2 and the balance of the fiscal year. The revenue bright spot this quarter is Asia Pacific, a region that delivered strong growth of 11.8%, 13% constant currency. This growth is led by Japan, India and Singapore, which we continue to see as expanding markets. The second bright spot in our financial performance…

Thank you, Kate, and good afternoon, everyone. I will highlight trends and initiatives that directly impacted our results and operations for the first quarter, provide an update on our fiscal '20 operational priorities and discuss early trends in the second quarter. As Kate noted, we continue to see some client uncertainty prompted by concerns related to the global economic environment. Despite these choppier waters, we believe there is an opportunity to capture market share. Many companies continue to engage in crucial transformations and a flight to value typically insist. As in the previous quarter, we made positive strides with operational improvements and sales productivity, cost containment and delivery efficiency. I will briefly touch on each of these key operational objectives. While global revenue decreased 3.6% from the prior year quarter, we did see global productivity gains, including increases in outreach, meetings generated and average pipelines during the same period. In addition, gross margin percentage increased by over 100 basis points during the same period, reflecting an increase in bill pay ratio and a strong increase in bill rates in the U.S. business. These efforts and sustained sales motion and discipline, pricing governance and pipeline building helped to offset some of the macro factors discussed earlier and a meaningful drop in velocity due to natural completion of projects related to the implementation of new accounting regulations. Jenn will provide more detail around revenue, gross margin and bill rates. We are encouraged by the productivity strides, yet we recognize the urgency to increase revenue velocity, particularly in our largest markets, which as a group have not performed to a desired level. As a result, we have adjusted leadership, team focus and/or structure to ensure directed and granular concentration and go-to-market opportunity in several key markets, including Germany and the Netherlands, which we…

Thank you, Tim. Good afternoon, everyone, and thank you, Kate, for the kind remarks. I've really enjoyed getting to know this organization since joining in April, and it's been great to work more closely with Kate, Tim and the rest of the executive team this quarter. I'm inspired by Kate's vision and the long-term prospects for the company. Now, I will start by giving detail on our first quarter financial results, and we'll then discuss the trends we're seeing in the second quarter of fiscal 2020. Starting with an overview of our first quarter results. Total revenues for the first quarter of fiscal '20 was $172.2 million, a 3.6% decrease from the comparable quarter of fiscal '19 and a 5.4% decrease sequentially. On a constant currency basis, revenue decreased 3% year-over-year and 5.3% sequentially. Our first quarter gross margin was 39.2%, up 100 basis points from the prior-year first quarter, primarily due to improvement in our bill pay ratio, reflecting the favorable impact of our internal pricing initiatives. SG&A expenses for the quarter were $57 million or 33.1% of revenue compared to $56.4 million, 31.6% of revenue last year. As Kate mentioned earlier, SG&A in the first quarter fiscal '20 includes a number of onetime items, which I will discuss later in detail. Our net income for the first quarter was $4.9 million or $0.15 per diluted share compared to $5.7 million or $0.18 per diluted share in the prior-year quarter. In Q1, adjusted EBITDA, which we define as EBITDA before stock compensation and contingent consideration adjustments was $11.9 million or 6.9% of revenue compared to $13.2 million or 7.4% of revenue in the prior-year quarter. Now let me provide some color around our first quarter revenue geographically. Our U.S. revenue, excluding our recently acquired entity Veracity decreased 4% year-over-year…

Thank you, Jenn. Looking ahead, we are committed to improving the revenue trajectory, investing in the right capabilities to compete successfully in the future and delivering solid financial returns to our shareholders. We are excited about the work ahead in fiscal '20 and look forward to updating you as we progress. Before turning to questions, as usual, I'm happy to report our client continuity statistics for Q1 of fiscal '20. Client continuity remained strong, during our first quarter, we served all of our top 50 clients from fiscal '19 and 49 at the top 50 from 2018. In the quarter, we have 281 clients for whom we provide services at a run rate exceeding 500,000 in fees. This number is consistent with fiscal 2019. In addition, our top 50 clients for the quarter represented 37% of total revenues, while 50% of our revenues came from a 103 clients. Our largest client for the quarter was approximately 3.3% of revenue. At the end of the first quarter, 94% of our top 50 clients have used more than one type of service or solution. This penetration reflects the diversity of relationships we are building within our clients organizations and reinforces the opportunity for growth. That concludes our prepared remarks, and we're now happy to answer any questions.

[Operator Instructions] Our first question comes from Andrew Steinerman with JPMorgan. Please proceed.

You have mentioned positioning the company to gain market share. So I'd be curious to know which vendors you see Resources gaining market share from and why? And if I could, I'm going to ask a second question of Jenn, could you just go over the revenue impact in the second quarter of the first quarter acquisition divestiture and Belgian office closing?

Sure. Thanks for the question, Andrew. But what I was referring to is that what we've seen in other scenarios where macro impacts to affect the marketplace is that there is a flight to value. And what I mean by that is there are clients who are still going through large initiatives and transformation and they need assistance to do it. But they're less likely to use big ticket, big consulting firms. And so we believe that - in that environment, we have the ability to take share.

Okay.

Andrew, this is Jenn. Yeah so our revenue forecast in Q2 includes the impact of Veracity and also includes the [indiscernible] revenue from our Belgium and Sweden practices. And on a - it's a net increase to the Q2 revenue forecast.

Could you tell me how much?

I think we're still working through, Andrew, what the run rate for Veracity. They've been in our financials for a short period of time and we're still working through some of their projections. They've had one client that has reduced their service needs from us and they are just onboarding another client that is likely to have a more significant positive impact in the quarter, that I wouldn't want to provide an answer right now without really understanding the impact of those two moves.

Maybe can I just try one other way, Jenn, maybe look back on the first quarter. I think you said revenues - for total revenues, constant currency was down 3% year-over-year. What would it be on a kind of organic constant currency year-over-year basis?

Comparing Q2 forecast to Q2 last year?

No first quarter, I'm saying, let's look back at the first quarter, we just reported. And I'm saying instead of just looking at constant currency, let's make adjustments for the divestiture and the acquisition and think about what the year-over-year revenue change would be in the first quarter just reported?

It would be as close to a wash, Andrew.

Okay.

So we really need. I mean, the bottom line is we need more experience to give you a more credible answer to your question for Q2. And I don't want us to provide something that we're not comfortable with yet. So we'll be prepared as we continue to work together and get more of a sense. Jenn needs to visit with that client or excuse me, that part of our company in more detail following the close of this quarter. And she'll be doing that shortly.

Thank you. [Operator Instructions] I'm not showing any further questions at this time. I would now like to turn the call back over to Kate Duchene for any closing remarks.

Okay. Thank you, Operator. Thank you again, everyone, for attending this call and for your interest in RGP. We look forward to talking with you again after on our next earnings call following the close of our second quarter. Thank you.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.