UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35636

ASGN Incorporated

(Exact name of registrant as specified in its charter)

Delaware

95-4023433

(State of Incorporation)

(I.R.S. Employer Identification No.)

4400 Cox Road, Suite 110

Glen Allen, Virginia 23060

(Address, including zip code, of Principal Executive Offices)

(888) 482-8068

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock

ASGN

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

At ~~November 2, 2020,~~April 30, 2021, the total number of outstanding shares of the Common Stock of ASGN Incorporated (the "Company") ($0.01 par value) was ~~52.9~~53.2 million.

ASGN INCORPORATED AND SUBSIDIARIES

INDEX


PART I — FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (U ~~naudited)~~(Unaudited)			3

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Operations and Comprehensive Income			4

Condensed Consolidated Statements of Stockholders’ Equity			5

Condensed Consolidated Statements of Cash Flows			6

Notes to Condensed Consolidated Financial Statements			7

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			1211

Item 3 — Quantitative and Qualitative Disclosures about Market Risks			2014

Item 4 — Controls and Procedures			2014

PART II — OTHER INFORMATION

Item 1 — Legal Proceedings			2115

Item 1A — Risk Factors			2115

Item 2 — Unregistered Sales of Securities and Use of Proceeds			2115

Item 3 — Defaults Upon Senior Securities			2115

Item 4 — Mine Safety Disclosures			2115

Item 5 — Other Information			2115

Item 6 — Exhibits			2216

Signature			2317

PART I — FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (Unaudited)

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In ~~millions, except per share data)~~millions)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	229.7	$	95.2	Cash and cash equivalents	$	386.5	$	274.4
Accounts receivable, net	Accounts receivable, net	676.5		648.7		Accounts receivable, net	646.9		678.7
Prepaid expenses and income taxes	Prepaid expenses and income taxes	10.3		29.4		Prepaid expenses and income taxes	20.2		23.3
Other current assets	Other current assets	18.2		18.2		Other current assets	20.6		18.0
Total current assets	Total current assets	934.7		791.5		Total current assets	1,074.2		994.4
Property and equipment, net	Property and equipment, net	74.2		73.7		Property and equipment, net	68.3		69.4
Operating lease right of use assets		93.2		94.6
Operating lease right-of-use assets						Operating lease right-of-use assets	76.2		84.9
Identifiable intangible assets, net	Identifiable intangible assets, net	496.8		476.5		Identifiable intangible assets, net	475.6		487.9
Goodwill	Goodwill	1,590.9		1,486.9		Goodwill	1,617.5		1,618.4
Other	Other	21.8		18.2		Other	22.7		23.0
Total assets	Total assets	$	3,211.6	2,941.4		Total assets	$	3,334.5	$	3,278.0
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	50.1	$	39.2	Accounts payable	$	29.9	$	39.8
Accrued payroll and contract professional pay	Accrued payroll and contract professional pay	236.5		203.2		Accrued payroll and contract professional pay	284.7		266.1
Operating lease liabilities	Operating lease liabilities	31.0		25.8		Operating lease liabilities	28.0		29.4
Other current liabilities	Other current liabilities	71.8		72.7		Other current liabilities	86.3		80.9
Total current liabilities	Total current liabilities	389.4		340.9		Total current liabilities	428.9		416.2
Long-term debt	Long-term debt	1,033.2		1,032.3		Long-term debt	1,033.7		1,033.4
Operating lease liabilities	Operating lease liabilities	70.2		75.7		Operating lease liabilities	55.0		62.9
Deferred income tax liabilities	Deferred income tax liabilities	107.2		98.7		Deferred income tax liabilities	108.6		108.7
Payroll tax deferral and other		87.4		17.6
Other						Other	62.5		69.7
Total liabilities	Total liabilities	1,687.4		1,565.2		Total liabilities	1,688.7		1,690.9
Commitments and contingencies (Note 6)
Commitments and contingencies (Note 5)						Commitments and contingencies (Note 5)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value; 1.0 million shares authorized; 0 shares issued	Preferred stock, $0.01 par value; 1.0 million shares authorized; 0 shares issued	0		0		Preferred stock, $0.01 par value; 1.0 million shares authorized; 0 shares issued	0		0
Common stock, $0.01 par value; 75.0 million shares authorized; 52.8 million and 52.9 million shares outstanding as of September 30, 2020 and December 31, 2019, respectively		0.5		0.5
Common stock, $0.01 par value; 75.0 million shares authorized; 53.2 million and 52.9 million shares outstanding as of March 31, 2021 and December 31, 2020, respectively						Common stock, $0.01 par value; 75.0 million shares authorized; 53.2 million and 52.9 million shares outstanding as of March 31, 2021 and December 31, 2020, respectively	0.5		0.5
Paid-in capital	Paid-in capital	657.7		638.0		Paid-in capital	674.5		661.3
Retained earnings	Retained earnings	870.9		744.7		Retained earnings	975.0		926.3
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(4.9)		(7.0)		Accumulated other comprehensive loss	(4.2)		(1.0)
Total stockholders’ equity	Total stockholders’ equity	1,524.2		1,376.2		Total stockholders’ equity	1,645.8		1,587.1
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	3,211.6	$	2,941.4	Total liabilities and stockholders’ equity	$	3,334.5	$	3,278.0

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(In millions, except per share ~~amounts)~~data)


		Three Months Ended				Nine Months Ended						Three Months Ended
		September 30,							March 31,
		2020		2019				2020				2019		2021			2020
Revenues	Revenues	$	1,011.9	$	1,002.7	$	2,939.2		$	2,898.7	Revenues	$	1,025.7		$	990.5
Costs of services	Costs of services	740.9		711.3		2,126.5			2,058.2		Costs of services	744.7			709.6
Gross profit	Gross profit	271.0		291.4		812.7			840.5		Gross profit	281.0			280.9
Selling, general and administrative expenses	Selling, general and administrative expenses	177.2		188.6		547.3			574.8		Selling, general and administrative expenses	194.0			197.9
Amortization of intangible assets	Amortization of intangible assets	12.9		11.9		37.6			38.8		Amortization of intangible assets	12.2			12.1
Operating income	Operating income	80.9		90.9		227.8			226.9		Operating income	74.8			70.9
Interest expense	Interest expense	(9.3)		(12.7)		(30.4)			(41.2)		Interest expense	(9.2)			(11.4)
Income before income taxes	Income before income taxes	71.6		78.2		197.4			185.7		Income before income taxes	65.6			59.5
Provision for income taxes	Provision for income taxes	19.3		20.7		52.5			50.2		Provision for income taxes	16.9			15.7
Income from continuing operations		52.3		57.5		144.9			135.5
Loss from discontinued operations, net of income taxes		0		(0.1)		0			(0.1)

Net income	Net income	$	52.3	$	57.4	$	144.9		$	135.4	Net income	$	48.7		$	43.8

Earnings per share:	Earnings per share:										Earnings per share:
Basic	Basic	$	1.00	$	1.09	$	2.75		$	2.57	Basic	$	0.92		$	0.83
Diluted	Diluted	$	0.99	$	1.08	$	2.73		$	2.54	Diluted	$	0.91		$	0.82

Number of shares and share equivalents used to calculate earnings per share:	Number of shares and share equivalents used to calculate earnings per share:										Number of shares and share equivalents used to calculate earnings per share:
Basic	Basic	52.5		52.8		52.6			52.7		Basic	53.0			52.8
Diluted	Diluted	53.0		53.4		53.1			53.4		Diluted	53.7			53.3

Reconciliation of net income to comprehensive income:	Reconciliation of net income to comprehensive income:										Reconciliation of net income to comprehensive income:
Net income	Net income	$	52.3	$	57.4	$	144.9		$	135.4	Net income	$	48.7		$	43.8
Foreign currency translation adjustment	Foreign currency translation adjustment	3.0		(2.4)		2.1			(2.5)		Foreign currency translation adjustment	(3.2)			(2.5)
Comprehensive income	Comprehensive income	$	55.3	$	55.0	$	147.0		$	132.9	Comprehensive income	$	45.5		$	41.3

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)


		Common Stock			Paid-in Capital		Retained Earnings		Other			Total				Common Stock			Paid-in Capital		Retained Earnings		Other		Total
		Shares	Par Value								Shares				Par Value
Three Months Ended September 30, 2020
Balance at June 30, 2020		52.5	$	0.5	$	645.9	$	818.6	$	(7.9)		$	1,457.1
Three months ended March 31, 2021														Three months ended March 31, 2021
Balance at December 31, 2020														Balance at December 31, 2020		52.9	$	0.5	$	661.3	$	926.3	$	(1.0)	$	1,587.1
Vesting of restricted stock units	Vesting of restricted stock units	—	—		(1.1)		—		—			(1.1)		Vesting of restricted stock units		0.1	—		(4.8)		—		—		(4.8)
Employee stock purchase plan	Employee stock purchase plan	0.3	—		5.2		—		—			5.2		Employee stock purchase plan		0.2	—		7.6		—		—		7.6
Exercise of stock options	Exercise of stock options	—	—		0.6		—		—			0.6		Exercise of stock options		—	—		0.1		—		—		0.1
Stock-based compensation expense	Stock-based compensation expense	—	—		7.1		—		—			7.1		Stock-based compensation expense		—	—		10.3		—		—		10.3

Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		3.0			3.0		Foreign currency translation adjustments		—	—		—		—		(3.2)		(3.2)
Net income	Net income	—	—		—		52.3		—			52.3		Net income		—	—		—		48.7		—		48.7
Balance at September 30, 2020		52.8	$	0.5	$	657.7	$	870.9	$	(4.9)		$	1,524.2
Balance at March 31, 2021														Balance at March 31, 2021		53.2	$	0.5	$	674.5	$	975.0	$	(4.2)	$	1,645.8

Three Months Ended September 30, 2019
Balance at June 30, 2019		52.8	$	0.5	$	625.5	$	664.1	$	(6.4)		$	1,283.7
Three months ended March 31, 2020														Three months ended March 31, 2020
Balance at December 31, 2019														Balance at December 31, 2019		52.9	$	0.5	$	638.0	$	744.7	$	(7.0)	$	1,376.2
Vesting of restricted stock units	Vesting of restricted stock units	0.1	—		(0.8)		—		—			(0.8)		Vesting of restricted stock units		0.1	—		(4.9)		—		—		(4.9)
Employee stock purchase plan	Employee stock purchase plan	0.1	—		5.7		—		—			5.7		Employee stock purchase plan		0.2	—		5.9		—		—		5.9
Exercise of stock options		—	—		0.1		—		—			0.1
Stock-based compensation expense	Stock-based compensation expense	—	—		7.8		—		—			7.8		Stock-based compensation expense		—	—		8.9		—		—		8.9
Stock repurchase and retirement of shares	Stock repurchase and retirement of shares	(0.3)	—		(3.9)		(16.1)		—			(20.0)		Stock repurchase and retirement of shares		(0.8)	—		(9.2)		(18.7)		—		(27.9)
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		(2.4)			(2.4)		Foreign currency translation adjustments		—	—		—		—		(2.5)		(2.5)
Net income	Net income	—	—		—		57.4		—			57.4		Net income		—	—		—		43.8		—		43.8
Balance at September 30, 2019		52.7	$	0.5	$	634.4	$	705.4	$	(8.8)		$	1,331.5
Balance at March 31, 2020														Balance at March 31, 2020		52.4	$	0.5	$	638.7	$	769.8	$	(9.5)	$	1,399.5

		Common Stock			Paid-in Capital		Retained Earnings		Other			Total
		Shares	Par Value
Nine Months Ended September 30, 2020
Balance at December 31, 2019		52.9	$	0.5	$	638.0	$	744.7	$	(7.0)		$	1,376.2
Vesting of restricted stock units		0.2	—		(7.0)		—		—			(7.0)
Employee stock purchase plan		0.5	—		11.1		—		—			11.1
Exercise of stock options		—	—		0.6		—		—			0.6
Stock-based compensation expense		—	—		24.2		—		—			24.2
Stock repurchases and retirement of shares		(0.8)	—		(9.2)		(18.7)		—			(27.9)
Foreign currency translation adjustments		—	—		—		—		2.1			2.1
Net income		—	—		—		144.9		—			144.9
Balance at September 30, 2020		52.8	$	0.5	$	657.7	$	870.9	$	(4.9)		$	1,524.2

Nine Months Ended September 30, 2019
Balance at December 31, 2018		52.5	$	0.5	$	601.8	$	586.1	$	(6.3)		$	1,182.1
Vesting of restricted stock units		0.3	—		(7.6)		—		—			(7.6)
Employee stock purchase plan		0.2	—		12.6		—		—			12.6
Exercise of stock options		—	—		0.1		—		—			0.1
Stock-based compensation expense		—	—		31.4		—		—			31.4
Stock repurchases and retirement of shares		(0.3)	—		(3.9)		(16.1)		—			(20.0)
Foreign currency translation adjustments		—	—		—		—		(2.5)			(2.5)
Net income		—	—		—		135.4		—			135.4
Balance at September 30, 2019		52.7	$	0.5	$	634.4	$	705.4	$	(8.8)		$	1,331.5

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2020		2019			2021		2020
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income	Net income	$	144.9	$	135.4	Net income	$	48.7	$	43.8
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	65.6		68.8		Depreciation and amortization	22.0		21.4
Stock-based compensation	Stock-based compensation	23.9		31.1		Stock-based compensation	10.3		8.7
Other	Other	5.4		12.1		Other	1.0		1.7
Changes in operating assets and liabilities, net of effects of acquisitions:	Changes in operating assets and liabilities, net of effects of acquisitions:					Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	Accounts receivable	(18.4)		(30.3)		Accounts receivable	30.3		(30.5)
Prepaid expenses and income taxes	Prepaid expenses and income taxes	19.2		(1.9)		Prepaid expenses and income taxes	3.0		7.9
Accounts payable	Accounts payable	13.3		(17.9)		Accounts payable	(10.0)		(3.9)
Accrued payroll and contract professional pay	Accrued payroll and contract professional pay	27.9		25.1		Accrued payroll and contract professional pay	19.3		9.1
Income taxes payable	Income taxes payable	0.8		15.5		Income taxes payable	9.9		5.7
Operating lease right of use assets		21.8		20.9
Operating lease right-of-use assets						Operating lease right-of-use assets	8.9		7.2
Operating lease liabilities	Operating lease liabilities	(20.8)		(21.3)		Operating lease liabilities	(9.5)		(7.4)
Payroll tax deferral and other		54.2		(5.7)
Other						Other	(14.1)		0.4
Net cash provided by operating activities	Net cash provided by operating activities	337.8		231.8		Net cash provided by operating activities	119.8		64.1
Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Cash paid for property and equipment	Cash paid for property and equipment	(28.3)		(22.8)		Cash paid for property and equipment	(9.3)		(15.3)
Cash paid for acquisitions, net of cash acquired	Cash paid for acquisitions, net of cash acquired	(151.5)		(48.5)		Cash paid for acquisitions, net of cash acquired	0		(85.5)
Other	Other	(0.3)		(0.1)		Other	(0.1)		(0.2)
Net cash used in investing activities	Net cash used in investing activities	(180.1)		(71.4)		Net cash used in investing activities	(9.4)		(101.0)
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Proceeds from long-term debt	Proceeds from long-term debt	65.5		59.0		Proceeds from long-term debt	0		65.5
Principal payments of long-term debt	Principal payments of long-term debt	(65.5)		(178.0)		Principal payments of long-term debt	0		(32.5)
Debt issuance and amendment costs		(1.2)		0

Proceeds from option exercises and employee stock purchase plan	Proceeds from option exercises and employee stock purchase plan	11.7		12.7		Proceeds from option exercises and employee stock purchase plan	7.7		5.9
Payment of employment taxes related to release of restricted stock awards	Payment of employment taxes related to release of restricted stock awards	(7.0)		(7.7)		Payment of employment taxes related to release of restricted stock awards	(4.8)		(4.9)
Repurchase of common stock	Repurchase of common stock	(27.9)		(20.0)		Repurchase of common stock	0		(27.9)
Net cash used in financing activities		(24.4)		(134.0)
Net cash provided by financing activities						Net cash provided by financing activities	2.9		6.1
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	1.2		(0.7)		Effect of exchange rate changes on cash and cash equivalents	(1.2)		(0.4)
Net Increase in Cash and Cash Equivalents		134.5		25.7
Net Increase (Decrease) in Cash and Cash Equivalents						Net Increase (Decrease) in Cash and Cash Equivalents	112.1		(31.2)
Cash and Cash Equivalents at Beginning of Year	Cash and Cash Equivalents at Beginning of Year	95.2		41.8		Cash and Cash Equivalents at Beginning of Year	274.4		95.2
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	229.7	$	67.5	Cash and Cash Equivalents at End of Period	$	386.5	$	64.0


Supplemental Disclosure of Cash Flow Information	Supplemental Disclosure of Cash Flow Information					Supplemental Disclosure of Cash Flow Information
Cash paid for —	Cash paid for —					Cash paid for —
Income taxes	Income taxes	$	40.7	$	36.6	Income taxes	$	2.6	$	1.2
Interest	Interest	$	22.4	$	37.0	Interest	$	2.4	$	4.7
Operating lease liabilities						Operating lease liabilities	$	8.8	$	8.4
Non-cash transactions —	Non-cash transactions —					Non-cash transactions —
Unpaid portion of additions to property and equipment		$	3.2	$	1.1

Operating lease right of use assets obtained in exchange for operating lease liabilities	Operating lease right of use assets obtained in exchange for operating lease liabilities	$	20.2	$	13.0	Operating lease right of use assets obtained in exchange for operating lease liabilities	$	0.3	$	8.5
Contingent purchase consideration		$	6.0	$	0

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General

Basis of presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The December 31, ~~2019~~2020 condensed consolidated balance sheet was derived from audited financial statements. The financial statements include adjustments consisting of normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the financial position of ASGN Incorporated and its subsidiaries ("ASGN" or the "Company") and its results of operations for the interim dates and periods set forth herein. The results for any of the interim periods are not necessarily indicative of the results to be expected for the full year or any other period. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 ("~~2019~~2020 10-K").

2. Acquisitions

~~COVID-19 pandemic~~
— As a result of the COVID-19 pandemic, the Company experienced a precipitous decline in revenues from its creative marketing and permanent placement divisions in the second quarter of 2020, with some recovery in the current quarter.

In ~~the second quarter of~~ 2020, the Company ~~performed an impairment assessment~~acquired four consulting services businesses for $186.0 million in aggregate purchase consideration. None of these acquisitions were material individually or in the aggregate. At March 31, 2021, the Company had not finalized the determination of fair values allocated to all of the ~~goodwill~~assets and ~~trademarks~~liabilities for certain of these divisions, which included sensitivity analyses and stress testing on certain of the more sensitive inputs to the valuation models, including the weighted-average cost of capital and future expected revenues. Based on this assessment in the second quarter of 2020, the Company concluded that their fair values, more likely than not, exceeded their carrying values. In the third quarter of 2020, revenues from these divisions improved and the other more sensitive inputs to the valuation models remained reasonable. As a result, there were no indicators of impairment at September 30, 2020. Given the uncertainty of the current economic environment, accounting estimates and assumptions that require management's judgments concerning the effects of the economic downturn and recovery, particularly those relating to the recoverability of intangible assets and goodwill, are being closely monitored.

As allowed by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), the Company deferred payment of $60.8 million in federal payroll taxes. This relief program is applicable for wages paid through December 31, 2020 and requires 50 percent of the amounts deferred to be paid by December 31, 2021 with the remaining amount paid by December 31, 2022.

~~2. Accounting Standards Update~~

~~On January 1, 2020, the Company adopted Accounting Standard Update ("ASU") No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326).~~ This standard requires a financial asset to be presented at the net amount expected to be collected. The financial assets of the Company in scope of ASU 2016-13 were primarily accounts receivable. The adoption of this standard did not have a significant impact to the Company's consolidated financial statements.

~~On January 1, 2020, the Company adopted ASU No. 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. This update provides guidance regarding the capitalization of implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 was adopted prospectively and cloud computing implementation costs incurred on January 1, 2020 or later are included in other noncurrent assets in the consolidated balance sheet and are presented within operating cash flows. As of September 30, 2020, capitalized implementation costs for cloud computing arrangements were not significant.

~~On January 1, 2020, the Company adopted ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.~~ This guidance eliminates Step 2 of the goodwill impairment test and goodwill impairment will now be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

~~In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04,~~ ~~Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.~~ ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases and other contracts. This guidance is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the impact of this guidance.acquisitions.

3. ~~Acquisitions~~

~~LeapFrog Systems, Inc. ("LeapFrog")~~

OnAugust 31, 2020, the Company acquired all of the outstanding shares of LeapFrog, headquartered in Boston, Massachusetts, for $66.0 million in cash and up to $6.0 million in estimated future contingent consideration. The acquisition deepens and expands the Company's capabilities in digital innovation and enterprise solutions for its financial services, insurance and healthcare clients. LeapFrog is part of the Apex Segment. LeapFrog's results of operations are included in the consolidated results of the Company from the date of its acquisition.

The purchase accounting for the LeapFrog acquisition remains incomplete with respect to the provisional fair value of assets acquired and liabilities assumed, as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. Measurement period adjustments will be recognized prospectively within 12 months from the date of acquisition. Goodwill associated with this acquisition totaled $42.4 million, which is not deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets of $35.1 million included customer and contractual relationships and non-compete agreements with useful lives ranging from approximately two to seven years.

~~Blackstone Federal~~

On January 24, 2020, the Company acquired certain specified assets and liabilities that make up the federal division of Blackstone Technology Group ("Blackstone Federal"), for $85.5 million in cash. Blackstone Federal is headquartered in Arlington, Virginia. The acquisition expands the Company's capabilities in agile application development, cloud modernization and systems architecture, cybersecurity, user experience design and branding services to government clients and is part of the ECS Segment. The results of operations of Blackstone Federal are included in the consolidated results of the Company from the date of its acquisition.

Goodwill associated with this acquisition totaled $61.1 million, which is deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets related to this acquisition totaled $22.8 million, with useful lives ranging from one to nine years. The purchase accounting for this acquisition has been finalized.

~~Intersys Consulting, LLC ("Intersys")~~

On October 17, 2019, the Company acquired all of the membership interests of Intersys, headquartered in Austin, Texas, for $67.0 million in cash. The acquisition expands the Company's capabilities in digital innovation and enterprise solutions and it is part of the Apex Segment. The results of operations of Intersys are included in the consolidated results of the Company from the date of its acquisition.

Goodwill associated with this acquisition totaled $41.4 million, of which $38.7 million is deductible for income tax purposes. Goodwill represents the acquired assembled workforce, potential new customers and future cash flows after the acquisition. Identifiable intangible assets related to this acquisition totaled $23.8 million, with useful lives ranging from three to ten years. The purchase accounting for this acquisition has been finalized.

4. Goodwill and Identifiable Intangible Assets

~~Changes in~~The following table summarizes the activity related to the carrying amount of goodwill by reportable segment for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and the year ended December 31, ~~2019 were as follows~~2020 (in millions):

Apex Oxford ECS Total
Balance as of December 31, 2018 $ 662.1 $ 230.8 $ 528.2 $ 1,421.1
DHA acquisition — — 24.7 24.7
Intersys acquisition 41.4 — — 41.4
Translation adjustment — (0.3) — (0.3)
Balance as of December 31, 2019 703.5 230.5 552.9 1,486.9
Blackstone Federal acquisition — — 61.1 61.1
LeapFrog acquisition 42.4 — — 42.4
Translation adjustment (0.4) 0.9 — 0.5
Balance as of September 30, 2020 $ 745.5 $ 231.4 $ 614.0 $ 1,590.9


	Apex Segment		Oxford Segment		ECS Segment		Total




Balance as of December 31, 2019	$	703.5	$	230.5	$	552.9	$	1,486.9
2020 acquisitions(1)	40.3		—		89.2		129.5
Translation adjustment	(0.1)		2.1		—		2.0
Balance as of December 31, 2020	743.7		232.6		642.1		1,618.4
Purchase price adjustments	—		—		0.2		0.2
Translation adjustment	(0.1)		(1.0)		—		(1.1)
Balance as of March 31, 2021	$	743.6	$	231.6	$	642.3	$	1,617.5

_____

(1) For the 2020 acquisitions, approximately $77.1 million of the goodwill was deductible for income tax purposes.

Acquired intangible assets consisted of the following (in millions):


			September 30, 2020						December 31, 2019								March 31, 2021						December 31, 2020
		Estimated Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Estimated Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and contractual relationships	Customer and contractual relationships	2 - 12.75	$	437.3	$	211.2	$	226.1	$	384.9	$	179.9	$	205.0	Customer and contractual relationships	7.3 - 12.8	$	440.9	$	233.4	$	207.5	$	441.3	$	222.9	$	218.4
Contractor relationships	Contractor relationships	2 - 5	71.1		70.9		0.2		71.1		70.6		0.5		Contractor relationships	4.0	71.1		71.0		0.1		71.2		71.0		0.2
Backlog		1 - 2.75	28.3		27.1		1.2		25.0		23.9		1.1
Contract Backlog															Contract Backlog	1.0 - 2.8	29.3		28.7		0.6		29.3		28.5		0.8
Non-compete agreements	Non-compete agreements	2 - 7	27.4		17.0		10.4		24.8		13.8		11.0		Non-compete agreements	3.0 - 5.0	27.8		19.3		8.5		27.8		18.2		9.6
In-use software		6	18.9		18.9		0		18.9		18.9		0
			583.0		345.1		237.9		524.7		307.1		217.6
Trademarks (not amortized)			258.9		—		258.9		258.9		—		258.9
																	569.1		352.4		216.7		569.6		340.6		229.0
Not subject to amortization:															Not subject to amortization:
Trademarks															Trademarks		258.9		—		258.9		258.9		—		258.9
Total	Total		$	841.9	$	345.1	$	496.8	$	783.6	$	307.1	$	476.5	Total		$	828.0	$	352.4	$	475.6	$	828.5	$	340.6	$	487.9

Estimated future amortization expense ~~is as~~ follows (in millions):


Remainder of 2020		$	13.5
2021		46.6
Remainder of 2021				Remainder of 2021	$	35.6
2022	2022	38.4		2022	39.1
2023	2023	33.5		2023	33.9
2024	2024	26.2		2024	26.6
2025				2025	21.5
Thereafter	Thereafter	79.7		Thereafter	60.0
		$	237.9		$	216.7

5.4. Long-Term Debt

Long-term debt consisted of the following (in millions):


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Senior Secured Credit Facility:	Senior Secured Credit Facility:					Senior Secured Credit Facility:
$250 million revolving credit facility, due 2024	$250 million revolving credit facility, due 2024	$	0	$	0	$250 million revolving credit facility, due 2024	$	—	$	—
Term B loan facility, due 2025	Term B loan facility, due 2025	490.8		490.8		Term B loan facility, due 2025	490.8		490.8

Unsecured Senior Notes, due 2028	Unsecured Senior Notes, due 2028	550.0		550.0		Unsecured Senior Notes, due 2028	550.0		550.0
		1,040.8		1,040.8			1,040.8		1,040.8
Unamortized deferred loan costs	Unamortized deferred loan costs	(7.6)		(8.5)		Unamortized deferred loan costs	(7.1)		(7.4)
Total long-term debt		$	1,033.2	$	1,032.3
							$	1,033.7	$	1,033.4

Senior Secured Credit Facility

— The senior secured credit facility ("Credit Facility") consists of a term B loan and a $250.0 million revolving credit facility ~~with a maximum borrowing capacity of $250.0 million~~ ("Revolver"). Borrowings under the term B loan bear interest at LIBOR plus 1.75 percent, or the bank’s base rate plus 0.75 percent. Borrowings under the Revolver bear interest at LIBOR plus 1.25 ~~percent~~ to 2.25 percent, or the bank’s base rate plus 0.25 to 1.25 percent, depending on leverage levels. ~~At September 30, 2020, the Company had no outstanding borrowings under the Revolver and had $3.9 million in undrawn stand-by letters of credit to secure certain obligations.~~ A commitment fee of 0.20 to 0.35 percent is payable on the undrawn portion of the Revolver. The Revolver is limited to a maximum ratio of senior secured debt to trailing 12-months of lender-defined consolidated EBITDA of 4.00 to 1.00, which was 1.13 to 1.00 at March 31, 2021. There are no required minimum payments on the Credit Facility and it is secured by substantially all of the Company's assets and includes various restrictive covenants. The Company is required to make mandatory prepayments on its term B loan from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events, subject to certain exceptions. The Revolver is limited to a maximum ratio of senior secured debt to trailing 12-months of lender-defined consolidated EBITDA. At ~~September 30, 2020,~~March 31, 2021, the Company was in compliance with its debt covenants.

Unsecured Senior Notes

— The Company has $550.0 million of unsecured senior notes ~~due in 2028~~ ("Senior Notes")~~. The Senior Notes~~, which bear interest at 4.625 ~~percent, which~~percent. Interest is payable semiannually in arrears on May 15 and November ~~15 of each year.~~15. The Senior Notes are unsecured obligations and are subordinate to the Company's Credit Facility to the extent of the collateral securing such facility. The Senior Notes also contain certain customary limitations including, among other terms and conditions, the Company's ability to incur additional indebtedness, engage in mergers and acquisitions, transfer or sell assets and make certain distributions.

6.5. Commitments and Contingencies

The Company’s deferred compensation plan liability was ~~$13.1~~$14.1 million and ~~$11.8~~$14.4 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively, and was primarily included in other noncurrent liabilities.~~2020, respectively. The employees' deferred compensation is deposited in a rabbi trust (see Note ~~11.~~10. Fair Value ~~Measurements)~~Measurements).

The Company has operating leases for corporate offices, branch offices and data centers. NaN of these properties were owned indirectly by certain board members and an executive of the Company until they were sold to an unrelated party in June 2020.

The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. The Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its condensed consolidated financial statements.

7.6. Revenues

The Company’s contracts have termination for convenience provisions and do not have substantive termination penalties; therefore, the contract duration for accounting purposes may be less than the stated terms. For accounting purposes, the Company's contracts with customers are considered to be of a short-term nature (one year or less). The Company does not disclose the value of remaining performance obligations for short-term contracts.

The Company has contract liabilities of ~~$6.8~~$14.0 million and ~~$8.4~~$18.4 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, for payments received in advance of providing services under certain contracts. Contract liabilities are included in other current liabilities on the condensed consolidated balance sheets and are generally recognized as revenues within three months from the balance sheet date.

8.7. Income Taxes

For interim reporting periods, the Company’s provision for income taxes is calculated using its annualized estimated effective tax rate for the year. This rate is based on its estimated full year income and the related income tax expense for each jurisdiction in which the Company operates. The effective tax rate can be affected by changes in the geographical mix, permanent differences and the estimate of full year pretax accounting income. This rate is adjusted for the effects of discrete items occurring in the period.

8. Earnings per Share

The following ~~is a reconciliation~~table shows the calculation of ~~the number of shares and share equivalents used to calculate~~ basic and diluted earnings per share (in millions, except per share amounts):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Net income	Net income	$	52.3	$	57.4	$	144.9	$	135.4	Net income	$	48.7	$	43.8

Weighted-average number of common shares outstanding - basic	Weighted-average number of common shares outstanding - basic	52.5		52.8		52.6		52.7		Weighted-average number of common shares outstanding - basic	53.0		52.8
Dilutive effect of share equivalents	Dilutive effect of share equivalents	0.5		0.6		0.5		0.7		Dilutive effect of share equivalents	0.7		0.5
Number of common shares and share equivalents outstanding - diluted	Number of common shares and share equivalents outstanding - diluted	53.0		53.4		53.1		53.4		Number of common shares and share equivalents outstanding - diluted	53.7		53.3

Basic earnings per share	Basic earnings per share	$	1.00	$	1.09	$	2.75	$	2.57	Basic earnings per share	$	0.92	$	0.83
Diluted earnings per share	Diluted earnings per share	$	0.99	$	1.08	$	2.73	$	2.54	Diluted earnings per share	$	0.91	$	0.82
Number of anti-dilutive share equivalents	Number of anti-dilutive share equivalents	0		0		0.2		0.2		Number of anti-dilutive share equivalents	0		0.3

~~10.~~9. Segment Reporting

ASGN provides ~~IT and~~ professional staffing and IT consulting services in the technology, digital, creative, engineering and life sciences fields across commercial and government sectors. ASGN operates through its Commercial and Federal Government businesses. The Commercial business is comprised of the Apex and Oxford segments, and the Federal Government business is the ECS ~~Segments.~~ segment. Approximately 95 percent of the Company's revenues are generated in the United States.

The Apex ~~Segment~~segment provides technology, digital, creative, scientific, engineering staffing and consulting services to Fortune 1000 and mid-market clients across the United States and Canada. The Oxford ~~Segment~~segment provides hard-to-find technology, digital, engineering and life sciences staffing and consulting services in select skill and geographic markets in the United States and Europe. The ~~Company’s commercial business is comprised of the Apex and Oxford Segments. The~~ ECS ~~Segment, the Company’s federal government business,~~segment delivers advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization, science and engineering to U.S. defense, intelligence and federal civilian agencies. ~~Virtually all of the Company's revenues are generated in the United States. Revenues from outside the United States accounted for less than 5.0 percent of consolidated revenues.~~

The Company has three major revenue sources: (i) contract, (ii) permanent placement and (iii) federal government. The Company’s contract revenues are comprised of assignment revenues and consulting revenues. Consulting services consist of deliverables-based projects including support service centers and managed projects such as software development.

~~The Company’s management~~Management evaluates the performance of each segment primarily based on revenues, gross profit and operating ~~income. The information in the following tables~~income, which is derived directly from internal financial reporting of the segments used for corporate management ~~purposes. The following tables present revenues, gross profit, operating income and amortization~~purposes, which is presented below by segment (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Apex	Apex									Apex
Revenues	Revenues	$	596.1	$	644.1	$	1,802.1	$	1,878.7	Revenues	$	630.4	$	629.1
Gross profit	Gross profit	173.0		192.2		528.1		555.4		Gross profit	182.0		184.5
Operating income	Operating income	69.4		79.2		202.3		213.1		Operating income	68.5		67.1
Amortization	Amortization	5.7		4.0		16.5		15.5		Amortization	5.7		5.3
Oxford	Oxford									Oxford
Revenues	Revenues	$	127.2	$	152.5	$	396.1	$	455.3	Revenues	$	137.5	$	148.7
Gross profit	Gross profit	52.1		61.9		157.8		183.3		Gross profit	54.0		59.3
Operating income	Operating income	12.1		13.6		31.0		36.3		Operating income	11.3		11.1
Amortization	Amortization	0.2		1.0		0.5		3.0		Amortization	0.1		0.2
ECS	ECS									ECS
Revenues	Revenues	$	288.6	$	206.1	$	741.0	$	564.7	Revenues	$	257.8	$	212.7
Gross profit	Gross profit	45.9		37.3		126.8		101.8		Gross profit	45.0		37.1
Operating income	Operating income	16.7		12.7		44.3		30.5		Operating income	14.8		11.3
Amortization	Amortization	7.0		6.9		20.6		20.3		Amortization	6.4		6.6
Consolidated	Consolidated									Consolidated
Revenues	Revenues	$	1,011.9	$	1,002.7	$	2,939.2	$	2,898.7	Revenues	$	1,025.7	$	990.5
Gross profit	Gross profit	271.0		291.4		812.7		840.5		Gross profit	281.0		280.9
Operating income(1)	Operating income(1)	80.9		90.9		227.8		226.9		Operating income(1)	74.8		70.9
Amortization	Amortization	12.9		11.9		37.6		38.8		Amortization	12.2		12.1

___________________ (1) Consolidated operating income includes corporate operating expenses, which are not allocated to the segments, consisting of consolidated stock-based compensation expense, compensation for corporate employees, acquisition, integration and strategic planning expenses, public company expenses and depreciation expense for corporate assets.

___________________

(1)

Consolidated operating income includes corporate operating expenses, which are not allocated to the segments, consisting of consolidated stock-based compensation expense, compensation for corporate employees, acquisition, integration and strategic planning expenses, public company expenses and depreciation expense for corporate assets.

119

The Company has three major revenue sources: (i) Assignment, (ii) Consulting and (iii) Federal Government. Permanent placement revenues for full year 2020 were approximately 2.6 percent of total revenues and are no longer significant to our consolidated results for disclosure purposes. Consequently, we no longer present these revenues separately in our financial statements and instead they are included in assignment revenues. For comparability, all prior periods have been recast for this change in presentation. The following table presents ~~segment~~disaggregated revenues by type (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Apex	Apex									Apex
Assignment	Assignment	$	492.2	$	544.7	$	1,502.3	$	1,598.0	Assignment	$	512.8	$	539.5
Consulting	Consulting	96.6		85.1		271.5		237.0		Consulting	117.6		89.6
Permanent placement		7.3		14.3		28.3		43.7
		596.1		644.1		1,802.1		1,878.7			630.4		629.1
Oxford	Oxford									Oxford
Assignment	Assignment	$	95.8	$	115.3	$	306.9	$	350.0	Assignment	117.4		135.5
Consulting	Consulting	14.1		15.0		38.4		41.1		Consulting	20.1		13.2
Permanent placement		17.3		22.2		50.8		64.2
		127.2		152.5		396.1		455.3			137.5		148.7
ECS	ECS									ECS
Firm-fixed-price	Firm-fixed-price	$	82.0	$	64.4	$	201.2	$	153.8	Firm-fixed-price	60.5		57.0
Time and materials	Time and materials	80.8		68.4		234.6		200.6		Time and materials	90.7		72.4
Cost reimbursable	Cost reimbursable	125.8		73.3		305.2		210.3		Cost reimbursable	106.6		83.3
		288.6		206.1		741.0		564.7			257.8		212.7
Consolidated	Consolidated	$	1,011.9	$	1,002.7	$	2,939.2	$	2,898.7	Consolidated	$	1,025.7	$	990.5

The following table presents the ECS Segment (federal government business) revenues by customer type (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019			2021		2020
Department of Defense and Intelligence Agencies	Department of Defense and Intelligence Agencies	$	172.0	$	112.6	$	414.4	$	316.2	Department of Defense and Intelligence Agencies	$	143.3	$	114.9
Federal Civilian	Federal Civilian	96.2		82.0		276.1		213.5		Federal Civilian	92.5		84.6
Other	Other	20.4		11.5		50.5		35.0		Other	22.0		13.2
		$	288.6	$	206.1	$	741.0	$	564.7		$	257.8	$	212.7

~~11.~~10. Fair Value Measurements

Recurring Fair Value Measurements — The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll and contract professional pay approximate their fair value based on their short-term nature. The carrying amount of long-term debt recorded in the Company’s condensed consolidated balance sheet at ~~September 30, 2020~~March 31, 2021 was $1.0 billion and approximated its fair value (see Note 5.4. Long-Term ~~Debt)~~Debt), which was determined using quoted prices in active markets for identical liabilities (Level 1 inputs).

The Company ~~has a deferred compensation plan and the employees' deferred compensation is deposited in a rabbi trust. This rabbi trust~~ had investments, primarily mutual funds of ~~$13.1~~$14.1 million and ~~$11.8~~$14.4 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, held in a rabbi trust restricted to fund the Company's deferred compensation plan, which are measured at fair value using the net asset value ~~per share.~~practical expedient. These assets were primarily included in other noncurrent ~~assets.~~assets in the accompanying condensed consolidated balance sheets.

Certain acquisitions completed in 2020 contained provisions requiring that the Company pay contingent consideration in the event the acquired businesses achieved certain specified earnings results in 2021. The Company determined the fair value of the contingent consideration as of each acquisition date using a valuation model which included the evaluation of the expected performance of the acquired entity against the target performance metric and the application of an appropriate discount rate (Level 3 inputs). At the end of each reporting period, the fair value of the contingent consideration was remeasured and any changes were recorded as an adjustment to goodwill if the purchase accounting window was still open. Contingent consideration liabilities with fair values of $5.0 million at March 31, 2021 and December 31, 2020 were included in other current liabilities and other non-current liabilities in the accompanying condensed consolidated balance sheets, respectively.

Nonrecurring Fair Value Measurements —Certain assets, such as goodwill and trademarks, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as, when there is evidence of ~~impairment (see Note 1. General for discussion of our assessment performed as of September 30, 2020). The~~impairment. There were no fair value ~~assigned to identifiable intangible~~adjustments for non-financial assets ~~is primarily determined using a discounted cash flow method (a non-recurring fair value measurement based on Level 3 inputs). All assets~~or liabilities during the three months ended March 31, 2021 and ~~liabilities of acquired companies are recorded at their estimated fair values at the dates of acquisition.~~2020.

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements are based upon current expectations, as well as management's beliefs and assumptions and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words "believes," "anticipates," "plans," "expects," "intends," and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include, but are not limited to, the following: (1) the impact of the COVID-19 global pandemic on our competitive position and demand for our services; (2) the availability of qualified contract professionals and our ability to attract, train and retain them; (3) our ability to remain competitive in obtaining and retaining clients; (4) management of our growth; (5) continued performance and integration of our enterprise-wide information systems; (6) our ability to manage our litigation matters; (7) the successful integration of our acquired subsidiaries; (8) maintenance of our ECS Segment contract backlog; and (9) the factors described in Item 1A1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 ("~~2019~~2020 10-K") ~~and this form 10-Q under the section titled "Risk Factors."~~. Other factors also may contribute to the differences between our forward-looking statements and our actual results. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ.

OVERVIEW

~~We provide~~ASGN provides professional staffing and IT ~~and professional staffing~~consulting services in the technology, digital, creative, engineering and life sciences fields across commercial and ~~federal~~ government sectors. Our ~~commercial~~Commercial business is comprised of ~~our~~the Apex and Oxford ~~Segments. The~~segments, and the Federal Government business is the ECS segment.

Our Apex ~~Segment~~segment provides technology, digital, creative, scientific, engineering staffing and consulting services to Fortune 1000 and mid-market clients across the United States and Canada. ~~The~~Our Oxford ~~Segment~~segment provides hard-to-find technology, digital, engineering and life sciences staffing and consulting services, in select skill and geographic markets in the United States and Europe. Our ~~federal government business is comprised of our~~ ECS ~~Segment, which provides IT solutions to the federal government, including~~segment delivers advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT ~~modernization.~~modernization, science and engineering to departments and agencies in the federal government.

We have three major revenue sources: (i) contract, (ii) permanent placement and (iii) federal government. Our contract revenues are comprised of assignment and consulting revenues. Consulting services consist of deliverables-based projects including support service centers and managed projects such as software development.

~~The Impact of COVID-19 on our Results and Operations~~

Our financial performance for the quarter and the first nine months of 2020 was adversely affected by lower demand from our commercial customers related to the COVID-19 pandemic, which was partially offset by high growth in our federal government business. In mid-March of this year, we began experiencing week-to-week revenue declines in our commercial business, which continued through the first half of the second quarter. In the second half of that quarter, weekly production levels improved, which has continued through the third week of the fourth quarter. Over that same period, we saw double-digit year-over-year revenue growth in our federal government business.

For the fourth quarter of 2020, we expect consolidated revenues will be down from the third quarter due to 3.5 fewer Billable Days and lower revenues from certain federal government programs that experienced high volume in the third quarter of 2020. On a per Billable Day basis, we estimate our commercial business will be up 4.0 to 4.5 percent over the third quarter of 2020. We also estimate our federal government business will be up slightly above 10.0 percent year over year despite the very high fourth quarter 2019 comparable, which grew over 30 percent year over year and included $34.4 million in revenues from the early renewal of software licenses. While we believe these are reasonable expectations, any worsening of the COVID-19 pandemic could adversely affect our results for the fourth quarter.

~~CONSOLIDATED~~ RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2020~~MARCH 31, 2021 COMPARED WITH THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2019 AND THE THREE MONTHS ENDED JUNE 30,~~MARCH 31, 2020

Revenues

Revenues for the quarter were ~~$1.01~~$1.03 billion, ~~an increase of 0.9~~up 3.6 percent from the ~~third~~first quarter of ~~2019 and up 8.0 percent sequentially. This performance was driven by the~~2020 reflecting high growth of our ~~federal government~~Federal Government business and sequential quarterly growth in our Commercial business since the ~~growth~~second quarter of all of our commercial divisions from the trough-level revenues experienced in late May of 2020. Revenues from our commercial business, which accounted for 71.5 percent of total revenues, were down year over year due to lower customer demand caused by the COVID-19 pandemic. Revenues from our federal government business, which accounted for 28.5 percent of total revenues, were up year over year reflecting increased volume on certain existing programs, new contract awards and the contribution from Blackstone Federal, which was acquired in January of thislast year.

The table below shows our revenues by business and by segment for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019 and the three months ended June 30,~~ 2020 (in millions):


												% of Total
		September 30,				June 30,		Change				September 30,				June 30,		Change											% of Total
		2020		2019		2020		Y-Y		Seq.		2020		2019		2020		Y-Y		Seq.			2021		2020		Change			2021		2020		Change
Business	Business																					Business
Commercial
Commercial:																						Commercial:
Assignment	Assignment	$	588.0	$	660.0	$	580.0	-10.9	%	1.4	%	58.2	%	65.8	%	61.9	%	-7.6	%	-3.7	%	Assignment	$	630.2	$	675.0	-6.6	%		61.4	%	68.1	%	-6.7	%
Consulting	Consulting	110.7		100.1		96.4		10.6	%	14.8	%	10.9	%	10.0	%	10.3	%	0.9	%	0.6	%	Consulting	137.7		102.8		34.0	%		13.5	%	10.4	%	3.1	%
Contract		698.7		760.1		676.4		-8.1	%	3.3	%	69.1	%	75.8	%	72.2	%	-6.7	%	-3.1	%
Permanent placement		24.6		36.5		20.7		-32.6	%	18.8	%	2.4	%	3.6	%	2.2	%	-1.2	%	0.2	%
Commercial		723.3		796.6		697.1		-9.2	%	3.7	%	71.5	%	79.4	%	74.4	%	-7.9	%	-2.9	%
																							767.9		777.8		-1.3	%		74.9	%	78.5	%	-3.6	%
Federal Government	Federal Government	288.6		206.1		239.7		40.0	%	20.4	%	28.5	%	20.6	%	25.6	%	7.9	%	2.9	%	Federal Government	257.8		212.7		21.2	%		25.1	%	21.5	%	3.6	%
Consolidated	Consolidated	$	1,011.9	$	1,002.7	$	936.8	0.9	%	8.0	%	100.0	%	100.0	%	100.0	%					Consolidated	$	1,025.7	$	990.5	3.6	%		100.0	%	100.0	%

Segment	Segment																					Segment
Apex	Apex	$	596.1	$	644.1	$	576.9	-7.5	%	3.3	%	58.9	%	64.2	%	61.6	%	-5.3	%	-2.7	%	Apex	$	630.4	$	629.1	0.2	%		61.5	%	63.5	%	-2.0	%
Oxford	Oxford	127.2		152.5		120.2		-16.6	%	5.8	%	12.6	%	15.2	%	12.8	%	-2.6	%	-0.2	%	Oxford	137.5		148.7		-7.5	%		13.4	%	15.0	%	-1.6	%
ECS	ECS	288.6		206.1		239.7		40.0	%	20.4	%	28.5	%	20.6	%	25.6	%	7.9	%	2.9	%	ECS	257.8		212.7		21.2	%		25.1	%	21.5	%	3.6	%
Consolidated	Consolidated	$	1,011.9	$	1,002.7	$	936.8	0.9	%	8.0	%	100.0	%	100.0	%	100.0	%					Consolidated	$	1,025.7	$	990.5	3.6	%		100.0	%	100.0	%

Commercial Business — Revenues from our ~~commercial~~Commercial business (Apex and Oxford segments combined) were down ~~9.2~~1.3 percent year over year ~~resulting from lower customer demand attributable to~~but up slightly after adjusting for one fewer billable day in the ~~COVID-19 pandemic. On a sequential basis,~~current quarter. Billable days are business days adjusted for additional time taken off around holidays, year-end client furloughs and inclement weather. Commercial consulting revenues were 17.9 percent of total Commercial revenues were up ~~3.7~~34.0 percent ~~with all commercial divisions experiencing growth~~year over ~~the second quarter of 2020. Contract revenues, which exclude permanent placement~~year due to high demand for our value-added consulting offerings. Assignment revenues were down ~~8.1~~6.6 percent year over ~~year;~~year. Our predominately commercial IT services divisions accounted for approximately 86.8 percent of Commercial revenues and were up 1.8 percent year over year (3.4 percent adjusting for the one fewer billable day in the quarter). The other commercial divisions (creative marketing and permanent placement ~~revenues, which~~services) accounted for ~~2.4~~13.2 percent of ~~consolidated~~Commercial revenues and were down ~~32.6~~17.4 percent year over year.

~~Our predominately commercial IT~~From an industry perspective, Commercial revenues fall into five broad industry verticals: (i) financial services, ~~divisions (Apex Systems~~(ii) consumer and ~~Oxford Core), which together accounted for 87.5 percent~~industrials, (iii) healthcare, (iv) technology, media and telecom and (v) business and government services. Three of ~~commercial revenues,~~the five industry verticals were down ~~5.0 percent~~ year over year, but ~~increased 3.1 percent sequentially. Our creative marketing and permanent placement divisions (Creative Circle and CyberCoders), which combined accounted for 12.5~~our two largest verticals, healthcare (23.8 percent of ~~commercial revenues,~~Commercial revenues) and financial services (22.7 percent of Commercial revenues), were ~~down 30.6~~up 9.6 percent ~~year over year, but increased 8.2~~and 16.7 percent, ~~sequentially.~~respectively.

From an industry perspective, our commercial revenues fall into five industry verticals (financial services; consumer and industrials; healthcare; technology, media and telecom ("TMT"); and business and government services). Financial services, our largest industry vertical (24.6 percent of commercial revenues), was up 11.1 percent year over year, while the other four industry verticals were all down. All industry verticals, except TMT, experienced sequential growth.

Revenues from our Apex Segment were down 7.5 percent year over year resulting from lower customer demand attributable to the pandemic. On a sequential basis, revenues were up 3.3 percent. Revenues from Apex Systems, which accounted for 88.1 percent of the segment’s revenues, were down 2.6 percent year over year, but were up 3.3 percent sequentially. Revenues from the segment's creative marketing division were down 32.4 percent year over year, but were up 3.6 percent sequentially.

Revenues from our Oxford Segment were down 16.6 percent year over year primarily resulting from lower customer demand attributable to the pandemic, but were up 5.8 percent sequentially as our permanent placement and consulting revenues showed improvement throughout the quarter.

Federal Government Business — Revenues from our ~~federal government~~Federal Government business (ECS segment) were up ~~40.0~~21.2 percent year over ~~year and 20.4 percent sequentially. This growth~~year. The increase was driven by a number of factors, including increased volume on certain existing programs, new contract awards and the contribution from ~~Blackstone Federal, which was~~ acquired in January of this year. Revenues from existing programs included a $38.5 million sequential increase under cost reimbursable contracts related to artificial intelligence/machine learning ("AI/ML") solutions and the development and expansion of unclassified networks.businesses.

~~Gross Profit and Gross Margin~~

~~The table below shows gross profit and gross margin by business and by segment for the three months ended September 30, 2020 and 2019 and June 30, 2020 (in millions):~~

Gross Profit Gross Margin
September 30, June 30, Change September 30, June 30, Change
2020 2019 2020 Y-Y Seq. 2020 2019 2020 Y-Y Seq.
Business
Commercial $ 225.1 $ 254.1 $ 217.0 -11.4 % 3.7 % 31.1 % 31.9 % 31.1 % -0.8 % —
Federal Government 45.9 37.3 43.8 23.1 % 4.8 % 15.9 % 18.1 % 18.3 % -2.2 % -2.4 %
Consolidated $ 271.0 $ 291.4 $ 260.8 -7.0 % 3.9 % 26.8 % 29.1 % 27.8 % -2.3 % -1.0 %
Contract
Commercial $ 200.6 $ 217.7 $ 196.3 -7.9 % 2.2 % 28.7 % 28.6 % 29.0 % 0.1 % -0.3 %
Federal Government 45.9 37.3 43.8 23.1 % 4.8 % 15.9 % 18.1 % 18.3 % -2.2 % -2.4 %
$ 246.5 $ 255.0 $ 240.1 -3.3 % 2.7 % 25.0 % 26.4 % 26.2 % -1.4 % -1.2 %
Segment
Apex $ 173.0 $ 192.2 $ 170.6 -10.0 % 1.4 % 29.0 % 29.8 % 29.6 % -0.8 % -0.6 %
Oxford 52.1 61.9 46.4 -15.8 % 12.3 % 40.9 % 40.6 % 38.6 % 0.3 % 2.3 %
ECS 45.9 37.3 43.8 23.1 % 4.8 % 15.9 % 18.1 % 18.3 % -2.2 % -2.4 %
Consolidated $ 271.0 $ 291.4 $ 260.8 -7.0 % 3.9 % 26.8 % 29.1 % 27.8 % -2.3 % -1.0 %

~~____________~~

~~Note: Contract gross profit and margin exclude permanent placement revenues.~~

Gross profit is comprised of revenues less costs of services, which consist primarily of compensation for our contract professionals, allowable materials and reimbursable out-of-pocket expenses. Consolidated gross profit was down 7.0 percent year over year resulting from the overall decline in revenues, but was up 3.9 percent sequentially.

Gross margin for the quarter was down year over year due to changes in business mix stemming from the decline in permanent placement revenues and the high revenue growth of our federal government business, which carries lower gross margins than our commercial business. Gross margin on federal government revenues was lower than the third quarter of last year due to increased volume from certain programs under cost reimbursable contracts, which typically have lower margins than other contract types.

The contract gross margin for the commercial business, which excludes the effects of permanent placement revenues, was up slightly year over year. This improvement reflected, among other things, the higher contribution of consulting revenues and lower billable consultant expenses, which are generally passed through to the customer with no markup.

~~Selling, General and Administrative Expenses~~

Selling, general and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, rent, information systems, marketing, telecommunications, public company expenses and other general and administrative expenses. SG&A expenses for the third quarter were $177.2 million (17.5 percent of revenues), a year-over-year reduction of $11.4 million and a 130 basis point reduction in SG&A expense as a percent of revenues. This improvement related to effective expense management, as well as lower incentive compensation and travel expenses.

~~Amortization of Intangible Assets~~

~~Amortization of intangible assets was $12.9 million, up from $11.9 million in the third quarter of 2019. This increase relates to the effects of recently acquired businesses.~~

~~Interest Expense~~

Interest expense was $9.3 million, down 26.8 percent from the third quarter of 2019. This improvement was the result of (i) a reduction in LIBOR, (ii) a 25-basis point reduction in the spread on our Credit Facility resulting from our capital restructuring in the fourth quarter of 2019 and (iii) lower amortization of deferred loan costs.

Interest expense for the quarter was comprised of $6.4 million of interest on the Senior Notes, $2.5 million of interest on the Credit Facility and $0.4 million deferred loan fee amortization. The weighted-average borrowings outstanding were $1.0 billion for the third quarter of 2020 and 2019. The weighted-average interest rate in the current quarter was 3.4 percent, down from 4.3 percent in the third quarter of 2019.

~~Provision for Income Taxes~~

The provision for income taxes was $19.3 million for the current quarter of 2020, down from $20.7 million in the third quarter of 2019. The effective tax rate for the current quarter was 27.0 percent, which was slightly higher than the third quarter of last year.

~~Net Income~~

Net income decreased $5.1 million year over year or 8.9 percent to $52.3 million for the current quarter from $57.4 million in the third quarter of 2019. This decrease related to the year-over-year decline in commercial revenues and gross profit from lower customer demand attributable to the COVID-19 pandemic.

~~CONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 2019~~

~~Revenues~~

Revenues for the first nine months of 2020 were $2.9 billion, an increase of 1.4 percent year over year, primarily driven by the high growth of our federal government business. Revenues from our commercial business, which accounted for 74.8 percent of total revenues, were down year over year resulting from lower customer demand caused by the COVID-19 pandemic. Revenues from our federal government business, which accounted for 25.2 percent of total revenues, were up reflecting increased volume on certain existing programs, new contract awards and the contribution from Blackstone Federal, which was acquired in January of this year.

~~The table below shows our revenues by business and by segment for the nine months ended September 30, 2020 and 2019 (in millions):~~

% of Total
2020 2019 Change 2020 2019 Change
Business
Commercial
Assignment $ 1,809.2 $ 1,948.0 -7.1 % 61.6 % 67.2 % -5.6 %
Consulting 309.9 278.1 11.4 % 10.5 % 9.6 % 0.9 %
Contract 2,119.1 2,226.1 -4.8 % 72.1 % 76.8 % -4.7 %
Permanent placement 79.1 107.9 -26.7 % 2.7 % 3.7 % -1.0 %
Commercial 2,198.2 2,334.0 -5.8 % 74.8 % 80.5 % -5.7 %
Federal Government 741.0 564.7 31.2 % 25.2 % 19.5 % 5.7 %
Consolidated $ 2,939.2 $ 2,898.7 1.4 % 100.0 % 100.0 %
Segment
Apex $ 1,802.1 $ 1,878.7 -4.1 % 61.3 % 64.8 % -3.5 %
Oxford 396.1 455.3 -13.0 % 13.5 % 15.7 % -2.2 %
ECS 741.0 564.7 31.2 % 25.2 % 19.5 % 5.7 %
Consolidated $ 2,939.2 $ 2,898.7 1.4 % 100.0 % 100.0 %

~~Commercial Business~~ — Revenues from our commercial business were down 5.8 percent year over year resulting from lower customer demand attributable to the COVID-19 pandemic. Contract revenues, which exclude permanent placement revenues, were down 4.8 percent resulting from a decline in assignment revenues partially offset by an increase in consulting revenues. Permanent placement revenues, which accounted for 2.7 percent of consolidated revenues, were down 26.7 percent.

~~Our predominately commercial IT services divisions (Apex Systems and Oxford Core),~~ ~~which together accounted~~ for 86.5 percent of commercial revenues, were down 2.7 percent. Our creative marketing and permanent placement divisions (Creative Circle and CyberCoders), which combined accounted for 13.5 percent of commercial revenues, were down 21.9 percent.

From an industry perspective, our commercial revenues fall into five industry verticals (financial services; consumer and industrials; healthcare; technology, media and telecom; and business and government services). Four of our five industry verticals showed declines year over year. However, financial services, our largest industry vertical (22.3 percent of commercial revenues), was up 10.3 percent.

Revenues from our Apex Segment were down 4.1 percent year over year resulting from lower customer demand attributable to the COVID-19 pandemic. Revenues from Apex Systems, which accounted for 86.8 percent the segment's revenues, were about the same as the prior year period. Revenues from the segment's creative marketing division were down 21.9 percent.

~~Revenues from our Oxford Segment were down 13.0 percent primarily resulting from lower customer demand attributable to the COVID-19 pandemic.~~

~~Federal Government Business~~ — Revenues from our federal government business were up 31.2 percent. This increase was driven by a number of factors including, increased volume on certain existing programs (mainly AI/ML solutions and development/expansion of unclassified networks), new contract awards and the contribution from Blackstone Federal, which was acquired in January 2020.

Gross Profit and Gross Margin

The table below shows gross profit and gross margin by business and by segment for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in millions):

Gross Profit Gross Margin
2020 2019 Change 2020 2019 Change
Business
Commercial $ 685.9 $ 738.7 -7.1 % 31.2 % 31.7 % -0.5 %
Federal Government 126.8 101.8 24.6 % 17.1 % 18.0 % -0.9 %
Consolidated $ 812.7 $ 840.5 -3.3 % 27.6 % 29.0 % -1.4 %
Contract
Commercial $ 606.9 $ 630.9 -3.8 % 28.6 % 28.3 % 0.3 %
Federal Government 126.8 101.8 24.6 % 17.1 % 18.0 % -0.9 %
$ 733.7 $ 732.7 0.1 % 25.7 % 26.3 % -0.6 %
Segment
Apex $ 528.1 $ 555.4 -4.9 % 29.3 % 29.6 % -0.3 %
Oxford 157.8 183.3 -13.9 % 39.8 % 40.3 % -0.5 %
ECS 126.8 101.8 24.6 % 17.1 % 18.0 % -0.9 %
Consolidated $ 812.7 $ 840.5 -3.3 % 27.6 % 29.0 % -1.4 %

~~____________~~


	Gross Profit						Gross Margin
	2021		2020		Change			2021		2020		Change
Business
Commercial	236.0		$	243.8	-3.2	%		30.7	%	31.3	%	-0.6	%
Federal Government	45.0		37.1		21.3	%		17.5	%	17.4	%	0.1	%
Consolidated	$	281.0	$	280.9				27.4	%	28.4	%	-1.0	%

Segment
Apex	$	182.0	$	184.5	-1.4	%		28.9	%	29.3	%	-0.4	%
Oxford	54.0		59.3		-8.9	%		39.2	%	39.9	%	-0.7	%
ECS	45.0		37.1		21.3	%		17.5	%	17.4	%	0.1	%
Consolidated	$	281.0	$	280.9				27.4	%	28.4	%	-1.0	%

~~Note: Contract gross profit and margin exclude permanent placement revenues.~~

Gross profit is comprised of revenues less costs of services, which consist primarily of compensation for our contract professionals, allowable materials and reimbursable out-of-pocket expenses. Consolidated gross profit was ~~down 3.3 percent~~flat year over year ~~resulting from the overall decline in revenues.~~on revenue growth of 3.6 percent and up 1.6 percent sequentially on revenue growth of 1.4 percent.

Gross margin was 27.4 percent, down ~~year over year due~~from 28.4 percent in the first quarter of 2020. The year-over-year compression related to changes in business mix ~~stemming~~and higher unemployment tax rates for 2021 in certain states. These business mix changes included a lower mix of revenues from ~~the decline in~~our high-margin creative marketing and permanent placement services and a higher mix of revenues ~~and the high revenue growth of~~from our ~~federal government~~Federal Government business, which carries a lower gross ~~margins~~margin than our Commercial business. The effect of the changes was partially offset by a higher mix of commercial business. Gross margin on federal government revenues was lower year over year due to increased volume from certain programs under cost reimbursable contracts, which typically have lower margins than other contract types.

The contract gross margin for the commercial business, which excludes the effects of permanent placement revenues, was up 30 basis points year over year. This improvement reflected, among other things, the higher contribution of consulting ~~revenues and lower billable consultant expenses, which are generally passed through to the customer with no markup.~~revenues.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, rent, information systems, marketing, telecommunications, public company expenses and other general and administrative expenses. SG&A expenses ~~for the nine months ended September 30, 2020~~ were ~~$547.3~~$194.0 million ~~(18.6~~(18.9 percent of revenues), a year-over-year reduction of ~~$27.5~~$3.9 million and a ~~120 basis point~~110 basis-point reduction in SG&A expense as a percent of revenues. This improvement related to, ~~effective expense management,~~among other things, lower travel and entertainment and healthcare expenses, as well as lower ~~incentive~~ compensation ~~and travel~~ expenses.

Amortization of Intangible Assets

Amortization of intangible assets was ~~$37.6~~$12.2 million, ~~down from $38.8 million in~~consistent with the ~~same period of 2019. The lower expense in the current year was due to accelerated amortization for certain acquired intangibles, which had higher amortization at the beginning of 2019.~~prior-year period.

Interest Expense

Interest expense was ~~$30.4~~$9.2 million, down ~~26.2~~19.3 percent from $11.4 million in the ~~prior year.~~first quarter of 2020. This improvement ~~was~~resulted from the ~~result~~reduction of (i) a reduction in LIBOR, (ii) a 25 basis point reduction in the spread on our Credit Facility resulting from our capital restructuring in the fourth quarter of 2019 and (iii) lower amortization of deferred loan costs.

LIBOR. Interest expense for the ~~year~~quarter was comprised of ~~$19.1~~$6.4 million of interest on the Senior Notes, ~~$10.0~~$2.4 million of interest on the Credit Facility and ~~$1.3~~$0.4 million of deferred loan fee amortization. The weighted-average borrowings outstanding were ~~approximately~~$1.0 and $1.1 billion for the ~~nine months ended September 30,~~first quarter of 2021 and 2020, ~~and 2019.~~respectively. The weighted-average interest rate ~~during~~in the ~~period~~current quarter was ~~3.7~~3.3 percent, down from ~~4.4~~4.1 percent in the ~~same period~~first quarter of ~~2019.~~2020.

Provision for Income Taxes

The provision for income taxes was ~~$52.5~~$16.9 million, ~~for nine months ended September 30, 2020, compared with $50.2~~up from $15.7 million ~~for~~in the ~~same period~~first quarter of ~~last year. Our~~2020. The effective ~~income~~ tax rate for the ~~nine months ended September 30, 2020~~current quarter was ~~26.6~~25.8 percent, which ~~was~~is slightly lower than ~~for~~ the ~~same period~~first quarter of last year.

Net Income

Net income increased ~~$9.5~~$4.9 million or ~~7.0~~11.2 percent year over year to ~~$144.9~~$48.7 million ~~in nine months ended September 30, 2020,~~for the current quarter from ~~$135.4~~$43.8 million in the ~~same period~~first quarter of ~~2019.~~2020. This increase primarily related to ~~the moderate growth in revenues year over year and~~ lower SG&A and interest expenses.

ECS Segment Contract Backlog

Contract backlog is a useful measure of potential future revenues for our ECS Segment. Contract backlog represents the estimated amount of future revenues to be recognized under awarded contracts including task orders and options. Contract backlog does not include potential value from contract awards that have been protested by competitors until the protest is resolved in our favor. Contract backlog does not include any estimate of future work expected under indefinite delivery, indefinite quantity contracts or U.S. General Services Administration schedules. Contract backlog is segregated into funded contract backlog and negotiated unfunded contract backlog, which together make up total contract backlog.

Funded contract backlog for contracts with U.S. government agencies primarily represents contracts for which funding has been formally awarded less revenues previously recognized on these contracts and does not include the unfunded portion of contracts where funding is incrementally awarded or authorized by the U.S. government even though the contract may call for performance over a number of years. Funded contract backlog for contracts with non-government agencies represents the estimated value of contracts, which may cover multiple future years, less revenues previously recognized on these contracts.

Negotiated unfunded contract backlog represents the estimated future revenues to be earned from negotiated contract awards for which funding has not yet been awarded or authorized and from unexercised priced contract options.

Contract backlog estimates are subject to change and may be affected by the execution of new contracts, the extension or early termination of existing contracts, the non-renewal or completion of current contracts and adjustments to estimates for previously included contracts. Changes in the funded contract backlog are also affected by the funding cycles of the government.


(in millions)	(in millions)	September 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Funded Contract Backlog	Funded Contract Backlog	$	571.4	$	488.4	Funded Contract Backlog	$	458.7	$	444.5
Negotiated Unfunded Contract Backlog	Negotiated Unfunded Contract Backlog	2,136.5		2,082.7		Negotiated Unfunded Contract Backlog	2,221.3		2,201.7
Contract Backlog	Contract Backlog	$	2,707.9	$	2,571.1	Contract Backlog	$	2,680.0	$	2,646.2

ECS Segment Book-to-Bill Ratio

The book-to-bill ratio for our ECS Segment was ~~1.3~~1.1 to 1.0 for the ~~third~~first quarter of ~~2020.~~2021. The book-to-bill ratio was calculated as the sum of the change in total contract backlog during the period plus revenues for the period, divided by revenues for the period. The contract backlog coverage ratio (backlog at ~~September 30, 2020~~March 31, 2021 divided by trailing-twelve-months of ECS Segment's revenues) was ~~2.7~~2.5 to ~~1.0.~~1.

Liquidity and Capital Resources

Our working capital at ~~September 30, 2020~~March 31, 2021 was ~~$545.3~~$645.3 million, and our cash and cash equivalents were ~~$229.7~~$386.5 million (including ~~$30.8~~$30.7 million held in foreign countries). Our cash flows from operating activities, which benefit from our highly variable cost structure, have been our primary source of liquidity and have been sufficient to fund our working capital and capital expenditure needs. At ~~September 30, 2020,~~March 31, 2021, we had full availability under our $250.0 million revolving credit facility. We believe that our cash on hand, expected operating cash flows and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements and capital expenditures for the next 12 months.

Net cash provided by operating activities was ~~$337.8~~$119.8 million for the first ~~nine months~~quarter of ~~2020,~~2021, compared with ~~$231.8~~$64.1 million in the same period of ~~2019.~~2020. Net cash provided by operating activities before changes in operating assets and liabilities was ~~$239.8~~$82.0 million ~~compared with $247.4~~up from $75.6 million in the same period of ~~2019.~~2020. Changes in operating assets and liabilities resulted in net cash generation of ~~$98.0~~$37.8 million ~~for the first nine months of 2020,~~ compared with net cash

usage of ~~$15.6~~$11.5 million in the same period of ~~2019. The net cash generation~~2020. This change mainly related to a reduction in ~~2020 included~~ the ~~deferral~~number of ~~federal payroll taxes as provided by the CARES Act.~~accounts receivable days sales outstanding.

Net cash used in investing activities was ~~$180.1~~$9.4 million for the first ~~nine months~~quarter of ~~2020, compared with $71.4 million for the same period~~2021 and was mainly comprised of ~~2019. Net cash used in investing activities at September 30, 2020 included $151.5 million for acquisitions and $28.3 million in~~ capital expenditures. ~~This compares with~~Net cash used in investing activities in the same period of ~~2019, which~~2020 was $101.0 million and included ~~$48.5~~$85.5 million for acquisitions and ~~$22.8~~$15.3 million infor capital ~~expenditures.~~expenditures, which included costs related to a major front and back office systems upgrade project.

Net cash ~~used in~~provided by financing activities was ~~$24.4~~$2.9 million for the first ~~nine months~~quarter of ~~2020, compared~~2021 and was primarily comprised of cash flows associated with ~~$134.0 million in the same period of 2019.~~employee stock-based compensation. Net cash ~~used in financing activities for the nine months ended September 30, 2020 consisted primarily of $27.9 million used for repurchases of our common stock. Net cash used in~~provided by financing activities in the same period of ~~2019~~2020 was $6.1 million and consisted primarily of ~~$119.0~~$33.0 million inof net ~~payments of long-term debt and $20.0~~proceeds from the revolving credit facility, partially offset by $27.9 million used for repurchases of our common stock.

Senior Secured Credit Facility

— The senior secured credit facility ("Credit Facility") consists of a term B loan and a ~~senior secured~~$250.0 million revolving credit facility ~~with a maximum borrowing capacity of $250.0 million~~ ("Revolver"). At ~~September 30, 2020,~~March 31, 2021, the Company had $490.8 million outstanding under the term B loan and no outstanding borrowings under the ~~Revolver and had $3.9 million in undrawn stand-by letters of credit to secure certain obligations.~~Revolver. Borrowings under the term B loan bear interest at LIBOR plus 1.75 percent, or the bank’s base rate plus 0.75 percent. Borrowings under the Revolver bear interest at LIBOR plus 1.25 to 2.25 percent, or the bank’s base rate plus 0.25 to 1.25 percent, depending on leverage levels. A commitment fee of 0.20 to 0.35 percent is payable on the undrawn portion of the Revolver. There are no required minimum principal payments on the Credit Facility until maturity, and it is secured by substantially all of the Company's assets and includes various restrictive covenants.

Unsecured Senior Notes

— The Company has $550.0 million of unsecured senior notes due in 2028 ("Senior Notes"). The Senior Notes bear interest at 4.625 percent, ~~which is~~ payable semiannually in arrears on May 15 and November ~~15 of each year.~~15. The Senior Notes are unsecured obligations and are subordinate to the ~~Company's~~ Credit Facility to the extent of the collateral securing such facility. The Senior Notes also contain certain customary limitations including, among other terms and conditions, ~~the Company's~~our ability to incur additional indebtedness, engage in mergers and acquisitions, transfer or sell assets and make certain distributions.

Recent Accounting Pronouncements

~~See "Note 2. Accounting Standards Update" in~~There have been no recent accounting pronouncements that significantly impact the ~~notes to the condensed consolidated financial statements in Part I, Item 1.~~Company.

Critical Accounting Policies

There ~~have been~~were no significant changes to our critical accounting policies and estimates during the ~~nine months ended September 30, 2020~~first quarter of 2021 compared with those disclosed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our ~~2019~~2020 10-K ~~and "Note 1. General" in the notes to the condensed consolidated financial statements in Part I, Item 1 included herein.~~.

Commitments

~~We have not made any~~There were no material changes to the significant commitments or contractual obligations that were disclosed in our ~~2019~~2020 ~~10-K, nor have we entered into any new ones.~~10-K.

Item 3 — Quantitative and Qualitative Disclosures about Market Risks

With respect to our quantitative and qualitative disclosures about foreign currency risks and interest rates risks, there have been no material changes to the information included in our ~~2019~~2020 10-K. Based on the relative size and nature of our foreign operations, we do not believe that a 10 percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our condensed consolidated financial statements. A hypothetical 100 ~~basis point~~basis-point change in interest rates ~~for the Credit Facility~~on variable-rate debt would have resulted in an interest expense ~~change~~fluctuation of approximately $4.9 million based on ~~an annualized basis. The $550.0~~$490.8 million ~~Senior Notes bear a fixed interest rate and thus are not susceptible to interest rate market risks.~~of debt outstanding for any 12-month period.

Item 4 — Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. The term "disclosure controls and procedures" means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods. We have established disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting that occurred during the three months ended ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1 — Legal Proceedings

We are involved in various legal proceedings, claims and litigation arising in the ordinary course of business. However, based on the facts currently available, we do not believe that the disposition of matters that are pending or asserted will have a material effect on our financial position, results of operations or cash flows.

Item 1A — Risk Factors

There have been no material changes to the risk factors previously described in our ~~2019~~2020 ~~10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.~~10-K.

Item 2 — Unregistered Sales of Securities and Use of Proceeds

~~None.~~On March 18, 2021, the Board of Directors approved a two-year stock repurchase program under which the Company may repurchase up to $250.0 million of its common stock through March 18, 2023. This program superseded the previous stock repurchase program that was set to expire on May 31, 2021. The Company did not repurchase any securities under this program during the three months ended March 31, 2021.

Item 3 — Defaults Upon Senior Securities

None.

Item 4 — Mine Safety Disclosures

None.

Item 5 — Other Information

None.

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Item 6 — Exhibits

INDEX TO EXHIBITS


Number	Number		Footnote	Description	Number		Footnote	Description
3.1	3.1		(1)	Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective June 23, 2014	3.1		(1)	Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective June 23, 2014
3.2	3.2		(2)	Certificate of Amendment of Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective April 2, 2018	3.2		(2)	Certificate of Amendment of Amended and Restated Certificate of Incorporation of On Assignment, Inc. effective April 2, 2018
3.3	3.3		(3)	Third Amended and Restated Bylaws of ASGN Incorporated, effective April 2, 2018	3.3		(3)	Third Amended and Restated Bylaws of ASGN Incorporated, effective April 2, 2018
4.1	4.1		(4)(P)	Specimen Common Stock Certificate	4.1		(4)(P)	Specimen Common Stock Certificate
31.1	31.1		*	Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a)	31.1		*	Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a)
31.2	31.2		*	Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a)	31.2		*	Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a)
32.1	32.1		*	Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350	32.1		*	Certification of Theodore S. Hanson, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350
32.2	32.2		*	Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350	32.2		*	Certification of Edward L. Pierce, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350
101	101		*	The following material from this Quarterly Report on Form 10-Q of ASGN Incorporated for the period ended September 30, 2020, formatted in Inline XBRL Part I, Item 1 of this Form 10-Q formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statement of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.	101		*	The following material from this Quarterly Report on Form 10-Q of ASGN Incorporated for the period ended March 31, 2021, formatted in Inline XBRL Part I, Item 1 of this Form 10-Q formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income; (iii) Condensed Consolidated Statement of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.
104	104			Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101)	104			Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101)

*	*	Filed herewith.			*	Filed herewith.
(1)	(1)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on June 25, 2014.			(1)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on June 25, 2014.
(2)	(2)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on March 16, 2018.			(2)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on March 16, 2018.
(3)	(3)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on April 2, 2018.			(3)	Incorporated by reference from an exhibit to our Current Report on Form 8-K filed with the SEC on April 2, 2018.
(4)	(4)	Incorporated by reference from an exhibit to our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the SEC on September 21, 1992.			(4)	Incorporated by reference from an exhibit to our Registration Statement on Form S-1 (File No. 33-50646) declared effective by the SEC on September 21, 1992.
(P)	(P)	This exhibit has been paper filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S-K.			(P)	This exhibit has been paper filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S-K.

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SIGNATURE

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ASGN Incorporated

~~November 6, 2020~~Date: May 7, 2021	By:	/s/ Edward L. Pierce
		Edward L. Pierce
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer and Duly Authorized Officer)

2317