RHI - Earnings call transcript Q3 2018 | Robert Half International Inc.

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Operator

Hello, and welcome to the Robert Half Third Quarter 2018 Conference Call.

Our hosts for today’s call are Mr. Max Messmer, Chairman and CEO of Robert Half; and Mr. Keith Waddell, Vice Chairman, President and Chief Financial Officer. Mr. begin. may you Messmer,

Max Messmer

hello you and joining everyone. you for Thank us. Thank

forward-looking results to begin, contain that other holds represent and I the we such of remind current predictions, These judgment our would be from believe, uncertainties are and include they subject forward-looking call Before future today’s risks and as expect, similar We however, guidance forecast, like estimate, materially everyone what statements believe reasonable; expressions. on could comments estimates to cause statements. actual that and the project, words these differ statements. remarks made to to

these the SEC described in filings, statements call. made of no today’s today’s our XX-Ks, and our assume in and on XX-Qs today’s and Some uncertainties including X-K. risks update press to are We release obligation

remarks page, link Conference information, Investor click page, also available the on roberthalf.com. bottom will on the Quarterly Investor you your find at our Calls left are our From in website For the of Center. home the Center at prepared the

quarter stockholders dividend flow of cost million was in $X.XX third at quarter from $X.XX, the million. and a Now, the third up Net third in Company-wide expenditures third compared September Cash XX% to on third constant the financial basis a This last $XX were billion. of reported compared quarter We a operations XXXX. results share up $XX both million is of currency for let’s were $X.XXX to XXXX. and the capital was $XXX revenues to of in income quarter. same-day Half’s per total quarter year. paid review Robert the XX%

Robert of million. quarter, million X.X shares Half repurchased third cost in $XX at a also the We

stock million our Board X.X repurchase repurchase under have shares for We plan. available approved

solid staffing our Protiviti and the in of All third quarter. year-over-year revenue reported gains divisions

performed to leading buoying business Robert was for hiring our segments sustained invested operations key during specializes. is during in optimism quarter for Also among capital persist base. in driving shortages globally, over talent, client midsize and quarter. well our companies, the the skilled Half professional-level the company at in heightened Our permanent the which Return demand small the and results. Skills third Protiviti especially particularly by placement closer the the turn this a increased Keith now activity look XX% to is third States, United on quarter. I’ll call which for particularly

Keith Waddell

you. Thank

operations. period noted, just were further revenues non-GAAP international Max constant by certain non-US and $X.XXX XX% the revenue on figures up same-day reported is trends a are is broken our a our “as-adjusted” of certain global reported quarter schedule release operations. reflects basis. impact revenue is inter-company of currency as-adjusted to and our As showing insight financial ago The year-over-year adjustments in the a and growth billion. earnings third in on billing in US from designed measure supplemental days, These a removal fluctuations basis. currency rates operations. out This both term a provide year Accompanying and the This into both

US of basis, on were as-adjusted revenues on staffing an basis. a $XXX $XXX XX% staffing an comprised revenues of basis, up staffing XX% same-day up on X% quarter revenues Third million, up non-US of as-adjusted million, and

the United We countries XXX worldwide, locations staffing XX XX locations have in including outside States.

X.X%. revenues million quarter, decreasing rate movements had by rate XX.X Currency year-over-year growth effect the quarter fourth staffing revenue third the has compared compared The the third staffing XX.X the year reported which days The quarter the to in one billing exchange reduced of year in ago. had days prior XX.X $X in quarter third quarter billing days XX.X year-over-year XXXX. the by versus of days to fourth reported

operations the revenues basis. third global United an the outside from States. within million United on $XXX XX% were year-over-year million business as-adjusted million, from up with Protiviti, coming revenues Protiviti $XX $XXX were quarter States For and

XX% quarter effect Protiviti non-US of revenues Protiviti basis, a decreasing on an year-over-year year were while the were up $X year-over-year Exchange Protiviti same-day up reported the the from as-adjusted last revenues had million XX in serve by basis. Third rates US XX% independently countries. quarter third XX and member through its by a and clients revenues in decreasing X.X%. on locations network owned of firms growth

fringe compared applicable larger to conversion the one year to in Now, in margin the XX.X% revenues bill/pay and third costs. staffing higher same offset applicable Expanding during margin. XX.X% temp-to-hire gross consulting Gross ago. operations fees let’s of quarter and of our benefit was temporary period turn revenues, spreads

revenues Protiviti for ago. XX.X% third year When margin, operations our quarter consolidated combined gross of quarter revenues. XX.X% was revenues Protiviti of consulting points XXX permanent one year $XX XX.X% Protiviti compared were revenues XX.X%. placement gross and third or $XX staffing was temporary quarter Protiviti basis for gross or margin with revenues. increased million, in gross one versus staffing Third to ago the million to One of margin margin consolidated year ago, of the overall in XX.X%

staffing mix Protiviti XX% Protiviti revenues revenues SG&A year of XX.X% versus ago in a quarter this costs year’s XX.X% the permanent XX.X% quarter, comparable in ago year in of SG&A the quarter’s of third ratio. SG&A last for revenues, to points staffing Protiviti XX this period. period. compared placement of quarter were Third to added costs revenues versus were basis The higher

Third period XX.X%. quarter was from Operating operating $XXX was ago. XX% divisions margin income one from same year million, our the up staffing

quarter, and margin Operating up in for sales XX% million accounts was third Our income, XX.X permanent the increase from million placement quarter. the of million the in and our of of This temporary DSO, division operating $XXX an an third divisions days. days margin an XX.X%. produced was same Protiviti produced year This the from year’s of end operating for were the outstanding, in staffing was prior XX% Operating increase X% $XXX $XX receivable the million, reported an prior period of This profit XX.X%. third quarter, the third an prior from in $XX income and in At margin consulting X.X%. of operating operating the quarter. resulted was year. implied

we move some XXXX we adjusted billing of review Before revenue saw and so the quarter October, of fourth for in quarter currency trends far monthly all days. guidance, and the in let’s third to

temporary full and the compared XXXX. that divisions exited the period two October staffing Our compared consulting versus up of September same also third Revenues weeks with X.X% X.X% X% year, to the in were quarter first for prior the up for revenues to quarter.

revenues a quarter. full permanent September our to were For up increase placement for versus XX.X% the year compared division, last XX.X%

midpoint filings. to you basis placement today’s offer billion. EPS $X.XX a represent compared revenue and fourth our provides and implies caution brief We of guidance: $X.XX. know, so Income are subject XX% during mentioned last we periods one XX%. some call the period first fourth-quarter on press growth billion which year. the the The trends mind, in against share, our estimates per to and For too SEC of to saw up we quarter into our of much the information in revenues Revenues, year-over-year risks October, This we quarter. guidance three this included All weeks same-day $X.XXX October. and far same time, limit third look permanent into a were the $X.XXX on the to in as as-adjusted of following quarter Protiviti that in guidance release to we growth them. X% reading they But provide With in of

the turn I’ll Max. to Now, call over back

Max Messmer

and equally million in openings NFIB reported openings, reported according in Index, Other CEOs & for staffing recent Robert job In for were indicators performance to report high Thank year in our across the unemployment occupations growth according it to positioned States the matching of States, This Demand proprietary with in confident very all-time measures hiring most in partner feel revenue lower rich of leaving to Confidence near local in you, their talent provided market on Department The the the and divisions at plans to at our than highs loyal Half August, and recent Vistage much This research. particularly the another businesses, knowledge, United for and Labor. recent were identifying of this midsize market. Accounting them hiring is by small hit their the XX JOLTS the need and CEO one. database, most expanded of third the actual service skilled creation. are We Finance Protiviti. that. The rates strong was at levels, and and is primary often Protiviti employees And number and year, same an was small solutions help a also existing XX% the from quarter. we professional an solid pleased the Keith. In job Employers seen well ahead. survey. It also board is consulting low sign has in for and the and year Protiviti businesses by our historic strong in a better X.X%, quarter. to plans positive. continues X.XX technology, grow number client its and job record quits with expand midsize for that nurture base. target, the efforts. are workforce in of Protiviti. job a Year-over-year with audit is client a tighter internal as offerings candidate US remains United hiring

pleased experienced regarded to ability solutions. key are between the with also talent and Protiviti. us the network these access differentiator: Together, interim offer a with to collaboration businesses and consulting to of solutions We implement provide divisions staffing these combined technologies our vast with a teams highly

Now, would ask If you yourself you return you to questions. additional as a your limit try to one permits, follow-up, that certainly usual we’ll Thank be needed. you. single questions. and to if answer question Keith happy We have and time please as I to

Operator

[Operator Instructions].

Mark Marcon question Baird. R.W. from from first Your comes

ahead. open. is line Your Please go

Mark Marcon

Good afternoon results. you could bit talk I strong the if little a and was wondering on international. about congratulations

very strong a growth maintained comps. despite much You there tougher

if side? of on what weakness any you Just talk you're a signs international markets if seeing, in any bit little seeing wondering about could you're the

Keith Waddell

in the for Belgium, quarters several strength been some to I'd Mark, say the that has extent seen Germany, internationally staffing UK. we've

This are about their was getting other comps tougher, good. particularly And than markets quarter quite still Canada prospects. those bullish

fourth good solid strong quarter. are the total. our in Australia the percent quarter. generally of countries UK strong country we and much other another move very a the internationally, as of smaller the pretty in But In Some very managers Protiviti, Germany, had into feel as speaking,

we the people quarter feels good. in as fourth of our where sentiment about into the tone countries is, internal have strength pretty frankly, So business our go those

Mark Marcon

collaboration of And mean perceived well what to your there. to the Protiviti great. you I how talk can to technology of bit then with really wondering the is from about initiatives be perspective? go-to-market, RH in Technology, I’m nice that relative you due that acceleration much fine tuning a some That’s terms as as little a have of market

Keith Waddell

quarter short sequentially technology we're the quarter We answer a X% were good the relatively is were Well not have comparisons proud combination. it's which in year-on-year while technology, easy. for did and The a almost of. sequential comparisons the very grew we in particularly

we’ve so confidence higher budgets. And small tech comps, business all, first of higher

So a the client rising small standpoint business tide raises base. boats from the of all

transformation. development up In digital talked metrics including and candidates stack, cloud, the addition we to focus that, broadened you've of support the we've about got the on that before secular how strength cyber, DevOps. in We've down

relative and getting accounting technology to more as Resources we together in to in and As latter are well Management go where we market case. you more Protiviti Protiviti as finance in with mentioned, and the traction

some strategy, between really the it's some some unique technology, of positioning So quarter market, and it's of of have it’s the staffing Protiviti. solid we in our

Mark Marcon

you. Thank Terrific.

Operator

from question Lynch. Your from of Bank comes Bisbee Gary America next Merrill

go Please ahead. open. is line Your

Gary Bisbee

afternoon. Good Hey.

comps I a how You commented to tougher guess the you ago. US? on out plays accelerate international. really year any fourth on that Obviously the thoughts in started just quarter

Keith Waddell

had that guidance still same-day to rate in of placement X% currency into the our of That particularly has there. fourth. as points momentum get X and The the growth strong our comps so is so year-on-year about continues the talk last in said, guidance a quarters perm Protiviti. tougher embedded we've Well, we and couple the constant midpoint backdrop the

that pretty pleased we're midpoint how given of the comps get. So much with our X% tougher

Gary Bisbee

seen look Yes, I we've about that of data sounds guess right. all good. economic the

are have bunch things of forward higher great over cited rates. et last small data the Is the looks I or What two, You or issues, be some is stuff of this month that malaise are more sentiment flowing level or hear there of Thank of are looking backwards everything the your is market customers from any -- any down know about hearing the updated but commentary? just continuing cetera. business you a the quite market to clients caused to you interest strong? you. trade

Keith Waddell

into strong confidence. sentiment we Trade remain buying conversations rates so habits. not forward higher have have clients issues as quite the and their I’d or does say the trickled yet does with

far no midsize strong, quite businesses. our economy There's so So, particularly given The our question good. results, is small so given US to underlying data. for

Max Messmer

Gary small all business Wall is people we it I'd Street they lot Main of hear and Street. add to They the expect concerns one about way. like a read to the is Street that all but that, versus comment business recognize good midsize about continue to of Wall that they is very talk

to things good them. So, all so far look

Gary Bisbee

Thank you. to it. Glad hear

Operator

Your Andrew next question comes from from JP Morgan. Steinerman

go Please line Your open. ahead. is

Andrew Steinerman

comment the the a you your up your to I Andrew. in bill rate about inflation wage you prospectively? about third comment this in will wanted mention pick the you was caught third it's quarter. quarter? gross do bill Hi, increases. definitely spread bill/pay Give and positive rate Could ask think that I

Keith Waddell

we So That's an passing our not bill expanding of year-on-year our numbers direct it X.X% bill is rate was saw our seeing recovery we up during lines slightly higher The were last reflection rate but a well the where which we're had rates increases range X-ish margins than as where pay that getting increase we're year-on-year into years across percent the straight we increases. that of business five X.X% actually reflect. inflation were some through last are wage that That's of higher year-on-year. only from X.X%. quarter

Andrew Steinerman

Great. Thank you.

Operator

Your next from from Jeff BMO question Capital comes Silber Markets.

ahead. line is go open. Please Your

Jeff Silber

so you much. a on And me my again congratulations Thank let well. as quarter add strong

perm spending was I'm the In what were curious margins, divisions, operating of down that? terms on, you margins if additional Protiviti, going of there down operating two drill bit year-over-year. and a on behind just Was

Keith Waddell

resources of double-digit in on had investment its invest much added of relate quarter. continue second as we call growth. commensurate where the Protiviti growth third pretty hedge top-line last both talked and placement in that internal the we so perm to and in quarters between Well heads several headcount we've row significantly now a the with to to And the

heads. SG&A, margin in both both shows that and expected, Protiviti shows as for the gross the For that were up in were staffing, to on prospects, in bullish therefore up investment

Jeff Silber

what know bit little And on but tax the minor, was you this it guided. had then I great. is Okay, a rate lower than

fourth little you color bit that are just Thanks. why could in and your If us what a incorporating was give you quarter? guidance for the

Keith Waddell

books and tax always had So purposes. our the return, that tax recognized tax we rate, credits third been not yet return for the reconcile had book quarter, we to some

drove So the in that reconciliation reduction rate. a

third just is quarter, was up the fourth that's of and a couple had in range For from the our to XX% what we points quarter XX% which XX%.

Jeff Silber

great. so Okay, Thanks much.

Operator

comes question from And your next from Kevin Suisse. Credit McVeigh

ahead. go is open. Please line Your

Kevin McVeigh

help What's real in And us nice bill step the you to Thank Great. kind be at perm. lower end. what versus it the cause thoughts way And maybe any a is just on end higher of little more on give you there temp versus would that? in Keith, rates? is Hey QX like kind obviously you. implied understand rate bill Protiviti of similar color the guidance? just up looks to that what you'd Can QX at Any pretty expect guide it QX. then to the a versus

Keith Waddell

Okay.

here. are So several there questions

us revenues. lower trend just would So saw would implied we've It's all low What something bill higher see expect getting into that we range. the seen we versus probably we in end? about that’s would Xs, the be rates, the at the the make X.X

the third pretty board fourth looked there’s built the to at have some sequentially we how revenues. have that quarter in because how we quarter, quarter and was the that during later we quarter, slower some there got a looked going the said, the you maybe got year, the that in pretty time the if That we at somewhat clients slowing. a had end, on we’ve many To come quarter improve growth of finished But take the and tougher the that whereby the we fourth the the good higher, more off concern past, as are upside on revenue. had look they're across if candidates extent slowdown in won’t rates we more off to come our basis you past in convert the began our much you candidates quarter. have pretty on good fourth would to quarter, comps in third during at to time the If process no year, lower and would extent the because there

ask argue risk biggest to it's So holiday the would you We what's the if revenues? impacted.

a for perm us following placement always know you As in is lumpy. while, quite December

their of companies quarter, the close do of the hiring that. at to shop try some Some next beginning ahead and get

So current predict. to December is particularly hard

in that comps They mind, but think top still grow tougher, points. I with on upside, with revenue their it's yet which of guidance, lot notwithstanding that still the good would X downside can good. a Protiviti, our be related. that So is feel they momentum we about double-digits have they think percentage

Kevin McVeigh

helpful. Thank you. Very

Operator

Patnaik Your Barclays. next Manav question comes from from

open. Please ahead. Your line is go

Ryan Leonard

in Manav. filling Yeah this is Ryan for

Just in give kind above with can growth. when of The seen to the past robust in the at that hire point this you demand, to on the on have it line hiring. guess keep revenue little color to a decision rates? you question higher In growth you've a And commensurate the cycle? maybe tended I decision

Keith Waddell

top quarter make perm subjective with concert Protiviti. people temp, field, in call we the in and have every the It's a we

couple to line a with we're supported Our continuing thinking to years growth. capacity holding is added revenue capacity by more we in that of given than hire revenue that ago,

created as just hire long but as a or as well that's years that strategy, dry we ago continue art the strategy. of as grow intact our powder, some there. science it's that stays the we and think we QX guided if we've for couple is can or in line projected So you -- shown will, there way to We given

Ryan Leonard

that? look guess, anything across you by any if wars who And your Understood. are be any I impacted would mix, client like people trade or more there to exposures

Keith Waddell

Well, side, at on Typically concentrations staffing on the irrespective two news is how one large good banks, time, don't the of any assignment specifically, staffing period. have client principally side, our temporaries with on clients have we a not larger we and of out larger or to banks. wars Protiviti's larger the FSI are the is. the I'm projected Protiviti sure company companies. is in exposure deals if directly trade impact the

it's more it's concern, the how confidence, so direct directly sentiment second does client So it base. our not does order the that how that's impacts impacts impact that of impact the impacts how than

Ryan Leonard

a Understood. lot. Thanks

Operator

next Your from Blair. comes Tim McHugh question William from

Your line is open. go Please ahead.

Tim McHugh

that guess Is the are to feel I can able where both higher one, you to inflation? price continue on do you bill the workers just that like and to to high comment can do that you continue else Thanks. spread, pay we to you're the see you're elaborate and as clients. you on anything able why you're even to that to with suspect there going wages able wage rate you and having through think do expand I pass

Keith Waddell

for us investments recruiting that side. Is the combination to to them on our the of are do recruiters to is there we're they're their looking experience in well similar candidate titles mean, together A technology going title market. king coach on? Clients centric anything And when of plus having Further, often has on, to for to skills. clearly what else have have done tend is our today's I the very first help clients with choice. we different alternatives there someone. be

if when don't clients That's supply of analyst. If a with sensitive how many you're analyst, a consult have for skills we're you deal skills clients is, even don't the maybe financial the looking be analyst, for a same when we're to titles But analyst way budget get have. for the are. financial and just ordinarily having a financial point labor you'd probably help one And you're look with a many we them our that title budget looking similar has analyst match. the our helping to we surprised wouldn't

of too continue are not we that we expand them to through to can much the But pass think high continues and margins? can an tighten and Now accept such Clearly clients basis. directional we're standpoint, on do as careful more a that's at absolute gross going that absolute levels to they from more reality we be to marketplace. our run supply up the

Tim McHugh

made is Okay. or just impacts, how is technology is question, using over I the an that? mean, can -- more I any other color update? tangible the on them, responding give last I here, you've year then internally how two there that the the I investments guess, guess are And deal you guess to -- the

Keith Waddell

market productivity dilution flat Well, candidates it and have I and close, close a from first longer candidate opportunities able offset the do streamlining part technology what are recruiting dealing candidate been you our where internal the essentially harder candidates. investments. of to and multiple all by process discovery you to of your sourcing if tight that is to look the with We've takes offset candidates it's at argue help you technologies would that would where with have

productivity down. would our investments, technology our flat, be I but net, So is for our argue, would productivity

we pleased a big proceeding. on The other talked thing, how the making call quarter, push we're with digital And clearly that's into as last we're about marketing.

that we we're the places identify that into, with where that interact in ultimately the from and we larger candidates extending space reach our expand come such apply able payoff with, with. that to will the continue the the we learning to markets AI extending the machine think marketing extending interact We clients I

productivity it's So of revenue digital about growth growth. investments about internal it is because as much better me, to as

Tim McHugh

you. Thank Okay.

Operator

Instructions]. [Operator

Sommer Your from next Tobey from SunTrust. question comes

go open. Your line Please is ahead.

Jason Thomson

you for focused growth. maybe than Hi. the line see you Last you in To quarter this mentioned this on Tobey. say this far approach would what so more that would of profitability XXXX Thomson growth question. for plan extent Joseph and This on Thank you. so -- is you revenue still XXXX? were my Thank your see defines quarter the for your you what's -- you fourth do taking

Keith Waddell

Well, profitably. not grow as cost we We're to think can grow changed That going has grow. much since we quarter. said, lever and fixed I I'd say last still very our

order expansion are So third facts for guided some we the is had the margins quarter and than in margin reported we the higher to. are

So we're because but that continue for optimize grow not we higher going is grow optimistic can we profitably, and the we're market totally think profitability to to to grow. conducive for us

Jason Thomson

you. Thank

Operator

And Macquarie your next question comes from Hamzah Capital. Mazari from

is ahead. Please go line Your open.

Hamzah Mazari

Thank you my for taking question.

approaching You that over do ago Do or bill do wage talked as Well, function a stronger sort with you rates that couple I'd Is of had you -- being you a view backdrop about market years? say pay little a a inflation talked about you willing probably to of clients a of number clients quarters of sort of frugal. X%. how sustainable view just that?

more inflation post has just reform if change Thank there this you. wage a So as been or wondering related? tax view you

Keith Waddell

Well, is a it supply starts and which with demand. function of wage inflation

for that have pay As the it's tighten, Clients understand just to labor logical markets more you that. it.

backdrop, to and Given the that. for economic recognize pay willing they're

roughly it? rates our you all had How interconnected. XXXX, sustainable very bill look If years by increased you straight XXXX to where back are they is to So X%. five

increases rate time X% range. we've had So multiple had of past the bill in where less multiple we the periods years, certainly in quarters much of

Hamzah Mazari

you. Great. Thank

Operator

Instinet. And from from your Sean Kennedy Nomura comes next question

open. Your ahead. go line Please is

Sean Kennedy

range cycle? to quarter. X% on Nice it I the gentlemen. see what chance was evening, the from temp X% be this current wondering is our there Thank any growth conditions to accelerate the job achieve range to Good double-digit necessary growth? you. we And would

Keith Waddell

quite the candidate on is side. strong Well, currently lifting heavier the demand is supply and

And We've points, had so have low unemployment faster periods to of past to up more periods delivering in than a candidates get couple efficient the many hours certainly in to even in we've take growth assignments. now grown even we're growing. the where we would

where several better we've tougher we'll accelerated growth. our luck, we've also and not of than So With what now actually a our it's comps. of because we're hope had the newer rates do little certainly with being we've impossible conservative We guided. guidance quarters

candidate the we the more extent that candidates, convert recruit And king. and be focus. to accelerates So growth on rate the candidates to more is assignments, would revenue we

Sean Kennedy

Thank you. Great.

Max Messmer

That was our thank joining for interest. us last today. your to everyone question. appreciate We'd like We

Operator

This concludes teleconference. today's

will part Center archived be at If in in Robert Half's of Investor format audio you missed the it call, www.roberthalf.com. any of website the

dial call can Dial-in are the you. the earlier press release conference the also details You replay. contained and Thank conference issued company's ID in today.

Robert Half International (RHI) 23 Oct 182018 Q3 Earnings call transcript