RHI - Earnings call transcript Q3 2019 | Robert Half International Inc.

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Operator

Hello, and welcome to the Robert Half Third Quarter 2019 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 appreciate and on joining today's call. everyone. you your We us Thank

the on believe, to represent comments predictions, reminder, forecast, these holds a As made remarks such words similar other of the as statements. expressions. and judgment consider include estimates project, our forward-looking These and current be statements expect, reasonable. our estimate, what future guidance and contain call We

from results the to subject and that to risks differ actual materially statements. However, they are forward-looking could uncertainties cause

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

Investor page, Center the of our roberthalf.com. convenience, From on bottom at at click of your prepared today's our call the For website home Investor for page. left the remarks Center the the link are in available

financial $X.XXX year's for on on Now third Revenues and up constant the let's a last from results. X% X% same-day were quarter currency company third reported up basis basis. Half's Robert a review quarter billion,

per net is year-over-year. share a increase $X.XX in the versus income same ago. period X% quarter Third This $X.XX one year was

operations capital per In was outlay $XX in Cash flow for total to record $XX a cash quarter September, million. and cash our of million from dividend third expenditures we the share distributed $XXX $X.XX million. were a shareholders of

during $XX the We also for shares X.X quarter Half approximately repurchased Robert million million.

board-approved repurchase have X.X available We plan. under shares repurchases stock million for our

States. strong our also our of Management was subsidiary strong had and our the third demand particularly staffing Half for services Protiviti a talent Resources United the Persistent quarter, among business resulted very staffing in in in quarter. the standout lines continued shortages Robert

third Protiviti the with the invested Return on was and for operations. are seeing We staffing XX% continued the momentum in company quarter. our capital are U.S. in we pleased

our now third the turn at a look detailed call quarter I'll for more results. over to Keith

Keith Waddell

Max. you, Thank

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

Non-U.S. were staffing on as $XXX basis. million, an X.X% year-over-year down adjusted revenues

outside U.S. XXX locations locations have worldwide XX XX We the including in countries staffing

same quarter the There year days, fourth has billing in the quarter one year fourth XX.X one the XX.X billing were to in The quarter days versus ago. quarter third XX.X ago. days current equivalent

by million. effect during staffing rate This reported the staffing movements exchange had by percentage revenues our X.X of points. rate growth decreasing quarter revenue year-over-year Currency the reported $XX year-over-year reduced

the outside quarter results year is the the million, Now States. for million third period. of global XX% an States and $XXX revenues the is Protiviti, from ago as from in were were the $XX adjusted operations up basis, let's global United million $XXX take a Protiviti look On at revenues that United versus

a effect adjusted were by year-over-year in of and basis. firms revenues decreasing the Protiviti on the XX its were had reported clients up and U.S. $X year, prior owned adjusted countries. up independently as basis, X% points. as Protiviti the non-U.S. XX% through in an revenues third an percentage by of On member the serve quarter Exchange from rates Protiviti decreasing million rate revenues network growth X.X locations year-over-year XX

our is to placement turn to margin of quarter the revenues revenues quarter. and consulting XX.X% in to let's revenues last quarter gross gross consolidated XXXX, were temporary ago. Now margin. third staffing third revenues XX.X% In year of quarter the of staffing In third year's flat applicable XX.X% our compared operations, applicable the in of which compared third was permanent one business,

year Protiviti points Protiviti and When of the basis $XX ago third SG&A year versus XX.X% of margin, margin temporary revenues. with in quarter One XX.X% XX.X%. to third XX.X% last quarter revenues gross margin $XX XX.X% margin Protiviti the SG&A revenues revenues ago of revenues. ago, XX of in or the was rose the of of compared gross staffing XX.X% combined third Staffing consulting year was costs in the compared gross or gross Protiviti costs period. million quarter year's overall quarter. staffing XX.X% for third quarter Protiviti were were Protiviti in third to in million

our divisions X.X% amount. million. Third income $XXX from this quarter was of staffing operating was Operating margin

reported consulting $XXX and million and million operating of operating an income margin in operating temporary margin operating divisions XX.X%. income while permanent X.X% produced our an staffing produced of placement reported Our and of division $XX

an the $XXX operating profit were XX.X resulting days. receivable in $XX XX.X%. and the outstanding were at quarter margin sales quarter third days operating million implied Accounts end of for Third million Protiviti was of

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

revenues X This in compared Permanent period September prior were and X to same increase X% to year with full for Revenues up revenues the when X.X% revenues temporary quarter. the September for up full quarter year quarter. the up compares the to weeks consulting the X.X% versus were September X.X% compared of X%. Our placement ago were October first October in a the X.X% third up for XXXX. divisions of to exited staffing compared

this in essentially have quarter know, X revenues you quarter but into last weeks revenues placement reading period too were brief of that you With in first $X.X the provide We as up billion periods, against these $X.XXX guidance, information when so the saw into the income caution much compared permanent $X. the October, in very mind, are we during them. third October the flat XX%. fourth to that to same time trends we billion, For some were insight $X.XX and offer following to per share we year,

between is from XX% Compared just same-day, revenue our days growth seasonal guidance one and extra X.X Limiting subject between tax of we mentioned EPS Protiviti estimates the call of guidance whereas including to filings. the to and compared implies only our quarter fourth of XXXX year-over-year third all and growth sequentially as-adjusted guidance of this press respectively. midpoint XX% of our we ago. are to basis on The and of we projected a loss rate day X% The revenue provide lose to an year and the quarter, due the X% SEC In to X.X growth in release a on our This differs EPS ended, and trends implies days quarters. typical risks X% X%. negative sequentially, in billing today's third the quarters XXXX. XXXX, of in XXXX, lost

to back over Now, I'll Max. it turn

Max Messmer

we're results encouraged and We in company's staffing third by the momentum our Keith. quarter operation. and pleased were you, seeing continued Thank the with U.S. consulting

provide we to particularly solutions Demand broad-based a managed Protiviti was offering all quarter. its solutions jointly consulting had and for earlier, audit Protiviti our As of operations. noted a including services with staffing strong its across internal

particularly the rate strong staffing operations Our United X.X%. fell in U.S. are market, September, from benefiting the In States. labor the to unemployment

was are technology acute staffing for companies investments. low higher in for digital The skills are projects in fueling making supply, was that The XXXX. which last time Staffing the services demand ours. like rate challenges specialized transformation are for this is short particularly December required

going labor XX% to have showed global and CEOs, small September. a increase durable overall The confidence from nearly month. demand. mid-sized on are impact businesses in believe hire among Yet ahead, hiring Vistage the of year Index Confidence X-point these plan to CEOs We in decline the prior in CEO the a a shortages

highs, indices their absolute. various the While historic strong at many remain business of confidence they are off

on us we've talked past. in seamless Half about supported experience Whether focused or with technology as our provide expertise investments on in by call online the customers Robert the engage experts. and are this We of within a staffing person, technology we can local

we combination, Robert That's a which for differentiator believe is unique a key Half.

an where major global as provide traditional as all roof. these see outsourcing and and projects party by experts solutions managed of full-time operations consulting gaining Protiviti's third survey XXXX blend and uniquely alternative a qualified found models are finance solutions staffing our important that handled are Protiviti the to staff, believe professionals under We by an We we to differentiator. arrangements. in contract also diverse blended offered staffing one solutions popularity are trends

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

Operator

first [Operator question Baird. from Instructions] Our from comes Mark Marcon

line go open. Your ahead. is Please

Mark Marcon

of thought a as I good, in where managed was really you're wondering resources. it little you do as potential well the blended Max you could afternoon, that Good see particularly quarter bit of solutions, to that Protiviti was talk management about sort your as the growth terms its if Keith. that? relates seeing and and your What of in solutions I development? both combination out is

wondering to then expecting as what That's with follow-up both in you. and do just segment with a you I'm from you're sometimes one as detail Thank question. trends And of some terms the provide has explicitly perspective? regards margin well to the by guidance, Keith,

Keith Waddell

quite yet did solutions well blended our again. So,

certainly a was that under solution. cases business of variable deep did Blended from something get staffing. -- fixing all particularly growth resources managed, Protiviti three Whether they're up they cleaning new, across manage They a we from for matter perfect all Solutions Protiviti building whether solutions earlier, areas. the backlog, solutions well. all scalable can they appreciate get -- said that use whether Max they're Clients one expertise get and the are roof. As problem, Technology subject broad-based its blended they're solutions

is growing P&L we It's lot maybe guidance, or from quarters we’ll there X row, As think X go a bit. upside we a where and fastest the of clearly a in our we of tremendous. far just as is we days. for one been development, believe On are. down it's early Potential, operations think

the essentially basically The do staffing, staying For but revenues easier. flat Europe strong. growth seeing third quarter. to slow with get comps with the continues rate stayed year-over-year points we're X U.S.

to exposure macro limited mostly we to every seems We're uncertainty manufacturing particularly in that's have the day a its lot don't we're in of news chain trade and policy The and with that. and doing how U.S. pleased supply the

the our fourth holding in we're U.S. concern quarter, Because is holidays is always people off fall rate moreso maybe that staffing, there candidates essentially is most decide the have which year-over-year take it up Wednesday. again calendar more with So, it's The than very could X-week year but well the and typically in flat growth judgment does, to on because than impact this more revenue, both clients the QX. anxiety,

They time yet will XX% toughest, the part modestly little couple of the have they them Protiviti. slow Revenues in because ago. that up they will a that projects replace. are comps large a ended international In -- zone, year were a to take the

in that time Further off have year-over-year Protiviti. partly of deferred about lot Protiviti, of busy for the staff more their differed than is so talked growth because time with been they've the heavier That and shortens time That this have their because just a is slowing they quarter for scheduled more typically case, because year, the I partly off. December Wednesday in so effectively the modest rates even date off. Protiviti

basis change, Temp up points Protiviti they to their basis the primarily and tax leverage XX last downtime. less about down basis staffing international XX to I for to to revenues. rate XX Protiviti operating XX more XX.X% due law income year-on-year, gross of impacts holiday utilize XX due down XX down XX SG&A, basis the basis SG&A That means to that flat-to-up margin pursuant gross up points tax XX just XX% margin the Protiviti leverage to points talked basis non-deductible time because zone. XX to to staffing year-on-year, off staff operating negative million. XXX higher [Ph] points cost shares because to from Effectively, points. year-on-year. year-on-year about. that XX points of XX

Mark Marcon

That's great.

you're sounds actually good trends. seeing So it like

a Protiviti certain guidance side to basically, we've on a a at accounting just that we sort extent. summary? doesn't QX. that's You're QX quarter, when anxiety calendar correct like of we folks it you're to you're vacation fourth any take look our sound for that perspective, for I Is also the got And the change basically mean from the have seeing deferred. a some give to been that relative macro

Keith Waddell

all, U.S. at the in Not particularly

where the a this said the I quarter. trends was little of September, from Protiviti's we we we is September much we're picked that October we about pretty the particularly to happy As of intact are up about. QX, start but earlier, continued strong. coming part which think for second back pipeline The soft, very take holidays early part into happy our

market on described position. their on actually all it yesterday leaders call switches their are of the One as in

business perfect Protiviti way that particularly was thought for describe I a tone So the the U.S. to of in of kind

Mark Marcon

That's great Thank hear. to you.

Operator

from Steinerman Andrew Your JP Morgan. next is question from

Please is line Your go ahead. open.

Andrew Steinerman

labor going I question a it to already anxiety. move the But place higher just past that fourth X% past GDP, say, you of is higher looking off as further everything is growth, small me you still heard than like shouldn't sort we of about we is us, Hi, tight backdrop X% real guide revenue allow though we levels, conducive here. Keith. are it maybe as it out? know definitely let's question hope in fourth the quarter, and quarter think business you my have even confidence, higher And growth; even growth so cyclical calendar I for market, a could give high

Max Messmer

that all We if also better. look not next the easier just few quarters, compares made. that would Well, you our at note harder, we the would you they get for that's with agree also observations

show and seen the we're not U.S., But did well they declining. So, Europe, extent in we're does we quarter, trend to some but the the UK third reasons that bullish not maybe particularly but in U.S., bullish declining, it's have nonetheless. are line outside slowing for abruptly the chronicled, the a the certainly declining

Andrew Steinerman

you. thank Okay,

Operator

from comes question Jeff Silber Capital. from BMO next Your

open. is line Your Please go ahead.

Jeff Silber

In that so out stand there the the something prepared going unit? with doing Resources much. you really among was else or Thank alluded staffing, of on to work you're you Robert Management that Half remarks, in Protiviti because the your fact that that is was

Max Messmer

ordinary, or we're clients So, few not work is which doing it is because this than actually say a work. observations, Protiviti, with their one, I'd of Protiviti, as the Other have have particularly their anytime classified is is which skills, means out level, need they're for leaner focuses. anything in middle more they which higher specialized management, where project a resources of the management that,

very all temps as candidate Management that supply Resources will helps is the for view. to example, an at that a to will essentially than a Further, for of clients access candidates supply the career, be people Half Further, or resources lot management which with and point the chosen that further account of pay case is and travel travel, for temps. not account have from as Resources contractors consultants a Robert Management different has

for very is resources case different the temps. management a So, then candidate for account supply story

Jeff Silber

know that. guidance there giving From I beyond got perspective, current year? we've we you're same in in helpful. in XXXX should is that. the quarter, out that's next about for not a appreciate beyond know anything but expenditures the model tax capital a of I terms Thanks. thing, Okay, rate

Max Messmer

[Ph]. can you be you the between going to and to it tax rates XX%, used grew smooth say quarters somewhat I'd extent the generally between are XX% to could

they expect the continue next be were well. and as capex, we On year year would elevated this would to they somewhat elevated

Jeff Silber

Okay, you so great, thank much.

Operator

Suisse. Kevin McVeigh question from Your comes from Credit next

is line open. Please ahead. Your go

Kevin McVeigh

what then, of, along you just Hey, Keith, the don't sense are give those how mentioned, were plans I and pay hiring your and in us bill the you quarter lines, spreads think could Great, thanks. a

up? shaping

Keith Waddell

from this swings period, for a So, unusual it's that's quarter, up the X.X% was full point our back as U.S. quarter dilution increases. and they non-U.S. that's rate little much bill not year-on-year, you operations. higher, percentage is see last 'XX, 'XX were rate to than it if in in The to increases a rate look 'XX as bill less after

in rate, So to any moderated that We've did fourth follows hire can our macro last Hiring we particularly X.X outside so which of rate. the quarter, continue U.S. third the significance in we there. X.X we in given read late particular our U.S. conditions clearly support quarter, two. don't versus growth hiring to quarter, the

Kevin McVeigh

Thank you.

Operator

Your next SunTrust. question Sommer comes from from Tobey

Your line is open. Please go ahead.

Tobey Sommer

with Thanks. time as for biggest hiring business the This has Tobey caution you it for the hires in well? [Ph] available but has talent clients seems to the Bebon is pulling today. recently, on finding it elongated find a back been Jasper Based confidence NFIB takes data, small for issue bit,

Max Messmer

isn't So, for so candidates. of the macro It's elongation, intense, isn't the there shorter uncertainty. because more is, it's about, but it answer competition

the One a issues point have that client of we on employer would this way the they We've to yet the the back their their placement, spend to all and candidate doesn't to time do employer, biggest counters getting done offer, don't side, the we happen. all we leave employer. all otherwise the candidate, existing perm particularly existing the the work where of goes it make makes the that existing

So, there is orders, or lack of point stress is not a of the the job candidates is stress point lack tightness. the that demand

Tobey Sommer

thanks. Great,

Max Messmer

I well end supply held manufacturing earlier, chain our in manufacturing States. to we're think, or markets not exposed and As reasonably said the up, have particularly United we

Tobey Sommer

makes That you. Thank sense.

Operator

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

line Your Please ahead. go open. is

Gary Bisbee

relative in other more performance, in obviously growth your quite any can there, look continues and provide color comps, markets Yes, it's tough international to Europe again quite the to that data but major places you slowing Thanks. but on strong. the

that in defined and about How quarter? Thank was is change So, how during the trending? thinking pattern there you you. that are any

Max Messmer

easier did out, our is Canada UK, are about talked but expected year-over-year be look you be slowing, is fourth the little get quarter uncertainty slowing, Germany year-on-year fourth it earlier, continue, in call last Belgium, and which still barely when are expect is to negative comps it get was and Brexit, it slowing, strong. are the points we as market. trends we it our it we negative quarter. at strong, year-on-year It in But But still third. but of biggest at the the you a positive So, rate. the in macro fact slowing on trade would we has a said to as slowed, see be that did all growth Australia see we versus play, four played those helpful if stayed I look more at

Gary Bisbee

Great, then, companies on the perm time we was defer And hires to just look year, the December? thanks. where how and overall the more are relative sentiment into year-end, when trend just thinking more in as stronger business, sometimes back as there follow-up uncertainty macro business next or perm to in that both business, aggressively cooled through either years has business over the October, about in you conditions, I the November, U.S.

Max Messmer

they the take to yet they the that we're gotten actually not and where don't more bit of the that plenty job there discounting as offer have the uncertainty about talked is stay issue quarter. another client. earlier, the about job Because of plenty getting little demand, the we pauses concern to, candidates, put, change of candidates but one don't is demand make for and make traditional a else. that our the the December That fourth don't identified, orders business, and perm environment said, it's there's they overall to, slows agreed always that. somewhere is month they've They and change We've a attached in or

candidate us is for about So, than it job orders. it's more so control

Gary Bisbee

helpful, That's thanks.

Operator

Manav next Patnaik Your Barclays. from from Instructions] [Operator question comes

go Your line open. Please is ahead.

Manav Patnaik

not of comments Manav. I'm curious, just is any your interesting, for on This uncertainty U.S. it's the really Ryan feeling in the about

seen you back just have your standpoint back I headline things past the tax all holding even because mean a some thinking If years, to on from different, conversations, of from Europe? I of or look elections guess just on over we've pauses hiring, pure impacting obviously going the different been that's about couple of maybe people there what's related reform.

Max Messmer

seems industries, a reference October. of that there's The from slowdown', Analysis to published, growth an into economic chain. be likely of study was that was Bureau contained, would than other I 'Job based on other it study in late Economic manufacturing supply headline spillovers published evidence is

think I you focused and manufacturing, to So, manufacturing is, slowdown broader because distinguish described, I just how not pauses, two. would of seems point the exposed the as we're the the and manufacturing other because than on are that more that's

Manav Patnaik

lot next use on Can then, you of And the uptick that enough. the we've talk about about year? here. maybe how the about a technology in app quarter going you throughout talked the investments Fair call of into and think

Max Messmer

has Well, candidate-focused. those we're that the pleased with gotten is engagement how app very launched. principally we've The come from

add personalize to continue functionality, We our app user both improve on the and online. experience that additional experience, user

the data also how app, are expand in our We jobs. we We continuing AI sell, used we the match online. and ML, how using cases use recruit, fill where it we to we market, as how and we as well how leverage that's on

where scale. are the done, implementation our pleased as with investment the call who never match initial candidates part that marketing, digital for last we micro-targeted of which what large job the is. it, done strategy, at we're before. talked new on when we've orders digital of doing We to to is inviting get that in was that a with personalized, about message they gets what that We're it, with our We've all

strategy about more digital our we've good and feel we come. got to So,

Manav Patnaik

you. thank Great,

Operator

Your Goldman George Sachs. Tong next question comes from from

is line Your go ahead. open. Please

George Tong

good afternoon. thanks, Hi,

temp year-over-year for contributed indicated revenue with what to compared up You third exited staffing slowdown? the you quarter that to X.X% Can factors X.X% the the full discuss quarter. September

Max Messmer

out script X%. but October there coming and our later picked rate up the we because October, September in soft little that put the we also a was year-on-year was September of early earlier, said I As growth holidays, in

deceleration. in So, September part and acceleration, October, we latter not did of and it's better, a actually an

George Tong

helpful. that's it, Got

third on specifically, So, fourth what that and you U.S. U.S., relative based the rate help your unpack quarter you're earlier, of you're you little in the in EU. the the said Can seeing hiring a to moderation how hiring EU? moderating recruiters you're up in degree bit the your in scaling quickly the maintaining in quarter in what

Max Messmer

We roughly our to acquaint growth top-line tried our to rate. rate hiring

hiring to that's EU flat slightly. X% the That's what So, plan and down EU, like. plan is X% like to growing looks what is in U.S. hiring the the looks our

George Tong

Got Thank it. you.

Max Messmer

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

Operator

This concludes today's teleconference.

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Robert Half International (RHI) 23 Oct 192019 Q3 Earnings call transcript