RHI - Earnings call transcript Q3 2020 | Robert Half International Inc.

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Operator

Hello, and welcome to the Robert Half Third Quarter 2020 Conference Call.

Our hosts for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half and Mr. Michael Buckley, Chief Financial Officer. Mr. begin. may you Waddell,

Keith Waddell

appreciate today. We your everyone. time Hello,

These Before that call the started, the I'd future future contain of current remind you like to performance. about comments estimates statements, holds. predictions we represent what including our judgment get forward-looking and statements made on today's

recent could in in forward-looking update and However, risks statements. no XX-K they that and are our today's to the results uncertainties assume on risks to actual subject described press the today's These and release differ most uncertainties are with We filed and cause materially made XX-Q statements from call. SEC. to obligation

are During earnings non-GAAP “as included financial supplemental this schedule figures press some further as may adjusted.” these presentation, mention measures Reconciliations release. and measures explanations in to we a our reference and these of

modified Robert growth related Robert In provided connection with presentation addition, rates Half management office intersegment Protiviti we in of Protiviti from Half Technology their resources temps, for staffing disclosed. have blended, report measure and of divisions include revenues intersegment team, company's revenues the these manage now and and to and we our combined account services This with separately is from and The amount it's externally. revenues internally how consulting them is on, we'll also how solutions. divisional the to

permanent with revenue and unprecedented robust proud also and diversified the we commitment office quarter our divisions. by XX% per of an our and in quarter revenues year-on-year service third quarter For to gains employees had another levels last resourcefulness with results as our solutions your high of capital October continues quarter-on-quarter sequential by of staffing We're in million, quarter XXXX XXth reported on divisions. during adjusted XXXX was $X.XX exhibited year. per down in were operations reporting $XXX gains year's team a at strong Protiviti website shareholders convenience, in our And a and pleased growth an to share I'm leveraging third income third early its ago. consecutive outlay Center our all staffing weekly was prepared our clients Investor maintain roberthalf.com. $X blended the million. candidates. $X.XX quarter for be the led a growth the divisions and a expenditures operations. remarks pleased dividend the of to quarter of for and our including third down XX% our year replacement with offerings as Company-wide available today's particularly call $X.XX outstanding of Cash to record We're $XX the cash billion $X.XX of reflect of pipeline from flow the extremely the are distributed quarter share a across monthly very in consistent total and we third In September, our quarter were compared million. cash service on from basis. basis a of that

for quarter $XX acquired million. XXX,XXX the approximately also during We shares

Return X for quarter. capital have repurchase stock available the We for under shares was third in plan. on million board-approved the our XX.X% repurchase company invested

over the to CFO, Mike our call Now turn Buckley. I'll

Mike Buckley

Keith and everyone. you, hello, Thank

with Let's start revenues.

and adjusted year basis. million revenues on third an were from staffing XX% on adjusted $XXX as XX% reported Also down were down year-over-year. revenues year. This global on revenues of were As third basis staffing revenues decrease year-over-year $XXX Keith XX% as US the basis. adjusted million a basis, Non-US a the staffing prior in as quarter a from XX% ago were down XX% noted $X.XXX of on decrease quarter. third one billion is the quarter an

days the in were current fourth third XX staffing to The quarter We worldwide XX.X XXX ago. days XX.X year States. the year-over-year to year-over-year revenues billing quarter billing This billing XX fourth locations XX.X quarter third equivalent Currency effective in revenue In quarter, days points. ago. during third X.X staffing movements one the locations million. outside reported staffing the rate increasing the there by had United has $X quarter year increased percentage including have countries compared by exchange rate of the our growth one

locations Protiviti within basis, look up owned adjusted X% by points. in the million, its reported Non-US revenues were revenues Global had closer US basis. for global quarter $XXX Protiviti United effective rate a year is Exchange $XXX with on $X million revenues the from take down Protiviti. as States let's independently the versus revenues member by results rates $XX off Protiviti increasing quarter year-over-year operations year-over-year countries. and outside and million third were of States. the percentage up were increasing an million as is network its third XX Protiviti business Now adjusted X% revenues through served at XX the in growth XX%. a X.X clients United and that from the period an On firms ago

investments these quarter, and company our makes on their investment an cash Under to investments plans, account gains compensation SG&A our held deferred directions. deposits we the of of changed losses with fund the consistent these presentation obligations under plans. into and During exclude balances expenses direct trust employees employee to the

As the changes and realized gains deferred losses to occur, accordingly. companies compensation obligation unrealized investments, employees and

the amount changes the However, no assets equal also cost of offsetting an trust to the leading net and value by investment company. related

in of to compensation obligations company's cost. SG&A direct case Going deferred forward changes will be to above noted Protiviti, continue or in the included the

the separately after-tax operating provided. will the of level of does This presented reported below investment income. However, income be pretax assets not outside the and flow cash or change trust previously changes SG&A or offsetting in

assets. discussion intangible of consolidated adjusted non-GAAP Going consolidated measure before income. forward, income be with will we This calculated for will the and combined income replace the operating of of income segment income as interest taxes amortization

in to lower XX.X% in gross compared is revenues due revenues of and applicable year primarily ago. revenues. third third was one decline in conversion quarter margin, percentage gross of to year-over-year now operations, margin to XX.X% our gross the staffing applicable consulting The margin temporary Turning quarter

permanent the in XX% in XX temporary ago. revenues quarter third to ago same with consultant points year staffing consolidated XX.X%. margin XX.X% overall basis one versus When Our the consolidated combined gross of were gross compared decreased and year revenues revenues quarter of third period the staffing to margin staffing placement

of quarter revenues. for to gross investments Protiviti as XXXX. was deferred of of third investment same the by in in increases X.X% Protiviti in as expense XX.X% quarter current were of deferred a XX.X% the third the underlying investment the One in XX.X% accounts. in staffing result and the primarily $X.X Staffing in $XX trust in of The Included For the related of from a $XXX,XXX versus increases Protiviti underlying in revenues same of to the includes year of cost respectively. the resulting revenues including year trust continued compensation or ago. of to This the million SG&A million underlying revenues related compared or percentage increasing had cost compensation X.X% the XX.X% staffing is gross cost XX.X% X.X% of were increases quarter percentage the million revenue increase impact Protiviti SG&A of X.X% ago. staffing margin leverage assets negative X.X% the quarter investment $XX deferred SG&A Company-wide XX.X% of one Protiviti quarter related revenues third or expense SG&A revenues in global in margin SG&A expense related and to decline year quarter ago compensation trust was third in quarter in Deferred trust one revenues. activities. third compensation to of in expenses was

for income the therefore compensation $XX to of period. X.X%, Combined was were revenues Operating quarter cost in quarter. in with segment segment in revenues quarter in with third the underlying from million Protiviti quarter million XX.X%. X.X%. This for related margin increases investment our Segment income expense segment third margin income assets. includes to Protiviti compared was was $XX divisions SG&A $XX $XXX segment staffing XX% margin XX.X% third segment a a income of was ago of the million the Third $XX was of of trust quarter million million. Combined the for Protiviti year deferred

Our reconcile our to third compared a XX% tax ago. to quarter third made to to accounts was lower quarter The adjustments year's rate XX% rate actually is tax tax year filed. annual tax as prior primarily due returns

rate tax of for is year-over-year nine-month we Our the what line year. with full expect XX% in

$XXX the quarter days. third Moving at were outstanding receivable sales and accounts was the XX.X or onto implied million DSO day end accounts of receivable,

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

compared period down for for in to of XX% the October to quarter XX.X% same revenues third the prior exited divisions full Revenues XXXX. down ago. Permanent full the staffing versus in to decrease September quarter. down quarter. compared the This of September versus XX.X% consultant were compares and decrease the weeks two year September were placement XX.X% one the temporary Our a year with revenues XX.X% first

are adjusted On SG&A staffing as financial XX%, to XX% same offer we of too temporary following first reading the to to gross Protiviti. XXXX. you midpoint share, Protiviti XX% X%, staffing these underlying much XX%, time percentages quarter to up this overall XX%. the XX%, XX% a of X% year-over-year were saw into overall XX% For of October. XX% to basis very a deferred Protiviti basis billion XX% and The to down know, overall consulting $X.XX. the XX%. guidance: them. trends into XX%, insight and midpoint compensation We as brief our to major growth on down of period XX% assumptions XX%. Revenue revenues into With of information that we $X.XX placement $X.XXX XX%, fourth billion; provide income, caution of Protiviti But, revenue during weeks these an three The to guidance to implies to inclusive XX% down to year-over-year quarter in Staffing staffing mind, XX% decline follows: X% to as on excluding impacts. so XX% XX%. some XX%, the in periods a revenues margin percentage have Revenues to in a that to Protiviti investment Income per $X.XXX to XX% we the overall you of X% compared October, the X%, Segment permanent as are assumptions

to and press We be in to limit we call the on our shares We this XX% quarter. one the tax are subject XX% XXX million. and in today's risks to estimates to release between filings. All mentioned provide our expect and rate SEC be guidance

to call over Keith. Now, the back I'll turn

Keith Waddell

you, thank Mike. So

continues to the The As an of partnership service revenues. the in reported Protiviti also growth We've particular our public accelerating evidenced sector operations source intersegment be enterprise. newly our and is seen to in of staffing for financial between services and growth strength clients. our our

experienced and demand technology, working significant of Remote ceases long technology The our second to quarters. reductions enterprise require we've made can longer cloud With addition, and limited solutions regardless right quarter client we security, in the tools, zones match the after as benefitted for in the is these strategically invest data will geographies. for class digital future services and hybrid world cost to the third in benefit transformation and talent and In talent network the our also privacy of areas. to increased pandemic to global quarter have them. continue candidates time continued clients structure location. we no provide models continue to and companies have online or will Access to

to the While nature, the the quarter as overall fourth uncertainty much economic any continues. known. report to NFIB to There's the additional continues pandemic business timing stimulus in to optimistic environment and be the ever should virus as on closer move small and be Medical community. of solutions amount trends progresses the COVID-XX about improving the remains fiscal reality

that Our no the majority qualified more are or vast half of hire, to recent applicants. study than few trying but reporting show small businesses

brands, our positioning business to believe with and and technology people, unique strengths the continue future our professional growth We model. of for

you. your just ask Please and Now happy Mike will follow-up single to question needed and and if to answer a time. as there's questions. back We'll I be one come

Operator

Your Instructions] comes question Andrew Steinerman the from from go Please [Operator of line ahead. first JPMorgan.

Andrew Steinerman

favorably. I medium and small follow through you suggested do surely, it's serving reported there. picture that Hi are about recession through just made for a recession Robert with more it Keith, NFIB dependent Kind small agree was it's sized question NFIB lot you on on not big and dependence and question are trends think of you of customers about medium businesses it's like types small I its My sized they assuming small really that business worried restaurants. kind you sized favorable and this serve going of businesses medium a maybe and this business about stimulus Keith, the is really Do How trends suggesting your of feeling? them? that Half's

Keith Waddell

SMB more which very the have June. So that that companies. that the our you almost nimble we such average XX% they've you that in the more our we and would fact as own cap But trends been cap if look weekly that clients. XXX They agree mid started past conservatively we've our more to way mid changed mostly quarter. talked by cut mid sequential the are and the larger SMB in XX% that's period Clearly, has at it's XX%. resilient cap actually cap, the true of in We've more encouraged, the But numbers. consistently to monthly post-pandemic They've and and clients is apparent large beginning been about trends have clients improved on we're mid than SMB mid are growth define definitely improving. during is our also added seen back during our in number businesses XX accelerating mid large, employees early than

our far to that's caveat. not companies. more our off, into year, Robert many widely It's capacity Half, at therefore off that with that have capacity our to impacted. true time at We carry We'll client employees holiday that planned expect true their have will that's one company's most holiday/paid less close paid over off time reported less December take have as of so think be will been taken deals. impacted, big planned We employees time QX clients this

XX% the resolved will the would get that, adjusted good way we're clients be is hopefully December pre post-pandemic for once said which to period than impact. progression shows helpful and history participate we a which of expecting and do we normal comfortable define bigger total the do do we So that forward yes, now But SMB closer that going feel about they the that our or think outsized stimulus gets and probably as in would an that of post-election.

Andrew Steinerman

midpoint holiday effect got is in guide, Perfect the point The right. make of quarter and already to I just included sure right? that December the your fourth

Keith Waddell

That's correct.

Operator

comes question Robert from the Baird go line W. from Company. Marcon next Please of Mark and Our ahead.

Mark Marcon

the of and if talk if doing downturn eventually going that do you're this Protiviti a to some contrast I we how regards there. isn't maybe have out differences with investors it, as was back as and the that think wondering you obviously come the on could we versus coming and we to clearly what well on you're a I'm little bit with who should side account side very, But We've wondering strongly, temp some vaccine. accounting discussions between start could Protiviti. very about accounting about for compare you the seeing when finance had needs professionals seeing concerned are you're

Keith Waddell

transaction XX over so expect level we've And generally been project down, than accountemps volume there. are type different particularly and very to that remote so transactional and also at driven positions as of to downturn transaction will you are no than participate and conducive levels or is, through that I'll our as speaking as Protiviti that efforts. due impacts a finance accounting years. what here it nicely volume know clients has I've the service are improve, doing driven we've volume accounting staffed fully work every we has been high say transaction as levels less those positions is been That's negatively and or multiple diversification accountemps has and to its there business. volumes level, Protiviti management about offerings great to talked which accountemps Though positions resources. relative also

For I area practice incredible. consulting is which ever, within the think technology is first largest Protiviti the time

We've well anti-money compliance they're clients. as about it's their internal at credit of their impacted we've So financial actions and a certain technology impacted, transaction particularly risk, enforcement talked accountemps positions. while talked audit services. involved well laundering; they've done type And in in with risk is not they've that consulting, done Protiviti somewhat then as with about driven

very about get So we're when optimistic will a how things from normal accountemps COVID to participate standpoint. more back

Mark Marcon

what to and you terrific could you're how little much have you personnel with profile with stance and a to about clarify regards your or That's going capacity to or if with hiring can when someone regards currently on you how and is like some about thinking subtractions regards potential your internal additions chatter talk excess internal bit that?

Keith Waddell

say, the first you all, of pre-pandemic compared call so so and Sure with the quarter that quarter. let's third if I'd first

down Our quite pretty no our incredible the it's cut down and negative so of because leverage is that got our with aggressively that XX% income think revenues had, net that through we are type XX% and effectively principally COVID impacts given frankly cost. we I

We we that back do positive better and revenue when leverage actually are that in we'll way. get cautiously XX% that optimistic we'll a

Our to workforce our more We're is because we internal of very tenured staff. piece our tenured of on less levels the part focused the ways workforce productivity current had that with. workforce is

We measure have that. better data to

for your good organization. fewer, more let adding their have We spread that at Frankly, good as next optimistic XX% very we having be XX% profitable, productivity revenues you But will going let the productivities line we're more you again, do over if they're our better buy-in the no that and that money said than consistent have people profitability individual to their down very such we're for the more that our on up going spreading at to super over down alignment than make versus people good levels pleased corporate so we rise the did bottom XX% internal down line. we're be met top will more more the we're people, on internally which across internally we profitability. drive up, got it our XX%

Mark Marcon

impressive, you. thank That was

Operator

you. Thank

comes question BMO the ahead. Jeff from next Our Please line from go of Silber Markets. Capital

Jeff Silber

hiring on not, you see answer net up doing and ramp you do follow-up starting a to Mark's question. a to to start internal if need that? to basis last what Just that Are on

Keith Waddell

of think lot now. more We've and have much currently we've because we we the a the us do largely talking much capacity to need large we because with staff don't think hiring we're Well in turnover done have, now that all staffing with that's a we we pretty unused replaced furloughs behind but got tenured that, by short-term. in

you're their job future. tenured the it's best there's say to happy I been. is upside levels confidence because there at if in postings don't the in of So with we're productivity the staffing inherent indication online levels is ever have level we're that we as looking our some our would adjusted, which happy and particularly

Jeff Silber

appreciate Mike. All second And right, be that's helpful. I for question that. the might

in because just you on I'll might that I'm the have trust that, presentation why the in of change is volatility you these appreciate the curious seen now, us SG&A can Thanks. give Regarding color it it. assets? some If

Keith Waddell

at be and so XX,XXX me more let then Mike And can talk feet practical.

we've all, of had over understand first XX for years, over understand participants. X,XXX these got I we've plans So

to cost our no we for those this. got As And appropriate both We've to directions. no But costs, own its simple The one SG&A flow. the the we together, putting believes employees SG&A and typically from same those doesn't the every that you about same mark-to-market item. thing adjustments items that mean earlier net the that doing of opposite because quarter is the impact plans used also it earnings, line make underlying mark-to-market exactly the in the it, you as doesn't assets to cash and to numbers of amounts of for under have footnotes. it's simply had these out why have equation it's we same now, said these way two-line mark-to-market SEC our and net oversimplified and one have. said or opposite disclosed answer thinking impact We've side Mike take more economic amount. this, is of earlier I have we obligation there's and

has zero in the it's take it we've short forever economically answer and years SEC face statement. footnotes our the this on had So to and what and the income asked put us again, put forward of instead, plus we going XX the had

Jeff Silber

go sorry, I'm ahead.

Mike Buckley

has It been and it's so really footnotes just in the movement. disclosed a geography

Jeff Silber

we something is that there presentation different? quarter's be the see presentation or so to that seeing same forward, the and going going correct press it we're is is this in Got release

Keith Waddell

the There's and just model what together. have our do seeing the two It's look face of put because that's to attached you we'll next you'll to best to your to you the those on each you're right and press change help other if if statement rows two not release. income

as have the gotten the your You'll we exactly rows you've But that you in same would same exactly had We have tell if can't historically. suggest the did that. that, model. SG&A traditionally could SG&A do would combination you of you to the be two

Jeff Silber

appreciate the I Thanks so suggestion. Okay, much.

Operator

you. Thank

Your next the from Manav ahead. Patnaik Please line of Barclays. go from comes question

Manav Patnaik

the that I work benefits high would your think was talked larger my across first agree the your I the I with Keith, level flexibility just curious guess goal like probably shop country? someone SMB where the from clients go seeing and located. that's willing was that. talent just can person home geographically is XX I firms to virtual smaller about question hire beyond from with the you are you that, the But XXX to

Keith Waddell

have the office as local particularly pleased that, premise of site been talking is, outside very geography. so in line businesses for that two only but that on SMB on client's there's But clearly or have say, questions the not not here. just local working and the then versus assignment they're remote in in and and the we One geography. depending XX% I'd to of also people are geography. there's going And They're market. XX%, could the they're the sometimes same distant you're has in project remote Well bigger there's either working are work not the that business altogether. shown a Whereas in premises. to different largely minimal remotely suddenly willing It's on geography be in we've a remote in on the same same to geography different minimal not

Manav Patnaik

Got Protiviti. maybe it of growth a are and engagements flavor like the you which which the where you right kind just of declining know seeing and you areas Can on now? of areas strongest maybe the give us either or idle

Keith Waddell

where area, success are that large We've the staffing public Protiviti staffing. are by manages and in really area get by the selling Well provided But the them. in we is teams joint and the pursuit frankly they're resources the work, the strongest probably proud Protiviti sector. got joint having the

wheelhouse, think process in process optimization wheelhouse is their about the it in fact of you Protiviti's If management, it's right wheelhouse.

additionally with If models. claims. got all housing payments, they're up of volumes you calling unemployment they're charts Their dealing requirements you've look and at overwhelmed school the eligibility virtual are districts for assistance can't the processing, learning off unemployment and keep with technical states support claims, volumes with the that

made So staffing Protiviti, the this difference to a public meaningful quarter. and both sector has

are not total were all revenues shown release to a by XX% moment of grew retail, But picture. you from well. Strongest those cyber, by that's said, part the at and to its how pleased laundering, rates and to the attached shown quarter, Protiviti operational the schedules as staffing staffing compliance the risk and public of first the technology for is that. risk We've money piece That Protiviti. the revenue we've ever, growth billed is also report time - we're big that strong for year-on-year in notice press transformation. the sector actually consulting, You'll this its cloud, Protiviti you its activities much

reimbursable to pressure been So discretion internal There's fee And level. is looked budgets. well, good. that overall. level audit if it more where and impacted very as fees has more there. see they're It's while at quarter to fee said are very more last than got traveling they've even a you revenues up, client revenue expenses little everything I actually Protiviti's a or you not than remember less in down X% because The because the some versus XX% get up Protiviti, up

points another to You percentage can add X that.

and Protiviti doing with actually staffing that percentages numbers both in growth release. schedules the very we we well, doing and So press very well in you as together Protiviti attached the show as rate that in to well

Manav Patnaik

Got it, thanks Keith.

Operator

you. Thank

Our comes next line Please ahead. question the Mazari from from Hamzah of go Jefferies.

Mario Cortellucci

you even is for of filling in quarter? Mario what give us update a October? trended And in just was us This Cortellucci spread the the into sense that pay quarter the quick Could the you few on bill Hamzah. maybe throughout can give a first how weeks

Keith Waddell

the rates. overall quarter on There's apples-and-apples, get rates the so surprisingly Well pay before increasing a not environment. mix this to so to X% and adjusted starts rates, we're and them know, all pressure some as up given for were their X% but that's our X% still versus and bill that, with quarter you ago

given clients attract to have assignment. the a We right talent to

Mario Cortellucci

this know, to and I faster But I you're unique curious that improvement. historically of slower the we've a little since that of of like temps to could obviously an I economy starting June recovery already. Great, thanks kind and feel temp. V-shaped that a is, situation has of see about do know mean early that to extreme more. it the improved you to how I pace just had perm now portion cause then different I'm lag I guess has see rebound cycle maybe guess on, the than anything because an

pace V-shaped seeing your midcap this would customers a SMBs' and I temp said given longer with rebound followed it dynamic So out and the the the this, I then like drag of recession. maybe didn't could normally portion you're than know by regular also in slower

Keith Waddell

a be, well of come we cut as recovered all off done the off that trough they to they're the true remote case market out temp, lower of think not would our also draw, for and us, But including though answer normal. they staff staff, resources has which unusual, don't many perm is they coming haven't they're short the need And of before. its clients is upgrading too that remember deep

temp say so there's nicely disproportionately far, about that relationship states, everything of about. actually the of big call would surprises based because perm, I earlier they're us. work, talked demand I I part reasons participating sector off centers versus trough a we've So as rebounded their that on the and the the talked are actually seen Office very team little public from from and

Mario Cortellucci

thank you Great, so much.

Operator

you. Thank

Crédit Your McVeigh next question Suisse. ahead. comes Please go from the line from of Kevin

Kevin McVeigh

you as about bit, it's internal out through recovery in playing talked on as that Keith, just or whether is any little it seems clients cycle. perm your furloughs dynamic a this have Robert this opposed are Half furloughs how process sense but been would And a is expected how to aggressive the with because as little what for you firms bit maneuvering given coming stronger furlough than like perm

Keith Waddell

A, I peak were And in largely less to also played several look way than think perm little to I'd a would furloughed. those if people when out trough it you their major way furloughs say, fell have we're given from months traditionally. a

coming is observed. and furloughs that perm that nicely back evidence the no there's further trough, So from as you impacted

demand don't extensively I the call. think about having services. And on on the are as talk meaningful so our effect any negative we furloughs last for

Kevin McVeigh

or candidates another said would rate we're going from of the historically Got guess pressing I all? sourcing on maybe just way, that see. that it that, regions. of you and geographically then than just is the in cost-efficient more wage follow-up it just wider to a the in you're any any spread maybe Keith Is the is because is environment at wage.

Keith Waddell

and period ever started say would we unemployment strong from so this event disruption because you tighter it's place generally driven. further and [ph] speaking, than a I very started with

by the this think they XX and where quickly clearly of over there over in typically would large the more months, fact end see I more happened the water like in prior few. clients it downturns a tunnel is than torture happened than that

are are up. up. to pay are they're as all what this relevant about not up But bill up but pay or as still of to rates rates but still think they're rates. I to happens as they rates were, much business the happens not as much Bill those were, they what

by by While that's be the little impacted large think bit in it work might the I remote don't a driver. phenomenon,

Kevin McVeigh

thank helpful, you. Very

Operator

you. Thank

question the from America. of ahead. Please next Gary line Bisbee from of Your Bank comes go

Gary Bisbee

business, have deteriorating sub I staffing lag we we management to is seen The the resources typically obviously you off just the with look segments. see longer at or to and the earlier? the growth else that the quarter. rate there engagements temp point improvement a maybe while two sort just to of took within businesses professional - fair ask trend week-to-week is is discussed technology revenue that and of you wanted last when it and would those that to also say from roll anything

Keith Waddell

tech had the And week-to-week they although divisions begun longer than had were have have our impacted you later got to as observed, later, the of in well. growth weeks other They that a improve in in as once management bit so facts happy are, [ph] resources they that they and [ph] links it are was longer meaning to so several to assignments that hit consistent June. they early period, assignment they flight than rode that report

other project than focused The thing work on transactional more I work earlier more friendly about was is they're because remote work. than transactional that that Project work. talked

our at tech transactional it's that compare work and impact the you resources and peak So pandemic kind it friendly. because to there team work to than that less project during is of you than if remote more more accountemps partly to of to be to There is of the because office the look tech. management management's cumulatively resources former seems resilient trough

Gary Bisbee

at continuing me Protiviti that to better particularly up holding within delivered that you've similar. which cost makes is the SG&A sense. the doing interesting And Okay, to and seems level, that it reductions then, grow, pretty

In but that we over it there. in SG&A. the you. reduction I trending a like next to larger guess the how anything you about I should quarter fact Thank bit, percentage on quarter than out so point looks commented a there in would and you trending? next Was or know particular anything temp quarter more think

Keith Waddell

SG&A. Well, direct are cost that are Protiviti's cost in that, first for payroll SG&A. principal those of all but not remember cost in in

to to profitability the the noticed that, itself people in in largest internal and by will reduced the they're XXXX incredible. cost cost and calendar their for non-billable an they've driven during reasons attached you going Having also that's the same I marketing primarily that's factor. They've some is there's added. if travel, spicket the less that's many, on for that to to calling impacts of certainly back cost audit be think travel because fourth But and turn SG&A they've the the [ph] said quarter, years because for their a which many including just Protiviti's increase been marketing practice been they've training all off got we're their overall year.

of of the a the they're So business profitable good place and is growing most which be. lines any they're to really of our fastest

Gary Bisbee

thanks. Yes for sure,

Operator

Thank you.

of next ahead. Sommer Your the go Tobey from Please question comes Truist line Securities. from

Jasper Bibb

or business? you for what could regarding what from This of in I your speak for labor and is Jasper was that mean to hearing been onshoring Bibb filling Thanks. you've customers reshoring Tobey. hoping might kind of outsourced

Keith Waddell

a of side. We but of and on chain heavily trend. and it's the they're bringing say moving major a aren't few hear so have a it's little Primarily have the or clearly reliance some Protiviti theme to on happy some wouldn't that not supply their I again back engagements offshore bit a we But it. companies needle.

Jasper Bibb

clients hearing cycles? could the of was power you're dynamic of vary labor in split and that coming between might you of early from here. the seen stages perm to the flexible I Thanks what volumes kind as and then whether kind needs speak of what back from in you've hoping kind

Keith Waddell

has in true a of as together rates because they of lean need just and trough. that But coming and last perm the other in out variable really perm very the your recoveries they at the help by the during of to and couple Well first recovered volume growth case keep clients transaction downturn it optimism always has hint SMB higher recovery look have much typically time. of deeper and trough downturns which temp are a cycles, frankly thereafter cost pretty prior and as is more large any the beginning at you just of nimble get our if most are and for incentives economic

extra lean the and the they're of recovery, want many to one other early markets talent. tap into the labor their hand On of advantage going they best chose to extent that take to upgrade or into and overcut of market got see it's to because

the than impact don't than other into was a in different of So it see frankly, past timeframe. that condensed recovery stages we downturn, early smaller differ in of anything much

Jasper Bibb

I the appreciate it. questions Thanks taking for Keith.

Operator

Thank you.

Your of the go next from line question from George Tong Please ahead. comes Goldman Sachs.

George Tong

XX margin lower in year-over-year impact wage gross talk the expect most the about that growth slowdown pay conversion how for bps recent temp to staffing Can spreads? contracted due part. you you bill revenues temp Temp

Keith Waddell

we've I'm the managed margins Well first and than now, of you during trough of pandemic done temp most significantly how we of downturn. less XXX gross we're glad mentioned period one because margins temp during in our significantly frankly all as a things meaning down and better. the we're to peak here it's proud typically We'd that points be gross stand we basis

spread wages temp going an going on would that's because that much there to to in to amount lower to way. that extent we're wage impact take have we to margin otherwise. As the not apply our and are it the same We're take going growth, slowing absolute temp to

in wage margin. doesn't with growth compression compression So mean

George Tong

that's you're into what assumptions infection to it, and you in then with rates elaborate Got around guide. wanted helpful. your assuming outlook? Can on dive your your lockdowns COVID XQ And I

Keith Waddell

a just the Well going ebbs is partial just all the only been the lockdowns, be of and It doesn't of midpoint modest be assumption that, They're flows, the country going flows. our in they're part continue case in that growth going complete be months. partial sequential to be we few that's does there's be and and to to to it's reason like guide. and assume major calculus why have shutdown last will there a hotspots, restrictions assume it's the ebbs

George Tong

helpful. very Thank it, you. Got

Operator

Thank you.

Your the Marcon Baird. next go ahead. question Please Mark of from from line comes

Mark Marcon

plateaued to you're talked that public wondering and if going the like for? your seems Just has the have to it are projects would continued could follow-up. But if that I'd a sector sector certainly seeing while. those long go one how about on continue what extent and how was Mike, growth given think quick you perspective. you Keith talk or to about I public for hear is, love far you and behind It's if

Keith Waddell

believe use believe is of demand unemployment up process as state bridge loves for certainly COVID. and Protiviti lives are question we we the time go that housing going because There's lags first demand show of because the no to need said optimization of I period. to earlier that to some we current we and side governments for and to is optimization assistance. local it is bulge building the that nice when have period Well many and some of rates but bulge is component objective other relationships ourselves But of this the their could these bulge processes as past as have for there bulge ever we're to forward the

Mark Marcon

initial how period proxy you [ph] as does a last? longer bulge and for bulge that use period a kind are or claims tracking Would you thinking unemployment about of that will

Keith Waddell

states, and we addition that claims. related surge and to of housing go fact on among unemployment the this the we're say surge But referencing a dealing to to continuing so we growth just source we're and penetration primarily their dealing every is that handful assistance new states the with were to the in rates I growing you and single with surge, If our yes. of a itself already states that if only state where would if share we're states are, such will,

Mark Marcon

Great, thank you.

Keith Waddell

you for joining was question. us. Okay, last our Thank much that very

Operator

This concludes teleconference. today's

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Robert Half International (RHI) 22 Oct 202020 Q3 Earnings call transcript