ASGN - Earnings call transcript Q4 2019

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Operator

Greetings, and welcome to the ASGN Incorporated Fourth Quarter and Full Year 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Kimberly Esterkin, Investor Relations.

Kimberly Esterkin

you. Thank thank Conference us Call. and Fourth for for XXXX Quarter you afternoon today joining ASGN's Good George ECS; With Chief Officer. Blazer, Systems; Executive are Officer; President me Ted Rand President Hanson, of Chief Ed Pierce, and President and Wilson, Financial of Apex

we like remind our I everyone would statements. contains forward-looking started, get that Before to commentary

risks Although, risks could as these And actual any results uncertainties and differ made Certain call. statements these from and such, in are statements. on filings. update We they reasonable in release statements believe do described uncertainties. we are not to those materially today's assume subject are and to this SEC our obligation of press our

Relations note the convenience, These between cash investors.asgn.com. are included measures, intended remarks For our income, section financial and on can that and measures non-GAAP our press prepared such be website non-GAAP free in call, referencing supplement Please GAAP certain materials EBITDA, be at we the net will are today's as also release. your supplemental non-GAAP measures adjusted of GAAP and this Investor found comparable flow. measures. adjusted to the in Reconciliations

turn Chief President over call Officer, Ted Executive Hanson. now to will I the and

Ted Hanson

And you Kimberly. Call. joining Quarter ASGN's Fourth Full you, Thank thank Year for and XXXX Earnings

be answer questions Rand session. Wilson President of on ASGN's quick Q&A and the include also to get earnings remarks call, Blazer, of George available today's with your on item we to Officer interest have and to our and ECS Chief President along to a prepared started, beginning Financial efficiency, the of housekeeping we've Before Ed I will Apex discuss. time In the myself streamline during Pierce. decided are Systems; line

the the resource pursue via strategy in year to XXXX provider turn and to model. build ASGN for many of government as deployment let's of our to an scale our differentiated we commercial services markets continue a IT accomplishments was Now, results.

solutions anticipate defense federal workforce look XXXX be employ customers than us corporations to crucial consultative objectives growth accomplish Our and tuck-in needs with successfully and more IT our combined to complex to proactively clients agencies strategic cutting-edge advanced civilian respond Fortune challenges. to acquisitions. including their To of and continued and through and We government their before. management ever with organic each select business

on ability effectively ASGN's performance. to solid evolving as quickly our but evidenced customers' act by needs our financial

QX full very exceeded with the are our for line with quarter year year results. in with quarter pleased full XXXX our improving We or fourth All double-digits XXXX the numbers and were for for both year-over-year. guidance, and revenues reported

remained also totaled of the XX.X% high-end Margins than our solid up year XX.X% respectively. over Consolidated for in greater $X $X quarter is with to am range. I that, note the guidance revenue. EBITDA above pleased and full second and this just of billion, revenues margins of year-over-year our and for quarter XX.X% the quarter fourth billion consecutive

of XXXX XX.X%. end the quarter segment Apex largest grew of on comps segment, in multiple across for revenue clients which X.X% $XXX.X million very which in the by tough year-over-year markets commercial quarter, our generated up services fourth revenues

Apex For segment revenues the X.X%. year, full improved

XXXX. And over growth In year-over-year Healthcare & markets, and Life over of Services, posted the Sciences and Financial the each Consumer/Industrial the Technology of Apex markets Business quarter Aerospace Media, segment slight revenue Services, decline double-digit quarter posted single-digit terms in end Defense Communication, the for fourth a fourth end growth all prior saw the for revenue the quarter. period.

mandatory shortfall led weeks $X time a the accounts. to slowdown off our during furloughs This of growth holiday higher-than-expected ago. the December, of period to in Financial small Despite $X by number along Services from key final revenue double-digit of slowdown resulted with a a was accounts, revenue year markets Business in compared the a and there enacted in million period end which approximately consultants same the time these as to two by million our

while rates accounts achieved branch retail and year-over-year. Top the quarter, single-digit digits accounts fourth still grew mid-single high growth for

to we for Fortunately, slowdown to that Apex levels and round To January, holiday this saw expected line in production so believe quarter. with in out posted return Circle the isolated our we the Creative segment, season. was expectations revenue the

segment of with for the Consulting Oxford the margins with Apex Gross XX.X%, fourth expectations. grow across work segments segments for continued the totaling both Apex $XXX.X consulting consistent for and our revenues XXXX. were million segments to XX.X% to up million, rate. Oxford quarter, for On overall over consulting outperform up consulting the revenues $XXX.X and Apex continued margin our reported Margins a year-over-year. XX.X% basis, full year work

organically, continue XXXX. to which strategic revenues made capabilities consulting we mid-October grow through we progress we've look our broaden integrating fourth our M&A. quarter, Consulting, also we in In to significant the acquired Intersys As

XXXX. the the the to positively Apex We and acquisition that completed of to The which quarter, expect pipeline QX back-office functions contributed fourth full and Intersys' overall their be above has integration in support systems in segment bookings expectation. the and was Intersys will share contribution of our profitability our

engagements our able to cloud support around assist the with With contracts able newer is new to enterprise of and to on amount for implementation securing been an provide these to opposed to been including upgrades Intersys, work There's decades. of of Apex talent vendors for to multiple planning traditional resource support segment with clients' systems. leveraging the cloud our and the software scarcity consultants technologies services, cloud within clients have talent the new The as strategy that increased embedded partners. work bid DevOps in together, by integration we've of type

systems develop and advanced account, for apply fin-tech data cloud service engagement we Intersys solutions Most client's expertise a an where fast-growing won will our our and Apex operating jointly dashboards with and recently, team reports analytics team. customer to

factor acquired for our contributing the a winning a be approach will this and component center work. Center Mexican project, this believe this For Development was critical we newly of

be Intersys' which Apex's of We Development clients. many serve are able traction with great seeing near-shore to will U.S. Center, Mexican

our have on work accounts. site of performed clients Some tours their performed of being even of behalf

IT which to certain government Defense agents. next provides Now the segment turn civilian and federal largest of solutions let's agencies Department intelligence to ECS, the our including

For solutions the services year-over-year, of learning reported fourth our demand XX.X% defense customers. high from and $XXX.X million, for up machine driven primarily revenues ECS quarter, by

ECS' stronger And financial new software as even growth continues this a of to purchase we early enter originally ahead pipeline remains of be million initially customer-driven contract would the ECS' a while the that expected under cost to reimbursable XXXX. $XX.X expected licenses come for business strong, performance anticipated in full XXXX. industry we to we year, quarter of outperform and average. was segment due than fourth

book-to-bill of XXXX, a in ECS X.X:X year. book-to-bill QX $XXX.X the full of ultimately to awards for ratio In X.X:X, contract received new million resulting equates ratio a healthy in which

U.S. key support the technical awards the services NOAA. provide Atmospheric to the by Projects and a Oceanic to Advanced of Some for Agency ECS won in National contract tasking effort or and programmatic analytical Administration fourth Research new the included Defense and quarter support

deployment the information optimize quarter, the contracts that saw cloud significant expansion two delivery in geographic used also U.S. In of areas with routes. we a to we the of fourth Service hold and Postal system key technology

had offers coverage on-demand of the ECS quarter At a revenue. the a fourth times talent period clients engineering slightly ratio prior the quarter, a X.X trailing permanent healthcare, sciences, for $X.X reported billion fourth and placement segment million consulting life of a ECS' the of months revenues IT, down $XXX.X result from decrease The as revenue work. commercial, of in for or backlog year total which end of XX contract Oxford

to notes fixed like our a with offering, the and of we balance rate. a I'd fees risk. to of quarter. moment down on with us interest a to capacity we while term million highly take variable closing In in longer the piece paid simultaneously issued the fourth to a This a lowering offer borrowing $XXX a allowed capital Through announced loan November, portion the intention established new term our our we sheet specifically market. loan notes now secure of rate this senior unsecured competitive our focus in and to

fixed million. the our that that pleased our I'm deal debt for by successful was elongate go tenure $XXX of oversubscribed rate, favorable be to and loan, support $XX the execution a facility strategic so needs. our we revolving to to off future of team's paying current To at portion report back term million positioned our ASGN a credit total of to our while marketplace to was simultaneously able in the

Pierce, Ed specifics high-yield CFO on of the bond our shortly. will our deal speak further

our only our us with clients. enabled Importantly, cash down strategic pay make commercial but strategy to that value, flow services higher government fit tuck-in our margin to higher debt, of consulting providing acquisitions our also has long-term strong to and not free

add purposefully goal but businesses for existing Our that with synergies not companies strong ASGN value, to about revenue creates their our rather to intrinsic businesses. just is

goal, ready to this a maintain support be we of future make in and purchases very pipeline the commercial strategy. can our opportunistic targets To that government that spaces long-term strong we accomplish so

not shying up current leveraging scale us to with become tuck-ins to us opportunity the while leverage clients. market we our of our we our and enable While even more chain that position necessarily focused now from transformative entrenched away are M&A, are our moving on pipeline value services,

Federal DHA choice just that ECS Case is our in to weeks government markets. clear IT in ago services as over Apex we acquirer Then ASGN commercial point, of is and It in for three segments acquired solutions Intersys and Blackstone respectively. welcomed successfully XXXX, of the an and part ECS. and we

of welcome enterprise to Blackstone cybersecurity from federal ECS' of be Their group. to the consultants to deliver IT modernization development Blackstone joining most group pleased cloud technical and ASGN. complex to Federal impressive services some functional Federal agile will application are We and solutions the government.

sub-agencies. record our capabilities we DHS contract Blackstone pathways customer. addition, add Through business our digital Federal transformation an government new within IT XX-year-old and its has prime for of Homeland Department solutions the Security, their supporting and deepen our also DHS track

revenue Blackstone We XXXX. XX% this strategy scale for This growth $X tuck-ins. growth hybrid and revenue in margins and Federal growth through see the combination over mid-teens year a ECS will acquisition our with to fits strategic in billion capital organic anticipate allocation EBITDA to of and perfectly

that the financial Ed to With turn speak fourth quarter now performance. Pierce in over to about call detail our I'll more Ed? said,

Ed Pierce

of for And our our were the year Thanks, above acquisition which after income the Ted. solid the in revenues, the quarter. and all onetime financial and And Ted were high-end income excluding full highlighted, costs deferred reported estimates. results write-off and estimates, not integration net loan guidance guidance adjusted for as XXXX has net expenses, of we

was the XXXX, line at at third-party in were the were cost dates contract generally favorable ECS. expectations, Ted the made and occur direction to quarter of a at from were the various and at in of with Revenues These at time expected for million advantage terms. other pricing last under Apex growth from of the included were XXXX by to take revenues lower-than-expected software of a Systems Revenue consultants higher-than-expected a mandatory the earlier, except furloughs December December purchases, which licenses reimbursable and as large in $XX.X XX.X% in purchase of off few accounts. weeks as divisions mentioned result two customer

integration higher-margin in estimates in at in revenues. were than and acquisition permanent Apex Systems not were margin Gross the for and million expectations. guidance as profit estimate. estimate guidance however division of our our mainly was and included year-over-year expenses, line a and was ECS $X.X Gross with above growth expenses a below decline our SG&A placement result our quarter faster in our which

our than Excluding those lower expenses, slightly guidance estimates. SG&A was

reduction and to in of term million facilities and In we debt. the rate pay notes on revolving million. B the capacity facility, to issuance, $XXX senior proceeds other X.XX credit and November, the in the senior completed loan borrowing with point ASGN resulting credit borrowings due in restructuring facility our that of credit under an our Concurrent issued interest senior revolving increase down used XXXX $XXX a the

In the in $XX.X took write-off onetime we connection a restructuring, deferred with loan costs. million of

planning than benefits quarter initiative tax and Our and tax expense from returns. of tax onetime completion the was the for the compensation, the favorable state discrete to including state true-up the quarter effective benefit tax following of stock-based in related guidance estimates certain lower our rate tax XXXX a state filing excess items due to

acquisition our expect excess full and of Our approximately for Net quarter of million income to income million And tax before the benefits of million, XXXX write-off tax any effective XX%. million $X.X rate stock-based XXXX rate or after $XX.X be compensation for was we year for was loan included onetime after XX.X%. tax from income cost and expenses which taxes. or $X.X $XX.X $XX.X taxes deferred integration million effective

estimates. approximately $XX.X net these our above Excluding slightly income million was items, and two guidance

$XX.X were activities operating million X.X% from and of flow free $XX.X Cash was or cash revenues. million flow

XX.X QX the days our or is day X.X quarter, last fewer were $XX $XXX.X than EBITDA approximately million Each For estimates. Adjusted days DSO midpoint was of million. year. and of above DSOs the accounts was receivable guidance

the flows were activities million For cash XXXX, cash full operating flow $XXX.X from million. $XXX.X was and year free

resources During debt, down hand. XXXX, our of to we and $XX.X for repurchase million stock cash $XX used acquisitions, to on $XX.X capital to $XXX.X pay million our million increase million

During X.XX beginning declined of XXXX, from the adjusted XX months the at at times EBITDA our leverage ratio of the to trailing debt the times year. year X.X end to

this Blackstone XXXX, to to the estimates on $XXX estimating net and $XX.X the from million million. $XXX million acquisition $XX.X XXXX. financial $XXX billion, our EBITDA first income of of Regarding for to we're estimates These results XX, revenues date quarter from million of the of include Federal million January adjusted of $X

now will to back Ted? over call remarks. for turn Ted the closing I some

Ted Hanson

was of operational execution year ASGN. financial solid Ed. and Thanks, a XXXX for

I As this XXXX, a of another note the we is strategic Blackstone also off feel Federal. year enter that successful yet confident on positive acquisition with starting close

certainly to review go-forward important it's the is important historical also discuss track to our record, as While it opportunities.

The $XXX expected billion IT larger are counterpart market ASGN with approximately its in space. gaining XXXX, total several billion to $XX times IT market than addressable share roughly the size, number market in at for player we the staffing is ASGN's $XXX In where two approximately quickly services with is staffing billion. accounted market total this

resources, unique began resource augmentation, then candidate Unlike same and customized, our also the clients. our model. to differentiate through pool project's for consultant company. individual but our we in staffing when industry, in others staff the us our deployment to we're to backbone solutions mentioned provide more competitive much traditional and foundation itself high-end It able needs. This call, original I makes to addition technical our to continues ASGN our offering advanced profitable As selection the leverage of as enables today's tailor

and IT Our that finance or agencies automation, available. relationships procurement civilian Digital engagement workforce advanced cognitive federal introduction technologies. on to dramatically changing planning success processes and AI, know machine can transformation and management. quickly continued in company's expected and business they ASGN long-standing provide most resulted particular is with in from and the change to XXXX and Fortune companies computing, has technologies on to solutions inventory ERP Enterprise is resource of with rely the consultants learning blockchain acceptance government

as best service including and customers advanced innovation these operation digital and in center integration of gaming in Virginia in we in to To Apex's our and in the our light center evolving as Apex's of lab center certification needs, continue our facilities area. training ECS' well invest Seattle, systems secure development in workforce AI in Mexico, the

our investing in the to of clients growth commitment in is for we Our awards received. areas evident

for Technology Top Cloud Partner MSP XXXX. example, for and quarter, Public Networks fourth cybersecurity -- Platinum or area Attivo a the named During in ECS XXX was an the

labor strengthening offerings meet organic and critical continue will government tuck-in ASGN find to most and economy to enhance IT grow supply, of commercial balanced strategic expand This evolve acquisitions the With a approach from our our that clients' combined solutions. will growth, and service and ways to our come a with needs. tighter

for We your our calls. progress forward quarterly continued and Thank ASGN. continuing look to you on for future your support all time to share today of

your to questions. call the up open now will We Operator?

Operator

question. [Operator Kevin Thank Instructions] time, questions your of from we be proceed Suisse. question-and-answer line conducting Our you. Credit of Please the will come a At this McVeigh set session first with of

Kevin McVeigh

things sounds that. profile Fortune transition it federal the of mean kind that Great. what revenue the of around more margin longer-term given a sense XXX ultimately from around have perspective? the context of mix more like Thanks so bit Any contribution of government can Hey, kind to you business? like of little procurement folks much. that a And the

remix little we And the the kind just of as of within then any any bit? of given the that, a year of thoughts sense just this business context pace M&A

Ted Hanson

for and call for thanks the the on Kevin, question. So being

Kevin McVeigh

Yes, for Thanks. sure.

Ted Hanson

really we will government, mix business think commercial if you of whether for federal we have a If about you don't. between and target our

the other see numbers can ECS than You by has much our segments. two grown faster that

to going of as a XX% the now mix are will. have approach increase that's there. and the commercial sense the we naturally of But specified basically don't they get business, you a So million marketplace, can $XXX versus target you if but

And then been the it's to be, as acquisitions, on you mean it our is to XX posture over could here I XX last relates question opportunistic. me to see going the to which I is what months think

we carefully. at that I think we one the of most look It's things do. allocation very that important capital

is point out acquisition. with increase looking have obtain make proposition then a during set we're acquisition that a as it that customer, to for. year. the there the number that's the an But is And the we're don't acquisitions or at may marriage If really really we value that there certain opportunistic relates solution to our that likely an to think we the of target going for it we contracts

Kevin McVeigh

it furloughs the revenue that related then And And you little below a the of just did so low some the third-party the of coming helpful. that to license the third-party within that was pull on may seems out in quick That's for license the if QX context QX that the kind just in guidance primarily like of of software bit there? guidance sale then you sale? adjust come end as it real

Ted Hanson

No.

If things, -- Kevin. two maybe you separate about are think those

these million mentioned of to on two tune the the an Year's awkward about of on timing have New both two we $X weeks were a where $X the definitely Wednesday, the of furloughs and Christmas So to year million. Day and in the definitely impact weeks as holidays the last

in expect. would January we up those back to that We've seen levels customers the now come spend from

that, So kind at will I end year. onetime of the you a event, think that's the if of

of Oxford Circle commercial specifically a pre-holiday January. period naturally the the they On unit have business reset side our and Creative coming of the Apex's of first the into with and out

they You restart have are on through, immediately spent don't that January X. budgets

week X% may the to lose the will typically December units so X% And if you end we January. from as volume of first business of into come you those in of

-- think year. related, I latter those things that that are I happens something mentioned the -- but every not those So two are that is

is several software not in licenses, problem pull-through QX As it XXXX. been second relates those -- of most on to because be would a have that in the to license going for the of ECS half the us renewed

So it but may headwind the in not first be then, a a little bit of quarter. here

Kevin McVeigh

Super, helpful. Thank you.

Operator

Our of Gary Bisbee your with proceed Please next from America. question question. comes Bank the of line of

Gary Bisbee

Hey from to in the due afternoon. which $X was And guided a slowed the like million business for bit on QX. to sounds the you've first I revenue total guess guys, think basically growth bit QX to quite I timing, and Apex. slowing it the $X holiday a good question adjusting even million in the more

is A ago Is markets. business uncertainties some ebb-and-flow going trade, seeing following and on from of and impact prolonged in sort of coming more growth? of still impact it end you in quarter you a some a any that normal those at Apex you demand macro the Or characterize just having this? pause growth talked of are maybe whatever about how

Ted Hanson

portion if terms is in Gary just of business. our portion going of Rand -- got And strategy a on. this byproduct talk to related I'm that a the industry you I'll natural to of is of we've let this because will, going a let Apex

Rand Blazer

of third drop-off probably fourth that was reported Wednesday that, a down. the you're the or of the of we when off requirement quarter. Well back biggest that us. of And then you the Gary, That into the increased happened forecast time. – correct. surprise American flow reported paid the flow it's we bit work that all our probably furloughs society falling a quarter at That nature the today. continued the did holiday – requisition and said back little we fourth but XXXX. to of end so the some last we – was at our the Having At numbers or to looked didn't at slowing other expect on holiday way And go quarter excess in the end time period

QX Having said obviously a from that comps that, QX are we year tough in and very believe ago. our

QX XX% and If over you QX Apex growth in were and Systems. in XX% look at we the XXXX, over

normal of we mentioned The the Ted comps. year beginning and things tough at the a sure ago overcome. are So have which we few that make reset minutes to anticipate

as there's I will pick technology; two revs goes but industry. budgets industries Will for quarter telecommunications the as slowdown: That definitely year? begin on the saw where unfold we get don't solidified know. to up a and

would is holding we well we're our is in the there So the very can the fourth quarter. you say from and I range double-digit industries hire continuing as other numbers through doing still are also tell Ted consulting opportunity business to gave. believe

matter all and moving a pieces So these it's in out of see shakes quarter. the it how

Gary Bisbee

follow-up to the Okay. of consulting Thanks. is something it revenue maybe you into And a the that that non-consulting even way that's said. of is right Or to the that offering more this I consulting you better just that that is new it is reason coming because the fit about part, some sort revenue sharply. Is way say you Obviously, back if this business. assignment traditional it. Thanks. not demand is that this But the to of the lot a you're I a in incremental portion strong of the was fair about And it and growth that customer? on think a then as have of a slowed fair out, that? think ask than out think quite

Ted Hanson

Rand?

Rand Blazer

go respond, I'll and Ted yes. Well, ahead

correct. is different said to ever before. you than us incremental where into There definitely the new we've more done of new coming kind solutions, areas entering work think we're I because doing providing business is thing second we're

bodies. will of clients for the for into and up as and if or some providing opposed I our driving the our think whereby work the more reshuffled responsibility some outcome pick work, to extent performance you past just redefined accountability to staffing we being consulting is

as So we bit new on it's into new but I risk while that. taking it both a certainly think solutions controlling little a the associated and of accountability moving see we're definitely some of with frontier

Gary Bisbee

you. Thank

Ted Hanson

to And add Gary was that. I going to

us value see there. the to are you what drive these As up see byproducts going natural chain, of you're

positive to thing. the value it's is The proposition a client higher. So

Our that become and stickiness you more this And with client of of will in Board's rate, terms margin sticky. much if for better will a in in terms prospects is that of ultimately business terms then the business.

So I think if will migrate that there'll flow we as the this chain. strategy is the and here up right value and ebb you be

Gary Bisbee

Yes. you. I appreciate that. Thank

Operator

Our of next Please line Fargo your with Caso Edward comes the Wells from of Securities. question. proceed

Ted Hanson

Ed?

Operator

your is mute? phone on Ed,

Justin Donati

Yes.

Justin Thank Sorry is for you Ed. Donati for This my about taking on that. questions.

The not margins but like I was are looks gross margin QX. had only EBITDA for margin. first your on outlook down question It also

if wondering could mix drivers of these walk the to through just and So you planning some some how of issues? you're offset

Ted Hanson

becomes much going relates here it margin gross thing part the one question. as a see to thanks you're that that for mix. to bigger ECS The is Justin the of

mix to going margin a our You're standpoint. profile from gross of at reacted kind see

you at I the come gross a of look ways. lose year the maintaining naturally in margin Ed unit, a we're you the certain business EBITDA within in certain handle amount when good of And this increasing and margin you and very across I'll let margins doing job even quarter. If Ed? first then think

Ed Pierce

Yes.

mainly on at And the XXX terms basis been that about roughly effect effect to relates payroll historically, sequentially tax reset. to XX least on points. margin, it is as EBITDA margin on decline the XXX of talking in assignment to you're basis about due it's the business, gross And points. If that's a

you really And midpoint. you're question? Ted mainly going And placement year-over-year, that thing look mix much, movement lower with if it seeing mean of right. our mix the probably it business result moved the your other to sort a of that margins the is I of is answer Does you changing. of at revenues. permanent haven't If that compare be is

Justin Donati

Life one. leading know, one didn't there. your but customers, the color in been up the weaker to about with this appreciate In it's I just then you conversations I a last Healthcare quarter, Healthcare hearing Yes. slowdown have anything elections? And Sciences?

Ted Hanson

I way. it characterize that No. wouldn't

you in and if us just really you of part. what us think a scientific will clinical see the market I refocus and serving on IT, there a so Sciences harder will on drilling from Life little you if is down our de-emphasis

what's underneath much market that. that's the of think you I too I that's say in to not would relating healthcare election the so, what hear. And

you providers past However, do really were being implementation naturally healthcare on they the focused EHR see systems. of in

have as enterprise systems Now systems and the else those these other integration as their really focused they're on that they to of comes security well systems, everything that. that with

And so our from about we the hear color most that that's of healthcare clients.

Justin Donati

All right. you. Thank

Operator

Markets. line comes proceed question Jeff Capital Silber next Our BMO question. with of of from the Please your

Jeff Silber

next you're I in perm to it But year you you'll giving piece did grow start perm the continues year-over-year. business. increase for specific to But go excluding Thanks, so next decline be of year. that able a do you much. not know I a think, to business small guidance down? called out, if annual the revenues just even Oxford wanted to focus on the assignment looks Oxford little. I like it's know the

Ted Hanson

growth did really of I bit think now a the of side little We that do. They're in Right? you good bit doing gotten and see the Oxford growth. business. little we've a a EBITDA job of things on margin

grow kind rates to at it the if for XXXX will years. prospects of for have market We you

better single-digit we bit we So little that be do would of will. kind if could a obviously, And rates. lower

Jeff Silber

kind XQ possible the out organic helps Ed, to as is on it helpful. Just the acquisition? model impact growth of DHA And That's in parse revenues acquisition well each of Okay. as us Intersys segment. the

Ed Pierce

earlier we and disclosing you know as the in on We're Yes. DHA separately not did commentary that year.

EBITDA Intersys with line were last million those at quarter in they said and it to projections. contribute expected about million we to $X.X much in about in As adjusted we Intersys revenues that $X.X relates pretty

Jeff Silber

Okay. Great. the guidance for first in looking of embedded And you for you're terms in can what Blackstone? then quarter, give us

Ed Pierce

Yes.

that We included in release. earnings also our

revenues contribution $X.X expecting And million million a $X.X about so in we're EBITDA. adjusted and of in

Jeff Silber

so Thanks, that. appreciate much. I that. missed I much. so Thanks Okay.

Ed Pierce

Okay. Sure.

Operator

next Our line question. Weber RBC Seth with Markets. of Capital from Please your proceed question comes the of

Seth Weber

guys, The color some afternoon. win call there around Is rate for you'd ECS just provide step X.X, changed Hey the in here? just just has close that you And George. Thanks. Maybe kind feel you issues? there? book-to-bill. rate your Do book-to-bill like in timing any could anything down good of out or

Ted Hanson

George?

George Wilson

nothing Seth best out or Yes. with of concerned Sure. timing the of to and those I in things. of terms win appreciate question. in It's the any I'm type No primarily Thanks, that, rates industry. call

out things protests hanging that As awards. got waiting are well as and protest on several we've

expect I We've pick that that to seen it So several awards in QX. do up forecast. support already

Seth Weber

Okay. – And then

Ted Hanson

too think want not in problem will and George to if celebrate will third said, around I'll nature, contracting. kind over quarter that, to if X.X:X a I of government the Seth, it's there's if of – the don't X.X:X add like cyclical we seasonal Hey, didn't you you we nature,

you at it's really If LTM, look X.X:X. healthy a

there. So we've like great lot George I very here. got pleased prospects think said, And of we're I mean, a

Seth Weber

I'm understood. does to make revenue. make – that so with to calibrating just just software understanding I the margin you in Can the little license revenue impact came revenue, Thanks. Yeah. that margin sure, impact I'm want in quarter? And for the Because just bit $XX the sure then of No, Thanks. trying margin? gross light we're the million a how on – even big on – just

Ted Hanson

Ed?

Ed Pierce

business. lower-margin was that Well,

Seth Weber

Okay.

Ed Pierce

ECS' revenues. Again, other

margins And you – XX that higher. margin. in to improvement gross item So QX about were points our up gone would have it basis a would or XXX ECS' about points been consolidated see or have normalize – an if on would of basis exclude particular basis you

have does it So an did – have effect. it

Seth Weber

helpful. very That's guys. you. Appreciate Thank Perfect.

Operator

the from of your questions set Please SunTrust Sommer line next Robinson Humphrey. of of comes proceed question. Tobey with Our

Tobey Sommer

you Could the and long-term services? also EBITDA spending CapEx implications margin to you. of Thank higher-margin moving describe on IT

Ted Hanson

think be we five-year like go idea I where incorporated five-year we if Tobey, back XXXX, were Well, that chain. target, this is that up in out laid Analyst we value our to strategy the moving Day – in to the you the our going

set we to help XX% consultative move one that with that end ECS, the was Apex XX.X% target the the more with which having EBITDA system of Now five-year would drivers to now at of period. capabilities margin to us be the

us down for CapEx, we plan. times on revenues. told up set while in strategic have And the like in and still the deal past typically and here of And that marketplace with the a margins come evolution five-year over the targets in our many good feel going we we as around of are EBITDA X% right what's little then target you those in the so and we've a business

right that were And fourth I I the for think on think our we it same. the quarter. stance remains at

Tobey Sommer

you. Thank queue. the in back get I'll Ted. Thanks

Ted Hanson

Thanks, Tobey.

Operator

the Our William of from proceed Please Tim next come with Mulrooney your of questions question. Blair. line

Tim Mulrooney

my taking for questions. Thanks afternoon. Good

at this the like and And it pretty So looks is bill tight several volumes rates Oxford. Apex bit little type that this for a up in reflective quarter mix extremely an whereas next Is fourth labor market? strong you'd down the were were the quarters? of of just expect

Ted Hanson

weeks falloff from the think in eventually you've are like this they in here through January. certainly, last was got our two had customers contributor here large back the said, now we they some and as worked which of I Tim – furloughs, to biggest the

value one And margin after will rise that bill the number then we contributor. to second to rates work. expect higher So as that, go was our our we continue

And so to expect think you see that. I should

is our – large is I necessarily I portfolio. important an account think would distinction changing to make pricing not in

driving that at we're year in and price are day because those a a every higher set then they for times. work, typically reset other So not

driving value is up definitely see units and that higher-end increase So rates the more complex the in you our work. commercial higher within doing

Tim Mulrooney

on Very wondering proposal. any how thoughts had And this as it's the the budget you early coming ECS right. process I All over And year? impact House week might the was in released their to this White ECS helpful. if then

Ted Hanson

George?

George Wilson

very set. I mission-oriented customers. Yes was putting we've going the showed capital we're looked sure the where sure. we has as are where customer being And that's my to that were that investments. organizations Actually in at I of our that's federal mean report Washington list Arc had that very on and and wife few our that set I happy is Post making very civilian to moneys very budget decreased been customer focused the customers

was I'm budget I ends proposed. but it proposed. the so it way too all how concerned not We'll how was that about about very up, And wasn't see the concerned

Tim Mulrooney

you. Thank right. All

Operator

Our Mark your comes line of final proceed question with Baird. from Please the question. Marcon of

Mark Marcon

regards taking question. that With how is Apex? my Thanks of in portion business afternoon. the for to consulting the versus of much Oxford Good

Ted Hanson

say is don't generally in question. are I larger thanks a rates I in and Apex very the the Mark, just We units for is that disclosed just both I mean chunk the and the But Oxford. naturally I than -- growth would think proportional. revenue have in margin profiles the that. separately it will by it's similar say

Mark Marcon

-- this Just in XX% of the of I are mean difference like XX% terms from go-to-market? saying in and we And Okay. what's it's the Apex?

Ted Hanson

is say I with of of in businesses those the I it's focuses consistent one generally difference think on. go-to-market would each what the proportional and

about highly those their Apex IT very sciences If as XXX Oxford and within the the serving more where marketplaces the of consulting well industries but IT to work -- are across services specific and tailored profile and IT in you healthcare accounts Fortune as think solutions regulatory not those as they're Fortune life they're offerings so all in also in serving focused only of falls they different engineering, XXXX customers. it's

Mark Marcon

regards seeing the sort any with it's with labor to tight trends it. Got the then of how perm? you to the in quite reconcile What in market tight. with market do we elevation labor just obviously then of And And regards are conversions? terms

Ted Hanson

in we bottleneck I you that placement ability or around revenues candidate-driven the So that what I conversion. we change mean anything a at at necessarily we saw causing end a but tell rate. create in that because haven't faster definitely of conversion. didn't we the will today saw real spoke if permanent hire I marketplace you direct think it's to to a year the it's in the will grow so seen

to slowdown candidates are normal the QX. in while waiting we that year. the because our permanent end that saw we the of we less at likely so a year did out saw sequentially something when QX the to in grow leave bonus at they are like job the down or a they're to revenues And saw a then QX end of year-over-year QX placement And

we kind that in candidate because So But say. trends would difficult I grow it environment permanent is the that more tight a overall would tell definitely revenues of so are you the supply causing to those is placement.

Mark Marcon

Got it. And then ABX. any comments to with regards

Ted Hanson

others It you our some doesn't business if to will it help affect like because... is if anything really may

Mark Marcon

I would be. would it think

Ted Hanson

mean talent the to customers. bringing way. a mean it's will a us. in it's we're to our compliant you Yes proposition help if large I value I

that so have world. economy And avoids the that the gig they risk in

So I think in that way.

in in industry say it's But a slight would rate. would growth to difference hurting. terms meaningful That's I certainly not going as trend I out, not you will, a it's help. call IT. if it of make an

Mark Marcon

and you do about were Fin And then, up more. double Services, in Financial Great, That's you year How think -digits. have Services as I one then unfolds? terrific. the

Ted Hanson

that Rand, do to on you one want Financial Services? take

Rand Blazer

and Well, a to management, insurance. banks, we wealth the have only big on banks focused are I Mark fin-tech, it. think big broad we approach, Meaning, not regional

all ebb of some those see among and flow do we So, players.

good The to earnings show banks results. pretty continue some

So, continue our grow. anticipation is we'll to

And not trying portfolio, the broaden in footprint not our to we're sustain we're portfolio. big if But we're Financial Services. broadening out certainly growth. the a have going to We out

Mark Marcon

you're existing early a sales sounds Great Can the how terms you client like color have some there. and Intersys, introductions gone seeing and bit into provide of it in of just more then, your little signs cross base? success the

Ted Hanson

Rand?

Rand Blazer

we Creative we've and Yeah. our pipeline base Apex pretty value units, account Oxford across mentioned large and Mark, I Circle a units before, services. for with have think, our

wanted will, So, enough Intersys, their we acquired needed accounts cross-purpose while is to when our on pipeline if legacy we to deliver large that you we them them.

we if report number. this -- have we So, I don't --

we've is months. X astronomical, this at of been pursuits amount the But for we're X.X only months, considering doing now jointly

We entire point thin. the really client wearing we're them across our leveraging probably base, them to are

And focused so, and was But are this delivering Intersys' to that we we get as opposed have picking important we're accounts. choosing that. certainly at I to areas. larger to legacy trying just on And think And watch on obviously. pipeline,

Okay?

Mark Marcon

thanks. Absolutely,

Operator

does today's This conference. conclude

disconnect time. great may participation. you this lines your a Thank night. at for have And You your

ASGN (ASGN) 13 Feb 202019 Q4 Earnings call transcript