ASGN - Earnings call transcript Q3 2020

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Operator

Greetings and welcome to ASGN, Inc.

Third Quarter 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kimberly Esterkin, Investor Relations. Thank you.

begin. may You

Kimberly Esterkin

Rand Good Chief today operator. With thank for ECS; Executive you are George Apex Thank President Officer. Wilson, ASGN afternoon third us of Officer; Chief and for Hanson, Ed call. President quarter joining of Ted Systems; Pierce, you, and President and Blazer, Financial XXXX me conference

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

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

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

Ted Hanson

both third with third earnings expectations. call. XXXX quarter, joining and ASGN exceeding quarter Kimberly. results you, ASGN’s you strong for thank Thank the for And Adjusted reported our revenues EBITDA

result $XXX the Adjusted our million, margin better-than third initial from outperforming our ahead in for saw of and of of quarter, $XXX.X revenues for on the over of with segment quarter, quarter, guidance for or business. our the Apex lower expected commercial up quarter, third in Performance federal totaled revenues, improvement up markets. quarter. sequentially to on work and both prior million XX.X%, prior commercial segment each the clients of Apex the XXXX with guidance. new $X.XX tough than were was ECS, the year, the government totaled results to year-over-year by the our of expectations. The a year. a the X.X% the particular, continued QX revenues broad-based For billion, bids request comps, mainly in well turnaround EBITDA Throughout $XXX ahead million X.X%. up XX% Systems was

and we evidence QX this growth fact, believe during in discuss upward revenue quarter our on in with trajectory. this across guidance growth CFO, steady commercial balanced witnessed solid very QX, that week-over-week call. later our recovery fourth is Pierce, second improvements now segments. the is all a revenue quarter trough hit our in today’s Ed In will levels more on business We and

solutions key diverse Skyris of and continues purchased and quarter client areas, also As us simultaneously were Then, service segment. Apex digital September, scale, in LeapFrog ECS. the value is provide with In emphasized us cycles. a the while post throughout chain. high-end with which build hand. we of in part acquired companies their part with IT ASGN’s have offerings, a cash to to transformation higher for Systems, large to capabilities end, now just ability stability I base moving and modernization Both acquired of pursue as way our IT up our business we market as provide model accelerate be on clients the aspects initiatives. us M&A great These previously, our

leverage. to take of on enabled source the and liquidity flow is has important without allocation to strategy acquisitions, our principal make us of our cash an additional part free Our capital need

Circle, which let’s LeapFrog services includes and clients our for performance the and multiple segment Apex, the of first Before specifics turn segment, third end Creative markets. quarter. our the getting across Skyris largest into acquisitions, Apex commercial to Systems

For sequentially. $XXX.X the up million, of X.X% down Apex generated year-over-year, X.X% quarter but of third XXXX, segment revenue the

quarter, X.X% to Creative declined compared Apex For double the Systems year-over-year, third revenues while Circle XXXX. declined QX revenues digits

and Systems with services quarter, sequential to slowdown the the levels. Apex prior Revenues weekly the Apex demonstrated for placement COVID-XX-related for steepest to down rebound Circle and while the the Circle’s seeing revenues, skills the holding of revenues event weekly with higher, double-digits X.X%, both notable above in and Systems the Systems digital-related experienced some Creative move third from year, trends third continue Importantly, permanent from revenue continue and and declines levels X.X% ad, Apex steady. quarter. revenue quarter Creative exited at second respectively. improvements pre-COVID-XX

rates top First, branch growth accounts retail and while QX, down. accounts for achieved low single-digit were

improvements, our sectors, business wealth accounts, management, our regional including of clients. largest banks, saw revenue and Revenues insurance revenues all big and services. growth three technology, services, and year-over-year. and including telecom banks, services Consumer in five industry continued and vertical healthcare double-digit verticals media financial experience and financial declined solid across industrials fintech to government Second, vertical,

and while Our experienced industrial for consumer and hospitality a prior-year result margins vertical, to Apex EBITDA were basis lower segment Circle margins. the consumer still Gross up including showing down utility and were staples Apex down. energy, at period, and however, year-over-year, COVID-XX. in the within and XX Apex over primarily Gross Systems XX%, retail, accounts, due strong e-commerce, transportation, points declines both maintained Circle permanent year-over-year Creative while of placement growth the Systems, airlines, Creative mix margins were as

growth returning the our consulting totaled grow commercial to quarter, to Apex third million continue $XXX.X Oxford we for revenues. and double-digit XX.X% for the combined segments work rates. Consulting Importantly, up year-over-year,

double-digits consulting up for the work and was prior-year strong period. pipeline over also Our remained

remain offering make provide our to will value consulting and our we so expect capabilities. continue We important we clients, high-end that our an source consulting bolster that acquisitions of

digital third in toward innovation proficiencies As healthcare from clients headquartered industry-leading to noted accelerating solutions transformation ideal an the in and transformation, to long-standing provides LeapFrog focuses methodologies previously, With umbrella, time, services broader enterprise-scale industries. acquired Under and expertise welcome providing time enterprise we the subject on digital digital a insurance and Apex during access consultancy services, Apex Massachusetts. Fortune LeapFrog, specialized the At and trend Boston, a for the LeapFrog quarter to business expands ASGN. XXX segment’s is and and relationships. client greater same now LeapFrog talent LeapFrog Apex an pool. the Apex to matter benefits financial

are joint marks work with While beginning of we anniversary just one-year our LeapFrog, our of our Intersys. acquisition October

been cloud work, strategy, to work their analytics, leveraging of the Apex securing agile multiple of on Intersys an Intersys amount and cloud With and increased have data addition clients able engagements contracts including new in for DevOps we bid partners. with our and

with near-shore Mexican Center. traction great seeing Development also Intersys’ are We

to the Mexican new combined was using both to and client’s cloud resources expand the data service one quarter, U.S. digitization and this provided warehouse. our data a client’s data Apex expand in provide cloud client We past expertise For enterprise architecture work team Intersys engaged governance initiative. customer digital and to roadmap execution engineering, for

We also gas engagement large this a and company part customer’s near-shore develop fueling a launched as go-to-market with app of global strategy. to a mobile very oil

Our work DevOps included Azure client’s design architecture. and the implementation on digital with platform, an consistent

a spend. an Department XX% imagery from networks opportunities is all COVID-XX and AI/ML business of technology and $X solutions artificial provides other another of analysis, ECS, million machine including X.X is million to The government, ECS’ we supply their in fiscal through range learning, civilian ECS the space. analytics ECS rapidly support XXXX. as the AI/ML X exceptional chain in assurance Security; primarily government’s systems; from government-wide industry-leading business intelligence Government to AI/ML remains Backlog awarded across support support segment well data book M&A. of Let’s revenues experienced projects business support across federal to year, This to the healthy FBI; of Similar $XXX.X quarter current and the with bill as increased or to The expansion and including growth customers pipeline third approximately new total and now to up to for to to provide end cloud, up federal turn of benefited $XXX.X sequentially space, new and government growth strong. Defense, presented agencies of in revenues $XXX million, previous analytics billion data revenue cyber intelligence of improved contract was achieved and was the analysis. the markets, the several AI/ML quarter. award for its the our a trailing management the contracts also government provide mission-critical won the wide or commercial intelligence domains third the strategic unclassified a acquire which ECS’ and agencies. increasing efforts. response the spending at to in logistics and Bloomberg to on full end ECS demand X.Xx a of learning ratio driven billion artificial revenue. QX spectrum and services. in an with the contracts FBI and $X.X intelligence quarter machine continue included by anticipating and information of Key supports the Department award and of year-over-year. coverage in software XX-month development to for third development the video DevOps, sentiment of to quarter Homeland

Skyris other complex acquisition community focused largest our and the Just Adding of one NGA is with further of data capabilities mission expertise advances is and programs we ECS' end, contract the science federal on providers we prime Skyris of on business customers is to and on several sensing expands range post and of the quarter a contractor to unit, technically the offer Skyris' announced unique NGA. Skyris. the missions. ECS' significant Agency relationship Geospatial-Intelligence which remote October joined and solutions civilian intelligence X, the National mission-critical ECS vehicles. solutions has and cutting-edge DoD,

and to win expect execute task geospatial as existing We as new past ECS' leverage capabilities on well performances orders to contracts. Skyris'

solid Oxford of permanent from and are their third Both segment, talent business for Oxford as their to the IT, in our life CyberCoders The up accounts more Oxford's Europe, $XXX.X talent Turning second clients and XXXX, and prior are XX.X% offerings sciences the X.X% of life confidence revenues year recovery quarter commercial own but in engineering our sequentially. recovery. gain seeing down and healthcare, our from U.S. up on-demand the Oxford well last million mid-market Across as IT, sciences offers as lows. Segment CyberCoders trending a placement through reported quarter for division. consulting engineering Oxford.

the a services evolve continues part Although of remains needs by with to CyberCoders' critical the rebound. on consulting market insulated continue ASGN's clients support to and as business, and The positive commercial the customers. express opportunities impending also IT commercial making of services even needs. small induced bookings our in I remain and their The solutions meet volatility election bullish ability our high-end placement sequential turnaround, is spurred market confidence market showed existing the to market COVID-XX permanent strong from a are business seeing our government to emerging ASGN. overall for the recession.

right expertise CFO, to now guidance our capabilities large with that customer the our industry in to the quarter We Pierce, said, and meet detail. turn to of have our to ready needs accounts. right fourth the quarter Ed over I'd and performance call With the diverse discuss third further like

Ed Pierce

well last our Thanks, revenue May level our Ted experienced sequentially. estimates just above and mentioned, Net also which commercial slightly were billion, Revenues for were afternoon, of up QX year-over-year trough financial up the our were the from all guidance quarter above revenues our income since by late year. sequentially. quarter. of and level quarterly Good X% adjusted EBITDA of solid driven of the our for is last everyone. $X QX up the Ted. growth highest in business all and was both revenues growth of federal government the performance divisions the high quarter

line and higher revenues Our of preceding were which revenues was XX.X% because on the adjusted and than accounted EBITDA our was margin XX.X%, Billable the quarter pandemic, estimates. of Day. guidance for in down quarter year-over-year Commercial with for the additional one total

growth under QX contract margin carries up preceding growth down due from which contracts, the than and expenses. our no profit, mix quarter million, markup. from last effective year driven a year-over-year was was stemming reflected, XX% high Blackstone with revenues are commercial accounted the down Billable revenues high of among government This interest a margins was However, improvement billable margin federal approximately changes up Federal, quarter. effects through to placement XX.X% expenses commercial government than X.X%, which Day XX.X% incentive up gross increased which lower revenue business. revenues in business certain Gross of by and the than factors, the certain to existing up of year higher permanent in XXX in units on including Net by expense a typically types. percent permanent improvement SG&A X.X% new was lower customer revenues were were which and decline for partially on gross operating the on of consulting contract year. offset commercial the expense. sequentially. expenses, passed lower this contribution basis was the cost The January The programs contribution from excludes of margin total revenues, volume the other decrease lower than business, SG&A federal revenues management volume year-over-year placement margin. reduction year-over-year our points in and lower due other high government $XX.X divisions revenues, sequential to the commercial of XX.X% by consultant of which our per margins slightly the This and have and acquired revenues things, higher for Federal reflected of of reimbursable lower was gross Gross for business, compensation basis, contract programs, on expense and year-over-year. awards income in the number revenues, year-over generated generally all

of ratio million, expenditures adjusted $X.X earlier, into Cash cash margin EBITDA included was and was capital XX investing the basis the of activities adjusted rate for above cash million As was our the mentioned and which X. the flow and senior was the XX.X%. to quarter sequentially. debt EBITDA mid-point free and facility, were were secured $XXX.X of Leapfrog million cash $XX.X to points used was Free $XXX.X credit estimates. flow conversion guidance related XX.X%, acquisition below X.XX million, ratio end, and leverage equivalents up under our outstanding no There $XX.X for allowable At million million. X, cash well revolving our was XX.X% maximum of also borrowings X.XX of $XXX

the fourth assume are We These our XXXX. materials, of are and earnings quarter quarter. on providing pandemic the which in Furthermore, affect markets production formal of for release. deterioration financial supplemental the and are guidance of our current serve. of worsening release in for forth estimates, based could the no earnings date Consequently, adversely as we are results trends any these estimates the set

our net to the $XXX quarter, estimates million million. and to income of million estimate of $XX.X adjusted $XXX million $XXX Regarding million, we financial revenues of for fourth $XX.X $XXX million EBITDA to

due low Our than per will in and down be be Billable being Day X.X assume digits Billable revenues single-digit to part sequentially estimates fewer low there up over QX. QX, Days single revenues we estimate will

up revenues For Billable revenues fewer because to our Billable will we X.X be commercial sequentially business, of the flat-to-down sequentially. and per Days, estimate X% Day X.X% our will be

in weeks trends not are experienced considered specific into production, we providing were and estimates. QX our have financial outlook in weekly details recent production first on continued the three Although weekly QX the and of

the above comparable. For high will our year-over-year slightly very growth expect despite XX% federal government we revenue be business, XXXX QX

time, to I spending fewer which and year turn million of previously over lower benefited growth of will you to Ted Relative there the this quarter fourth the from of for back on some government from was X.X in we will software and reimbursable have level because year, revenue Billable for quarter. the be high last cost XX% closing remarks. we quarter Days of third down a early Thank the $XX.X licenses. call the expected was estimate your of renewal in in contracts reported, revenues As revenues certain now Ted? over third spending for

Ted Hanson

Thanks, Ed.

the and for that the of positively government we year, foothold can marketplaces services. enter As scale solid quarter established ASGN commercial IT at has final federal a in the fourth say and I

companies look in new demand us the more customers consulting than This January they our cybersecurity acquired DHA, government and for acquired which vehicles. on months of the relationship Intersys, offerings. our of are clearly Our expanded and we XXXX, forward consulting capabilities growing customers in in to new we which feeling consistent are also provide than and technology FBI and M&A contract their From past, strategic to of Development that our capabilities, strengthened near-shore confident seeing acquire which need expanded ever big Department XXXX, October new an continue a high-end to stronger more data while beginning intelligence, will with Blackstone Security. at dynamic creates in favorable moving XXXX, we ASGN's perspective, we provides and continue before. the Mexican markets business or in with Federal, the commercial providing the a much Center. roadmaps with acquired of Homeland us footprint services.

offers our innovation, am LeapFrog geospatial position is and and digital a positioned is both remote to very success expertise ASGN trajectory the solid in most or strengthens many broadens business NGA. Skyris acquisitions, working with acquisitions, meeting recent Turning in internal cases that our new have in Through growth see on environment. to and pleased us our new our upward capabilities while this expectations. our I exceeding organic for continued we

continue for of We each advance for we to commercial government look and will prepared the today. provide remarks our our our appreciate company to want of fourth third concludes for That our IT of strengthen quarter. ways services and and quarter. Directors, our Board clients throughout a management employees of entire thank and the On I ASGN. all to behalf of your fabulous team continued support we

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

Operator

America. question. you. Bisbee proceed line of first from Instructions] your of with Gary Our Bank Please the Thank [Operator with question comes

Gary Bisbee

staffing how impact just commercial that activity are I recent maybe in if virus at and in it the no you on have strong businesses spike I any your point? instead assumes the guys, this could guidance, thinking with markets. about guess, gave Hey, very good afternoon, could you another and guess, start deterioration I quarter.

Ted Hanson

the thanks question. for Well, Gary,

we on at if yet that Europe, think cases what's haven't business of fairly seen there. remains steady we an new this impact look wave I in on going or

there. their see this expect We out change I weeks is or of seeing trend. in that our are didn't clients we ahead haven't know of just can continues And I but of trend our week that, how, I business, affect same that hopefully in few going. we behavior where performance, terms what seen tell may we're the our kind we'll since us carved you here, there that don't every if that in know here. Obviously, guidance

some or obviously are affected seen performance whether to business that small good so is struggling business they on still of degree areas, industries But footing. small we've percentage those areas, in things it's our federal government or it's affected large accounts, of still difficult. accounts, in still And COVID a the some and non-COVID although a is

Gary Bisbee

obviously, well. in And thanks. maybe the think, your wins. and I contracts Ed And as then how of been of about business? today the several attributed Can is existing driver in a little quarter existing some that meaningful significant or new as concept growth and a the you contracts? of that growth, talk the bit to over growth that Okay, there's ECS discussion driver in M&A things a time growth growth in of Is

Ted Hanson

you it Ed, the fiscal I'll want that the into the to numbers down the of break driven calendar here call Well, do comment of let spending saw break that, Gary? third the but you at well, if a government’s of contracts for was to want the heavy definitely, and year George down end numbers couple you then end quarter Sure. on some coming existing quarter. by our extra let as the we Ed in growth, look, for

Ed Pierce

were our program. QX. particular government’s saw going made largely spending about Ted mentioned be in you it comment existing and a sort release, Yes. was a where it's and basis, to on going that from I couple know coincided about, existing in of end sort say, that about in million. terms of And programs a growth mentioned we that coming our over that Look, you're spent, higher that in QX expect of increase as from, Gary, And the year. we with sort is let’s surge the $XX.X the think go-forward in there earnings we of of coming fiscal to the

right, revenue as in surge, that Now that the relates we exclude revenue the had to servers you from it if to growth, XX% quarter, for the still saw we growth quarter. the were

about with see to similar it So relates think you expect QX, those in And those of to we as kind contracts, it surge terms. don't from those a programs. then,

And so that's numbers. our all in contemplated

Gary Bisbee

Thank Great. you.

Operator

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

Jeff Silber

Thanks so much.

what color expect that appreciate You of how have spent acquisitions time in a us well. I'm seems a bit should they're up prepared something acquisitions the saying to like terms it. of continue? pace giving comments, It bit. you're And we trending multiples, deal as I and the in some on that do little your Is seem ramped also then to curious

Ted Hanson

acquisitions with part for industry building of set the spot we of in important Thanks mean, diversified portfolio are we're I question, have Yes. the these right across segments. Jeff. obviously, I – the a right a mean, account capabilities.

growth And up and chance M&A lot so that more better them work the these work, and into business, build or us with access is bring give to acquire we a customers. we a we our will, for if you opportunities of move we to going organically, capabilities better through whether value have them to real can the a chain

is? high the continue for is It's know, pace our out type kind I don't have things working will terms – and that So of of the pipeline. we're laid obviously bar kind we're in past. of the looking in like of for on a the companies always it you we've we

commercial the talk good of to we've can't the pace, here at. lot I So M&A had and but for marketplace a both things to the lately, been sector, and look government a it's quite in good

and we've or acquisitions to to be done what on the make again, that at it's we right we've As off believe reasonable are whether accretive multiples, here, some I because pretty, smaller, grand that's remarks. opportunities – go-to-market pretty you not things, here is able the the paying some they into having And adjusted good, will, double partners in prepared gotten in bat. EBITDA that synergy the it bring low important on we our revenue that of is approach think most EBITDA, our And capability relates to what's really revenues those and high the adjusted off. having in scheme but single EBITDA, been if business multiples, of mentioned things digits it's digits a new little

Jeff Silber

on helpful. great. you trending? the are it My easier from Okay, That's constraint bill-pay of in color talent? bit to can Is a how loosening follow-up, little supply us is a perspective, spreads talent give And – supply I'm just curious the this find is environment? up

Ted Hanson

So IT this about being tell not picture work. of would recession has that this unemployment out been I and talent you

I see So that. don't

I Rand, in will talk you there we've and a way. little change bit also you that about to what think seen great you bill-pay if see spreads. wanted a that about

Rand Blazer

IT is I recession a – for think workers. correctly, through you what we're said going this not it

fact put numbered one valued that And the get think, to work when people that the two up the in to steady So years. extent. that I industry, some for have some we've or that's we and of as units. around think our inch has had we preference, discipline And continued I you're the it's Bill-pay we been have these with. inside clients past though, spread, more you commercial to

it's think I as we steady go. So

Jeff Silber

Okay, appreciate the much. color. Thanks so

Operator

Truist. Sommer with Tobey your proceed Our with line question. question of next Please from the comes

Tobey Sommer

what from the or work could of growth customers sales maybe and or Thank comment goals, supply either reshoring in chains with if from consulting seeing you. medium as you – hearing your capabilities rethought. that, could area? context respect about And long-term from of let percentage wondering retooled you're delivery and or are you know and I profit nearshoring for was and us what the to

Ted Hanson

that? do talk Rand, about you to want

Rand Blazer

along Well, in all, $X billion business. all we a have want we it would we're say, I first business, to be that when of commented

our So double goal is grow continue consulting $X and to digits. get to it billion first to in

you path how on We've the of path. government on on ECS side, couple is that in fabulously we're gains great That's last see on that doing. side, the So the years. commercial made can

control there's customer that we're limiting response in better. say right reported answer U.S. nearshore, on. of going that Does it in don't with your to the I direct big as HX-Bs put personalized control closer line we’ve – building a the some where time scenario second a overseas these of zone. those the I it trend There to going trend and scrutiny mega market on. onshore bring are And that to a the think offshore, the in early sight say getting that, far to workforce, because quarter. there's customer, Toby? As I sight say better We workers as not, April see to back going still on certainly it, I'm assistance, it getting would a trend on react to discussions, of the I'm not here There of case Tobey, better in a that line virus But by can around are mega it's put teams, the back there influencers you timeframe. but basis. things continue American have think are question, you created direct some March, some in definitely it's was case

Tobey Sommer

you does. It demand choose see at direct scale, which the their staffing as on if alternative such competitor providers? Thanks. there a and trajectory And sales, of in existing as business put to is which at yourself staffing customers business to your able approaches to of a a $X for you’re follow-up, lines consulting consulting billion the point a

Rand Blazer

do want Ted, you me to take that?

Ted Hanson

Yes, Rand.

Rand Blazer

don’t so. I’ll think on. Tobey, then will start jump and I Ted

as consulting. amount let’s much staffing number. them of and on the companies, use X X than money The Fortune bigger population money is consulting a spend XXX number amount on staffing of

sure the don’t the think they’re or to looking that is points value. to saying, work is going new of think valued continue you our can mix going, add world match offering win staffing reputation quality earlier, a other. able side because account competence, for do value the which what I think win. valuable. we to said talk one excellence and are for. I And technical They’re technical we a and make value and consulting have solutions or good the capability we’re the they’re into roadmaps we pulling to of in relationships, Where particularly us are need once seeing and to and to clients you’re to add, trying as And And with those. I value we brought have them. have they’re price Ted deal think, looking we good requirements use and and there’s to willing get deep technologies relationship about muscle I a it, more, account having that and But these and these our our share that and digitization let’s around we’re certainly definitely But this. extremely clients.

Ted Hanson

client’s strategy, I execute said Rand directing and they work And end as Rand big fees asking, the day, traditional the stay I for the think And that. the design, markup in should think the – consulting their to customer said, as pay, I at most and in architecture the these firms instances. up is to want to and really don’t of

faster. consulting is to that have the $XX was And off and The here going is U.S. billion IT growing that’s probably not the other U.S. market a was $XXX on And IT like far it market more the but thing market. you too here billion in it’s staffing that, where

I services think a the consulting see be I just play of – firms. there will, of if big plenty in conflict staffing here there’s the don’t we there’d traditional I you the room And market. to that traditional versus provide around mean, So

Tobey Sommer

Thank you very much.

Operator

your Please comes Jefferies. proceed with from of Surinder next question. with Our Thind line question the

Surinder Thind

afternoon. of the Good is I fabulous side commercial on first guess, here the just Congratulations question quarter. business. on

but the in structural five on last to the look a about the follow-up conversations about terms can at coming this to how numbers question, are about that may you’re thinking talk way bit side? how current obviously be growing. consulting versus the a we top trying when of the the of about little staffing having as they’re maybe with unemployment down, And to So And the the color seem you’re we bit the numbers I’m unemployment the side on for there little think be environment. numbers, thinking clients demand outlook

one So maybe was there’s confidence, their increase or in a unemployment business some – preference to over the other, increasing. continue the for color if around model structural how if

Ted Hanson

Rand?

Rand Blazer

There’s Ted. needs. talk Well, there. their when of let a about of questions their talks in technology talks, if back all, me they problem or a first about, Thanks he go Yes. number and business say, client

to now And Creative place. commercial In Circle, the Oxford units and that’s is you’ve taking terms, consulting a they productivity can but doing surge of work out dialogue of the get a and workforce goes ability some the workforces, productivity us us from, conversation staff, you so and provided they’re and to Apex we’re or always than the in using. smaller management where do more? team quickly And and where see our lot back an expert as pull traditionally and

extension you And we of happened natural more can architectures workforce But client’s we we technology quickly the to call work that’s we’ve of and from the that that staffing. segments I see roadmaps, we a into the industry from together set, a into different roadmaps a of put have because insight company, in bank. So is, what digital need seen built got as what we retail call what’s hospital, management. dragged solution business our think XX side needs, from for them and we a

saying, dashboards up of the and to movement and support architect putting very movement or different we’re business, flow recoding, the business need of was at to And mean, to constructing harnessing world, the Accenture good may in lot order they client. to I capable for data be of assurance into around there’s of so things. roadmap. on clouds engaged healthcare recognized be we a get in their looking roadmaps, or a or And distributed now or clouds clouds done Ted the digital they’ve but those encoding even housing, the data which aspects get consistently. hybrid there’s revenue going of lot work of Quality those as stay

business of always So there’s needs. set a

And but skill, engaging those in work. not the in built digital transformation definitely up of area. technical are Some kinds modern as we’re some I them of enterprise are they winning and actually now call, – our as sexy, or we’ve dialogues more we’re what

structural particularly? you’re referring of are Surinder I terms employment, thinking. in not the In mean, headed I’m you I to [indiscernible] there, sure, guess, where what you’re

Surinder Thind

And seems they I to if of question about about we’re within I different now And of traditional of we’re environment. like the are we potentially – over if clients enter temporary but more to more is for layoffs, for view Boeing – growth increasing the side the things see was is we basis of the obviously is guess recessionary reasons, I two lot services. versus guys obviously layoff. into terms to tied? in mean, commercial I how on permanent just they’re guess, question, should go-forward how initially guess, heading a expect about the what into I other what demand are was you better? thinking beginning rates I layoffs. more hold what a look, different hearing recessionary maybe business the we we’re just one Disney, permanently environment mean, there’s more closely up a were type a opposite more that Or to it’s maybe was those genesis does

Rand Blazer

information Well, could. XX segments Ted, I in. eight Surinder, around work you the that’s and we we why if industries provide

transportation when California not the there’s those work. scenario because amount a were repeatedly like tied a that on factor, to the is are of or They’re a that business clients or We sectors clients. over and and negative have hospitality economy back in a quarters, in us gas said of of there’s clients spending couple definitely our for oil the growth the of our couple service some clients airline to last their the and the little can’t IT much got lot animal clients, people world you’ve shutdown working is overall Disney of not into travel it’s U.S. Disneyland, the okay. Boeing is go facing, probably just that that transportation and air there so the mean, different I

other banks, have those example, the technology in staff for that that banks, Microsoft, not continuing regional side, on in they’re cut back of do So to Apple, management, e-commerce, they’ve fact, banks, well. these industries, wealth some our very And Amazon, the using of if bank with Well, their us backs. automation transactions. that supports to replace are personalized Thanks. financial automation their for and branch base, they their better customer closed clients,

financial up requires Zelle if and of all it whatever. mention or PayPal you XXXX how or make customer it provide of get you capabilities, So using today that they’re the XX% better it can massaging easy those see digitally, And place to and at not data transactions where and to for running, to will be Venmo looked number use technology to maintain that customer or service. XX-some percent the in even that you took there

modernization businesses. as digitization from federal the remarks integrators Ted clearly all our the and and the see of from where hear industries side and in and government growing of the that were just our technology communication, So with you George and certainly the technology can financial services, working side, interest made, you some we’re big healthcare

I to of be past still are it’s be But base, their air there’s trying forever, little predictor world sure going things digitize which I think we a travel find to to automate, gets these do and oil to positives, not I’m ways until not digitize fit they’re about that talked that. where and their gas down, So change that in. down more long-term hard we – with going lot business COVID. to Ted? and they’re is I’m structurally But when inside, a have they’re their mean, of customer industries productive or bit a hospitality, relationship the to

Ted Hanson

is, firm third what large the and government with of large I portfolio diversification. this account right with which say, all services rest industry would a the of I sector Surinder I in commercial of sector, this the wrapped would is accounts agree the add it to the said, that around Rand value of with

IT so us. to And those that that are the clients in I need really are going from believe services

capabilities our don’t to with And that growing a meet We’re going see structural I forward. issue that.

Surinder Thind

Okay. helpful. That’s you. very Thank

Operator

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

Seth Weber

contract I’m business. the by sort think Hey that’s Is understand color the around the commentary way guys, there there see good any type? all the to the type ECS to around I revenue the any by the on disclosure about contract. afternoon. by composition trying the backlog? implications Appreciate of in Is contract margin. backlog

Ted Hanson

George, do one? want to you take that

George Wilson

as you breakdown, and we have, by backlog don’t the that are probably I of we a breakout can question, we in you would backlog, terms contracts there of – in what the Thanks say what of look of reflected sure. Seth. in backlog that. But terms as Yes, for mentioned the doing provide in generally there our general, different We contracts that at our you the three of of sort types percent provide types well. really see

Seth Weber

Okay.

it we a So that a the forward current should thinking how about dynamic be Is of going sort is representation margin then. fair accurate? of

Ed Pierce

and quarter Seth, plus don’t the in the a area that. up surge during cost one reflects the Seth, caused go definitely spike that quarter this

the equal be more material at and plus. fixed expected and cost you is what a the our price, looked if we think to of in contribution second in mix I quarter fourth common

Is delay better fair? a profile. And bit different gross that so little obviously that would margin a

George Wilson

Yes.

won to not want FBI the say that of And don’t and that’s quarter will those say, Homeland just I plus the areas. up. Security and folks You on pick contracts it. several and materials, all at the are time that recently have starting cost the to one And are also ramp in we

Seth Weber

degree accounts. I you the just the are better just across helpful. around Okay. seeing, And follow-up Apex. That’s of sequentially? sequential I retail versus top guess, performing appreciate branch to top Can the color whether improvement you. Or same talk to Thank then two? on accounts you’re

Ted Hanson

Rand, do you that? want take to

Rand Blazer

represent not Yes, our program Circle XX%, branch Yes, as about a Apex there not in Creative our and accounts business. the there accounts in top in of accounts. XX% is well. is top improvement put Remember top accounts. Oxford sequential We’ve

And mid-market typically not the of them that accounts sector Don’t that more smaller or this. – offices, general so smaller are given we’ve branch economy, are all but case, at In accounts, not there the that different are Apex of some, accounts top in of the accounts economy. the in sequential national in just service is stages three so seen like smaller most by two them our office branch of and mature, can deterioration one accounts. scope. themselves. we hit in some So, growth the it’s they’re But

Seth Weber

Right.

Okay. That’s good a guys. appreciate helpful. Have I it, very night.

Operator

Our next Kevin question Please Credit of your comes the Suisse. line McVeigh proceed with question. from with

Kevin McVeigh

for the out the Is extended way the there as we’re call results Great. or kind it as should which about holiday you’d Thanks. the just other, sure. looked guidance kind regardless. anything in of we guidance, or pretty way to thinking one obviously good about it Ted falls the nice any impact think relate of And holiday that here

Ted Hanson

Thanks, Kevin.

how sequentially Ed, coming fewer obviously and thought you to always when of we talk third So from can fourth, framework put have about it just the we that the days. the about guidance the together? you

Ed Pierce

with QX have to that days. it’s of Yes. last like fewer considered obviously sequentially, they’re the I available you and mean, going say same year, we you number compare days. When of

so, it. it’s And – did reflected already not Kevin we consider and it’s really

Ted Hanson

solid a to you’d billable sequential so basis, what it’s on look at growth fourth got quarter, day third there, worth. Kevin, it for if And anyway you’ve

Kevin McVeigh

I I the along XX. more Thursday was thinking Year’s Christmas lines of guess, kind the with New the on the on No, a and holiday

Ted Hanson

that. all it send can we Kevin, No,

Kevin McVeigh

Okay.

along it’s estate Okay. kind then benefit thinking flows anything that like use guess, I about some margin lines? – occupancy, you’re less cost about other that reinvest those into thoughts of maybe of even that thinking anything whether in on structural And T&E, the business, just, or post-COVID, any you’re the can real either kind

Ted Hanson

a which with of the While our travel billable don’t on have you’re – we margin So right? now, bit consultants expenses, less seeing obviously through pass side, and a have we markup. right that little gross

But from time of we’re travel, there’s less up right small pick healthcare. almost investing obviously business. benefiting kind same bit we’re lower there. a SG&A, the So our in a little inconsequential Within

that each or invested even current So account businesses of of where XXXX. opportunities to modest prepare a in amount ourselves our in one beyond support it’s for appropriate have head order count

there’s there’s pickup. there savings some some so, also and And

come the although the used expenses that we So not the into travel travel expenses I’m sure way that to, will business, healthcare some of there business. into will kind come will be

back kind to XX%, from here Kevin, EBITDA range our on here in objective up move margins if march of overall, and which from to all a still are the our XX.X% such, they confident. is think try to I stepped where still long-term range, XX% that, we’re I feel

get to going there. We’re

are going automation Some to contribute, our structure going but to little and other better these we’re things. through SG&A things also of do leveraging of a job

here. on focused we’re what really that’s So

move the to plan. long-term that Just those margin had profiles we our in

Kevin McVeigh

Super helpful. Thank you.

Operator

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

Tim Mulrooney

Yes. Good afternoon. Two questions here.

business, to grabbing As services additional share consulting as I’m piece of industries if some continues provided around commercial type your of work a could the account work? that or the a consulting types grow project larger types, wondering certain of share you are Are details outside ECS. there

Ted Hanson

talk to you to want that? do Rand, Sure.

Rand Blazer

I Yes. eight of our our report on operate five, financial will. it industrial sector, government sectors, but would strong it’s and tend come be But you healthcare consulting to the our services industries, suspect Consumer six fallen in well, say integrator business bit. – I was side our a off most of back. we remember stronger months, past will in consult these if we

other of we what certain natural of areas. earlier, is hasn’t technology, doing, the a are is a little extension the saying, so this doing? So I’ve mine. we’re the your little where base, competence, but I a doing is work less which client’s not one workforce management in think described and bit only telecommunications and that done kind we’re probably a than tech, What

it clients different defense the deal in me, excellence. technologies, through aerospace auto and industry to and You technologies. turned for it centers then run take the lot with developing we’ve manage of of those built of in different responsibility, for for a They’ve to or centers agile or in build productivity that’s Whether certain it’s throughput other us hit areas, specific also excellence manage teams teams over this it, for levels. or

digital we’ve kinds a getting roadmap. into transformation digital Now roadmap, the what call developed we we’re of services, where

whether the economy best have in We translating data where on harnessing capturing or areas. that different service. based they manifesting insight into apps customer mobile and in personalized more can the digitize business, their they of practices sectors think in correlating data that’s and different itself some It’s

redistribute need Some areas cases certain of it’s the on they key certain matter helping security cloud either for have around. them or to a that visibility

somebody businesses operate that’s What effectively are moving I a varies. of cloud we or the I there’s But that. of here using is not their they’re help What necessarily, today. that more even doing more a IBM it can structure than the architects in areas lot to that’s we mean, lot we’re can dashboards, like where Accenture into So data harnessed think is of dashboards help. do different things. them

Tim Mulrooney

Great.

I’ve offerings? detail. technologies to got you same along Has training for Okay. lines, are And another environment consultants. kind Thank all and one the more of but provide you focused if on focused you, areas which for Rand for that additional your created so, an they the opportunity to on? consultants new or

Rand Blazer

labor use of many at well. sorry, look I our as in Ted, – our Ted’s versed go if Well, is contingent deployment teams. consulting you mean, to all, to build our of first model ahead. this well

specific specialized the that industry cloud specialized technologies, a may So requirement the it rely and whether structure we while do experience, the now, methodology experience service or in in and or the and pulling we be has leadership workday, operational labor around on have in the dashboards. salesforce, contingent

bringing in overly So specialized. a and team workforce and very using industry train we that’s don’t because experienced very have our generally to we’re

of around highly and hot training We’ve other continuing way, certainly alluded in something to ago it people. around salesforce, salespeople, technology done national investment our done areas. A by is business. now extent, training And cybersecurity, that very have about some our a to service certain account the digital certainly and in digital certainly do as the we we a are as this Ted, ourselves Dashboard we and it – our well minute business, that. for consulting done around and technologies. ongoing for cloud, we Now, we technical our that around leaders for it do

experience We cloud ASGN information things dashboards the and consolidate across can building it support in doing that own networks. also around to our have our

So, we do expertise. have

out, which are will we on to University network, that We go a which pool is certain we’ll and specialized. have do in feel? have, a pick place. Talent Did contingent relying select that our you give with labor when we put and/or areas trained we’ll And help training us work that

Ted Hanson

us adding Remember technology never on workforce. industry they our with come expertise always mean, It’s there. for based inexperienced worth to want workforce business. their experience, I clients own

talent business, So kind we’re that’s way a that XXX% model around their providing other bringing about of a really units and part Apex And a the utilized time need the services our a worried just-in-time rate charge commercial is the And that bench and can in and to we on our we’re That very really work for and not fee our carrying not us. all around consulting of and basis. competitive. that’s utilization. about talent

model there. business of part that So the our really is differentiated

Tim Mulrooney

gentlemen. you, Thank Understood.

Operator

from the Mark W. Marcon comes of Our with question Please next proceed with line Robert your Baird. question.

Mark Marcon

Good afternoon, add let me everybody. my congratulations. And

perspective. thinking are current additions And your sort short-term on Just thinking with for of follow wondering, got I’ve George some a ups regards to you’re what and what head you count from about internal government. capacity

Ted Hanson

Okay.

we So Mark, I feel now more. do we mentioned I have mean, to right earlier, like like capacity

so our seeing performance. you’re in And that

we than adding modestly little are We but have will. don’t freeze on if maybe a you a we would do, typically less head to count

other we if have, obviously don’t serve, to are we then there if So work there talent, that. deploy where we that account are can to need opportunities opportunities that we’re adding

getting bit XXXX, of in count investment not a little regular today, head pace. our than for for a ready but So that little less but only

Mark Marcon

look mean, get what have? like I’m would trying incremental side excess through on I the we margins when then, the when of COVID? we other to And think you Great. how on on side just other say might truly the get much you commercial like capacity – the

Ted Hanson

mid, XX.X% on I just I’ll I of mean, the XX% call there difficult Well, times it our that part been obviously of that we’ve sustainable guide of we’ve EBITDA the pre-COVID that’s kind that think range kind margins back business. kind performing are in performed to you at in there Yes. I moving basis. and Mark, And a of would we’re say.

keep of George, had And you right for So, you I’d if you you kind a said. there will. question

Mark Marcon

does bit talk Yes. the we’ve seen Can are you? from you you that about right. impact What when the prior talk little implications election? – Assume sweeps? the polls a in George, that How can changes you have had

George Wilson

Mark. for Thanks question, Yes. the Sure.

a We mission changes if in that some we aisle. and going broad get and customers some And central get [indiscernible] shifts sweep have here, and policies support across political do have we’re seen pipelines to the we’ve such. obviously

So we could that’s are as high end we Denmore that dollars. something the classify That’s high-end where that in way R&D the really Republican. specialized focus not technologies. because where going the we’re or And stay applications, we you chase chase

we goes, be there’s And so impact our we know going any think significant to where to it programs. don’t

Mark Marcon

a from then And short-term… Great.

Ted Hanson

the that AI I migration, – you you and about support if things data going right? those too, the specialized, are to will, be across where long-term cloud mean, areas thing machine traffic Cybersecurity, are if one Mark, think in And budget government. and a have long-term we learning,

in. and be right there. staying disciplined that going we that areas is be to confident be going are those George feel think about to I And want we’re we really fairly So – to things

Mark Marcon

mix year how we software of we terms from had from think the perspective? really of short-term a very seasonality then And the perspective, a pass-through would that same expect about Or ago? that short-term a question. should in you – revenue as Great. Just sort is

Ted Hanson

George?

George Wilson

Yes.

will have got not provide pickups continued We surge will accomplish a But QX as continued as it pick in I We up in expect purchases. did also the necessarily we So forward, to not it – supplemental like this to technology it’s a had in we QX but is license like in moving our do to well seasonal. QX revenue. that’s our QX. log huge just technology that year and expect form missions last we’ve pass-through other

Mark Marcon

very Thank much. you Great.

Operator

hand the back for like no in further to the queue. remarks. I’d are There closing Hanson questions call to Mr.

Ted Hanson

today. fourth to XXXX. the talking you Great. thank being Well, And parts Everyone healthy. results for everyone I want about quarter call and to first of forward our the stay to we look in safe on

Operator

for this your participation. Thank does gentlemen, teleconference. you and Ladies conclude today’s

You time lines day. may have a at and disconnect wonderful your this

ASGN (ASGN) 28 Oct 202020 Q3 Earnings call transcript