ASGN - Earnings call transcript Q2 2021

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Operator

Hello and welcome to the ASGN Incorporated Second Quarter 2021 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to, Kimberly Esterkin, Managing Director at ADDO Investor Relations. Kimberly. ahead, go Please

Kimberly Esterkin

Rand Good Chief ASGN’s thank call. second Hanson, ECS; Executive are operator. George Apex us President Officer. Wilson, With for today Ted of Officer; Chief and for quarter Ed President President afternoon you, of you Systems; Pierce, and and joining me Blazer, Financial Thank XXXX 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 this uncertainties, Although filings. materially and any not risks those release these as in We results we Certain these believe on assume SEC call. press obligation from actual subject they in differ are could of to update our to today’s made do and statements. risks described and statements

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

Ted Hanson

standpoint. ASGN’s is the key market of all employees, XXXX such for earnings it and performance planned not the all post not the quarter that more. clients to ASGN demand initiatives execution our The is for very for as and Were and is acquisitions, both for our would capturing and to be our we contributing call. results. of second to able results and second strong, quarter, our strong client of and Thank incredible from share serving joining services you, the I you market demand progressing and Kimberly, reported strong am company is thank a report ASGN pleased growing,

improving of prior-year quarter, in Both business million, business. or our be Government Oxford the while realized XX.X%, revenues, driver continues our continuing our from announcement reporting As on will operations, in will segments, our above Federal announced of second million, of of performance. with Commercial consulting up Oxford, and of Segment’s EBITDA Commercial a quarter accounted Creative all also our of two guidance our guidance or today’s which divestiture Federal in of are the in the results to be range above the discuss today’s Segment of Segment, ECS high-end big business revised and our Government for operations. July, business speak $XXX.X two totaled overall operations consulting period. Pierce, regarding the which the million, pipeline you revenues. now CyberCoders, for segments, Systems, our represent will for of call. $XXX.X and range forth I Segment, at XX.X%, consolidated The for or the firing On cylinders. to we business. the and Ed and Apex CFO, year-over-year financial call, the set Commercial The top our stellar recall, these revenues beginning million our of Revenues consolidated Circle discontinued that our later we conjunction guidance the continuing the QX second Adjusted XX.X% for revised $XXX.X the consulting includes growth accounted came XX.X% $XXX.X Segment

X.X% was second business Government Federal line in performing also in quarter, Our the with expectations. up our

the totaled second generation flow $XX.X for to our In EBITDA, and remained million revenue addition and strong cash quarter. free solid

of the as stock. flow generation supports price back attractive view M&A behind the our buying we sale and growth, organic share Our repurchases. Oxford current We announcement us, stock market investments free cash in our and are in the with

announcement the approximately M&A and repurchases have common to $XX our do million being $XXX on deployed us shares have million plan. share from active not repurchase divestiture, Oxford $XXX preclude front. the the Following Share million we repurchase of remaining under

along ample Our acquisitions. to our with borrowing make cash capacity on hand to continue us enable

be consider if will additional While on taking balance we of would Oxford The to taking we are positioned continue on also current up leverage sheet capital. with debt. additional well needed, divestiture our without to free acquisitive

have the eight run beginning revenue with Since companies acquisition aggregate of strategy Our of rate approximately we annual an acquired is million. succeeding. XXXX, $XXX

It’s our XXXX. acquisitions This that revenues largest results of standalone intrinsic multiples. also of underlying a organic discontinued combining noteworthy the is It’s turn Commercial, can business, said, now is and as second from value our let’s services large With not we acquisition expected high presented the industry of the higher the contributes As report Oxford included expect segment, capabilities detail with across considering from beginning our the business, particularly their with multiple revenues on their the these and to we growth own. our verticals. just businesses will enterprises companies record segment to and which that for result XXX contribution achieve QX which when more margins quarter, operations. revenue performance that for synergies we of historical Fortune

up period, and Segment Circle high XXXX, year-over-year, Growth the Commercial just XX.X% e-commerce to and year-over-year continued both digits organically. were double grew and while grew operating XX.X% of sequentially, in XX.X% quarter, of verticals XX.X% single From Systems experienced & retail, $XXX.X For the compared CyberCoders their contributed as year-over-year and The of units also consulting our Circle improvement Services not second double-digit growth perspective, digits reported grew & Business the straight achieving Commercial as industry energy, quarter quarter but Segment respectively. industry and Each increase these over Apex million, Government improved all Creative Creative XXXX. this hospitality and revenue utilities growth. across significant prior-year revenues during up and to year-over-year sequential up all of industry business, well in on as staples, the due XX.X% revenue. second of five Industrial Commercial the sequentially generated quarter but the to with growth basis. and transportation. accounts consumer a of year-over-year commercial accounts fourth an CyberCoders strength

Our Telecommunications, or double vertical Technology TMT, and was up digits year-over-year.

Government QX in Systems points posted was accounts up Creative saw commercial Circle and CyberCoders were our with Both accounts the the rates units XXXX, from Circle with positive digits, achieved consulting their technology above, Business up also growth while up along higher productivity XXXX, Within in while increased retail and to top gross Wealth the in revenue growth account From for Creative with across year with rates over & all five Government accounts verticals an due Gross in mentioned branch double-digit accounts Banks, for we growth up over accounts Financial of XXX margins year-over-year. Services growth vertical, industry in Segment along flat digits at the top up industry the Commercial were margins were Defense prior while Regional Management business QX flat accounts and QX. was in margins XXXX. double workforce. significant & target, growth accounts the basis with Services up as our were EBITDA were bill second mid-single Services XX%, Business to quarter Aerospace year-over-year. the and FinTech accounts accounts. and perspective, business. Apex due higher associated telecommunications top

more Importantly, of performance reflective EBITDA were up a XXXX, to typical year. QX margins compared which is

a consulting significant our year-over-year, revenues million grow We also represents revenues growth. during commercial which of to increase continued XX.X% $XXX.X totaled quarter. second Consulting the of quarter, XX.X% the organic for

is demand the success an and This case growth bolstered resulted how doubling pipeline third entire acquisitions, Intersys, continues Mexican of of onset capabilities that of the from excellent has Mexican in business. Our the expertise have of grow in factors, capabilities Delivery book this these Center. combination acquisitions strength across broad-based in at near-shore trending is of success our in positively our industry for to consulting quarter. business Since our technical muscle of Center. resulted the of and businesses double-digit to have a of client the pandemic, rates spread domain we one commercial able of our the example of our The of size consulting near-shore demand, including been our high in and Delivery global business

and Speaking of for Business remains ASGN portfolio Avaap, Europe, we of acquisitions, in enhanced and second legacy quarter, Healthcare clients digital offerings significant service we the Unit’s in our modern solution, sectors. a the to capabilities employees the and to Infor our add the end enterprise Infor at integrator, for at upgrade Business Infor strengthening as cloud. of particularly of The offerings. the managed and and and manufacturing advisory of space, team the in & the the Industrials in expect capabilities healthcare their consulting opportunities healthcare to welcomed our Unit growing solutions including Commercial transformation, XXX the and roughly Segment, enterprise Consumer new forefront users of U.S. the

and capabilities, accelerate. enabling solutions of and cloud, us We transformation work modern to tie and in digital analytics of the innovation our strengthen data our together and As real-time an enterprise large our in digital strengthen many their customer in with revenues data as see updates. our we particular, clients’ cloud Work consulting is environment continue across increasing engagements, of to our Agile roadmaps. in amount and DevOps, implement component digital individual elements clients a their applications of support business support

software drivers of and the ability been build have and Our of management dashboards experience customer interfaces operations our business propel key to revenues. to internal

customers very in business, our is service and a of We of work our set which recovery to our diversified are bring piece build accounts, of have assigned. the value pleased commercial seen representative commitment every we to with

totaled agencies Federal civilian Revenues Government second million turn coverage ISM ratio and X.X of mission-critical Segment, remained in provides for and the Government $X.X Contract the The pipeline or ratio recent to impact Government with other now the billion year-over-year. up X.X% acquisitions book quarter, the of during the the X.X approximately Let’s Defense, the Federal Segment intelligence Growth XX-month strong, the at intelligence a services a of Government solutions artificial the for and learning and business the primarily segment’s quarter continued backlog healthy for Federal both Segment’s Federal and bill in to Department end which revenues. million $XXX.X the quarter to of due times Segment demand of machine X. was to high second also trailing second including totaled business Skyris. new awarded new $XXX to agencies.

pipelines on focuses we solutions Intelligence and introduces space for sustainment Segment, acquisitive awarded data data in Artificial the Laboratory three-year operations. intelligence feeds. the the the development in development, federal the new the of remain of mission areas Combatant were several government Similar quarter, going We activities from in and and This the and the work award contract to a DoD awarded from analytics Department Army enhancing also award forward. Command Commercial to support were be Research to and continue will a to During Defense. DoD’s we fielding

services IndraSoft Systems Just IndraSoft’s long-term consultants team of Information position consulting acquisition and the transformation Army IndraSoft, post an leading the with the high-growth deployment including ASGN of is digital we capital defense the as other footprint quarter, industry-leading solutions provider of acquire XXX agencies. acquisition IT announced and highly-skilled that of Defense ASGN’s Agency, our to the Government. another solutions. of Intelligence second example cybersecurity strategy deepens businesses provider The to key end customers, Air a Force, Federal of and

and Before discuss speaking quarter to CFO, second guidance. third Pierce, acquisition Ed? our Ed our quarter the I will strategy, over now the call to further results our about financial turn

Ed Pierce

Thanks, Ted. Good afternoon, everyone.

comments on since our commenting performance in financial last quarter, a will I changes for make financial the quarter. on few the Before our first reporting

that announced approximately month equates million, we income estimated Oxford $XXX As agreement into an which had taxes, entered business we of sell aware, are for proceeds, of million. $XXX to to most you our earlier of this net

revised pertains reported future our as found our historical also financial to are and results longer periods. decision periods, in we for that results operations. our continuing the our that are can historical This to Oxford earning have business only operations, a included but the to materials current report be not Consequently, in discontinued as divest website. operations. of but The included business on As to revised result results supplemental Oxford, historical discontinued no

as renamed Government Oxford the CyberCoders We our combined and been Federal to have the segment, division changed also segment renamed have with remove The Segment. reporting Apex the which Segment. ECS Segment, a we separate Commercial has Segment the have

our These above our growth guidance high-end and solid reflected As of the was performance Segment guidance. of Federal our and growth above estimates initial commented, results our for financial well Segment. Ted Commercial double-digit recently quarter the our the Government updated in

quarter, revenues grew not this XX.X% year-over-year adjusted business, year. and the revenues. include million, mentioned QX higher year QX of do both $XXX.X continuing operations, sequentially up at for X.X% rate the I For earlier, quarter up which, of were Net Oxford a and than EBITDA as and from over and income over last up the were

margin adjusted million, of and Our were basis points up year, of other EBITDA Revenues in Commercial improvement our Commercial expansion business XX.X% XX margin Segment. our of was reflecting, QX up in XX.X% among $XXX.X mix gross from last from things, Segment year-over-year.

one up number our million, including with up both guidance Revenues straight XX.X% our This year-over-year year-over-year on of fourth high-margin growth in past above marketing and cash estimates double-digit XX.X% growth Income incentive our guidance were historical was acquisition-related above year-over-year contribution businesses. our the operations of future sequentially. Gross growth of increase in high above estimates. million healthcare continuing approximately percentage year. our for margin million, of $XX.X Government million increased in $XXX.X and our continuing was and Adjusted $XXX.X EBITDA expenses, Segment EBITDA was updated support to SG&A flow business, acquisition-related up XX.X% into was of and with $XXX.X levels. Consistent we a was volume The Federal million by estimates. and quarter line expenses half $XX.X adjusted estimates and of were updated acquired operations in from year-over-year. for not QX which rate The expenses first contract quarter up higher adjusted the last in is X.XX of and At was with updated XX%, existing expenses guidance practice, our divisions include were our commercial basis down million awards year-over-year, cash XXXX for and line factors, were Free in to cash of at slightly X.X% expenses credit year-over-year, conversion Senior the the growth from ratio increase historical the equivalents end, conversion related year-over-year the free flow $X.X under XXXX. For quarter, million. the up revolving which and compensation do over driven creative There no the margin our of services. to consulting, certain XX SG&A headcount guidance by guidance placement million. cash our because were facility, and the EBITDA Debt and levels. estimates new both $XXX.X and were Secured points $XXX from up driven outstanding quarter the of leverage borrowings high-end from and was point programs, was X. from in all commercial

supplemental materials. earnings forth and release Our quarter set our financial are estimates the third for in

third of $XX.X to continuing $XXX billion $XXX adjusted For $X.XXX million of revenues to from quarter million, to operations the estimate of EBITDA $X.XXX and of billion, income $XX.X million. XXXX, million we

were of the the closing which X We XXX your in expenses sequentially. business. divisions to year-over-year COVID-XX. call SG&A estimating our support and remarks. will I’ll of are from curtailed Ted commercial growth over to Our approximately our headcount Thank other well operations of all Ted? for million, after-tax as increases last relates you $XXX on will both Oxford to increases the discontinued all is estimate and virtually to for year. from the mid-point implied We million in of up income business, time, turn be over range gain sale revenue some the to back XX.X% as estimates, rate due sequential At expected include the expenses for growth that QX

Ted Hanson

building place global Oxford and companies Thanks, acquired us freeing I Ed. of the not our which strategic to any and slowing soon. These of than high-margin capital government are consulting sell of successfully IT approximately focus for during point, our second the exciting up made have high-growth, ASGN, consolidated the commercial business, to more consulting commercial in in and bandwidth and services took Since on six ECS, $XXX.X totaled time markets. solutions diversified business times and and both Case XX.X% or a two-thirds million sharply at decision we a quarter. envision start XXXX, pandemic, the do both down business, including revenues management

follow Our high and is today. have margin, acquisition business value approach when Still, to in high work strategy, so to doing succeeding, even contributed M&A our remain it this higher approach which like to this toward and evolution we discuss acquisitions. I’d comes ourselves positioned bigger. we to a measured think to of has three-pronged growth,

new acquisition strategic first accretive annual margins companies us new prong The solutions by strategy this capabilities, provide in action. tuck-in is Each that demand and in growth acquisitions completed of since examples XXXX of six acquisitions our with in million the three-part sub-$XXX revenues high strategy contracts and rates or are beginning our new EBITDA making of of customers. with the we of

breadth generate than As by to-date made value rates it’s standalone acquisitions just add not we of the are we can their to The capabilities have our flow company, we higher the portfolio. acquire discontinued is also operations. expected it’s earlier, anticipated and leveraging value synergies across classified intrinsic I what the tuck-in to our revenue mentioned the now achieve growth higher as businesses of cash that our

to balance sheet tuck-in opportunities million are our larger the be solutions a revenue. Segments. think second than new addition, add rates capabilities Government the and greater Commercial of completion and contracts, and near Federal growth strategic of margins our of the prong or given at of accretive part scale, in as strategy completed $XXX In of also to new acquisitions first would strategy, we strength and developing new our the our sale, prong our Like Oxford

M&A of acquire and in our has current strategy are standalone and not revenues that would business which but than ASGN umbrella, offerings Finally, further, can example ECS XXXX, our to initial prong to our fulfill our over in generate of solutions, third to revenue our businesses strategy. one step that billion in is grown growth acquisition annual An with with that in approach which taking the adjacencies under quicker conflict be services IT the a our synergies much help $X long-term expectations. fit now

to in everything the path, our to days on services mission XX the done past continue supports leading and markets. we and make a strategic We to of solutions and government have be growth ground IT further our provider commercial

resurgence appropriate With strong of business the of for actions the our growth and we that our stability commercial now have growth business, confident ASGN position federal taken we government long-term sustainable are markets in and the to we the serve.

business Following expectations on that of ideal Day vision, the With is the Government and look now Oxford XX. of community said, the completion into believe we goals. our the long-term the our to re-segmentation September an time and forward investment divestiture update the Analyst to this Commercial and with acquisitions, a multiple share Virtual of Federal strategy Segments, and we reset hosting

your time On on ASGN. our be Analyst behalf entire our over This concludes Directors, of this and we Thank company today. again for your continued coming details weeks. announced this Additional the you for of appreciate support Board remarks prepared of Day afternoon. will

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

Operator

first today Thank Nolan from coming question be conducting session. Instructions] is you. We’ll from now Maggie Blair. [Operator Our William question-and-answer a

Your live. now line is

Maggie Nolan

increasing the the this the moved changes services the past, of large question, on all had sale mid-market the you. quarter. And this on strategic of accounts the performance from talked and Thank some at you’ve niche Congrats for good I of Oxford, with away kind side. small accounts. penetration a kind commercial and the focus high-level on of you’ve about in high-end here

that then how So share that talk any accounts are through key illustrate details And us assessing has at can you’re how potential penetration you you with high trended? accounts? can us there

Ted Hanson

also it a other were let as Well, I’ll Maggie, thanks in where serving had jump had providing competitive kind question. services. smaller noted, areas IT had and an it lot business, while accounts here. healthcare, all, And the we first me life and sciences, And things; these become, of of market Really with for really engineering, Rand Oxford practice. they really you the didn’t of middle

because And enterprise commercial so accounts, spenders both IT. in large the they’re we accounts largest believe gov on in and

Oxford Oxford about more would pyramid and quarter and commercial providing XXX rates in that more it value the here where do doing growth to consulting really on of our that? interest has we great focused here. And pulling I accounts. thought comfort our stay IT-focused of capital business. and was think and seen Rand, being higher-end our so to spend large and would some with that be but off a add and good us way you coming in strategy those do providing about best in than that services services, to things, with more by example, is. that And bulk kind work a go higher up larger the IT would areas be Fortune level really value because accounts this anything it It’s the to you’ve is is more They’ll staying of the with this great of accounts practicing. which invest that’s

Rand Blazer

And our of rate are top those at that growing that’s we accounts all think and as are I Ted good. No, mentioned. five top Maggie, a grow, accounts report across we our industries increasing penetration high-teens

many all as we and the we consulting work that how do relationship, well. expanding So growing and accounts top and deepening account at And base we those are not we the look only that’s pointing are what we are numbers upwards portfolio have with want. but

Maggie Nolan

Mexico obviously in the area a successful for and company. center been delivery the highlighted again, you then And great. Okay, that’s

talent curious, your on the the consulting a geographic for in IT your future and business kind plans what considering basis just go-forward are I’m current footprint So delivery of environment?

Ted Hanson

Rand?

Rand Blazer

account our I’ll focused Well, Maggie, start. very I base. we’re on think, look,

degree seen a step integration the DevOps for our center mentioned a applications, cloud in work, What we we’ve as And of has requirement, to it. We DevOps of development is, around so high of cloud, that dashboards. work. when the remarks, want lot to use systems, account particularly we’ve Mexican up base a

U.S. So that continue it’s we’re to is footprint timely our kind accounts in We work. that based Mexico. If acquired of years somewhere done for We more right are that. and And of work a have their ago servicing on their geographically, global what else on take account, U.S. focused just do and to accounts. of us and it’s the of initiatives, that seeing the we initiatives. specific crescendo us step expand some we’ll with a found say we biggest was We that strategic account couple good is there and to to them but specific would now U.S. some I importance that but accounts, very up a been of want accounts our our be very to base overseas, okay? we in support

this consulting at least our to, globalize point. at not practice, think, We’re not I trying

Maggie Nolan

Okay.

Rand Blazer

want add? you Ted, to

Ted Hanson

in time. here. say would which zone, time forth good is long good from maybe offshore Yes, great obviously been I think they that have and captive And a of here, in these great work I accounts collaboration well finish different lot benefits talent, was real-time winner workforces nearshore mean, same find large a communication, had put. back just a ways that, for has But I India Maggie, the with

prepared in And winning a in to the with there’s to real a think continue we’ve going invest I I offering, base. is and this it because mean, point, labor doubled so I you our great And workforce pool that we’re remarks, there. will, to if Rand’s client think

Maggie Nolan

Definitely a very hot market.

the for Rand, congrats. good and Ted So all Thanks to commentary, and hear.

Ted Hanson

Thanks.

Operator

you. Thank

from Bisbee coming of from is question Securities. Next Bank Gary America

live. now Your line is

Gary Bisbee

guys. Hey Good afternoon.

the have points maybe to easier. growth, just XX points You help consulting growth, right? comp than one, us ask, I So, was I XX the first to understand year-over-year the guess, more had percentage

than So more it. quarter don’t I lot because a more is sequentially, had of do XX%. a the Like, incrementally was than most And more QX. think nothing deal last think lot to it up was M&A that there with recent I

we So And couple like think what a step that such up? next up? step of in trajectory do the drove given big quarters how about

Ted Hanson

then it is will. pulling here Gary, to same second not things. the a us here about So, the revenues in the our into a I’ll the was as And Segment, if service hall in in This table the set is I’ll over pulling contribution turn remember, and had Commercial ability in years from existing is and the client And acquisitions the client you we just the Rand, first quarter – strategy across account. the of consultative new services This business. portfolio, walk pulling, together. and hiring relationships, to account decades have do new to we where already these but

on terms will, then, is set, this in synergies. the Rand, to revenue So table is work really for you’re if of mute. you And Rand, where it from? coming

Rand Blazer

in quarter lapped XXXX. performance strong let is also, only sorry. Gary, me past comment that not also this year-over-year, Yes, our but we’ve I’m

companies XXXX, against So in not but lapped performance it. report many have we

We’re doing better.

high We’re sector. digits XXXX growing the commercial single in against

and And built Ted a awareness are strong their mark. accounts and some solutions, look, fact worlds, of have LeapFrog ability the these Business we we a we’ve good analysis So that And intimate through solutions, just but their base now we engagements, staffing The the makes made organically that’s very DevOps, engagements. the the think How also then set a very have key of have have firm knowledge now and coupled that’s factors the capabilities, of we and of difference. I competitive we strong business Intersys, think but strong acquisitions what keynoted years I through areas of Infor strength solution doing these solution have in where growing strong step through diversified last to not accounts up with pretty really it, and these but enterprise consulting staff the only we I some, are. the a cloud, that to third, operating over some good not couple like Avaap. of data staff and it? think the ability

as well. us formula, grow helping a here. all think we I And working it’s good it’s it’s

our As then Ted that But good to staff. relationships position, a with work. penetrate insights we and it’s up matter work us this in are those put and executing to if the said, continue we have account trying existing of stepping and the

Gary Bisbee

then the follow-up business. Circle I gave faster on grew. the And business if you growth year-over-year the assignment for all Creative heard traditional rates they CyberCoders, XX% Great. and than a more Apex, just that were Ted,

on am growth can those Were us color not year-over-year what what Or So that give missing? you I business? rates?

Ted Hanson

Ed, growth can you address that one, on rates? the assignment

Rand Blazer

me component our you make Do up number. XX.X% real consulting overall sector low rate of a can. the in I quickly? and growth want comment commercial double-digit XX.X%, to staffing I Ted, Well, is think

of Did all that coupled us two XX.X% rate. Gary? give So answer a those your question, together that, growth

Gary Bisbee

I heard XX% up up Apex And Apex the XX%. CyberCoders thought up consulting Creative maybe includes in and that. XX%, I Well, Circle

assignment… the So

Ted Hanson

The it Yes, Yes. is. based Apex has on percent.

Gary Bisbee

right. All Okay.

slower that through that that going guess design? And And there is think, assignment is traditional. decline that what’s I so either to implies help so, Or I then, by traditional in at much any think sort Apex, growth if still color or right? on a of engagements

Ted Hanson

growth been the the track, it’s consistent, it’s I of SA business. can mean, mean, I the of if kind kind best I published few on We’ve better single-digit getting would of by on you a Gary. numbers. pre-COVID more high points in say part we it’s will, staffing rates,

and still said, that that you flavor the get number, we like we way a Creative, can for report assignment of here. is Now Apex, this so XX% CyberCoders Rand

that’s after whole consistent. we’re Look, going Gary. the market, fairly think I So

we’re perturbating one not So the other. over

both. accounts. from consulting if programs have access IT we’re we’re the they Or their of it, standpoint also programs, to obviously all of an large these And in staffing right? bundle We’re enterprise in

all this. So we’re at flying

cherry over what’s we’ve look, going of spot. because other, here I a got picking to not We’re difference that’s and really mean, make kind favorite a one the

number the in U.S. We’re marketplace, it what in doing that enables consulting. player we’re two staffing and IT

the of like harmony two together kind so in And work that.

Gary Bisbee

Thanks. right, fair Okay. All enough.

Operator

Thank you.

is coming Truist Our next from Sommer question Securities. Tobey today from

Your live. line now is

Tobey Sommer

And particularly new for you your segment level of delve if sort your M&A light in And reporting then curious strategy. maybe of a third third Is bit. represent talk of to the Thanks. company? thanks. a into prong larger about leverage prong? terms I in little could was the you comfort Could opportunities? if wonder I could that the those it

Ted Hanson

Yes.

was with are, and was they often So itself the smaller. that in commercial. They stand bit alone could government in our even there something that say although federal or could not would if was larger. It different conflict support marketplace I a be

its So the as reporting it’s acquisitions a segment. here. call we’re go not the I think much, And a last peers part question, is but we find Tobey, about to that own trying whether little the revenue right then technical mean mean, what your would to size, market. question? be, I do I serve that’s as of

Tobey Sommer

Comfort on sizable... do leverage because something if you

Ted Hanson

Yes, yes.

businesses. characteristics have times five to levered in to XX quickly look, So have to X.X leverage I EBITDA up the these of total within kind flow we, or and of able that debt XX X.X bring great months because past about free think below to of cash times total back to been the down

never add doing here don’t comfortable is think is we to a we’ve be required sitting sheet would I million. it’s In been past, $XXX this balance again, that. – with us. we, have position a going unique million divestiture, you, another I because on which net the for $XXX would the then So and tell

balance go have forward. So on here million about $XXX to $XXX we’re going as million to the sheet we

with But order just be would of kind to it. that that I take the in done we And going comfortable don’t it to get it’s leverage if believe things we’re looking did, totally so at.

Tobey Sommer

Okay.

AI about could talk veins at that budget sort might pertinent be learning, headline business? of to and what looking On mix out spending parsing relevant are? the We federal machine the your the with revenue struggle of then are growth a pertinent company’s spending exposure that on find rate often by side, sort levels a your the of of in you and sort estimation and that investors are most what federal to relevant spending

Ted Hanson

give Tobey, you, the of of mind some I something on it. the we top had Yes. mean, you see going your the to insights might tip Investor anything at if be Tobey, certainly that? Day. marketplace given George. George, to I’d mean, you, tell fine on held I that mean, fingers, that more best we feel as we’re for I

George Wilson

that you, and with Tobey, the that is fast the believe – in for budget analytics that AI. and I we also really thing only add The our would Yes. currents in our only question. of cyber, the cyber The the are do thank particularly thing solutions we then

in we that areas are very those our those of to acquisitions we’ll centers as spend feel So of we’re excellence, where that’s the continue focusing with with on confident about areas. all focus. well as and And our

Ted Hanson

Yes.

the weeks. Day So there, of in matter just best Tobey. we do spend We’ll of you kind to size and market of a when to the get Investor our a here give growing is

Tobey Sommer

ASGN of the then, you Great. We’ll you’re Do to the to of relative of of years. teaser. Curious And like stakes and think capability scale just leading assignment IT curious call consulting add besides are players sort you the of consulting that of market, drive couple doing about and consulting to the feel of the lot on this? evolution a traditional a for is solutions table services a I’m largest be rest whether having capability kind players in capability going the

Ted Hanson

good side business, part IT off desk. I the when decided it we things; integrated definitely believe you first-mover with here. question. not have second that Rand would separate don’t definitely were an got was Well, two Right. the And And this tell would a to build were staffing. of our the do a – and strategy mean, into of we we we this, I we I –

frame, put people engagements, place that We So successful knew consulting from world how risk manage to them included a we’ve completions. to together bid, manage, the put to how built the framework do to systems scope, in that. out who

off if got the of on kind we right so you foot, And will.

to desk, the see do or strong more and this, others that the have capabilities I’d muscle off we side things consulting, so their to really as call technical of do ability said. of And trying don’t all but I service staffing do up dress

will good will mean the market. and I bigger IT in the that others staffing this play do of be able yes, the a accounts. players to the in we’ve I there. this mean going Some think market, these which to But we’re from from surely this relationships are mean matters. everything. first it’s way done account area really what that’s I and being a mover benefit I ultimately, And is that

had we’ve them years for As I mentioned and before, decades.

to and trust have and And on willing a step for help certain up the them certain there the take key that’s solutions, and us we here. real this so clients to get additional responsibility and

Tobey Sommer

for with you on us outlook commercial perspective this Last news guess, rate Thanks. bill I particularly for is. side and around the give me. all data curious Could growth, some I’m your question your what inflation?

Ted Hanson

Yes.

I new not think this a it It’s part of will. market, Tobey.

would certain So for to will a and say, been for has wage our rates years and up but go I technical number, wouldn’t going continue I I bill up. in you mean and resources rates to years inflation point

would on And so we that our data see in a year-to-year typically basis.

know lot of widen kind that’s the bill margin which been say in pay And to one one bill can so But see rates able reported not last inflation. talk raise I period year. that but you of the And gross that we’re the long but highlight thing, a the and out right it’s wage a is margin And seeing the I only way now certainly time the over inflation between and rates but we’re norm. to appropriately, the in to us, able of of certainly, within point are profile margin. you spread I there’s of the about area a rates, we in for bill would our things wouldn’t it’s

Tobey Sommer

much. Thank you very

Operator

Thank you.

is today from question Silber Capital from Markets. coming BMO Jeff Next

Your line is now live.

Jeff Silber

Thanks much. so

both question. and external terms clients hearing supply just internally? follow-up to beyond your We’ve it to of the inflation the reading in issues it. tougher and for also resources finding you wage a aspect last labor obviously about Just been of Are people find

Ted Hanson

you want take to one? Rand, that do

Rand Blazer

I U.S. Jeff, corporate it’s IT high want long employment IT And it we’re it’s levels the I flip, a our well. but be time staffing think don’t for we two I America to what have as been that is very, continues Jeff, is, for time. a been business. very of increase. in IT long not tough spending the This Well, mean to profession. is This very number do some

matter And there’s the things of work people question, that us candidates. So of this, I demand. in that and today. so a takes It diligence with loyalty. it’s find lot with It’s some easy, database think where that them. the that to and that mean go us. employee It’s have work of this community, there’s a lot community, a building It’s teams those people a skills I have that past Does having staying of and the staying worked it’s mean of that building know in forecasting it. building it’s recruiting elements know pipeline of specialized CE us we contract of make into matter I not. Jeff? not answer a it ahead for just the it’s your and brand with

Jeff Silber

very actually That’s Yes. helpful.

as us second the doing acquisition companies question, market. tell a before to the days? thing. multiples these lot it what for acquisitive while, to other are same Obviously, been want but the to the has trending how Can you I of company of terms acquisition you over And pandemic? mentioned, shift In my there’s a compares

Ted Hanson

Yes.

be value the to pay business, remember, with going more add to get judgment if right the I believe are willing here, in we’re sometimes really done very acquisitions higher-growth, We’ve to look, So for these or because been multiple, our mean, don’t multiple the our below to providing but fortunate Jeff. it we we here. higher-margin could even think we’ve higher-value I services own I that customer. been businesses able mean, ultimate would the at that’s economic

stratospheric but than now, I even or customer to to in were our us. that and so here. stray And certainly own companies really good more we bit pay Multiples the mean, we’re return our as that multiple, the for are even really real below transformation a secret there’s getting reasonable right around a own if digital for for little work to we’re And value multiples base. that consultative sauce our that’s for capabilities providing really adding build are

Jeff Silber

color. right. much. Thanks All Really the appreciate so

Operator

you. Thank

Thind from coming is Jefferies. question Next from Surinder

is now Your live. line

Surinder Thind

afternoon. Good

through of Segment, Commercial part. for full-time use stuff? see to to little over do of versus your does question you where about those acquisitions, more sense that and ratio specifically, talk time? maybe the I delivery you contract there’s versus the about kind delivery more a As of bringing more of get guess, how in the And on on think full-time strategy does where the the of follow-up mix Can I contract it change? you’re kind mix, make of a adding the capabilities. staff a consulting employees? And to And kind terms that Just bit staff

Ted Hanson

Rand, Yes. take you that do to It’s one? question. good want a

Rand Blazer

watch go. I Surinder, Yes. we it as say, going to we’re would

XX-year we from can on our talent SMEs and leadership, and before tune bring But times. including labor team. internal industry it we the and contingent own couple increase internally. a we put all, a with We I had part increased know, acquisitions, certainly now, bit in the engagements in a we have as done – the lot work labor more it we XX-, blending running we want as I solutions. and here before arms businesses of solutions, made past over leadership be in want contingent these and framing in be do our on myself, our as of model the sometimes really do consulting We legs architecting I but people these have many our of to the don’t already ever to consulting history to of can say, done of well that in with have our here. would work that engagements. First the we will same come got talent has believe years as the

a a XXs have might we on it’s was I bench works. be the When the cases have I this. and digital on and the leads a some demand. the depending little contingent. we’re and some us to in consulting, KPMG we the back of enough do work, enterprise this didn’t would versus it and have and internal heavier know to So is I it in the more doing blend, I growing the transformation, to today, that to like enough solution, answer. And think get I’d have but this into that engagement, done contingent say requires running Certainly, right really blend modern as satisfy

Surinder Thind

of helpful. to, and a on clients there amount work And the guys larger from there meaningful stuff. penetration some color demand that Is some question the you then was and of related That’s existed good just do relationships business? any a about capacity? should is with those perhaps part have larger that that think consulting firms historically? subcontracting of the of Or small really the in how some Or may we

Ted Hanson

ahead. Yes, Rand, go

Rand Blazer

in guys, Yes, had big a we will, you the our client subcontractor haven’t to base. if to become

of different the For nature the blending and lot work smarter their a and with apportion most equipped together. them give and of teams work credit. part, the to teams today clients contracting depending beginning and are CIOs on do getting are it to best smarter and the the who’s

to that’s the not subcontractor vendors. future, path particularly Surinder. have near CIO with But the horizon, see software don’t a was always don’t being the exactly that alliance we for the there’s looking relationships, guys. of And anymore. Whether pursued in we big So that I on what a think do I

out and teams different they consultants. have the blend confidence sold based work ability the of expertise think the on I the and to

Surinder Thind

at million that Got of of you’re a are you about about it. in terms then are least $XXX in in about those think that there firms see? final And the that That’s seeing at guys in helpful. below issue there Or versus kind that just do earlier are the Or kind private of the terms the I valuation. a But valuations think marketplace? asked how million a you kind question of $XXX question what as stuff? is the you of you balance and what revenues, looking scaling that above

Ted Hanson

back command the maybe that that sides, for to multiples in in a multiple, would industry have mean, they And both it is the pay go you that, or growth just and because as be going it or technical willing their transformation right? out are have able say, not own work I multiple again, strategy side, great business I see rates, here industries. expertise, then getting been businesses But but if a and deploy services scale, able marketplace. higher greater a higher do, look, more on Surinder, we’re that has industry, us, develop could Well, of I that seen they maybe, we not whatever if sometimes, comprehensive we a which maybe to larger we’re have chops, our multiple. And less against the judge think to bring consulting commercial multiple account has paying aren’t business a digital just greater for flip lower you we’ve and we valuation against accounts, portfolio crack to on in and this, to capabilities but for and one the multiple, something is scale have kind that

Surinder Thind

That’s helpful.

so quarter. And and thank you congratulations a on great

Ted Hanson

you. Thank

Operator

you. Thank

today Marcon question coming next is Mark from Your from Baird.

Your line is now live.

Mark Marcon

about Hey, good and CyberCoders a if Circle. afternoon. talk Wondering you both could Creative bit little

You’ve growth. pre-COVID very sit relative like had sequentially, to now growth quarters those kind of strong did of four levels? year-over-year Where

Ted Hanson

Rand, do you want to take that one?

Rand Blazer

that them negative benchmark are to they’re They just you slightly both of against Yes. if XXXX, date. – Mark, QX

markets have growth, mechanics the key themselves They script guess, path. their a of both way through I over focus job Mark, going management all two do it’s the So in base. say same caught of they that business is Systems They’ve sequential They a done they’ve Apex their this, heck top-notch this. a the some portfolio broadened on. Circle, in Circle. got the years They’re team CyberCoders and great on account add Creative been and solution blending I’ll the pre-COVID, I’d in really some okay, adopted they following Creative almost has of that last really terms that. large a

on themselves They on I’d now for caught and say the definitely definitely good really they’re And path. same CyberCoders. that a So have path.

Mark Marcon

That’s hear. get think now, that mean on I big that Creative how they’re do Circle now great could you to path?

Rand Blazer

solutions, number, stronger the focused agency they but certainly ad should a pre-COVID. position accounts. And we and on think Mark, that were I work a they than forecasted don’t get set certainly work. narrower a up They COVID, of to even kind a really lot of during events but before creative COVID. And tripled a narrower particularly emphasized heavily and of of were set

out. to broaden had we’ve things so And

take beyond pre-COVID. So have better a I can it team management, stronger expect we structure that better and where it now was a management

Mark Marcon

great. And That’s used they in Okay. Circle to to Creative does margins where historically? compared gross how be the

Rand Blazer

I should going? keep Ted,

Ted Hanson

Yes.

Rand Blazer

below, where large I a think hair most mixed all in Apex, their but creative like much has hair of in the a the set and not creative are not team digital they’re Apex. of and I think, a But just around because that’s IT marketing their function. account, marketing driven difference, services below, creative is little they of of the more and different at portfolio. and services sense

margins, pretty have environment, the So they the in of and higher deterioration – margins really really different well, gross very enjoy their I held kind years. margins think, client over have treatment little

Mark Marcon

above they Are average? commercial the

Ted Hanson

Yes. They are, Mark.

Mark Marcon

organic? was of And that Apex Okay. on growth, then the XX.X% Great. how Systems, much

Rand Blazer

organic. was XX.X%

Mark Marcon

to to regards And like outlook the with confident looks are federal terrific. then upcoming the it how government, that? accelerating you and contracts the there think or how What’s regards should and That’s with of decelerating? Great. potentially terms improved. just And pace in renewals we book-to-bill about

Ted Hanson

numbers. assets in just not awards are we think I I parsed growth especially ECS growth he as continued dealing are Mark, guidance for we’re the here, XXXX gets don’t rates great for all on versus these But and look, Well, give of new had. who the with his contracts. the think here looking comps basis the gov. it gave commercial a Yes. forward in tough Ed for the place that fact don’t bookings, administration We ASGN, its the overseeing over

of extensions work. getting and get of five-year instead on awards work, beginning that this larger three- So on to we’re some

that quarters. I’ll that, giving well but out of for all numbers think here I So the portends kind future, without there for any stop the

Mark Marcon

about you’re the press well conflicts. strategic cyber regards think in what to federal portend of targeting increasing we I that terms day kind the And potentially shift of some of should Raytheon’s mean, terms other budgets to just just in Wouldn’t of issues after? how around the go a of installations. obviously, of given with able comments all and

Ted Hanson

those I of we would was, marketplace speaks in kind have the the where playing, with end-to-end fast and we to are in George’s cybersecurity. cybersecurity, we federal and robust that and sizable a agree around is around of think Look, you, very one currents comments and of offering

we I what could So at, would, I just leave agree would generally we think with it said. you

Mark Marcon

you. Thank Great.

Operator

of like further I’d Thank the We question-and-answer the Hanson end or back reached any comments. you. our Mr. to session. turn floor for over to closing

Ted Hanson

we here. Great. Day everyone spoken again, We’ve XX. more and you Well, speaking the again, few in to And of thank being look to you Analyst I twice thank the that future. our we support can now we’ll last with ASGN. Virtual September forward talk And you hope your make and for weeks, about for

Operator

It and webcast. teleconference does you. Thank conclude today’s

and you a your wonderful your disconnect may have line thank You this at time participation We for today. day.

ASGN (ASGN) 29 Jul 212021 Q2 Earnings call transcript