Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the ASGN Incorporated Second Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Kimberly Esterkin, VP, Investor Relations. you. Thank

begin. may You

Kimberly Esterkin

and Good ASGN's thank With second Chief Blazer, Ted operator. Financial us me for today Hanson, President, Rand Officer, for quarter Executive Perry, afternoon you, Chief you Officer. and joining are Marie Thank conference call.

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

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

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

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

Theodore Hanson

you call. thank and ASGN's Kim, XXXX joining earnings you Thank quarter second for

Before we the officially to welcome our ASGN today, Kim team. note we begin are I want to discussion that excited to

board As our closely work to with on happy new our her Vice President and have of are Investor Relations, to investors analysts. we

quarter. to let's So, the turn

discretionary revenues portions relation the was quarter saw our in and business, ranges. as the we midpoint for commercial performance anticipated. The our government our to particularly continued guidance throughout federal the cyclical XXXX slightly quarter, April second with our of to or grow results continued in expectations, countercyclical while of ASGN’s the in-line and consulting with ahead more above performance

revenues of above the XXXX were $X.X of our range. guidance billion Second midpoint quarter

the of a consolidated prior-year total up from higher-value consulting of our in based During consulting XX% revenues, growth high-end, work, of XX% the quarter, period. on revenues reached

Adjusted our above quarter sequentially improved XX%, EBITDA the to top-end the margin of range. for guidance

second high-margin, our seasonality model. management. typical moving Nevertheless, long-term and by our business As continue anticipated, was our effective the margin benefited our consulting discretionary from revenues, in in growth margin services. revenues more growth intact offset quarter, the in partially This remains we declining as consultative variable toward profile cost expense a more of structure, commercial we

With consolidated results, that I'd to on as segments. a our our to turn like background operating

performance, three we As be themes consistent segment review quarterly throughout. our will

for conditions more macro cyclical and our remained First, difficult discretionary services.

were continue our highlight to Second, of a businesses bookings the solid grow, quarter. and federal commercial and consulting

our Third, customer support cost market our strong provide cycles. base variable and business stabilizers, including throughout U.S.-focused and structure, diversified our

our performance. discuss let's segment So,

a Fortune with begin declined which I’ll year-over-year on companies. largest Commercial enterprises for revenues tough large the XXXX X.X% quarter Commercial, predominantly services comparison. our segment, and by Segment

from segment permanent As of more anticipated, the our our in in and strength along declines portions was marketing consulting services, benefited the discretionary IT of creative revenues digital business, by including certain staffing. which for with placement, offset areas

with roughly basis. quarter, nice of wins revenues Bookings commercial the quarter more work book-to-bill up the X.Xx million to of toward a during contribution of trailing XX bookings saw projects. project of the existing months Of we and won new heavily extensions, consulting renewals quarter, weighted on $XXX for increased approximately X.Xx and year-over-year XX% consulting were the XX% For a translated organically. a and

in now significantly XXXX. has workforce consulting part providing competitive growth, a Mexican at technical Intersys Center Center, usage when through we which Mexican of an capabilities seeing We've been remains of first Our larger our Delivery our strong Delivery our than important acquired rates. increased it acquisition

our our us helps the of the Commercial goals, execution the same supports while of clients' work Mexican to at and time cost Our our supports Delivery Segment expansion Center margins. respond reduction

of Industrial, Segment times saw macro second improved verticals in five In growth balance Commercial our was digits commercial quarter. challenging sectors. in Consumer Staple, our in growth downside. and growth the our & Provider Healthcare Utility to We of base vertical Industrial in industry-diversified industry was protection two conditions, our performance. provides single the and on and client fastest strong up with low growing also driven Consumer the vertical, by accounts. year-over-year Turning

grew In Financial digits, by sectors, offset Business in terms in Services Banks. both Wealth Management low and including year-over-year, in Services of TMT, Big decline double a in was were due to Technology, was & growth down Media, and technology double-digits declines, down Business down accounts Services. Telecommunications, pullback Defense & Government a with mid-single-digits Aerospace but and or certain telecommunications.

revenues, Even with AI to show our commercial become projects. growing has service across invest bookings areas work, Segment. particular, in in our strong these continue IT Commercial of our our consulting in that one decreases clients fastest

the & cloud, an Our foundations clients, generative cybersecurity, serve as revenues that to growth our very will our are enterprise In possible. we but taking revenue AI multi-layer still of by expectation AI small, that near supporting in there our roadmaps cases new term, fuel technologies and make are mature solutions usage adopted. and data ultimately technologies is more use market the these analytics are will so AI as

drive contract to a company customer their For communications to innovation in the quarter, looking enhance won instance, Fortune second support we product and AI/ML experience. an XXX

predictive the actions. of framework, suite of predictive data Our system its security. able then models on to client's responsiveness testing, model client's while to training and online designing, analysis By built a a ASGN was baseline its this team our a maintaining direct improve and conducted sales data customer

automate copying save developing media XXX client of engaged the a more to employees strategic focus action data tasks, employee plan on journey such facilitate By by also roadmap repetitive by a We tasks. provide enabling to were as towards forms, money prefilling company's Fortune plan time and our to automation. its and company and to a will

automates allocation. an In same June, our the help management. processes, own we project automating to that are insight with AI clients setup ASGN's we AgileGenius, work time AgileGenius manage At give GlideFast this are project internal Agile clients' our new ServiceNow and with launched IT key our using technology. to significantly with service integration will us and our to We projects speed anticipate of aspects increase added

now Segment Segment, agencies. Department solutions turn the by of sequentially. provides Iron Let's for community, up civilian the intelligence and our revenues acquisition, Federal our which up and primarily to federal Defense, were of mission-critical driven the to Federal Government year-over-year, the X.X% quarter X.X% were contribution Vine

was second backlog Contract coverage or trailing ratio at X.Xx a the revenues. $X.X the XX-month the end billion of of quarter, healthy segment's over

trailing of to New contract awards translates which X.Xx the X.Xx XX-months' quarter million, basis. approximately book-to-bill were and a for on $XXX a

is delays in start work. any experiencing to mission of and on due high our remains we are government new the the pullback projects, nature activity federal causing protest of While contracts not active critical

second we wins quarter, In cybersecurity, and saw demand solutions. our increased managed for cloud and the considerable ServiceNow

to Service. provide For instance, geospatial States contract modernization analytics re-compete the we United Postal to advanced won a digital

As part operational this of introducing while AI improve will costs. be contract, tools ECS that effectiveness, efficiency reducing and

IT We with secured and to the Navy safety two also U.S. center public provide network support one the another enterprise services. data its contracts, with FBI to project

Chief Security goals. customer contract digital our new modernization, awarded task architecture cloud, Technology Further, support Government classified AI/ML and Segment this Officer Homeland for an of Department under was won vehicle expand services. we ADAPTS open-source a Our intelligence to several to orders & Federal customer’s

qualifications online and capabilities for the artificial was capabilities new intelligence has latest AI years. AI, about We've to testing to solutions an ASGN key Procurement Federal Government From technologies built the providing player XXXX, to commercial will AI work number-one Data contractor spend active efforts with These in specifically the in-house bring many secure procurement, for provide System. Federal to for been needed according the to development, the Speaking XXXX government AI missions. in and ECS sensitive future. the us

that, to third XXXX discuss the Marie call and over turn With second results quarter the I'll quarter guidance. to our

Marie Perry

to Thanks, this with Ted. great It’s everyone speak afternoon.

with our results for expectations. in quarter were noted, As the line Ted our

revenues the of serving quarter withstanding, toward revenues of were down of That estimates, QX range. of were guidance growth end $X.X in X% comparison for difficult performance Second QX of year-over-year April XXXX. the with our on high heels basis than a XX% as another more our billion

from million, Revenues $XXX.X from revenue of streams, high-margin were million, commercial year-over-year. the Commercial year-over-year. Segment down Revenues X.X% XX.X% totaled consulting, our up our largest $XXX.X

million $XX.X year-over-year. GlideFast our consulting acquisition, grew from XX.X% revenues the contribution Excluding

offsetting digital as that marketing creative expected, assignment year-over-year was in portion in as staffing. services, consulting, the and period. said, a decline XX.X% growth predominantly prior-year With of placement As as a revenues IT this revenues, declined to compared discretionary well permanent more our our assignment

Government Federal were up year-over-year, $XX.X million our Segment X.X% Revenues Vine acquisition. from our including Iron million, contribution $XXX.X from a

a a including On mainly gross margins. the second The slightly commercial year-over-year our which was to related creative over basis and which down gross gross points in higher margin lower XX.X%, have gross margin basis, mix year. revenues, of of margins. was margin revenues Government placement last lower business mix quarter Segment, Federal marketing to XXX digital from than mix, higher of compression carry and consolidated Turning permanent revenues, a

margin XX.X%, year-over-year. digital and Federal margin to from programs. XX permanent higher Last Segment for was due margin priced a year more smaller also was firm points our points primarily certain fixed the XX Gross cyclical contribution for noted. creative basis Segment as XX.X%, year-over-year and Gross the Commercial Government basis down down discretionary from benefited marketing placement revenues

$X.X X.X% management incentive year-over-year compensation SG&A the SG&A planning expense second also million, expenses in integration, estimates. included guidance that lower expense. $XXX.X include in million not our do acquisition, for we down expenses strategic quarter and expenses were due and effective

related portion higher of interest half expected, rates. debt; acquisitions. which rising to to only was intangible impact our As debt is of below expense increased Amortization reminder, of interest fixed our recent rates as a over assets our at a due market year-over-year

adjusted our basis Income management, quarter sequentially was quarter consulting incentive million growth second compensation, continued expense margin end and XX%. improved range seasonality, surpassed and effective from million, points adjusted due was guidance to EBITDA $XXX.X was lower XXX business. the margin commercial our top typical EBITDA of $XX.X and EBITDA Adjusted for in operations continuing the

million, equivalents At quarter under and and $XXX $XX.X had availability million cash our we senior revolver. full cash end, were secured

$XXX.X second acquisitions. XX.X% the from XXXX. flow for the our availability Free strong of we free cash ample revolver, under totaled make powder full flow cash quarter quarter to generation With strategic dry up and have million,

share. the of million at $XX.X cash we per deployed shares average limited XXX,XXX an on of price $XX.XX the acquisition present, repurchase opportunities in Given on

to our guidance. Turning

estimates in financial are and is Vine. for also of materials. days Iron in which from than supplemental days the less release include third assume These the of XX.X XXXX. Billable and third revenues XXXX Our QX estimates forth anticipated Estimates in our X.X set fewer million period quarter earnings $XX.X than prior-year the quarter, Days X.XX

be services, in both assignment by includes to which Commercial We again consulting the in expect macro growth Segment. challenging Federal and Government Segment, offset for the conditions QX partially

commercial in changes in durations. stretching comparison, we year-over-year In project addition difficult to consulting of do work the the pace face

this billion as we for the of $X.XX revenues to With $X.XX background, quarter third are estimating billion.

to $XX.X net and million million We of are million estimating EBITDA adjusted $XXX million. of $XXX.X $XX.X income to

sustained We are support continued and a downside, more once softness while economy will seen to continue our permanent to year-over-year challenged, expecting margins we placement our and in to the the federal keep of meantime, leading important a In and to gross mix business economy more variable proactively expenses work creative our adjusted remains margin. digital leverage cost similar the It's mind, improves. indicator greater recent structure to while EBITDA marketing work. will historically have our manage rallies mix on trends, government the including in assignment due that decline

With these in efforts, adjusted believe QX. sustain achieved EBITDA we we can the margin

Thank back Ted to now for some the closing turn remarks. call you; I'll

Theodore Hanson

Marie. Thanks,

for As decision expectations. challenging, began. we and remain to higher-value conditions With our where are bring discussion efforts business but IT performing to services strategic consulting on us to solutions, our circle and evolving operations our to we want increasingly I our focus Macro conclude, shaping our full is high-end, success.

our stabilizers with will with ability those operating adapt drive forward. combined to stabilizers, resilient and clients’ to Our our evolve our and model, support going needs, business our performance

and committed ASGN growth development. As we current environment, remains achieving further to weather the

published have gauged by am Our only be annual ongoing performance; and our will that impact financial we Report. fourth also pleased it mind, we on we work. our which the live not to the ESG be by that in communities in note progress in demonstrated solid With will June I

ASGN's business, and part DNA. As of a are governance people environmental, social initiatives core

for since embarking made ESG entire to creating journey. continued our your great stakeholders. toward want to efforts more all for all thank our want also have our a for headway thank commitment future team sustainable of on this We of employees past our I quarter. reporting your I

evident is our results. and this You continued to put needs in first, clients’ our

call. quarter second again joining for you Thank our

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

Operator

you. Thank

We session. will question-and-answer be a Thank now Instructions] conducting [Operator you.

with Maggie is Please Our proceed. first William from Blair. question Nolan

Maggie Nolan

discretionary prepared difficult, your last you In when particularly to Marie. said current remains compare reported the the state macro you Can and for the environment remarks, you of Ted Hi, earnings? services.

Theodore Hanson

question, good Maggie. Well, Yes.

I kind May think results quarter saw in during April said and of and marketplace our prepared downturn, we our March you, remarks we the in tell at look that for you when June after pretty what we would billable steady – saw and play last a reported June per we us what revenues if was that following day.

Marie what expecting I commercial, there mentioned, federal. in in So our as offset with think more by is slight growth same a of weakness we're QX the guidance. in And in

quarter bookings first they can business our in even think than line very here, for clients but it's and when for bookings quarter, again, – in we if and and about I work or more last up extended the that I the how of sign month the very you'd think things anything in performing I new quarter. And look work. to months the you one And I mean, cautious. the you just two were, being just don't that add and commercial, their about jump will, at bottom that? their saw if the especially think I tell, of of you remain Rand, Rand let protecting careful wary, clients I'll in

Randolph Blazer

is that And second hit second the cautious I expect of out they the the a that Maggie, and it it think very thoughtful first where referring it of March. work And do little you in in what Ted it their seen And or quarter to stretch bookings pace. to say, throughout we it and work indicative in be the as terms started we've the I spend. new that Ted. dip late would see just client in the third. quarter about they're going to coming they're in in slower can all, current just quarter do

where I that. get think, we're that, we they're support and coming we from. seeing mean, I

cautious is think to So can the we word it. put best I

Theodore Hanson

think Center. a Maggie, our Yes. to Maybe Mexican in point, one have that data of we're mentioned is part Delivery a this And lower high of how remarks. do our more prepared that support technical skills and muscle And see point. in you in thinking comes it can a that price really utilization just operation, cost-effective other we great is do clients but it but about I seeing way. we continue work, And at I that

So first the the that's the and not in where were in third. of clearly very totally unlike you've – second coming but out quarter, it here we the into seen

Maggie Nolan

and are obviously be Thanks, respect. developments, heard also here it Okay. that in on your and the throughout some catalysts And understood remarks My Rand. notable I would follow-up one Ted there that prepared is AI some macro. and interesting a

all? out any you some Are interesting area assets that clients? So pipeline at help for think build catalyst M&A that capabilities looking could within with that given you in you seeing a do to context, are already become that, you the traction that at

Theodore Hanson

Yes. take want you Rand, that? do to

Randolph Blazer

work today We Well, I screen is technologies. from is ServiceNow, They're hear your I think Microsoft and to you companies, thing on question and only our the a definitely tech have lot technologies the in like radar discount the key would answer Snowflake, Amazon AI Maggie, And don't cloud all say capabilities. yes. the cloud.

You you good a of unless can't data. AI have set have

and analysis of as middle for the is data, And it innings still still, quarters, and so then one we've said put the data. what data. data, to just the a having ability predictions that cloud and the Otherwise, number in not that harness place AI trend having your crappy data, based good making call in data, it's predictions other purifying I is on of the of

the and so. future? still piece, which we work cases We is Ted look our data our So this in real bookings it's had quarters. more the said for than the at you use of work, on expect our second the if And remarks, as our I a goes point. combination quarter bookings, AI. But well between foundation it mentioned, strength the cloud think previous we've service the propellant probably as in a AI at for it's three had we And

Maggie Nolan

you. Thank

Operator

Thank you.

with Capital is Our from Please next question Jeff BMO Markets. Silber proceed.

Jeffrey Silber

something remarks, so mentioned little that much. color? project Is the seeing get bit prepared business. now? Thank on stretching didn't that In in that we the work you something you're your just you you the about a change see pace more last quarter durations, of specifically consulting Can

Theodore Hanson

in we've to it bit rate. burn a – lower seen not in maybe to And right? their have little way for think them affects burn done so with rates the it long as stick more, look, I the we're three in is I stick with slightly way it. doesn't months, a a in slower. in the Jeff, this seeing obviously, run, things, they'll little, short It's that to next say, and done revenues our clients think months, the look, spend get run, the that And say can but run, less, to said but are it, best our short be allows next the six

for bit a Do to start? little expense. I done, it do again, different ways to which in to what them Do they something all about if will? longer way wait you work deployment maybe? they clients manage optimize that little tools ends do a burn they we slower, ago, goes spend the think And a they do to up they a model access, their start I spoke is when being that, that try to where to it their second for are So when back things do just looking think them at there's have

Jeffrey Silber

with where has do own just are changes? Are follow-up really internal adding? I'm the to That's you curious a on just net basis, And so, helpful. Okay. subtracting? headcount. your are you if My

Theodore Hanson

Yes.

numbers, don't attrition always can our headcount I give of discuss part which that you you we stabilizers but model. color of is a inside business our to letting release a We business. So work, natural just of around it, tell we're part the our as

down get our where rates out that on some and letting it's we're are. other that, natural opportunity, we So work. we're coming behind back further there's what based and investing where our until trending in attrition naturally on that we In areas are just think headcounts areas a return attrition

net So some down, addressing trending this. and are but require on we're there basis, that investment, a areas we're

Jeffrey Silber

much. so Thanks Okay.

Operator

Thank you.

Our next proceed. question Securities. is Please Truist from Tobey Sommer with

Tobey Sommer

into I for maybe wanted and know one question book-to-bill is Thanks. below ask talked like about to you a to to spur need kind I feel Do a But bids take that you're not pinned which where getting do we've ECS, a a of submitted and is stubbornly quickly. protests to at something more point yet adjudicated about you the positive some differently to while. measures direction? try –

Theodore Hanson

Yes. is it's target X.X, have development a Tobey, would sure, I Well, low our above that's you. of and I book-to-bill with stubbornly activities. been just and kind business for in investments, look, mean our think agree We're we capture to making here.

more the area We're in going think where definitely street. the that's on to help getting I us an it's bids out future.

on bids we here that pretty work more quarter ever of that's got is end to into work. for we're and X.X, front that. a We've have quarter the And I those better than a We conversion with we one this substantially of hope had, one positive. seeing need which at build bid out above now we've on think

the We're So one. book-to-bill for we way. see it would a above same shooting that's we –

Tobey Sommer

to number more some in to changes for a investments dimensions? way bids? sense quantify increased across of the us magnitude the put added that give flesh you Any of of order Could those around the

Theodore Hanson

capture at a Well, added organic work. today. mechanism. in we more I revenues, bid is of business great what mean, bigger I Tobey, a it over that, takes and in bid acquisitions. had to to XXXX. growth. pieces mean, $X million bigger sophisticated $XXX bought it probably, ECS I billion some do say Today, we We've would And on business It's have a was when

so And priority, It's investment that's is number if that business our one in going. you where our will.

And bids more in being marketplace that and work the putting to and bigger starts able to those. qualified with close so then

Tobey Sommer

consulting And seeing as you dollar book-to-bill, what then in projects difference ones? smaller of Is if space, hearing of if the sizes? think million it there How any up characterize would about pick or commercial Okay. think you're and mid-single-digit versus customers? and sort what project you're a demand million your larger from of you low-single-digit you within bifurcate value maybe in

Theodore Hanson

want you do that to one? take Rand,

Randolph Blazer

you the quarters, every Yes. if at over things into the quarter, are and There's figures. a seven bit. move book no in question, even well now recent look time we they the up And

But getting and more contribute comfortable most about a is can think work XX-month that we where longer for of work of and duration clients think work do and a out period book with extending I I still work. confident we time. our the

But go, bookings, quarter, little So I of work Tobey. work, it less work this gets generally some is is lot past larger of will, turning of in A new featured, you little had we work not a our like quarters. we in as if which when forward, move carry-forward, it the existing a that you the Ted lot a think have expansion. existing existing previous in over,

Tobey Sommer

question, me. last And just for a one

say new just the a to is Was reticence around more quarter-to-quarter you not that is glean being a work the bounce the Or And change? – a a reflective little and of much more that did change? renewals. in would from surprise that something smaller On customer? that a and at represent

Randolph Blazer

going, Tobey, their does clients. but a part I around around work reflects little some of say Well, that existing our you it is relative of come a bit in. Ted, think cautiousness it bounce quarter-to-quarter new, XX-XX split take playbook. first I'll a between at the and then it can Keeping shot I stretching and out

moves well. to employment judicious or when start Not some to to going be IT their with going And move. happens, work, data, protect earnings earnings, if spend can that. New to with very is it. they're said with they take about going they're to they're stretch steps as We've always they're about there that It work, earnings. new, And okay? out cautious has have to being

went unanticipated So XX-XX to this as I don't Ted by Tobey, more think surprise. us a other, would one recent it's another, of to that close it be or it's not the way reflective alarming, nature client each spending of most cautious in If But quarter. in proximity when as a commented on.

Tobey Sommer

Thank you.

Operator

Thank you.

Our America. next Balsky Bank question Heather is from with of Please proceed.

Heather Balsky

Thank taking guess I question. first I Hi. consulting the business. wanted about to for my you ask

You burn consulting trade spoke in any any shifting Thanks. extending firms business? it's you're down your of from type projects? in business, to in bigger change I'm rate. earlier the if about the reflecting, are demand whether consulting And seeing curious some of seeing you behavior your for the other

Theodore Hanson

Rand, do you want to take that?

Randolph Blazer

Well, I'll start.

which view work. being the is data, commented more matter in. protecting around work seeing as we've stretch ongoing to some data of structures own We're and work prudent slight and pointed work, just being that added out. current is but out and point a new AIs, we've of a of still Most of believe. nice Not modification work and the and work work new the existing where a think around of their a Heather. new and little from own that's work extension on and I The much that amount foundations bit a bit, bookings of their earnings, believe, I now we this little around a client business

know ourselves, our back and on their to know than modernize and anything that that cut you'd don't business. new dealing new support own doing path out got a even spending, we've right IT our with framework anticipate support away technologies tried I going. we've we're still – other in what we're mean, trying business. gone to haven't there's look of we our I until forward at not IT we but And company something

or your Did any expect. would that I question don't think we So or than they're answer different help that respond? behaving we

Heather Balsky

Yes. know new really changes you. Yes, another which and was But and early curious, technology, very question, AI the AI And of opportunity talked hand. days. at you sort the I and that about generative helpful. when you and I'm question, follow-up Thank opportunities AI is in think of it's

the all of spending to on within other markets? we've that, could get sense TAM how think the technology. for relative Do trying TAM talked some happen see to you about perspective And in some to of or type compared Do the cloud that the expanding a of invest you size been I your end you of need that much TAM cloud? that capabilities. you the have

Randolph Blazer

start. Ted, I'll start we

start? want You me to

Theodore Hanson

Go yes. Yes. and ahead. Yes, yes

Randolph Blazer

to We think, the analytics, first going more data There's more spend that's growing. cloud, thing. foundation AI be of that the all, of there'll that's data world, are definitely be spend intelligence, in in business sort because use cases

That seen experience. of first. be are about customer we've in seems to talking the mentioned what the use some we've In fact, cases the

we a and that cases kind getting – some priority. But about us that way, It's are by I what bit Gartner aren't this. a maybe call talked to little to use there counterintuitive of other the

be around as focused the operational management well highlight they the to tend Use of think control would customer as experience business. thing. I cases same the

So do There's we spend? are companies. of reramping think processing a lot a better there lot technology the existing and and of beginning AI major for in this platforms data. archiving big in is of about their retrieving Even AI talk supporting companies the investments and it. a the out technology There's

moment taken market of up the say x in these I do have addressable dollars. spend a think more total a billions we lot areas, has gone So to there's

existing for customers, it We of our in our of supply power data all to chains have to the not ability done major support manage that to businesses. community yet. our us our But proactively a there's that no it's business harness the and question use and opportunity

the year a back investment boom, XK than a it more much was So And a right? it than was in there's return investment. measurable 'XXs there more on when on that's return preservation

think we have? Ted, are. the same do I you reading probably So you're articles

Theodore Hanson

here upfront, what growth to bit I it I off situation you factor, AI pent-up are that and And just in into further a And think return demand of said clients on foundational little in but a a the is going economic spending ready lot we're whatever get just work this also of invest I this, in get before really be we spending there's get think until in really IT. a in terms kind here. to sure, right would deploy ready these all capabilities. get which for to maybe of here a for that as they holding echo

Randolph Blazer

Heather and one Can Ted? thing I mention more

Heather Balsky

Yes.

Randolph Blazer

call maps. maps. we think through how and really are, the We AI They've modified they AI use digital client now road what helping what the road developed been reflect potentially used have would good cases to support through We've there's to around to the think go the what think fact technologies clients And trying emerging it that And also I are with and that discussion our about clients. this. that. are to

some And tools technology just coming the remember, are being now of out. revamped,

have help and discussion road Sometimes on, our clients it. maps there's price to going that us they and of our lot tags on on how of a even our and on at action talk But about lot it. don't least technology a to use team

Heather Balsky

AI. about companies on say, hearing to talk going the Yes. I some spend was of we we're the cover increasing

Some have specific. been set budget, have some less

how it's you. big Thank just perspective this be. opportunity on to interesting get an some So of could

Operator

Thank you.

Our next proceed. Please UBS. with Josh question is Chan from

Joshua Chan

than ask SG&A your revenue like It looks looks I Hi, it this quarter, wanted continue Thanks SG&A. more to on margin which declined one taking helped QX. for may into that and really good my afternoon. like questions.

some give line just on So what's a bit color helping you wondering the you if push lower SG&A here? can

Marie Perry

Josh. Yes. Hi,

stabilizers SG&A an our perspective, from business work. So it's at really

management So of SG&A incentive at XX.X%, a for ending lower combination a and comp. expense on really QX, we're cash

And our also model softens, our stabilizers business so variable revenue as that about of talked component that the we as flexes well.

Joshua Chan

Okay. for things. then guess there. of healthy two but GlideFast for a what like still guess is the was on Thanks very sort reconcile you is bookings, I seems of color those And macro the trying booking I you I this that I to cautious? know up the that contrast just in there, quarter. consulting kind pretty it's narrative could with

Theodore Hanson

and mean work. little said it around around edges, But came I things we've nothing bit more more a like quarter, extensions say a here think the would just it do few than were time. said, that renewals I and through Josh. ratably didn't in Again, Yes. moves some that come if different, signal vary. Rand maybe But just dramatically new a kind of cautiousness can they from the that's every June, bookings quarter, I of clients. incremental

right? We And not continue at model. a to from little we're IT the things to bit I contract big for IT traditional wants a it deployment, than – a projects, get our great great work, staffing different perspective client our to come look, firms. continue we're We done, a option, stop who think use consulting

and effective because right We for coming our quickly the not the up to teams get fit the capability, it, industry technical are in experience cost mixed the with together strength client bench. off custom it's job right delivery people center those ends done. that the So we've a outcome and can with very great because put and got our technologies being Mexican

I So CTOs things CIOs they like with directors a in option having for who and and that we're they also times these, stick expense, the about need motion. the are IT to great to but have think in worry know

Joshua Chan

Thanks time. and Okay. Thanks Great. Marie. for the color, Ted for Yes. your

Operator

Thank you.

Please is Our with McVeigh from next proceed. question Kevin Credit Suisse.

Kevin McVeigh

a much. of calls. so I had And Thanks couple Great.

EBITDA, bit, like million EPS was the this, in it to you looks the maybe us, that is the relative looks But revenue Or little to answered is help the And like in maybe that where that can if and EBITDA advance. if than $XX it with Street. we help the the the the better from us apologize guidance so, as QX, bit start well? impact the So looks the you was that additive and the EBITDA guidance that maybe it? then million or already? leverage? you what $XX a then a could of Is expense acquisition, I some little understand can And revenue

Theodore Hanson

take the first. I'll So

our by somewhere slightly within the – down federal, And if the would commercial that day ranges in right? you. you're what sequentially basis of is a what the billable in X% third you things, carry side to through kind quarter So were up both on revenue slightly growth Kevin, continued offset to is softness of ways on seeing, in give

is stabilizers business stabilizers Our so are working, expense down. our profile and

quarter, go here it's we in and acquisition and the our contribution EBITDA QX gross acquisitions, you good target XX% give think these level. And into every margin is second as the levels we we forward the saw on that at margin based we on topline carries a and so gave range the expected right? guide kind we Marie, that we the what of that guidance sustainable here

Marie Perry

Correct.

Kevin McVeigh

So that's new a That’s… not deal.

Theodore Hanson

deal not the that's a in built new guidance. That's

We acquisition. GlideFast have lapped the

the was that done So Xst July of the in year. at prior

quarter. So we October quarter still a on was organic We're we the reporting space numbers. our that go the in of now in Iron the federal cybersecurity that. bought last not we third have that which It's Vine, to here in year. And capability in lapped

acquisition there last quarter number get the from is the Vine. so And of you Iron

Kevin McVeigh

caution that they've some like trending of don't to how think back how client know to is trying if internal And they of the Or sense in phasing, about terms come maybe kind right of Any the – to utilization? the that I word, been should your of point, Terrific. this we conversations, is guess? then around? manage but market? the I Is

Theodore Hanson

consistent. mostly conversations client Rand,

Randolph Blazer

history. helped in Yes. account continue mean, that's which that there. we is conversations footprint client and are mean, I'm keep consulting in our had long national other and we're yes, in not a talking been I very staffing we as us out investment always is we've That's your have of deteriorate. question many with let managers around And and Kevin, of to our part have directors the but the one not XX-year those we significant world, marketplace and the And mean, I we our not them. base. account well build about IT to conversations – services businesses, more we've as or I ongoing conversations, we're sure, enough strengths willing

you conversations the and what AI cases with lot about the towards are of map road map, place. what foundational moving be and the the now in to have Some a And potentially we done call put that it. it's pieces this can use new road

to – they're early be the not sectors, that adopters Remember are to of going not it. at companies some also, technology. of it's Fortune they're quick In get XXX not

The growing enough tend it's early be we're in adopters are banks. So now sectors. companies adopters later to those interesting right health that's care. with two that technology the consumer And industrial and where

or that or they So I protect to are worried Most own spend the cautious depending though, not. to internal aptitude or a our varies part cautious what clients have call Was whether earnings were their you there on more prudently second that the would clients they're team? question, conversation about or of cautious.

Kevin McVeigh

Are are manage not environment of a is capacity. just the internal to kind necessarily, where Rand, they they their some just is? internal start they where internal, of point use again? managing capacity, macro No, of at still kind the that clients consultants given Or

Randolph Blazer

the with in gets don't is relatively business percent out. but you Ted, definitely earnings placement a – our as comment, the territory. news Ted. make have really IT same I'll getting is can reports staffing come staffing small, revenue is companies companies say I know, perm hit I as good perm the mean, is negative some the gotten a we're getting – And where placement, placement our of would that, And reports then quarter I down. definitely our perm in, and But you're jump

of now are it losing quarter. another a the add of these more is is new because business of going little they're to momentum let's and bit where of getting see is some kind territory here stretch into projects just little is down out without well, of, we – in not people. out staffing discretionary, IT Consulting but a The stretched some and it it's most

assumed think, you. given our we've what and guidance I some And of we've that, in so

Kevin McVeigh

helpful. Thanks, Rand. Very

Operator

Thank you.

question Mark Our proceed. with Please Baird. from is next Marcon

Mark Marcon

taking Hey. characterize questions. and On the side? staffing consulting Good rates terms as IT would you spreads, for bill afternoon of how in my as pay both on commercial and bill thanks those well

Theodore Hanson

in there very movement can imagine do bill very a for premium. we're good preserving seeing steady, I would and client's say small the all tough that sets margin you are We're the in rates a mean labor pay and IT willing skill rates. in demand to still the and really Mark. reasons incremental I at up

So obviously seeing the in of I some that, all you of really think of that. out but seen margin if spikes come all now will, steadiness, you've we're good of

which with higher mostly higher mix and to that worked, bill rate right? because would creep We our expect. rate bill consulting continues you our So business up continue to commercial of see lift business other margin, slightly our higher that's value, rate, of our the

Mark Marcon

nearshore Intersys. given could really how bigger good And capabilities that How through that And it a Mexican acquired sounds Right. the mentioned then for you you like much become it that? is big price it's clients. value

Theodore Hanson

Yes.

and it in Intersys approximately on continue resources. there's bought pull we because they when do had XXX significantly, grown to So XXXX, We've that we demand a there. such

ownership productive of stick for point go it's are most cost some And to to that back happen. price a their they of big area it with looking and Mark. that to leverage they can have total clients of again, investment we continue the projects say, want us, because that So these

sense pulling makes on be they it So that would that.

Mark Marcon

you continue capacity excess needed Great. are Or there? capacity? to I capacity have you add mean do just you and at

Theodore Hanson

always big rates could – to have we have right another sets, little XXX%. if it never all group capabilities could – put utilization are capacity we of we we're and could if have there mean, I skill because work. But a we the

a we're again, because one going This in areas term. called there near the tried certain we to So I there's big demand. investing of be in investment in may one areas it's not It's demand places out of is where because area. those while an have opportunity where the is

Randolph Blazer

that Mexican Hey, can has center add really Right. real quickly? grown Ted, The terrifically I just to development stepped up. and

to more of technologies there be moving towards overall are have productive and offshore our some offshore, we're part which certain Indian starting also We they're them, strategy.

bit, I to growing not Indian to compared side, a just still Mexico, smaller wanted the mention but and important okay. just ignore to little them, So

Mark Marcon

down? revenue. creative That's versus down in creative then terrific. how was perm were mentioned placement XX% And much release, and were were XX% perm down that the of much down XX% How was you and

Theodore Hanson

take to want that. you do Marie,

Marie Perry

perm for second quarter. from So

revenue, As gave you the a are of percent a that mean, percent numbers as of commercial. total really I

of it kind as of so as give revenues. total And you a we percent know,

So XXXX, in of QX X.X%.

Mark Marcon

That's what Marie? a relative ago, to year

Marie Perry

XXXX, year, it last So X.X%. was

Mark Marcon

the correct? when go imply, then down I Is around through staffing Okay. imply seems does to that XX%. math, it Great. And that IT that is

Theodore Hanson

is double-digit say not Mark. quite low right I'd that double-digit. but much, low Maybe about

Mark Marcon

be Rand periods? you're what Ted, other and Okay. terms seeing GFC. that the we're cycles. during multiple caution you growing of that? the TMT And like Business Apex is to look on you a have you today at up they And in in, for softening? do Government in the potential they and that you've How take thinking room Services, relative fallen a to basing where still terms about to should think would related gone characterize point we both there contraction. How and macro further of and ended stabilize basis? inning when through And go-forward Or are what is should

Theodore Hanson

a will, little quarter third for we've if of the kind that you guidance, our programmed look, Well, that into in noted we've softness, quarter.

your So question, a are two it to part Mark, last little weaker. downturns or the first could the remain for created And your no the the same get question, same. part of of

pretty back visibility If that healthy, it major long that were in a had. has of downturn happened runway great banking, credit of have there it you this around things And to the that, was crisis, financial other were that event kind an obviously, industries the there was and event didn't go right? but some

visibility. And It's all for times. to all had a in those it so more way and ways. through. long us this allowed one austere clients our had to us, of our is businesses prepare different watch We've We've the

all we've so And done that.

than those in downturns all the so you've because reasons. cycle of maybe react seen here in enterprise the differently And client past

of because that when the the they control transaction IT they to the they – turn say, have today I controllable hit think really is protected over is down They part is customer I'm the more the and the of programs the get it's to want business, immediately to protective, part going going way which staffing ever staffing is than can the the get can other transactional immediately of different procures these business. thing button that here. and been. I'm

consulting us they obstacles and of because been it get control but also do for within very And the had effectively these of to the can keep work to so some to systems. procurement turn piece and our they down they've able come around going, have they've that transactional offering those

Rand, So I'd anything a and all different to it's they're market, just say that? different. will, add you'd if you

Randolph Blazer

that Well, both cloud cautious, rebound AI we've think there's and or I nobody a Today, not and today of the and their and logistics before. and propellant. one the say come more propel internal ever somewhere, knew let and going some it great I financial rebound foundational use to Mark, I you'll in with there's like seen. if on I in how and than it. crisis, is other me, the was think we're I'll was also and infrastructure when the add chaos this I not thing. to back would what got exactly chaotic. out time versus customer chaotic. people spend their And of downturns fact the coming space acute And the are I think, the companies tools is technology cautious, then XXXX or rebound operations, the to going

spending, Fed, the today going because is right? for had It's chaos I getting we're to is it's look the know. maybe still a I So everybody so to there, in helped signals consumer we not But that. XXXX, growing still way, great. so lot looking know And rebound into I heard, quite forward And be the right? everybody question of tied or don't XXXX. I of that a up And okay? think, revenue, thinks this But

Theodore Hanson

you've for And Mark, this while. seen a

they're You They we're pin-up to they demand want right, clients' into ready to investments ramp quickly They levels, do to the to can't as stuff. through after strategic key that opportunity know internally this, heavy possible. building, to mechanism longer investment the then when their best up have more return and around that do it the make that get most get and fill as where the opportunity quickly their we to that.

on that. obviously, right, XXX% is Rand think I So

Mark Marcon

flow management regards I meantime, buy can continuing which back skill. in relative strong to generating appreciate testament is With and talk that. the preserving the allocation, of about little to terms you're capital cash you free to And in bit preference margins, stock? your to a acquisitions the a

Theodore Hanson

Sure. Marie?

Marie Perry

of we've kind really sharing. story similar It's that Yes. been the

continuing really rates, M&A. And there's given obviously, our talked desire there so Fed best the just with really, and to and no use we targets our first But about or opportunities. out raise is what

slightly kind and million of rounding you repurchase share repurchase, $XX in saw share so up for QX. And the

had signaled lower actually we we that earlier up conversations some shares the more ended at on on I think of prices. that buying we

share And bought so you at. see we the that average those price

opportunities we for flow for so free to M&A. cash will our continue continue and repurchase utilize to And look for share

Theodore Hanson

M&A there future time And attractive the opportunities plow to it's the on now are and those. Mark, front,

relationships purchase the Marie own has is to But price that is shares. right. thinking so share work we’re We're make we're we on menu to spade the our the And at our done. understand target and And more sure in to accretive what needs identifying the doing list, market. these those all be been never opportunities building levels,

can our in during you actions that so last see the quarter. And evidence

Mark Marcon

Absolutely. Thank you.

Operator

Thank you.

to would like for this are closing there back time, comments. Mr. questions Hanson, turn at As I further over floor the no Ted to CEO,

Theodore Hanson

with you of for speaking forward and questions, release everyone a thank earnings the we quarterly and in and our to operator, look you, next quarter. being Thank part your

Operator

you your participation. Thank teleconference. today's concludes This for

now disconnect may You your lines.

ASGN (ASGN) 26 Jul 232023 Q2 Earnings call transcript