ASGN - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to the ASGN Incorporated Second Quarter 2024 Earnings Call. [Operator Instructions] I will now turn the conference over to your host, Kimberly Esterkin of Investor Relations.

You may begin.

Kimberly Esterkin

Good afternoon, and thank you for joining us today for ASGN's Second Quarter 2024 Conference Call. With me are Ted Hanson, Chief Executive Officer; Rand Blazer, President; and Marie Perry, Chief Financial Officer.

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

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

your remarks Relations be of For prepared found in our investors.asgn.com. can our supplemental materials convenience, and at the section Investor website

Please Officer. to to as also press on adjusted Hanson, supplement the measures. Reconciliations the we non-GAAP and free call, such net referencing turn call adjusted over These will and comparable measures today's income GAAP be note in that GAAP are included EBITDA, cash release. I Executive between measures, intended certain non-GAAP now are non-GAAP will Ted flow. this measures Chief

Theodore Hanson

thank the ASGN's conditions in Thank the with our expectation. XX.X% adjusted macro that Kim. EBITDA ASGN's billion, Second expectations $X.XXX second would our at quarter margin for be for were Call. Earnings And was QX. QX consistent results you, top while XXXX of confirmed Quarter you Revenues of joining

long-term Consistent Their where IT to in road and have with the and changed. our QX, on budget. first maps continue acutely when against focus quarter, our clients IT to not spend priorities

second high continue protecting the Global rates, XXXX, and call bookings increased to Presidential new continue impending inflation, spend. to the unique headwinds This that geopolitical concluded line, hosted such hiring cautious and of experts recent the and their of remain ASGN's quarter team Index is IT about election a hinder U.S. to bottom for unrest, muted, interest ISG However, as base. On their concerns not drive behavior customer execution. by

evolution indices. but Code Human In Services the it GICS of consolidated has responsible market that the of sector the the in recognition statements, ASGN's industrials in & XX.X% Services. Joint under consulting only & not With equity in technology under officially prior each for our Employment IT from sector totaled The be to IT strategy, Resources and reflected revenues MSCI the increasing of from classification, Other whether revenues in accomplishment, XX.X% our pivot May, information revenues Consulting second our the revenues and the Committee XXXX, strategic or receiving we year higher-end, consulting higher-value toward S&P ultimately, also into of been GICS the up is quarter. a acknowledged consulting GICS IT services for measured financial Code IT making quarter our switched are by margins overall moving IT solutions. of company progress Code, pyramid up new goal our

to which, by be business long-standing relationships, client our Our continuing nurture our trusted goal variable driven progress like this will of cost model. our structure, towards our cornerstone

account portfolio across insight verticals into clients' offers large and us Our investments IT industry long-term our roadmaps. X diverse first-hand

provide some we as these clients' and I'll related details discuss how our staying particular, in critical we As more remain ourselves ahead the those of to segment future, to we relationships IT IT for are supporting needs our committed about performance. AI we our most clients' fostering and needs. position

segment largest begin by So let's with our commercial. revenue,

softness areas cyclical our Commercial X.Xx our XX-month double $XXX.X working. revenues consulting basis. to and trailing the continued business commercial for consulting book-to-bill year-over-year million consulting of improved on Commercial in Commercial Segment more the a of digits Our our business. at assignment flat revenues to a IT softer were comparison, puts on is but essentially our sequentially. difficult year mid-market expand prior Commercial due X.X% Fortune declined bookings a strategy segment XXXX year-over-year services companies. macro low quarter Despite large economy, by

led an X%, growth perspective, revenues second we growth Telecommunications X.X% year-over-year of TMT and compared revenues to industry XXXX verticals. X while the double-digit Consumer revenues quarter TMT improved e-Commerce. X From improved Sequentially, our of by in telecommunications, in commercial X.X%. saw in and in into also banks, we and additional increased business materials, software QX services. the tech consumer financials, including billable day sub-verticals, saw sequential XX account XXXX, utilities, diversified Taking Industrial services hardware, regional growth e-commerce, discretionary, and

not to encouraging we remains seen improvements, in have it IT Although, sequential inflection yet believe these spending. we point an see

IT the work. up move consulting we higher-end toward services As pyramid

adding sets new solution our to teams, skill are architects. project including We

opportunity to add It our solve industry to also attribute ability our lengths, problems. expand the ASGN their clients to value and to sets and sizes Our skill margins, advanced enhance IT high project complex reflects the contract improve offers our performance. teams our to our vertical

for use AI those of Identifying cases one Gen complex is problems.

deploying new cases AI discipline capabilities across so are us Data in is a to use approach still are AI the we AI. solution While enables stages differentiate early of business are implementation. fuel growing, the our our AI multilayered and ASGN's services for efforts. we to

engagement. Infrastructure our Data diligently a and is our AI forefront team at naturally is So compute-intensive, working Analytics to AI create so scale. also AI that is our the can solutions practice of Cloud and

Finally, AI must be secure.

practice an use cyber our development. integral So role plays case in

technical on where relying technology. conduct understand to apply Our clients business novel to to and are assessments readily this us case

during address to the me examples provide to bring engagement won ability projects sense provide a quarter. work and the of give these a clients' We needs. combination IT let performing examples are we So to ASGN's AI our and of some of the

brand And our awareness solution. is gaining migration client lifestyle a deploying forecast cloud-based enhance increase first project Azure the brand data an In a Cloud. AI and accelerator. their was and on growth, an accelerator, marketplace, marketplace several consulting our relationships. In a across as sacrificing control develop engaged data expertise roadmap QX, build approach critical project our Google quarter, agile with By during a on customer provides for technologies a Fabric implementing by quality practice Microsoft opportunity won to QX, hit commercial and company, in importantly, we platform, Participating a and to their another its listing FinOps on Gemini-based Fabric. new the milestone by insights priority following is to a without actionable across our base. Fabric and the our AI-powered a on Xx our Microsoft This efficiency. our GitHub, consulting first solution launched multinational we analytics track implement to Google Cloud. such This implementation the cloud began team of of team consulting contract improved clients' accelerate Mexico this client workshop service, a in and Data BigQuery beauty involves recently Azure complete to to AI-powered management velocity piloting to better By Microsoft pilot in is

the during quarter, and Mexico with development Also, Delivery application gaming company modernization. our Center second a supported Fortune XXX

GitHub-trained X-year Our clients This project collaborated delivery in-gaming for and managers program with engagement of team with technical all a develop Copilot scaling to is custom roadmap a architects, closely lifecycle. developers up the tool. our a our the creation over

our for Management won Threat performed clients. Finally, and another Vulnerability assessment project during quarter was healthcare large payer of the one a consulting

cloud standards. client that mitigate solution ensure to looking helped clients' cloud primary reduced significantly scanning their clients' was our from industry commercial risks. our By threat on-premise management broadened client scope operating threat migrating solution, team and to capabilities were scanning future tool systems a our their enhance Our and This vulnerability our hybrid up to times. scanning

year-over-year, civilian Let's federal Defense, now turn Federal agencies. to the and for quarter improved IT but provides year-to-date revenues our Segment, Department the a advanced intelligence which declined the basis. community single of Federal on digits Government solutions low to segment

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

awards basis. book-to-bill on at our a putting contract were XX-month million, X.Xx $XXX.X New trailing

under won in orders as Task originally have as QX XXXX not we anticipated. IDIQs materialized quickly

to quarter. services grow, note, the quarter while our are an this addition, flow fees speak pass-through positive shortly. topic seeing today's provide Marie lower-than-expected on a in impacted those of begin our be results. third call. already core a second orders On to In about in I'll we released licensing greater government further update continue task will later revenues

like in Federal upscaling Excellence, are available we of AI professionals with are Gemini Gen our our ChatGPT, proprietary such publicly and AI Data for our Copilot. our services along actively Center task we Commercial professionals Through training our new As AI. in orders, with large prepare as models, Government Gen segment, we language and

earning partnerships and ASGN's government in-demand expand enhance also overall professional us Our certification are cases internal teams to the our improve efficiencies. technology use and our training create skill ability These professionals' opportunities to provide AI set, certifications.

at XXXX. billion the During the began re-compete task the receiving quarter, second Government our DARPA under Federal orders of end Segment $X.XX IDIQ awarded to we

of At $XX single and providing oversight program analytics and team supporting meet July, and support is business receiving we lifecycle dynamic missions. orders to Missile operations which services, along solutions, in million intelligence task re-compete DARPA start with business their the we development an on and research are acquisition with Defense with began Agency contract advisory Our modernization expert award the solutions.

QX, under in reflected XXXX is work began While in this it backlog. QX contract our

provides team to to critical our Federal addition contract and prime a in IT and In the the X-year contract established Justice solutions Technology ever allows $X This spot won to solutions. it the services largest backlog re-compete IT with Supplies the on AI-infused the Support to contracts include and those QX contract award FBI billion by Services a FBI. is technology already vehicle XXXX, Information the our This segment FBI. booked Solutions Government expand cybersecurity in

forward discuss task turn our quarter orders that, FBI quarter Government I'll to look guidance. contract, Segment performance. With supported call the to for over the add and decades, Federal the will receiving has now under to second bookings and Marie third results over Our we this X our to which

Marie Perry

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

our Revenues our the quarter Federal $XXX.X Revenues sequential sequentially. in our Segment reflects Segment, expected were year-over-year. in billion Second from Federal sequentially. stream the million, Segment. and offset Government were the lower-than-expected largest Commercial decrease $X.XXX $XXX.X million, were up to revenues down high-margin flat Government revenue segment prior million, of our steadiness of a totaled Commercial license revenues year Consulting, from essentially $XXX and flat year-over-year X.X% and X.X% we compared the Revenues XX.X% Commercial by from

would year performance license quarter on based spoke level the be XXXX we noted we that consistent anticipated the our This of in similar segment's would the I software second of was to quarter. we assumption quarter, revenues Federal year-over-year. belief prior have When last Government that

services core quarter. While grow, for lower segment the in as our were continued XXXX shortfall for the revenue than resulted revenue revenues of licensing This quarter to our noted, expectations. the second in the Ted

on segment, other Commercial as anticipated. the Our hand, performed

year. second margins was XX from an of the quarter second to of Gross for points XXXX of XX.X%, basis margins. last the Turning quarter increase

up XX.X%, points reflecting revenues. was a well Gross XX.X%, revenues basis was as Segment Commercial XX up segment assignment as basis the revenues, the and government both which year-over-year, federal XX points expansion for lower of margin margin consulting Gross due margin margin. lower for to licensing primarily gross a higher from mix year-over-year, carry consulting

the to in our guidance planning SG&A compared million the in of quarter included $XXX.X and million also integration $XXX.X expenses million that SG&A estimates. expenses were $X.X for strategic expenses were in quarter included XXXX. acquisition, second not

end net due quarter, mix EBITDA the guidance gross was adjusted income range higher and was adjusted top $XXX.X business million, improved the to XX.X%. million, of Adjusted was was EBITDA margin For EBITDA margin margins. and $XX.X at our

secured under our were availability cash million, ratio had and $XXX cash our revolver At $XXX.X net X.XXx. equivalents and end, and quarter senior leverage full million was we

Turning cash EBITDA. flow a approximately Free for cash the of quarter flow or of XX% $XX.X was statement. rate million adjusted our to conversion

cash on in and opportunity, we free share that deployed row flow our for repurchase. million a sheet is in cash share the repurchases cash market $XXX second flow. free quarter the This exceeded excess combination Given the balance a of

repurchase our under share authorization. remaining million $XXX have We million $XXX

to meantime, when solid cash have expect revolver, and under continue availability shares. generation free M&A In full to flow ample make ASGN repurchase to With we strategic dry the powder we the our acquisitions improves. market

guidance. to Turning

earnings our conditions Our and financial quarter billable are These current third in market days third XXXX assume of materials. estimates and quarter. on set estimates supplemental release XX.X are in based the for the forth

to quarter quarter. expect and that the similar the of market second We demand our to third conditions for services in be

not licensing of As repeat. QX it revenues large federal a government relates we revenues, are in had we which XXXX, pass-through to amount to of expecting segment

billion, $X.XXX to for $XX.X With estimating adjusted million XXXX, of this background, net to EBITDA of million, are XX.X% $XX.X we of million revenues QX $XXX adjusted billion to million of income $XXX XX.X%. EBITDA $X.XXX to margin and

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

Theodore Hanson

with discussion today's began a We review Marie. of Thanks, environment. the macro

The proved than in cycles. with cautiously first, more second much to the quarter prior themselves continuing like clients position

quarter. just in the Marie pick positive guidance begun the have the anticipate I steadiness note, up government a mentioned continued to a quarter. from third as bookings discussed, we previously, evident As in third On

our we NYPD July, funding for re-compete other and received cybersecurity In contract under the support. system with

announce $X.X a we I'm that or last billion of Institutes the National IDIQ were just with pleased to addition, In awarded week NIH. Health

X X its a NIH critical AI/ML, visualizations to management released, over Our other awardees scope Once and who been and period Federal data our developing advanced support using Government analysis will is the include solutions with tasked team's of IT to task orders the begin analytics be Segment X-year of techniques. work needs. have

in These belief or despite IT current being more believe believe, At recent these along the than accounts. cost industry As IT headwinds we is ultimately structure sector. areas, opportunities. consultative focal diverse has in support we capture services ever evident and in X large believe We core reverse the it to strategy is not conditions, business our consulting market variable the ASGN, awards, have will cycles. been our shifted business system. we from economic our with to Market enterprise better positioned in-demand and provides ASGN's throughout

an operational In IT consulting Board our expand we Board June, is who vision enhance our Obermaier to Patty strategic for Directors. adviser X of and directors Board As advisers her expertise we consulting our to and our path She adding our and of served we her experience decades business, the forward. Officer January forge to Patty welcomed necessary are to Microsoft's we since than welcome and to Division. are the has excited Health Chief as ASGN. Sciences Life Growth to officially more Global IT

its Social Speaking the of about Annual Governance Environmental Report. June, ASGN topic governance. Fifth In released

key foundation in established standards. frameworks our year, prior great reporting in We we while our with have sustainability the strides the also and over evolving regulatory building years, past made ESG upon capabilities

remarks. partners our Industry quarter. of to past our like most has commitment your your prepared concludes this dynamics shift clients' being That my may macro trusted gratitude will but express ASGN not for entire family to IT to the economy I'd the and fluctuate one support wavered.

for again quarter to our XXXX Operator, the call you Thank questions. open second call. please joining

Operator

Silber And [Operator Instructions] first Capital BMO question line Jeff our with comes the from Markets. of

Unknown Analyst

Jeff. for on Ryan is This

there on it should tell licenses Federal on dynamics then of Can just of you a some Just And It pass-through quarter. software the timing may all shift sounds quick like a the the Government. a tough how some we together? be the revenues be the about comp in of in those question didn't us you the around thinking in sounds XQ. like get magnitude

Theodore Hanson

Yes.

So Ryan, thanks for the question.

through but think those ebb before, licenses -- software I we've flow are and said they the quarter. obviously,

that of the timing So uncertain. is

I I part amount in past future certain licenses didn't quarters. script come. always of think a the solutions. the There had just excuse they'll mean we on me, Marie said and are to software during licenses planned a amount quarter are of that prior our year quarter, of -- they similar come

of so will. it's And that, a always if component you

little we gross think but and good core I direct licenses of So needed certainly profitable solution, the is software through very they margin. the margin with news our the the That's we business generate business and EBITDA generate growing, that this here, provide is are that's and most labor positive. what part

for quarter. that their a ECS licenses, were the delivered during expected during little expectations So here little were but their what think even they on the though bit I positive EBITDA was the thing a bit off and they -- all more quarter, the in

flow I little bit have in a so license ebb the of and to expect you revenue. just think And

Unknown Analyst

the quarter Got you for the then give during trends on business? any can exit your follow-up, And just it. sequential across color the and rates

Theodore Hanson

is the pretty first X weeks through Coming here business July of steady.

in of What or a the I saw QX not first steady up a similar X has X QX. in think had the first for down that marginally we're July. we for steadiness given QX weeks basically QX. weeks guide during has the looking So you, been here Marie to we We to

what not are conditions changing. They market are here. So are they

And here. and you reflect not the quarter-to-quarter, first numbers so even only but -- that, weeks if will, for the few

Operator

you. Thank

the of next question Romeo Blair. line from with comes Trevor Our William

Trevor Romeo

had just bookings there. First consulting I commercial the the on was pipeline one and

And Just out I or might bookings finally, we the you competitors? of any if could suggest trends wondering next there as call renewal among clients you'd as the kind any activity and quarters? move just in of any the there kind taking indications are or projects be as guess, that the from project coming change few any sluggishness size are then versus of far caution in. scope would new to through of And forward-looking share the your weightings

Theodore Hanson

him Well, look, saying the take consulting. trailing better book-to-bill future I'll in I'll would one. what X.Xx in date XX nothing that news, portend it we've past quarters let to to is with There's anything is if seeing than commercial solid in or that just worse. pass Rand there months. a by been the will, that consistent the you for It's what

I think of they right, are more Rand? same, the

Randolph Blazer

Yes.

we've about a of think, but there, I size of shape Trevor, questions same engagement lot is had. the as and

You AI work text. for There's work engagements More pretty meaty tending getting in we towards AI X what the ready the cited heard we and AI, about extended some data there. inclusion. data the of more call prep

think them fact as watching consulting the up you sequentially it's are numbers a bit I The we And the think We're as are. solid. book-to-bill little world. we same and competitors. we're we're to is I in that go, peer steady the beating pretty the steady

-- of that's is good. see if a is in long seeing we And And any it. of X-year fact, that and one obviously, you helps -- look the the about good the feel it them work us in project, we term. nature think of we're I at

that does color? Trevor, give you

Trevor Romeo

helpful Ted Rand. That's thanks too. Yes, and

Theodore Hanson

Trevor, a of comp were in XXXX. QX could add And growth XX% we I that also facing

So growth year-over-year Consulting, and down in to as and we the though on basis did couple even flattish sequential we're QX going change comps here of of single QX. in a to They're drop get see a the into kind Commercial we are of here for dramatically. the of quarter going kind points digits

get So what the growing business is yes, picture we'll it's here. is but here, growing we steadily. the there And changing and see

Randolph Blazer

in our Consulting and it margins can Yes, see right? right, you margins, increases, as gross

Trevor Romeo

quick business. Is just between on IT kind any out and Right, businesses. discretionary maybe performance kind core to there a the okay. assignment more And way follow-up parse then the of of the creative and digital perm the

industry think we incremental the on heard in others from in softness perm side. I about a few some the

just that's how percentage So your performed? how a of as trended kind that's of curious revenue and

Marie Perry

as was revenue X.X%. of Perm pretty quarters. the that a And for Okay. honestly, prior with quarter percent was consistent total

Theodore Hanson

So I too much wouldn't that. than expect more

thing same that the seen in that I've -- reporting there's number. so of think I kind softness of some

already Our business, marketing under our is It's XX%. The creative just and down here. low placement predominantly gotten soft. which permanent digital is still sum CyberCoders to of is historic our

of So there. seeing a change you're not lot

those I a our just saying guide was in Trevor, in a bit just imply So just that of assignment weakness of just seeing numbers weakness going overall, little forward. you're bit little would business

Operator

with the from comes of question Joseph next Canaccord. Our line Vafi

Joseph Vafi

to just see Guys. results the steady Nice here.

I on working we've kind that lot kind towards maybe stuff. of pivot some And seen least software projects. know enterprise incremental AI-centric a at Just of you're in and spend of

have AI that some funding about service worried projects you're kind how have thinking Just And sustaining other them. from kind to of quick steady of commentary And of kind then offerings of business? follow-up. areas your some away a and if that of focus maybe an about in here you're maybe I wondering

Theodore Hanson

Yes.

AI, spending distracting, Joe, Not big anything I'll Rand what So in core be you'd spending, that Rand, that? one. a IT take you ramp-up add if which let from I'll call will, may in normal to

Randolph Blazer

no. No,

they're you we've you with as a the clients lot good are where AI guys, enterprise the pretty said for embedding software it of good. think bring I see in today's Microsoft, can chips, Ted, same astute software. are their the in we help those case clients remarks, got that of report, more obviously ServiceNow Look, featured. some studies on businesses. capability to were We The their and is smart true

And after is a big you said to translate projects to efficiency through. say remarks, work into that's busily enterprise all which Microsoft, client systems, all But are they for systems, of Joe, or in operating around systems, that then it's software that. AI the I in toward with which They're work on begin our take problem table cases, their ServiceNow, specific Ted if it's dealing still So the going enterprise job that to prep the It's really they're being providers. now capability now. further greater advantage the thought as help individual of would of all for contribute again, very these products. being when come our will, ERP Salesforce, financial Google, cloud the use whether need And put their lot needed embedding his this will software.

Joseph Vafi

there? appreciate of it. maybe any about you is sorry us and additional that was kind thinking incremental how Mexico then in that terms much for have Yes, count, update of Rand update Thanks on on -- just and head of volumes, you're on mute. then there client I any kind And delivery for might that.

Theodore Hanson

the in script that development especially just kind a high. Joe. was that Headcounts our world. So there, things the remained the We actually of in mentioned some not data in Rand AI-enhanced right delivery utilization They're change of now very quarter-to-quarter center. about work of talked some Mexico area, they assigned lot of focused to were, where on the very

story. to there's a I be a good here say from wouldn't of been this quarter. lot But quarter continues change last to So

Joseph Vafi

of generation the in sneak there's just Marie, takes for should I'll puts if about cash the for thinking year? kind commentary on flow Got on to the and one of we free kind we Maybe, normalized any are, of be some a of it. flow kind got And you've if model kind where year. cash then relative maybe of

Marie Perry

Absolutely, Joe.

million. rate XX% EBITDA was to the like traditionally, So conversion it's our $XX quarter was More for to XX%. approximately flow The XX%. cash

was that was And this in so was working it that. -- capital. it related of little But flexes to a north really quarter

we would kind anticipate some that target, that XX% probably of So -- XX%. more to that of of

Operator

of with of next line question America. Balsky comes Heather Bank Our from the

Emily Marzo

federal on This quick. is What's Balsky. it think you realize for lower a softer a late. Wondering And Book-to-bill Emily more really we on in little came Marzo Heather IDIQ I bureaucratic, projects bit if touch is on about than could came it those here? going and little should How expected. bit was in being delayed? Or idiosyncrasies?

Theodore Hanson

look, said range licenses, we on our were the So off million quarter. the about of ] the [ I earlier like midpoint XX for

Our units said. we or commercial slightly above delivered at what

like delta, kind were that's a affect So in EBITDA. come license impact software the -- we on will, That purely little and area revenue. just that in will ebb will for quarter. an you Didn't bit. if was the the It of that flow

just bit. right not lot of a X see adjudicated third times. good in here But at we're just the to a everyone's was some weeks X quarter our below the first our the in and good little we quarter, in being in a won didn't July news the was business, and but lost. wasn't is Bookings you lost noted that work, or pickup the some seeing the weeks. I about we first It we moment. it's getting We will, during think that pushed expectations here -- awards just the really QX have QX velocity certain were pursuing off different stuff if was -- made. start

And stuff get some so that booking standpoint. a portends it through here we'll from

bookings good in a here quarter expecting we're So QX.

Emily Marzo

the environment if you pretty if I the any steady? in if seen could it's in environment how And changes see ask M&A follow-up or the you've a on challenges and

Theodore Hanson

No.

think same, same that environment things I affecting remains the the M&A the are spending. it's

the aren't numbers. great feeling So targets their about

their are higher numbers. We've We rates. got interest questioning

their down and bit higher -- to you what be the sustain So equity need or batten a have want support to some so certain order sell little think businesses within firms a the for in And decided on now returns to have here that there this I hatches discount founders for to multiples, private longer. have can multiples. still are rates hurdle

clearly So solution there's will. I what We're really we we're we the by add to those acquire organizations. acquisition, building no new relationships identified with that of companies that those mean, if know that you in bring we're want going principles the news certain monitoring to capabilities we've there, future.

and So we we're together. Ilene so sheet to that that need ], little here. just sure, come a it. for It's balance right could to have do bit [ the improve need acquisition-ready things environment We

Operator

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

Surinder Thind

When some and I the few high-level about of a quarters not trends, just last I has think really the think lot has changed. the general commentary that been

that them them versus spend maybe little I troughing a from more? things to just it what bit holding to look when would characterize is are So back back over maybe point? at that, what's way get this Or another and any color client conversations

Theodore Hanson

go revenue second adjusted and We've have half looks on got bathtub, was client day Rand into of just second, third are you take and part almost not into half So of middle back It the you conversations. would will. first surrender We But of the like take growing. growth year, last trends tell if let on flat. we I'll to -- you fourth kind if third, that year a and if number normal just We things and been a then in had the things to will. here, where a the that you opening our to to things the decelerating of quarter first kind second step the slight first and of quarter basis, flat out. down the the seasonably flattened

whole true business, true I the that -- that's would And for for say it's individually. the not is even units certainly but

much not there. there's change So

and we slip are you if trough, if is. I'd in need a you get to call that that there a up will. macro when we're bathtub, And that here wondering, obviously, improve. looks like to do from here So it a But say want things the

client conversation Rand side. and on budget the

Randolph Blazer

levels are, best the I characterize the to conversations. way there's conversations two of think

question for in industry, about businesses going not, the first questions what's working, practice The what's things the should What is the thinking I have their part are AI? and second of do in What's do? software ready enterprise it? to the what's best within vendors, for capability we is, implement seeing be the well vendors our clients is, the need be to roadmap to where needs. the as the and that as our question a go as we're The things to what we own are need

projects We I've level of second just stop just individual on. we questions The can't are, need moving. some keep got to

X longer-term projects, you them You what it, we maybe our to particularly at when what acting they're path, they're heard would affecting when text, I when see. about in security, on instrumental of least call read -- about they're those

going of I we're But business. first questions because wouldn't the nature in of road full to overall, set really of where say, as lot map they're building questions, the a a the still going force as

had mentioned reflect ISG, I thinking. they've in they our I that same outlook certain remarks, think opening think But his Ted root. stations things They take said a ISG when thing. would the for thought

map for question those. laying to doing on is that, road get going, And than other future what Some really you about of things the really them we're and and have read out based it's a a working.

in trying take this Every of lot relatively map. Microsoft, how investment say, for a enterprise counting piece and to together is Fabric in true the new AI does vendors day, that new change. of new are road a they're hold capability, which there's the capability, software into and Listen, example, all capability

not clients think still going that full fact that indicative is they're are there Quest the the Does help? force yet. I So that

Surinder Thind

Mexico of think there. terms term where at should for increased that numbers? should does. we delivery, more mean bookings bookings Is or we And how think a request near color this I I appreciate percentage demand Mexico out of the about How resources clients when can in about that than think Yes, provide. color about just other the and there or we as just you that point. then of

Theodore Hanson

Yes.

delivery center the segment on Mexico So bookings consulting. and working we delivery Surinder. commercial center, projects don't are by U.S.-based Mexico The

are clients will. cost you really commercial includes total group But that focused of So if to when high demand remains of for give we because professionals, on consulting it delivery you ownership. that

And And points will, Clients, as ever, of of the advantages positive, so rather price you communication, times those if technical mix and resources they're get the us. lot looking to at would of offshore, now whether a more that here the same capabilities, alternative nearshore, many time they that's offshore, access for still with resources. they're it's good but a really stuff the an sending zone. than

for we So is something going think this continue build to us. to that's

how this deployed project through. And for that Other part they've the it, team, sometimes in Mexico the to in on execute the and put in benefits and received project that the team times, a work. mix the knows of a them we up of is us just we asked that, terms we as and went client and that's team project certain together

Randolph Blazer

AI expertise the bit an great, offshore which of build there little and capability Indian a to adding it building also also also so is Fabric. I and and in that certain headcount. have insertion think up ServiceNow We've I Could a doing little in Copilot, begun, GitHub, Mexico and very platform, involved Ted's technologies we've is quarter past got like and around really mentioned ServiceNow bit

it's to So benefit nearshore the offshore, beginning of to can those but or we tied technology locations. to -- in much it's client, us, in that's build that we're a build each capability very multidimensional

the didn't to Indian ignore okay? So on want piece this, I just

Operator

from comes question line with Tobey Sommer of the Securities. next Truist Our

Tobey Sommer

kind quarter, And changing but is this book-to-bill quarter sort On going of I being to that. are of predictability improve the in the I business? you're internally IDIQs the the business, stubbornly Government manage Consulting revenue licensing. you and think the way anything context the below? and a exclude changes you maybe ask the this And understand seasonally that forecasting of picking there that it's your in Any you strong up of

Theodore Hanson

Well, we the to look, they where need see we're we're we -- issue, If addressing resources I be a to think performance adding mean, we're always team it. added.

there. always -- that's So think been of don't change that's case. kind there's the I any

agree if dismiss to been we're I of just really get deal as book-to-bill with, you low. has And It's I But on look, been for them stubbornly opportunities, kind some well a been -- the of there adjudicated. won't here need mean, backdrop with we positioned I will. stubborn think we it's you. these to

quickly IDIQ working together so a period. they -- as as for pieces government difficult out long on and amounts -- And avoid putting the customer the what's can large did, offices, get them of the so contracting and difficult these I'm that government work not once around and towards the trend looking there long protest word

are of we're and our that that headwind, to a little done early we're coming. July on of but releases but be are that already to see they'll going bit here and are get looking still that those It's things landing, are there work, some winning on we're So a forward going out in a in pleased to market little soon things bit press now, getting too things. we're hit kind that

So quarter. think this have about good we're to going good we feel bookings and I quarter, a

Tobey Sommer

if see we uptick string also to growth part business, for recruiting much before spree on what's pretty decline. It's of follow-ups In capacity sales have me of do sequential business, the of assignment the a separately, were assignment And like? how you Two earnest? have of core in business. in hire to a demand and long but another to to in capacity the then lot generate you consecutive quarters an

Theodore Hanson

to business group EBITDA of There's a whether which the us, difficult this lot today your Right. now. their did highest or is I'd the just talk most I reflection moment of in about win, revenue say the not. that here been Well, the and ] was on more help at and team, us. all about on look, say on And time, situatedness fight no worn this -- wearing downturn. and are doubt a And has same it's of team the it and the long worn is has all it. it [ protected you're a the point is because of its or everything you time, its when at And you best that, is around more point in not were doing customer work highest times, we at that's

everyone's head is very there capacity, client the be for and it each their got I even and for relationship building picture The So other. for Everybody Tobey. strong. is the though on of clients And may not right. revenue execution the amount we work in have think the and

our where look, where up in don't is headcount exactly think, be extent with I when we leaving of when picture naturally think up, demand place we that in the there -- of maintaining there it great that capacity. places the know head our of down right clients relationships we to we're can terms we're is we that. And it letting kind they'll now, that but enough spending understand have on, these we what's know in their going picks we're

can if on effort you sure and and we critical that's what's need we there know intensity for would the their projects, of to because -- for are a we engage ball be that our are. have that that's kind will, with that, when the Well, believe a also we needs we're clients to more but the that. velocity do slope of first to work, fastest ready we'd the right spending and and up because let picking make question comes, spot and clients we Now how crystal we're have model IT add? But as the here when way we

Operator

from comes the question Mark next of with line our And Baird. Marcon

Unknown Analyst

on Mark. This for Alex is

some And if I some was drivers kind obviously, some was wondering looking just some margins, that. First that? had with you've the in more you decline as I on color otherwise. just key off, give and at As increase could Federal and well of

Theodore Hanson

but Margins. Yes, of a a sequentially there's bit here, year-over-year, little decline steady are in margins margins.

Randolph Blazer

Right. Yes.

Theodore Hanson

driver going what's really of business on, mix. the primary that Now is

a which of some is a lower of EBITDA better our units, last mid of creative placement maintaining half and do margin job And contribution of seeing marketing growing higher-margin services. federal, our permanent the you're here versus is So year. the our which our first in lower digital business service, revenues you're seeing

of you primary moving the will, is is of And so how the EBITDA all that around. driver, if margin

Unknown Analyst

where Okay. forward? little take year and bit and kind further, looking I we And you the we were have spending federal IT was an think really coming wondering, up, just election election wondering kind of would quickly, then going of a forward

Theodore Hanson

us that's but very a think don't conversation. government all in doesn't question it I -- another who's big strong. political is about strategic It's corporate one the criticality spending not on enterprise look, Well, involve agencies strong. it IT to is shape so very another matters the to initiatives that on there it's around office. spending yet, their much I or I think accomplish for IT for Yes. and it or mean But form in

where the to of what behind and spending, customers bit business. to the will every our get thing like uncertainty get going that, important understand and environment they return that And interest us, environment importantly, going, not from then confidence what I be most I is So here of drives better the rate the IT election feel most the second we once part that more of is a business like it's so hopefully, to and who's begin little the normal they and getting looks along we with that that's to where our day office get goes levels all more headlines think a guessing think that. us in behind

Operator

now reached to I'll the we session. end back have you. remarks. for Ted question-and-answer closing the Thank of over call Hanson the And turn

Theodore Hanson

your XX attention here Be wanted just and Well, quarter you our on say today ASGN, in to we for look questions another thank reporting your and to everyone well. and forward days. third

Operator

today's conference, this your Thank And this lines may and your at disconnect concludes participation. you you time. for

ASGN (ASGN) 24 Jul 242024 Q2 Earnings call transcript