Robert Half : Q1 2025 Audio Recording PDF

Published: 2025-04-23 16:21:37 ET RHI

Q1 2025

Financial Results

Conference Call

Prepared Remarks From:

M. Keith Waddell, President and Chief Executive Officer, Robert Half Inc.

Michael C. Buckley, Chief Financial Officer, Robert Half Inc.

April 23, 2025

First-Quarter 2025 Financial Results Conference Call

Prepared Remarks

April 23, 2025

Disclaimer

The statements made in the conference call speak only as of the date made, and listeners are cautioned that changes in general economic, business or other conditions or in the business condition, financial results or operations of Robert Half may have occurred since such date. Robert Half undertakes no duty to update the statements made in the conference call. Also, subsequent conference calls may have been held, press releases issued, or documents containing later or additional information may have been filed with the Securities and Exchange Commission ("SEC") or New York Stock Exchange ("NYSE") or otherwise become available or come into existence. Robert Half undertakes no duty to make any such conference call, press release, or any such document or additional information available here, and it should not be assumed that the failure of any such conference call, press release, document or additional information to appear here is an indication that no such conference call has occurred, that no such press release or document exists, or that no subsequent additional information which may be material has arisen. Some of the documents Robert Half files with the SEC and NYSE appear elsewhere on the Robert Half website. Listeners to this conference call may contact Robert Half for copies of such documents or any other document filed with the SEC and NYSE. Alternatively, copies of such documents are available directly from the SEC and the NYSE.

Operator:

Introduction

M. Keith Waddell, President and Chief Executive Officer, Robert Half:

Hello, everyone. We appreciate your time today.

Before we get started, I would like to remind you that the comments made on today's call contain forward-looking statements, including predictions and estimates about our future performance. These statements represent our current judgment of what the future holds. However, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are described in today's press release and in our most recent 10-K and 10-Q filed with the SEC. We assume no obligation to update the statements made on today's call.

During this presentation, we may mention some non-GAAP financial measures and reference these figures as "adjusted." Specifically, we present adjusted revenue growth rates, which remove the impacts on reported revenues from the changes in the number of billing days and foreign currency exchange rates. Additionally, we present adjusted gross margin; adjusted selling, general and administrative

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

expenses; and adjusted operating income by combining the gains and losses on investments held to fund the Company's obligations under employee deferred compensation plans with the changes in the underlying deferred compensation obligations. Since the gains and losses from investments and the changes in deferred compensation-related obligations completely offset, there is no impact on our reported net income. Reconciliations and further explanations of these measures are included in a supplemental schedule to our earnings press release.

For your convenience, our prepared remarks for today's call are available in the Investor Center of our website, roberthalf.com.

For the first quarter of 2025, global enterprise revenues were $1.352 billion, down 8 percent from last year's first quarter on a reported basis, and down 6 percent on an adjusted basis.

Net income per share in the first quarter was $0.17, compared to $0.61 in the first quarter one year ago. First-quarter 2025 net income was reduced by $0.13 per share for one-time charges related to cost actions to reduce ongoing administrative expenses.

Business confidence levels moderated during the quarter in response to heightened economic uncertainty over U.S. trade and other policy developments. Client and job seeker caution continues to elongate decision cycles and subdue hiring activity and new project starts.

Despite the uncertain outlook, we are very well-positioned to capitalize on emerging opportunities and support our clients' talent and consulting needs through the strength of our industry-leading brand, our people, our technology and our unique business model that includes both professional staffing and business consulting services.

Cash flow used in operations during the quarter was $59 million. Cash outflows are typically elevated each year in the first quarter due to the annual payment cycle for bonuses and SAAS subscriptions renewals, among others. In March, we distributed a 59-cent-per-share cash dividend to our shareholders of record, for a total cash outlay of $61 million. Our per-share dividend has grown an average of 11.6 percent annually since its inception in 2004. The March 2025 dividend was 11.3 percent higher than the prior year. We also acquired approximately 650 thousand Robert Half shares during the quarter for $39 million. We have 6.6 million shares available for repurchase under our board-approved stock repurchase plan.

Return on invested capital for the Company was 5 percent in the first quarter.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

Now I'll turn the call over to our CFO, Mike Buckley.

Michael C. Buckley, CFO, Robert Half:

Revenues

Thank you, Keith. Hello, everyone.

As Keith noted, global revenues were $1.352 billion in the first quarter.

On an adjusted basis, first-quarter talent solutions revenues were down 11 percent year over year. U.S. talent solutions revenues were $676 million, down 10 percent from the prior year's first quarter. Non-U.S. talent solutions revenues were

$199 million, down 15 percent year over year. We conduct talent solutions operations through offices in the United States and 17 other countries.

In the first quarter, there were 61.9 billing days, compared to 62.8 billing days in the same quarter one year ago. The second quarter of 2025 has 63.2 billing days, compared to 63.5 billing days during the second quarter of 2024.

Currency exchange rate movements during the first quarter had the effect of decreasing reported year-over-year total revenues by $12 million-$10 million for talent solutions and a $2 million impact to Protiviti.

Contract talent solutions bill rates for the first quarter increased 4.2 percent compared to one year ago, adjusted for changes in the mix of revenues by functional specialization, currency and country. This rate for the fourth quarter was 3.4 percent.

Now let's take a closer look at results for Protiviti. Global revenues in the first quarter were $477 million: $387 million of that is from the United States, and $90 million is from outside the United States. On an adjusted basis, global first-quarter Protiviti revenues were up 5 percent versus the year-ago period. U.S. Protiviti revenues were up 4 percent, while non-U.S. Protiviti revenues were up 8 percent compared to one year ago. Protiviti and its independently owned Member Firms serve clients through locations in the United States and 28 other countries.

Gross Margin

Turning now to gross margin: In contract talent solutions, first-quarter gross margin was 38.9 percent of applicable revenues, versus 39.5 percent in the first quarter one year ago. Conversion (or contract-to-hire) revenues were 3.2 percent of contract revenues in both the current quarter and the first quarter of 2024.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

Our permanent placement revenues were 12.8 percent of consolidated talent solutions revenues in the current quarter, and 12.3 percent in the first quarter of 2024. When combined with contract talent solutions gross margin, overall gross margin for talent solutions was 46.7 percent, compared to 47.0 percent of applicable revenues in the first quarter one year ago.

For Protiviti, gross margin was 18.9 percent of Protiviti revenues in both the current quarter and the first quarter of 2024. Adjusted gross margin for Protiviti was 18.1 percent for the quarter just ended, compared to 20.7 percent last year. Protiviti gross margin for the current quarter includes $8 million of one-time charges related to cost actions to reduce ongoing administrative expenses. These mid-April actions are expected to result in annual savings of $32.5 million, with 75 percent of a full quarter's benefit recognized in Q2 due to timing, and the full benefit each quarter thereafter.

Selling, General and Administrative Costs

Enterprise SG&A costs were 34.0 percent of global revenues in the first quarter, compared to 35.4 percent in the same quarter one year ago. Adjusted enterprise SG&A costs were 35.2 percent for the quarter just ended, compared to 33.0 percent one year ago.

Talent solutions SG&A costs were 43.7 percent of talent solutions revenues in the first quarter, versus 44.3 percent in the first quarter of 2024. Adjusted talent solutions SG&A costs were 45.5 percent for the quarter just ended, compared to 40.8 percent last year. Talent solutions SG&A for the current quarter includes $9 million in onetime charges related to mid-March cost actions to reduce ongoing administrative expenses, which are expected to result in annual savings of $47.5 million, with full effect in the second quarter and thereafter.

First-quarter SG&A costs for Protiviti were 16.3 percent of Protiviti revenues, compared to 15.9 percent of revenues for the same quarter one year ago.

Operating Income

Operating income for the quarter was $39 million. Adjusted operating income was $19 million in the first quarter, or 1.4 percent of revenue. First-quarter adjusted operating income from our talent solutions divisions was $10 million, or 1.2 percent of revenue. Adjusted operating income for Protiviti in the first quarter was $9 million, or 1.8 percent of revenue. Adjusted operating income includes $17 million of onetime charges related to cost actions to reduce ongoing administrative expenses-$9 million for talent solutions and $8 million for Protiviti.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

Loss from investments held in employee deferred compensation trusts

Our first-quarter 2025 income statement includes a $20 million loss from investments held in employee deferred compensation trusts. This is completely offset by an equal reduction of employee deferred compensation costs, which are reflected in SG&A expenses and direct costs. As such, it has no effect on our reported net income.

Tax Rate

Our first-quarter tax rate was 22 percent, compared to 30 percent one year ago. The lower 2025 rate reflects the accelerated timing of certain tax credits that would have otherwise been recorded in the upcoming fourth quarter. This has no impact on the estimated full-year tax rate for 2025 of 31 to 33 percent.

Accounts Receivable

At the end of the first quarter, accounts receivable were $787 million, and implied days sales outstanding (DSO) was 52.4 days.

Guidance

Before we move to second-quarter guidance, let's review some of the monthly revenue trends we saw in the first quarter and so far in April, all adjusted for currency and billing days.

Contract talent solutions exited the first quarter with March revenues down 13 percent versus the prior year, compared to a 12 percent decrease for the full quarter. Revenues for the first two weeks of April were down 12 percent compared to the same period last year.

Permanent placement revenues in March were down 10 percent versus March 2024. This compares to an 8 percent decrease for the full quarter. For the first three weeks in April, permanent placement revenues were down 2 percent compared to the same period in 2024.

We provide this information so you have insight into some of the trends we saw during the first quarter and into April. But as you know, these are very brief time periods. We caution against reading too much into them.

With that in mind, we offer the following second-quarter guidance:

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

Guidance Assumptions

Midpoint revenues of $1.36 billion are 7 percent lower than the same period in 2024 on an adjusted basis. On a sequential basis, mid-point estimated Q2 revenues are down 4 percent. For the most recent six-week period ended April 11, weekly sequential revenues have remained essentially flat.

The major financial assumptions underlying the midpoint of these estimates are as follows:

Adjusted revenue growth, year-over-year:

Talent solutions:

Down

10%

14%

Protiviti:

Overall:

Down

Adjusted gross margin percentage:

Contract talent:

38%

40%

Protiviti:

21%

24%

Overall:

37%

39%

Adjusted SG&A, as a percent of revenues:

Talent solutions:

43%

45%

Protiviti:

15%

16%

Overall:

33%

35%

Adjusted operating income, as a percent of revenues:

Talent solutions:

Protiviti:

Overall:

Tax Rate:

31%

35%

100 million to 101 million

2025 capital expenditures and capitalized cloud computing costs: $75 million to $95 million, with $15 to $25 million in the second quarter.

All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filings.

Now I'll turn the call back over to Keith.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

M. Keith Waddell, President and Chief Executive Officer, Robert Half:

Thank you, Mike.

U.S. trade and other policy uncertainty has caused many economists to lower their economic growth forecasts for the remainder of the year. Business confidence levels, which had surged following the U.S. elections, have recently moderated. Given this, in March we reduced our administrative cost structure and lowered staffing levels at corporate services and for administrative field positions in talent solutions, and did so in April for Protiviti. Revenue-producing roles were not impacted. This will result in annual cost savings of $80 million and improve profitability levels.

Despite the present uncertain outlook, we remain optimistic about our growth prospects once economic conditions improve.

U.S. job openings continue to reflect strong pent-up demand and remain well above historical averages. The supply of labor remains tight-the unemployment rate in the United States for those with a college degree is only 2.6 percent, with rates for many in-demand accounting, finance and other professionals even lower.

Though the latest NFIB Small Business Optimism Index is off its recent peaks, it is still only slightly below its long-term average. Further, 40 percent of small business owners reported job openings they could not fill in March-and of those trying to hire, 87 percent reported few or no qualified applicants for the positions they were trying to fill.

As business confidence improves, hiring urgency returns, project demand accelerates, deferred backlogs and growth initiatives are re-prioritized, and labor churn normalizes. This puts pressure on client resources that are often already stretched thin and creates hiring and consulting demand that traditionally sets the stage for very strong gains for us in the early part of growth cycles.

Although Protiviti's results were also impacted by elevated economic uncertainty, it achieved year-over-year revenue growth for the third quarter in a row. Protiviti's prospects and pipeline remain very strong, though the current environment has lengthened the time it takes to convert opportunities to wins and begin projects. The expanded use of contract professionals sourced through talent solutions continues to be a significant contributor to Protiviti's success, and is a key component of our enterprise-wide competitive advantage.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

We hold steadfast to our time-tested corporate purpose-to connect people to meaningful and exciting work and provide clients with the talent and consulting expertise they need to confidently compete and grow.

We'd like to thank our employees across the globe for their resilience and unwavering commitment to success. Their efforts have earned us significant recognition already in 2025, including being honored as one of America's Most Innovative Companies by Fortune and one of America's Best Large Employers by Forbes. We are particularly proud that high levels of employee engagement again earned both Robert Half and Protiviti recognition as two of Fortune's 100 Best Companies to Work For®.

Now, Mike and I would be happy to answer your questions. Please ask just one question and a single follow-up, as needed. If there's time, we'll come back to you for additional questions.

Q&A Session

M. Keith Waddell, President and Chief Executive Officer, Robert Half:

That was our last question. Thank you for joining us today.

Operator:

This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the Investor Center of Robert Half's website at roberthalf.com. You also can dial the conference call replay. Dial-in details and the confirmation code are contained in the Company's press release issued earlier today.

Robert Half Q1 2025 Financial Results Conference Call, Prepared Remarks, April 23, 2025

Disclaimer

Robert Half Inc. published this content on April 23, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 23, 2025 at 20:20 UTC.