ASGN (ASGN) FY Conference June 04, 2025 03:00 PM ET Speaker0 Hello, everyone. Thank you for joining. I'm Maggie Nolan. I'm the research analyst here at William Blair who covers IT services, and that includes ASGN along with my colleague, Trevor Romeo. I'm required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit our website at williamblair.com. So we're very excited to have ASGN here with us today, Ed Hansen, the CEO Shiv, the President Marie, t ...

Founder Ryan Malone Returns to Board Chairman, Passes the Baton to Bleibtreu inStrategic Leadership TransitionIRVINE, Calif., June 4, 2025 /PRNewswire/ -- SmartBug Media® — HubSpot's most decorated Elite Partner in the world and the digital agency of choice for organizations looking to create resilient growth across the entire customer lifecycle — today announced a strategic leadership transition, promoting Adam Bleibtreu from his current role as president of the company to chief executive officer, effectiv ...

Financial Performance - Revenues for Q1 2025 were $968.3 million, a decrease of 7.7% compared to $1,049.0 million in Q1 2024[8] - Gross profit for Q1 2025 was $275.4 million, down from $296.2 million in Q1 2024, reflecting a gross margin of 28.5%[8] - Net income for Q1 2025 was $20.9 million, a decline of 45.0% from $38.1 million in Q1 2024, resulting in earnings per share of $0.48[8] - The company reported a comprehensive income of $21.7 million for Q1 2025, compared to $37.9 million in Q1 2024[8] - Basic earnings per share for the three months ended March 31, 2025, were $0.48, compared to $0.82 for the same period in 2024, reflecting a decrease of approximately 41.5%[25] - Operating income decreased to $46.6 million in Q1 2025, a decline of 34.2% from $70.9 million in Q1 2024[8] - The Company reported a segment operating income of $74.9 million for the three months ended March 31, 2025, compared to $91.8 million for the same period in 2024, a decrease of approximately 18.4%[27] Assets and Liabilities - Total assets increased to $3,698.4 million as of March 31, 2025, compared to $3,429.0 million at December 31, 2024[7] - Long-term debt rose to $1,282.6 million as of March 31, 2025, up from $1,033.5 million at the end of 2024[7] - Long-term debt as of March 31, 2025, totaled $1,282.6 million, an increase from $1,033.5 million as of December 31, 2024[18] - The Company has $550.0 million of unsecured senior notes due in 2028, bearing interest at 4.625% payable semiannually[20] Acquisition Details - The company completed the acquisition of TopBloc, LLC for $340.0 million, with 90% paid in cash and 10% in equity[14] - The preliminary fair value of identifiable intangible assets from the TopBloc acquisition is estimated at $78.9 million, with goodwill of $245.9 million[14] - Goodwill balance as of March 31, 2025, is $2,139.5 million, reflecting an increase from $1,893.1 million as of December 31, 2024, primarily due to the acquisition of TopBloc for $245.9 million[15] - Goodwill from the TopBloc acquisition is estimated at $245.9 million, with approximately $215.6 million deductible for income taxes[14] Cash Flow - Cash and cash equivalents decreased to $107.0 million at the end of Q1 2025, down from $205.2 million at the beginning of the year[11] - Net cash provided by operating activities was $16.8 million in Q1 2025, significantly lower than $73.3 million in Q1 2024[11] Segment Performance - The Commercial Segment generated revenues of $672.2 million for the three months ended March 31, 2025, while the Federal Government Segment contributed $296.1 million[27] - The Company’s Federal Government Segment revenues from the Department of Defense and Intelligence Agencies were $128.9 million for the three months ended March 31, 2025, down from $150.1 million in 2024[30] - The Federal Government Segment generated revenues of $296.1 million for the three months ended March 31, 2025, down from $317.5 million in the same period of 2024, a decrease of approximately 6.5%[30] - The Commercial Segment's consulting revenues increased to $290.1 million for the three months ended March 31, 2025, compared to $277.0 million in the same period of 2024, reflecting a growth of 4.5%[27] Compliance and Future Expenses - The Company is in compliance with its debt covenants, with a maximum ratio of senior secured debt to trailing-twelve-months consolidated EBITDA of 1.64 to 1 as of March 31, 2025[19] - Estimated future amortization expense for identifiable intangible assets totals $199.2 million, with the highest expense of $54.1 million expected in 2026[17]

Financial Data and Key Metrics Changes - Revenues totaled $968.3 million, a decrease of 7.7% year over year, in line with guidance expectations [31] - Adjusted EBITDA margin was 9.7% for the quarter [8][34] - Net income for the quarter was $20.9 million [34] - Free cash flow totaled $6.6 million, lower than typical due to an increase in Days Sales Outstanding (DSO) [36] Business Line Data and Key Metrics Changes - Revenues from the commercial segment were $672.2 million, a decrease of 8.1% year over year [31] - Assignment revenue totaled $382.1 million, a decrease of 16% year over year [31] - Commercial consulting revenues, the highest margin stream, totaled $290.1 million, an increase of 4.7% year over year [31] - Federal government segment revenues were $296.1 million, a decrease of 6.7% year over year [31] Market Data and Key Metrics Changes - Consulting bookings for the commercial segment were $336.9 million, improving 4.2% compared to the first quarter of 2024 [13] - Book-to-bill ratio was 1.2 times for both commercial and federal segments [12][24] - Contract backlog for the federal government segment was over $3.1 billion, with a coverage ratio of 2.6 times trailing twelve-month revenues [24] Company Strategy and Development Direction - The company aims to nurture long-standing client relationships and expand technology partnerships, focusing on IT modernization and efficiency [11] - The acquisition of TopBloc is expected to enhance solution capabilities and drive future growth [10][42] - The company is committed to providing high-value IT services while maintaining a flexible cost structure [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while macroeconomic uncertainty persists, there is confidence in the company's unique business model and its ability to adapt [41] - Clients remain cautious about increasing IT spending, but demand for AI and data solutions continues to grow [9][15] - The company expects to see improvements in DSO and is cautiously optimistic about future revenue guidance [36][38] Other Important Information - SG&A expenses for the quarter were $214.5 million, including one-time costs related to acquisition and software write-offs [33] - The company repurchased approximately 0.6 million shares at an average price of $78.44, with $478.6 million remaining under the share repurchase authorization [35] Q&A Session Summary Question: Can you characterize bookings across different businesses? - Management indicated a mix of renewal and new work, with renewal being a larger percentage [52] Question: What is the impact of DOGE on the federal business? - The impact has been more on the civilian side rather than defense, with some interruptions in traditional management consulting work [55] Question: How have margins been maintained? - Margins have improved due to a higher mix of consulting work and the addition of capabilities like TopBloc [66] Question: What is the visibility on client projects? - Clients are in a cautious wait-and-see mode regarding new projects, influenced by macroeconomic factors [73] Question: How much did TopBloc contribute to Q1 results? - TopBloc's contribution was immaterial as it was only included for a few weeks in March [78] Question: What is the velocity of adjudications in relation to DOGE? - The velocity of adjudications is less visible, with agencies ensuring alignment on contract decisions [130]

分组1 - ASGN Inc reported quarterly earnings of $0.92 per share, missing the Zacks Consensus Estimate of $0.95 per share, and down from $1.16 per share a year ago, representing an earnings surprise of -3.16% [1] - The company posted revenues of $968.3 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.24%, but down from $1.05 billion year-over-year [2] - ASGN Inc shares have declined approximately 30.3% since the beginning of the year, compared to a decline of -10.1% for the S&P 500 [3] 分组2 - The current consensus EPS estimate for the coming quarter is $1.25 on revenues of $1.01 billion, and for the current fiscal year, it is $4.88 on revenues of $4.01 billion [7] - The Zacks Industry Rank for Computers - IT Services is currently in the bottom 42% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]

Q1 2025 Earnings Supplemental Materials Safe Harbor Certain statements made in this news release are "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking information includes estimates of the company's future financial and operating performance. Certain data and statements in this presentation, other than those setting forth strictly historical information, are fo ...

Financial Performance - Total revenues for Q1 2025 were $968.3 million, a decrease from $1.05 billion in Q1 2024[5] - Net income for Q1 2025 was $20.9 million, down from $38.1 million in the same period last year[9] - Adjusted EBITDA for Q1 2025 was $93.6 million, representing 9.7% of revenues, compared to $108.3 million or 10.3% in Q1 2024[10] - SG&A expenses increased to $214.5 million from $210.2 million in Q1 2024, including a $4.4 million write-off related to software enhancements[8] - Cash provided by operating activities for Q1 2025 was $16.8 million, a decrease of 77% from $73.3 million in Q4 2024[24] - Free Cash Flow for Q1 2025 was $6.6 million, down 89% from $62.5 million in Q4 2024[24] - Net income for Q1 2025 was $20.9 million, a decline of 45% compared to $38.1 million in Q4 2024[26] - Adjusted EBITDA for Q1 2025 was $93.6 million, down 13.5% from $108.3 million in Q4 2024[26] - The company expects net income for Q2 2025 to be between $29.3 million and $34.3 million[28] - Adjusted Net Income for Q2 2025 is projected to range from $45.5 million to $50.5 million[28] Revenue Segments - IT consulting revenues accounted for approximately 61% of total revenues, up from 56.7% in Q1 2024[6] - The Commercial Segment generated revenues of $672.2 million, down from $731.5 million in Q1 2024, while the Federal Government Segment revenues were $296.1 million, down from $317.5 million[5] - New bookings in the Commercial Segment for the trailing twelve months were $1.3 billion, with a book-to-bill ratio of 1.1[3] - New contract awards in the Federal Government Segment for the trailing twelve months were $1.5 billion, with a book-to-bill ratio of 1.2[3] - The company reported a book-to-bill ratio for the Commercial consulting business, indicating strong demand for new contracts[33] - The company anticipates continued growth in the Federal Government Segment with new contract awards expected to contribute to future revenues[34] Acquisitions and Investments - The company completed the acquisition of TopBloc for $340 million, financed with 90% cash and 10% equity[11] Future Outlook - The company expects Q2 2025 revenues to range between $985 million and $1.015 billion, reflecting current market conditions[12] - Total assets increased to $3,698.4 million in Q1 2025, up from $3,429.0 million in Q4 2024[24] - Long-term debt rose to $1,282.6 million in Q1 2025, an increase of 24% from $1,033.5 million in Q4 2024[24]

Core Viewpoint - ASGN Inc is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of surpassing expectations in previous quarters [1][6]. Earnings Performance - ASGN Inc has consistently exceeded earnings estimates, averaging a 5% beat over the last two quarters [2]. - In the last reported quarter, ASGN Inc achieved earnings of $1.28 per share, surpassing the Zacks Consensus Estimate of $1.23 per share by 4.07% [3]. - In the previous quarter, the company reported earnings of $1.43 per share against an expected $1.35 per share, resulting in a surprise of 5.93% [3]. Earnings Estimates and Predictions - There has been a favorable shift in earnings estimates for ASGN Inc, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [6]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests that ASGN Inc has a nearly 70% chance of delivering a positive surprise [7]. - Currently, ASGN Inc has an Earnings ESP of +0.35%, reflecting increased analyst optimism regarding its near-term earnings potential [9].

Financial Performance - Revenues for 2024 were $4.1 billion, a decrease of 7.9% year-over-year, with the Commercial Segment contributing $2.87 billion (down 9.6%) and the Federal Government Segment contributing $1.23 billion (down 3.5%) [128] - Gross profit declined 7.5% to $1.18 billion, with a gross margin of 28.9%, reflecting a higher mix of Commercial consulting revenues [134] - Net income for 2024 was $175.2 million, down from $219.3 million in 2023 [139] Expenses - Selling, general and administrative expenses were $821.2 million, representing 20.0% of revenues, down from 19.0% in 2023 [135] Bookings and Contracts - Commercial consulting bookings were $1.28 billion, down from $1.35 billion in 2023, with a book-to-bill ratio of 1.1 to 1 [142] - New contract awards in the Federal Government Segment increased to $1.34 billion from $1.02 billion in 2023, with a book-to-bill ratio of 1.1 to 1 [144] - Funded contract backlog was $529.0 million, while the total contract backlog was $3.12 billion, reflecting a coverage ratio of 2.5 to 1 [144] Cash Flow - Cash and cash equivalents at year-end were $205.2 million, with working capital of $550.6 million [145] - Net cash provided by operating activities was $400.0 million, down from $456.9 million in 2023 [146] - Net cash used in investing activities was $35.3 million, primarily related to capital expenditures [147] - Net cash used in financing activities in 2024 was $333.2 million, primarily for stock repurchases of $327.2 million and principal payments of $5.0 million on term loan B [148] - In 2023, net cash used in financing activities was $310.9 million, including $273.1 million for stock repurchases and $31.5 million in net repayments under the revolving credit facility [148] Debt and Obligations - Long-term debt obligations total $1,300.7 million, with $62.0 million due in less than 1 year and $627.7 million due in 3-5 years [150] - Total contractual cash obligations amount to $1,418.3 million, including operating leases and purchase obligations [150] - The company had no off-balance sheet arrangements as of December 31, 2024 [153] Reserves and Liabilities - Workers' compensation loss reserves were $2.8 million in 2024, down from $3.0 million in 2023, net of anticipated recoveries of $10.5 million [151] - Deferred compensation plan liability increased to $17.8 million in 2024 from $16.6 million in 2023 [152] Interest Rate Sensitivity - A hypothetical 100 basis-point change in interest rates on variable-rate debt would result in an interest expense fluctuation of approximately $4.9 million based on $493.8 million of debt outstanding [155] Credit Facilities - The August 2023 amendments to the senior secured credit facility generated net proceeds of $8.0 million, offset by related amendment costs [149] - The company has undrawn stand-by letters of credit outstanding of $3.7 million as of December 31, 2024 [151]

Financial Data and Key Metrics Changes - For Q4 2024, total revenues were $985 million, a decrease of 8.3% year-over-year, but essentially flat compared to Q3 2024 [36] - Gross margin for Q4 2024 was 29%, an increase of 60 basis points from the previous year [39] - Adjusted EBITDA was $109.7 million, with an adjusted EBITDA margin of 11.1% [40] Business Line Data and Key Metrics Changes - Revenue from the Commercial Segment was $692.7 million, a decrease of 7.5% year-over-year, while consulting revenues increased by 6% to $284.7 million [37][38] - Federal Government segment revenues were $292.3 million, a decrease of 10.2% year-over-year, primarily due to lower-than-expected software license revenues [38] Market Data and Key Metrics Changes - The Federal Government segment maintained a robust win rate of approximately 90% for re-competed contracts, with a contract backlog exceeding $3.1 billion [27][28] - The company noted improvements in the Financial Services vertical, particularly among Big Banking clients, which are significant IT spenders [14][55] Company Strategy and Development Direction - The company is focused on advancing towards higher-end, high-value IT consulting solutions, with IT consulting revenues comprising approximately 58% of total revenues [6] - The acquisition of TopBloc is aimed at enhancing organic consulting growth and capitalizing on the growing demand for ERP implementations [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving business confidence, although a turnaround in IT spending has yet to materialize [8] - The company anticipates that new administration spending initiatives could lead to increased demand for its core solutions in AI, cybersecurity, and digital modernization [29] Other Important Information - The company plans to allocate free cash flow towards paying down debt post-acquisition of TopBloc, which is expected to close in late Q1 2025 [45] - Free cash flow for Q4 was $88.9 million, with a conversion rate of approximately 81% of adjusted EBITDA [41] Q&A Session Summary Question: Can you provide more color on Federal Government conversations regarding the new administration? - Management indicated that clients are still trying to understand the impact of the new administration, but there is a strong need for services in AI, cybersecurity, and IT modernization [60][61] Question: Have you seen any slowdown in awarding contracts or payments? - Management noted that while there are mixed signals regarding new awards, they have not seen a slowdown in payments [64][66] Question: What are your thoughts on the TopBloc acquisition and its strategic importance? - The acquisition is seen as accretive to growth and margins, with significant opportunities in the Workday ecosystem [70][78] Question: Are there signs of improving activity in client budgets? - Management observed encouraging signs in certain sectors, particularly financial services, indicating a potential uptick in IT spending [79][83] Question: Can you elaborate on the performance of the Financial Services vertical? - The Financial Services vertical has seen a slight recovery, with current revenue mix in the high teens, compared to 20-25% historically [88][91] Question: How did Creative Circle perform in the quarter? - Creative Circle and CyberCoders, which make up about 9% of revenue, experienced a decline greater than the IT offering, consistent with previous trends [139]