Robert Half(RHI) - 2024 Q3 - Quarterly Report

Revenue Performance - Revenue for the first three quarters of 2024 was $4.41 billion, a decrease of 10.3% compared to the prior year[60] - The company's total revenues for Q3 2024 were$ 1.47 billion, a 6.3% decrease compared to $1.56 billion in Q3 2023[71] - Total revenues for the nine months ended September 30, 2024, were$ 4.41 billion, a 10.3% decrease compared to $4.92 billion in the same period in 2023[90] Net Income and Earnings - Net income for the first three quarters of 2024 was$ 197 million, with diluted net income per share of $1.91[60] - Total income before income taxes for Q3 2024 was$ 95 million, or 6.5% of revenues, down from $136 million, or 8.7% of revenues, in Q3 2023[84] - Combined segment income for Q3 2024 was$ 90 million, or 6.2% of revenues, down from $130 million, or 8.3% of revenues, in Q3 2023[84] - Total income before income taxes was$ 282 million, or 6.4% of revenues, for the nine months ended September 30, 2024[101] - Combined segment income was $266 million, or 6.0% of revenues, for the nine months ended September 30, 2024[102] Contract Talent Solutions - Contract talent solutions revenues decreased by 11.9% to$ 831 million in Q3 2024, driven by a 12.8% decrease in hours worked[71] - Contract talent solutions revenues decreased by 14.5% to $2.57 billion for the nine months ended September 30, 2024, compared to$ 3.01 billion in the same period in 2023[90] - Contract talent solutions gross margin dollars decreased by 13.9% to $323 million in Q3 2024 from$ 375 million in Q3 2023, with gross margin percentage dropping to 38.9% from 39.8%[73][75] - Contract talent solutions gross margin dollars decreased by 15.7% to $1.01 billion in 2024 from$ 1.20 billion in 2023, with gross margin percentage dropping to 39.3% from 39.8%[92] - Contract talent solutions selling, general and administrative expenses increased by 3.7% to $318 million in Q3 2024 from$ 307 million in Q3 2023, representing 38.3% of revenues compared to 32.5% in Q3 2023[78][79] - Contract talent solutions selling, general and administrative expenses decreased by 2.8% to $958 million in 2024 from$ 986 million in 2023, with the expense ratio rising to 37.2% from 32.8%[96] Permanent Placement Talent Solutions - Permanent placement talent solutions revenues decreased by 11.9% to $123 million in Q3 2024, due to a 13.6% decrease in placements[72] - Permanent placement talent solutions revenues decreased by 15.0% to$ 379 million for the nine months ended September 30, 2024, compared to $446 million in the same period in 2023[90] - Permanent placement talent solutions gross margin dollars declined by 11.9% to$ 123 million in Q3 2024 from $140 million in Q3 2023[74][75] - Permanent placement talent solutions gross margin dollars fell by 15.0% to$ 378 million in 2024 from $445 million in 2023, maintaining a gross margin percentage of 99.8%[92] - Permanent placement talent solutions selling, general and administrative expenses decreased by 5.0% to$ 113 million in Q3 2024 from $119 million in Q3 2023, but increased as a percentage of revenues to 92.0% from 85.3%[78][79] - Permanent placement talent solutions selling, general and administrative expenses decreased by 9.8% to$ 346 million in 2024 from $384 million in 2023, with the expense ratio increasing to 91.3% from 86.1%[97] Protiviti Performance - Protiviti revenues increased by 6.4% to$ 511 million in Q3 2024, driven by a 4.4% increase in average hourly bill rates and a 2.0% increase in billable hours[72] - Protiviti revenues decreased by 0.3% to $1.46 billion for the nine months ended September 30, 2024, compared to$ 1.47 billion in the same period in 2023[90] - Protiviti's gross margin dollars remained flat at $126 million in Q3 2024 compared to Q3 2023, but gross margin percentage decreased to 24.6% from 26.2%[74][75] - Protiviti's gross margin dollars decreased by 7.3% to$ 323 million in 2024 from $348 million in 2023, with reported gross margin percentage dropping to 22.1% from 23.8%[92] - Protiviti's selling, general and administrative expenses increased by 12.4% to$ 80 million in Q3 2024 from $71 million in Q3 2023, representing 15.6% of revenues compared to 14.7% in Q3 2023[78][79] - Protiviti's selling, general and administrative expenses increased by 3.6% to$ 229 million in 2024 from $221 million in 2023, with the expense ratio rising to 15.6% from 15.1%[97] Gross Margin Analysis - Total gross margin dollars decreased by 10.8% to$ 572 million in Q3 2024 from $641 million in Q3 2023, with gross margin percentage dropping to 39.0% from 41.0%[73][75] - Gross margin for the three months ended September 30, 2024 was$ 571.7 million, or 39.0% of revenue, compared to $640.9 million, or 41.0% of revenue, for the same period in 2023[76] - Adjusted gross margin for the three months ended September 30, 2024 was$ 577.7 million, or 39.4% of revenue, compared to $638.1 million, or 40.8% of revenue, for the same period in 2023[76] - Total gross margin dollars decreased by 14.0% to$ 1.71 billion for the nine months ended September 30, 2024, compared to $1.99 billion in 2023[92] - Gross margin for the nine months ended September 30, 2024, was$ 1,711,132, representing 38.8% of revenue, compared to $1,990,840, or 40.5% of revenue, for the same period in 2023[95] - Adjusted gross margin for the nine months ended September 30, 2024, was$ 1,728,809, or 39.2% of revenue, compared to $1,998,091, or 40.6% of revenue, for the same period in 2023[95] Selling, General, and Administrative Expenses - Selling, general and administrative expenses increased by 2.8% to$ 511 million in Q3 2024 from $497 million in Q3 2023, representing 34.9% of revenues compared to 31.8% in Q3 2023[78][79] - Adjusted selling, general and administrative expenses decreased by 4.0% to$ 488 million in Q3 2024 from $508 million in Q3 2023, representing 33.3% of revenues compared to 32.5% in Q3 2023[78][79] - Selling, general and administrative expenses for the nine months ended September 30, 2024, were$ 1.53 billion, down 3.6% from $1.59 billion in 2023, with the expense ratio increasing to 34.7% from 32.3%[96] - Adjusted selling, general, and administrative expenses for the nine months ended September 30, 2024, were$ 1.46 billion, down 6.1% from $1.56 billion in the same period in 2023[96] U.S. and International Operations - U.S. operations accounted for 78.2% of total revenue in Q3 2024, while international operations contributed 21.8%[71] - U.S. operations contributed$ 1.15 billion (78.2% of total revenue) in Q3 2024, a 5.2% decrease from $1.21 billion (77.3% of total revenue) in Q3 2023[71] - International operations generated$ 319 million (21.8% of total revenue) in Q3 2024, a 10.2% decrease from $355 million (22.7% of total revenue) in Q3 2023[71] - Revenues from U.S. operations decreased by 10.0% to$ 3.44 billion for the nine months ended September 30, 2024, compared to $3.82 billion in the same period in 2023[90] - Revenues from international operations decreased by 11.1% to$ 976 million for the nine months ended September 30, 2024, compared to $1.10 billion in the same period in 2023[90] Economic and Labor Market Conditions - U.S. real GDP increased by 2.8% during the first three quarters of 2024, while the unemployment rate rose from 3.7% to 4.1%[61] - The unemployment rate for college-educated individuals in the U.S. remained low at 2.3%, with even lower rates for in-demand accounting, finance, and IT positions[61] Headcount and Workforce Strategy - The company decreased headcount for contract and permanent placement talent solutions segments but increased full-time headcount for Protiviti compared to prior year-end levels[61] - The company's proprietary "Recruiters plus award-winning AI" strategy continues to add significant value to clients[61] Income Taxes and Investments - The provision for income taxes was 31.2% for Q3 2024, up from 29.9% in Q3 2023, primarily due to nondeductible expenses[88] - The Company's (income) loss from investments held in employee deferred compensation trusts was income of$ 29 million for Q3 2024, compared to a loss of $14 million in Q3 2023[83] - Income from investments held in employee deferred compensation trusts was$ 88 million for the nine months ended September 30, 2024[101] Cash Flow and Capital Expenditures - Cash and cash equivalents were $570 million at September 30, 2024[104] - Operating activities provided cash flows of$ 255 million during the nine months ended September 30, 2024[104] - Capital expenditures totaled $65 million for the nine months ended September 30, 2024, with$ 23 million for cloud computing arrangements[105] - The company expects 2024 capital expenditures to range from $80 million to$ 90 million, with $45 million to$ 55 million for software initiatives and technology infrastructure[105] - Cash and cash equivalents decreased to $570 million as of September 30, 2024, from$ 729 million in 2023[104] - Operating activities provided cash flows of $255 million in the nine months ended September 30, 2024, compared to$ 522 million in the same period in 2023[104] - Capital expenditures for the nine months ended September 30, 2024, totaled $65 million, with 58% allocated to software initiatives and technology infrastructure[105] - The company repurchased 2.5 million shares at a cost of$ 171 million during the nine months ended September 30, 2024[105] - The company announced a quarterly dividend of $0.53 per share, payable on December 13, 2024[105] Financial Obligations and Credit Facilities - Employee deferred compensation plan obligations totaled$ 664 million as of September 30, 2024[107] - The company reported current and long-term operating lease liabilities of $66 million and$ 173 million, respectively, as of September 30, 2024[107] - The company has an unsecured revolving credit facility of $100.0 million, maturing in May 2026, with no borrowings as of September 30, 2024[105]