Robert Half(RHI) - 2022 Q2 - Quarterly Report

Form Details Key identification details for Robert Half International Inc., including filing status, incorporation, and shares outstanding Registrant Information Key identification details for Robert Half International Inc., including filing status, incorporation, and shares outstanding - Robert Half International Inc. is a Delaware corporation, identified as a large accelerated filer[2][4] Registrant Information | Metric | Value | | :----- | :---- | | Commission File Number | 1-10427 | | Shares Outstanding (as of July 31, 2022) | 109,567,871 | | Common Stock Par Value | $0.001 per share | PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Unaudited condensed consolidated financial statements for periods ended June 30, 2022, and December 31, 2021 Condensed Consolidated Statements of Financial Position (Unaudited) Balance sheet shows slight decrease in total assets and liabilities, with increased stockholders' equity Condensed Consolidated Statements of Financial Position (Unaudited) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Assets | | | | | Cash and cash equivalents | $590,909 | $619,001 | $(28,092) | | Accounts receivable, net | $1,091,598 | $984,691 | $106,907 | | Employee deferred compensation trust assets | $416,678 | $494,991 | $(78,313) | | Total current assets | $2,260,742 | $2,268,547 | $(7,805) | | Total assets | $2,933,835 | $2,952,359 | $(18,524) | | Liabilities | | | | | Total current liabilities | $1,266,873 | $1,358,673 | $(91,800) | | Total liabilities | $1,466,167 | $1,571,308 | $(105,141) | | Stockholders' Equity | | | | | Total stockholders' equity | $1,467,668 | $1,381,051 | $86,617 | Condensed Consolidated Statements of Operations (Unaudited) Strong revenue and net income growth for Q2 and H1 2022, driven by significant increases in service revenues Condensed Consolidated Statements of Operations (Unaudited) | Metric (in thousands, except per share) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | YoY Change (%) | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------- | | Service revenues | $1,862,827 | $1,580,581 | 17.98% | | Gross margin | $815,547 | $664,872 | 22.66% | | Income before income taxes | $240,833 | $203,862 | 18.13% | | Net income | $175,821 | $149,213 | 17.83% | | Diluted Net income per share | $1.60 | $1.33 | 20.30% | | Metric (in thousands, except per share) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | YoY Change (%) | | :------------------------------------ | :----------------------------- | :----------------------------- | :------------- | | Service revenues | $3,677,661 | $2,978,961 | 23.45% | | Gross margin | $1,587,393 | $1,226,583 | 29.42% | | Income before income taxes | $468,233 | $353,968 | 32.29% | | Net income | $344,060 | $259,811 | 32.43% | | Diluted Net income per share | $3.12 | $2.32 | 34.48% | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Total comprehensive income for Q2 and H1 2022 impacted by net income and negative foreign currency adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | YoY Change | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | | Net income | $175,821 | $149,213 | $26,608 | | Foreign currency translation adjustments, net of tax | $(24,048) | $4,398 | $(28,446) | | Total other comprehensive income (loss) | $(24,033) | $4,437 | $(28,470) | | Total comprehensive income (loss) | $151,788 | $153,650 | $(1,862) | | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | | Net income | $344,060 | $259,811 | $84,249 | | Foreign currency translation adjustments, net of tax | $(25,016) | $(4,439) | $(20,577) | | Total other comprehensive income (loss) | $(24,985) | $(4,360) | $(20,625) | | Total comprehensive income (loss) | $319,075 | $255,451 | $63,624 | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Stockholders' equity increased from net income and stock-based compensation, partially offset by dividends and repurchases Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | Metric (in thousands, except per share) | Balance at Dec 31, 2021 | Balance at June 30, 2022 | Change | | :------------------------------------ | :---------------------- | :----------------------- | :----- | | Total Stockholders' Equity | $1,381,051 | $1,467,668 | $86,617 | | Net income (Six Months) | N/A | $344,060 | N/A | | Other comprehensive income (loss) (Six Months) | N/A | $(24,985) | N/A | | Dividends declared (Six Months) | N/A | $(95,738) | N/A | | Stock-based compensation (Six Months) | N/A | $29,593 | N/A | | Repurchases of common stock (Six Months) | N/A | $(166,313) | N/A | | Shares outstanding (June 30, 2022) | 110,686 | 109,607 | (1,079) | | Shares outstanding (June 30, 2021) | 113,128 | 111,970 | (1,158) | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash from operations increased, while investing and financing activities used more cash, leading to a net decrease Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | YoY Change | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | | Net cash flows provided by operating activities | $302,078 | $233,472 | $68,606 | | Net cash flows used in investing activities | $(55,196) | $(31,113) | $(24,083) | | Net cash flows used in financing activities | $(256,839) | $(231,910) | $(24,929) | | Change in cash and cash equivalents | $(28,092) | $(31,621) | $3,529 | | Cash and cash equivalents at end of period | $590,909 | $542,805 | $48,104 | Notes to Condensed Consolidated Financial Statements (Unaudited) Detailed notes on accounting policies, financial line items, and other relevant information, including revenue and leases Note A—Summary of Significant Accounting Policies Outlines business model, brand unification, segment renaming, and key accounting policies for revenue and compensation - The Company completed a multiyear process to unify its divisional brands under a single 'Robert Half' brand, simplifying its go-to-market structure and allowing for future flexibility[17][88] - Reportable segments were renamed to 'contract talent solutions', 'permanent placement talent solutions', and 'Protiviti'[17][88] Advertising Costs | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | | Advertising Costs | $14,500 | $11,800 | Advertising Costs | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Advertising Costs | $28,700 | $20,200 | Employee Deferred Compensation Trust Assets and Allowance for Credit Losses | Metric (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Employee deferred compensation trust assets | $416,678 | $494,991 | | Allowance for Credit Losses (Balance) | $22,835 | $21,530 | Note B—New Accounting Pronouncements ASU 2021-10 adoption had no material impact; no other new accounting pronouncements were yet adopted - The Company adopted ASU 2021-10, 'Government Assistance,' in January 2022, which did not materially impact the financial statements[37] - No other recently issued accounting pronouncements were yet adopted by the Company[38] Note C—Revenue Recognition Details revenue recognition policies across three segments, including criteria for service delivery and revenue disaggregation - Contract talent solutions revenues are recognized on a gross basis as the Company acts as a principal, bearing the risk of hiring, selecting, pricing, and payment for engagement professionals[40][41] - Permanent placement talent solutions revenues are primarily recognized when candidates accept permanent employment offers, with historical data used to estimate and accrue for guarantee period liabilities[43] - Protiviti's consulting revenues are recognized over time using a proportional performance method based on costs incurred, as services provided have no alternative use and contracts include enforceable payment rights[44] Service Revenues | Service Revenues (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contract talent solutions | $1,165,693 | $978,281 | $2,321,416 | $1,867,557 | | Permanent placement talent solutions | $200,096 | $143,640 | $386,878 | $255,344 | | Protiviti | $497,038 | $458,660 | $969,367 | $856,060 | | Total service revenues | $1,862,827 | $1,580,581 | $3,677,661 | $2,978,961 | Contract Liabilities | Contract Liabilities (in thousands) | Amount | | :---------------------------------- | :----- | | Balance as of December 31, 2021 | $25,601 | | Payments in advance of satisfaction of performance obligations | $36,646 | | Revenue recognized | $(41,310) | | Balance as of June 30, 2022 | $20,061 | Note D—Other Current Assets Other current assets slightly decreased, with cloud computing costs rising and other miscellaneous assets falling Other Current Assets | Other Current Assets (in thousands) | June 30, 2022 | December 31, 2021 | Change | | :---------------------------------- | :------------ | :---------------- | :----- | | Prepaid expenses | $72,932 | $69,526 | $3,406 | | Unamortized cloud computing implementation costs | $50,410 | $44,692 | $5,718 | | Other | $38,215 | $55,646 | $(17,431) | | Total Other current assets | $161,557 | $169,864 | $(8,307) | Note E—Property and Equipment, Net Net property and equipment increased due to additions in computer hardware and software, offset by depreciation Property and Equipment, Net | Property and Equipment (in thousands) | June 30, 2022 | December 31, 2021 | Change | | :------------------------------------ | :------------ | :---------------- | :----- | | Computer hardware | $168,714 | $157,408 | $11,306 | | Computer software | $248,496 | $246,013 | $2,483 | | Property and equipment, cost | $676,027 | $661,718 | $14,309 | | Accumulated depreciation | $(572,411) | $(568,315) | $(4,096) | | Property and equipment, net | $103,616 | $93,403 | $10,213 | Note F—Leases Operating lease expenses increased for Q2 and H1 2022, with a weighted average remaining lease term of 3.6 years Operating Lease Details | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | | Operating lease expenses | $22,500 | $21,700 | Operating Lease Details | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Operating lease expenses | $45,100 | $43,200 | | Cash paid for operating lease liabilities | $46,743 | $45,531 | | Right-of-use assets obtained from new leases | $17,384 | $8,467 | | Right-of-use assets from modifications | $17,744 | $13,829 | Lease Terms and Discount Rate | Metric | June 30, 2022 | December 31, 2021 | | :----- | :------------ | :---------------- | | Weighted average remaining lease term | 3.6 years | 3.9 years | | Weighted average discount rate | 2.3% | 2.3% | | Present value of operating lease liabilities | $250,591 | N/A | - As of June 30, 2022, the Company had additional future minimum lease obligations of $6.1 million under executed operating lease contracts that had not yet commenced[57] Note G—Goodwill Goodwill slightly decreased due to foreign currency adjustments, with no impairment identified in the annual assessment Goodwill | Goodwill (in thousands) | December 31, 2021 | June 30, 2022 | Change | | :---------------------- | :---------------- | :------------ | :----- | | Contract talent solutions | $134,584 | $134,215 | $(369) | | Permanent placement talent solutions | $26,189 | $26,117 | $(72) | | Protiviti | $62,082 | $61,936 | $(146) | | Total Goodwill | $222,855 | $222,268 | $(587) | - The Company's annual goodwill impairment assessment for the quarter ended June 30, 2022, determined no impairment events or circumstances[61] Note H—Accrued Payroll and Benefit Costs Accrued payroll and benefit costs slightly increased due to higher payroll, partially offset by lower payroll taxes Accrued Payroll and Benefit Costs | Accrued Payroll and Benefit Costs (in thousands) | June 30, 2022 | December 31, 2021 | Change | | :----------------------------------------------- | :------------ | :---------------- | :----- | | Payroll and benefits | $471,325 | $449,246 | $22,079 | | Payroll taxes | $57,108 | $74,117 | $(17,009) | | Workers' compensation | $16,909 | $16,820 | $89 | | Total Accrued payroll and benefit costs | $545,342 | $540,183 | $5,159 | - The Company deferred paying $51.1 million of applicable payroll taxes under the CARES Act, expected to be paid within the next 12 months[62] Note I—Employee Deferred Compensation Plan Obligations Nonqualified deferred compensation plan assets and liabilities decreased due to negative market returns in H1 2022 Employee Deferred Compensation Plan Obligations | Metric (in thousands) | June 30, 2022 | December 31, 2021 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Nonqualified plan asset value | $416,700 | $495,000 | $(78,300) | | Nonqualified plan liability value | $440,300 | $535,300 | $(95,000) | Employee Deferred Compensation Plan Expenses | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :-------------------- | :------------------------------- | :------------------------------- | | Contribution expense | $12,794 | $13,918 | | Increase (decrease) in employee deferred compensation expense | $(65,622) | $27,810 | Employee Deferred Compensation Plan Expenses | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Contribution expense | $24,996 | $23,472 | | Increase (decrease) in employee deferred compensation expense | $(95,623) | $39,797 | Note J—Commitments and Contingencies Involved in two class-action lawsuits with unpredictable outcomes; maintains a $100 million undrawn revolving credit facility - The Company is defending against two class-action lawsuits in California (Gentry and Dorff) alleging unpaid compensation, misclassification of employees, and wage statement violations, with outcomes and potential loss ranges not feasible to predict[68][69] - The Company has a $100.0 million unsecured revolving credit facility, extended to May 2024, with no borrowings outstanding as of June 30, 2022[73] Note K—Stockholders' Equity Ongoing stock repurchase program with 5.8 million shares authorized; 1.4 million shares repurchased for $133.5 million - As of June 30, 2022, the Company is authorized to repurchase up to 5.8 million additional shares of common stock[74][151] Stock Repurchases | Stock Repurchases (in thousands, except shares) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Common stock repurchased (shares) | 1,386 | 1,514 | | Common stock repurchased (cost) | $133,527 | $124,210 | | Repurchases related to employee stock plans (shares) | 295 | 251 | | Repurchases related to employee stock plans (cost) | $32,786 | $19,345 | Note L—Net Income Per Share Diluted net income per share increased for Q2 and H1 2022 due to higher net income and fewer diluted shares Net Income Per Share | Metric (in thousands, except per share) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net income | $175,821 | $149,213 | | Diluted weighted average shares | 109,696 | 111,889 | | Diluted Net income per share | $1.60 | $1.33 | Net Income Per Share | Metric (in thousands, except per share) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net income | $344,060 | $259,811 | | Diluted weighted average shares | 110,143 | 112,191 | | Diluted Net income per share | $3.12 | $2.32 | Note M—Business Segments Operates in three segments: contract, permanent placement, and Protiviti, all showing revenue growth with varying income trends - The Company's three reportable segments are: contract talent solutions, permanent placement talent solutions, and Protiviti, providing specialized talent and consulting services[79] Segment Performance | Segment (in thousands) | Three Months Ended June 30, 2022 (Revenue) | Three Months Ended June 30, 2021 (Revenue) | Three Months Ended June 30, 2022 (Income) | Three Months Ended June 30, 2021 (Income) | | :--------------------- | :----------------------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Contract talent solutions | $1,165,693 | $978,281 | $133,567 | $94,010 | | Permanent placement talent solutions | $200,096 | $143,640 | $36,751 | $30,599 | | Protiviti | $497,038 | $458,660 | $70,213 | $79,980 | Segment Performance | Segment (in thousands) | Six Months Ended June 30, 2022 (Revenue) | Six Months Ended June 30, 2021 (Revenue) | Six Months Ended June 30, 2022 (Income) | Six Months Ended June 30, 2021 (Income) | | :--------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Contract talent solutions | $2,321,416 | $1,867,557 | $266,813 | $169,688 | | Permanent placement talent solutions | $386,878 | $255,344 | $74,079 | $48,234 | | Protiviti | $969,367 | $856,060 | $127,290 | $137,303 | - Intersegment revenues between contract talent solutions and Protiviti were $137.5 million for the three months and $281.7 million for the six months ended June 30, 2022[84] Note N—Subsequent Events Announced a quarterly dividend of $0.43 per share on August 2, 2022, payable September 15, 2022 Dividend Details | Dividend Details | Value | | :--------------- | :---- | | Quarterly dividend per share | $0.43 | | Declaration date | August 2, 2022 | | Record date | August 25, 2022 | | Payment date | September 15, 2022 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results, covering executive overview, operations, and liquidity Executive Overview Strong Q2 and H1 2022 revenue and net income growth, driven by robust labor market demand and strategic capitalization - The Company completed a multiyear brand unification to 'Robert Half' for simplified market structure and increased brand awareness[88] - Service revenues for the first half of 2022 increased by 23.5% to $3.68 billion, with net income up 32.4% to $344 million and diluted EPS up 34.5% to $3.12[89] - Permanent placement talent solutions revenue grew 51.5% YoY, contract talent solutions grew 24.3% YoY, while Protiviti grew 13.2% YoY[90] - The U.S. unemployment rate decreased from 3.9% in December 2021 to 3.6% at the end of Q2 2022, indicating a robust labor market with significant talent shortages[92] Critical Accounting Policies and Estimates No material changes to critical accounting policies or estimates for the six months ended June 30, 2022 - No material changes occurred in the Company's critical accounting policies or estimates for the six months ended June 30, 2022[94] Recent Accounting Pronouncements Refers to Note B for details on recently adopted and issued accounting pronouncements - Refer to Note B for information on recent accounting pronouncements[95] Results of Operations Operating results analyzed across three segments, with demand highly dependent on general economic and labor trends - Operating results are analyzed across three reportable segments: contract talent solutions, permanent placement talent solutions, and Protiviti[96] - Demand for the Company's services is largely dependent on general economic and labor trends, making future demand difficult to forecast[97] Non-GAAP Financial Measures Uses non-GAAP measures like 'as adjusted' revenue growth and combined segment income for operational performance insights - Non-GAAP measures include 'as adjusted' revenue growth rates, adjusted gross margin, adjusted selling, general and administrative expense, and segment income, used to understand financial performance[100][103] - Adjustments for 'as adjusted' revenue growth remove the impact of changes in foreign currency exchange rates and billing days to highlight growth from operating activities[101][102] - Combined segment income is defined as income before income taxes, adjusted for net interest (income) expense and amortization of intangible assets, used by management to evaluate segment performance[104] Three Months Ended June 30, 2022 and 2021 Strong Q2 2022 revenue growth across segments, improved gross margin, decreased SG&A percentage, and deferred compensation loss Service Revenues (in thousands) | Metric (in thousands) | June 30, 2022 | June 30, 2021 | YoY Change (%) | | :-------------------- | :------------ | :------------ | :------------- | | Total Service Revenues | $1,862,827 | $1,580,581 | 17.98% | | U.S. Revenues | $1,467,000 | $1,220,000 | 20.25% | | International Revenues | $396,000 | $360,000 | 10.00% | | Contract talent solutions revenues | $1,165,693 | $978,281 | 19.16% | | Permanent placement talent solutions revenues | $200,096 | $143,640 | 39.31% | | Protiviti revenues | $497,038 | $458,660 | 8.37% | Segment Revenue Growth (As Adjusted) | Segment Revenue Growth (As Adjusted) | Global | U.S. | International | | :----------------------------------- | :----- | :--- | :------------ | | Contract talent solutions | 21.3% | 22.7% | 16.6% | | Permanent placement talent solutions | 42.6% | 44.3% | 39.0% | | Protiviti | 10.8% | 8.3% | 20.6% | Financial Performance (in thousands) | Metric (in thousands) | June 30, 2022 | June 30, 2021 | YoY Change (%) | | :-------------------- | :------------ | :------------ | :------------- | | Total Gross Margin | $815,547 | $664,872 | 22.66% | | Contract talent solutions gross margin | $464,853 | $388,070 | 19.78% | | Protiviti gross margin | $151,030 | $133,348 | 13.26% | | Total SG&A Expenses | $509,394 | $488,093 | 4.36% | | Income before income taxes | $240,833 | $203,862 | 18.13% | | Combined segment income | $240,531 | $204,589 | 17.57% | | (Income) loss from investments held in employee deferred compensation trusts | $(65,622) | $27,810 | N/A | - Protiviti's adjusted gross margin percentage decreased year-over-year due to higher staff resource costs and continued headcount expansion[115] - The provision for income taxes was 27.0% for Q2 2022, compared to 26.8% for Q2 2021[125] Six Months Ended June 30, 2022 and 2021 Substantial H1 2022 revenue growth across segments, mixed gross margin trends, increased SG&A, and deferred compensation loss Service Revenues (in thousands) | Metric (in thousands) | June 30, 2022 | June 30, 2021 | YoY Change (%) | | :-------------------- | :------------ | :------------ | :------------- | | Total Service Revenues | $3,677,661 | $2,978,961 | 23.45% | | U.S. Revenues | $2,880,000 | $2,300,000 | 25.22% | | International Revenues | $795,000 | $683,000 | 16.40% | | Contract talent solutions revenues | $2,321,416 | $1,867,557 | 24.30% | | Permanent placement talent solutions revenues | $386,878 | $255,344 | 51.52% | | Protiviti revenues | $969,367 | $856,060 | 13.23% | Segment Revenue Growth (As Adjusted) | Segment Revenue Growth (As Adjusted) | Global | U.S. | International | | :----------------------------------- | :----- | :--- | :------------ | | Contract talent solutions | 25.9% | 27.8% | 19.9% | | Permanent placement talent solutions | 54.1% | 58.8% | 44.0% | | Protiviti | 15.1% | 12.3% | 26.0% | Financial Performance (in thousands) | Metric (in thousands) | June 30, 2022 | June 30, 2021 | YoY Change (%) | | :-------------------- | :------------ | :------------ | :------------- | | Total Gross Margin | $1,587,393 | $1,226,583 | 29.42% | | Contract talent solutions gross margin | $926,714 | $733,003 | 26.43% | | Protiviti gross margin | $274,566 | $238,629 | 15.06% | | Total SG&A Expenses | $1,023,588 | $911,155 | 12.34% | | Income before income taxes | $468,233 | $353,968 | 32.29% | | Combined segment income | $468,182 | $355,225 | 31.80% | | (Income) loss from investments held in employee deferred compensation trusts | $(95,623) | $39,797 | N/A | - Protiviti's adjusted gross margin percentage decreased due to lower staff utilization rates and a significant increase in headcount[133] - The provision for income taxes was 26.5% for H1 2022, compared to 26.6% for H1 2021[143] Liquidity and Capital Resources Liquidity driven by increased operating cash flow, used for capital expenditures, repurchases, and dividends, with strong working capital Cash Flow (in thousands) | Cash Flow (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $302,078 | $233,472 | | Net cash used in investing activities | $(55,196) | $(31,113) | | Net cash used in financing activities | $(256,839) | $(231,910) | | Cash and cash equivalents at end of period | $590,909 | $542,805 | - Capital expenditures for the first half of 2022 totaled $55 million, with approximately 82.5% invested in software initiatives and technology infrastructure[149] - The Company expects 2022 capital expenditures to range from $95 million to $105 million, with $75 million to $85 million allocated to software and technology[149] - The Company repurchased 1.4 million shares of common stock for $133 million in the first half of 2022, in addition to $33 million in repurchases related to employee stock plans[151] - The Company's working capital, including $591 million in cash and $1.09 billion in accounts receivable, is expected to provide significant ongoing liquidity[152] Material Cash Requirements from Contractual Obligations Material cash requirements include operating lease liabilities and employee deferred compensation plan obligations Contractual Obligations | Contractual Obligation (in thousands) | Amount | | :------------------------------------ | :----- | | Current operating lease liabilities | $84,000 | | Noncurrent operating lease liabilities | $166,000 | | Employee deferred compensation plan obligations | $440,000 | - No material changes to the Company's contractual purchase obligations occurred during the first half of 2022[158] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk Exposed to foreign currency risk, with a strengthening U.S. dollar unfavorably impacting H1 2022 revenues and net income - Approximately 21.6% of the Company's revenues for the six months ended June 30, 2022, were generated outside the U.S., exposing it to foreign currency fluctuations[161] - The strengthening U.S. dollar in the first half of 2022 decreased reported service revenues by $55 million (1.9%) and reported net income by $3 million (1.1%)[162] - Currency fluctuations generally do not affect cash flow or result in actual economic gains or losses, as international operations generate revenues and incur expenses in the same local currency[162][164] ITEM 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2022, with no material changes during the quarter - The Company's disclosure controls and procedures were evaluated as effective as of June 30, 2022[166] - No material changes were made to controls and procedures during the quarter ended June 30, 2022[166] PART II—OTHER INFORMATION ITEM 1. Legal Proceedings No material developments in legal proceedings previously disclosed in the annual report on Form 10-K - No material developments occurred in legal proceedings previously disclosed in the annual report on Form 10-K[168] ITEM 1A. Risk Factors No material changes to risk factors previously disclosed in the annual report on Form 10-K - No material changes to risk factors previously disclosed in the annual report on Form 10-K[169] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchases in Q2 2022, including publicly announced plans, with 5.8 million shares authorized Common Stock Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | Number of Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | :----------------------------------------------------------------------------- | | April 1, 2022 to April 30, 2022 | 308,566 | $106.44 | 75,165 | 6,601,110 | | May 1, 2022 to May 31, 2022 | 360,576 | $93.14 | 360,576 | 6,240,534 | | June 1, 2022 to June 30, 2022 | 475,208 | $79.00 | 475,000 | 5,765,534 | | Total April 1, 2022 to June 30, 2022 | 1,144,350 | N/A | 910,741 | N/A | - Repurchases include shares tendered by employees for payment of applicable withholding taxes (233,401 shares in April 2022 and 208 shares in June 2022)[173] - Since plan inception in October 1997, 122,234,466 shares have been repurchased out of 128,000,000 authorized[173] ITEM 3. Defaults Upon Senior Securities No defaults upon senior securities during the reporting period - No defaults upon senior securities[171] ITEM 4. Mine Safety Disclosure Mine Safety Disclosure is not applicable to the company - Mine Safety Disclosure is not applicable to the Company[172] ITEM 5. Other Information No other information to report under this item - No other information to report[174] ITEM 6. Exhibits Lists exhibits filed with Form 10-Q, including corporate governance documents, CEO/CFO certifications, and XBRL data - Exhibits include corporate governance documents (Restated Certificate of Incorporation, Amended and Restated By-Laws), CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL financial data[177]