ASGN rporated(ASGN)2022-02-10 02:38Financial Data and Key Metrics Changes - For Q4 2021, revenues totaled $1.1 billion, up 17% year-over-year, and adjusted EBITDA was $130.3 million, an increase of 26% year-over-year [8][21] - Full year revenues reached a record $4 billion, with adjusted EBITDA of $483.1 million, reflecting increases of 14.5% and 23% year-over-year, respectively [9][21] - Free cash flow from continuing operations for 2021 was $246.9 million, with a senior secured debt leverage ratio of 1.02 to 1 at year-end [9][25] Business Line Data and Key Metrics Changes - The Commercial segment generated revenue of $790.5 million in Q4 2021, up 24.1% year-over-year, while the Federal Government segment's revenue was $263.3 million, consistent with the prior year [12][18] - Commercial consulting revenues totaled $191.7 million in Q4 2021, a significant increase of 75.2% year-over-year [15] - The Federal Government segment's adjusted EBITDA margin improved to 11.3%, up 230 basis points year-over-year, with a gross margin increase of 560 basis points [18][23] Market Data and Key Metrics Changes - All five commercial industry verticals for Apex Systems experienced double-digit growth year-over-year, with particularly high growth in retail, energy, utilities, airlines, and airfreight [13] - The Federal Government segment's new business pipeline remained strong, with $131.1 million in new business awarded during the quarter [19] Company Strategy and Development Direction - The company is focused on organic growth, strategic acquisitions, and returning capital to shareholders, with a strong emphasis on expanding high-margin consulting services [9][10][30] - Recent acquisitions, such as the Avaap Infor business unit, are aimed at enhancing capabilities in healthcare and manufacturing ERP solutions [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's upward trajectory, citing strong productivity and a favorable business mix despite ongoing pandemic challenges [11][30] - The company anticipates revenue growth above market rates for 2022, driven by high-margin commercial consulting and digital marketing services [26] Other Important Information - The company repurchased $181.3 million of its common stock in 2021, with a new two-year $350 million repurchase plan approved [10] - Management highlighted the importance of integrating acquisitions quickly and efficiently as a competitive advantage [29] Q&A Session Summary Question: What drove the margin outperformance in Q4? - Management indicated that stronger performance in the Commercial segment, particularly from consulting services, was a key driver of margin outperformance [32] Question: Have more RFPs been released in the government sector? - Management noted that while the market is improving, it is still not fully functional compared to pre-COVID levels, but there are more opportunities being released [34] Question: How does the consulting service fit into the overall IT services market? - Management explained that their consulting unit provides methodology, IP, and leadership, allowing them to compete effectively against larger consulting firms [60][64] Question: How is the company managing wage inflation? - Management confirmed that they have been able to pass wage inflation through to clients, maintaining a balance of supply and demand for skilled IT professionals [70] Question: What is the growth outlook for the Commercial Consulting business? - Management indicated that growth is coming from both existing staffing clients and new clients, with a focus on providing value through consulting services [72]