Robert Half(US:RHI)2020-07-24 02:45Financial Data and Key Metrics Changes - Companywide revenues for Q2 2020 were $1.1 billion, down 27% from the same quarter last year on a reported basis, and down 26% on an as-adjusted basis [8][12] - Net income per share in Q2 was $0.41, compared to $0.98 in the same quarter one year ago [9] - Cash flow from operations during the quarter was $301 million, with capital expenditures of $8 million [10] - Companywide operating income was $58 million in Q2, with an operating margin of 5.3% [22] Business Line Data and Key Metrics Changes - Staffing revenues were down 33% year-over-year on an as-adjusted basis, with U.S. staffing revenues at $640 million, down 34% from the prior year [12][13] - Protiviti's global revenues in Q2 were $284 million, with U.S. revenues up 6% year-over-year on an as-adjusted basis [15] - Overall staffing gross margin decreased to 42.5%, down 260 basis points compared to the year-ago second quarter [18] Market Data and Key Metrics Changes - Non-U.S. staffing revenues were $184 million, down 31% year-over-year on an as-adjusted basis [13] - Currency exchange rate movements decreased reported year-over-year staffing revenues by $8 million [14] - The current third quarter has 64.3 billing days, compared to 64.1 billing days in the same quarter last year [14] Company Strategy and Development Direction - The company has shifted its strategic focus to embrace the new operating environment created by the COVID-19 pandemic, emphasizing remote work and virtual client interactions [29][30] - There is an increased demand for talent as companies upgrade their talent pools without regard to physical location [30] - The company aims to fully participate in any economic recovery, supported by cost reductions and a technology-driven team [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recent signs of week-on-week sequential growth in staffing operations, despite significant uncertainty [7] - The company anticipates a continuation of low-single-digit sequential growth in staffing revenues for the third quarter [27][46] - Management noted that the labor market is experiencing unprecedented unemployment levels, which has shifted the focus towards remote work and new skill requirements [29][66] Other Important Information - The company implemented actions to reduce its overall cost structure by approximately 30% compared to Q1 2020, achieving a reported savings of 24% in Q2 [9][19] - The company distributed a $0.34 per share cash dividend to shareholders, totaling $38 million [10] Q&A Session Summary Question: Trends in revenue from different verticals and geographic impacts - Management indicated that they are over-indexed in professional services and financial services, while under-indexed in hospitality and retail [37] - Revenue performance in different states showed consistent growth despite varying COVID impacts [38] Question: Long-term impact of virtual talent sourcing on recovery - Management believes that sourcing talent virtually will enhance recovery by allowing access to a larger labor pool and lower-cost areas [40] Question: Assumptions around Protiviti in the third quarter - The guidance assumes low to mid-single-digit growth for Protiviti, driven by technology consulting and regulatory solutions [46] Question: Trends in permanent placement assignments and deal closures - Management reported that video interviewing has become widely accepted, facilitating the closing of permanent deals [53] Question: Demand impact from furloughed workers - Management noted that furloughs are more prevalent in mid-cap and large-cap companies, and many furloughed employees may not return due to health concerns and childcare needs [66] Question: Cash flow trends and payroll tax deferrals - The company reported strong cash flow performance, with $301 million in operating cash flow, and noted the impact of FICA deferrals [71] Question: Sequential trends in temp staffing revenue - Management acknowledged that while there are slight improvements, the overall revenue trends remain cautious due to ongoing uncertainties [106]