Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Hi Keith. I was intrigued by your point about third quarter sequential averages. When you look at your contract staffing business, what do you think the shape of the recovery will look like?
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: Well, I would argue the latter, the spring load and rebound. And I base that in part on if you look at the number of job openings, which in the U.S. are just under $9 million. While I understand that's less than their peak or it was in the 12-ish range if you compare to prior staffing industry downturns, that $8.9 million is significantly higher than it was at those times and we view those openings as pent-up demand for future hires, be it contract or perm placement. So we think the level of pent-up demand for hiring as further evidenced by the labor short market we're in, we think that bodes very well. And we think we will come spring loaded when we get through this funk, your word that we've been experiencing for the last 6, 7 quarters.
Q: Keith, you talked about the broad-based strength in Protiviti. A number of other companies in the consulting space aren't seeing that sort of a bit of a rebound. I'm wondering if you can talk a little bit about what you think some of the underlying factors are for you to see some broad-based stabilization and the high confidence that you have that we should see a sequential improvement?
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: Well, I'd say, first of all, by solution, the regulatory risk and compliance continues to be strong and leads the way. We had a very nice business process improvement quarter where we had joint wins with Protiviti and with Talent Solutions, that contributed (inaudible) and tech consulting continued to be impacted by client budget pressures pretty much like before. But if we look at the pipeline, we've gotten very good pipeline statistics this quarter as compared to last, that gives us some confidence. We typically see a seasonal lift in the second quarter for Protiviti. And while not quite what the average seasonal second quarter lift, we're certainly back getting close to that. And with a little luck year-on-year, Protiviti will get back to flat. And so based on the momentum they've got coming from first quarter based on the pipeline and the internals of that pipeline, which are very strong, they feel good about sequential growth in the second quarter, much of which falls to the bottom line. We talked about 200 basis point improvements in gross margin and segment margin all because a disproportionate amount of that incremental revenue falls to the bottom line, which is a wonderful thing.
Q: This is (inaudible) Thomas on for Manav. I wanted to just see if you could give us additional color on what you're seeing around staff attrition and utilization.
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: And are we talking about Protiviti, are we talking about Protiviti, Robert Half enterprise? What's the context?
Q: (inaudible) able to go into both.
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: And as far as staff attrition at Robert Half, I'd say consistent with virtually every company across the globe, our attrition is down both in our corporate services area as well as out in our branches. And so I think it's just a -- as we've talked about before and because of caution inclusive of our internal staff as well as those we place on assignment, there's just less attrition.
Q: Had one on pricing and bill rates. It sounded like you saw about 3% bill rate growth in the quarter. I think that continued to moderate a bit relative to the past few. I was just kind of wondering if you could talk about your expectations for both fill rate growth and bill pay spreads over the next few quarters and whether you see any variation across your mix of specialties within contract talent?
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: Just like we've seen moderation in bill rate growth for several quarters in a row, we would expect that moderation to continue. However, we see very little impact to our spreads just as we've seen very little impact to our spreads over the last few quarters. If you look at our Talent Solutions gross margins on the contract side, the change has been primarily on conversions contract to hire. Those are down 40 to 50 basis points year-on-year. They're down another 10 sequentially. So those are driving the change in gross margins much more so than the moderating bill rate increases, which are essentially pass-throughs of pay rate increases, which we also expect to continue to moderate.
Q: I was curious about your pipeline for Protiviti. You talked about a strong pipeline. When you look at potential projects there. And then you look at sort of within that business where you're seeing strength and weaknesses, is there a correlation there? And are there areas within Protiviti, if you -- that you think should rebound faster. I guess when you think about that business and how sales could come back or accelerate, how do you see that evolving into a recovery?
A: M. Keith Waddell - Robert Half Inc. - Vice Chairman, President & CEO: Well, our regulatory risk and compliance has been the strongest. It's expected to continue to be the strongest. It has a very nice pipeline. The area most impacted by client cautiousness and focus on cost has been first internal audit and then next technology consulting. And so a reversal of those conditions would benefit a turnout and tech consulting the most. But as we said, every single Protiviti solution is expecting sequential revenue growth in the second quarter. And that's very different than what we've seen for several quarters. So we see that as a very good trend. And the pipeline is reasonably strong across all those solutions, and it's very strong in areas like regulatory compliance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
