ASGN Incorporated Reports Third Quarter 2024 Results
Adjusted EBITDA and gross margins at midpoint or top end of guidance estimates
Highlights
-
Revenues were
$1.031 billion -
Net income was
$47.5 million -
Adjusted EBITDA (a non-GAAP measure) was
$116.9 million (11.3 percent of revenues) -
Operating cash flows were
$135.8 million and Free Cash Flow (a non-GAAP measure) was$127.9 million -
Repurchased approximately 1.0 million shares of the Company's common stock for
$95.6 million
IT Consulting Revenues - Approximately 57.9 percent of total revenues
-
Commercial Segment - New bookings for the trailing-twelve-month period ("TTM") were
$1.2 billion ; book-to-bill ratio was 1.1 to 1 -
Federal Government Segment - New contract awards for the TTM were
$1.1 billion ; book-to-bill ratio was 0.9 to 1
Management Commentary
"Our results for the third quarter of 2024 show that market demand remains relatively stable,” said ASGN’s Chief Executive Officer,
Hanson continued, “Despite tight budgets, clients know that advancing their IT strategies is essential to sustaining their competitive edge. Strong commercial and government bookings in the quarter demonstrate the continued need for ASGN’s IT services and are a sign of pent-up demand. As we complete the final quarter of the year, ASGN remains focused on being positioned to support the business and technology needs of our clients.”
Third Quarter 2024 Financial Results - Summary
|
Three Months Ended, |
||||||||||
|
|
|
|
||||||||
(In millions, except per share data) |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
Revenues |
|
|
|
|
|
||||||
Commercial Segment |
$ |
718.8 |
|
|
$ |
782.4 |
|
|
$ |
725.7 |
|
Federal Government Segment |
|
312.2 |
|
|
|
334.4 |
|
|
|
309.0 |
|
|
|
1,031.0 |
|
|
|
1,116.8 |
|
|
|
1,034.7 |
|
|
|
|
|
|
|
||||||
Gross Margin |
|
|
|
|
|
||||||
Commercial Segment |
|
32.8 |
% |
|
|
32.5 |
% |
|
|
32.7 |
% |
Federal Government Segment |
|
20.7 |
% |
|
|
20.4 |
% |
|
|
20.6 |
% |
Consolidated |
|
29.1 |
% |
|
|
28.9 |
% |
|
|
29.1 |
% |
|
|
|
|
|
|
||||||
Net income |
$ |
47.5 |
|
|
$ |
59.4 |
|
|
$ |
47.2 |
|
Earnings per diluted share |
$ |
1.06 |
|
|
$ |
1.23 |
|
|
$ |
1.02 |
|
|
|
|
|
|
|
||||||
Non-GAAP Financial Measures |
|
|
|
|
|
||||||
Adjusted Net Income |
$ |
64.3 |
|
|
$ |
81.1 |
|
|
$ |
62.6 |
|
Adjusted Net Income per diluted share |
$ |
1.43 |
|
|
$ |
1.68 |
|
|
$ |
1.36 |
|
Adjusted EBITDA |
$ |
116.9 |
|
|
$ |
137.5 |
|
|
$ |
117.1 |
|
Adjusted EBITDA margin |
|
11.3 |
% |
|
|
12.3 |
% |
|
|
11.3 |
% |
__________ |
Definitions of non-GAAP measures and reconciliation to GAAP measurements are included in the tables that accompany this release. |
Consolidated revenues for the quarter were
Total IT consulting revenues were
Gross margin for the third quarter of 2024 was 29.1 percent, an expansion of 20 basis points from the third quarter of 2023. Gross margin for the Commercial Segment was up 30 basis points, reflecting a higher mix of consulting revenues as well as margin expansion in these revenues. Gross margin for the Federal Government Segment was up 30 basis points.
Selling, general, and administrative (“SG&A”) expenses were
Net income was
Adjusted EBITDA (a non-GAAP measure) was
Capital Resources and Capital Allocation
At
-
Cash and cash equivalents of
$166.6 million -
Full availability under its
$500.0 million Senior Secured Revolving Credit Facility (due 2028) -
Senior Secured Debt of
$495.0 million (term loan B facility due 2030) -
Senior unsecured notes totaling
$550.0 million at 4.625 percent (due 2028)
In the third quarter of 2024 the Company repurchased 1.0 million shares of its common stock for
Fourth Quarter 2024 Financial Estimates
The Company's financial estimates for the fourth quarter of 2024, which are set forth below, assume no deterioration in the markets ASGN serves. These estimates do not include any acquisition, integration, or strategic planning expenses. Reconciliations of estimated net income to the estimated non-GAAP financial measures are included in the tables that accompany this release.
(In millions, except per share data) |
|
Low |
|
High |
||||
Revenues |
|
$ |
990.0 |
|
|
$ |
1,010.0 |
|
SG&A expenses(1) |
|
|
197.8 |
|
|
|
201.5 |
|
Amortization of intangible assets |
|
|
13.9 |
|
|
|
13.9 |
|
Net income |
|
|
39.2 |
|
|
|
42.1 |
|
|
|
|
|
|
||||
Earnings per diluted share |
|
$ |
0.88 |
|
|
$ |
0.94 |
|
Gross margin |
|
|
28.4 |
% |
|
|
28.6 |
% |
Effective tax rate(2) |
|
|
28.0 |
% |
|
|
28.0 |
% |
|
|
|
|
|
||||
Non-GAAP Financial Measures: |
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
103.0 |
|
|
$ |
107.0 |
|
Adjusted Net Income(3) |
|
$ |
52.5 |
|
|
$ |
55.4 |
|
Adjusted Net Income per diluted share(3) |
|
$ |
1.18 |
|
|
$ |
1.24 |
|
Adjusted EBITDA margin |
|
|
10.4 |
% |
|
|
10.6 |
% |
___________ |
||
(1) |
Includes non-cash expenses totaling |
|
(2) |
Estimated effective tax rate before any excess tax benefits related to stock-based compensation. |
|
(3) |
Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets.” These savings total |
The financial estimates above are based on an estimate of “Billable Days,” which are Business Days (calendar days for the period less weekends and holidays) adjusted for other factors, such as the day of the week a holiday occurs, additional time taken off around holidays, year-end client furloughs, and inclement weather. There are 61 Billable Days in the fourth quarter of 2024, which is one more day than the year ago period, and 2.5 fewer days than the third quarter of 2024.
Conference Call
The Company will hold a conference call today at
A replay of the conference call will be available beginning today at
About
Safe Harbor
Certain statements made in this news release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward-looking statements include statements regarding our anticipated financial and operating performance.
All statements in this news release, other than those setting forth strictly historical information, are forward-looking statements. Forward-looking statements are not guarantees of future performance and actual results might differ materially. In particular, we make no assurances that the proposed revenue, expense, and profit estimates outlined above will be achieved. Additional examples of forward-looking statements in this press release include, without limitation, statements regarding our ability to attract, train, and retain qualified internal employees, the availability of qualified billable professionals, management of our growth, continued performance and improvement of our enterprise-wide information systems, our ability to successfully adapt to, integrate, and leverage new and developing technologies, including generative artificial intelligence, our ability to manage our litigation matters, the successful integration of acquisitions, and other risks detailed from time-to-time in our reports filed with the
CONSOLIDATED SELECTED FINANCIAL DATA (Unaudited) (In millions, except per share data) |
|||||||||
|
Three Months Ended |
|
Nine Months Ended
|
||||||
|
|
|
|
||||||
|
2024 |
|
2023 |
|
2024 |
|
2024 |
|
2023 |
Results of Operations: |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Costs of services |
730.6 |
|
794.4 |
|
733.6 |
|
2,217.0 |
|
2,401.4 |
Gross profit |
300.4 |
|
322.4 |
|
301.1 |
|
897.7 |
|
975.1 |
Selling, general, and administrative expenses |
207.5 |
|
206.0 |
|
205.6 |
|
623.3 |
|
640.6 |
Amortization of intangible assets |
14.0 |
|
17.8 |
|
15.1 |
|
44.2 |
|
53.8 |
Operating income |
78.9 |
|
98.6 |
|
80.4 |
|
230.2 |
|
280.7 |
Interest expense |
(16.0) |
|
(18.5) |
|
(15.8) |
|
(49.4) |
|
(49.7) |
Income before income taxes |
62.9 |
|
80.1 |
|
64.6 |
|
180.8 |
|
231.0 |
Provision for income taxes |
15.4 |
|
20.7 |
|
17.4 |
|
48.0 |
|
62.0 |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares and share equivalents used to calculate earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
44.5 |
|
48.1 |
|
45.7 |
|
45.4 |
|
48.8 |
Diluted |
45.0 |
|
48.4 |
|
46.1 |
|
45.9 |
|
49.2 |
CONSOLIDATED SELECTED FINANCIAL DATA (Continued) (Unaudited) (In millions) |
|||||||||
|
Three Months Ended |
|
Nine Months Ended
|
||||||
|
|
|
|
|
|||||
|
2024 |
|
2023 |
|
2024 |
|
2024 |
|
2023 |
Summary Statements of Cash Flow Data: |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
(8.0) |
|
(9.8) |
|
(5.2) |
|
(24.0) |
|
(33.3) |
Cash used in financing activities |
(92.9) |
|
(85.6) |
|
(110.7) |
|
(283.6) |
|
(231.6) |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Measure: |
|
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Capital expenditures |
(7.9) |
|
(9.8) |
|
(5.3) |
|
(24.0) |
|
(32.7) |
Free Cash Flow (non-GAAP measure) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
Summary Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
Working capital |
503.7 |
|
579.2 |
|
|
|
|
|
|
|
2,348.0 |
|
2,392.0 |
|
|
|
|
|
|
Total assets |
3,431.7 |
|
3,544.6 |
|
|
|
|
|
|
Long-term debt |
1,034.4 |
|
1,036.6 |
|
|
|
|
|
|
Total liabilities |
1,657.3 |
|
1,652.5 |
|
|
|
|
|
|
Total stockholders’ equity |
1,774.4 |
|
1,892.1 |
|
|
|
|
|
|
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES (Unaudited) (In millions, except per share data) |
||||||||||||||
|
Three Months Ended |
|
Nine Months Ended
|
|||||||||||
|
|
|
|
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2024 |
|
|
2023 |
Net income |
$ |
47.5 |
|
$ |
59.4 |
|
|
47.2 |
|
$ |
132.8 |
|
$ |
169.0 |
Interest expense |
|
16.0 |
|
|
18.5 |
|
|
15.8 |
|
|
49.4 |
|
|
49.7 |
Provision for income taxes |
|
15.4 |
|
|
20.7 |
|
|
17.4 |
|
|
48.0 |
|
|
62.0 |
Depreciation and other amortization(1) |
|
9.4 |
|
|
7.0 |
|
|
9.4 |
|
|
28.2 |
|
|
20.8 |
Amortization of intangible assets |
|
14.0 |
|
|
17.8 |
|
|
15.1 |
|
|
44.2 |
|
|
53.8 |
EBITDA (non-GAAP measure) |
|
102.3 |
|
|
123.4 |
|
|
104.9 |
|
|
302.6 |
|
|
355.3 |
Stock-based compensation |
|
9.9 |
|
|
10.3 |
|
|
11.0 |
|
|
32.6 |
|
|
33.7 |
Legal settlement expense |
|
3.6 |
|
|
2.7 |
|
|
— |
|
|
3.6 |
|
|
2.7 |
Acquisition, integration, and strategic planning expenses |
|
1.1 |
|
|
1.1 |
|
|
1.2 |
|
|
3.5 |
|
|
4.5 |
Adjusted EBITDA (non-GAAP measure) |
$ |
116.9 |
|
$ |
137.5 |
|
$ |
117.1 |
|
$ |
342.3 |
|
$ |
396.2 |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
||||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
$ |
47.5 |
|
|
$ |
59.4 |
|
|
$ |
47.2 |
|
|
$ |
132.8 |
|
|
$ |
169.0 |
|
Credit facility amendment expenses |
|
— |
|
|
|
2.3 |
|
|
|
— |
|
|
|
1.5 |
|
|
|
2.3 |
|
Legal settlement expense |
|
3.6 |
|
|
|
2.7 |
|
|
|
— |
|
|
|
3.6 |
|
|
|
2.7 |
|
Acquisition, integration, and strategic planning expenses |
|
1.1 |
|
|
|
1.1 |
|
|
|
1.2 |
|
|
|
3.5 |
|
|
|
4.5 |
|
Tax effect on adjustments |
|
(1.3 |
) |
|
|
(1.6 |
) |
|
|
(0.3 |
) |
|
|
(2.3 |
) |
|
|
(2.5 |
) |
Non-GAAP net income |
|
50.9 |
|
|
|
63.9 |
|
|
|
48.1 |
|
|
|
139.1 |
|
|
|
176.0 |
|
Amortization of intangible assets |
|
14.0 |
|
|
|
17.8 |
|
|
|
15.1 |
|
|
|
44.2 |
|
|
|
53.8 |
|
Other |
|
(0.6 |
) |
|
|
(0.6 |
) |
|
|
(0.6 |
) |
|
|
(1.8 |
) |
|
|
(1.8 |
) |
Adjusted Net Income (non-GAAP measure)(2) |
$ |
64.3 |
|
|
$ |
81.1 |
|
|
$ |
62.6 |
|
|
$ |
181.5 |
|
|
$ |
228.0 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per diluted share: |
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
$ |
1.06 |
|
|
$ |
1.23 |
|
|
$ |
1.02 |
|
|
$ |
2.89 |
|
|
$ |
3.43 |
|
Adjustments |
|
0.37 |
|
|
|
0.45 |
|
|
|
0.34 |
|
|
|
1.06 |
|
|
|
1.20 |
|
Adjusted Net Income (non-GAAP measure)(2) |
$ |
1.43 |
|
|
$ |
1.68 |
|
|
$ |
1.36 |
|
|
$ |
3.95 |
|
|
$ |
4.63 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common shares and share equivalents (diluted) |
|
45.0 |
|
|
|
48.4 |
|
|
|
46.1 |
|
|
|
45.9 |
|
|
|
49.2 |
|
_________ |
||
(1) |
|
The three and nine months ended |
(2) |
|
Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets,” which currently total approximately |
FINANCIAL ESTIMATES FOR THE FOURTH QUARTER OF 2024 RECONCILIATIONS OF ESTIMATED GAAP TO NON-GAAP MEASURES (In millions, except per share data) |
|||||||
|
|
Low |
|
High |
|
||
Net income(1) |
|
$ |
39.2 |
|
$ |
42.1 |
|
Interest expense |
|
|
15.0 |
|
|
15.0 |
|
Provision for income taxes |
|
|
15.3 |
|
|
16.4 |
|
Depreciation and other amortization(2) |
|
|
9.8 |
|
|
9.8 |
|
Amortization of intangible assets |
|
|
13.9 |
|
|
13.9 |
|
EBITDA (non-GAAP measure) |
|
|
93.2 |
|
|
97.2 |
|
Stock-based compensation |
|
|
9.8 |
|
|
9.8 |
|
Adjusted EBITDA (non-GAAP measure) |
|
$ |
103.0 |
|
$ |
107.0 |
|
|
|
Low |
|
High |
|
||||
Net income(1) |
|
$ |
39.2 |
|
|
$ |
42.1 |
|
|
Amortization of intangible assets |
|
|
13.9 |
|
|
|
13.9 |
|
|
Other |
|
|
(0.6 |
) |
|
|
(0.6 |
) |
|
Adjusted Net Income (non-GAAP measure)(3) |
|
$ |
52.5 |
|
|
$ |
55.4 |
|
|
|
|
|
|
|
|
||||
Per diluted share: |
|
|
|
|
|
||||
Net income |
|
$ |
0.88 |
|
|
$ |
0.94 |
|
|
Adjustments |
|
|
0.30 |
|
|
|
0.30 |
|
|
Adjusted Net Income (non-GAAP measure)(3) |
|
$ |
1.18 |
|
|
$ |
1.24 |
|
|
_______ |
||
(1) |
|
Does not include acquisition, integration, and strategic planning expenses, or excess tax benefits related to stock-based compensation. |
(2) |
|
Comprised of (i) |
(3) |
|
Does not include the "Cash Tax Savings on Indefinite-lived Intangible Assets". These savings total |
Non-GAAP Financial Measures
Statements in this release include financial information presented in accordance with accounting principles generally accepted in
EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin provide a measure of the Company's operating results in a manner that is focused on the performance of the Company's core business on an ongoing basis, by removing the effects of non-operating and certain non-cash expenses. These non-operating and non-cash items are specifically identified in the reconciliations of GAAP measures to Non-GAAP measures that accompany this release.
Adjusted Net Income provides a method for assessing the Company's operating results in a manner that is focused on the performance of the Company's core business on an ongoing basis by removing the effects of non-operating and certain non-cash expenses, adjusted for some of the cash flows associated with amortization of intangible assets to more fully present the performance of the Company's acquisitions. The calculation of Adjusted Net Income is presented in the reconciliations of GAAP measures to Non-GAAP measures that accompany this release.
Free Cash Flow provides useful information to investors about the amount of cash generated by the business that can be used for strategic opportunities and is computed as presented in the tables that accompany this release.
Commercial consulting bookings are defined as the value of new contracts entered into during a specified period, including adjustments for the effects of changes in contract scope and contract terminations. The book-to-bill ratio for the Commercial consulting business is the ratio of bookings to revenues for a specified period.
Federal Government Segment new contract awards are defined as the estimated amount of future revenues to be recognized under contracts awarded during a specified period, including adjustments to estimates for contracts awarded in previous periods. The book-to-bill ratio for the Federal Government Segment is the ratio of New Contract Awards to revenues for a specified period.
Revenues calculated on a Same Billable Days basis provide more comparable information by removing the effect of differences in the number of billable days on a year-over-year basis. Revenues on a Same Billable Days basis are adjusted for the following items: differences in billable days during the period by taking the current-period average revenue per billable day, multiplied by the number of billable days from the same period in the prior year; Billable Days are business days (calendar days for the period less weekends and holidays) adjusted for other factors, such as the day of the week a holiday occurs, additional time taken off around holidays, year-end client furloughs, and inclement weather.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241023177164/en/
Vice President, Investor Relations
kimberly.esterkin@asgn.com
Source: