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Robert Half International (RHI)

Q4 2010 Earnings Call

January 26, 2011 5:00 pm ET


Harold Messmer - Chairman, Chief Executive Officer and Member of Executive Committee

M. Waddell - Vice Chairman, President and Chief Financial Officer


Tobey Sommer - SunTrust Robinson Humphrey Capital Markets

Giridhar Krishnan - Credit Suisse

Paul Ginocchio - Deutsche Bank AG

Vance Edelson - Morgan Stanley

Andrew Steinerman - JP Morgan Chase & Co

Jeffrey Silber - BMO Capital Markets U.S.

Sara Gubins - BofA Merrill Lynch

Gary Bisbee - Barclays Capital

Mark Marcon - Robert W. Baird & Co. Incorporated

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Kevin McVeigh - Macquarie Research

Timothy McHugh - William Blair & Company L.L.C.



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Hello, and welcome to the Robert Half International Fourth Quarter 2010 Conference Call. Our hosts for today's call are Mr. Max Messmer, Chairman and CEO of Robert Half International; and Mr. Keith Waddell, Vice Chairman, President and Chief Financial Officer. Mr. Messmer, you may begin.

Harold Messmer

Thank you, and good afternoon, everyone. We appreciate your joining us. I'll start by reminding everyone that comments made on this call contain predictions, estimates and other forward-looking statements. These statements represent our current judgment of what the future holds and include words such as forecast, estimate, project, expect, believe, guidance and similar expressions. We believe these remarks to be reasonable but would remind you that they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We have described some of these risks and uncertainties in today's press release and in our SEC filings, including our 10-Ks, 10-Qs and today's 8-K. We assume no obligation to update the statements made on this conference call.

Now let's review our fourth quarter results. Revenues for the fourth quarter were $852 million, up 15% from the fourth quarter of last year. Income per share for the fourth quarter was $0.17, up 89% from the fourth quarter of 2009. Cash flow from operations during the fourth quarter was $74 million, and capital expenditures were $13 million.

We paid a quarterly cash dividend to stockholders at $0.13 per share for a total of $19 million. We also repurchased 700,000 RHI shares during the fourth quarter at a cost of $20 million. Approximately 11.4 million shares remain available for repurchase under our Board-approved stock repurchase plan.

During the fourth quarter, demand for our professional staffing and consulting services continued to improve across the board. Each of our lines of business reported sequential and year-over-year revenue growth in the fourth quarter. Our Robert Half Finance & Accounting Permanent Placement division continued to perform well, with revenues up 30% versus one year ago.

Our technology and office Administration divisions also reported strong revenue growth, as did our international operations. Protiviti reported its best operating results in more than two years.

Now I'll turn the call over to Keith for a closer look at our fourth quarter financial results. We'll have time for questions after our remarks.

M. Waddell

Thank you, Max. We'll start with company-wide revenues. Fourth quarter revenues were $852 million, an increase of 15% from the fourth quarter of last year and an increase of 4% sequentially. On a constant currency basis, the year-over-year and sequential growth rates were 16% and 3%, respectively. There were 62 billing days in the fourth quarter of 2010, the same as the fourth quarter of the prior year. There will be 63 billing days in the first quarter of 2011.

Revenues for Accountemps where $319 million, up 11% from the fourth quarter of 2009 and up 6% sequentially on a same-day basis. Accountemps is our largest staffing division, with 354 offices worldwide. It accounts for 37% of company revenues.

OfficeTeam had revenues of $174 million in the fourth quarter, up 23% from the fourth quarter of 2009 and up 11% sequentially on a same-day basis. OfficeTeam, which was introduced in 1991, is our high-end administrative staffing division. It represents 21% of company revenues. There are 320 OfficeTeam locations worldwide.

Fourth quarter 2010 revenues for Robert Half Management Resources were $103 million, up 14% from the fourth quarter of 2009 and up 9% sequentially on a same-day basis. This division was introduced in '97 and places senior-level accounting and finance professionals on a project basis. It has 153 locations worldwide, and it makes up 12% of company revenues.

Revenues for Robert Half Technology were $92 million in the fourth quarter, up 21% from the fourth quarter of 2009 and up 10% sequentially on a same-day basis. Robert Half Technology was introduced in 1994 and places information technology professionals on a consulting and full-time basis. This business operates in 116 locations worldwide and accounts for 11% of company revenues.

Robert Half Finance & Accounting, our Permanent Placement division, had revenues of $59 million in the fourth quarter. As Max indicated, this is a 30% increase from the fourth quarter of 2009 and an increase of 8% on a same-day sequential basis. Our Permanent Placement services were established in 1948 and are in 354 locations worldwide. This business accounts for 7% of company-wide revenues.

Fourth quarter revenues for our international staffing operations were $221 million, up 16% from the fourth quarter of 2009 and up 13% sequentially on a same-day basis. On a constant currency same-day basis, these growth rates were 19% versus one year ago and 8% sequentially. We have staffing operations at 100 locations in 18 countries outside the U.S. international staffing operations represent 30% of total staffing revenues.

Protiviti revenues were $104 million in the fourth quarter, up 8% from a year ago and up 5% sequentially. Formed in 2002, Protiviti is a global business consulting and an internal audit firm providing risk, advisory and transaction services. It has 60 locations in 16 countries and accounts for 12% of total RHI revenues. Protiviti's International operations represent 29% of total Protiviti revenues.

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