Robert Half International Inc. (RH I )

Q2 2010 Earnings Call Transcript

July 21, 2010 5:00 pm ET

Executives

Max Messmer – Chairman and CEO

Keith Waddell – Vice Chairman, President and CFO

Analysts

Mark Marcon – Robert W. Baird & Company

Tim McHugh – William Blair & Company

Andrew Steinerman – JPMorgan

Sara Gubins – Bank of America

Jeff Silber – BMO Capital Markets

Gary Bisbee – Barclays Capital

Kelly Flynn – Credit Suisse

Vance Edelson – Morgan Stanley

Tobey Sommer – SunTrust

Phil Stiller – Citigroup

Kevin McVeigh – Macquarie

Presentation

Operator

Welcome to the Robert Half International conference call to discuss second quarter 2010 financial results. 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.

Max Messmer

Good afternoon, everyone, and thank you for joining us. As is our custom, I would like to remind everyone before we begin that comments on this call contain predictions, estimates and other forward-looking statements. These statements represent our current judgment of what the future holds. They include words such as forecast, estimate, project, expect, believe, guidance, and similar such expressions.

While we believe these remarks to be reasonable, 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 the press release issued today and in our SEC filings, including our 10-Ks, 10-Qs, and today’s 8-K. Our comments today should be considered in light of this press release and the SEC filings. We assume no obligation to update the statements made on this conference call.

Now let's review our second quarter financial results. Second quarter revenues were $769 million, up 3% from the second quarter of last year. On a sequential basis, revenues were up 4% from the first quarter. Income per share for the second quarter was $0.08, up 147% from the $0.03 reported this time last year and up 54% from the $0.05 reported in the first quarter of this year.

Cash flow from operations was $35 million during the second quarter. Capital expenditures were $6 million. During the second quarter, we paid a cash dividend to shareholders of $0.13 per share for a total of $19 million. We also repurchased 2.5 million shares of RHI common stock during the second quarter at a total cost of $66 million. There remain approximately 2.6 million shares available for repurchase under our Board approved stock repurchase plan.

Keith will provide a more detailed review of our second quarter financial results, but I did want to note that we were pleased to see year-over-year and sequential revenue growth during the quarter. We believe this is indicative of improving labor markets in our various geographies. Our OfficeTeam and Robert Half Technology staffing divisions performed particularly well, as did our permanent placement operations. Second quarter revenues for our Robert Half Finance & Accounting permanent placement division were up 29% from one year ago and up 15% sequentially.

Now I will turn the call over to Keith for a closer look at our results.

Keith Waddell

Thank you, Max. We will first start with companywide revenues. To recap, second quarter revenues were $769 million, up 3% from the second quarter of last year and up 4% sequentially from the first quarter of this year. On a constant currency basis, the year-over-year and sequential growth rates were 2% and 6% respectively. There were 63 billing days in the second quarter, the same as the second quarter of 2009 and up one day from last quarter. There are 64 billing days in the current third quarter.

Second quarter revenues for Accountemps were $295 million. This is down 5% from a year ago and is flat sequentially on a same day basis. Accountemps is our largest staffing division and accounts for 38% of company revenues. There are 357 Accountemps locations worldwide.

OfficeTeam had second quarter revenues of $150 million, which is up 11% from the second quarter of last year and up 5% sequentially on a same day basis. OfficeTeam is our high end administrative staffing division and represents 20% of company revenues. There are 322 OfficeTeam locations worldwide.

Robert Half Management Resources revenues were $93 billion in the second quarter. This is down 1% from a year ago and down 1% sequentially on a same day basis. Robert Half Management Resources places senior level accounting and finance professionals on a project basis. It has 151 locations worldwide and makes up 12% of company revenues.

Robert Half Technology had second quarter revenues of $82 million, up 9% from the second quarter of last year and up 7% sequentially on a same day basis. Robert Half Technology places information technology professionals on a consulting and full-time basis. It operates in 117 locations worldwide and accounts for 11% of company revenues.

Our permanent placement division, Robert Half Finance & Accounting, had revenues of $56 million in the second quarter. This is up 29% from the second quarter of 2009 and is up 15% sequentially. This business was established in 1948 and it operates in 357 locations worldwide. It accounts for 7% of companywide revenues.

International staffing operations had revenues of $189 million during the second quarter, up 3% from the second quarter of 2009 and down 1% sequentially. On a constant currency basis, revenues for international operations were up 3% compared to the second quarter of last year and up 3% sequentially. We have staffing operations in 101 locations in 20 countries outside of the US. International staffing operations represent 28% of total staffing revenues.

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