Robert Half International (RHI)

Q3 2011 Earnings Call

October 25, 2011 5:00 pm ET


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

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


Sara Gubins - BofA Merrill Lynch, Research Division

Kevin D. McVeigh - Macquarie Research

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

Jeffrey M. Silber - BMO Capital Markets U.S.

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

James Samford - Citigroup Inc, Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

James J. Janesky - Avondale Partners, LLC, Research Division

Gary E. Bisbee - Barclays Capital, Research Division

Giridhar Krishnan - Crédit Suisse AG, Research Division

Ato Garrett - Deutsche Bank AG, Research Division



Hello, and welcome to the Robert Half International Third Quarter 2011 Conference Call. Our host 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 M. Messmer

Hello, everyone and thank you for joining us on the call today.

Before we review our third quarter results, I would like to remind you 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 8-K. We assume no obligation to update the statements made on this conference call.

Now let's discuss the third quarter. Company-wide revenues were $985 million, a 20% increase from the third quarter of 2010. Income per share was $0.31, up 121% from last year's third quarter amount of $0.14 per share. Cash flow from operations in the third quarter was $72 million, capital expenditures were $13 million, we paid our stockholders a cash dividend of $0.14 per share during the quarter at a cost of $20 million. We also repurchased 2.1 million RHI shares during the third quarter at a total cost of $48 million. Approximately 6.4 million shares remain available under our board approved stock repurchase plan.

We saw a broad-based demand for our professional services throughout the third quarter resulting in double digit year-over-year revenue growth rates for the fifth consecutive quarter. All of our divisions performed well led by our Technology Staffing division. In addition, we were particularly pleased with the continuing expansion of our gross margins across our Temporary Staffing divisions.

Keith Waddell will now provide you with a closer look at our third quarter financial results.

M. Keith Waddell

Thank you, Max. As you noted, third quarter revenues for the company were $985 million, an increase of 20% from a year ago and an increase of 4% sequentially, on a same-day basis. There were 64 billing days in the third quarter, the same as last year's third quarter and up one day sequentially, the current quarter has 61 billing days.

Accountemps had third quarter revenues of $367 million, up 17% from a year ago and up 5% sequentially on a same-day basis. Accountemps is our largest staffing division and has 352 offices worldwide. It accounts for 37% of company revenues.

Third quarter revenues for OfficeTeam were $196 million, up 20% from the third quarter of last year and up 3% from the second quarter of this year on a same-day basis. Established in 1991, OfficeTeam has our high-end Administrative Staffing division. It has 315 locations worldwide and represents 20% of company-wide revenues.

Robert Half Management Resources had revenues of $118 million in the third quarter, up 20% from a year ago and up 3% sequentially on a same-day basis. Robert Half Management Resources, which was introduced in 1997, places senior-level accounting finance professionals on a project basis. It has 151 locations worldwide and makes up 12% of company-wide revenues.

Third quarter revenues for Robert Half Technology were $114 million, up 30% from the third quarter of last year and up 7% sequentially on a same-day basis. Robert Half Technology was introduced in 1994 and places information technology professionals on a project and full-time basis. This business operates on 113 locations worldwide and accounts for 12% of company-wide revenues.

Third quarter revenues for Robert Half Finance & Accounting, or Permanent Placement Division, were $79 million, up 38% from last year's third quarter and down 3% sequentially on a same-day basis. Our Permanent Placement business was established in 1948. It has 352 locations worldwide. This business accounts for 8% of company-wide revenues.

Third quarter revenues for our International Staffing operations were $264 million. This is an increase of 29% from last year and an increase of 1% sequentially on a same-day basis. On a constant-currency basis, the growth rates were 19% versus one year ago and 2% sequentially on a same-day basis. We have staffing operations in 104 locations and 19 countries outside the U.S. International staffing operations represent 30% of total staffing revenues.

Third quarter revenues for Protiviti were $111 million, this is 12% higher than the third quarter one year ago and 6% higher sequentially on a same-day basis. Protiviti was formed in 2002 as a global business consulting and internal audit firm providing risk, advisory and transaction services. Protiviti and its independently owned member firms serve clients through a network of 72 locations in 23 countries. Protiviti's international operations represent 24% of Protiviti's revenues.

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