The paragraph is a transcript from a conference call for Robert Half's Fourth Quarter 2024 financial results. Keith Waddell, the CEO, provides an introduction reminding listeners about forward-looking statements and associated risks. He notes that these statements are subject to risks that could cause actual results to differ. The CFO, Michael Buckley, is also present. They discuss financial measures and indicate that a reconciliation of non-GAAP measures is available in the earnings press release. The global enterprise revenues for the fourth quarter were $1.382 billion, which is a 6% decrease from the previous year. Earnings per share declined from $0.83 to $0.53 compared to the same quarter last year. Protiviti, a business unit, showed year-on-year revenue growth, and contract revenues remained stable for 23 weeks before the holiday period.

The paragraph discusses the financial performance and future outlook of a company as it enters the New Year. It highlights increased U.S. business confidence post-elections and outlines the company's strong positioning to capitalize on opportunities through its staffing and consulting services. Key financial activities include a $0.53 per share cash dividend distribution totaling $54 million, a 10.4% increase from the previous year, and the repurchase of 1 million shares for $77 million. The company reported a return on invested capital of 15% in Q4. Michael Buckley, the CFO, reports that global revenues for Q4 were $1.382 billion, with a decline in U.S. and non-U.S. Talent Solutions revenues. The paragraph also details the number of billing days across various quarters in 2024 and 2025.

During the fourth quarter, currency exchange rate fluctuations impacted reported year-over-year revenues, decreasing them by $4 million, primarily affecting Talent Solutions. Sequential quarterly fluctuations reduced revenues by $7 million, with Talent Solutions affected by $5 million and Protiviti by $2 million. Contract Talent Solutions saw a 3.4% increase in dual rates compared to the prior year, slightly up from 3.2% in the third quarter. Protiviti's global fourth-quarter revenues reached $488 million, with a 5% increase globally compared to the previous year, a 6% rise in the U.S., and flat revenues outside the U.S. Meanwhile, Contract Talent Solutions' gross margin decreased to 39.1% from 39.7% a year ago, and conversion revenues dropped to 3.2% from 3.4%. Permanent placement revenues remained steady at 12.1%. Overall, Talent Solutions gross margin was slightly down at 46.4% compared to 46.9% the previous year. Conversely, Protiviti's gross margin improved to 24.9% from 23.9% the year before.

In the recent quarter, Protiviti's gross margin, adjusted for deferred compensation investment income, was 25.1%, slightly down from 25.9% the previous year. The company had 11,000 full-time employees and contractors, a 4.8% increase from the prior year. Enterprise SG&A costs were 34.1% of global revenues, slightly lower than last year's 35.1%, but adjusted SG&A costs rose to 33.8% from 32.5%. Talent solutions SG&A costs slightly decreased to 44.4% of revenues, with adjusted costs increasing to 43.9% from 40.8%. Talent solutions employed 7,600 full-time staff, a 5.2% decrease. Protiviti's SG&A costs were up to 15.2% compared to 14.5% the previous year. Operating income was $65 million, with an adjusted combined segment income of $71 million and a margin of 5.1%. Talent solutions segment income was $23 million with a 2.5% margin, while Protiviti's segment income was $48 million with a 9.9% margin. Investment income from employee deferred compensation trusts, totaling $6 million, was offset by corresponding employee compensation costs in SG&A expenses and direct costs.

The paragraph discusses financial results and projections, highlighting that the company's net income remains unaffected despite changes in tax rates and accounts receivable. It reports that Contract Talent Solutions revenue decreased by 11% in December and 14% in January compared to the previous year, while Permanent Placement revenues also saw declines. The company provides cautious insights into short-term trends and offers first quarter guidance, projecting revenues between $1.35 billion and $1.45 billion, and income per share between $0.31 and $0.41. It anticipates various growth and margin rates, with overall revenue expected to decline by 1% to 4% year-over-year. Adjusted contract margin and SG&A percentages for different sectors are also provided.

The paragraph reports on the financial projections and market conditions relevant to Talent Solutions and Protiviti for the upcoming period. Segment income growth estimates for Talent Solutions range from 1% to 4% and for Protiviti from 4% to 7%, with an overall growth of 2% to 5%. The company's tax rate is projected to be between 31% and 35%, and they expect to have between 101 million and 102 million shares. Capital expenditures and cloud computing costs for 2025 are anticipated to be between $75 million and $95 million, with $20 million to $25 million expected in the first quarter. Protiviti is expected to see seasonal impacts on segment income due to staff promotions and compensation increases leading to a 4.4 percentage point decline in segment margin. Revenue and earnings growth for the first quarter are estimated at 9% and 20%, respectively. The U.S. labor market remains strong, with job openings above historical averages and low unemployment rates, particularly for skilled workers. Business confidence is rising, shown by increases in the NFIB Small Business Optimism Index, indicating better hiring conditions and project demands.

The paragraph highlights Protiviti's strong financial performance, marked by consecutive quarters of revenue growth across its major solution areas, particularly in regulatory risk and compliance. The company's success is attributed to the use of contract professionals through Talent Solutions, contributing to its competitive advantage. Protiviti's future prospects remain robust, with expectations for continued revenue growth. The company has been recognized as a great place to work and for promoting executive women. Demographic trends and client preferences for flexible resources are seen as favorable for future growth. Robert Half, Protiviti's parent company, is also acknowledged as one of Fortune's most admired companies, underscoring sustained excellence and resilience through economic cycles.

The company's unique industry position has earned it significant distinctions over the years, including being recognized as one of Fortune's Best Workplaces for Parents and one of America's most responsible companies by Newsweek. During a Q&A session, Mark Marcon from Baird inquired about Protiviti's revenue growth, noting a deceleration in the fourth quarter due to factors such as foreign exchange impacts and holiday timing, which affected margins. However, the company is optimistic about a significant reacceleration in the first quarter, predicting around 9% growth. Michael Buckley explained that the fourth quarter was impacted by client holidays and contract logistics, but solution growth remained strong and is expected to continue into the first quarter, supported by a robust pipeline and momentum in risk and consulting.

The paragraph discusses the impact of current economic conditions, including anti-money laundering progress, holiday noise affecting business quarters, and potential differences in small business hiring trends compared to past cycles. Keith Waddell highlights how the current economic indicators, such as high job openings and low unemployment, are favorable compared to previous economic recoveries. He mentions the National Federation of Independent Business (NFIB) confidence index is higher now than after past downturns, indicating optimism for small businesses. Additionally, the potential influence of AI on employment is acknowledged, but there is uncertainty about its impact on small businesses. Overall, the economic environment is seen as stronger than in past recoveries, affecting decisions on staffing and margins.

In the paragraph, Keith Waddell discusses the current state of Robert Half's contract business, noting no significant impact on SMBs or internal staff despite recent economic challenges. He mentions the company's margins remain stable compared to past financial crises and anticipates recovery. Andrew Steinerman from JPMorgan asks about the impact of NFIB business confidence on new orders and whether the recovery in IT contract revenues will differ from other sectors. Waddell responds that early January faced holiday disruptions but business picked up later. While client engagement is improving with more discussions on projects, it's still early to see a rise in job starts, and the company expects flat performance in the first quarter compared to the fourth quarter.

The paragraph discusses the company's conservative revenue guidance for the first quarter, noting a $40 million impact due to fewer days and currency changes compared to the previous year. The tech sector has performed well recently, particularly in data analytics, governance, ERP platform modernization, and talent solutions, suggesting tech might outperform Finance & Accounting (F&A) in the next cycle. Despite political uncertainties in Europe, the international business is only slightly softer compared to the U.S., with modest declines expected in both Talent Solutions and Protiviti over the next few quarters, attributed largely to comparative figures rather than current economic conditions.

In the paragraph, Trevor Romeo asks about Protiviti's operating margins and the potential for achieving double-digit growth in both revenue and margins for the full year 2025, despite the seasonal impact of salary increases. Keith Waddell expresses optimism, stating that Protiviti aims for a "double-double" in revenue growth and operating margin improvement compared to the previous year. Manav Patnaik from Barclays inquires about Protiviti's use of temp staffing and its correlation with growth. Waddell notes that while he can't confirm if it's a leading indicator, Protiviti's revenues from contractors sourced through Talent Solutions increased by 18%, indicating rising usage, with contractor work accounting for over 40% of their hours.

The collaboration between Protiviti and Talent Solutions is proving to be a competitive advantage as it gains market share from the big four firms. Despite previously attributing client reluctance to high inflation and interest rates, optimism is now rising due to anticipated pro-growth policy changes, including tax and regulatory adjustments. Although client engagement has increased, this has not yet fully translated into new job placements. The company's guidance remains cautious, projecting activity to remain flat in the near term. The conversation ends with an analyst seeking clarification on hiring plans amidst the changing dynamics.

In the discussion, Keith Waddell explains that while their current workforce productivity is lower, they have the capacity to increase output without hiring more staff initially. However, as optimism and demand grow, they might begin to hire recruiters proactively. He also notes that candidate willingness to change jobs tends to rise as the economic outlook improves, and frustrations with employers pushing for more in-office work could drive more turnover. Typically, in better economic times, candidates feel more secure in changing jobs, reducing their fear of job loss.

The article discusses the dynamics of firm placement and temporary staffing revenues, highlighting a divergence in their performance trends. While firm placement revenues show a narrowing decline rate, temporary staffing revenues experience a widening decline. Keith Waddell attributes this difference to several factors: perm placements are intrinsically more volatile than contracts; temp staffing faced more disruptions due to holidays, particularly in the initial weeks of the quarter, whereas the impact diminished by the third week. He suggests that the temporary holiday noise caused an exaggerated perception of decline in temp staffing. Overall, he notes that pricing and bill growth have remained steady in the low-to-mid three percent range, aligning with pay rate increases.

In the paragraph, Keith Waddell discusses the stagnation of contract revenues despite overall economic growth and a strong labor market. He explains that this trend has persisted over the past 23 weeks and is consistent with the pattern observed over the last 10 quarters. Waddell attributes this to the concentration of labor market growth in sectors like government, healthcare, and leisure, which are not significant for Robert Half or the staffing industry. He also mentions reduced labor churn during this period, which includes the COVID-19 pandemic. However, Waddell notes an improvement in recent weeks and a positive outlook following the election and increased small business expectations.

In the paragraph, Kevin McVeigh from UBS asks about client hesitancy despite high indicators, and Keith Waddell explains that clients, especially small businesses, are cautious and prefer to see tangible results before making decisions, although interactions have increased, suggesting future engagement. McVeigh also inquires about a higher tax rate in Q1 guidance, and Waddell attributes it to lower stock prices affecting tax deductions from restricted stock incentive shares, resulting in a minor impact on EPS. The operator then introduces the next question from Jeff Silber of BMO Capital Markets, who mentions investment community concerns about Trump's policies, particularly regarding the Department of Government Efficiency.

In the conversation, Keith Waddell explains that their exposure to federal government-driven revenues is minimal, mainly focusing on state and local government work rather than federal. They do have some Medicare work, but it's not significant and mostly associated with open enrollment. Regarding the tax rate, Waddell indicates that while it may be high in the first quarter due to vesting events, it is expected to decrease as the year progresses. In response to a question about Protiviti's capacity, Waddell mentions that while there's potential to increase utilization of their full-time staff, one advantage is their ability to quickly scale using contractors through Talent Solutions.

The paragraph involves a discussion between Kartik Mehta, Michael Buckley, and Tobey Sommer regarding financial impacts and business outlooks. Michael Buckley explains that the loss of billing days in the first quarter cannot be compensated for in the second quarter, with financial impacts noted to be significant. The conversation then shifts to the potential factors that could boost small business optimism and hiring, with Keith Waddell suggesting that less regulation, increased M&A activity, and favorable tax rates are important. However, Waddell is uncertain about the exact ranking of these factors in driving business optimism.

In the discussed paragraph, Keith Waddell from Protiviti notes a slight increase in activity related to M&A and IPOs, which could significantly benefit Protiviti if such activities continue to rise. He highlights that private equity exits via IPO or M&A generate substantial work for the company, particularly in internal controls and integration—areas that have seen limited activity in the past few years. The financial services sector remains robust for Protiviti, contributing 40% of their revenue, with strong demand in anti-money laundering and internal audit services, especially within financial institutions that lack sufficient internal staff. Overall, the financial services vertical is performing well for Protiviti. The paragraph concludes with an acknowledgment of the end of the teleconference, with a note that the recording will be available on Robert Half's website.

The paragraph informs that you can access the replay of the conference call by logging in, and the details for doing so are available in the company's press release issued earlier.

This summary was generated with AI and may contain some inaccuracies.