Robert Half (RHI) Q4 Earnings, Revenues Top Estimates, Up Y/Y

Robert Half International Inc. (NYSE:RHI) reported strong fourth-quarter 2018 results with earnings and revenues surpassing the Zacks Consensus Estimate.

Earnings per share (EPS) of 95 cents beat the Zacks Consensus Estimate by 4 cents and increased 46.2% year over year. The reported figure exceeded the company guided EPS range of 88-94 cents.

Total revenues of $1.48 billion outpaced the consensus mark by $24.5 million. The top line increased 10.1% year over year on a reported basis and 10.3% on an adjusted basis. Notably, revenues came in higher than the midpoint of the guided range of $1.43-$1.49 billion by nearly 2 million.

Robert Half witnessed broad-based strength across its staffing and Protiviti operations. Over the past year, shares of the company have gained 5.8% against 10.1% decline of the industry it belongs to. The Zacks S&P 500 composite has rallied 6.3% in the same time frame.

Let’s delve deeper into the numbers.

Solid Segmental Performance

Based on the nature of services, Robert Half has three reportable operating segments namely, Temporary and Consultant Staffing, Permanent Placement Staffing and Risk Consulting and Internal Audit Services. While revenues from Temporary and Consultant Staffing and Permanent Placement Staffing come under the global staffing division, the same from Risk Consulting and Internal Audit Services are reported under the Protiviti division.

Global Staffing Division: Staffingrevenues of $1.21 billion increased 7.6% year over year on a reported basis and 8.5% on an adjusted basis. U.S. staffing revenues of $934 million increased 8.1% on a reported basis and 7.1% on an adjusted basis. Non-U.S. staffing revenues increased 6% on a reported basis and 13.6% on an adjusted basis to $285 million.

Currency movements had an unfavorable impact of 1% on reported staffing revenue growth.

Fourth-quarter 2018 had 61.7 billing days compared with 61.3 days in fourth-quarter 2017. At present, Robert Half operates 324 staffing locations worldwide, with 85 locations situated in 17 countries outside the United States.

Protiviti:Protiviti revenues were $263 million, which increased 22.8% year over year on a reported basis and 19.2% on an adjusted basis, with strength across both the U.S. and non-U.S. regions. Protiviti revenues from the United States grew 17.6% on a reported basis and 16.4% on an adjusted basis to $204 million. The same from international regions surged 45.1% on a reported basis and 29.5% on an adjusted basis to $59 million.

Currency movement lowered segmental revenue growth by 0.9% on a year-over-year basis. Currently, Protiviti along with its independently-owned Member Firms has a network of 83 locations in 26 countries.

Gross profit in fourth-quarter 2018 came in at $620.06 million, up 12.1% year over year. Gross margin increased to 41.8% from 41.1% in the year-ago quarter.

Staffing gross margin expanded 120 basis points (bps) year over year to 44.4%. Protiviti gross margin increased to 30.2% from 30.0% in the year-ago quarter.

Operating income was $153.90 million, up 19.5% year over year. Operating margin was 10.4% compared with 9.6% in the year-ago quarter.

At the staffing division, operating income increased 16% year over year to $120 million. Operating margin was 9.8%. Protiviti reported operating income of $34 million, which grew 32% from the year-ago quarter. Protiviti recorded an operating margin of 12.9%.

Selling, general and administrative expenses increased 9.8% year over year to $466.15 million.

Robert Half ended fourth-quarter 2018 with cash and cash equivalents of $276.57 million compared with $294.75 million at the end of the previous quarter. Cash flow from operations was $123 million and capital expenditures were $15.29 million in the reported quarter.

In the reported quarter, Robert Half bought back 2.4 million shares for $137 million. The company has 6.7 million shares available for repurchase under its repurchase plan as approved by the board of directors.

The company also paid a cash dividend of 28 cents per share in December, totaling $34 million.

First-Quarter 2019 Guidance

Robert Half expects first-quarter 2019 revenues in the range of $1.460-$1.525 billion. The Zacks Consensus Estimate of $1.49 billion falls within the guided range.

Earnings are anticipated in the band of 92-98 cents per share. The Zacks Consensus Estimate of 94 cents is within the guided range.

The mid-point of these projections indicates year-over-year top-line growth of 10% (on a same-day as-adjusted basis) and 7% (on a reported basis before adjustment for billing day and currency drags) and bottom-line growth of 21%.

Zacks Rank & Upcoming Releases

Currently, Robert Half carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting fourth-quarter 2018 earnings reports of key players like Aptiv (NYSE:APTV) , ManpowerGroup (NYSE:MAN) and Gartner (NYSE:IT) . While Aptiv and ManpowerGroup will release results on Jan 31, Gartner is slated to report on Feb 5.

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