Gross margin, Adjusted EBITDA and Adjusted
EBITDA margin exceeded expectations
ASGN Incorporated (NYSE: ASGN), a leading provider of IT
services and solutions to the commercial and government sectors,
reported financial results for the quarter and year ended December
31, 2024.
Highlights
Fourth Quarter 2024
- Revenues were $1.0 billion
- Net income was $42.4 million
- Adjusted EBITDA (a non-GAAP measure) was $109.7 million (11.1
percent of revenues)
- Operating cash flows were $100.2 million and Free Cash Flow (a
non-GAAP measure) was $88.9 million
- Repurchased 0.5 million shares of the Company's common stock
for $43.9 million
- IT Consulting revenues were 59 percent of total revenues
Full Year 2024
- Revenues were $4.1 billion
- Net income was $175.2 million
- Adjusted EBITDA (a non-GAAP measure) was $452.0 million (11.0
percent of revenues)
- Operating cash flows were $400.0 million and Free Cash Flow (a
non-GAAP measure) was $364.7 million
- Repurchased 3.5 million shares of the Company's common stock
for $327.2 million
- IT Consulting revenues were 58 percent of total revenues
- Commercial Segment - New bookings were $1.3 billion;
book-to-bill ratio was 1.1 to 1
- Federal Government Segment - New contract awards were $1.3
billion; book-to-bill ratio was 1.1 to 1
Subsequent Company Developments
- On January 30, 2025, the Company announced President Rand
Blazer will transition to the role of Executive Vice Chairman
effective March 1. As part of a planned succession, Shiv Iyer,
former Americas Consulting and Industry X Lead Executive for
Accenture, will become President and join the executive team.
- On February 4, 2025, the Company announced a definitive
agreement to acquire TopBloc, LLC, a leading, high-growth,
tech-enabled Workday consultancy, for $340 million in cash and
equity.
Management Commentary
“Throughout 2024, we remained focused on advancing ASGN's
business towards higher-end, high-value IT consulting solutions,”
said ASGN Chief Executive Officer, Ted Hanson. “In the fourth
quarter, commercial consulting revenues grew by 6 percent
year-over-year, complemented by a double-digit increase in
bookings. Similarly, in our federal government business, solid
bookings led to a book to bill of 1.1 times on a trailing
twelve-month basis. Growth in IT consulting revenues contributed to
an expansion in our margins, with gross and Adjusted EBITDA margins
exceeding our expectations for the quarter.”
Mr. Hanson continued, “ASGN is poised for a dynamic start to
2025. We are enhancing our strong leadership team with the addition
of a new President. We are expanding our ERP capabilities with the
signing of a definitive agreement to acquire TopBloc, and we are
positioning our solutions capabilities in key areas like AI,
cybersecurity, and data in high demand across our client base.
While IT spending has yet to fully rebound, these strategic actions
position us well for anticipated demand.”
Fourth Quarter 2024 Financial Results -
Summary
Three Months Ended
Year Ended
December 31,
December 31,
(In millions, except per share data)
2024
2023
2024
2023
Revenues
Commercial Segment
$
692.7
$
748.6
$
2,868.7
$
3,174.4
Federal Government Segment
292.3
325.5
1,231.0
1,276.2
985.0
1,074.1
4,099.7
4,450.6
Gross Margin
Commercial Segment
32.6
%
32.1
%
32.5
%
32.1
%
Federal Government Segment
20.5
%
19.9
%
20.4
%
20.6
%
Consolidated
29.0
%
28.4
%
28.9
%
28.8
%
Net income
$
42.4
$
50.3
$
175.2
$
219.3
Earnings per diluted share
$
0.95
$
1.06
$
3.83
$
4.50
Non-GAAP Financial Measures
Adjusted Net Income
$
57.1
$
68.8
$
238.6
$
296.8
Adjusted Net Income per diluted share
$
1.28
$
1.45
$
5.22
$
6.09
Adjusted EBITDA
$
109.7
$
121.0
$
452.0
$
517.2
Adjusted EBITDA margin
11.1
%
11.3
%
11.0
%
11.6
%
__________
Definitions of non-GAAP measures and
reconciliation to GAAP measurements are included in the tables that
accompany this release.
Consolidated revenues for the quarter were $985.0 million,
compared with $1.07 billion in the fourth quarter of 2023. From an
industry perspective, the Company operates in six broad industry
verticals. Commercial Segment revenues (70.3 percent of total
revenues) totaled $692.7 million, compared with $748.6 million in
the fourth quarter of 2023. Commercial Segment revenues are
categorized into five verticals: (i) Consumer and Industrial, (ii)
Financial Services, (iii) Technology, Media and Telecom ("TMT"),
(iv) Healthcare, and (v) Business Services. Two of these five
industry verticals saw year-over-year growth in the fourth quarter:
TMT increased mid-single digits and Consumer and Industrial was up
low single digits. The remaining three verticals declined. Federal
Government Segment revenues (29.7 percent of total revenues), the
sixth industry vertical, were $292.3 million, compared with $325.5
million in the prior-year period.
Total IT consulting revenues were $577.0 million (58.6 percent
of total revenues), compared with $594.0 million (55.3 percent of
total revenues) in the fourth quarter of 2023. Commercial Segment
consulting revenues were $284.7 million, up 6.0 percent
year-over-year. Federal Government Segment revenues, which are all
IT consulting revenues, were $292.3 million, as stated above.
Assignment revenues totaled $408.0 million (41.4 percent of total
revenues), compared with $480.1 million in the prior-year period,
and reflect continued softness in the more cyclical portions of the
Commercial Segment business.
Gross margin for the fourth quarter of 2024 was 29.0 percent, an
expansion of 60 basis points from the fourth quarter of 2023. Gross
margin for the Commercial Segment was up 50 basis points,
reflecting a higher mix of consulting revenues as well as margin
expansion in these revenues. Gross margin for the Federal
Government Segment was up 60 basis points.
Selling, general, and administrative (“SG&A”) expenses were
$197.9 million, compared with $203.6 million in the fourth quarter
of 2023. SG&A expenses included $1.9 million in acquisition,
integration, and strategic planning expenses, which were not
included in the Company's previously-announced guidance
estimates.
Net income was $42.4 million ($0.95 per diluted share), compared
with $50.3 million ($1.06 per diluted share) in the fourth quarter
of 2023.
Adjusted EBITDA (a non-GAAP measure) was $109.7 million, or 11.1
percent of revenues ("Adjusted EBITDA margin," a non-GAAP measure),
compared with $121.0 million or 11.3 percent of revenues in the
fourth quarter of 2023.
Capital Resources and Capital Allocation
At December 31, 2024, the Company had:
- Cash and cash equivalents of $205.2 million
- Full availability under its $500.0 million Senior Secured
Revolving Credit Facility (due 2028)
- Senior Secured Debt of $493.8 million (term loan B facility due
2030)
- Senior unsecured notes totaling $550.0 million at 4.625 percent
(due 2028)
In the fourth quarter of 2024 the Company repurchased 0.5
million shares of its common stock for $43.9 million at an average
price of $90.45 per share. Approximately $528.5 million remained
available at quarter end for repurchases under the Company's stock
repurchase plan.
First Quarter 2025 Financial Estimates
The Company's financial estimates for the first quarter of 2025,
which are set forth below, assume no deterioration in the markets
ASGN serves. These estimates do not include any acquisition,
integration, or strategic planning expenses. Reconciliations of
estimated net income to the estimated non-GAAP financial measures
are included in the tables that accompany this release.
(In millions, except per share data)
Low
High
Revenues
$
950.0
$
970.0
SG&A expenses(1)
204.7
208.3
Amortization of intangible assets
12.9
12.9
Net income
27.8
30.7
Earnings per diluted share
$
0.63
$
0.69
Gross margin
28.5
%
28.7
%
Effective tax rate(2)
28.0
%
28.0
%
Non-GAAP Financial Measures:
Adjusted EBITDA
$
91.0
$
95.0
Adjusted Net Income(3)
$
40.2
$
43.1
Adjusted Net Income per diluted
share(3)
$
0.91
$
0.97
Adjusted EBITDA margin
9.6
%
9.8
%
___________
(1) Includes non-cash expenses totaling
$24.5 million, comprised of: (i) $14.1 million of stock-based
compensation, (ii) $7.9 million of depreciation, and (iii) $2.5
million of amortization related to capitalized cloud-based
application implementation costs.
(2) Estimated effective tax rate before
any excess tax benefits related to stock-based compensation.
(3) Does not include the “Cash Tax Savings
on Indefinite-lived Intangible Assets.” These savings total $8.5
million each quarter, or $0.19 per diluted share, and represent the
benefit of the tax deduction that ASGN receives from the
amortization of goodwill and trademarks.
The financial estimates above are based on an estimate of
“Billable Days,” which are Business Days (calendar days for the
period less weekends and holidays) adjusted for other factors, such
as the day of the week a holiday occurs, additional time taken off
around holidays, year-end client furloughs, and inclement weather.
There are 62 Billable Days in the first quarter of 2025, which is
0.75 days fewer than the year ago period, and 1 more day than the
fourth quarter of 2024.
Conference Call
The Company will hold a conference call today at 4:30 p.m. ET to
review its financial results for the fourth quarter and full year
2024 and to provide first quarter 2025 estimates. The dial-in
number is 877-407-0792 (+1-201-689-8263 outside the United States),
and the conference ID number is 13750060. Participants should dial
in ten minutes before the call. The prepared remarks, supplemental
materials and webcast for this call can be accessed at
www.asgn.com.
A replay of the conference call will be available beginning
today at 7:30 p.m. ET until February 19, 2025. The access number
for the replay is 844-512-2921 (+1-412-317-6671 outside the United
States for callers outside the United States) and the conference ID
number is 13750060.
About ASGN Incorporated
ASGN Incorporated (NYSE: ASGN) is a leading provider of IT
services and solutions to the commercial and government sectors.
ASGN helps corporate enterprises and government organizations
develop, implement, and operate critical IT and business solutions
through its integrated offerings. For more information, please
visit asgn.com.
Safe Harbor
Certain statements made in this news release are
“forward-looking statements” within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, and involve a high
degree of risk and uncertainty. Forward-looking statements include
statements regarding our anticipated financial and operating
performance.
All statements in this news release, other than those setting
forth strictly historical information, are forward-looking
statements. Forward-looking statements are not guarantees of future
performance and actual results might differ materially. In
particular, we make no assurances that the proposed revenue,
expense, and profit estimates outlined above will be achieved.
Additional examples of forward-looking statements in this press
release include, without limitation, statements regarding our
ability to attract, train, and retain qualified internal employees,
the availability of qualified billable professionals, management of
our growth, continued performance and improvement of our
enterprise-wide information systems, our ability to successfully
adapt to, integrate, and leverage new and developing technologies,
including generative artificial intelligence, our ability to manage
our litigation matters, the successful integration of acquisitions,
and other risks detailed from time-to-time in our reports filed
with the SEC, including our Annual Report on Form 10-K for the year
ended December 31, 2023 as filed with the SEC on February 23, 2024.
We specifically disclaim any intention or duty to update any
forward-looking statements contained in this news release.
CONSOLIDATED SELECTED
FINANCIAL DATA (Unaudited)
(In millions, except per share
data)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
2024
2023
2024
2024
2023
Results of Operations:
Revenues
$
985.0
$
1,074.1
$
1,031.0
$
4,099.7
$
4,450.6
Costs of services
699.0
769.2
730.6
2,916.0
3,170.6
Gross profit
286.0
304.9
300.4
1,183.7
1,280.0
Selling, general, and administrative
expenses
197.9
203.6
207.5
821.2
844.2
Amortization of intangible assets
13.9
17.9
14.0
58.1
71.7
Operating income
74.2
83.4
78.9
304.4
364.1
Interest expense
(14.9
)
(16.7
)
(16.0
)
(64.3
)
(66.4
)
Income before income taxes
59.3
66.7
62.9
240.1
297.7
Provision for income taxes
16.9
16.4
15.4
64.9
78.4
Net income
$
42.4
$
50.3
$
47.5
$
175.2
$
219.3
Earnings per share:
Basic
$
0.96
$
1.07
$
1.07
$
3.88
$
4.54
Diluted
$
0.95
$
1.06
$
1.06
$
3.83
$
4.50
Number of shares and share equivalents
used to calculate earnings per share:
Basic
44.1
47.1
44.5
45.2
48.3
Diluted
44.5
47.5
45.0
45.7
48.7
CONSOLIDATED SELECTED
FINANCIAL DATA (Continued) (Unaudited)
(In millions)
Three Months Ended
Year Ended
December 31,
December 31,
September 30,
2024
2023
2024
2024
2023
Summary Statements of Cash Flow
Data:
Cash provided by operating activities
$
100.2
$
116.4
$
135.8
$
400.0
$
456.9
Cash used in investing activities
(11.3
)
(7.2
)
(8.0
)
(35.3
)
(40.5
)
Cash used in financing activities
(49.6
)
(79.3
)
(92.9
)
(333.2
)
(310.9
)
Reconciliation of GAAP to Non-GAAP
Measure:
Cash provided by operating activities
$
100.2
$
116.4
$
135.8
$
400.0
$
456.9
Capital expenditures
(11.3
)
(7.2
)
(7.9
)
(35.3
)
(39.9
)
Free Cash Flow (non-GAAP measure)
$
88.9
$
109.2
$
127.9
$
364.7
$
417.0
December 31,
December 31,
2024
2023
Summary Balance Sheet Data:
Cash and cash equivalents
$
205.2
$
175.9
Working capital
550.6
579.2
Goodwill and intangible assets, net
2,332.9
2,392.0
Total assets
3,429.0
3,544.6
Long-term debt
1,033.5
1,036.6
Total liabilities
1,652.3
1,652.5
Total stockholders’ equity
1,776.7
1,892.1
RECONCILIATIONS OF GAAP TO
NON-GAAP MEASURES (Unaudited)
(In millions, except per share
data)
Three Months Ended
Year Ended December 31,
December 31,
September 30,
2024
2023
2024
2024
2023
Net income
$
42.4
$
50.3
47.5
$
175.2
$
219.3
Interest expense
14.9
16.7
16.0
64.3
66.4
Provision for income taxes
16.9
16.4
15.4
64.9
78.4
Depreciation and other amortization(1)
10.0
7.8
9.4
38.2
28.6
Amortization of intangible assets
13.9
17.9
14.0
58.1
71.7
EBITDA (non-GAAP measure)
98.1
109.1
102.3
400.7
464.4
Stock-based compensation
9.7
10.3
9.9
42.3
44.0
Legal settlement expense
—
—
3.6
3.6
2.7
Acquisition, integration, and strategic
planning expenses
1.9
1.6
1.1
5.4
6.1
Adjusted EBITDA (non-GAAP measure)
$
109.7
$
121.0
$
116.9
$
452.0
$
517.2
Three Months Ended
Year Ended December 31,
December 31,
September 30,
2024
2023
2024
2024
2023
Net income
$
42.4
$
50.3
$
47.5
$
175.2
$
219.3
Credit facility amendment expenses
—
—
—
1.5
2.3
Legal settlement expense
—
—
3.6
3.6
2.7
Acquisition, integration, and strategic
planning expenses
1.9
1.6
1.1
5.4
6.1
Tax effect on adjustments
(0.5
)
(0.4
)
(1.3
)
(2.8
)
(2.9
)
Non-GAAP net income
43.8
51.5
50.9
182.9
227.5
Amortization of intangible assets
13.9
17.9
14.0
58.1
71.7
Other
(0.6
)
(0.6
)
(0.6
)
(2.4
)
(2.4
)
Adjusted Net Income (non-GAAP
measure)(2)
$
57.1
$
68.8
$
64.3
$
238.6
$
296.8
Per diluted share:
Net income
$
0.95
$
1.06
$
1.06
$
3.83
$
4.50
Adjustments
0.33
0.39
0.37
1.39
1.59
Adjusted Net Income (non-GAAP
measure)(2)
$
1.28
$
1.45
$
1.43
$
5.22
$
6.09
Common shares and share equivalents
(diluted)
44.5
47.5
45.0
45.7
48.7
_________
(1) The three months and year ended
December 31, 2024, include $1.6 million and $5.7 million,
respectively, of amortization related to capitalized cloud-based
application implementation costs included in SG&A expenses.
(2) Does not include the “Cash Tax Savings
on Indefinite-lived Intangible Assets,” which currently total
approximately $8.5 million per quarter (approximately $0.19 per
diluted share) and represent the benefit of the tax deduction for
amortization of goodwill and trademarks.
FINANCIAL ESTIMATES FOR THE
FIRST QUARTER OF 2025
RECONCILIATIONS OF ESTIMATED
GAAP TO NON-GAAP MEASURES
(In millions, except per share
data)
Low
High
Net income(1)
$
27.8
$
30.7
Interest expense
14.5
14.5
Provision for income taxes
10.8
11.9
Depreciation and other amortization(2)
10.9
10.9
Amortization of intangible assets
12.9
12.9
EBITDA (non-GAAP measure)
76.9
80.9
Stock-based compensation
14.1
14.1
Adjusted EBITDA (non-GAAP measure)
$
91.0
$
95.0
Low
High
Net income(1)
$
27.8
$
30.7
Amortization of intangible assets
12.9
12.9
Other
(0.5
)
(0.5
)
Adjusted Net Income (non-GAAP
measure)(3)
$
40.2
$
43.1
Per diluted share:
Net income
$
0.63
$
0.69
Adjustments
0.28
0.28
Adjusted Net Income (non-GAAP
measure)(3)
$
0.91
$
0.97
_______
(1) Does not include acquisition,
integration, and strategic planning expenses, or excess tax
benefits related to stock-based compensation.
(2) Comprised of (i) $7.9 million of
depreciation included in SG&A expenses, (ii) $2.5 million of
amortization related to capitalized cloud-based application
implementation costs included in SG&A expenses, and (iii) $0.5
million of depreciation included in costs of services.
(3) Does not include the "Cash Tax Savings
on Indefinite-lived Intangible Assets". These savings total $8.5
million per quarter ($0.19 per diluted share) and represent the
benefit of the tax deduction for amortization of goodwill and
trademarks.
Non-GAAP Financial Measures
Statements in this release include financial information
presented in accordance with accounting principles generally
accepted in the United States ("GAAP") and also include non-GAAP
financial measures that are provided as additional information to
enhance the overall understanding of the Company's current
financial performance and not as an alternative to the consolidated
interim financial statements presented in accordance with GAAP.
Management uses these non-GAAP measures (earnings before interest,
taxes, depreciation, and amortization ("EBITDA"), Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income
per diluted share, Free Cash Flow, and Revenues on a same Billable
Days basis) to evaluate the Company's financial performance. These
terms might not be calculated in the same manner as, and thus might
not be comparable to, similarly titled measures reported by other
companies. The financial information tables that accompany this
press release include reconciliations of net income to non-GAAP
financial measures.
EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin provide a
measure of the Company's operating results in a manner that is
focused on the performance of the Company's core business on an
ongoing basis, by removing the effects of non-operating and certain
non-cash expenses. These non-operating and non-cash items are
specifically identified in the reconciliations of GAAP measures to
Non-GAAP measures that accompany this release.
Adjusted Net Income provides a method for assessing the
Company's operating results in a manner that is focused on the
performance of the Company's core business on an ongoing basis by
removing the effects of non-operating and certain non-cash
expenses, adjusted for some of the cash flows associated with
amortization of intangible assets to more fully present the
performance of the Company's acquisitions. The calculation of
Adjusted Net Income is presented in the reconciliations of GAAP
measures to Non-GAAP measures that accompany this release.
Free Cash Flow provides useful information to investors about
the amount of cash generated by the business that can be used for
strategic opportunities and is computed as presented in the tables
that accompany this release.
Commercial consulting bookings are defined as the value of new
contracts entered into during a specified period, including
adjustments for the effects of changes in contract scope and
contract terminations. The book-to-bill ratio for the Commercial
consulting business is the ratio of bookings to revenues for a
specified period.
Federal Government Segment new contract awards are defined as
the estimated amount of future revenues to be recognized under
contracts awarded during a specified period, including adjustments
to estimates for contracts awarded in previous periods. The
book-to-bill ratio for the Federal Government Segment is the ratio
of New Contract Awards to revenues for a specified period. There is
no assurance our new contract awards will result in future
revenues.
Revenues calculated on a Same Billable Days basis provide more
comparable information by removing the effect of differences in the
number of billable days on a year-over-year basis. Revenues on a
Same Billable Days basis are adjusted for the following items:
differences in billable days during the period by taking the
current-period average revenue per billable day, multiplied by the
number of billable days from the same period in the prior year;
Billable Days are business days (calendar days for the period less
weekends and holidays) adjusted for other factors, such as the day
of the week a holiday occurs, additional time taken off around
holidays, year-end client furloughs, and inclement weather.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250204396991/en/
Kimberly Esterkin Vice President, Investor Relations
kimberly.esterkin@asgn.com
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