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Robert Half (RHI) Q2 Earnings Beat, Revenues Miss Estimates

Zacks Equity Research
·4 min read

Robert Half International Inc. RHI reported mixed second-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Quarterly earnings of 41 cents per share beat the consensus mark by 17% but were down 58% year over year. Revenues of $1.11 billion missed the consensus mark by 1.6% and declined 27% year over year on a reported basis and 26% on an as-adjusted basis.

Notably, the company’s shares have depreciated 14.2% over the past year, compared with the 31.6% decline of the industry it belongs to.

Staffing Revenues Decline, Protiviti Up

Global Staffing revenues of $840 million declined 34% year over year on a reported basis and 33% on an as-adjusted basis. This decline was mainly due to the negative impact of COVID-19 on staffing operations. U.S. staffing revenues of $640 million were down 34% on an adjusted basis. Non-U.S. staffing revenues were down 31% on an as-adjusted basis to $184 million. Currency movements had an unfavorable impact of 0.6% on staffing revenues.

The quarter had 63.4 billing days, flat with the year-ago quarter’s tally. At present, Robert Half operates 326 staffing locations worldwide, with 88 locations situated in 17 countries outside the United States.

Protiviti revenues came in at $284 million, which increased 4% year over year on a reported basis and 4.5% on an as-adjusted basis. This increase was driven by strength in solutions offerings and pipeline. U.S. Protiviti revenues increased 6% year over year on an as-adjusted basis while non-U.S Protiviti revenues declined 2%.

Currency movement lowered revenue growth by 0.6% on a year-over-year basis. Currently, Protiviti, along with its independently owned Member Firms, has a network of 86 locations in 27 countries.

Costs Escalate, Margins Shrink

Gross profit in the quarter was $423 million, down 34% year over year. Gross margin of 38.2% shrunk 380 basis points (bps) year over year. Operating income of $58 million was down 63.5% year over year. Operating margin declined to 5.3% from the year-ago quarter’s 10.5%.

Selling, general and administrative expenses as percentage of total revenues were 32.9%, up 140 bps year over year. The upswing resulted from negative leverage as revenues declined in response to the pandemic.

Key Balance Sheet & Cash Flow Figures

Robert Half ended the first quarter with cash and cash equivalents of $502 million, compared with the $250 million witnessed at the end of the previous quarter. Cash flow from operations was $301 million and capital expenditures were $8 million in the quarter. In the quarter, Robert Half paid out $38 million in dividends.

Currently, Robert Half carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax Inc. EFX reported second-quarter 2020 adjusted earnings of $1.60 per share that beat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis. Revenues of $982.8 million outpaced the consensus estimate by 6.4% and improved 12% year over year on a reported basis. The stock currently carries a Zacks Rank #3 (Hold).

ManpowerGroup Inc. MAN reported mixed second-quarter 2020 earnings of 18 cents per share, beating the consensus mark by 38.5% but declining more than 100% year over year. Revenues of $3.74 billion missed the consensus mark by 1.5% and declined 30.4% year over year. The stock currently carries a Zacks Rank #3.

IHS Markit Ltd. INFO recorded second-quarter fiscal 2020 adjusted earnings per share of 69 cents that surpassed the consensus estimate by 6.2% but decreased 3% on a year-over-year basis. Total revenues came in at $1.03 billion, missing the consensus mark by 2.1% and declining 10% from the year-ago quarter. The stock currently carries a Zacks Rank #3.

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