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Robert Half (RHI) Q4 Earnings Meet Estimates, Revenues Beat

Zacks Equity Research

Robert Half International Inc.’s RHI fourth-quarter 2019 earnings came in line with the Zacks Consensus Estimate and revenues beat the same.

Quarterly earnings of 98 cents per share were up 3.2% year over year. The reported figure came at the higher end of the company’s guided range of 94 cents to $1.

Revenues of $1.54 billion marginally beat the consensus mark and increased 3.8% year over year on a reported basis and 4.3% on an adjusted basis. Revenues were at the higher end of the guided range of $1.5-$1.565 billion.

Robert Half witnessed revenue growth in its U.S. staffing and Protiviti operations in the quarter.

The company’s shares have declined 5.9% over the past year, compared with the 6.8% decline of the industry it belongs to.

Let’s delve deeper into the numbers.

Solid Segmental Performance

Global Staffing revenues of $1.23 billion increased 1.2% year over year on a reported basis and 2.1% on an adjusted basis. U.S. staffing revenues of $962 million increased 3% on a reported basis and 3.2% on an adjusted basis. Non-U.S. staffing revenues declined 4.8% on a reported basis and 1.5% on an adjusted basis to $271 million.

Currency movements had an unfavorable impact of 0.5% on staffing revenues.

The quarter had 61.7 billing days, flat with the year-ago quarter. At present, Robert Half operates 326 staffing locations worldwide, with 87 locations situated in 17 countries outside the United States.

Protiviti: Protiviti revenues were $304.7 million, which increased 15.7% year over year on a reported basis and 14.1% on an adjusted basis, with strength across the U.S. and non-U.S. regions. Protiviti revenues from the United States grew 17.3% on a reported basis and 17.5% on an adjusted basis. The same from international regions rose 10.4% on a reported basis and 3.3% on an adjusted basis.

Currency movement lowered revenue growth by 0.3% on a year-over-year basis. Currently, Protiviti, along with its independently-owned Member Firms, has a network of 36 locations in 27 countries.

Operating Results

Gross profit in fourth-quarter 2019 was $646.4 million, up 3% year over year. Gross margin of 41.6% declined 20 basis points (bps) year over year.

Operating income of $153.2 million was down slightly year over year. Operating margin declined to 10% from 10.4% in the year-ago quarter.

Selling, general and administrative expenses increased 4.2% year over year to $485.7 million.

Balance Sheet

Robert Half ended the quarter with cash and cash equivalents of $270.5 million compared with $312.7 million at the end of the previous quarter. Cash flow from operations was $81 million and capital expenditures were $19 million in the quarter.

In the reported quarter, Robert Half bought back around 1 million shares for $59 million. The company has 2.5 million shares available for repurchase under its existing repurchase plan as approved by the board of directors. It paid out $36 million in dividends.

First-Quarter 2020 Guidance

Earnings are anticipated between 90 cents and 96 cents, the midpoint of which is lower than the current Zacks Consensus Estimate of 95 cents. Revenues are expected between $1.515 billion and $1.58 billion, the midpoint of which is higher than the current Zacks Consensus Estimate of $1.53 billion.

Zacks Rank & Stocks to Consider

Robert Half currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Waste Management WM, S&P Global SPGI and Fidelity National Information Services FIS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings (three to five years) growth rate for Waste Management, S&P Global and Fidelity National Information Services is estimated at 8.2%, 10% and 8.9%, respectively.

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