Robert Half's 2Q Earnings & Sales Beat - Analyst Blog


Leading staffing firm Robert Half International Inc. ( RHI ) reported second quarter 2013 earnings of 46 cents, ahead of the prior-year quarter adjusted earnings of 38 cents per share by 21.1%. Earnings also beat the Zacks Consensus Estimate by 7%.

Despite sluggish performance in the international markets, Robert Half witnessed strong earnings growth driven by solid demand for skilled professionals in the U.S., particularly in permanent placement, information technology staffing and in Protiviti operations. In fact, the company's earnings have now grown more than 15% year over year for 13 straight quarters driven by growing demand for skilled workforce and consulting services.

We believe that the demand for the company's services, in particular its staffing services, is highly dependent on the state of the economy and the staffing needs of the company's clients. A gradual improvement in economic conditions and job market in the U.S. has led to a rise in the demand for the company's specialized staffing and consulting services.

Quarter in Detail

Robert Half's total revenue increased 3.4% year over year to $1.06 billion in the second quarter and beat the Zacks Consensus Estimate of $1.05 billion by 1.6%. On a constant currency basis, revenues increased 1% year over year on the back of rising global staffing revenues. While revenues in the U.S. grew 4% in the second quarter, international staffing revenues declined 7% on a constant currency basis.

Gross profit was $432.1 million in the reported quarter, up 4.0% year over year. Gross margin expanded 20 basis points to 40.6% in the second quarter as against 40.4% in the prior-year quarter owing to higher sales. Operating income increased 39.9% to $100.8 million in the quarter. Operating margin increased 250 basis points to 9.5% in the second quarter of 2013 on the back of higher gross margins, lower operating expenses and solid Protiviti results.

Segment Details

Revenues at Accountemps declined 0.7%, while revenues at Robert Half Management Resources decreased 1.2%. Revenues increased 2.3% and 1.4% at Office Team and at Robert Half Finance and Accounting, respectively. Revenues grew 10.2% at Robert Half Technology, while revenues at the Protiviti division jumped 18.7% from the prior-year quarter.

Financial Update

Robert Half had cash and cash equivalents of $246.9 million at the end of the second quarter versus $22.4 million at the end of first quarter 2013. Capital expenditure was $11 million as against $8 million in the prior quarter of 2013.

Robert Half paid its stockholders a cash dividend of 16 cents per share on Jun 12 at a total cost of $22 million. The company also repurchased 1.2 million shares for a total of $39 million during the quarter. There are approximately 9.4 million shares remaining under the board approved stock repurchase plan.

Robert Half carries a Zacks Rank #2 (Hold). Other stocks in the business services sector include On Assignment Inc ( ASGN ), Manpower, Inc. ( MAN ) and Amn Healthcare Services Inc ( AHS ), all of them holding a Zacks Rank #1 (Strong Buy).

AMN HLTHCR SVCS (AHS): Free Stock Analysis Report

ON ASSIGNMENT (ASGN): Free Stock Analysis Report

MANPOWER INC WI (MAN): Free Stock Analysis Report

ROBT HALF INTL (RHI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AHS , ASGN , MAN , RHI

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