Robert Half (RHI) Q3 Earnings, Revenues Top Estimates, Up Y/Y
Robert Half International Inc.RHI reported strong third-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 39.7% year over year. The reported figure exceeded the company guided EPS range of 88-94 cents.
Total revenues of $1.46 billion outpaced the consensus mark by $5 million. The top line increased 10.7% year over year on a reported basis and 11.1% on an adjusted basis. Notably, revenues came in line with the midpoint of the $1.43-$1.49 billion guided range.
Quarterly results benefited from growth across the company's staffing divisions and Protiviti operations. The company is seeing positive business sentiment across the company's small and midsize client base, especially in the United States. Lack of a skilled workforce across the globe increased demand for skilled talent, primarily in professional-level segments.
So far this year, shares of Robert Half have gained 15.2% against the 2.7% decline of the industry it belongs to. The Zacks S&P 500 Composite Index has rallied 3.2% 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: Staffing revenues of $1.21 billion improved 8.7% year over year on a reported basis and 9.8% on an adjusted basis. U.S. staffing revenues of $920 million increased 7.7% on a reported basis and 7.4% on an adjusted basis. Non-U.S. staffing revenues increased 12.1% on a reported basis and 17.9% on an adjusted basis to $293 million.
Currency movements had an unfavorable impact of 0.8% on reported staffing revenue growth.
Third-quarter 2018 had 63.3 billing days compared with 63.1 days in third -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 $253 million, which improved 21.2% year over year on a reported basis and 17.5% on an adjusted basis, with strength across both the U.S. and non-U.S. regions. Protiviti revenues from the United States grew 17.3% on a reported basis and 17.1% on an adjusted basis to $200 million. The same from international regions surged 38.3% on a reported basis and 19.5% on an adjusted basis to $53 million.
Currency movement decreased segmental revenue growth by 0.6% on a year-over-year basis. Currently, Protiviti along with its independently-owned Member Firms has a network of 81 locations in 25 countries.
Gross profit in the third quarter came in at $610.46 million, up 11.7% year over year. Gross margin increased to 41.6% from 41.2% in the year-ago quarter.
Staffing gross margin expanded 110 basis points (bps) year over year to 44.5%. Protiviti gross margin declined to 28.1% from 29.6% in the year-ago quarter.
Operating income came in at $151.13 million, up 14.3% year over year. Operating margin was 10.3% compared with 10% in the year-ago quarter.
At the staffing division, operating income increased 17% year over year to $126 million. Operating margin was 10.4%. Protiviti reported operating income of $25 million, which grew 4% from the year-ago quarter. Protiviti recorded an operating margin of 10.1%.
Selling, general and administrative expenses increased 10.9% year over year to $459.33 million.
Robert Half International Inc. Price, Consensus and EPS Surprise
Robert Half ended the third quarter with cash and cash equivalents of $361.7 million compared with $308.7 million at the end of the previous quarter. Cash flow from operations was $185 million compared with $148 millionin the last quarter. Capital expenditures of $10 million rose $1 million from the previous quarter.
In the reported quarter, Robert Half bought back 1.1 million shares for $79 million. The company had 9.1 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 September, which sums up to a total payment of $34 million.
Robert Half expects fourth-quarter 2018 revenues in the range of $1.43-$1.49 billion. The Zacks Consensus Estimate of $1.45 billion is below the midpoint of the currently guided range.
Earnings are anticipated in the band of 88-94 cents per share. The Zacks Consensus Estimate of 86 cents lagged the midpoint of the currently guided range by 5 cents.
The mid-point of these projections reflects year-over-year top- (on a same-day, as-adjusted basis, including Protiviti) and bottom-line growth of 9% and 40%, respectively.
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 Business Services sector are keenly awaiting earnings reports of key players like Booz Allen Hamilton Holding BAH , Waste Connections WCN and First Data FDC . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29. Waste Connections and First Data will release third-quarter 2018 results on the same day.
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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 Nasdaq, Inc.