ASGN Inc

Previous wording

ASGN provides information technology ("IT") services and solutions across the commercial and government sectors. ASGN operates through two segments, Commercial and Federal Government. The Commercial Segment, which is the largest segment, provides consulting, creative digital marketing, and permanent placement services primarily to Fortune 1000 and large mid-market companies. The Federal Government Segment provides advanced IT solutions to the Department of Defense, the intelligence community, and federal civilian agencies. Virtually all of the Company's revenues are generated in the United States.

Current wording

ASGN provides information technology ("IT") services and solutions across the commercial and government sectors. ASGN operates through two segments, Commercial and Federal Government. The Commercial Segment, which is the largest segment, provides consulting, creative digital marketing, and permanent placement services primarily to Fortune 1000 and large mid-market companies. The Federal Government Segment provides advanced IT solutions to the Department of Defense, the intelligence community, and key federal civilian agencies, namely the Department of Homeland Security. Virtually all of the Company's revenues are generated in the United States.

Previous wording

From an industry perspective, the Company operates in six broad industry verticals. Commercial Segment revenues (69.7 percent of total revenues) were down 8.1 percent year-over-year and are categorized in five verticals: (i) Financial Services, (ii) Consumer and Industrial, (iii) Technology, Media, and Telecom ("TMT"), (iv) Healthcare, and (v) Business Services. The TMT industry vertical had double-digit growth, while Consumer and Industrial was up low single digits year-over-year. The remaining three industry verticals declined year-over-year. Federal Government Segment revenues (30.3 percent of total revenues), the sixth industry vertical, were down 6.6 percent year-over-year, reflecting lower third-party software licenses revenues compared with the prior year.

Current wording

From an industry perspective, the Company operates in six broad industry verticals. Commercial Segment revenues (69 percent of total revenues) were down 8.1 percent year-over-year and are categorized in five verticals: (i) Financial Services, (ii) Consumer and Industrial, (iii) Technology, Media, and Telecom ("TMT"), (iv) Healthcare, and (v) Business Services. The Consumer and Industrial vertical was up mid-single digits, while the remaining four industry verticals declined year-over-year. Federal Government Segment revenues (31 percent of total revenues), the sixth industry vertical, were down 6.7 percent year-over-year mainly due to a few programs that ended and a slight impact from the Department of Government Efficiency's cost-cutting efforts.

Previous wording

Total IT consulting revenues were $597.2 million (57.9 percent of total revenues), down 1.9 percent year-over-year. Commercial Segment consulting revenues were $285.0 million, up 3.9 percent year-over-year. Federal Government Segment revenues, which are all consulting revenues, were $312.2 million, down 6.6 percent year-over-year as stated above. Assignment revenues, which totaled $433.8 million (42.1 percent of total revenues), were down 14.6 percent year-over-year, reflecting continued softness in the portions of the Commercial Segment business that are more sensitive to changes in macroeconomic cycles (i.e., more cyclical).

Current wording

Total IT consulting revenues were $586.2 million (61 percent of total revenues), down 1.4 percent year-over-year. Commercial Segment consulting revenues were $290.1 million, up 4.7 percent year-over-year. Federal Government Segment revenues, which are all consulting revenues, were $296.1 million, down 6.7 percent year-over-year as stated above. Assignment revenues, which totaled $382.1 million (39 percent of total revenues), were down 15.9 percent year-over-year, reflecting continued softness in the portions of the Commercial Segment business that are more sensitive to changes in macroeconomic cycles.

Previous wording

Consolidated gross profit declined 6.8 percent year-over-year on a revenue decline of 7.7 percent. Gross margin for the third quarter of 2024 was 29.1 percent, an expansion of 20 basis points compared with the third quarter of 2023. Gross margin for the Commercial Segment was up 30 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 30 basis points due to lower third-party software licenses revenues, which carry lower margins.

Current wording

Consolidated gross profit declined 7.0 percent year-over-year on a revenue decline of 7.7 percent. Gross margin for the first quarter of 2025 was 28.4 percent, an expansion of 20 basis points compared with the first quarter of 2024. Gross margin for the Commercial Segment was up 40 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 down 20 basis points, primarily due to higher rates of fringe benefits.

Previous wording

Selling, general, and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, information systems, rent, public company expenses, and other general and administrative expenses. SG&A expenses were $207.5 million, compared with $206.0 million in the third quarter of 2023. The higher SG&A expenses reflected higher legal settlement expenses and depreciation and amortization of capitalized cloud implementation costs.

Current wording

Selling, general, and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, information systems, rent, public company expenses, and other general and administrative expenses. SG&A expenses were $214.5 million, compared with $210.2 million in the first quarter of 2024. SG&A expenses in the first quarter of 2025 included $3.3 million in acquisition, integration, and strategic planning expenses, compared with $1.2 million in the first quarter of 2024. The first quarter of 2025 also included a $4.4 million one-time write-off related to previously capitalized costs for software enhancements that will no longer be placed into service.

Previous wording

Amortization of intangible assets was $14.0 million, compared with $17.8 million in the third quarter of 2023. The decrease was due to the accelerated amortization method of certain acquired intangibles, which have high amortization rates at the beginning of their useful lives.

Current wording

Amortization of intangible assets was $14.3 million, compared with $15.1 million in the first quarter of 2024. The decrease was due to older intangibles reaching the end of their useful lives in the second half of 2024.

Previous wording

Interest expense, net, which consists primarily of cash-based interest expense, amortization and adjustments to deferred loan costs, and interest income, was $16.0 million, down from $18.5 million in the third quarter of 2023. The decrease is attributable to $2.3 million of costs in the prior year period that related to the August 2023 amendments to the senior secured credit facility. The weighted-average outstanding borrowings and cash-based interest rate in the third quarter of 2024 and 2023 were $1.0 billion and 6.0 percent for both periods.

Current wording

Interest expense, net, which consists primarily of cash-based interest expense, amortization and adjustments to deferred loan costs, and interest income, was $15.4 million, down from $17.6 million in the first quarter of 2024. The decrease is primarily the result of lower interest rates in 2025 on the senior secured credit facility, additionally, the prior year included $1.5 million of costs related to the March 2024 amendment to the senior secured credit facility. The weighted-average outstanding borrowings and cash-based interest rate in the first quarter of 2025 and 2024 were $1.13 billion and 5.5 percent, and $1.04 billion and 6.2 percent, respectively.

Previous wording

The provision for income taxes was $15.4 million, down from $20.7 million in the third quarter of 2023 due to lower income before income taxes. The effective tax rate was 24.5 percent, down from 25.8 percent in the third quarter of 2023.

Current wording

The provision for income taxes was $10.3 million, down from $15.2 million in the first quarter of 2024 due to lower income before income taxes. The effective tax rate was 33.0 percent, up from 28.5 percent in the first quarter of 2024. The increase in the effective tax rate relates to tax shortfalls on stock-based compensation.

Previous wording

Commercial consulting bookings are the value of new contracts entered into during a specified period, including adjustments for the effects of changes in contract scope and contract terminations ("Bookings"). The underlying contracts are terminable by the client on short notice with little or no termination penalties. Measuring Bookings involves the use of estimates and judgments and there are no independent standards or requirements governing the calculation of Bookings. Information regarding Bookings is not comparable to, nor should it be substituted for, an analysis of reported revenues. The book-to-bill ratio for our commercial consulting revenues is the ratio of Bookings to commercial consulting revenues for a specified period. The average duration of commercial consulting projects is one year.

Current wording

Commercial consulting bookings are the value of new contracts entered into during a specified period, including adjustments for the effects of changes in contract scope and contract terminations ("Bookings"). The underlying contracts are terminable by the client on short notice with little or no termination penalties. Measuring Bookings involves the use of estimates and judgments and there are no independent standards or requirements governing the calculation of bookings. Information regarding Bookings is not comparable to, nor should it be substituted for, an analysis of reported revenues. The book-to-bill ratio for our commercial consulting revenues is the ratio of Bookings to commercial consulting revenues for a specified period. The average duration of commercial consulting projects is approximately one year.

Previous wording

Contract backlog for our Federal Government Segment represents the estimated amount of future revenues to be recognized under awarded contracts, including task orders and options, at a point in time ("Contract Backlog"). These estimates are subject to change and may be affected by the execution of new contracts, the extension or early termination of existing contracts, the non-renewal or completion of current contracts, and adjustments to estimates for previously included contracts. The timing of the execution of new contracts and other changes are affected by the funding cycles of the government and can vary from quarter to quarter. New contract awards are 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 (“New Contract Awards”). Information regarding New Contract Awards is not comparable to, nor should it be substituted for, an analysis of reported revenues. Due to variability, New Contract Awards are presented on a trailing-twelve-months (“TTM”) basis. The book-to-bill ratio for our Federal Government Segment is the ratio of New Contract Awards to revenues for a specified period. Contract Backlog coverage ratio is calculated as total Contract Backlog divided by TTM revenues.

Current wording

Contract backlog for our Federal Government Segment represents the estimated amount of future revenues to be recognized under awarded contracts, including task orders and options, at a point in time ("Contract Backlog"). These estimates are subject to change and may be affected by the execution of new contracts, the extension or early termination of existing contracts, the non-renewal or completion of current contracts, and adjustments to estimates for previously included contracts. There is no assurance our contract backlog will result in future revenues. The timing of the execution of new contracts and other changes are affected by the funding cycles of the government and can vary from quarter to quarter. New contract awards are 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 (“New Contract Awards”). Information regarding New Contract Awards is not comparable to, nor should it be substituted for, an analysis of reported revenues. Due to variability, New Contract Awards are presented on a trailing-twelve-months (“TTM”) basis. The book-to-bill ratio for our Federal Government Segment is the ratio of New Contract Awards to revenues for a specified period. Contract backlog coverage ratio is calculated as total Contract Backlog divided by TTM revenues.

Previous wording

Our working capital, which is current assets less current liabilities, at September 30, 2024 was $503.7 million, and our cash and cash equivalents were $166.6 million. Our cash flows from operating activities have been our primary source of liquidity and have been sufficient to meet our working capital and capital expenditure needs. At September 30, 2024, we had full availability under the $500.0 million revolving credit facility. We believe that our cash and cash equivalents on hand, expected operating cash flows, and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months.

Current wording

Our working capital, which is current assets less current liabilities, at March 31, 2025 was $508.1 million, and our cash and cash equivalents were $107.0 million. Our cash flows from operating activities have been our primary source of liquidity and have been sufficient to meet our working capital and capital expenditure needs. At March 31, 2025, we had approximately $250.0 million available under the $500.0 million revolving credit facility. We believe that our cash and cash equivalents on hand, expected operating cash flows, and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months and beyond.

Previous wording

Net cash provided by operating activities was $299.8 million for the first nine months of 2024, compared with $340.5 million in the same period of 2023. Net cash provided by operating activities before changes in operating assets and liabilities was $245.0 million, compared with $286.6 million in the same period of 2023. Net cash provided by changes in operating assets and liabilities was $54.8 million for the first nine months of 2024, compared with $53.9 million in the same period of 2023.

Current wording

Net cash provided by operating activities was $16.8 million for the first three months of 2025, compared with $73.3 million in the same period of 2024. Net cash provided by operating activities before changes in operating assets and liabilities was $66.4 million, compared with $77.4 million in the same period of 2024. Changes in operating assets and liabilities resulted in net cash usage of $49.6 million for the first three months of 2025, compared with $4.1 million in the same period of 2024. This year-over-year change primarily related to an increase in accounts receivable days sales outstanding in the first three months of 2025.

Previous wording

Net cash used in financing activities was $283.6 million for the first nine months of 2024 and included $283.3 million to repurchase the Company's common stock. Net cash used in financing activities in the first nine months of the prior year was $231.6 million and included $197.7 million to repurchase the Company's common stock, net repayments of borrowings under the revolving credit facility totaling $31.5 million, and the effects of the August 2023 amendments to the Company's senior secured credit facility which generated net proceeds of $8.0 million that were offset by related amendment costs.

Current wording

Net cash provided by financing activities was $201.2 million for the first three months of 2025 and included net borrowings under the senior secured credit facility totaling $248.7 million, offset by $50.4 million used to repurchase the Company's common stock. Net cash used in financing activities in the first three months of the prior year was $80.0 million and included $79.7 million used to repurchase the Company's common stock.

Previous wording

For details on the Company’s senior secured credit facility, comprised of a revolving credit facility and term loan B, and unsecured senior notes, see Note 3. Long-Term Debt in Part I, Item 1.

Current wording

For details on the Company’s senior secured credit facility, comprised of a revolving credit facility and term loan B, and unsecured senior notes, see Note 5. Long-Term Debt in Part I, Item 1 in this Quarterly Report on Form 10-Q ("10-Q").

Previous wording

There were no material changes to the significant commitments or contractual obligations that were disclosed in our 2023 10-K.

Current wording

Commitments and Contingencies — There have been no material changes to our contractual cash obligations from those described in our 2024 10-K.

Previous wording

There were no material changes to our critical accounting policies and estimates during thethird quarter of 2024 compared with those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 10-K.

Current wording

There were no material changes to our critical accounting policies and estimates during thefirst quarter of 2025 compared with those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2024 10-K.