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Leading staffing firm Robert Half International Inc. (RHI - Free Report) reported fourth quarter 2013 earnings of 49 cents, ahead of the prior-year quarter adjusted earnings of 42 cents per share by 16.7%. Earnings also beat the Zacks Consensus Estimate by a penny.

Despite sluggish performance in the international markets, Robert Half witnessed strong earnings growth driven by solid demand for services by skilled professionals in the U.S., The company’s permanent placement and technology staffing divisions and Protiviti operations delivered strong staffing revenue in the quarter. In fact, the company’s earnings have now grown in double-digits for 15 straight quarters on a year over year basis, 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 its clients. A gradual improvement in economic conditions and the U.S. job market has increased the demand for the company’s specialized staffing and consulting services.

Quarter in Detail

Robert Half's total revenue grew 4.8% year over year to $1.08 billion in the fourth quarter and beat the Zacks Consensus Estimate of $1.075 billion by 0.8%. On a constant currency basis, revenues increased 3% year over year, driven by a 6% growth in the U.S. and a 3% decline in international staffing revenues in the fourth quarter.

Gross profit was $443.2 million in the reported quarter, up 6.4% year over year. Gross margin expanded 60 basis points to 40.9% in the fourth quarter as driven by higher sales. Operating income increased 7.2% to $104.1 million in the quarter. Operating margin increased 20 basis points to 9.6% in the fourth quarter of 2013 on the back of higher gross margins and solid Protiviti results.

Segment Details

Revenues increased 3.0% and 6.7% at Office Team and at Robert Half Finance and Accounting segmnets, respectively. Revenues grew 14.1% at Robert Half Technology, 0.7% at Robert Half Management Resources and 17.9% at the Protiviti division year over year. Only Accountemps revenues declined 0.4% in the quarter.

Full Year 2013 Results

For full year 2013, Robert Half posted earnings of $1.83 per share, the highest ever reported by the company. Earnings were in-line with the Zacks Consensus Estimate and were way ahead of the prior-year quarter earnings of $1.50 per share by 22.0%.

Robert Half's total revenue grew 3.4% year over year to $4.25 billion in 2013. It was slightly ahead of the Zacks Consensus Estimate of $4.24 billion.

Financial Update

Robert Half had cash and cash equivalents of $275.8 million at the end of the fourth quarter versus $279.7 million at the end of the third quarter. Capital expenditure was $21 million in the fourth quarter as against $11.8 million in the third quarter.

Robert Half paid its stockholders a cash dividend of 16 cents per share on Dec 16, amounting to a total of $24 million. The company also repurchased 0.5 million shares for a total of $20 million during the quarter. There are approximately 8.1 million shares remaining under the board’s currently approved stock repurchase plan.

Robert Half carries a Zacks Rank #2 (Buy). Other stocks worth considering in the business services sector include Cross Country, Inc. (CCRN - Free Report) , On Assignment Inc (ASGN - Free Report) and Korn/Ferry International (KFY - Free Report) . While Cross Country holds a Zacks Rank #1 (Strong Buy), On Assignment and Korn/Ferry carry a Zacks Rank #2 (Buy). 

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