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Robert Half (RHI) Q1 Earnings Miss, Revenues Top Estimates

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Robert Half International Inc. (RHI - Free Report) reported mixed first-quarter 2020 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same.

Quarterly earnings of 79 cents per share missed the consensus mark by 2.5% and were down 15% year over year. Revenues of $1.51 billion marginally beat the consensus mark and increased 3% year over year on a reported basis and 2% on an as-adjusted basis.

Notably, the company’s shares have depreciated 30.5% over the past year compared with the 42.5% decline of the industry it belongs to.

Staffing Revenues Decline, Protiviti Up Significantly

Global Staffing revenues of $1.21 billion declined 0.3% year over year on a reported basis and 1% on an as-adjusted basis. This decline was mainly due to the negative impact of COVID-19 on staffing operations. The U.S. staffing revenues of $944 million were down 0.2% on an adjusted basis. Non-U.S. staffing revenues were down 4% on an as-adjusted basis to $269 million. Currency movements had an unfavorable impact of 0.7% on staffing revenues.

The quarter had 63.1 billing days compared with 62.2 billing days in the year-ago quarter. At present, Robert Half operates 327 staffing locations worldwide, with 88 locations situated in 17 countries outside the United States.

Protiviti revenues came in at $294 million, which increased 16.5% year over year on a reported basis and 15% on an as-adjusted basis. This increase was driven by strength across internal audit, technology consulting and regulatory compliance consulting, and services provided jointly with staffing. The U.S. and non-U.S. Protiviti revenues increased a respective 20% and 2%, year over year, on an as-adjusted basis.

Currency movement lowered revenue growth by 0.6% on a year-over-year basis. Currently, Protiviti, along with its independently-owned Member Firms, has a network of 86 locations in 27 countries.

Robert Half International Inc. Revenue (TTM)

Costs Escalate, Margins Shrink

Gross profit in the quarter was $610.7 million, up 0.5% year over year. Gross margin of 40.5% shrunk 90 basis points (bps) year over year. Operating income of $131.1 million was down 10.3% year over year. Operating margin declined to 8.7% from the year-ago quarter’s 10%.

Selling, general and administrative expenses as percentage of total revenues were 31.8%, up 40 bps year over year. The upswing resulted from negative leverage as revenues declined in response to the pandemic.

Key Balance Sheet & Cash Flow Figures

Robert Half ended the first quarter with cash and cash equivalents of $249.9 million compared with the $270.5 million witnessed at the end of the previous quarter. Cash flow from operations was $125 million and capital expenditures were $14 million in the quarter.

In the March-end quarter, Robert Half bought back around 1 million shares for $51 million. It paid out $40 million in dividends.

Currently, Robert Half carries a Zacks Rank #5 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax Inc. (EFX - Free Report) reported first-quarter 2020 adjusted earnings of $1.40 per share that beat the Zacks Consensus Estimate by 8.5% and improved 16% on a year-over-year basis. Revenues of $957.9 million outpaced the consensus estimate by 4.2% and improved 13% year over year on a reported basis.

The Interpublic Group of Companies, Inc. (IPG - Free Report) delivered first-quarter 2020 adjusted earnings of 11 cents per share beating the consensus mark by 22.2% and being flat on a year-over-year basis. Net revenues of $1.97 billion beat the consensus estimate by 1.6% but decreased 16.5% on a year-over-year basis.

IHS Markit Ltd. (INFO - Free Report) recorded first-quarter fiscal 2020 adjusted earnings per share of 66 cents that surpassed the consensus estimate by 4.8% and increased 10% on a year-over-year basis. Total revenues came in at $1.08 billion, marginally missing the consensus mark but improving 3% from the year-ago quarter.

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