Q4 2021 ASGN Inc Earnings Call

Greetings.

Speaker 1: Greetings. Welcome to the ASTN Incorporated fourth quarter and full year 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session...

Come to the ask Jan incorporated fourth quarter, and full year 2021 earnings call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operators to concern a conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

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Please note this conference is being recorded.

Speaker 1: I will now turn the conference over to your hosts, Kimberly Esterkin and Vesta Relations. Thank you. Very cool.

I will now turn the conference over to your host can't really estrogen Investor Relations. Thank you you may begin.

Thank you operator, and good afternoon, and thank you for joining us today for a S. Jan's fourth quarter and full year 2021 conference call with me are Ted Hanson Chief Executive Officer.

Speaker 2: Thank you, operator. Good afternoon and thank you for joining us today for ASGN's fourth quarter and full year 2021 conference call. With me are Ted Hansen, Chief Executive Officer, Rand Blazer, President, and Ed Pierce, Chief Financial Officer.

Dan Glaser, President and Ed Pierce Chief Financial Officer.

Before we get started I would like to remind everyone that our commentary contains forward looking statements.

Speaker 2: Before we get started, I would like to remind everyone that our commentary contains four bookings.

Speaker 2: Although we believe these statements are reasonable, they are subject to risks and uncertainties, and as such, our actual results could differ materially from those statements.

Although we believe these statements are reasonable they are subject to risks and uncertainties and as such our actual results could differ materially from those statements.

Speaker 2: Certain of these risks and uncertainties are described in today's press release and in our FCC filings. We do not assume any obligation to update statements made on this call.

Certain of these risks and uncertainties are described in today's press release and in our SEC filings, we do not assume any obligation to update statements made on this call.

Speaker 2: For your convenience, our prepared remarks and supplemental materials can be found in the investor relations section of our website at investors.asgn.com.

For your convenience our prepared remarks and supplemental materials can be found in the Investor Relations section of our website at investors that I S. T M Dot com.

Speaker 2: Please also note that on this call we will be referencing certain non-GAAP measures such as adjusted EBITDA, adjusted net income, and free cash flow. These non-GAAP measures are intended to supplement the comparable GAAP measures. Questions between GAAP and non-GAAP measures are included in today's press release.

Please also note that on this call we will be referencing certain non-GAAP measures such as adjusted EBITDA adjusted net income and free cash flow.

These non-GAAP measures are intended to supplement the comparable GAAP measures reconciliations between GAAP and non-GAAP measures are included in today's press release I will now turn the call over to Ted Hanson Chief Executive Officer.

Speaker 2: I will now turn the call over to Ted Hansen, Chief Executive Officer.

Thank you Kimberly and thank you for joining <unk> fourth quarter 2021 earnings call.

Speaker 3: Thank you, Timberly, and thank you for joining ASDN's fourth quarter 2021 earnings call.

The fourth quarter capped off an extremely productive year for <unk> with momentum building throughout Q4.

Speaker 3: The fourth quarter capped off an extremely productive year for ASEAN with my men I'm building throughout Q4 and positioning us very well for 2022. I want to express my gratitude to all of my teammates at ASEAN for your exceptional performance and dedication to our company and our clients this year. Your efforts are the reason why ASEAN

Positioning us very well for 2022.

To express my gratitude to all of my teammates today Austrian for your exceptional performance and dedication to our company and our clients this year.

Your efforts are the reason why <unk> is a market leader.

Beginning with the fourth quarter revenues totaled $1 1 billion up 17% year over year and ahead of the top end of our guidance range.

Speaker 3: Beginning with the fourth quarter, revenues totaled $1.1 billion, up 17% year-over-year and ahead of the top end of our guidance range. Adjusted EVADA totaled $130.3 million, an improvement of 26% year-over-year and also surpassing the high end of guidance.

Adjusted EBITDA totaled $130 3 million, an improvement of 26% year over year and also surpassing the high end of guidance.

Outperformance of the commercial segment led by our consulting business, along with higher productivity across the company drove our progress in the quarter, our federal government segment experienced an improving business mix, resulting in impressive EBITDA and gross margins more on that shortly.

Speaker 3: Outperformance of the commercial segment led by our consulting business, along with higher productivity across the company drove our progress in the quarter. Our federal government segment experienced an improving business mix resulting in impressive EBITDA and gross margins. More on that shortly.

Our success in the final quarter of 2021 combined with the strength of the prior three quarters resulted in record full year revenues of 4 billion and adjusted EBITDA of $483 1 million increases of 14, 5% and 23% year over year, respectively. Our.

Speaker 3: Our success in the final quarter of 2021 combined with the strength of the prior three quarters resulted in record full year revenues of $4 billion and adjusted EBITDA of $483.1 million, increases of 14.5% and 23% year-over-year respectively.

Our commercial segment accounted for $2 9 billion or 73% of consolidated revenues in 2021, while our federal government segment accounted for $1 1 billion or 27% of total annual revenues.

Speaker 3: Our commercial segment accounted for $2.9 billion or 73% of consolidated revenues in 2021, while our federal government segment accounted for $1.1 billion or 27% of total annual revenue.

Speaker 3: Free cash flow from continuing operations totaled $246.9 million for 2021. Over the past year, we maintained a very balanced and flexible approach to capital allocation, investing in our organic growth, making strategic acquisitions that support our long-term growth strategy and providing returns to our shareholders.

Free cash flow from continuing operations totaled $246 9 million for 2021.

Over the past year, we maintained a very balanced and flexible approach to capital allocation investing in our organic growth, making strategic acquisitions that support our long term growth strategy and providing returns to our shareholders. During 2021, we spent $181 3 million on the repurchase of our common.

Speaker 3: During 2021, we spent 181.3 million on the repurchase of our common stock, of which 13 million was under the new two year, 350 million repurchase plan approved by our Board of Directors in December of last year.

Stock up.

<unk> $13 million and under the new two year $350 million repurchase plan.

Proved by our board of directors in December of last year.

While we will leverage our share buyback program. This year, we continue to believe that M&A remains our best use and highest return on invested capital and I will provide an update on our recent acquisitions momentarily.

Speaker 3: While we will leverage our shared buyback program this year, we continue to believe that M&A remains our best use of and highest return on invested capital, and I will provide an update on our recent acquisitions momentarily.

Ultimately the acceleration of revenue growth throughout Q4 momentum we are witnessing in Q1 to date in our first quarter 2022 guidance, which appears will discuss shortly.

Speaker 3: Ultimately, the acceleration of our revenue growth throughout Q4, momentum we are witnessing in Q1 to date, and our first quarter 2022 guidance, which appears will discuss shortly, are all indications that our business remains on an upward trajectory.

All indications that our business remains on an upward trajectory.

Speaker 3: While nearly all of our employees continue to work remotely, we're not experiencing any impact of note from the recent surge in the pandemic.

While nearly all of our employees continue to work remotely we're not experiencing any impacts of note from the recent surge in the pandemic.

Speaker 3: Our productivity and volume of work remain very high. Keep in mind that as a leading provider of IT services and solutions, our business has very steady and predictable trends. These predictable trends include not just our revenue growth, which remains above market, but also our continued margin and cash flow expansion.

Our productivity and volume of work remain very high keep in mind that as a leading provider of IP services and solutions. Our business is very steady and predictable trends. These predictable trends include not just our revenue growth, which remains above market, but also our continued margin and cash flow expansion.

In other words ESPN is not at the whims of bleeding technology trends that our job is to implement technology and business solutions that are in demand by our clients.

Speaker 3: In other words, ASGN is not at the whim to a fleeting technology trend. Our job is to implement technology and business solutions that are in demand by our clients.

These digitization and transformational trends are in the early innings of growth and have long trajectories ahead of them.

Speaker 3: These digitization and transformational trends are in their early innings of growth and have long trajectories ahead of them. This type of work provides us with a strong pathway for continued success across the end markets we serve.

This type of work provides us with a strong pathway for continued success across the end markets we serve.

Speaker 3: With that said, let's turn to more detail on our segment performance for the fourth quarter, beginning with our largest segment commercial, which services large enterprise and fortune 1000 come.

With that said, let's turn to more detail on our segment performance for the fourth quarter, beginning with our largest segment commercial.

With services large enterprise and fortune 1000 companies.

Our commercial segment had a fantastic fourth quarter driven by strength in all service areas.

Speaker 3: Our commercial segment had a fantastic fourth quarter driven by strengthen all service areas.

Speaker 3: For the fourth quarter of 2021, the commercial segment generated revenue of 790.5 billion up 24.1% every year and up 22.7% organically.

For the fourth quarter of 2021 in the commercial segment generated revenue of 795 billion up 24, 1% year over year and up 22, 7% organically.

Speaker 3: Growth in the segment reflected double digit growth in commercial consulting, creative marketing, and permanent placement services. Apex systems continue to report very strong growth, and for the second time creative circles and cybercredits surpassed their 2019 quarterly revenues.

Growth in this segment reflected double digit growth in commercial consulting creative marketing and permanent placement services apex systems continued to report very strong growth and for the second time creative circle's in cyber CDR surpassed their 2019 quarterly revenues.

From an industry perspective, all five commercial industry verticals for apex systems experienced growth during the quarter with every vertical achieving double digit growth on a year over year basis.

Speaker 3: from an industry perspective, all five commercial industry verticals, very tech systems experience growth during the quarter. With every vertical achieving double digit growth on a year-rear basis.

Speaker 3: APEC systems, commercial and industrial accounts were of double digits, both year-to-year and sequentially, due to the continued strength across all sectors, with particularly high growth and retail energy utilities, airlines and air freight accounts.

Apex systems commercial and industrial accounts were up double digits, both year over year and sequentially.

Due to the continued strength across all sectors with particularly high growth in retail energy utilities Airlines and air freight account.

Our technology and telecommunications or TMT vertical was up double digits year over year.

Speaker 3: Our technology and telecommunications or TMT vertical was up double digits every year. Within the vertical technology and telecommunications accounts all significant growth over Q4 2020.

Within the vertical technology and telecommunications accounts, all significant growth over Q4 2020.

Government and business services was up double digits led by business services with high double digit growth, while aerospace defense and government accounts.

Speaker 3: Government and business services was up double digits, led by business services with high double digit growth while aerospace defense and government accounts were down with roughly 1% versus Q4 2020.

Down roughly 1% versus Q4 2020.

Speaker 3: Financial services accounts were up high single digits with the largest growth across insurance, Fintech and wealth management.

Financial services, the counts were up high single digits with the largest growth across insurance Fintech and wealth management accounts.

Speaker 3: Healthcare continued with Delta TIGIC growth, driven by provider and payer account.

Healthcare continued with double digit growth driven by provider and payer account.

Revenues derived from our work in applications and project management.

Speaker 3: Revenue is derived from our work in applications and project management, including Agile, Digital, ERP and Cloud, continue to perform well. APEC Systems Top Accounts and Retail and Branch Accounts all achieve double-digit growth rates for CUPE.

<unk> agile digital ERP in cloud continued to perform well.

<unk> Systems' top accounts and retail and branch accounts, all achieved double digit growth rates for Q4.

Speaker 3: From an industry perspective for the quarter top account revenue at APEC systems was up in all five industry verticals we target. While creative circle also posted positive growth across their top account. Permit placement to cybercaterous exceeded our expectation.

From an industry perspective for the quarter top account revenue at apex systems was up in all five industry verticals, we target while creative circle also posted positive growth across their top accounts.

Permanent placement to cyber carriers exceeded our expectations.

Speaker 3: Gross margin for the commercial segment was 32.5% up 130 basis points from Q4 of last year due to growth across our high margin commercial consulting, creative digital marketing, and permanent placement business.

Gross margin for the commercial segment was 32, 5% up 130 basis points from Q4 of last year due to growth across our high margin commercial consulting creative digital marketing and permanent placement businesses.

EBITDA margins were flat compared with Q4 2020.

Speaker 3: EBITDA margins were flat compared to Q4 2020.

Higher gross margin and higher productivity in our workforce was offset by higher variable incentive compensation due to the outperformance of our expectations for the quarter as well as investments in new head count to support demand opportunities across our account portfolio.

Speaker 3: higher gross margin and higher productivity in our workforce was offset by higher variable and thin compensation due to the outperformance of our expectations for the quarter, as well as investment in new headcount to support demand opportunities across our account portfolio.

Speaker 3: We also continue to expand our commercial consulting revenues during the quarter. Commercial consulting revenues totaled $191.7 million in Q4 2021, a significant increase of 75.2% year-to-year, and up 67.2% organically. As you may recall at our Investor and Analysts Day Conference this past September , we projected to reach $500,95 million in commercial consulting revenues for 2021.

We also continued to expand our commercial consulting revenues during the quarter commercial.

Commercial consulting revenues totaled $191 7 million in Q4, 2021, a significant increase of 75, 2% year over year.

And up 67, 2% organically.

As you may recall at our Investor and Analyst Day Conference. This past September we projected to reach $595 million in commercial consulting revenues for 2021.

Speaker 3: and please report with our strong close to the year commercial consulting revenues total 641.2 million.

I am pleased to report with our strong close to the year commercial consulting revenues totaled $641 2 million.

Growth in consulting revenues was primarily driven by existing accounts and our pipeline of future opportunities continues to grow at high double digit rate and is trending positively in the first quarter.

Speaker 3: Growth in consulting revenues was primarily driven by existing account. And our pipeline of future opportunities continues to grow at high double digit rates and is trending positively in the first quarter.

Speaker 3: ASTN's consulting offerings remain an important source of value we provide our clients. So we continue to build out solution strengths and identify acquisition opportunities that expand our consulting capabilities in service to our clients. To illustrate our solution.

<unk> consulting offerings for main and important source of value we provide our clients. So we continue to build out solutions strengths and identify acquisition opportunities that expand our consulting capabilities and service to our clients.

To illustrate our solution capabilities and growth.

Speaker 3: A recent acquisition of a FAPT and Fort Business Unit gave us adequate ability in healthcare and manufacturing ERP solutions.

Our recent acquisition of <unk> and <unk> business unit gave us added capability in healthcare and manufacturing ERP solutions with this added strength, we won a major opportunity in Q4 to support a prestigious hospitals ERP process and move to the cloud.

Speaker 3: With this added strength, we want a major opportunity in Q4 to support a prestigious hospitals ERP process and move to the cloud.

Speaker 3: While this account was a longstanding account for APEC systems, the added ERP solution strength gave us the opportunity to expand our relationship by bringing this solution to one of our existing clients. This is a great example of how we are building and acquiring new solutions and taking that strength to the market.

While this account was the longstanding account for apex systems added ERP solutions strength gave us the opportunity to expand our relationship by bringing this solution to one of our existing clients.

A great example of how we are building and acquiring new solutions and taking that strength of the market.

Speaker 3: Now let's turn to our federal government segment, which provides mission critical solutions to the Department of Defense, intelligence agencies, and other civilian agents.

Now, let's turn to the Federal government segment, which provides mission critical solutions to the department of defense intelligence agencies and other civilian agencies.

Revenues for the Federal government segment totaled $263 3 million for the fourth quarter consistent with the prior year period on a very tough comparison.

Speaker 3: Revenues for the federal government segment total 263.3 million for the fourth quarter. Consistent with the prior period on a very tough compare.

Speaker 3: Black year-re-year revenue was a result of a discontinuation of a low-marchin contract all set by revenue generator from our endersoft and ERPI acquisition.

Flat year over year revenue was a result of the discontinuation of a low margin contract offset by revenue generated from our <unk> and ERP <unk> acquisitions.

Speaker 3: Importantly, even with this difficult revenue comparison, we saw an improving business mix that resulted in an adjusted EBITDA margin of 11.3% for the quarter, up 230 basis points every year.

Importantly, even with this difficult revenue comparison, we saw an improving business mix that resulted in an adjusted EBITDA margin of 11, 3% for the quarter up 230 basis points year over year.

Speaker 3: Gross margin also improved and was up an impressive 560 basis point here a year.

Gross margin also improved and was up an impressive 560 basis points year over year.

The federal government segment's new business pipeline remains strong with $131.1 million in new business awarded during the quarter and a book to Bill of one one to one on a trailing 12 month basis.

Speaker 3: The federal government segments, new business pipeline, remain strong with 131.1 million in new business awarded during a quarter and a book to bill of 1.1 to 1 on a trailing 12 month base.

Contract backlog totaled $3 billion at the end of the fourth quarter, a healthy coverage ratio of two six times. This segment's 12 month revenues.

Speaker 3: Contract backlog, total 3 billion at the end of the fourth quarter. A healthy coverage ratio of 2.6 times the segment's 12 month revenue.

In Q4 examples of some of the contracts awarded entire Federal government segment included three contracts that were plus ups for important mission critical work.

Speaker 3: In Q4, examples of some of the contract awarded to our federal government segment included the recontracts that were plused up for important mission critical work.

Speaker 3: including an award to support activities in the development, fielding and sustainment of assolutions for the VOD combatant command mission.

Including an award to support activities and the development fielding and Sustainment of Air solutions for the Dod combatant commands mission.

Speaker 3: A second award that focuses on licenses, training, and experience in AI-related analytical toolkits for the Air Force, and a third award for AI-related labeling and expertise for classified mission activities.

The second award that focuses on licenses training and experience.

AI related analytical toolkit for the Air Force.

And a third award for AI related labeling and expertise for classified mission activities.

Also during the quarter, we won a contract to provide system engineering technical and advisory services to the defense Advanced Research projects agency Tactical technology outfits.

Speaker 3: Also during the quarter we want to contract to provide system engineering, technical and advisory services to the defense, advance research project agencies, tactical technology all.

Speaker 3: A contract to provide software engineering and application modernization to the Air Force. And a follow-on contract to provide mobile application development and mobile device management for a premier law enforcement cushion.

A contract to provide software engineering and application modernization to the Air Force and a follow on contract to provide mobile application development and mobile device management for Premier law enforcement customer.

With that I will now turn the call over to Ed Pierce, our CFO to discuss our fourth quarter financial results and our first quarter 2022 guidance.

Speaker 3: With that, I will now turn the call over to Ed Pierce, our CFO , to discuss the fourth quarter financial result in our first quarter, 2022 guidance.

Ed.

Thanks, Ted and good afternoon, everyone as Ted mentioned earlier, our financial performance for the fourth quarter and full year 2021 exceeded our guidance estimates.

Speaker 3: Thanks, Ted. Good afternoon, everyone. As Ted mentioned earlier, our financial performance for the fourth quarter in four year 2021 exceeded our guidance.

Speaker 4: This performance reflected double digit growth of our commercial segment, solid performance of our federal government segment, the contribution from acquisition.

This performance reflected double digit growth of our commercial segment solid performance of our federal government segment the contribution from acquisitions.

Speaker 4: in the expansion and growth and adjusted even on margins in both business segments.

In the expansion and growth in adjusted EBITDA margins in both business.

Business segments for.

For the quarter revenues were slightly above $1 billion up 17% year over year and included $41 million from acquisitions made after Q3 of 2020 gross profit operating income and adjusted EBITDA were all up year over year and grew at higher rates and revenues.

Speaker 4: For the quarter revenues were slightly above $1 billion. Up 17% year over year, it included $41 million from acquisitions made after Q3 of 2020. Gross profit operating income and adjusted EBITDA were all up year over year and grew at higher rates in revenue.

Revenues from our commercial segment were 795 million up 24, 1% year over year and for the fourth straight quarter, all commercial divisions that were up year over year.

Speaker 4: revenues from our commercial segment were 790.5 million up 24.1% year-over-year. And for the poor straight quarter, all commercial divisions are up year-over-year.

Speaker 4: Revenue contributions from businesses acquired earlier in 2021 was approximately 8.8 million.

Revenue contributions from businesses acquired earlier in 2021 was approximately $8 8 million.

Speaker 4: revenues from our federal government segment were 263.3 million in line with last year and our guidance.

Revenues from our federal government segment were $263 3 million.

In line with last year, and our guidance estimates the revenue consistency for the quarter was achieved despite a difficult prior year comp.

Speaker 4: The revenue consistency for the quarter was achieved despite the difficult prior year cop, which had benefited from higher programs spending on certain cost-reinversible contracts.

Which had benefited from higher program spending on certain cost reimbursable contracts.

And from revenues on the web services project that was not renewed in Q3 of 2021.

Speaker 4: And from revenues on a web services project, it was not renewed in Q3 of 2021. Revenues for the quarter included a contribution of 32.2 million from acquisitions made after Q3 of 2020.

Revenues for the quarter included a contribution of $32 2 million from acquisitions made after Q3 of 2020.

Gross margin of 29, 8% exceeded the high end of our guidance estimates. It was up 310 basis points over Q4 of last year, both business segments reported year over year expansion in gross margin driven by improvements in business mix.

Speaker 4: Gross margin of 29.8% exceeded the high end of our guidance estimates. It was up 310 basis points over Q4 last.

Speaker 4: Both business segments reported Euroyear expansion in gross margin driven by improvements in business markets.

Speaker 4: Gross margin for the commercial segment was 32.5% up, 130 basis points a year over a year. This expansion was the result of double digit growth of our high margin commercial consulting and created a digital marketing service.

Gross margin for the commercial segment was 32, 5% up 130 basis points year over year.

This expansion was the result of double digit growth of our high margin commercial consulting and create a digital marketing services.

Gross margin for the Federal government segment was 21, 6% up 560 basis points.

Speaker 4: Rose margin for the federal government segment was 21.6% up 560 basis points as a result of changes.

The result of changes in business mix.

This improvement resulted from one lower level revenues from certain cost reimbursable contracts that had revenue surges from 2012 and in 2020 and from a low margin Web services project that was not renewed in Q3 of 2021 to the contribution from high margin businesses acquired.

Speaker 4: This improvement resulted from one lower level of revenues from certain cost-reimbursable contracts that had revenue surges from 2020 and 2020 and from a low-margin web services project that was not renewed in Q-perity of 2021 to the contribution from high margin businesses acquired in 2021 and three higher profitability on certain firm fixed price contracts through the initial term ended during.

In 2021.

Three higher profitability on certain firm fixed price contract the initial term.

Ended during the year.

SG&A expenses were $202 4 million up 32, 3% year over year, the increase related to higher year over year growth in the business, including double digit growth of high margin commercial revenue streams, which carry a higher level of expense.

Speaker 4: S.U.N. expenses were $202.4 million up, 32.3% year-over-year. The increase related to high-year-over-year growth in the business, including double-digit growth of high margin commercial revenue streams, which carry a higher level of expense than IT staffing and federal government services.

Staffing in federal government services.

Speaker 4: higher investment, head-con investments to support growth, and higher incentive compensation and healthcare expenses, they were both down in 2020 from historical level.

Higher invest head count investments to support growth and higher incentive compensation and health care expenses. They were both down in 2020 from historical levels.

Speaker 4: Income from continuing operations was 65.4 million, up 35.4% year-over-year. Adjusted EBITDA was up 26% year-over-year, reflecting expansion of 90 basis points in our adjusted EBITDA margin to 12.4%.

Income from continuing operations was $65 4 million up 35, 4% year over year.

<unk> EBITDA was up 26% year over year, reflecting expansion of 90 basis points and our adjusted EBITDA margin to 12, 4%.

Year end cash and cash equivalents were $529 6 million and there were no outstanding borrowings under our $250 million revolving credit facility, our senior secured debt leverage ratio was 1.0 to the west.

Speaker 4: A year in, cash and cash equivalents were 529.6 million, and there were no outstanding borrowings under our 250 million revolving credit to so-

Speaker 4: Our senior secure depth leverage ratio was 1.02 to 1.

Our financial estimates for the first quarter 2012.

Speaker 4: Our financial estimates for the first quarter, 2022 are set forth in our earnings release and supplemental earnings materials. These estimates are based on current production trends assume 60-degree billable days in the quarter.

22 are set forth in our earnings release.

Couple of mental earnings materials. These estimates are based on current production trends assumed 63 billable days in the quarter.

Which is one more day than Q1 of 2021.

Speaker 4: which is one more day than Q1 of 2021 and include an estimated revenue contribution of 39.6 million from acquisitions made after Q4 of 2020.

<unk>, an estimated revenue contribution of $39 6 million from acquisitions made after Q4 of 2020.

Our estimates also include <unk>.

Speaker 4: Our estimates also include, or also consider, the payroll tax reset, which occurs at the beginning of every year with results in lower growth and adjusted EBITOM margins in the first quarter.

Also consider the payroll tax reset which occurs at the beginning of every year, which results in lower gross and adjusted EBITDA margins in the first quarter.

Speaker 4: For the first quarter of 2022, we estimate revenues of 1 billion, 33 million to 1 billion, 53 million.

For the first quarter of 2022, we estimate revenues of $1 33 billion to $1 53 billion.

Speaker 4: Income from continuing operations of 54.8 to 58.4 million and adjusted of 117.3 to 122.3 million.

Income from continuing operations up 54, 8% to $58 4 million and adjusted EBITDA of $117 three to $122 3 million.

Speaker 4: With respect to the full year 2022, we expect revenues will grow above market rates. And gross margin will expand primarily as a result of double-digit growth of our high-margin commercial consulting and creative digital marketing services. We expect our adjusted EBITDA margin for the year will be in line with. Last year, as we continue to invest in our operating platform, to support high-sustainable growth of the business.

With respect to the full year 2022, we expect revenues will grow above market rates and gross margin will expand primarily as a result of double digit growth of our high margin commercial consulting and creative digital marketing services, we expect our adjusted EBITDA margin for the year.

Year will be in line with last year as we continue to invest in our operating platform to support high sustainable growth of the business.

Speaker 4: Thank you for your time and I'll turn it back over to Ted for some closing remarks Ted.

Thank you for your time and I'll turn it back over to Ted for some closing remarks Ted.

Thanks, Ed as many of you are aware over the past several months, we've announced a number of leadership changes each of which has been part of our long term succession planning.

Speaker 3: Thanks, Ed. As many of you are aware over the past several months, we've announced a number of leadership changes, each of which has been part of our long-term succession planning. I'd like to provide a brief update on these changes, beginning with the promotion of Ram Blaser to President of ASDN. Rand is approaching his 10th anniversary with ASDN in 15 years leading Apexist.

Like to provide a brief update on these changes beginning with the promotion of Rand Blazer President of ESPN.

Brand is approaching its 10th anniversary with ESPN in 15 years, leading apex systems.

Speaker 3: Since joining ASGN, RAND has been integral to our company's growth, and in particular, the expansion of our commercial consulting business.

Joining ESPN brand has been integral to our company's growth and in particular, the expansion of our commercial consulting business as.

As president of the ESPN brand will be well positioned to continue to provide leadership across our units and drive our growth strategies.

Speaker 3: As President of ASTN, RAN will be well positioned to continue to provide leadership across our units and drive our growth strategy.

We're also installing readymade leaders at the helm of each of our operating units, Sean Casey with more than 25 years and successive roles. With then the business has assumed rents former role as president of apex systems.

Speaker 3: We're also installing ready-made leaders at the helm of each of our operating units. Sean Casey with more than 25 years and successive roles with them, the business, has assumed Rand's former role as President of the APEC systems, while John Hennegan, whom we spoke about, in detail, last quarter has become President of the BCS. But Sean and John have worked hand in hand with our executive management teams since joining the ASTN and are well equipped to succeed in their new position.

While John Hennigan, whom we spoke about in detail last quarter has become president of the Vcs.

Sean and John have worked hand in hand, with our executive management team since joining <unk> and are well equipped to succeed in their new positions.

Along with these previously announced promotions, we continue to make investments in adding professionals to our team who will help drive our revenue growth and margin expansion. Some of these professionals, who have joined us organically some from peer firms and others around through acquisitions astm's ability to not only identify and fund strategic.

Speaker 3: Along with these previously announced promotions, we continue to make investments in adding professionals to our team who will help drive our revenue growth and margin expansion.

Speaker 3: Some of these professionals have joined us organically, some from peer firms and others arrived through acquisitions. ASGN's ability to not only identify and fund strategic acquisitions, but to also integrate them quickly and efficiently as a competitive advantage. I'm pleased to note that as of December 31st, all of our previously announced acquisitions have been fully integrated.

Acquisitions, but to also integrate them quickly and efficiently as a competitive advantage I am pleased to note that as of December 31, all of our previously announced acquisitions have been fully integrated.

This then ultimately brings me back to where we began our discussion today, our sustainable business model.

Speaker 3: This then ultimately brings you back to where we began our discussion today. Our sustainable business model, ASTN has evolved its business to be well aligned with multi-year, IT, and digital transformation trend. Each of these trends are in their early innings of growth and present strong tailwinds going forward. As evident in our financial performance, our business has already benefited from these secular trends, and we are well positioned to continue on an upward trajectory.

<unk> has evolved its business to be well aligned with multi year.

And digital transformation trend each.

Each of these trends are in their early innings of growth and presents strong tailwind going forward.

As evident in our financial performance our business is already benefit from the secular trends and we are well positioned to continue on an upward trajectory. In fact, we are tracking ahead of the model in which our three year targets introduced this past September were set.

Speaker 3: In fact, we're tracking ahead of the model on which our three-year targets introduced the path up timber were set.

It is these favorable industry tailwind that will provide us with consistent pipeline of higher margin consulting work going forward and help to grow our historically strong free cash flow generation capabilities.

Speaker 3: It is these favorable industry tailwinds that will provide us with consistent pipeline of higher margin consulting work going forward and help to grow our historically strong free cash flow generation capability.

We will deploy this capital into further expanding our high margin consulting services to boost our growth and ultimately our profitability for the long term.

Speaker 3: We will deploy this capital into further expanding our high margin consulting services to boost our growth and ultimately our profitability for the long term.

Speaker 3: ASTM is in the right in markets with the right capabilities and has the right team in place to maintain our leadership in the commercial and government space.

<unk> in the right end markets with the right capabilities and has the right team in place to maintain our leadership in the commercial and government spaces.

Speaker 3: I'm confident that our unique business model, strong cash flow generations and strategic capital deployment will continue to position us for success going forward. With that said, this concludes our prepared remarks. On behalf of the Board of Directors and the entire ASGM team, we thank you for your continued support of our company. We will now open up the call to your questions.

I am confident that our unique business model strong cash flow generation and strategic capital deployment will continue to position us for success going forward.

With that said this concludes our prepared remarks on behalf of the board of directors and the entire ASTM team. We thank you for your continued support of our company. We will now open up the call to your questions operator.

Operator.

Thank you.

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Keith.

Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Speaker 1: Our first question comes from a line of 10 mil runies with William Blair. Please proceed with your question.

Yes.

Speaker 5: Yeah, good afternoon. Congrats on the nice quarter and and Rand and everyone else can Rand Congrats on the promotion

Good afternoon, congrats on the nice quarter, and Rand and everyone else can ran congrats on the promotion.

Yes.

Thank you.

Speaker 5: Just a couple for me on margins. So, I mean, you're even done margin guide for the fourth quarter. I mean, it was looking for something close to 11.7% at the midpoint and you came in well ahead of that. Now, you listed some of the reasons for why you saw margin expansion, but can you talk about the primary factors that drove the outperformance relative to your internal expectation?

Yes.

Just a couple from me on margins. So your EBITDA margin guide.

For the fourth quarter I mean, it was looking for something close to 11, 7% at the midpoint and you came in well ahead of that now you listed some of the reasons for why you saw margin expansion, but can you talk about the primary factors that drove the outperformance relative to your internal expectations.

Well sure Tim.

Speaker 3: Well, sure, Tim, it's definitely business makes driven, if you will. Right, we got it.

Definitely business mix, driven if you will right we've got a much stronger performance in the commercial segment than we thought so.

Speaker 3: much stronger performance in the commercial segment than we thought and so

Speaker 3: the continued contribution from creative circle, from cybercoders, from our consulting business, primarily, which had the largest amount of ever performance was certainly a driver of gross margin, and then in turn EBITDA margin. And then I think Ed laid out, you know, in the federal segment, two things that really made the biggest difference, which was, you know, what we believe is the right decision to move.

The continued contribution from creative circle from cyber coders from our consulting business, primarily which had the.

The largest amount of over performance was certainly a driver of gross margin and then in turn EBITDA margin and then I think Ed laid out in the <unk>.

Federal segment, two things that really made the biggest difference which was the.

What we believe is the right decision to no bid.

Speaker 3: some low margin contracts and so that was a contributor and then we had better than expected performance from our two new acquisition, Indusoft and the RPI. In the second half of the year and they certainly...

It's a low margin contracts and so.

That was a contributor and then we had better than expected performance from our two new acquisitions into soft and the RPI in the second half of the year and they certainly contribute contributed to some of that margin over performance as well so faster growth in commercial that but then underneath that kind of gave your business by.

Speaker 3: contributed to some of that marching over performance as well. So faster growth in commercials and in fact, but then underneath that, it kind of gave you business by business a little flavor about where we saw, you know, things that were beyond our visual expectation.

This is a little flavor about where we saw.

Things that were beyond our original expectations.

Yes.

Speaker 5: Yep, that's really helpful. Thank you. And then my second question, this might be for John if he's on the call. You know, on the government side of the business.

Really helpful. Thank you and then my second question this might be for Jon if he's on the call on the government side of the business.

Speaker 5: Have you continued to see more RFPs released that were delayed in 2021? This is something that I know you've talked about the last.

Have you continued to see more rfps release that were delayed in 2021. This is something that I know you've talked about the last.

Speaker 5: several quarters. Have you seen more releases there on those delays? And then, you know, how would you characterize the pipeline now versus a year ago?

Several quarters have you seen more releases there on those delays and then how would you characterize the pipeline now versus a year ago.

Yes so.

Speaker 3: Yeah, so it's better than it was Tim. I mean, I would say that it's still, that market's still not functioning perfectly, as it pre-COVID, if you will. So we're seeing a few more opportunities been being released, we're definitely responding to those.

It's better than it was Tim.

Say that it's still that market is still not functioning perfectly.

Pre COVID-19 if you will.

So we're seeing a few more opportunities been being released we are definitely responding to those.

Speaker 3: We're still a little bit, kind of held back by the slowness of having the right people in the right chairs to make decisions on behalf of the government. So in those instances, they're extending contracts more than they're rebitting total awards, large multi-year awards.

We're still a little bit.

Kind of held back by the slowness of <unk>.

Adding the right people in the right chairs to make decisions on behalf of the government.

In those instances, they're extending contracts more than they're Rebidding total awards that large multi year awards.

Speaker 3: But I think every month and every quarter gets a little bit better and we think this year we're going to have the chance to begin to bid on things that are larger and so we'll have to watch that develop here in that federal marketplace.

But I think every every month and every quarter it gets a little bit better and we think this year, we're going to have the chance to begin to bid on things that are larger in so yes, we will have to watch that develop here in the federal marketplace.

Sounds good thanks, guys.

Our next question comes from the line of Tobey Sommer with truly Securities. Please proceed with your question.

Speaker 1: Our next question comes from the line of Toby Sommer with truest securities. Please proceed with your question.

Thanks, I was wondering if you could dig into that hospital customer example, that you had just to frame things.

Speaker 6: Thanks. I was wondering if you could gig into that hospital customer example that you had just to frame things. So how much revenue would Apex in its traditional form or legacy form, garner from a customer like that? Now I'll expect you to name them, of course, versus what that looks like when you sort of add consulting to the next.

So how much revenue.

Wood apex in its traditional formulas or legacy form.

From a customer like that I would expect you to name of course versus what that looks like when you when you sort of add consulting sort of net.

Sure I'll, let Randy take that one Ryan yes.

Speaker 4: Sure, I'll let Ray and take that one, Ray. Yeah, well, I think these consulting opportunities double the opportunity to be. But we had a steady amount of staffing business with this account, but this is taking it to another level. So this is a pretty meaty piece of work, and it's critically important to that account. So you can imagine that it's certainly in this case, probably more than a double in.

Well I think the these consulting opportunities double the opportunity Tobey.

We had a steady amount of staffing business with this account, but this is taking it to another level. So it's this is a pretty meaty piece of work and it's critically important to that that account. So you can imagine that it's certainly in this case, probably more than a doubling.

Okay and does that answer your grant just.

Speaker 6: Okay, and into that, and your grant just, Oh, it does, it does, thank you.

Oh It does it does thank you.

With respect to sort of in an average customer in the portfolio. So I don't know how special. This one is in terms of size and the amplification of the opportunity from consulting is that a fair benchmark or.

Speaker 6: with respect to sort of an average customer in the portfolio. I don't know how special this one is in terms of size and the amplification of the opportunity from consulting. Is that a fair benchmark or on an average customer basis in terms of the opportunity?

On an average customer basis in terms of the opportunity.

I think the opportunities there can be let me say first of all that.

Speaker 7: i think the opportunities there to be let me say first of all that you know this is

This is this is what we vision. This is exactly what we envision being able to fulfill the staffing requirements and then do the important even more value added driven work for them, which can add to the revenue stream, okay and in this case, maybe it's doubling I wouldnt expect in every case.

Speaker 7: This is what we vision. This is exactly what we vision. Being able to fulfill the staffing requirements and then do the important, even more value added driven work for them, which can add to the revenue stream. And in this case, maybe it's doubling. I wouldn't expect in every case. I think we've reported in the past, we penetrated only a portion of our account base with consulting work over time that work started as

We've reported in the past we've penetrated as only a portion of our account base with consulting work overtime that work started as.

I think more than nevertheless, tobey, but now it's seven figure engagements that go a year and sometimes even multiyear so I think youre going to see the consulting work grow and an account as we go plus we have to increase the number of accounts, we do that work for.

Speaker 7: I think more than NIVAL's Toby, but now it's seven figure engagements that go a year and sometimes even multi-year. So I think you're going to see the consulting work grow in an account as we go, plus we have to increase the number of accounts we do that work for. Yes.

Does that give you some sense.

It does thank you.

Speaker 6: It does, thank you. Okay. Could, on the cyber coders business, could you talk about the, a little bit more granular and flesh on the bones of the growth and revenues and maybe speak to how you're handling the hiring to take advantage of this market?

Okay.

On the cyber coders business could you talk about the little bit more granularity and flesh on the bones of the growth.

Revenues.

Maybe.

Two how you're.

Handling the hiring to take advantage of this market.

So tobey we don't release.

Speaker 3: So Toby, we don't release the growth rate to the individual units, but certainly cyber coders, contribution is up there well over to 19 levels. They're consistently growing sequentially, and that's just a factor of...

The growth rates of the individual units, but certainly cyber coders contribution is up there well over 2019 levels, there consistently growing sequentially and Thats just a factor of the labor market the permanent placement offering.

Speaker 3: Labor market, the permit placement offering. But as you know, it's not a large part of what we're doing here, but it's certainly contributing not as much on the top line, but to the margin profile, it's a gross margin level. So, you know, we're certainly investing in it organically so they can take advantage of the market opportunity, as our client has asked us.

But as you know it's not a it's not a large part of what we're doing here, but it's certainly contributing.

Not as much on the top line, but to the margin profile at the gross margin level. So.

We are certainly investing at it organically.

They can take advantage of the market opportunity as our clients ask us for that service, but.

Speaker 3: for that service, but also we're very focused on investing in the other parts of the business where we have a larger and market opportunity consulting services in the federal space.

Also where we are.

We're very focused on investing in.

Other parts of the business, where we have that larger end market opportunity consulting services in the federal space.

At other places.

Hey, Ted is it is it worth Televisa worth mentioning too <unk> approach to the market as border mortgage electronic approach. So they're scouring digital field to see where the opportunities are and then jumping in to fill that.

Speaker 7: Hey Ted, is it worth, Toby, is it worth mentioning too? Cyber coders approach to the market is more of an electronic approach. So they're scouring digital field to see where the opportunities are and then jumping into FILD.

Speaker 7: So they give us, if you will, an adjunct to the rest of our business, in that they are an electronic component to, you know, identifying opportunities and responding to them. And in this day and age right now, electronic means or digital means are critically important to clients because they're looking for people.

So they give us if you will an adjunct to our the rest of our business and that they are in electronic component too.

Identifying opportunities and responding to them and in this day and age right now electronic means of digital means are critically important to clients because they're looking for people.

Makes perfect sense.

Speaker 6: I wanted to ask a broad question about capital deployment as my last one. Ted, are you seeing opportunities for larger acquisition than you've done recently, which has primarily been small to you?

I wanted to ask a broad question about capital deployment as my last one.

Ted are you seeing opportunities for.

For larger acquisitions than you have done recently, which has primarily been small tuck ins.

Speaker 6: because that share repurchase that you authorized, you know, some clients were wondering whether that was indicative of a smaller opportunity set in front of them.

Because of that.

Share repurchase that you are authorized some clients were wondering whether that was indicative of a.

A smaller opportunity set in front of you.

No I don't think so Tobey look the authorization is bigger because we're a bigger company than two years ago. When we put our last authorization out there. So I don't think it's a reflection on what we believe the opportunity is in M&A, we are definitely.

Speaker 3: No, I don't think so, Toby. Look, the authorization is bigger because we're bigger companies than two years ago when we put our last authorization out there. So I don't think it's a reflection on...

Speaker 3: what we believe the opportunity is in M&A. We're definitely...

Speaker 3: seeing all flavors of acquisition opportunities. We're seeing things in the strategic tuck-in category that are stuff 100 million. We're actively looking at things that are larger than that that would also be.

Seeing all flavors of acquisition opportunities.

Seeing things in the strategic tuck in.

The category that are sub $100 million, we're actively looking at things that are larger than that that would also be.

Speaker 3: You know, strategic tuck ins, but they would be a more scale. You know, call it a hundred million above. And so, you know, feel good about the pipeline. There's definitely been a, you know, coming into the end of the year and in January , a little bit of a law.

Strategic tuck ins, but there would be a more scale in a call. It a 100 million at above and so.

Feel good about the pipeline there has definitely been a coming into the end of the year and in January a little bit of a lull in new business is coming to market.

Speaker 3: in new businesses coming to market, you know, from an M&H standpoint. But I think that that was just a small moment in time as deals were rushed to get done.

I'm, an M&A standpoint, but I think that that was just a small movement in time as deals were rushed to get done at 12 31, because what we're seeing here in January and now building into February and later in the first quarter is a is a pretty good.

Yes, pretty good flow of opportunities. So we're pleased with that part of it and we just have to keep working on one by one.

Speaker 3: Yeah, a pretty good blow of opportunity. So we're pleased with that part of it, and we just have to keep working on one by one.

Great. So it sounds like that's kind of seasonal phenomenon I appreciate the color.

Speaker 6: Great, it sounds like that's a kind of seasonal phenomenon. Appreciate the, thank you.

Thank you.

Our next question comes from the line of Jeff Silber with BMO capital markets. Please proceed with your question.

Speaker 1: Our next question comes from a line of Jeff Silver with the MO Capital Market. Please proceed with your question.

Speaker 8: Thanks so much. I just wanted to go back to the federal government segment and actually had a two-part question. You mentioned the lower growth rate not only because of the tough come, because of the also the decision to discontinue a low-margin contract. Are there any more contracts like this to come? And then also, gross margins were extraordinarily high. I know that's one of the reasons. Is that the new basis we should be using going forward for this segment? I know there's some seasonality, but just, you know, excluding that. Thanks.

Thanks, so much.

Wanted to go back to the Federal government segment actually had a two part question.

You mentioned.

The lower growth rate not only because of the tough comp because of the also the decision to discontinue a low margin contract are there any more contracts like this to come and then also the gross margins were extraordinarily high I know that's one of the reasons is that the new basis, we should be using going forward for this segment I know theres some seasonality.

But just excluding that.

So I'll answer the first part of that let Ed take the second so Jeff.

Speaker 3: So I'll answer the first part of that. Let Ed take the second. So...

Speaker 3: Jeff, thanks for the question. We don't see anything else. This was, I mean, obviously you can, we're very focused on.

Jeff Thanks for the question.

Don't see anything else. This was I mean, obviously you can see we're very focused on the quality of revenues and the conversion of those revenues down to the EBITDA line. So this was not a difficult decision to make every now and then you take on an opportunity to get to higher value Adil.

Speaker 3: Quality of revenues and a conversion of those revenues down to the EBITDA line. So this was not a difficult decision to make. Every now and then you take on an opportunity to get to higher value additional work in the future. In this particular case, that didn't happen. And so, you know, I think the team here made the right decision of ECS, not to bid that. And you can see its reflection as we go down the bottom line. Add on gross margin.

Additional work in the future in this particular case that didn't happen and so.

Thank the team here have made the right decision at ECS to bid that and you can see its reflection as we go down the bottom line.

Ed on.

Gross margins going forward.

Yes, I mean look I think Q4 was the high watermark.

Speaker 4: Yeah, I mean, look, I think Q4 was a high water mark, yes. You probably read and...

You probably read in our earnings.

Speaker 4: Erning to lease they benefited also from some adjustments related to firm fixed price contracts that

Earnings release, they benefited also from some adjustments related to firm fixed price contracts that.

Speaker 4: ran their initial terms in the year. So there was a pickup in gross profit related to that in Q4. So on an ongoing basis, again, this is probably higher than what they're going to perform.

Ran their initial terms.

In the year and so there was a pickup in gross profit related to that in Q4. So.

On an ongoing basis again, this is probably higher than what theyre going to perform.

Speaker 4: Anyway, I think it's probably about one to two points higher. If you look at it over the course of the four year.

Ed.

And.

Anyway, I think it's probably about one to two points higher if you look at it over the course of the full year.

Okay.

Speaker 8: Okay, that's important. That's going to help live push. Yep, I appreciate that, thanks so much. My follow-up question is about the recruiting environment, but I want to focus on your internal recruiters. I know we talk a lot of companies in the space, both private and publicly held, about the higher than normal turnover in those positions, getting everything that's going on. I'm just wondering if you can comment what you're seeing.

Yes, I appreciate that thanks, so much my follow up question is about the recruiting environment.

I want to focus on your internal recruiters I know, we've talked a lot of companies in the space, both private and publicly held about the higher than normal turnover in those positions given everything that's going on I'm. Just wondering if you can comment what you are saying.

Randy you want to take that one.

Speaker 7: Well, Jeff, it's a good question and comment.

Well, Jeff that's a good good question and comment.

Those firms are trying to pluck our recruiters because they are so damn good.

Speaker 7: Those firms are trying to pluck our recruiters because they're so damn good.

Speaker 7: So we are having some turnover in our recruiters, particularly though in the first year or so of them being with us because of our compensation system. It, you know, we're a high incentive company business and you can make some great money, but you've got to build that book of business, if you will, over a, you know, period of 12 to 18 months. So we are experiencing some turnover.

So we are having some turnover in our recruiters, particularly though in the first year or so of them being with us because of our compensation system.

We're a high incentive comp business and you can make some great money, but you've got to build that book of business. If you will over a period of 12 to 18 months. So we are experienced simpson turnover, probably likes going across the industry, but this has been going on for a couple of years now with us where instead of in the 20% turnover range, we're higher than that.

Speaker 7: Probably likes going across the industry, but this has been going on for a couple of years now with us, where instead of in the 20% turnover range, we're higher than that.

Speaker 7: Having said that, the productivity of our force has just been astronomical this past.

Having said that the productivity of our force has just been astronomical this past year and all the combination of things, we do including automation more automation of the recruiting process, making it easier for our recruiters to handle more workload leveraging the more senior recruiters with junior the handoff.

Speaker 7: And all the combination of things we do, including automation, more automation of the recruiting process, making it easier for our recruiters to handle more workload, leveraging the more senior recruiters with a junior, they handle off between the account managers. I mean, there's a...

Between the account managers I mean, there is this.

Whole host of things, we can do to improve the accuracy, the requisition flow, where the requirements to us to make it easier for our recruiters and make it more profitable because theyre going to hit on okay.

Speaker 7: Whole host of things we can do to improve the requisition flow where the requirements to us can make it easier for our recruiters and make it more profitable because they're gonna hit on them. Okay, by virtue of the quality of the...

By virtue of the quality of the requisition alright. So so we are facing turnover it hasnt hurt us in terms of overall performance, but its not something you want to see forever. We've also made some adjustments in compensation for this first year recruiters to help them out a little bit. So we're very mindful, we're very much watching I wish the others would.

Speaker 7: All right, so we are facing turnover. It hasn't hurt us in terms of overall performance, but it's not something you want to see forever. We've also made some adjustments and compensation for those first year recruiters to help them out a little bit. So we're very mindful, we're very much watching. I wish the others would quick tap it into our team, but I'm not sure that's going to happen. Okay, all right, I'll send them a memo.

Tapping into our team, but im not sure thats going to happen.

Alright, I'll send them a memo thanks so much.

Please.

Our next question comes from the line of Surinder <unk> with Jefferies. Please proceed with your question.

Speaker 1: Our next question comes from the line of Surin Dutha and with Jeffries. Please proceed with your question.

Speaker 8: Hello, so I'd like to start with a question about just the success of the commercial consulting business. Obviously the healthcare example that you guys provided.

So I think to start with a question about just the success of the commercial consulting business.

Obviously, the health Care example, that you guys provided.

Can you talk a little bit more about.

Speaker 8: how the consulting service fits into the overall picture, IT services consulting in general. Like, who are you taking market share from at this point? And in the case of the healthcare example, did you displace an existing consulting firm, or how should we think about that dynamic?

The consulting service fits into the overall picture.

It services consulting in general.

Who are you taking market share from at this point.

And in the case of the Healthcare example, did you displace an existing consulting firm or how should we think about that dynamic.

The surrender I'll start at a high level.

Speaker 3: This surrender out started a high level at Red added hammock here, but that

It's here, but.

Speaker 3: Senator, one way to think about this, obviously, is there's, and we've talked about this, the secular change going on in terms of how the CIO looks at getting things done, if you will. And so while there's market share moving around and we feel like we're positioned in the right place to be the biggest winner there, the client is directing

One way to think about this obviously as there is and we've talked about this a secular change going on in terms of how the CIO looks at.

Getting things done if you will right and so.

While theres market share moving around and we feel like we're positioned in the right place to be.

Our biggest winner there the client is directing.

Speaker 3: you know where they, what firms they go to in order to get this done, right? And so we have a unique capability, both in consulting and to be able to bring resources to the table, so the client is pulling us up into the work, if you will, there. And it doesn't mean that the client still doesn't work with some of the big consulting firms because they do.

Yes.

Were they.

What firms that go to in order to get this done right and so we have a unique capability both in consulting and to be able to bring resources to the table to the client is pulling us up into.

The work.

If you will there and it doesn't mean that the clients still doesn't work with some of the big consulting firms because they do.

Speaker 3: Right Rand, but there's this is the client directed activity if you will and you know by way of how we're positioned You know we're winning

Bright red, but there's this.

This is a client directed activity if you will and by way of how we're positioned we're winning there.

Yeah.

Yeah got it so sorry.

Speaker 7: Yeah, got it. So when I was a interpreter, go ahead. Sorry. No, no, you go ahead. Go ahead.

Go ahead sorry.

No you go ahead.

Go ahead.

So I was going to ask so related to that is effectively declined chopping up what would've been previously a large project.

Speaker 8: So I was going to ask, so related to that, is effectively the client chopping up what would have been a previously a large project that goes to big IT consulting firm X? Is that effectively what's happening? So there's a portion that you can...

Those two big consulting firm X is that effectively what's happening. So there is a portion that you can.

I guess.

Speaker 8: tackle or address. I'm just trying to fully understand the picture because part of the where I'm trying to get with this is

Tackle or address I'm, just trying to fully understand the picture because part of the where I'm trying to get with this is.

Speaker 9: Your guys is commercial consulting also business also uses

You guys as commercial consulting business also uses.

Speaker 9: temporary staffing professionals and so they they bring a different potentially maybe not skill

Temporary staffing professionals and so they bring a different.

Potentially maybe not skill set but.

What I would call a different level of IP to the table potentially right because if you hire consulting firm X.

Speaker 9: what I would call a different level of IP to the table potentially, right? Because if you hire consulting firm X.

Speaker 9: They bring IP with them, right? That's part of the firm and the culture wars. You guys kind of seem to be putting together teams. I'm just trying to understand that.

They bring IP with them right.

Part of the firm and the culture orders you guys seem to be putting together teams I'm just trying to understand that dynamic.

Okay.

Well, let me go Ted first of all I would say our consulting unit does provide methodology IP experience and leadership.

Speaker 7: Well, let me go Ted. First of all, I would say our consulting unit does provide methodology, IP experience, and leadership on these engagements. So we're bringing just like a consulting business more than just body.

On these engagements so we're bringing just like a consulting business more than just bodies.

Speaker 7: We're also happy to build the body, the team, with people with the relevant experience and the relevant technology experience to that. And generally, and oftentimes at a better price point, than the consultants who are using somebody on their bench.

We're also happy to build the body of the team with people with the relevant experience and a relevant technology experience to that generally and often times in a better price point and the consultants who are using somebody on their bench.

Speaker 7: So there's a combination of factors at work that give the, as Ted said, the CIO, a quality of work, a risk profile with that work, a price point with that work, and a comfortableness that they feel they can get it accomplished. And we're obviously doing well on communicating that and hitting the stride, and we're getting follow on work with most of our clients in consulting, as you could expect, like any good consulting business.

So there is a combination of factors at work that gives the as Ted said, the CIO a quality of work at risk profile with that work or price point with that work.

And are comfortable enough that they feel they get it accomplished and we're obviously doing well on communicating that and hitting hitting stride and we are getting follow on work with most of our clients in consulting as you could expect like any good consulting business would do.

Speaker 7: Okay, so don't think of us as just providing the team. We are assembling a team, but the team includes, if there's IP, certainly technology know how specific expertise in those technologies, methodologies, artifacts, in many cases that we've used in different engagements that can apply there.

So don't think of US has just providing the team we are assembling a team that the team includes.

Certainly technology know how specific expertise in those technologies methodologies artifacts in many cases that will be used in different engagements that can apply there.

Speaker 7: All right. And let me make a comment too, by you made a comment on the evolution of consulting for us. I mean, we've been at this for eight to 10 years. At the beginning, we did a lot of what we call workforce management kinds of consulting, where we helped them build the right teams and manage the productivity of those teams and take on accountability for end results.

And let me make a comment to buy you made a comment on the evolution of consulting for US I mean, we've been at this for eight to 10 years at the beginning we did a lot of what we call workforce management kinds of consulting where we help them build the right teams and manage the productivity of those teams and take on accountability and results. Okay.

Speaker 7: That was fine, but now we've gotten into the digital transformation and the modern enterprise, like in this case with the healthcare business, where we're actually providing a team. When somebody implements new ERP, you've got to maintain your existing ERP while you're translating to a new set of software, a new application, and then a new cloud environment with new security, with new linkages to your other ERP pieces.

It was fine, but now we've gotten into the digital transformation in the modern enterprise like in this case with the healthcare business, where we're actually providing a team when somebody implemented new ERP, you've got to maintain your existing ERP why you're translating to the.

To a new set of software and new application and then a new cloud environment with new security with new linkages to your other ERP pieces.

Speaker 7: And that all has to be augmented. And I think CIOs, in some cases, in this case, certainly recognize our insight in their technology environment, our knowledge of their technology, how we could take, I put teams together with the right credentials and experiences and methodologies to help do a lot of that work with.

And that all has to be augmented and I think <unk> in some cases in this case certainly recognized our insight and their technology environment or knowledge is there technology, how we could take.

I put teams together with the right credentials.

And experiences and methodologies to help do a lot of that workload.

Speaker 7: and it will go on for quite some time because these things are not done as much.

And it will go on for quite some time because these things are not done much. They are done over a long period of time. So we happened to have all the expertise both in the existing environment, the new environment around the cloud around cyber security and around the linkages to other systems that were required and the knowledge of the user community.

Speaker 7: They are done over a long period of time. So we happen to have all the expertise both in the existing environment, the new environment around the cloud, around cybersecurity, and around the linkages to other systems.

Speaker 7: that were required and the knowledge of the user community and how they have to be equipped to use the new technology. So it was hard for somebody else to bring all that to them. We were there and that's been there in the past. Maybe in some cases, in this case, it was in the Info software suite, but we were able to show that we could demonstrate and fill these gaps.

And how they have to be equipped to use the new technology. So it was hard for somebody else to bring all of that to them. We were there and thats and been there in the past maybe in some cases in the in four in this cases in the Infor software suite, but we were able to show that we can demonstrate and facilities.

<unk> does that give you a sense.

Speaker 9: Yeah, I think that's actually really quite helpful. And then it's a fully different question, just in terms of where...

Yes, I think thats it.

Thats actually really quite helpful.

And then as a.

Some of the different question just in terms of where.

We are.

Creative circle permanent placement in the prepared comments you guys talked about double digit growth strong performance.

Speaker 9: Creative Circle, permanent placement in the prepared comments. You guys talked about, you know, double digit growth, strong performance.

Speaker 9: Are both of those sub segments above pre-pandemic levels in terms of revenues at this point or where are we?

Both of those sub segments above pre pandemic levels in terms of revenues at this point or where are we in that cycle.

Speaker 9: It seems like everything else is obviously very or significantly above.

It seems like everything else is obviously very significantly above pre pandemic levels now.

Speaker 3: Yes, now two I think now two quarters running there above two 19 levels surrender Perfect

Now I think now two quarters running there above 2019 levels are under.

Got it okay perfect.

Is it for me thank you.

Our next question comes from the line of Andre Childress with Baird. Please proceed with your question.

Speaker 1: Our next question comes from a line of Andre children with Baird. Please proceed with your question.

Speaker 6: Hey, this is Andrean Schultz, on from Mark Markon. Thanks for taking our questions. So my first question is just about wage inflation. Obviously it's prevalent everywhere. How did you see that trend in Q4? How was your ability to pass it along to your clients? And if markets stay this tight, and wage inflation remains as prevalent on a go-for basis, how do you think that could impact your go-forge revenue and staffing margins, particularly on the APEX side of?

Hey, this is Andre Childress on for Mark Mark Thanks for taking our questions. So my first question is just about wage inflation, obviously, it's prevalent everywhere.

You see that trend in Q4, how is your ability to pass it along to your clients and.

If market stays as tight and wage inflation remains is prevalent on a go forward basis, how do you think that could impact your go forward.

Revenue in staffing margins, particularly on the apex side of things.

Yes, so Andre yes wage inflation is there.

Speaker 3: Yes, so Andre, yes, wage inflation is there. Yes, we've been able to manage it and pass that through into Bill Raichstark customers. I don't expect it's going anywhere, but we've not just seen this today, but over our history, you know, it's always been an imbalance of supply and demand with IT.

Yes, we have been able to manage it and.

Pass that through and the bill rates to our customers I don't expect it's going anywhere.

But we've we've.

Not just seen this today, but over our history has always been the imbalance of supply and demand with IP.

Speaker 3: highly skilled at T people. So we've always been dealing with some amount of inflation and then in turn, kind of dealing with our clients as it relates to that.

Hi, Lee.

Skilled people so we've always been dealing with some amount of inflation and then in turn.

Dealing with our clients as it relates to that.

Speaker 3: It just happens to be a little bit more acute right now. But if you look at our growth, you know, it's more, more volume of work. And so with a little bit of increase in bill rate. And so I expect that, you know, going forward to the last part of your question, we'll still be able to, you know, deal with our clients and have a discussion and include this, any other increases that we see in the bill rate because

Just happens to be a little bit more acute right now, but if you look at our growth it's more more volume of work and so.

With a little bit of increase in bill rate and so I.

I expect that going forward to the last part of your question, we will still be able to deal.

Deal with our client to have a discussion.

This any other increases that we see in the bill rate because.

Speaker 3: you know, the technology work and the digital strategies that we're helping the Mexicans are some of the most important things going on in their organizations. And so the talent to get to stun is very important to them. And you know, that's why we've been able to have an open dialogue and make this work a long way. Ray, I don't know if you'd have anything else to add to that. portraits…

The technology work in the digital strategies.

We're helping them execute or the some of the most important things going on in their organizations and so the talent to get this done it's very important to them and that's why we've been able to have an open dialogue to make this work along the way Randy I don't know if you'd have anything else to add to that.

No I think that's great.

Alright, thanks for that and obviously another fantastic performance by commercial consulting you noted that most of the new business was coming from existing clients I just wanted to make sure that is that existing clients existing.

Speaker 6: All right, thanks for that. And obviously another fantastic performance by commercial consulting. You noted that most of the new business was coming from existing clients. I just wanna make sure that is that existing clients, existing consulting clients or existing staffing clients that you're now cross-selling? And also how many staffing clients now are also consulting clients?

Hosting clients or existing staffing clients that you are now cross selling and also how many staffing clients now are also consulting clients.

Can I take this.

Speaker 7: Yeah, I want to make a point. A client is a client. I don't care if it's an existing client. I don't care if it's staffing or consulting. It's an existing client. And obviously a lot of our clients who are existing staffing clients. And yes, we are penetrating that base to bring new value solutions to them.

I want to make a point our client is a client I don't care, if it's existing client I don't care, if it's staffing or consulting and it's an existing client and obviously a lot of our clients were existing staffing clients and yes, we are penetrating that base to bring new value solutions to them, So and our growth is coming both from expansion of work with our existing clients.

Speaker 7: So, and our growth is coming both from expansion of work with our existing client base, both the ones doing staffing, work consulting, as well as new clients. And oftentimes consulting can be a new entry into a client where staffing may not be the only.

Base, plus the ones doing staffing or consulting as well as new clients and often times consulting can be a new entre into a client where staffing may not be the entre.

Okay. So it's multi dimensional here in terms of and we see clients as clients and if we can provide value to them through any of our solutions staffing our consulting we're happy to do that.

Speaker 7: Okay? So it's multi-dimensional here in terms of, and we see clients as clients, and if we can provide value to them through any of our solutions, staffing or consulting, we're happy to do that. And we're always after new clients.

And we're always after new clients.

Yeah.

Great. Thank you for the color.

Thank you ladies and gentlemen, we have reached the end of our question and answer session. I will now turn the call over to Paul Hudson, Chief Executive Officer for closing remarks.

Speaker 1: Thank you. Ladies and gentlemen, we have reached to the end of the question and answer session. I will now turn the call over to Ted Hanson, Chief Executive Officer for Closing our Mark.

Okay.

Speaker 3: Well, thank you again for listening to today's call. We hope everyone is staying healthy and look forward to speaking with you in April at the close of the first quarter.

Well. Thank you again for listening to today's call. We hope everyone is staying healthy and look forward to speaking with you in April at the close of the first quarter.

Be well.

Speaker 1: This concludes today's conference and you may just connect your lines up this time. Thank you for your participation and have a wonderful day.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.