ASGN (ASGN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $1.035 billion, down 8.5% year-over-year, with net income of $47.2 million and adjusted EBITDA of $117.1 million (11.3% margin), at the top end of guidance.

• IT consulting revenues made up 57.1% of total revenues, up from 53.1% a year ago, reflecting a strategic shift toward higher-value solutions.

• Commercial segment accounted for 70.1% of revenues, with new bookings of $1.3 billion (TTM) and a book-to-bill ratio of 1.2; Federal Government segment had $949.1 million in new awards (TTM), book-to-bill ratio 0.7.

• Gross margin improved to 29.1% in Q2 2024, up 20 basis points year-over-year, driven by a higher mix of consulting revenues.

• Strategic shift recognized by S&P/MSCI, reclassifying the company to the IT Consulting & Other Services sector.

Financial highlights

• Commercial segment revenues: $725.7 million, down 10.6% year-over-year; consulting revenues flat, assignment revenues down 16.2%.

• Federal Government segment revenues: $309.0 million, down 3.3% year-over-year; gross margin 20.6% (up 10 bps).

• Net income: $47.2 million ($1.02 per diluted share), down from $60.1 million ($1.22) in Q2 2023.

• Adjusted EBITDA: $117.1 million (11.3% margin), compared to $135.2 million (12.0%) last year.

• Free cash flow: $85.4 million, down from $101.3 million in Q2 2023.

Outlook and guidance

• Q3 2024 revenue guidance: $1.024–$1.044 billion; net income: $45.8–$49.4 million; adjusted EBITDA: $114–$119 million (margin 11.1–11.4%).

• Gross margin expected at 28.9–29.1%; adjusted net income per diluted share $1.31–$1.39.

• Market conditions and demand expected to remain steady in Q3; Federal segment not expecting repeat of large pass-through licensing revenues from Q3 2023.

• Management expects cash, operating cash flows, and full availability under the $500 million revolving credit facility to be sufficient for obligations and capital needs over the next 12 months.