ASGN (ASGN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues were $1.031 billion, down 7.7% year-over-year, with net income at $47.5 million and adjusted EBITDA at $116.9 million (11.3% margin); diluted EPS was $1.06, and adjusted EPS $1.43, both lower than Q3 2023.

• IT consulting revenues comprised 57.9% of total, with commercial consulting up 3.9% year-over-year; commercial segment accounted for 69.7% of total revenues.

• Bookings in both commercial and federal segments were strong, with commercial consulting bookings at $282.5 million and federal new contract awards at $666.4 million in Q3.

• Gross margin expanded to 29.1%, up 20 bps year-over-year, with commercial and federal segments both seeing 30 bps increases.

• Free cash flow was $127.9 million, with a conversion rate of 109% of Adjusted EBITDA.

Financial highlights

• Commercial segment revenues were $718.8 million (69.7% of total), down 8.1% year-over-year; commercial consulting revenues grew 3.9% year-over-year, while assignment revenues declined 14.6%.

• Federal government segment revenues were $312.2 million, down 6.6% year-over-year; gross margin rose to 20.7%.

• Net income was $47.5 million; adjusted EBITDA was $116.9 million (11.3% margin), both down from Q3 2023.

• Free cash flow for Q3 2024 was $127.9 million; cash and equivalents at quarter-end were $166.6 million.

• Long-term debt stood at $1.03 billion; stockholders’ equity was $1.77 billion.

Outlook and guidance

• Q4 2024 revenue guidance is $990 million–$1.01 billion, net income of $39.2 million–$42.1 million, adjusted EBITDA of $103 million–$107 million, and adjusted EBITDA margin of 10.4%–10.6%.

• Q4 gross margin expected at 28.4%–28.6%; adjusted EPS projected at $1.18–$1.24.

• Q4 expected to face a sequential headwind from fewer billable days, equating to about 4% of revenues; market conditions and demand anticipated to remain similar to Q3.

• No uptick in client IT spend expected in Q4; typical seasonal margin softness anticipated.

• Management expects cash, operating cash flows, and full revolver availability to be sufficient for obligations over the next 12 months.