Robert Half 4Q15 Earnings Call Notes

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Robert Half International (RHI) Harold M. Messmer on Q4 2015

US labor market remains strong and international markets have also started to rebound

“We anticipate the high demand for skilled talent will remain a growth driver for us, and we have every confidence in the opportunities ahead for Protiviti. While the stock market has been volatile and economic uncertainty persists, the U.S. labor market remains strong and international markets have also started to rebound.”

The regulatory state is an ally for us

“I was at a business meeting with the bunch of CEOs recently, and it was noted that there are over 75,000 pages in the Federal Register this year alone. I would say that the regulatory state is a great ally of Robert Half. We live in an environment, where there are more and more rules and regulations, and of course, we’re in the business of helping people deal with those. So on a positive note, regulations can be our friend as well as our enemy.”

M. Keith Waddell – Vice Chairman, President & Chief Financial Officer

Clients did get a little more cautious in December, but not significantly

“Well, I would say that our people would observe that in November, December the clients got a little more cautious, whether that’s due to market uncertainty or other reasons, the headlines about China, oil, et cetera, we could all debate. But our clients did get a little more cautious, not significantly more cautious. Further, December is always a somewhat odd month, because our internal staff have had a very good year in 2015. They probably checked out a little earlier, as did our clients frankly. So we felt like we’ve had a little more December effect than we would typically have.”

Caution impacted perm a little but candidates and clients are still being picky

“the clients becoming more cautious certainly impacted perm. It’s odd in that on the one hand clients are still picky; candidates are also harder to close. They’re accepting counteroffers, they’re accepting competing offers, they’re declining offers. So it’s a little odd that at the same time clients and candidates are being picky. And that has the effect of increasing the days to fill or increasing the sales cycle, however, you’d like to describe it. But the point is perm was a little bit light of what we had projected for the fourth quarter. It wasn’t dramatically light. We believe that current tone of business in perm is solid, and the guidance we’ve given for the first quarter reflects that.”

Tech was a little lighter, but not significantly so

“tech was a little bit lighter than we would have expected for the quarter, but not significantly so. Similarly, as we roll into 2016, tech is solid. Our Q1 guidance reflects that. We feel good about tech. But it was a little light, but not significantly so for the fourth quarter.”

Western Europe remains solid

“when we look outside the U.S., the UK remains solid, Germany remains solid. We had a nice quarter in Belgium, which should continue into the first quarter.”

Seeing bill rate increases begin to touch 5%

“for Robert Half, we’ve also seen a lot more wage inflation in cycles past than we’ve seen in this cycle. But we are, as I just mentioned, for the first time, seeing bill rate increases begin to touch 5%”

Europe got a little more cautious during the quarter too

“I would say the general discussion of clients got a little more cautious during the quarter would also apply outside the U.S., particularly to Europe as it did inside the U.S.”

We’re simultaneously dealing with pickier clients and pickier candidates

“in technology, we’re seeing technology development, the programmers, the engineers. We’re seeing the most acute shortages, accounting, internal audit, financial services, regulatory compliance. There are also pockets of accounting and finance where there are also candidate shortages. As I talked about earlier, we’re simultaneously dealing with pickier clients and pickier candidates. Candidates are getting more counteroffers. Candidates are getting competing offers. Candidates are turning down offers that our clients give them.”

No new entrants that are moving the needle

” We’ve talked about LinkedIn at length in calls past, and LinkedIn is still there. It’s a source; it’s not the source of perm candidates for us. It’s not particularly impactful to sourcing candidates for our temporary businesses. So on balance, are there any new entrants that are moving the needle? I’d say no.”