ASGN Inc, a leading provider of IT services and professional solutions, reported its financial results for the quarter ended June 30, 2024. The company operates through two segments: Commercial and Federal Government, with the Commercial Segment generating the majority of the revenue.
Performance Overview
ASGN Inc reported revenues of $1.035 billion for Q2 2024, falling short of the analyst estimate of $1.047 billion. However, the company exceeded earnings expectations with an EPS of $1.02, compared to the estimated $1.00.
Net income for the quarter was $47.2 million, down from $60.1 million in the same period last year. Adjusted EBITDA was $117.1 million, representing 11.3% of revenues, which was at the top end of the company's guidance estimates.
Segment Performance
The Commercial Segment, which accounts for 70.1% of total revenues, reported $725.7 million in revenue, a decrease from $811.3 million in Q2 2023. The Federal Government Segment generated $309.0 million, down from $319.6 million in the previous quarter.
IT consulting revenues, which make up 57.1% of total revenues, were $590.5 million, a slight decrease from the previous year. Assignment revenues, totaling $444.2 million, were down 16.2% year-over-year, reflecting continued softness in the more cyclical portions of the Commercial Segment business.
Financial Metrics
Gross margin for the quarter was 29.1%, an improvement from 28.9% in Q2 2023. The Commercial Segment's gross margin increased to 32.7%, while the Federal Government Segment's gross margin rose to 20.6%.
Operating cash flows were $90.7 million, and Free Cash Flow was $85.4 million. The company repurchased approximately 1.1 million shares of its common stock for $108.0 million during the quarter.
Management Commentary
“ASGN's results for the second quarter of 2024 confirmed our expectations that macro conditions in Q2 would be consistent with the first quarter of the year,” said ASGN’s Chief Executive Officer, Ted Hanson. “We are making measured, strategic progress toward our goal of moving into higher-end, higher-value IT consulting solutions.”
Key Financial Data
| Metric | Q2 2024 | Q2 2023 | Q1 2024 |
|---|---|---|---|
| Revenues | $1.035 billion | $1.130 billion | $1.049 billion |
| Net Income | $47.2 million | $60.1 million | $38.1 million |
| Adjusted EBITDA | $117.1 million | $135.2 million | $108.3 million |
| EPS (Diluted) | $1.02 | $1.22 | $0.81 |
Analysis
ASGN Inc's performance in Q2 2024 reflects the ongoing challenges in the IT services sector, particularly in the Commercial Segment. The decline in assignment revenues indicates a cautious spending environment among clients. However, the company's strategic shift towards higher-value IT consulting solutions and its strong cash flow generation are positive signs for future growth.
Investors should monitor the company's ability to navigate macroeconomic conditions and its progress in expanding its high-value consulting services. The upcoming third-quarter estimates suggest a stable outlook, with revenues expected to range between $1.024 billion and $1.044 billion and EPS between $1.01 and $1.09.
For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from ASGN Inc for further details.
