baird 2020 global consumer, technology & services ...€¦ · 03/06/2020 · focus on...
TRANSCRIPT
1©ASGN Incorporated. All rights reserved.
June 3, 2020
Baird 2020 Global Consumer,
Technology & Services Conference
© ASGN Incorporated. All rights reserved.
© ASGN Incorporated. All rights reserved.
Safe Harbor
Certain statements made in this presentation are “forward-looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a
high degree of risk and uncertainty. Forward-looking statements include statements regarding
our anticipated financial and operating performance.
All statements in this presentation, other than those setting forth strictly historical information,
are forward-looking statements. Forward-looking statements are not guarantees of future
performance and actual results might differ materially. In particular, we make no assurances
that the proposed revenue scenarios outlined in this presentation will be achieved. Additional
examples of forward-looking statements in this presentation include, without limitation,
statements regarding the expected impact of the COVID-19 global pandemic on our
competitive position and demand for our services; our ability to attract, train and retain qualified
staffing consultants, the availability of qualified contract professionals, management of our
growth, continued performance and improvement of our enterprise-wide information systems,
our ability to manage our litigation matters, the successful integration of our acquired
subsidiaries, and other risks detailed from time to time in our reports filed with the SEC,
including our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with
the SEC on March 2, 2020. We specifically disclaim any intention or duty to update any
forward-looking statements contained in this presentation.
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© ASGN Incorporated. All rights reserved.
3
ASGN At a Glance (NYSE: ASGN)
• U.S. addressable market of $290 billion3
• Additional opportunities in Europe
• Early mover in the “shared economy”
• Favorable tailwinds: digital transformation;
advantageous legislation; improving
government market conditions
• 25 consecutive quarters of above
industry growth
• $4.0 billion in LTM revenue1
• $455.4 million in LTM Adj. EBITDA1,2
• $293.0 million in LTM free cash flow1
• 13,200 customer relationships
• Relationships with ~350 of Fortune 500
• ~25,000 billable professionals
Company supports leading corporate
enterprises and government organizations in
developing, implementing and operating
critical IT and business solutions through an
integrated offering of professional staffing and
IT solutions
Our Company Our CustomersOur Markets
Deep, Trusted Relationships Track Record of Excellence Growing Addressable Market
One of the foremost providers of IT and
professional services in the technology,
digital, creative, engineering and life
sciences fields across commercial and
government sectors
Commercial IT Services and Federal
Government IT Solutions each offer
industry knowledge and depth, scalable
solutions and expansive geographic reach
© ASGN Incorporated. All rights reserved.
4
Investor Highlights
• Increasingly IT-Centric – Business model has evolved in line with client needs and expectations to
focus on higher-end, higher-margin IT consulting services and solutions capabilities.
• Unique Go-To Market Strategy – Diverse client base with a focus on expanding the large account
portfolio (over 50% of the Fortune 500 and key Federal Defense & Civilian government agencies),
which is often a more stable source of revenue and represents clients who are quicker adopters of
new technologies.
• Significant Exposure to Federal Marketplace – Over 20% of revenues generated from Federal
and Civilian government agencies, clients whose industry is typically better insulated from economic
uncertainty than its commercial industry counterparts.
• Strong Balance Sheet & Liquidity – Solid free cash flow generation and strategic actions taken in
Q4 2019 to improve capital structure, provide flexibility to direct funds in best interests of the
Company, its clients and its stockholders.
• Flexible Cost Structure – Variable expense structure provides high conversion of free cash flow to
Adjusted EBITDA, providing stability to business model.
• Track Record in M&A – History of successfully integrating tuck-in and transformational acquisitions
that have broadened the Company’s client base and added key IT capabilities and client contracts.
• Experienced Management Team – Led by industry experts who have successfully managed the
business and its clients during both positive and negative market cycles.
© ASGN Incorporated. All rights reserved.
ASGN: A Leader in High-End IT Services & Solutions
Strategy
Architecture
Design
Systems Deployment
(incl. upgrades)
Service Centers
Technical Staffing
Federal Government IT
Solutions OfferingsMission critical IT services for the
Federal Government
Commercial IT
Service Offerings
5
© ASGN Incorporated. All rights reserved.
Segment Overview
APEX SEGMENT OXFORD SEGMENT ECS SEGMENT
SERVICE OFFERINGS
Mission critical high-end IT
solutions for the Federal
Government
High-end IT, Engineering and Life
Sciences skills and solutions
Permanent Placement solutions
Information Technology, Engineering,
Finance & Accounting, Healthcare
Mission critical IT skills and
solutions
Creative/Digital skills and solutions
LTM REVENUES1
$604.7 Million15.2% of Consolidated Revenues
$2.5 Billion63.7% of Consolidated Revenues
$842.9 Million21.1% of Consolidated Revenues
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Federal Government
IT SolutionsCommercial IT Services
© ASGN Incorporated. All rights reserved.
Commercial IT Services Market
Technology TelecomFinancial
InstitutionsBusiness
Services
Healthcare
& Life
Sciences
Cloud Solutions
Cybersecurity
Workforce
Management
Application
Development
Science &
Engineering
Massive addressable market
Deep decades-long client relationships with major Fortune 500 companies
Lower cost of services vs. full-deliverable bench consulting model
AerospaceConsumer
& Industrial
Technology: With growing number of clients re-shoring IT support capabilities, Mexico Delivery Center gaining traction with US clients
Healthcare & Life Sciences: Demand for digital transformation (mobile/customer experience) continues to be focus of clients longer-term while hospital networks focused on COVID-19 near-term
Telecom: 5G, Integration/M&A, COVID-19 related WFH initiatives, continued push into SOW (Consulting) and Federal business in both near- and long-term. Media sector weakness expected near-term
Business Services: Capitalizing on client need for digital transformation, cloud, and analytics initiatives. Tailwinds from higher education business to online model
Aerospace: Clients adopting emerging technologies such as AI, cloud, digital, and accelerating cybersecurity and IT modernization
Financial Institutions: Stimulus funding at commercial banks creating heightened demand to implement new IT initiatives
Consumer & Industrial: revenues up double digits in Q1, despite weakness in Retail, Energy and Hospitality
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© ASGN Incorporated. All rights reserved.
Federal Government IT Solutions Market
Defense Federal
CivilianOther
Intelligence and
National Security
Cloud Solutions
Cybersecurity
Machine Learning
IT Modernization
Science & Engineering
Massive addressable market
Ample and increasing funding; durable mission requirements
Profitable countercyclicality
Deep decades-long client relationships
Accelerating cyber threats drive funding and demand across government and commercial customers
Drive to the cloud impacts all technology and business transformation efforts, with cloud-hosted, on premise, and hybrid solutions depending on customer and mission needs
AI and machine learning sun is rising as DoD, national security, federal civilian, and commercial customers demand actionable and scalable data approaches and decision intelligence at scale and at the edge of technology
Pent-up need for IT system modernization and digital transformation to achieve mission outcomes, productivity gains, and cost savings across economic cycles
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© ASGN Incorporated. All rights reserved.
COVID-19 Update
Q1 2020 Impact
• Solid first quarter 2020 results despite downturn beginning in mid-March
• Through February growth tracked at or above internal estimates
• March saw leveling off or retraction of commercial market revenues, while
Federal Government business remained strong
Proactive
Measures Taken
• Implemented business continuity plans prioritizing safety and health of employees
• Shifted 100% internal workforce and 80% billable consultants to remote; only
small portion of essential staff remain on site
• Repaid all borrowings under $250M revolver as of April 30, 2020; now have full
availability
• Paused share repurchase program in the quarter
ASGN is Strongly
Positioned for the
Future
• Increasingly IT-centric with expanded high-end solutions capabilities
• Expanded large account portfolio and exposure to Federal government
• Highly experienced & capable management team
• Smart capital deployment – solid liquidity and free cash flow generation
ASGN is better positioned now to manage through an economic downturn
than at any other time in the Company’s history.9
Financial Review
© ASGN Incorporated. All rights reserved.
Key Takeaways — Q1 2020
11
$103.5 Million 6.6% Y-Y
$48.8 Million 33.9% Y-Y
$57.7 Million 16.8% Y-Y
$990.5 Million 7.2% Y-Y
1.4 to 1.0 Q1 2020
Solid Performance in Q1: • Financial Results were within guidance ranges
• Growth led by above-market performance at ECS along
with growth by the Apex Segment
Blackstone Federal Acquisition:• Closed $85 million acquisition on January 24, adding prime
contract pathways within the Department of Homeland
Security (DHS)
• Fully integrated into the ECS business at the completion of
Q1
Successful Strategy Execution:• Evolution to IT Services
• Expansion of large-account portfolio
• Increased exposure to the Federal government marketplace
• Continued organic growth combined with select, strategic
tuck-in acquisitions
• Growth in higher-end, higher-margin IT consulting services
and solutions for commercial and government clients
Achievements Driven By:• Access to highly-skilled labor and differentiated deployment
model
• Capabilities in advanced Federal IT solutions
• Disciplined approach to capital allocation
REVENUES
ADJUSTED NET INCOME
ADJUSTED EBITDA
FREE CASH FLOW
BOOK-TO-BILL RATIO5 (ECS SEGMENT)
LEVERAGE RATIO4
1.14 to 1.0 Senior Secured Leverage Ratio
$43.8 Million 25.5% Y-Y
NET INCOME
© ASGN Incorporated. All rights reserved.
$172 $172
$259 $281
$293
7.1%6.6%
7.6% 7.1% 7.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
$-
$50
$100
$150
$200
$250
$300
$350
2016 2017 2018 2019 LTM
Free Cash Flow & Margin
$285 $311
$403 $449 $455
2016 2017 2018 2019 LTM
Adjusted EBITDA & MarginUSD in millions
11.7% 11.9%
11.9% 11.4% 11.4%
$795 $850
$1,024
$1,130 $1,147
2016 2017 2018 2019 LTM
Gross Profit & MarginUSD in millions
32.6% 32.4%
30.1%28.8%
28.7%$2,440 $2,626
$3,400
$3,924 $3,991
2016 2017 2018 2019 LTM
RevenuesUSD in millions
Summary of Financial Results
Consistent above-industry growth, stable margins and high free cash flow generation
USD in millions
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© ASGN Incorporated. All rights reserved.
13
Illustrative Financial Scenarios — Q2 2020
All illustrative scenarios assume–
• High-single digit year-over-year revenue growth for ECS Segment (ECS accounted for 21.5 percent of total revenues in Q1 2020)
• Decline of over 50.0 percent year-over-year in permanent placement and conversion fees
• Reductions in costs of services, incentive compensation (commissions and bonuses), headcount, travel & entertainment, outside services costs,
costs for events and discretionary spending
• No one-time charges are anticipated in these scenarios
Revenue decline of 5.0 percent assumes the low point (trough) of weekly Assignment Revenue occurs in late May and improves slightly
week-to-week thereafter
Revenue decline of 10.0 percent assumes weekly Assignment Revenue declines occur through the end of the quarter
The table below is provided for illustrative purposes only and is not intended to provide guidance as to the outcome of the Company’s
results for the second quarter. The table estimates what the Company’s financial outcomes could look like if such revenue scenarios were
to occur, and are solely for the purposes of illustrating financial effects of actions that would be taken to manage operating costs and
expenses.
Quarter Ended Quarter Ending June 30, 2020
June 30, Year-over-Year Decline in Revenues
($'s in millions) 2019 -5.0% -7.5% -10.0%
Revenues 972.3$ 923.7$ 899.7$ 875.3$
Permanent Placement as a % of Revenues 3.8% 1.9% 2.0% 2.0%
Gross Margin 29.3% 27.7% 27.6% 27.5%
Contract Gross Margin1 26.5% 26.3% 26.2% 26.2%
Adjusted SG&A Expense Margin2 17.9% 17.2% 17.6% 17.9%
Adjusted EBITDA Margin 11.7% 10.6% 10.2% 9.8%
Free Cash Flow as a percent of Adjusted EBITDA 77.3%
Senior Secured Debt (Term B Facility) - Outstanding 490.8$ 490.8$ 490.8$
Availability under $250.0 million Revolving Credit3 250.0$ 250.0$ 250.0$
Senior Secured Leverage Ratio (end of period)4 1.12x 1.14x 1.15x
t
105.0% ~ 135.0%
© ASGN Incorporated. All rights reserved.
Second Quarter 2020 Scenario Inputs
14
Depreciation
Stock Based Compensation
Amortization of Intangibles
Interest Expense
Effective Tax Rate9
Diluted Outstanding
Shares
27.0%
63.75
$’s and shares in millions
$1.2 – Cost of Services
$8.1 – SG&A$9.3
Billable Days10
$12.6
53.1
FY 2020
FY 2019
Q1 Q2 Q3 Q4
63.00 63.75 64.00 60.50
62.00 64.00 63.00 60.50
$8.8
$10.3
© ASGN Incorporated. All rights reserved.
Repurchases are an important component of the
capital allocation strategy.
Strong free cash flow underpins borrowing
capacity and ability to quickly de-lever. ASGN
has repaid all borrowings under its $250M
revolving credit facility and now has full
availability.
Track record of successfully integrating tuck-in and
transformative acquisitions. M&A remains a key
component of Company’s long-term growth
strategy; targeting investments in commercial and
government markets that add key services, clients
or contracts.
Disciplined Approach to Capital Allocation
15
ASGN’s free cash flow was $48.8 million at 3/31/20. The Company allocates its free cash flow among organic investments, M&A, debt
repayment and share repurchases based on what is in the best interests of employees, clients and stockholders, at any given time.
Leverage Ratio was 1.14x4 TTM EBITDA at 3/31/20, down from 3.7x TTM EBITDA at 4/2/18 (ECS acquisition date).
Strong Free
Cash Flow
Generation &
Borrowing
Capacity
M&A
Debt
Repayment
Share
Buybacks
Q&A
Appendix
© ASGN Incorporated. All rights reserved.
2020
Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1
Revenues
Consolidated
Assignment 594.5$ 620.0$ 634.4$ 647.5$ 2,496.4$ 650.3$ 684.0$ 705.6$ 720.6$ 2,760.5$ 721.6$ 744.4$ 760.2$ 760.2$ 2,986.3$ 744.0$
Permanent Placement 32.0 33.3 32.7 31.6 129.6 34.9 39.4 36.8 35.2 146.3 34.1 37.3 36.6 31.5 139.4 33.8
ECS - - - - - - 155.1 164.0 173.9 493.0 168.0 190.6 206.1 233.5 798.2 212.7
626.5$ 653.3$ 667.1$ 679.1$ 2,626.0$ 685.2$ 878.5$ 906.4$ 929.7$ 3,399.8$ 923.7$ 972.3$ 1,002.9$ 1,025.2$ 3,923.9$ 990.5$
Apex Segment
Assignment 471.3$ 491.3$ 506.4$ 524.3$ 1,993.3$ 524.9$ 553.7$ 575.2$ 590.7$ 2,244.5$ 592.2$ 613.0$ 629.9$ 628.6$ 2,463.6$ 615.9$
Permanent Placement 11.2 11.2 11.1 10.4 43.9 13.6 13.9 14.4 13.9 55.8 13.9 15.5 14.3 12.7 56.4 13.2
482.5$ 502.5$ 517.5$ 534.7$ 2,037.2$ 538.5$ 567.6$ 589.6$ 604.6$ 2,300.3$ 606.1$ 628.5$ 644.3$ 641.3$ 2,520.0$ 629.1$
Oxford Segment
Assignment 123.2$ 128.7$ 128.0$ 123.2$ 503.1$ 125.4$ 130.3$ 130.4$ 129.9$ 516.0$ 129.4$ 131.4$ 130.3$ 131.6$ 522.7$ 128.1$
Permanent Placement 20.8 22.1 21.6 21.2 85.7 21.3 25.5 22.4 21.3 90.5 20.2 21.8 22.2 18.8 83.0 20.6
144.0$ 150.8$ 149.6$ 144.4$ 588.8$ 146.7$ 155.8$ 152.8$ 151.2$ 606.5$ 149.6$ 153.2$ 152.5$ 150.4$ 605.7$ 148.7$
ECS Segment -$ -$ -$ -$ -$ -$ 155.1$ 164.0$ 173.9$ 493.0$ 168.0$ 190.6$ 206.1$ 233.5$ 798.2$ 212.7$
Net Income 22.4$ 33.1$ 34.9$ 67.3$ 157.7$ 29.1$ 33.6$ 49.1$ 45.9$ 157.7$ 34.9$ 43.1$ 57.4$ 39.3$ 174.7$ 43.8$
Loss from discontinued operations, net of tax (0.0) 0.1 0.0 0.0 0.2 0.1 0.1 - 0.1 0.3 - - 0.1 - 0.1 -
Interest expense 8.5 6.1 7.1 6.0 27.6 6.6 20.5 14.6 14.3 56.0 14.5 14.0 12.7 11.7 52.9 11.4
Write-off of loan cost 18.9 18.9 -
Provision for income taxes 12.7 20.2 18.9 (12.6) 39.2 9.9 11.5 10.5 14.3 46.2 13.3 16.2 20.7 11.8 62.0 15.7
Depreciation 6.0 6.1 6.4 6.7 25.2 6.8 10.1 9.7 9.9 36.5 9.7 10.0 10.3 10.1 40.1 9.3
Amortization of intangible assets 8.5 8.3 8.2 8.4 33.4 7.6 18.5 18.6 13.8 58.5 13.8 13.1 11.9 12.3 51.1 12.1
EBITDA (non-GAAP measure) 58.1 73.8 75.5 75.9 283.3 60.1 94.3 102.5 98.3 355.2 86.2 96.4 113.1 104.1 399.8 92.3
Stock-based compensation 5.6 6.0 6.4 6.1 24.0 4.9 8.9 8.6 9.1 31.5 9.5 13.9 7.7 8.2 39.3 8.7 Write-off of intangible assets
- - - - - - - - - - - 3.3 - - 3.3 -
Acquisition, integration and strategic planning expenses 0.9 0.7 1.5 0.9 4.1 9.8 3.4 1.7 1.7 16.6 1.4 0.6 0.7 3.9 6.6 2.5
Adjusted EBITDA (non-GAAP measure) 64.6$ 80.5$ 83.4$ 82.9$ 311.4$ 74.8$ 106.6$ 112.8$ 109.1$ 403.3$ 97.1$ 114.2$ 121.5$ 116.2$ 449.0$ 103.5$
Net income 22.4$ 33.1$ 34.9$ 67.3$ 157.7$ 29.1$ 33.6$ 49.1$ 45.9$ 157.7$ 34.9$ 43.1$ 57.4$ 39.3$ 174.7$ 43.8$
Loss from discontinued operations, net of tax (0.0) 0.1 0.0 0.0 0.2 0.1 0.1 - 0.1 0.3 - - 0.1 - 0.1 -
Write-off of loan costs 18.9 18.9 -
Credit facility amendment expenses 2.0 (0.1) 0.8 - 2.7 0.3 5.9 - - 6.2 - - - - - -
Write-off of intangible assets - - - - - - - - - - - 3.3 - - 3.3 -
Acquisition, integration and strategic planning expenses 0.9 0.7 1.5 0.9 4.1 9.8 3.4 1.7 1.7 16.6 1.4 0.6 0.7 3.9 6.6 2.5
Tax effect on adjustments (1.1) (0.3) (0.9) (0.4) (2.7) (2.6) (2.5) (0.4) (0.5) (6.0) (0.4) (1.0) (0.1) (6.0) (7.5) (0.7)
Non-GAAP net income 24.2 33.6 36.3 67.9 161.9 36.7 40.5 50.4 47.2 174.8 35.9 46.0 58.1 56.1 196.1 45.6
Amortization of intangible assets 8.5 8.3 8.2 8.4 33.4 7.6 18.5 18.6 13.8 58.5 13.8 13.1 11.9 12.3 51.1 12.1
Income taxes on amortization for financial reporting purposes
not deductible for income tax purposes (0.4) (0.4) (0.4) (0.4) (1.6) (0.3) (0.2) (0.3) (0.2) (1.0) (0.3) (0.2) (0.3) (0.1) (0.9) -
Adjusted Net Income (non-GAAP measure) 32.3$ 41.5$ 44.1$ 75.9$ 193.8$ 44.0$ 58.8$ 68.7$ 60.8$ 232.3$ 49.4$ 58.9$ 69.7$ 68.3$ 246.3$ 57.7$
Cash tax savings on indefinite-lived intangible assets 6.7 6.7 6.7 6.8 26.9 4.5 6.8 6.8 6.8 25.1 7.0 7.0 7.0 7.1 28.1 7.3
Calculation of free cash flow
Cash provided by operating activities 43.8$ 39.8$ 54.6$ 58.3$ 196.4$ 54.7$ 76.7$ 92.1$ 63.9$ 287.5$ 44.0$ 96.5$ 91.3$ 81.4$ 313.2$ 64.1$
Capital expenditures (6.8) (6.4) (4.8) (6.2) (24.3) (6.2) (8.4) (7.5) (6.6) (28.7) (7.5) (8.4) (6.9) (9.9) (32.7) (15.3)
Free cash flow (non-GAAP measure) 37.0$ 33.4$ 49.8$ 52.0$ 172.2$ 48.5$ 68.4$ 84.6$ 57.3$ 258.8$ 36.5$ 88.1$ 84.4$ 71.5$ 280.5$ 48.8$
Reconciliation of Net Income to Adjusted Net Income
2017 2018
Reconciliation of Net Income to Adjusted EBITDA
2019
Selected Financial Data ($ in millions)
18
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Apex Segment — 63.5% of Q1 2020 Consolidated Revenues
$629.1$606.1
Q1 2020Q1 2019
Revenues($ in millions)
+3.8%
Assignment &
Consulting97.9%
Perm Placement
2.1%
Revenue Mix
19
Recent Trends
• Industry diversification, large account portfolio and exposure to financial services provides stability
• Apex/Intersys partnership leading to joint wins; Mexico Delivery Center seeing traction with U.S.
clients
• 24.4% consulting services revenue growth Y-Y
$184.5$175.4
29.3%1128.9%11
Q1 2020Q1 2019
Gross Profit($ in millions)
+5.2%
© ASGN Incorporated. All rights reserved.
$212.7
$168.0
Q1 2020Q1 2019
Revenues($ in millions)
+26.6%
20
ECS Segment — 21.5% of Q1 2020 Consolidated Revenues
Cost Reimbursable
39.2%
Firm-Fixed-Price
26.8%
Time & Materials
34.0%
Contract Type
Commercial & Other
6.2%
Federal Civilian39.8%
Defense & Intel
54.0%
Customer
• Continued industry-leading revenue growth
• No slowdown in March despite pandemic
• High demand for machine learning, artificial intelligence services and cloud solutions
$37.1
$29.6
17.6%11 17.4%11
Q1 2020Q1 2019
Gross Profit($ in millions)
+25.3%
Recent Trends
© ASGN Incorporated. All rights reserved.
21
ECS Contract Backlog & Book-to-Bill Ratio
$458.6 $356.6 $494.3 $488.4 $490.6
$1,317.9 $1,589.4
$2,200.0 $2,082.7 $2,186.7
$1,776.5$1,946.0
$2,694.3$2,571.1 $2,677.3
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
Funded Backlog Unfunded Backlog
1.5 1.9
4.6
0.51.41.3 1.5
2.4 2.1 2.0
Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20
Book-to-Bill Trailing Twelve Months Book-to-Bill
Co
ntr
ac
tB
ac
klo
g (
$M
)12
Bo
ok-t
o-B
ill R
ati
o4
13 14
© ASGN Incorporated. All rights reserved.
Oxford Segment — 15.0% of Q1 2020 Consolidated Revenues
$148.7$149.6
Q1 2020Q1 2019
Revenues($ in millions)
Assignment &
Consulting86.1%
Perm Placement
13.9%
Revenue Mix
22
• Consistent performance vs. prior year despite pandemic
• Permanent placement revenues up Y-Y in Q1
• 9% consulting services revenue growth Y-Y
$59.3$58.9
39.9%1139.4%11
Q1 2020Q1 2019
Gross Profit($ in millions)
+0.7%
Recent Trends
© ASGN Incorporated. All rights reserved.
Footnotes
23
1 Last twelve months as of 3/31/20. Free cash flow is defined as net cash provided by (used in) operating activities, less capital expenditures.
2 Adjusted EBITDA, a non-GAAP financial measure, is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus stock-based
compensation expense and, as applicable, acquisition, integration and strategic planning expenses, write-off of loan costs, write-off of intangible assets and
impairment charges. Excluding the cash portion effect of the CEO transition in Q2 2019, LTM Adjusted EBITDA would have been $1.8M higher and totaled $457.2M.
3 U.S. Staffing market size from Staffing Industry Analysts’ “US Staffing Industry Forecast, April 7, 2020” and independent 3rd party (Parthenon) analysis of freelance
market. Commercial IT Services from Gartner; Technavio; Comptia; SIA Parthenon-EY CIO Survey (Light Deliverable Services). Government IT Solutions from Wolf
Den Associates LLC and ASGN internal estimates.
4 The ratio of the aggregated principal amount of consolidated indebtedness secured by a Lien on asset of ASGN or any of its subsidiaries to Lender defined trailing
12-months of EBITDA (Maximum leverage allowable is 4.25 to 1.0 of borrowings outstanding under revolver).
5 Book-to-bill ratio is calculated as the sum of the change in total contract backlog during the period plus revenues for the period, divided by revenues for the period.
6 Excludes permanent placement revenues and related gross profit.
7 Adjusted SG&A Expense Margin (a non-GAAP measure) excludes non-cash expenses – depreciation & stock-based compensation – & acquisition and integration
expenses.
8 The revolving credit facility available balance is $246.1 million after adjusting for outstanding letters of credit.
9 Effective tax rate estimate does not include excess tax benefits related to stock-based compensation.
10 Billable days are defined as business days (weekdays) less observable holidays (New Year’s Day, Memorial Day, Independence Day, Labor Day, Veteran’s Day,
Thanksgiving Day, Day after Thanksgiving and Christmas), and considers other factors such as the day of the week a holiday occurs and additional time taken off
around holidays.
11 Gross margin.
12 Contract backlog represents the estimated amount of future revenues to be recognized under negotiated contracts and task orders as work is performed. Contract
backlog excludes awards which have been protested by competitors until the protest is resolved in our favor. Contract backlog is segregated into two categories,
funded contract backlog and negotiated unfunded contract backlog.
13 Funded contract backlog for contracts with U.S. government agencies primarily represents contracts for which funding has been formally awarded less revenues
previously recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally awarded or authorized by the U.S.
government even though the contract may call for performance over a number of years. Funded contract backlog for contracts with non-government agencies
represents the estimated value of contracts, which may cover multiple future years, less revenues previously recognized on these contracts.
14 Negotiated unfunded contract backlog represents the estimated future revenues to be earned from negotiated contract awards for which funding has not been
awarded or authorized, and unexercised priced contract options. Negotiated unfunded contract backlog does not include any estimate of future potential task orders
expected to be awarded under indefinite delivery, indefinite quantity (IDIQ), U.S. General Services Administration (GSA) schedules or other master agreement
contract vehicles.
ASGN Incorporated 26745 Malibu Hills Road
Calabasas, CA 91301
818.878.7900
asgn.com