william blair & company - robert half · pdf filewilliam blair & company 35th annual...

William Blair & Company 35th Annual Growth Stock Conference June 9-11, 2015 Keith Waddell, Vice Chairman, President and CFO

© 2015 Robert Half International Inc. An Equal Opportunity Employer M/F/Disability/Vet.

Company Background

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§  Founded in 1948 as franchised business §  First and largest staffing firm specializing in accounting

and finance positions §  In 1986, acquired franchisor with no company operations

and began process of acquiring all franchises

§  Opened offices worldwide and launched new professional staffing divisions

§  In 2002, entered the risk consulting and internal audit business through formation of Protiviti


Awards and Recognition

“Most Admired Companies”

(1998‒2015)

“Best Places to Work” lists around the world

Responsible Investment Index

(2008‒2015) Barron’s 400 Index

FORTUNE® W O R L D ’ S M O S T A D M I R E D C O M P A N I E S 2 0 1 5

3

Protiviti a “Best Company to Work For”

(2015)


Global Operations

Europe Austria Belgium France Germany Italy Luxembourg Netherlands Switzerland United Kingdom

Middle East UAE

South America Brazil Chile

North America Canada United States

More than 400 offices in 20 countries worldwide

4 4

Asia-Pacific Australia China India Japan New Zealand Singapore


79%

21%

Robert Half Revenue Mix* – By Geography

United States International

*Q1 2015 Staffing Revenues

5


3%4%

4%

10%21%

Robert Half Revenue Mix* – International

Percentage of Global Staffing Revenues

Continental Europe

Canada

Asia-Pacific

U.K.

International

*Q1 2015

6


1%#2%#3%#

4%#

Other

Robert Half Revenue Mix* – Continental Europe

Percentage of Global Staffing Revenues

Germany

Belgium

France

Continental Europe

10%

*Q1 2015

7


Robert Half Revenue Mix* – Business Segments

78%

14%

8%

Permanent Placement

Risk Consulting and Internal Audit

Temporary and Consulting

*Q1 2015

8


Our Brands

Specialized Staffing

Project Skills

Project Management

and Deliverables

Recruiting

9


Business Strategy

§  Value proposition: Only full-time jobs require full-time staff

§  Clients value specialization in professional segments

§  Middle-market accounts are smaller, less price-sensitive; clients are demanding, quality is key

§  Internal staff must possess specialized skills

§  Protiviti provides consulting, project management, co-sourcing and outsourcing capabilities

10


Accounting Staffing Demand

§  U.S. job growth for financial analysts, accountants and auditors expected to outpace national average between 2012 and 2022*

§  Bookkeeping, accounting and auditing among top 15 occupations with highest projected job growth between 2012 and 2022*

§  Low unemployment in many roles (U.S. Bureau of Labor Statistics, Q1 2015)

–  Financial analysts: 1.8% –  Financial managers: 2.8% –  Accountants and auditors: 2.9%

*BLS Occupational Outlook Handbook, 2014-2015 Edition

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Technology Staffing Opportunity

§  IT staffing market is 3-4 times larger than accounting staffing §  Low unemployment for IT positions (U.S. Bureau of Labor Statistics, Q1 2015)

–  Network and computer systems administrators: 0.9% –  Computer and information systems managers: 1.1% –  Software developers, applications and systems software: 1.5%

§  New application development demand at middle-market companies

Growing need for customized software, websites, mobile and social media

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Unique Robert Half/Protiviti Delivery Model

§  We provide world-class consulting and specialized staffing, under one roof, at an attractive price

§  Global and regional consulting firms that compete with Protiviti lack the flexible resource capabilities of our staffing operations

§  Staffing competitors lack in-house access to Big 4 consulting methodologies like those of Protiviti

Staffing Consulting Blended

13


Marketing Approach §  Positioned as quality leader through advertising and PR activities

–  Thought leadership: published content, salary research, other resources

§  Content marketing: email/blogs/social media §  Candidate and client website experience

–  Gateway to expanded digital interaction –  Local landing pages –  Mobile-friendly –  Dynamic content –  Optimized for natural search rankings

§  Search engine marketing using data analytics and performance measurement §  Digital display advertising, radio (national broadcast and online streaming)

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20-Year Revenue History

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Robert Half F&A/Accountemps Other Services

Compounded Annual Growth 20 years ended 12/31/14

12.5% $4.7B

15


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

20-Year Cash Flow From Operations

$340.7M

Compounded Annual Growth 20 years ended 12/31/14

13.9%

16


Return on Equity (20-Year Average & Q1 2015)

*Through Dec. 31, 2014

24.9%

31.7%

20-Year Average* Q1 2015

17


Recent Operating Performance

§  20 consecutive quarters of double-digit net income and EPS percentage growth on year-over-year basis

§  Secular shift to temporary jobs

§  Macroeconomic improvement

18


Temporary and Consulting Revenue ($ in Billions) (2001‒Q1 2015)

$2.3

$1.8 $1.7

$2.2

$2.6

$3.1

$3.6 $3.6

$2.5 $2.6

$3.1$3.3 $3.4

$3.7

$0.86 $0.94

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

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Q1 2015 14.5% growth y/y

(same-day, constant- currency basis)


Temporary and Consulting Gross Margin % (2001‒Q1 2015)

36.6%

35.6%34.9%

36.0%36.5%

37.0%37.2%36.7%

34.1%34.1%

35.2%36.0%36.2%

36.6%36.1%

37.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

20


Temporary and Consulting SG&A % (2001‒Q1 2015)

28.9%

32.9%32.7%

29.0%

27.0%26.9%27.0%27.1%

29.8%29.9%

28.3%27.7%27.3%

26.8% 27.0%27.1%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

21


Temporary and Consulting Operating Income % (2001‒Q1 2015)

7.6%

2.7%2.2%

6.9%

9.5%10.0%10.2%

9.6%

4.2% 4.2%

6.9%

8.3%8.9%

9.8%9.0%

9.8%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

22


Permanent Placement Revenue ($ in Millions) (2001‒Q1 2015)

$189

$100 $95

$136

$219

$336

$444$427

$182

$221

$302

$334$348

$395

$93 $98

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

23

Q1 2015 11.9% growth y/y



Permanent Placement SG&A % (2001‒Q1 2015)

89.2%

106.8%

97.3%

87.5%

79.7%77.8%

80.6%

85.8%

103.7%

92.0%88.2%

83.3%84.3%80.1% 81.3%80.5%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

24


Permanent Placement Operating Income %(2001‒Q1 2015)

10.8%

-6.8%

2.7%

12.5%

20.3%22.2%

19.4%

14.1%

-3.8%

7.9%

11.7%

16.7%15.6%

19.9%18.7%19.3%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

25

2002

2009

2009


Protiviti Revenue ($ in Millions) (2004‒Q1 2015)

$352

$479

$543 $552 $547

$384 $386$424

$453

$528

$624

$134$164

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

26

Q1 2015 26.6% growth y/y



Protiviti Gross Margin % (2004‒Q1 2015)

37.8% 39.8%36.6%

31.6%28.3%

20.8%25.2% 26.8% 25.9%

29.3% 29.4% 27.4% 28.8%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

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Protiviti SG&A % (2004‒Q1 2015)

19.9%21.6%

25.5%27.8% 26.9%

28.9% 28.1%25.6%

23.5%21.2% 19.7%

21.9%18.8%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

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Protiviti Operating Income %(2004‒Q1 2015)

17.9% 18.1%11.2%

3.8% 1.3%

-8.0% -2.8%

1.2%2.4%

8.1% 9.7%5.5%

9.9%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 mos.2014

3 mos.2015

2009

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Strong Financial Position

Cash $261 million Total assets $1.6 billion Virtually no debt

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As of 03/31/15


*Through Dec. 31, 2014 **Cash flow from operations net of cash used for investing activities

Cash Returned to Shareholders ($ in Millions)

1 Year* 5 Years*

Free Cash Flow $ 252** $ 1,009**

Dividends

$ 98 38%

$ 428 40%

Share Repurchases

$ 162 62%

$ 650 60%

Total $ 260 100% $1,078 100%

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Robert Half Quarterly Dividend History Since Inception

$0.06 $0.07

$0.08

$0.10

$0.11 $0.12

$0.13 $0.14

$0.15

$0.16

$0.18

$0.20

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

$0.11

$0.12

$0.13

$0.14

$0.15

$0.16

$0.17

$0.18

$0.19

$0.20

25-‐M

ay-‐2004

25-‐Aug-‐2004

24-‐Nov-‐2004

25-‐Feb-‐2005

25-‐M

ay-‐2005

25-‐Aug-‐2005

25-‐Nov-‐2005

27-‐Feb-‐2006

25-‐M

ay-‐2006

25-‐Aug-‐2006

22-‐Nov-‐2006

26-‐Feb-‐2007

25-‐M

ay-‐2007

24-‐Aug-‐2007

26-‐Nov-‐2007

25-‐Feb-‐2008

23-‐M

ay-‐2008

25-‐Aug-‐2008

25-‐Nov-‐2008

25-‐Feb-‐2009

26-‐M

ay-‐2009

25-‐Aug-‐2009

25-‐Nov-‐2009

25-‐Feb-‐2010

25-‐M

ay-‐2010

25-‐Aug-‐2010

25-‐Nov-‐2010

25-‐Feb-‐2011

25-‐M

ay-‐2011

25-‐Aug-‐2011

23-‐Nov-‐2011

24-‐Feb-‐2012

25-‐M

ay-‐2012

24-‐Aug-‐2012

26-‐Nov-‐2012

25-‐Feb-‐2013

24-‐M

ay-‐2013

26-‐Aug-‐2013

25-‐Feb-‐2014

23-‐M

ay-‐2014

25-‐Aug-‐2014

25-‐Nov-‐2014

25-‐Feb-‐2015

22-‐M

ay-‐2015

11.6% CAGR

32


Share Count Reduction (Millions)

Shares Outstanding

2009 148.6

2010 146.2

2011 142.1

2012 139.4

2013 137.5

2014 135.1

5-Year Reduction 13.5

% Reduction 9%

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Market Opportunity — Staffing Services

§  Annual global revenues for staffing industry approximately $400B USD

§  Highest number of U.S. job openings in professional/business services (BLS JOLTS report, May 2015)

§  Employment services among the 10 U.S. industries expected to add the most jobs through 2022 (BLS)

§  Long-term demographics — war for talent, retiring baby boomers

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§  Secular demand for flexible staffing; temp penetration rate at all-time high and growing

§  We work with less than 10 percent of target prospects


Market Opportunity — Protiviti

§  Solid base of recurring internal audit and financial controls demand

§  PCAOB audit inspections

§  Growing suite of consulting services –  Financial services — regulatory

risk and compliance –  Technology privacy, security and

controls

§  Protiviti/staffing blended solutions

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Thank You

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