Robert Half Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; it does not provide a clear standalone Q4 income statement or cash-flow summary. Robert Half provides contract and permanent-placement talent solutions and business consulting through Protiviti.
Financial performance
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Service revenue | $7.238 billion | $6.461 billion |
| Gross margin dollars / percentage of revenue | $3.094 billion / 42.7% | $2.696 billion / 41.7% |
| Income before income taxes / margin | $897.0 million / 12.4% | $803.8 million / 12.4% |
| Net income | $657.9 million | $598.6 million |
| Diluted earnings per share | $6.03 | $5.36 |
| Operating cash flow | $683.8 million | $603.1 million |
| Cash and cash equivalents at year-end | $658.6 million | $619.0 million |
- Revenue rose 12.0%; net income rose 9.9%; diluted EPS rose 12.5%.
- Contract talent solutions revenue was $4.533 billion, up 12.2%. Permanent placement revenue was $725.2 million, up 27.2%. Protiviti revenue was $1.980 billion, up 6.9%.
- Contract talent growth reflected higher average bill rates (+9.5%) and hours worked (+2.2%). Permanent placement growth reflected more placements (+18.6%) and higher average fees (+8.6%). Protiviti bill rates increased 16.5%, while billable hours declined 9.6%.
- Reported gross margin improved to 42.7% from 41.7%. Reported SG&A was $2.117 billion, or 29.3% of revenue, versus $1.951 billion, or 30.2%. Combined segment income, a non-GAAP measure, increased to $890.6 million from $805.8 million, while its margin declined to 12.3% from 12.5%.
- Operating cash flow increased to $683.8 million; working-capital changes used $228 million. Investing activities used $116.6 million and financing activities used $509.2 million.
- Net accounts receivable was $1.018 billion. Total liabilities were $1.396 billion, including operating lease liabilities; the company reported no borrowings under its $100 million revolving credit facility at year-end. The facility matures in May 2024.
Changes, outlook and material items
- All three major practice areas reported record annual revenue. The company unified its Robert Half brands and renamed its reporting segments as contract talent solutions, permanent placement talent solutions, and Protiviti.
- Management said it was optimistic about 2023, citing continued client hiring and long-term opportunities in higher-skill talent services. It also noted clients were hiring at a more measured pace and sales cycles were lengthening. No specific 2023 revenue or earnings guidance is provided.
- Management expects 2023 capital expenditures of $100 million to $120 million, including $65 million to $75 million for software and technology infrastructure.
- The stronger U.S. dollar reduced 2022 reported revenue by $139.1 million (2.2%) and net income by $6.5 million (1.1%). Management said January 2023 exchange rates, if sustained, would likely have an immaterial effect on reported net income.
- Losses on investments held in employee deferred-compensation trusts were $86.1 million in 2022, compared with $61.1 million of income in 2021. The related change in employee obligations generally offsets the trust investment effect; the filing says these items have no net cost to the company.
- Cash dividends paid were $189.3 million and share repurchases were $319.9 million in 2022. A $0.48-per-share quarterly dividend was announced for March 2023, and an additional 10 million shares were authorized for repurchase in February 2023.
- Two California putative class actions allege wage-and-hour violations, including interview-time compensation and recruiter classification claims. Outcomes and potential losses could not be estimated, and no amounts were accrued for these cases. The company says it intends to defend them.
Key risks and contingencies
- Demand is sensitive to economic and labor-market conditions; talent shortages, client caution, competition, and short-duration engagements limit revenue visibility.
- Other principal risks include recruiting and retaining skilled employees, foreign-exchange movements, regulation and worker classification, cybersecurity and data privacy, and potential liability arising from placed personnel or consulting work.
- Management cited uncertainty around the sustainability of pandemic-related public-sector projects and demand for regulatory-compliance services. The filing also discusses geopolitical, climate, and other disruption risks.
- The independent auditor gave an unqualified opinion on the financial statements and internal control over financial reporting. Income taxes were identified as a critical audit matter because of judgment involved in tax provisions and deferred-tax-asset realizability.
Investor verification priorities
- Review segment-level growth and profitability, particularly Protiviti’s lower billable hours and lower combined segment margin.
- Assess whether measured hiring, longer sales cycles, and macroeconomic conditions affect 2023 demand and margins.
- Reconcile reported and adjusted non-GAAP measures, including deferred-compensation trust effects and foreign-exchange impacts.
- Monitor receivables, working-capital cash use, planned technology investment, and the timing and scale of repurchases and dividends.
- Track developments in the California employment lawsuits, the letter-of-credit facility renewal, and the May 2024 revolving-credit-facility maturity.