羅致恆富 (RHI) 2013 Q4 法說會逐字稿

Hello and welcome to the Robert Half fourth quarter 2013 conference call. Our hosts for today's call are Mr. Max Messmer, Chairman and CEO of Robert Half, and Mr. Keith Waddell, Vice Chairman, President, and Chief Financial Officer. Mr. Messmer, you may begin.

Thank you, good afternoon everyone. We appreciate your joining us. As is our custom, we would like to start today's call with a reminder that comments made on the call contain predictions, estimates, and other forward-looking statements. They represent our current judgment of what the future holds, and include words such as forecast, estimate, project, expect, believe, guidance, and similar expressions. We believe these remarks to be reasonable but we remind you they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. We have described some of these risks and uncertainties in today's press release, and in our SEC filings, including our 10-Ks, 10-Qs and today's 8-K. We assume no obligation to update statements made on today's call.

Now let's discuss last year's fourth quarter. Revenues were $1.08 billion, up 5% year-over-year. Income per share was $0.49, an increase of 16% from the fourth quarter of 2012. Cash flow from operations was $98 million during the fourth quarter, and capital expenditures were $21 million. We paid a $0.16 cash dividend to shareholders on December 16th at a cost of $24 million. We also repurchased 500,000 Robert Half shares during the fourth quarter at a cost of $20 million. Approximately 8.1 million shares remain available for repurchase under our Board-approved stock repurchase plan.

We saw continued strength in our staffing operations in the fourth quarter, during which growth rates accelerated for substantially all of Robert Half's specialized staffing divisions. Our technology staffing as well as our permanent placement divisions reported the strongest staffing revenue gains compared to the year ago quarter. Protiviti also reported another excellent quarter with revenue up 18% year-over-year. This was Robert Half's 15th consecutive quarter of double-digit net income and earnings per share growth on a year-over-year basis. Return on equity was 29% for the quarter. Earnings per share of $1.83 for 2013 is the highest reported ever by the Company.

Now I will turn the call over to Keith for a more detailed review of our fourth quarter financial results.

Thank you Max. As Max mentioned, global revenues were $1.08 billion in the fourth quarter, which is an increase of 5% over the previous year on both a reported and same-day constant currency basis. Global staffing revenues increased 3% on a same-day constant currency basis, with the US growing 6%, and international staffing revenues declining by 3%. US staffing revenues were $714 million in the fourth quarter, while international staffing revenues were $228 million. We have 345 staffing locations worldwide, including 99 locations in 18 countries outside of the US.

We calculated 61.9 billing days in the fourth quarter, compared to 62 billing days in the fourth quarter of 2012. The effect of which was a 0.2% decrease in reported year-over-year staffing growth rates. The current quarter has 62.4 billing days, as compared to 62.2 days in the first quarter of 2013. Currency exchange rates had no meaningful effect on the reported fourth quarter 2013 staffing revenues.

A supplemental schedule accompanying our earnings release shows year-over-year revenue growth rates for each of our staffing lines of business on both a reported as well as a same-day constant currency basis. The schedule further divides the data between US and non-US operations. You can find the schedule in today's press release, and in the Investors center of our website. This is a non-GAAP financial measure meant to provide you with information on certain trends in our staffing operations.

Fourth quarter global revenues for Protiviti were $142 million, including $112 million in the United States, and $30 million outside of the US. Global revenues for Protiviti grew 18% year-over-year, with the US up 20%, and non-US revenues up 12%. Protiviti and its independently owned member firms serve clients through a network of 75 locations in 25 countries.

Now let's review gross margin. Fourth quarter gross margin in our temporary and consulting staffing operations was 36.5% of applicable revenues. This was a 10 basis point increase over the fourth quarter of 2012. The fourth quarters of 2013 and 2012 include workers' compensation and other payroll-related credits of $2.7 million and $2.0 million respectively. Permanent placement revenues were 9.1% of overall staffing revenues for the quarter, compared to 8.8% reported in the same period last year. Together with the higher temporary and consulting gross margin previously discussed, overall staffing gross margin expanded by 30 basis points versus one year ago to 42.3%.

Protiviti's fourth quarter gross margin was $45 million, or 31.8% of Protiviti revenues compared to $32 million, or 26.9% of Protiviti revenues a year ago. The increase is due primarily to higher staff utilization.

Turning to SG&A costs, in the fourth quarter, our staffing SG&A costs were 33.0% of staffing revenues, compared to 32.0% reported one year ago. We ended 2013 with 10,300 full-time employees in our staffing divisions, up 8% from the prior year. Fourth quarter SG&A costs for Protiviti were 20.1% of Protiviti revenues, compared to 22.4% of revenues reported this time last year.

We ended 2013 with 3,100 full-time Protiviti employees and contractors, up 7% from the prior year. Fourth quarter operating income from our staffing divisions was $87 million, or 9.3% of staffing revenues. Temporary and consulting divisions reported $75 million in operating income for the quarter, or 8.7% of applicable revenues.

Fourth quarter operating income for our permanent placement division was $12 million, or 14.7% of applicable revenues. Protiviti's operating income was $17 million in the fourth quarter, or 11.7% of revenues, compared to $5 million in the fourth quarter a year ago, or 4.5% of revenues. Accounts receivable were $552 million at the end of the fourth quarter, with implied days sales outstanding of 46.3 days, compared to 45.1 days at the end of the fourth quarter of 2012.

Now let's turn to guidance for the first quarter of 2014. We saw the following trends in the fourth quarter, and so far in January. In the US, year-over-year growth rates for our temporary and consulting divisions accelerated in October, accelerated more in November, and slowed modestly in December. Also in the US, year-over-year growth rates for our permanent placement divisions accelerated in October, then slowed in November and December. Outside of the US, year-over-year temporary and consulting staffing growth rates, while still negative, improved consistently throughout the quarter. Permanent placement growth rates slowed in October, but improved in November and again in December.

For the first two full weeks of January, revenues for our temporary and consulting operations were up 2% on a same-day constant currency basis compared to the same period last year, with the US temporary and consulting revenues up 4%, and non-US temporary and consulting revenues down 5%. For the first full three weeks of January, permanent placement revenues were up 4% on a same-day constant currency basis, compared to the same period last year, with US perm revenues up 4%, and non-US perm revenues also up 4%. We remind you, however, it is difficult to read a lot into these trends, given the short time periods they represent.

Taking this information into account, we offer the following first quarter guidance. Revenues, $1.05 billion to $1.1 billion, income per share, $0.40 to $0.45. Please note our estimated first quarter income tax rate increases to 39%, up from 36% in the fourth quarter of 2013. This is primarily due to fewer available, unused foreign tax benefits. The higher tax rate lowered our first quarter guidance by approximately $0.02 per share. We limit our guidance to one quarter. All estimates we provide on this call are subject to the risks mentioned in today's press release, and in our SEC filings.

Now I will turn it back over to Max.

Thank you Keith. Our professional staffing units and Protiviti finished the year strongly, with US operations leading the way. We saw improving year-over-year revenue trends in all staffing lines of business, and most notably in our Protiviti subsidiary. Protiviti had an excellent year, marked by demand in its internal audit technology consulting and financial services advisory practice areas among others. We also were pleased with the on-going collaboration between our staffing divisions and Protiviti on joint business opportunities.

We see encouraging economic signs and positive trends in our markets right now. The United States unemployment rate is at a five-year low, and the number of temporary workers as a percentage of total US employment is at an all-time high. We believe demand for flexible staffing has momentum far beyond these post-recession years. More companies are benefiting from variable cost labor and as a result, are including skilled temporary professionals in their human resources mix. We see stable to improving trends outside of the United States as well. The difficult economic climate in Europe has affected staffing demand for a number of quarters. Economic data in the Euro Zone began improving in the second quarter of 2013, and the UK staffing market appears to be returning to growth. We feel our non-US staffing operations are well-positioned to benefit in a stronger economic climate.

As we head into 2014, we see other encouraging signs. Small and mid-size businesses are hiring. This is a key market segment for Robert Half. Companies of this size often lack their own human resources department and, as a result, they value our personalized consultative approach. Small and mid-size businesses are keenly aware our fees are not expensive when compared to the cost of hiring the wrong person. The regulatory and compliance space is one area where we are seeing a greater need for skilled finance and information technology talent. Financial services regulations such as Dodd-Frank are creating demand by companies for compliance expertise.

Likewise, US healthcare reform and consumer protection regulations are fueling demand for our services. The global regulatory environment is creating demand for both Protiviti and staffing services. We also see upside in our technology staffing business. The push by companies to implement new technologies is driving new business for us, particularly among small and mid-sized clients. These businesses are investing in customized software, IT security, robust websites, and social media. In addition, technology-driven marketing strategies and e-Discovery are catalysts for our creative staffing business and for Robert Half Legal.

At this time, we will be happy to answer questions. We would ask you please limit yourselves to one question as usual, and a single follow-up as needed. If time permits, we will certainly try to return to you later in the call if you have additional questions. Thank you.

(Operator Instructions). We will pause for just a moment. Our first question comes from the line of Mark Marcon from Robert W. Baird. Please go ahead.

Good afternoon, and congratulations on the strong year. I heard from others that everybody got kind of a blurred take from your guidance, Keith. Whatever audio you have fuzzed up. Can you just repeat the revenue guidance?

Sure. It is $1.05 billion to $1.1 billion.

Was that clearer, Mark?

That was clear. Thank you. With regards to RH technology, you are clearly seeing really terrific acceleration there. I am wondering if the SG&A ramp is really tied into in particular RH technology, and are you going to continue to overindex your investments there, in light of the good results, or is there anything else that is going on with SG&A? on the temp side?

So SG&A certainly was higher this quarter than it would typically be. We talked a little last quarter that not only have we invested in head count in Robert Half Technology, which is overindexed, to use your term. But we also began adding more broadly to our other divisions as well. We felt like, at the time, that things were getting more positive. The environment was getting more positive. So we began to add to head count in the third quarter. We continue to add to head count throughout the third quarter and into the early part of the fourth quarter.

As we disclosed in our earlier remarks, we did add 8% to our overall head count for the year, which is significantly faster than our revenues grew during the year. So in short, we were trying to get ahead of these positive trends. We clearly hired earlier than the revenues would otherwise dictated, but frankly, the acceleration we saw in the fourth quarter, if anything, confirmed our belief that it was a good time to add to head count broadly, not just limited to Robert Half Technology. As you then roll that into the first quarter, since most of the hiring took place toward the back end of the third quarter and the front end of the fourth quarter, there is not much extra SG&A, if you will, that rolls into the first quarter. So our assumption would be that as a percent of revenue, that the first quarter, given the revenue guidance we gave, the first quarter SG&A percentage shouldn't be heavier than the fourth quarter, and if anything, will tick down a little bit.

Great. Switching gears over to Protiviti, can you just give a little more color with regards to the areas that you are seeing the strongest level of demand? Obviously that has been terrific. Looks like you may have also taken pricing up given the sequential trends in gross profit relative to revenue.

Protiviti did have an excellent quarter. The prior quarter areas of strength continued. Financial services, risk and compliance, IT security, continuity, controls, et cetera. The big upside, relative to our own forecast was in the internal audit area, which had a huge fourth quarter. We are finding that as the PCAOB routinely performs its inspection of the Big Four and their audits, what they are finding is that more documentation and more testing is needed of internal controls. That clearly trickled down to Protiviti. It saw a nice spike in its internal audit practice pretty much across the board and accounted for a lot of the upside in the fourth quarter.

Great. Thank you.

Your next question comes from the line of Andrew Steinerman of JPMorgan. Your line is open.

Hi, there. Keith, could you start by going over what is the implied constant currency same day revenue growth in the first quarter guidance? And then my question around that, is how did you take into account a couple hundred basis point lift that we will get as we move through the first quarter as we anniversary that unusual January 2013 project end?

Okay. If you look at our guidance, at the midpoint, we are showing revenues growing to a little over 5%. So a 200 basis point acceleration versus the fourth quarter just ended. As you correctly stated, we should get a lift of 200 basis points from anniversarying the mortgage look-back project. Beyond that, because of the slow start that we had, which was largely weather-impacted, and as you know, we rarely invoke weather, but when we have had major offices lose two and three complete business days due to weather, it clearly impacted our start out of the gate this quarter. We were therefore more conservative for the full quarter, given that start. But overall, the midpoint of our guidance assumes a 200 basis point acceleration globally on year-over-year growth rates.

Perfect. Thank you.

Your next question comes from the line of Tim McHugh of William Blair. Your line is open.

Thanks. Just to follow up on the SG&A. It sounds like you kind of slowed down the pace of additional hiring as you got early into the fourth quarter. What is your thought process as we move through the year? Is there a lot of capacity there? I guess that you want to wait and see how that ramps up? Or would you even, do you back on that if you don't see it? Where do we sit in terms of additional head count and expansion?

We felt like we added a lot of capacity to staffing across the board in 2013, given the revenue trends, and we are happy about that. For the next quarter or two, we believe, given the capacity we have added in 2013, we can take it easy on the head count additions, and lever the investments that we made. It comes to later in the second quarter and into the third if the revenue trends continue, as we have seen recently, that we would again dial the head count up.

But over the course of the year, you should see more normal relationships between head count and revenues. Should the trend turn around on us, as we have proven we will do many times in the past, we would reverse some of that investment if market conditions dictate it. That said, I will tell you, having spoken to our people not only in staffing but in Protiviti, frankly, they are as optimistic, they are as positive as they have been in a long, long time.

Okay. And then Protiviti, it seems like you saw the international piece pick up here. I know you have mentioned internal audit. But I guess is that piece of Protiviti starting to kick in like you have seen in the US, or is it too early to say that?

So international Protiviti, we had a very good year in Europe with international Protiviti, with the revenue growth rates. I am happy to report that Europe Protiviti was productive not only in the fourth quarter, it was profitable for the full year, which was a huge improvement from where it had been in the past. Our profitability challenge remains in Asia, and we are working hard to diversify their revenue sources to rationalize their cost structure and to improve our operating margins there. But I would say internationally in staffing, we also saw improvement during the quarter.

If you take a quick tour of the world, in the UK, the fourth quarter got more positive year-over-year. The outlook is even more positive for the first quarter. Belgium was less negative. The outlook is we might even turn positive in the first quarter. Germany was slightly negative in the fourth quarter. The thinking is we might actually go positive in the first quarter there. France was less negative. The outlook would be to get even less negative again. Australia is the same, less negative in the quarter. Outlook is for less negative again, and Canada was more negative, slightly, and the outlook for that stays about the same. So when you put all of that together in staffing, while we might not get to even year-over-year in revenues, we think we can get close in the coming first quarter, which is a nice improvement and a continuation of the trend we have seen for the last two or three quarters.

Okay, great. That is helpful. Thanks.

Your next question comes from the line of Sara Gubins of Bank of America. Your line is open.

Thank you. Could you give us an update on pricing trends and bill pay spreads?

Pricing. It was pretty consistent. I think we were up 1.7% year-over-year. Pricing in the US actually got a little better quarter on quarter. Pricing non-US declined a little bit quarter on quarter. Pay bill spreads were pretty much consistent between the third and fourth quarter. The spike you saw in gross margin was almost entirely attributed to the workers' compensation accrual adjustment pursuant to the outside actuarial review, and we broke that out for you. It was $2.7 million pretax.

Great. And then two other quick questions. The first is Keith, could you give us the number of days for the rest of the year? And then second, Max, in your comments, you mentioned healthcare reform as being one driver. I am wondering if your clients are really focusing on that yet, and how are those discussions going? Thanks.

Okay. As to the number of days, let me just give you by quarter how we have calculated 2014. So for quarter two, 63.2. For quarter three, 64.2. For quarter four, 61.7. Full year, 251.5 compares to 251.6 a year ago. As to healthcare reform, we are not seeing much in our small business clientele in trying to stay below 50 the way we have talked for the future. We are seeing some pockets of strength with both healthcare providers and with insurance companies in their customer service functions, primarily with OfficeTeam as they deal with the transition to Obamacare. So a different kind of demand than we have talked about in the past. But it did, for OfficeTeam, move the needle a little bit.

Thank you.

Your next question comes from the line of Paul Ginocchio of Deutsche Bank. Please go ahead.

Thank you. Keith, I think you mentioned a quarter or two ago, it was 300 basis points for mortgage, and now it is sort of 200 points. Were the 100 basis points of loss from the weather? Is that the difference? Second, can you give us an update on the drag for mortgage processing? Is it getting worse, or the same? Thank you.

I am sorry but we only heard the last few words of your question. There must have been a technical problem. Would you mind repeating that, please?

Sure. I was asking about two things. The mortgage processing, can we get an update? Is that more of a drag, less of a drag than it has been in the past couple of quarters? I thought that the cycling of the foreclosure work was 300 basis points of acceleration. But it seems like it is now 200 basis points. Is the difference the weather impact year-to-date? Thanks.

For the foreclosure look back, the 300 basis points are from Accountemps and Management Resources. That has an impact of 200 basis points for all divisions combined. So that is how the 300 and the 200 relate. As to the impact of mortgage refinancing, mortgage origination, unrelated to the look back project, it has been pretty stable the last couple of quarters. And the fourth quarter, frankly, didn't look much different than the third quarter.

Thank you.

Your next question comes from the line of Jeff Silber of BMO Capital Markets. Please go ahead.

Thank you. As to Protiviti,I know you mentioned that head count for both employers and contractors was up about 7%. I am not sure if you are willing to talk about this. I was wondering, did you have this for the year, was it added towards the end? I am curious how it is trending currently.

Protiviti's head count was added pretty consistently over the course of the year. And so maybe we should talk a little about it, and a little about Protiviti guidance into the first quarter, generally. So Protiviti has tremendous momentum going into the first quarter. As we have learned from many years, particularly in internal audit, seasonally that declines in the first quarter. And our expectation would be that on a quarter on quarter sequential basis, revenues would be down somewhere in the 8% to 9%. That said, it still puts revenues up year-over-year on a double-digit basis.

From a Protiviti operating income standpoint, again year on year, the expectation for the first quarter will be very strong, up 80% to 90%. But sequentially, that is going to be down 50% or 60%. So when you do your modeling, let's not forget that seasonally, Protiviti declines as internal audit work gets crowded out by external audit work in the first quarter. And given Protiviti's contribution to our overall profitability, that seasonal decline has a much larger impact than it has for several years.

Okay. Great. That was helpful. Couple of numbers questions for 2014. What you are budgeting for capital expenditures, and what tax rate we should use for the rest of the year?

Okay. Cap Ex, our forecast is $60 million to $65 million, which is up a little bit from 2013. But 2013 was actually a little below what we had forecast for 2013. And importantly, the tax rate we are looking at is 39%, which is up 200 to 300 basis points from 2013. We did some restructuring in late 2012. That allowed us to use tax credits in 2013. Those have pretty much been exhausted so our tax rate for 2014 returns to a more traditional level, and that more traditional level is closer to 39%, so again, when you do your comparisons, a year ago between quarter four and quarter one, the tax rate went down. This year, between quarter four and quarter one, the tax rate is going up.

Okay, great. Thanks so much.

Your next question comes from the line of Kevin McVeigh with Macquarie. Your line is open.

Keith, I think you just answered my question but I wanted to just clarify. It looks like the revenue guide is similar to basically the same as Q4. The EPS, $0.02 of it is from higher tax. The incremental, $0.02, is that just lower contribution from Protiviti, or how should we think about that?

It is precisely that mix issue. Protiviti's seasonality provides it on a sequential basis. Their operating income goes down. But notwithstanding that, year on year, their operating income is up between 80% to 90%. It will be a hell of a quarter, but measured against their blowout quarter in the fourth quarter, it goes down somewhat for very traditional, very understandable, seasonal reasons.

Understood. I know you typically don't talk weather. If it is two to three days, any sense of what the revenue impact in terms of dollar amount would be, just as we are thinking about the Q1?

Sure. So our US revenue per day is about $11 million. And we are not talking every office losing two or three days. We are talking about primarily east of Chicago. But we have had major offices lose two and three full days, and even the Southeast yesterday was impacted. So it is very hard to kind of quantify putting all of those together precisely what the impact is. But when one billing day, one equivalent billing day for the whole country is $11 million, it impacts your revenues quickly.

Sure. Okay. Thanks so much.

Your next question comes from the line of Gary Bisbee of RBC Capital Markets. Please go ahead.

Hi, good afternoon. The first question is on Protiviti, since you have had, I understand the internal audit demand growth in the financial compliance area and technology area. Are those seasonal as well? Or is that more evenly spread? I am wondering can the seasonality of the business be reduced if those continue to be strong demand drivers over time?

You are precisely correct. There are not the seasonalities in financial services risk and compliance and IT consulting that there are in internal audit. Over time, as they become a larger portion of the total, there will be less seasonality into the first quarter. That is it. A lot of the outperformance during the fourth quarter was in fact internal audit. And it is that piece that is the most seasonal. And therefore, when we are looking sequentially, there is a larger impact than what we have seen in the last few years. But it is a good thing.

Internal audit did really well in the fourth quarter. They had an extremely good quarter. We have talked about Protiviti getting to double-digit operating margins forever. Well, guess what? We were solidly double-digit in this fourth quarter, and we still had some drag from Asia outside of the US. So we are very pleased with Protiviti's fourth quarter. We are very pleased with their profitability but there is seasonality in the business which impacts our guidance for the first quarter.

But just to emphasize your comments on internal audit, it is very much annuity-like in large part. Obviously we like that.

Yes, I totally understand that, it makes sense. I am just wondering if it might shift over time. It sounds like it could if those practices do well. The follow-up question, just on the temp segment, SG&A in the temp segment, operating margins. Despite the workers' comp credit, the margin went down a little bit sequentially, and how do we think about that moving forward? Do you think that the slowing of headcount growth versus this year should allow that to start moving back up or was there anything else going on? Thank you.

Frankly, it is all about head count. And field compensation of recruiters and salespeople. And as we got ahead of the revenue curve in the second half of 2013, it directly impacts temp operating margins.

Ladies and gentlemen, we are experiencing some technical difficulties. Please stand by. Your next question comes from the line of Hamzah Mazari, Credit Suisse North America. Please go ahead.

Good afternoon, thank you. I was wondering if you could give more color on what you are seeing in the Accountemps business? It seems that business has been pretty stable in terms of your dollar revenue per quarter. Any color there and maybe some more color on Canada? That business you said got more negative but has stabilized. Thank you.

Accountemps we are very optimistic about. We just anniversaried the foreclosure look back which for that division alone adds 300 basis points. I said earlier as we have spoken with our people internally, they couldn't be more optimistic, and that includes Accountemps. So we feel good about the momentum going into 2014 as it relates to Accountemps. As to Canada, the market has been a bit softer there. We have had some internal management changes over the last six to nine months, impacting 3% to 4% of revenue overall.

Sorry. I think you guys just cut out again.

Oh, I see. So I said as to Accountemps, we remain very bullish. Our people are very pleased with the momentum we have going into the year with Accountemps, including the anniversarying of the foreclosure look back business a year ago. As to Canada, the market there has been somewhat weaker of late than is the case in the United States. And to add to that, we have had some management changes that we feel good about, and will produce even better results as we move forward.

Great. Thank you.

Your next question comes from the line of Tobey Sommer of SunTrust. Please go ahead.

Thank you. I wanted to ask about what you feel like your ability is to harness pricing power if your businesses continue to accelerate and we get a little bit of a macro tailwind? It is a medium and longer term question.

Pricing history would say as that as the macro gets better, there is pressure on wage rates. We have to pay our temporary employees more. As we pay our temporary employees more, our clients understand that the market firms from a candidate point of view, and then that gives us an opportunity to not only pass through the higher wage rate, but to get a little more margin on it as well. So traditionally, we do quite well in improving macro environments from a pricing standpoint, and we certainly hope to do the same again. In the US this quarter, our pricing did improve a little. But that got offset by a little bit of decline outside of the US.

My follow-up question is the 39% tax rate the right rate to think about longer term, beyond 2014?

If you look back for a few years, you will see 39% or 40%, and in that range is more of a typical income tax rate for us. It was low for 2013 because of the utilization of the foreign tax credits as we talked about earlier.

Thank you.

(Operator Instructions). Your next question comes from the line of Randy Reece of Avondale Partners. Please go ahead.

Good afternoon. Is there any difference in your interest, willingness, eagerness, to invest in permanent placement capacity versus temporary and contract staffing recruiting and services on an incremental basis right now?

Well, I would say that we have relative to recorded revenues, we have invested more in the temp business over the course of 2013. That said, we have also overindexed to use a prior term, the hiring we have done in the perm business. Our temp business is about 90% of prior peak. Our perm business is about 75% of prior peak. We actually believe we have got a good shot at exceeding those peaks. So given that, we are not bashful about adding to head count in either area.

I was surprised at the pickup in growth in Robert Half Technology, especially given the difference in billing days. Is there any difference between US and international growth there, and to what do you attribute the acceleration?

Well, as to US versus international, we have a much smaller exposure internationally in tech than we do most of our other divisions. It is limited primarily at this moment to Germany. So tech non-US doesn't move the needle overall. As to the acceleration, we have been making investments in tech internally now for several quarters. We get more traction as our people get more experience, more up to speed, and become better recruiters. It is a very candidate-driven market. We typically have more orders than we do candidates, so it is all about recruiting. As our newer staff become better recruiters, the growth rate reflects that.

Thank you very much.

Today's last question comes from Andrew Steinerman with JPMorgan. Mr. Steinerman, you may go ahead.

Thanks. Just one question on typical seasonality for the first quarter, you were kind enough to remind us about Protiviti. I think for the rest of the staffing business, there are some headwinds and tailwinds as you go into the first quarter. What does your guidance anticipate in terms of seasonal trends for the staffing business, the non-Protiviti business?

It is all baked into the 5% year-over-year midpoint growth rate. As we look at the divisions, OfficeTeam in the fourth quarter benefits by holiday-related customer service demand which falls off in the first quarter. So it typically has the largest headwind in the first quarter. The tech business and Management Resources which are project-based, had many projects in December. And you have a little more difficult time getting them restarted in January. That typically means there is a little seasonal softness in tech and Management Resources. And Accountemps, typically does just a touch better. But when you put them all together, there isn't a huge staffing seasonal impact.

Perfect. Thank you.

That was our last question. We appreciate your joining us on today's call. Thank you.

This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the Investor center of Robert Half's website at www.roberthalf.com. You can also dial the conference call replay, dial in details and the conference ID are contained in the Company's press release issued earlier today. Thank you.