羅致恆富 (RHI) 2017 Q2 法說會逐字稿

Hello, and welcome to the Robert Half Second Quarter 2017 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.

Good afternoon, everyone, and thank you for joining us.

Before we begin, I want to remind you there are comments on the call today that contain predictions, estimates and other forward-looking statements. These statements represent our current judgment of what the future holds and include words such as forecast, estimate, project, expect, believe, guidance and similar such expressions. We believe these remarks to be reasonable, however, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

Some of these risks and uncertainties are described 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 the statements made on today's call.

For your convenience, our prepared remarks also are available on our website at roberthalf.com. From the About Us tab, go to our Investor Center, where you will find the Quarterly Conference Calls link.

Let's review our second quarter financial results. Revenues were $1.308 billion, down 1% on a same-day constant-currency basis and down 3% on a reported basis from the second quarter of 2016. Income per share was $0.64. Both revenues and EPS were slightly above the midpoint of our previous guidance for this quarter. [Year-to-date] cash flow from operations was $253 million. Capital expenditures were $11 million.

During the quarter, we returned $31 million to our stockholders through a $0.24 per share cash dividend. We also repurchased 1 million Robert Half shares for $47 million during the quarter. We have 4.2 million shares available for repurchase under our board-approved stock repurchase plan.

Second quarter revenues were strongest internationally, but we were also pleased with the quarter-over-quarter sequential performance of our domestic staffing operations. Every U.S. staffing line of business reported higher sequential revenue growth this year than the same period a year ago. Sequential revenue growth for overall U.S. staffing operations was 2% in the second quarter versus a sequential decline of 1% a year ago. Robert Half's return on invested capital was 29% during the second quarter.

I'll turn the call over to Keith now for a closer look at our results.

As Max noted, global revenues were $1.308 billion in the second quarter. This is down 3% from a year ago on a reported basis and down 1% on a same-day constant-currency basis.

Revenues for our staffing business were down 1% year-over-year on a same-day, constant-currency basis. U.S. staffing revenues were $872 million, down 3% on a same-day basis. Non-U. S. staffing revenues were $239 million, up 7% when adjusted for billing days and currency exchange rates. We have 325 staffing locations worldwide, including 83 locations in 17 countries outside the United States.

The second quarter had 63.3 billing days compared to 63.9 days in the second quarter of 2016. The current third quarter has 63.1 billing days, compared to 64.1 days in the third quarter of last year.

Accompanying our earnings release is a supplemental schedule showing year-over-year revenue growth rates on both a reported and same-day, constant-currency basis. This data is further broken out by U.S. and non-U. S. operations. This is a non-GAAP financial measure that offers insight into certain revenue trends in our operations. The effect of currency exchange rates decreased our reported year-over-year staffing revenues by $9 million in the second quarter, which decreased year-over-year reported staffing growth rates by 0.7%.

Global revenues for Protiviti were $197 million in the second quarter, with $164 million coming from revenues in the United States and $33 million from revenues outside the United States. Protiviti revenues were up 1% year-over-year on a same-day constant-currency basis.

U.S. Protiviti revenues were up 2% from the prior year on a same-day basis, and non-U. S. revenues were down 1%. Exchange rates had the effect of decreasing year-over-year Protiviti revenues by $1 million in the second quarter and decreasing the year-over-year reported growth rate by 0.7%. Protiviti and its independently owned member firms serve clients through a network of 75 locations in 25 countries.

Now let's turn to gross margin. Gross margin in our temporary and consulting staffing operations in the second quarter was 37.4% of applicable revenues. This is a 20 basis-point decline from the same period 1 year ago, primarily due to the absence of prior year workers' compensation credits of $1.4 million and slightly lower temp-to-hire conversions.

Revenues for our permanent placement operations were 10.1% of consolidated staffing revenues in the second quarter, which is up compared to last year's 9.9%. Together with temporary and consulting gross margin, overall staffing gross margin fell 10 basis points versus a year ago to 43.7%. Second quarter gross margin for Protiviti was $53 million or 26.7% of Protiviti revenues. A year ago, Protiviti gross margin was $56 million or 28.1% of Protiviti revenues.

In the second quarter, staffing SG&A costs were 33.5% of staffing revenues versus 32.3% in the second quarter of 2016. Second quarter SG&A costs for Protiviti were 18.3% of Protiviti revenues compared to 19.1% of Protiviti revenues in the year-ago period.

Operating income from our staffing division was $114 million in the second quarter, down 13% from the prior year. Operating margin was 10.3%. Our temporary and consulting staffing divisions reported $93 million in operating income. This was a decrease of 13% from 2016 and resulted in an operating margin of 9.3%. Second quarter operating income for our permanent placement division was $21 million, down 14% from the prior year and producing an operating margin of 18.7%. Operating profit for Protiviti was $17 million in the second quarter, a decrease of 7% from 2016, producing an operating margin of 8.4%.

At the end of the second quarter, accounts receivable were $708 million. Implied days sales outstanding, DSO, was 49.3 days.

Before we move to third quarter guidance, let's review the monthly revenue trends we saw in the second quarter and so far in July, all adjusted for currency.

Our temporary and consulting staffing divisions exited the second quarter with June revenues down 2% versus the prior year compared to a 1.6% decline for the full quarter. Revenue growth for the first 2 weeks of July was down 2.9% compared to the prior year.

For our permanent placement operations, June revenues were up 5.4% versus last year compared to a 1.4% increase reported for the full quarter. For the first 3 weeks in July, permanent placement revenues were up 9.8% compared to the same period last year.

This information covers trends we saw during the second quarter and in July. But as you know, we hesitate to read too much into these numbers as they represent very brief periods of time and include holiday impacts from the 4th of July.

With that said, we offer the following third quarter guidance:

Revenues: $1,305,000,000 to $1,365,000,000;

Income per share: $0.66 to $0.72.

The midpoint of our Q3 guidance implies reported revenues are down slightly or negative 0.3% on a year-over-year basis. However, revenues are up 1.1% adjusted for days and currencies (including Protiviti). EPS is down 2.5%.

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 our SEC filings. Now I'll turn the call back over to Max.

Thank you, Keith. We were encouraged by the second quarter results, particularly the continued strength in our non-U. S. staffing operations and the sequential progress of our U.S. operations.

Although GDP growth in the United States has been sluggish, the business outlook is positive. Since the start of 2017, U.S. business leaders, particularly owners of small and midsized companies, have expressed confidence in their prospects. If GDP growth improves, we believe hiring activity should not be far behind. The Federal Reserve Beige Book reported that "economic activity expanded across all 12 Federal Reserve districts in June with the pace of growth ranging from slight to moderate." Fed also reported that "employment across most of the nation maintained a modest to moderate pace of expansion."

The common thread among many of these business sentiment surveys is concern over the lack of available talent. As skill shortages become more pronounced in professional occupations, Robert Half is positioned to help companies locate and hire this hard-to-find talent. It is what we do best.

We are investing continually in technology innovation to better serve our customers, but technology has its limitations and a great many steps in the hiring process require human skill and judgment. We believe Robert Half's competitive difference is our ability to offer both innovative technology solutions and personal attention backed by our nearly 70 years of experience.

Protiviti also had a solid quarter, particularly its U.S. internal audit and risk and compliance practices. We believe Protiviti is well positioned in the marketplace.

Keith and I would be happy to answer your questions. (Operator Instructions)

(Operator Instructions) Your first question comes from Kevin McVeigh from Deutsche Bank.

Keith, I wonder if you could just help us -- I mean it seems like you've seen a nice uptick in the revenue. I think if memory serves me right, you had three quarters of literally the same revenue range. And now, we're seeing kind of an uptick in that, which you're seeing some leverage to the earnings. Any sense of some of the puts and takes, the low end versus the high end and then what tax rates implied in the EPS guidance?

Okay. First of all, the tax rate is 37.5%, which is a little lower than Q2. We're going to get some credits in the third quarter. Puts and takes on low and high end. So generally, when we're talking staffing now, tone of business, clients remain wait and see. They remain measured. Although sentiment does remain high, hiring is selective. It's methodical. We are seeing sequential demand improving slowly. Perm a little bit better than temp. Candidates have many options and must be sold on the opportunities presented. Europe remains strong. So the third quarter guidance, we focus first on sequential progress given the trends. The second quarter, June was a little softer than the first 2 months but not significantly so. There's a lot of noise in the post quarter because of the 4th. So we believe that starting in the U.S., we'll continue to have a little more sequential improvement that's dialed into the midpoint. U.S. remains strong, led by Continental Europe, particularly Germany and Belgium. We expect that would continue so that year-on-year for the first time in several quarters, adjusted for days and currency, will actually show positive revenue growth. As we talked earlier, it is one day shorter than the quarter a year ago, so there's a differential between reported and same-day. But generally speaking, the second quarter wasn't that different from the first. It was a little better, and our expectation at the midpoint of our guidance is that the third quarter gets a little better than the second quarter just reported.

That's super helpful. And then just one quick thought. Any thoughts on why the perm business has been so much stronger than temp just on a relative basis?

And that's relatively new. We've had several quarters where perm was weaker than temp. We've now had a few where it's a bit stronger than temp. The thinking is there's pent-up demand, clients have deferred hiring. And as things began looking a little better, they're now more willing to pull the trigger and catch up what they had deferred and procrastinated on. Generally speaking, we think perm and temp are highly correlated, and we would expect temp to follow perm. But it is true for the last few quarters, perm has been stronger than temp, and that continued right through the post-quarter period we just talked about.

Your next question comes from Mark Marcon from R. W. Baird.

I was wondering if you could talk a little bit about, philosophically, how you would think about investing on a go-forward basis assuming that the trends don't change materially, so maybe they're on an upward slope but it's a slower grind. In other words, when we think about the SG&A, how should we think about that and operating margin expectations, given this kind of slow-growth environment?

So on a go-forward basis, from an SG&A standpoint, you've got two things going. First of all, with Europe earlier cycle growing nicely, we're aggressively adding to headcount. In the U.S., which is slightly negative, we're continuing to pretty much hold the line such that when you put the 2 together, we've got compensation cost growing faster than revenue growth. Further, in the internal technology arena, we continue to invest heavily in our digital initiatives. Many of those are expensed rather than capitalized because they're improvements of existing solutions rather than brand new solutions. So together, you've got some negative leverage from SG&A because of the headcount, because of the technology spending. And by the way, a lot of what we've done in the past, in the recent past from a technology standpoint, has been Software-as-a-Service. So we're having to pay those license fees currently, which are expensed as well. So when you put it all together, as we said in our guidance at our midpoint, same-day constant-currency revenues are up 1% and EPS is down 2.5%. So there's some negative leverage, one to the other, but they're not totally out of balance.

No, that was very helpful. I mean what level of -- and this is obviously on the whole and it would matter depending on which segment. But what level of revenue growth would you need to get to in order to think about margins basically staying stable given the current pace?

Well, clearly -- right, I mean, low to mid-single digits would certainly get us there. And a lot of what we're talking about investment-wise is discretionary, so we can always throttle up or down. But given current conditions, given the outlook, given the -- still the possibility of regulatory reform in the United States, given all of those things, we're thinking as I described but to the extent we can get low to mid-single. And this quarter at midpoint, we're talking about 1% growth. So we're getting there. We're getting there. Things are improving. They're not getting worse. They're improving from a mix standpoint more with perm. That's higher margins, so that's helpful. So we're getting there.

Your next question comes from Andrew Steinerman with JPMorgan.

Keith, I don't remember in past second quarters you being so emphatic about saying, watch out for the timing of July 4. I definitely understand why you would say that in the second quarter, but it doesn't seem like it's your usual transcript type comments. And when I look at the temp revenues being down in July, yet your total revenue being up in the guide, I just don't quite get it. Is it that maybe after July 4, like last week, you saw an inflection positive? So is it kind of looking at the individual weeks that make you feel like we're nudging positive?

Well, the July 4, Andrew, simply put an exclamation point on it's a short period, it's two weeks. And the two weeks was inclusive of July 4, which fell on Tuesday rather than Monday a year ago. There are 1,000 theories out there about whether Tuesday's better than Monday that we don't need to go there. But the point is the post quarter we view as noise. And so just like last quarter, where we had a great March that we didn't totally roll into our guidance, this quarter, June was so-so and we didn't totally roll that into our guidance either. We've gone through the same bottom-up process discussions with all our key field people, Protiviti and staffing alike. And based on that, we've come up with the guidance that we have. But clearly, the guidance is more positive than the month of June or the start in July.

Great. And could you just make a quick comment about Protiviti in the guide?

So Protiviti, internal audit, strong, stayed strong. Companies continue to focus on strengthening their controls. The growth there has been moderating because they've had some large consulting project ends that they hadn't yet fully replaced. Those are in the technology area as well as the risk and compliance area. The international zone for Protiviti had some monster comps a year ago, if you look. And some of those projects are ending, which will have to be replaced. So net-net, our guide for Protiviti is that revenues year-on-year will be flat to slightly negative, and that's principally about replacing the large project ends. And as you know in the consulting business, you can't perfectly time the new projects versus the ends of the old projects.

Your next question comes from Tim McHugh with William Blair & Company.

I wanted to ask maybe on June, what was the feedback from the reviews you did with the field staff? Was there any difference in behavior? Or any kind of reason that you kind of gleam from those conversations?

There was nothing earth-shattering, Tim. I mean there's some give and take month-to-month. The improvement has been a bit uneven. It's not happening in a straight line. That said, notwithstanding June and notwithstanding the early July, everybody's standing by their guidance for the third quarter, where generally speaking, the United States included, things are getting a little better.

Okay. And then can you talk about the tech segment in more detail? What you're seeing there? I think a year ago, you had talked about one large customer that you kind of, I think, walked away from or something like that, if I recall it right. But I think we should be getting close to anniversarying that. So just kind of elaborate what you're seeing within that vertical.

Well, certainly there's no one large customer impact. I would say generally, we find with our middle-market companies that their tax spending has a larger discretionary element than is the case for their accounting and finance spending. In accounting and finance, you've got closes that you have to do. You've got filings that you have to do. In tech, particularly in tech support, you don't have those same deadlines. Further, there's more discretion as to when you start new projects. So generally speaking, we're finding there's more discretion in our clients' tax spending and therefore, the revenues are a bit more impacted than is the case in accounting and finance. Now that said, again looking sequentially, tech, we had growth there as well. As we talked about every single one of our lines of business, including in the U.S., did have sequential growth that would include tech. And we were encouraged by that.

Your next question comes from Jeff Silber with BMO.

It's Henry Chien calling for Jeff. Just a question on the sequential improvement in the U.S. and what's implied in the guide. Is that more a function of the environment improving? Or is there anything internal that you've done that you can point to, to drive some of that improvement?

Well, you never know for sure. We're always trying to get better internally. And the further away we get from the Salesforce conversion last August, the more that's in the rearview mirror. But generally speaking, we would observe that the environment has gotten a little better. And to me, perm is usually more economically sensitive than is temp. And it seems to be what's leading at the moment, - which bodes well for the environment.

Got it. Okay. And specifically, for Accountemps, is there anything that you're looking forward to at least within this year or next year that could spark a greater demand for accounting temp?

Well, in accounting, there's always change. So we've got rev rec change going on as we speak. You've got lease accounting, which is expected to be more process-intensive and to impact a broader number of companies then rev rec has. So we have that to look forward to. But there's always something going on in accounting. There's nothing that's going to move the needle in a major way, but change is good. And there's always change and there's change on the horizon, and those are two examples that just come to mind.

Your next question comes from Anj Singh with Credit Suisse.

This has kind of been touched upon in some of the earlier questions, but just wanted some more thoughts. Are you actually feeling the business pick up? Or is it just easier comps? I know you mentioned perm as a leading indicator, but you're implying a 2% acceleration from 2Q to 3Q midpoint but your comp is also easing by 2.5 points. So maybe as it relates to what you're assuming for your contribution from U.S. temp, how much of this is just easier comps versus actual strengthening of the business?

Well, one reason we talk sequential rather than year-on-year is because it takes the comps out of the argument. So clearly, the year-on-year comps are getting easier as you describe. But when you're looking sequentially, we're talking about the third quarter versus the second quarter just ended. So the comps are a lesser part of the story when you look sequentially. So we do think things are slowly picking up. Slowly picking up. And the comps do get easier year-on-year. And one of the reasons why year-on-year you're seeing improvement is because the comps get easier. But the other reason you're seeing year-on-year improvement is because we're growing sequentially. If you grew sequentially every quarter, you wouldn't have to worry about year-over-year. It takes care of itself.

Okay. Okay, got it. And then for my second question, realizing you guys don't really guide more than a quarter out. But in light of Protiviti margins year-to-date and what you mention with regards to your growth outlook there, how should we be thinking about what you've stated in the past that you can do sort of double-digit margins in that business on a full year basis? Is that realistic for this year? And any reason why you didn't show the typical seasonal uptick in Protiviti margins at 2Q?

So Protiviti margins, given their revenue performance, I would consider strong. And in fact, the big sequential increase for Protiviti comes in the third quarter as many companies do their annual Sarbanes-Oxley compliance work for the quarter. We do expect Protiviti operating margins for the quarter to be well into double digits. And our expectation is for the full year and long term, it's a double-digit operating margin business. We've just got some noise around replacing older, larger projects with newer projects and there are puts and takes always in that way. But we haven't, in any way, reduced our margin expectations long-term for Protiviti.

Your next question comes from Manav Patnaik with Barclays.

This is Ryan Leonard filling in for Manav. You mentioned at the beginning of the call talk about the confidence in the U.S. has improved notably since 2017. You mentioned that there's been some perm hiring as people are kind of really taking action on a pipeline that they let build up to a little bit. So I guess what does it take for that increased optimism in some of the hiring in perm to then filter into the temp side? I mean, your conversation with clients, is it -- are there supply issues? Or are they still waiting for regulatory clarity? Anything you can provide on your client conversations would be helpful.

On supply, what's interesting is, is that there's no question that supply is tight. But's what's interesting is our temp bill rates were up 2.5% this quarter on a year-over-year basis. So we've now had 4 or 5 quarters in a row where we have less wage inflation than we've had the immediately prior quarter. So what we're seeing is that our clients, they're just unwilling to pay more because they don't believe they can pass it through in what they bill their clients. So it's actually pretty unprecedented in our experience that on the one hand the labor market tightens, on the other hand wage inflation declines. So what we need to see more temp growth, we need to see clients with more activities themselves. Again, they're wait and see. When they see it, they'll do it. The transactional accounting operations positions that are a big part of Accountemps, they need more transaction volumes at our clients, which follows sentiment. So regulatory reform would definitely help. It's clearly been delayed, as everyone knows. But if you look at a chart over 10 years, you'll see perm and temp are highly correlated. Perm's getting better. We would expect temp to get better.

So I guess, to follow up on that. I mean you did say that it is unprecedented. So historically, they have been indicators, but what data are you looking at that would cause you to go out and hire a lot of recruiters saying, we think things are getting better, and we talked about the trough in 1Q. So I mean what is it that you think would indicate the underlying volume is picking up?

Well we would see weekly hours billed pick up. We then measure productivity per person internally. We would see that getting stretched. And as we saw that getting stretched, we would begin to add to headcount, which is what we're doing outside of the U.S. We're simply holding the line in the U.S.

Your next question comes from Gary Bisbee with RBC Capital Markets.

Any more margin commentary you can provide, just thinking through the guidance? Sometimes you give a little more color by segment or some of the puts and takes.

From a margin standpoint, we think our gross margins will stay flat. We did not get the workers' comp lift this quarter that we've gotten in prior quarters. To keep the gross margins where they are, they're at pretty high levels, so we're not unhappy to keep gross margins flat both year-on-year and sequentially. SG&A, as we talked about, is a bit pressured from the aggressive addition to headcount outside the U.S., coupled with holding the line in the U.S. We continue to make internal tech investments that we've talked about such that year-on-year, there is some margin compression on the staffing side. Protiviti, there's a little margin compression year-on-year. But sequentially, there's a nice improvement in the third quarter, which is seasonally their best quarter, such that when you put it all together from an operating margin standpoint, you'll see some dilution year-on-year, less than a percentage point. And sequentially, you'll see some improvement led by Protiviti's sequential lift.

Great. And then how meaningful is the incremental margin on the lost revenue from the change in number of days on EPS? I guess really what I'm getting at is, was it a meaningful impact in Q2 and will it be in Q3, the fact that you're facing down year-over-year number of billing days to EPS?

Well, clearly, it has an impact. All your fixed costs are the same, yet you cover it with less margin because of the shorter corridor. So it's impactful and it's more impactful than your average margin because your fixed costs are your fixed costs. So clearly, more days is better than fewer. And this quarter, we got one fewer than a year ago.

Your next question comes from Tobey Sommer with SunTrust.

Within perm, I was wondering if you could compare and contrast the performance within the various finance and accounting occupations that you traffic in with IT and perhaps demand in The Creative Group as well?

Well, we never break out per se the components of perm. I'd say the improvement in perm demand is broad-based, and it includes all of the segments that you talk about. But we don't specifically comment on one versus the other inside of perm.

And then growth within The Creative Group, is it comparable to the segment growth? Or somehow different?

And again, we do not break out for materiality reasons the results of The Creative Group, but it's doing fine.

So it would be on the better side?

It's doing fine.

Your next question comes from Hamzah Mazari with Macquarie Capital.

This is Kayvon filling in for Hamzah. You made some comments about the strength in the non-U. S. staffing operations. Could you maybe give us a little more color around that in terms of what you're seeing in the international staffing markets? Are there any particular countries or geographies that you see moving in and out of any cycles?

Well, the story's almost all good. We're led by Germany and Belgium on the continent. France has certainly picked up nicely. Canada doing well. U.K. flattish as Brexit impacts at least sentiment in the U.K. Australia doing well, as well. So outside the U.S., pretty much across the board with the U.K. being flat, everybody else growing nicely and Continental Europe, the best of all. And the nice part of that is we get our best margins, non-U. S. margins, in Germany and Belgium, and they're two of the strongest markets that we have. Further, you've got the euro appreciating relative to the dollar and so that's even more icing.

That's very helpful. And maybe a follow-up to that is on the regulatory side, are there any changes in the international space that either -- you're on the lookout for a positive or negative impact?

Well, I know there's discussion in France out some time in the distance about changes in their payroll laws, labor laws. France isn't that big a deal to us one way or the other, so I don't totally understand what's being proposed. But from the standpoint of its impact to Robert Half, I think would be de minimis. There's nothing else that moves the needle. I mean there are always some changes back and forth. There's some anti-money laundering regs coming non-U. S. I mean there are some things happening but nothing that moves the needle in a major way.

Your last question comes from David Silver with Morningstar.

I would like to just maybe go back to the question about the differential performance offshore as opposed to the U.S. And I think a couple of your peers have also noted stronger results in Europe in particular. And I hope I'm not splitting hairs, but would you say there's something just basically economics-driven to the differential performance here? Or would you say it's something, I don't know, either regulatory or cultural? In other words typical large employers, let's say, in Germany or Belgium are structurally more likely to utilize the services of a staffing company relative to those in the U.S.? In other words, reduce -- keep their full-time employment levels down or prefer to use Robert Half as a conduit, let's say, between the employee and the employer?

Well, we would observe that the cultural differences haven't changed much of late. And that the disparate results favoring non-U. S. are more macro economic than anything else. All of the cultural differences you noted are true, but they haven't really changed that much in the last few quarters. But what has changed is that the macro, particularly Continental Europe, is clearly improving. And staffing is participating. That's true with Robert Half. That's true in the industry generally.

Okay. And just one last question. Big picture. It's been kind of a turbulent legislative session in Washington this year. And a number of companies had hopes for economic legislation or economic incentives or reforms. From Robert Half's perspective, are there one or two key legislative proposals or legislative issues where a change in the momentum in Washington would make a difference in the perspective of your customers in terms of pulling the trigger on more of that backlog or of that potential hiring pool that you've cited?

Well, I think if you surveyed our clients, and there are many surveys out there, they would tell you two things. They would tell you tax reform, and they would tell you regulatory reform. And regulatory reform has happened to some degree. Tax reform has not, but maybe still hold out hope that it will. As I said earlier, the sentiment remains high amongst our middle-market client base, but they're wait-and-see type companies and they're still waiting to see. That said, things are getting a little bit better. They've progressively gotten a little bit better over the course of the year, and we expect that momentum to carry over into the third quarter. And it's that foundation that we use to give our guidance for the third quarter, which says things get a little bit better.

I'll add a comment to that, and that is that as a full taxpayer with no debt, of course, Robert Half itself would benefit greatly from tax reform as would our small to midsized clients. On your first point, I agree with Keith. At the end of the day, we think we're very well positioned to the extent that GDP growth in the United States picks up, you should see us pick up. Nothing would help us and our clients more than a pickup in GDP right now.

Thank you. I think that was our last question. We appreciate everyone being with us on the call today.

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.