asgn-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35636

ASGN Incorporated

(Exact name of registrant as specified in its charter)

Delaware

95-4023433

(State of Incorporation)

(I.R.S. Employer Identification No.)

4400 Cox Road, Suite 110

Glen Allen, Virginia 23060

(Address, including zip code, of Principal Executive Offices)

(888) 482-8068

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock

ASGN

NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

At October 25, 2024, the total number of outstanding shares of the Common Stock of ASGN Incorporated (the "Company") ($0.01 par value) was $44.2 million.

ASGN INCORPORATED AND SUBSIDIARIES

INDEX


PART I — FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (Unaudited)			3

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Operations and Comprehensive Income			4

Condensed Consolidated Statements of Stockholders’ Equity			5

Condensed Consolidated Statements of Cash Flows			6

Notes to Condensed Consolidated Financial Statements			7

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			11

Item 3 — Quantitative and Qualitative Disclosures about Market Risks			15

Item 4 — Controls and Procedures			15

PART II — OTHER INFORMATION

Item 1 — Legal Proceedings			16

Item 1A — Risk Factors			16

Item 2 — Unregistered Sales of Securities and Use of Proceeds			16

Item 3 — Defaults Upon Senior Securities			16

Item 4 — Mine Safety Disclosures			16

Item 5 — Other Information			16

Item 6 — Exhibits			17

Signature			18

PART I — FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (Unaudited)

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except share data)


	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	166.6	$	175.9
Accounts receivable, net	686.4		741.5
Prepaid expenses and income taxes	36.0		36.8
Other current assets	18.3		19.1
Total current assets	907.3		973.3
Property and equipment, net	79.2		81.4
Operating lease right-of-use assets	61.8		64.2
Identifiable intangible assets, net	453.7		497.9
Goodwill	1,894.3		1,894.1
Other non-current assets	35.4		33.7
Total assets	$	3,431.7	$	3,544.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25.8	$	34.0
Accrued payroll	236.6		236.5
Operating lease liabilities	20.3		19.5

Other current liabilities	120.9		104.1
Total current liabilities	403.6		394.1
Long-term debt	1,034.4		1,036.6
Operating lease liabilities	46.0		49.1
Deferred income tax liabilities	156.1		156.0
Other long-term liabilities	17.2		16.7
Total liabilities	1,657.3		1,652.5
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock, $0.01 par value; 1.0 million shares authorized; no shares issued	—		—
Common stock, $0.01 par value; 75.0 million shares authorized; 44.2 million and 46.7 million shares outstanding at September 30, 2024, and December 31, 2023, respectively	0.5		0.5
Paid-in capital	684.6		696.0
Retained earnings	1,091.4		1,195.6
Accumulated other comprehensive loss	(2.1)		—
Total stockholders’ equity	1,774.4		1,892.1
Total liabilities and stockholders’ equity	$	3,431.7	$	3,544.6

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

(in millions, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues	$	1,031.0	$	1,116.8	$	3,114.7	$	3,376.5
Costs of services	730.6		794.4		2,217.0		2,401.4
Gross profit	300.4		322.4		897.7		975.1
Selling, general, and administrative expenses	207.5		206.0		623.3		640.6
Amortization of intangible assets	14.0		17.8		44.2		53.8
Operating income	78.9		98.6		230.2		280.7
Interest expense, net	(16.0)		(18.5)		(49.4)		(49.7)
Income before income taxes	62.9		80.1		180.8		231.0
Provision for income taxes	15.4		20.7		48.0		62.0



Net income	$	47.5	$	59.4	$	132.8	$	169.0

Earnings per share:
Basic	$	1.07	$	1.23	$	2.93	$	3.46



Diluted	$	1.06	$	1.23	$	2.89	$	3.43




Shares and share equivalents used to calculate earnings per share:
Basic	44.5		48.1		45.4		48.8
Diluted	45.0		48.4		45.9		49.2

Reconciliation of net income to comprehensive income:
Net income	$	47.5	$	59.4	$	132.8	$	169.0
Foreign currency translation adjustment	0.2		(1.3)		(2.1)		1.1
Comprehensive income	$	47.7	$	58.1	$	130.7	$	170.1

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in millions)


	Common Stock			Paid-in Capital		Retained Earnings		Other		Total
	Shares	Par Value
Three Months Ended September 30, 2024
Balance at June 30, 2024	45.1	$	0.5	$	687.2	$	1,122.5	$	(2.3)	$	1,807.9
Stock-based compensation expense	—	—		9.9		—		—		9.9
Issuances under equity plans	0.1	—		7.7		—		—		7.7
Tax withholding on restricted stock vesting	—	—		(3.7)		—		—		(3.7)
Stock repurchase and retirement of shares	(1.0)	—		(16.5)		(78.6)		—		(95.1)
Other	—	—		—		—		0.2		0.2
Net income	—	—		—		47.5		—		47.5
Balance at September 30, 2024	44.2	$	0.5	$	684.6	$	1,091.4	$	(2.1)	$	1,774.4

Three Months Ended September 30, 2023
Balance at June 30, 2023	48.5	$	0.5	$	702.8	$	1,223.6	$	(0.3)	$	1,926.6
Stock-based compensation expense	—	—		10.3		—		—		10.3
Issuances under equity plans	0.2	—		7.8		—		—		7.8
Tax withholding on restricted stock vesting	—	—		(1.5)		—		—		(1.5)
Stock repurchase and retirement of shares	(1.2)	—		(17.5)		(75.1)		—		(92.6)
Other	—	—		—		—		(1.3)		(1.3)
Net income	—	—		—		59.4		—		59.4
Balance at September 30, 2023	47.5	$	0.5	$	701.9	$	1,207.9	$	(1.6)	$	1,908.7


	Common Stock			Paid-in Capital		Retained Earnings		Other		Total
	Shares	Par Value
Nine Months Ended September 30, 2024
Balance at December 31, 2023	46.7	$	0.5	$	696.0	$	1,195.6	$	—	$	1,892.1
Stock-based compensation expense	—	—		32.6		—		—		32.6
Issuances under equity plans	0.5	—		17.2		—		—		17.2
Tax withholding on restricted stock vesting	—	—		(13.7)		—		—		(13.7)
Stock repurchase and retirement of shares	(3.0)	—		(47.5)		(237.0)		—		(284.5)
Other	—	—		—		—		(2.1)		(2.1)
Net income	—	—		—		132.8		—		132.8
Balance at September 30, 2024	44.2	$	0.5	$	684.6	$	1,091.4	$	(2.1)	$	1,774.4

Nine Months Ended September 30, 2023
Balance at December 31, 2022	49.5	$	0.5	$	703.5	$	1,200.0	$	(2.7)	$	1,901.3
Stock-based compensation expense	—	—		33.7		—		—		33.7
Issuances under equity plans	0.6	—		18.9		—		—		18.9
Tax withholding on restricted stock vesting	—	—		(15.7)		—		—		(15.7)
Stock repurchase and retirement of shares	(2.6)	—		(38.5)		(161.1)		—		(199.6)
Other	—	—		—		—		1.1		1.1
Net income	—	—		—		169.0		—		169.0
Balance at September 30, 2023	47.5	$	0.5	$	701.9	$	1,207.9	$	(1.6)	$	1,908.7

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


	Nine Months Ended
	September 30,
	2024		2023
Cash Flows from Operating Activities
Net income	$	132.8	$	169.0
Adjustments to reconcile net income to net cash provided by operating activities:

Amortization and depreciation	72.4		74.6
Stock-based compensation	32.6		33.7

Other	7.2		9.3
Changes in operating assets and liabilities:
Accounts receivable	52.6		48.1
Prepaid expenses and income taxes	0.6		14.5
Accounts payable	(7.2)		(2.5)
Accrued payroll	0.9		(34.8)
Income taxes payable	17.2		31.6
Other	(9.3)		(3.0)
Net cash provided by operating activities	299.8		340.5
Cash Flows from Investing Activities
Cash paid for property and equipment	(24.0)		(32.7)

Other	—		(0.6)
Net cash used in investing activities	(24.0)		(33.3)
Cash Flows from Financing Activities


Proceeds from long-term debt	—		571.8
Principal payments of long-term debt	(3.8)		(595.3)
Debt issuance and amendment costs	—		(8.6)
Proceeds from employee stock purchase plan	17.2		18.9
Repurchase of common stock	(283.3)		(197.7)
Payment of employment taxes related to release of restricted stock awards	(13.7)		(15.7)
Payment of contingent consideration	—		(5.0)


Net cash used in financing activities	(283.6)		(231.6)
Effect of exchange rate changes on cash and cash equivalents	(1.5)		(0.3)
Net Increase (Decrease) in Cash and Cash Equivalents	(9.3)		75.3

Cash and Cash Equivalents at Beginning of Year	175.9		70.3
Cash and Cash Equivalents at End of Period	$	166.6	$	145.6


Supplemental Disclosure of Cash Flow Information
Cash paid for —
Income taxes	$	22.8	$	12.0
Interest	$	41.4	$	39.4
Operating leases	$	17.6	$	20.0
Noncash transactions —



Operating lease right of use assets obtained in exchange for operating lease liabilities	$	13.6	$	26.9

See notes to condensed consolidated financial statements.

ASGN INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General

Basis of Presentation — The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The December 31, 2023 balance sheet was derived from audited financial statements. The financial statements include adjustments consisting of normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the financial position of ASGN Incorporated and its subsidiaries ("ASGN" or the "Company") and its results of operations for the interim dates and periods set forth herein. The results for any of the interim periods are not necessarily indicative of the results to be expected for the full year or any other period. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 10-K").

2. Goodwill and Identifiable Intangible Assets

Goodwill by reportable segment is as follows (in millions):


	Commercial		Federal Government		Total
Balance as of December 31, 2022	$	1,074.7	$	817.2	$	1,891.9
Purchase price adjustment	—		1.1		1.1
Translation adjustment	1.1		—		1.1
Balance as of December 31, 2023	1,075.8		818.3		1,894.1


Translation adjustment	0.2		—		0.2


Balance at September 30, 2024	$	1,076.0	$	818.3	$	1,894.3

Acquired identifiable intangible assets consisted of the following (in millions):


		September 30, 2024						December 31, 2023
	Estimated Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer and contractual relationships	7 - 13	$	496.0	$	322.9	$	173.1	$	496.0	$	282.0	$	214.0


Non-compete agreements	2 - 7	29.3		21.5		7.8		29.3		18.2		11.1

		525.3		344.4		180.9		525.3		300.2		225.1
Not subject to amortization:
Trademarks		272.8		—		272.8		272.8		—		272.8
		$	798.1	$	344.4	$	453.7	$	798.1	$	300.2	$	497.9

Estimated future amortization expense is as follows (in millions):


Remainder of 2024	$	13.9
2025	48.8
2026	41.8
2027	32.0
2028	21.2
Thereafter	23.2
	$	180.9

3. Long-Term Debt

Long-term debt consisted of the following (in millions):


	September 30, 2024		December 31, 2023
Senior Secured Credit Facility:
$500 million revolving credit facility, due 2028	$	—	$	—
Term loan B, due 2030	495.0		498.8
Unsecured Senior Notes, due 2028	550.0		550.0
	1,045.0		1,048.8
Unamortized deferred loan costs	(5.6)		(7.2)
Term loan B, principal payments due in the next 12 months	(5.0)		(5.0)
Long-term debt	$	1,034.4	$	1,036.6

__________

The Company is required to make quarterly minimum principal payments totaling $5.0 million annually on the term loan until its maturity date; this amount is included in other current liabilities on the accompanying condensed consolidated balance sheets. Taking into consideration the $5.0 million annual required principal payments, the balance due at maturity will be $466.3 million.

Senior Secured Credit Facility — In March 2024, the Company amended its senior secured credit facility (the "facility") with a 50-basis point reduction in the term loan B ("term loan") interest rate. As a result, borrowings under the $495.0 million term loan bear interest, at the Company's election, at (i) the secured overnight financing rate ("SOFR") plus 1.75 percent, or (ii) the bank’s base rate plus 1.00 percent. Related to the debt amendment there were $0.9 million of costs. The Company accounted for the debt amendment as a modification and, accordingly, these costs were expensed as incurred. There was an insignificant amount of previously capitalized costs that were written off. Borrowings under the $500.0 million revolving credit facility (the "revolver") bear interest, at the Company's election, at (i) SOFR plus a 10 basis points adjustment plus 2.00 to 3.00 percent, or (ii) the bank’s base rate plus 1.00 to 2.00 percent, depending on leverage levels. A commitment fee of 0.30 to 0.45 percent is payable on the undrawn portion of the revolver. The facility is subject to various restrictive covenants including, when amounts are drawn under the revolver, a maximum ratio of senior secured debt to trailing-twelve-months of lender-defined consolidated EBITDA of 3.75 to 1, which was 1.07 to 1 at September 30, 2024. The facility is secured by substantially all of the Company's assets and at September 30, 2024, the Company was in compliance with its debt covenants.

Unsecured Senior Notes — The Company has $550.0 million of unsecured senior notes, due in 2028, which bear interest at 4.625 percent payable semiannually in arrears on May 15 and November 15. These notes are unsecured obligations and are subordinate to the senior secured credit facility. These notes also contain certain customary limitations including, the Company's ability to incur additional indebtedness, engage in mergers and acquisitions, transfer or sell assets, and make certain distributions.

4. Commitments and Contingencies

The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business, and collective class and Private Attorneys General Act ("PAGA") actions alleging violations of wage and hour laws. The Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its condensed consolidated financial statements.

5. Income Taxes

For interim reporting periods, the Company’s provision for income taxes is calculated using its annualized estimated effective tax rate for the year. This rate is based on its estimated full year income and the related income tax expense for each jurisdiction in which the Company operates. The effective tax rate can be affected by changes in the geographical mix, permanent differences, and the estimate of full year pretax accounting income. This rate is adjusted for the effects of discrete items occurring in the period.

6. Earnings per Share

The following is a reconciliation of the number of shares and share equivalents used to calculate basic and diluted earnings per share (in millions, except per share data).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023


Net income	$	47.5	$	59.4	$	132.8	$	169.0

Weighted-average number of common shares outstanding - basic	44.5		48.1		45.4		48.8
Dilutive effect of common share equivalents	0.5		0.3		0.5		0.4
Weighted-average number of common shares and share equivalents outstanding - diluted	45.0		48.4		45.9		49.2

Basic earnings per share	$	1.07	$	1.23	$	2.93	$	3.46



Diluted earnings per share	$	1.06	$	1.23	$	2.89	$	3.43

7. Segment Reporting

ASGN provides information technology ("IT") services and professional solutions across the commercial and government sectors. ASGN operates through two segments, Commercial and Federal Government. The Commercial Segment, which is the largest segment, provides consulting, creative digital marketing, and permanent placement services primarily to Fortune 1000 and large mid-market companies. The Federal Government Segment provides advanced IT solutions to the Department of Defense, the intelligence community, and federal civilian agencies. Virtually all of the Company's revenues are generated in the United States.

Management evaluates the performance of each segment primarily based on revenues, gross profit, and operating income derived directly from internal financial reporting of the segments used for corporate management purposes, which is presented below by segment (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Commercial
Revenues	$	718.8	$	782.4	$	2,176.0	$	2,425.8
Gross profit	235.8		254.2		706.9		777.5
Operating income	73.3		91.4		216.8		267.0
Depreciation and other amortization	7.4		5.0		21.9		14.5
Amortization of intangible assets	6.6		8.6		22.0		26.1
Federal Government
Revenues	$	312.2	$	334.4	$	938.7	$	950.7
Gross profit	64.6		68.2		190.8		197.6
Operating income	24.6		27.2		72.3		74.9
Depreciation and other amortization	1.6		1.4		5.0		4.3
Amortization of intangible assets	7.4		9.2		22.2		27.7
Consolidated
Revenues	$	1,031.0	$	1,116.8	$	3,114.7	$	3,376.5
Gross profit	300.4		322.4		897.7		975.1
Operating income	78.9		98.6		230.2		280.7
Depreciation and other amortization	9.4		7.0		28.2		20.8
Amortization of intangible assets	14.0		17.8		44.2		53.8
_______
Depreciation and other amortization includes $1.6 million and $4.1 million amortization related to capitalized cloud-based application implementation costs in the three and nine months ended September 30, 2024. Consolidated operating income includes corporate operating expenses, which are not allocated to the segments. These include stock-based compensation expense, depreciation expense, compensation for corporate employees, acquisition, integration, and strategic planning expenses, and public company expenses.

Virtually all of the revenues from the Commercial Segment are generated from time-and-materials ("T&M") contracts where payments are based on fixed hourly rates for each direct labor hour expended and reimbursements for allowable material costs and out-of-pocket expenses. Revenues from the Federal Government Segment are generated from: (i) firm-fixed-price, (ii) T&M, and (iii) cost reimbursable contracts. Revenues by segment and by type are as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Commercial
Assignment	$	433.8	$	508.2	$	1,332.5	$	1,598.8
Consulting	285.0		274.2		843.5		827.0
	718.8		782.4		2,176.0		2,425.8
Federal Government
Firm-fixed-price	92.6		107.3		273.8		297.9
Time and materials	128.0		126.8		395.4		377.9
Cost reimbursable	91.6		100.3		269.5		274.9
	312.2		334.4		938.7		950.7
Consolidated	$	1,031.0	$	1,116.8	$	3,114.7	$	3,376.5

Federal Government Segment revenues by customer type are as follows (in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Department of Defense and Intelligence Agencies	$	141.5	$	164.8	$	433.2	$	452.7
Federal Civilian	159.8		159.5		473.1		468.3
Other	10.9		10.1		32.4		29.7
	$	312.2	$	334.4	$	938.7	$	950.7

8. Fair Value Measurements

Recurring Fair Value Measurements — The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued payroll approximate their fair value based on their short-term nature.

Nonrecurring Fair Value Measurements — Certain assets, such as goodwill and trademarks, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as, when there is evidence of impairment. There were no fair value adjustments for non-financial assets or liabilities during the three months ended September 30, 2024.

The carrying amount of long-term debt recorded in the Company’s accompanying condensed consolidated balance sheet at September 30, 2024 was $1.0 billion (see Note 3. Long-Term Debt) and its fair value, determined using quoted prices in active markets for identical liabilities (Level 1 inputs), was slightly less than the carrying value.

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information in this discussion