December 2020 Investor Presentation · 2020. 11. 30. · Assignment $ 588.0 $ 660.0 $ 580.0 -10.9%...
Transcript of December 2020 Investor Presentation · 2020. 11. 30. · Assignment $ 588.0 $ 660.0 $ 580.0 -10.9%...
©2020 ASGN Incorporated. All rights reserved.
December 2020
Investor Presentation
© 2020 ASGN Incorporated. All rights reserved.
Safe Harbor
2
Certain statements made in this presentation are “forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk
and uncertainty. Forward-looking statements include statements regarding our anticipated financial
and operating performance.
All statements in this presentation, other than those setting forth strictly historical information, are
forward-looking statements. Forward-looking statements are not guarantees of future performance
and actual results might differ materially. In particular, we make no assurances that the proposed
revenue scenarios outlined in this presentation will be achieved. Additional examples of forward-
looking statements in this presentation include, without limitation, statements regarding the expected
impact of the COVID-19 global pandemic on our competitive position and demand for our services;
our ability to attract, train and retain qualified staffing consultants, the availability of qualified contract
professionals, management of our growth, continued performance and improvement of our
enterprise-wide information systems, our ability to manage our litigation matters, the successful
integration of our acquired subsidiaries, and other risks detailed from time to time in our reports filed
with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2019, as
filed with the SEC on March 2, 2020 and our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020, as filed with the SEC on May 11, 2020. We specifically disclaim any intention or duty
to update any forward-looking statements contained in this presentation.
© 2020 ASGN Incorporated. All rights reserved.
ASGN At a Glance (NYSE: ASGN)
3
• U.S. addressable market of $290 billion3
• Additional opportunities in Europe
• Early mover in the “shared economy”
• Favorable tailwinds: digital
transformation; migration of government
agencies to the cloud; reshoring/near-
shoring of consulting work
• $4.0 billion in LTM revenue1
• $439.2 million in LTM Adj. EBITDA1,2
• $381.0 million in LTM free cash flow1
• 13,200 customer relationships
• Relationships with ~300 of Fortune 500
• ~23,000 billable professionals
Support leading corporate enterprises
and government organizations in
developing, implementing and operating
critical IT and business solutions
through an integrated offering of
professional staffing & IT solutions
Our Company Our CustomersOur Markets
Deep, Trusted Relationships Track Record of Excellence Growing Addressable Market
One of the foremost providers of IT and
professional services in the technology,
digital, creative, engineering and life
sciences fields across commercial and
government sectors
Commercial IT Services and Federal
Government IT Solutions each offer industry
knowledge and depth, scalable solutions and
expansive geographic reach
© 2020 ASGN Incorporated. All rights reserved.
Investment Highlights
4
• Increasingly IT-Centric – Business model continues to evolve in line with client needs and
expectations to focus on higher-end, higher-margin IT consulting services and solutions capabilities,
particularly those related to digital transformation.
• Unique Go-To Market Strategy – Diverse client base comprised of commercial and government
clients. Growing focus on large accounts that are often more stable sources of revenue and
represent companies that are quicker adopters of new technologies.
• Significant Exposure to Federal Government Marketplace – Over 28 percent of Q3 2020
revenues generated from federal and civilian agencies, clients whose industries are typically better
insulated from economic uncertainty than their commercial industry counterparts.
• Strong Balance Sheet & Liquidity – Solid free cash flow generation provides flexibility to direct
funds in best interests of the Company, its clients and its stockholders. Also provides ability to make
tuck-in acquisitions in cash without the need to take on additional leverage.
• Flexible Cost Structure – Variable expense structure provides high conversion of free cash flow to
Adjusted EBITDA, providing stability to business model. Conversion rate of Adjusted EBITDA into
Free Cash flow of 72.3 percent in Q3 2020.
• Track Record in M&A – History of successfully integrating tuck-in and transformational acquisitions
that have broadened the Company’s client base and added key IT capabilities and client contracts,
helping move ASGN up higher in the value chain. ASGN successfully acquired five companies since
the start of 2019, three of which were acquired in 2020.
• Experienced Management Team – Led by industry experts who have successfully managed the
business and its clients during positive and negative market cycles.
© 2020 ASGN Incorporated. All rights reserved.
ASGN: A Leader in High-End IT Services & Solutions
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Strategy
Architecture
Design
Systems Deployment
(incl. upgrades)
Service Centers
Technical Staffing
Federal Government IT
Solutions OfferingsMission critical IT services for the
Federal Government
Commercial IT
Service Offerings
© 2020 ASGN Incorporated. All rights reserved.
Segment Overview
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APEX SEGMENT OXFORD SEGMENT ECS SEGMENT
SERVICE OFFERINGS
Mission critical high-end IT
solutions for the Federal
Government
High-end IT, Engineering and Life
Sciences skills and solutions
Permanent Placement solutions
Information Technology, Engineering,
Finance & Accounting, Healthcare
Mission critical IT skills and
solutions
Creative/Digital skills and solutions
LTM REVENUES1
$546.5 Million13.8% of Consolidated Revenues
$2.4 Billion61.6% of Consolidated Revenues
$974.5 Million24.6% of Consolidated Revenues
Federal Government
IT SolutionsCommercial
© 2020 ASGN Incorporated. All rights reserved.
Summary of Consolidated Financial Data — Q3 2020
7
OPERATING DATA
BALANCE SHEET DATA
REVENUE MIX8
($ in millions) 9/30/20 12/31/19
Cash and Cash Equivalents $ 229.7 $ 95.2
Working Capital 545.3 450.6
Senior Secured Debt 483.2 482.3
Senior Unsecured Notes 550.0 550.0
Total Long-Term Debt 1,033.2 1,032.3
Total Stockholders' Equity 1,524.2 1,376.2
CASH FLOW AND OTHER DATA
71.5% 79.4%
28.5% 20.6%
Q3 2020 Q3 2019
Federal Government(ECS Segment)
Commercial(Apex & Oxford Segments)
+8.0%
+6.7%
+3.9%
-105 bps
-125 bps
+7.2%
+8.8%
+0.9%
-6.7%
-7.0%
-227 bps
-142 bps
-8.9%
-3.7%
$113.3 Million
$67.1 Million
$52.3 Million
25.0%
26.8%
$271.0 Million
$1.01 Billion
ADJUSTED NET INCOME5
NET INCOME
CONTRACT GROSS MARGIN4
GROSS PROFIT
GROSS MARGIN
ADJUSTED EBITDA2
Seq.Y-Y
REVENUES
$250.0 Million
1.13 to 1.0
$81.9 Million -3.0% Y-Y
$87.6 Million -4.1% Y-Y
AVAILABILITY UNDER REVOLVING CREDIT FACILITY7
FREE CASH FLOW
SENIOR SECURED LEVERAGE RATIO6
CASH FLOWS FROM OPERATING ACTIVITIES
58.1% 65.8%
39.5% 30.6%
Q3 2020 Q3 2019
Perm Placement
Consulting
Assignment
(< 4.0%)
© 2020 ASGN Incorporated. All rights reserved.
Commercial Business (75.4% of LTM revenues)
8
TMTFinancial
ServicesBusiness &
Govt. ServicesHealthcare
Cloud Solutions
Cybersecurity
Workforce
Management
Application
Development
Science &
Engineering
Massive addressable market
Deep decades-long client relationships with major Fortune 500 companies
Lower cost of services vs. full-deliverable bench consulting model
Consumer
& Industrial
Financial Services : Regional Banks, FinTech, and Insurance Services driving growth; stimulus funding pushed through commercial banks is creating a heightened need for IT modernization.
Consumer & Industrial: Utilities, Consumer Staples & Specialty Retail showing relative; continued softness in Energy and Hospitality.
Healthcare: Demand for digital transformation (mobile/customer experience) and health records modernization continues to be a longer-term focus, while hospital networks focus on COVID-19 in the near-term.
TMT: Integration/M&A, COVID-19-related work from home initiatives and re-shoring of IT support capabilities (Mexico Delivery Center gaining traction). Media & entertainment sector weakness expected near-term.
Business & Govt. Services: Increased demand for digital transformation, cloud, data analytics, AI and cybersecurity initiatives. Tailwinds from higher education businesses transitioning to online models.
Cu
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© 2020 ASGN Incorporated. All rights reserved.
Commercial Business (Apex & Oxford Segments)
9
RECENT TRENDS
REVENUES REVENUES BY TYPE
REVENUES BY INDUSTRY VERTICAL9
Q3 % Change
($ in millions) 2020 Y-Y Seq.
Financial Services $ 178.1 +11.1% +9.2%
Consumer & Industrials 151.4 -23.5% +0.7%
Healthcare 160.9 -7.3% +7.4%
TMT (Technology, Media & Telco) 117.7 -13.3% -2.0%
Business & Government Services 115.2 -10.8% +1.1%
$ 723.3 -9.2% +3.7%
Q3 Q2 % Change
($ in millions) 2020 2019 2020 Y-Y Seq.
Apex Segment $ 596.1 $ 644.1 $ 576.9 -7.5% +3.3%
Oxford Segment 127.2 152.5 120.2 -16.6% +5.8%
$ 723.3 $ 796.6 $ 697.1 -9.2% +3.7%
Q3 Q2 % Change
($ in millions) 2020 2019 2020 Y-Y Seq.
Assignment $ 588.0 $ 660.0 $ 580.0 -10.9% +1.4%
Consulting 110.7 100.1 96.4 +10.6% +14.8%
Perm 24.6 36.5 20.7 -32.6% +18.8%
$ 723.3 $ 796.6 $ 697.1 -9.2% +3.7%
+14.8%+10.6%
+1 bps-78 bps
-31 bps+7 bps
+0.4%-1.2%
$110.7 Million
28.7%
31.1%
CONSULTING REVENUES
CONTRACT GROSS MARGIN4
3.4%
PERM MIX
GROSS MARGIN
Seq.Y-Y
© 2020 ASGN Incorporated. All rights reserved.
Federal Government IT Solutions Business (24.6% of LTM revenues)
10
Defense Federal
CivilianOther
Intelligence and
National Security
Cloud Solutions
Cybersecurity
Machine Learning
IT Modernization
Science & Engineering
Massive addressable market
Ample and resilient funding; durable mission requirements
Profitable countercyclicality
Deep decades-long client relationships
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Accelerating cyber threats drive funding and demand across customers.
Movement to the cloud is impacting technology and business transformation efforts, with cloud-hosted, on
premise, and hybrid solutions in demand depending on customer and mission needs.
AI and machine learning demand is rising as DoD, national security and federal customers require actionable
and scalable data approaches and decision intelligence to best meet their needs.
Pent-up need for IT system modernization and digital transformation to achieve mission outcomes, productivity
gains and cost savings across economic cycles.
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© 2020 ASGN Incorporated. All rights reserved.
Federal Government IT Solutions Business (ECS Segment)
11
$288.6$206.1
Q3 2020Q3 2019
Revenues($ in millions)
REVENUES BY CONTRACT TYPE
REVENUES BY CUSTOMER$45.9$37.3
Q3 2020Q3 2019
Gross Profit($ in millions)
Q3 Q2
2020 2019 2020
Firm-Fixed-Price 28.4% 31.2% 26.5%
Time and Materials 28.0% 33.2% 34.0%
Cost Reimbursable 43.6% 35.6% 39.5%
Q3 Q2
2020 2019 2020
Defense and Intel 59.6% 54.6% 53.0%
Federal Civilian 33.3% 39.8% 40.1%
Other 7.1% 5.6% 6.9%
9/30 6/30
2020 2019 2020
Backlog Coverage Ratio16 2.7x 3.6x 2.9x
TTM Book-to-Bill17 1.0 to 1.0 2.4 to 1.0 1.7 to 1.0
TTM BACKLOG RATIOS
CONTRACT BACKLOG13
9/30 6/30
($ in millions) 2020 2019 2020
Funded Backlog14 $ 571.4 $ 494.3 $ 435.3
Unfunded Backlog15 2,136.5 2,200.0 2,178.0
Total $ 2,707.9 $ 2,694.3 $ 2,613.3
Recognitions #2 for total awarded DoD AI/ML work (Bloomberg Govt.)10
#14 of top 250 Managed Security Service Provider List11
Top 100 Managed Service Provider in North America12
Recent Significant Contract Awards
DOD/IntelligenceTwo five-year contracts with FBI to provide
cybersecurity, counter terrorism and data analytics support
Federal Civilian
Eight DHS contracts to support cloud, business
intelligence and data analytics solutions
HIGHLIGHTS/RECENT AWARDS
© 2020 ASGN Incorporated. All rights reserved.
Q4 2020 Financial Estimates
12
Quarter Ended
September 30,
(In millions, except per share amounts) 2020 Low Mid-Point High
Revenues 1,011.9$ 968.0$ 978.0$ 988.0$
Growth Rates
Sequential 8.0% -4.3% -3.4% -2.4%
Y-Y 0.9% -5.6% -4.6% -3.6%
Gross Margin 26.8% 26.7% 26.8% 26.9%
SG&A Expenses 177.2 174.3 175.4 176.6
Amortization of Intangible Assets 12.9 14.0 14.0 14.0
Net Income
GAAP 52.3$ 44.4$ 46.2$ 48.1$
Adjusted5 67.1$ 58.3$ 60.1$ 61.9$
EPS (Diluted)
GAAP 0.99$ 0.83$ 0.87$ 0.90$
Adjusted5 1.27$ 1.09$ 1.13$ 1.16$
Effective Tax Rate 27.0% 27.0% 27.0% 27.0%
Adjusted EBITDA2 113.3$ 101.0$ 103.5$ 106.0$
Adjusted EBITDA Margin 11.2% 10.4% 10.6% 10.7%
Diluted Shares 53.0 53.4 53.4 53.4
Financial Estimates for the Quarter Ending
December 31, 2020
© 2020 ASGN Incorporated. All rights reserved.
COVID-19 Update
13
2020 Impact
(Through 9/30/20)
• Commercial (74.8% of YTD 20 revenues): Minimal effect in Q1, down 10.8
percent in Q2 Y-Y and down 9.2 percent in Q3 Y-Y. Returned to sequential
revenue growth in Q3, with revenues up 3.7 percent. Q3 commercial consulting
revenues also return to double-digit growth rates.
• Federal Government IT Solutions (25.2% of YTD 20 revenues): Minimal, if any,
impact on business in first nine months of the year. Revenues were up double
digits and continue to surpass industry growth trends.
Q4 2020 Outlook
• Visibility continues to improve. Commercial revenues will be flat to down
sequentially from Q3 to Q4 due to 3.5 fewer billable days, but revenues per day
will be up 4.0 to 4.5 percent sequentially. Commercial weekly production trends in
Q3 have continued into Q4.
• Federal revenues will grow slightly above 10 percent despite a very high Q4 2019
comparable.
ASGN is Strongly
Positioned for the
Future
• Increasingly IT-centric with expanded high-end consulting solutions capabilities
and growing pipeline of consulting opportunities. Customers are actively moving
forward on their technology road maps more clearly than before.
• Expanded large account portfolio and exposure to Federal government.
• Active M&A pipeline with opportunities to make tuck-in acquisitions that provide
new capabilities, new customers or new contract vehicles.
• Highly experienced & capable management team.
Appendix
© 2020 ASGN Incorporated. All rights reserved.
Selected Financial Data
15
($ in millions, except per share amounts) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3
Revenues - by Type
Commercial (Apex & Oxford Segments - Combined)
Contract Revenues--
Assignment 582.7$ 611.5$ 628.7$ 639.0$ 2,461.9$ 637.4$ 650.6$ 660.0$ 652.9$ 2,600.9$ 641.2$ 580.0$ 588.0$
Consulting 67.6 72.5 76.9 81.6 298.6 84.2 93.8 100.1 107.3 385.4 102.8 96.4 110.7
Total - Contract 650.3 684.0 705.6 720.6 2,760.5 721.6 744.4 760.1 760.2 2,986.3 744.0 676.4 698.7
Permanent Placement 34.9 39.4 36.8 35.2 146.3 34.1 37.3 36.5 31.5 139.4 33.8 20.7 24.6
Commercial (Apex & Oxford Segments - Combined) 685.2 723.4 742.4 755.8 2,906.8 755.7 781.7 796.6 791.7 3,125.7 777.8 697.1 723.3
Federal Government (ECS Segment) - 155.1 164.0 173.9 493.0 168.0 190.6 206.1 233.5 798.2 212.7 239.7 288.6
Consolidated 685.2$ 878.5$ 906.4$ 929.7$ 3,399.8$ 923.7$ 972.3$ 1,002.7$ 1,025.2$ 3,923.9$ 990.5$ 936.8$ 1,011.9$
Revenues - by Segment and Type
Apex Segment
Assignment 468.6$ 494.8$ 510.1$ 520.8$ 1,994.3$ 519.8$ 533.5$ 544.7$ 536.5$ 2,134.5$ 526.3$ 483.8$ 492.2$
Consulting 56.3 58.9 65.1 69.9 250.2 72.4 79.5 85.1 92.1 329.1 89.6 85.3 96.6
Permanent Placement 13.6 13.9 14.4 13.9 55.8 13.9 15.5 14.3 12.7 56.4 13.2 7.8 7.3
538.5 567.6 589.6 604.6 2,300.3 606.1 628.5 644.1 641.3 2,520.0 629.1 576.9 596.1
Oxford Segment
Assignment 114.1 116.7 118.6 118.2 467.6 117.6 117.1 115.3 116.4 466.4 114.9 96.2 95.8
Consulting 11.3 13.6 11.8 11.7 48.4 11.8 14.3 15.0 15.2 56.3 13.2 11.1 14.1
Permanent Placement 21.3 25.5 22.4 21.3 90.5 20.2 21.8 22.2 18.8 83.0 20.6 12.9 17.3
146.7 155.8 152.8 151.2 606.5 149.6 153.2 152.5 150.4 605.7 148.7 120.2 127.2
Commercial 685.2 723.4 742.4 755.8 2,906.8 755.7 781.7 796.6 791.7 3,125.7 777.8 697.1 723.3
Federal Government - 155.1 164.0 173.9 493.0 168.0 190.6 206.1 233.5 798.2 212.7 239.7 288.6
Consolidated 685.2$ 878.5$ 906.4$ 929.7$ 3,399.8$ 923.7$ 972.3$ 1,002.7$ 1,025.2$ 3,923.9$ 990.5$ 936.8$ 1,011.9$
Billable Days 63.00 64.00 62.50 60.50 250.00 62.00 64.00 63.00 60.50 249.50 63.00 63.75 64.00
Revenues Per Billable Day (Commercial Only) 10.9$ 11.3$ 11.9$ 12.5$ 11.6$ 12.2$ 12.2$ 12.6$ 13.1$ 12.5$ 12.3$ 10.9$ 11.3$
Gross Margin - by Business
Apex Segment 29.5% 29.9% 30.2% 30.1% 29.9% 28.9% 29.9% 29.8% 29.7% 29.6% 29.3% 29.6% 29.0%
Oxford Segment 40.3% 42.0% 41.1% 40.7% 41.0% 39.4% 40.8% 40.6% 39.6% 40.1% 39.9% 38.6% 40.9%
Commercial 31.8% 32.5% 32.4% 32.2% 32.2% 31.0% 32.0% 31.9% 31.6% 31.6% 31.3% 31.1% 31.1%
Federal Government - 18.5% 18.1% 16.5% 17.6% 17.6% 18.3% 18.1% 16.8% 17.7% 17.4% 18.3% 15.9%
Consolidated 31.8% 30.0% 29.8% 29.2% 30.1% 28.6% 29.3% 29.1% 28.2% 28.8% 28.4% 27.8% 26.8%
Contract Gross Margin - by Business
Apex Segment 27.6% 28.1% 28.4% 28.4% 28.2% 27.3% 28.1% 28.3% 28.3% 28.0% 27.8% 28.6% 28.1%
Oxford Segment 30.2% 30.7% 31.0% 31.0% 30.7% 29.9% 30.9% 30.5% 31.0% 30.6% 30.2% 31.2% 31.7%
Commercial 28.1% 28.6% 28.9% 28.9% 28.6% 27.7% 28.6% 28.6% 28.8% 28.4% 28.2% 29.0% 28.7%
Federal Government - 18.5% 18.1% 16.5% 17.6% 17.6% 18.3% 18.1% 16.8% 17.7% 17.4% 18.3% 15.9%
Consolidated 28.1% 26.7% 26.8% 26.5% 27.0% 25.8% 26.5% 26.4% 25.9% 26.2% 25.8% 26.2% 25.0%
Net income 29.1$ 33.6$ 49.1$ 45.9$ 157.7$ 34.9$ 43.1$ 57.4$ 39.3$ 174.7$ 43.8$ 48.8$ 52.3$
Earnings per share - Diluted 0.55$ 0.63$ 0.93$ 0.86$ 2.98$ 0.66$ 0.81$ 1.08$ 0.74$ 3.28$ 0.82$ 0.92$ 0.99$
Adjusted net income 44.0$ 58.8$ 68.7$ 60.8$ 232.3$ 49.4$ 58.9$ 69.7$ 68.3$ 246.3$ 57.7$ 61.7$ 67.1$
Adjusted earnings per share - Diluted 0.83$ 1.11$ 1.30$ 1.14$ 4.38$ 0.93$ 1.10$ 1.31$ 1.28$ 4.61$ 1.08$ 1.17$ 1.27$
Cash generated from operating activiities 54.7$ 76.7$ 92.1$ 63.9$ 287.5$ 44.0$ 96.5$ 91.3$ 81.4$ 313.2$ 64.1$ 186.1$ 87.6$
Free cash flow 48.5$ 68.4$ 84.6$ 57.3$ 258.8$ 36.5$ 88.1$ 84.4$ 71.5$ 280.5$ 48.8$ 178.8$ 81.9$
Adjusted EBITDA 74.8$ 106.6$ 112.8$ 109.1$ 403.3$ 97.1$ 114.2$ 121.5$ 116.2$ 449.0$ 103.5$ 106.2$ 113.3$
Adjusted EBITDA Margin 10.9% 12.1% 12.4% 11.7% 11.9% 10.5% 11.7% 12.1% 11.3% 11.4% 10.4% 11.3% 11.2%
2018 2019 2020
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Reconciliation of GAAP to Non-GAAP Measures
16
($ in millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3
Reconciliation of Net Income to Adjusted EBITDA
Net Income 29.1$ 33.6$ 49.1$ 45.9$ 157.7$ 34.9$ 43.1$ 57.4$ 39.3$ 174.7$ 43.8$ 48.8$ 52.3$
Loss from discontinued operations, net of tax 0.1 0.1 - 0.1 0.3 - - 0.1 - 0.1 - - -
Interest expense 6.6 20.5 14.6 14.3 56.0 14.5 14.0 12.7 11.7 52.9 11.4 9.7 9.3
Write-off of loan cost - - - - - - - - 18.9 18.9 - - -
Provision for income taxes 9.9 11.5 10.5 14.3 46.2 13.3 16.2 20.7 11.8 62.0 15.7 17.5 19.3
Depreciation 6.8 10.1 9.7 9.9 36.5 9.7 10.0 10.3 10.1 40.1 9.3 9.0 9.8
Amortization of intangible assets 7.6 18.5 18.6 13.8 58.5 13.8 13.1 11.9 12.3 51.1 12.1 12.6 12.9
EBITDA (non-GAAP measure) 60.1 94.3 102.5 98.3 355.2 86.2 96.4 113.1 104.1 399.8 92.3 97.6 103.6
Stock-based compensation 4.9 8.9 8.6 9.1 31.5 9.5 13.9 7.7 8.2 39.3 8.7 8.1 7.1
Write-off of intangible assets - - - - - - 3.3 - - 3.3 - - -
Acquisition, integration and strategic planning expenses 9.8 3.4 1.7 1.7 16.6 1.4 0.6 0.7 3.9 6.6 2.5 0.5 2.6
Adjusted EBITDA (non-GAAP measure) 74.8$ 106.6$ 112.8$ 109.1$ 403.3$ 97.1$ 114.2$ 121.5$ 116.2$ 449.0$ 103.5$ 106.2$ 113.3$
Reconciliation of Net Income to Adjusted Net Income
Net income 29.1$ 33.6$ 49.1$ 45.9$ 157.7$ 34.9$ 43.1$ 57.4$ 39.3$ 174.7$ 43.8$ 48.8$ 52.3$
Loss from discontinued operations, net of tax 0.1 0.1 - 0.1 0.3 - - 0.1 - 0.1 - - -
Write-off of loan costs - - - - - - - - 18.9 18.9 - - -
Credit facility amendment expenses 0.3 5.9 - - 6.2 - - - - - - - -
Write-off of intangible assets - - - - - - 3.3 - - 3.3 - - -
Acquisition, integration and strategic planning expenses 9.8 3.4 1.7 1.7 16.6 1.4 0.6 0.7 3.9 6.6 2.5 0.5 2.6
Tax effect on adjustments (2.6) (2.5) (0.4) (0.5) (6.0) (0.4) (1.0) (0.1) (6.0) (7.5) (0.7) (0.1) (0.6)
Non-GAAP net income 36.7 40.5 50.4 47.2 174.8 35.9 46.0 58.1 56.1 196.1 45.6 49.2 54.3
Amortization of intangible assets 7.6 18.5 18.6 13.8 58.5 13.8 13.1 11.9 12.3 51.1 12.1 12.6 12.9
Income taxes on amortization for financial reporting
purposes not deductible for income tax purposes (0.3) (0.2) (0.3) (0.2) (1.0) (0.3) (0.2) (0.3) (0.1) (0.9) - (0.1) (0.1)
Adjusted net income (non-GAAP measure) 44.0$ 58.8$ 68.7$ 60.8$ 232.3$ 49.4$ 58.9$ 69.7$ 68.3$ 246.3$ 57.7$ 61.7$ 67.1$
Calculation of Free Cash Flow
Cash provided by operating activities 54.7$ 76.7$ 92.1$ 63.9$ 287.5$ 44.0$ 96.5$ 91.3$ 81.4$ 313.2$ 64.1$ 186.1$ 87.6$
Capital expenditures (6.2) (8.4) (7.5) (6.6) (28.7) (7.5) (8.4) (6.9) (9.9) (32.7) (15.3) (7.3) (5.7)
Free cash flow (non-GAAP measure) 48.5$ 68.4$ 84.6$ 57.3$ 258.8$ 36.5$ 88.1$ 84.4$ 71.5$ 280.5$ 48.8$ 178.8$ 81.9$
Cash tax savings on indefinite-lived intangible assets
(benefit not included in adjusted net income) 4.5$ 6.8$ 6.8$ 6.8$ 25.1$ 7.0$ 7.0$ 7.0$ 7.1$ 28.1$ 7.3$ 7.4$ 7.4$
2018 2019 2020
© 2020 ASGN Incorporated. All rights reserved.
Footnotes1 Last twelve months as of 9/30/20. Free cash flow is defined as net cash provided by (used in) operating activities, less capital expenditures.
2 Adjusted EBITDA, a non-GAAP financial measure, is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus stock-based compensation
expense and, as applicable, acquisition, integration and strategic planning expenses, write-off of loan costs, write-off of intangible assets and impairment charges.
3 U.S. Staffing market size from Staffing Industry Analysts’ “US Staffing Industry Forecast, April 7, 2020” and independent 3rd party (Parthenon) analysis of freelance market.
Commercial IT Services from Gartner; Technavio; Comptia; SIA Parthenon-EY CIO Survey (Light Deliverable Services). Government IT Solutions from Wolf Den Associates LLC and
ASGN internal estimates.
4 Excludes permanent placement revenues and related gross profit.
5 Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets.” These savings total $7.4 million each quarter, or $0.14 per diluted share, and represent the economic
value of the tax deduction that ASGN receives from the amortization of goodwill and trademarks.
6 The ratio of the aggregated principal amount of consolidated indebtedness secured by a Lien on asset of ASGN or any of its subsidiaries to Lender defined trailing 12-months of
EBITDA (Maximum leverage allowable is 4.25 to 1.0 of borrowings outstanding under revolver).
7 The revolving credit facility available balance is $246.1 million after adjusting for outstanding letters of credit.
8 Assignment and Perm Placement revenues includes both Apex and Oxford Segments.
9 Verticals broadly defined as:
Financial Services: banks, thrifts & mortgage services, consumer finance, capital markets, financial technology, insurance, and investment firms
Consumer & Industrials: industrials excluding aerospace and professional services, consumer staples, consumer discretionary, energy, materials, utility & real estate
Healthcare: equipment & service providers and payers, health insurance administrators operating as diversified healthcare companies, biotechnology, pharmaceuticals and life
science tools & services
TMT (Technology, Media & Telco): software applications & systems, services excluding consulting & data processing/outsourced services, hardware manufacturing & services,
equipment & electronic manufacturing services, diversified Telco including wired/wireless Telco services; media, entertainment and interactive media/services
Business & Government Services: contractors, federal government agencies and state and local government, professional services, human resource & employment, data
processing & outsourced services, IT consulting, and other services
10 Bloomberg Govt. “Market Profile: Artificial Intelligence & Machine Learning”
11 MSSP Alert! “Top 250 Managed Security Services Providers (MSSPs) of 2020”
12 ChannelE2E “Top 100 Vertical Market MSPs™ 2020 Edition”
13 Contract backlog represents the estimated amount of future revenues to be recognized under negotiated contracts and task orders as work is performed. Contract backlog excludes
awards which have been protested by competitors until the protest is resolved in our favor. Contract backlog is segregated into two categories, funded contract backlog and negotiated
unfunded contract backlog.
14 Funded contract backlog for contracts with U.S. government agencies primarily represents contracts for which funding has been formally awarded less revenues previously
recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally awarded or authorized by the U.S. government even though the
contract may call for performance over a number of years. Funded contract backlog for contracts with non-government agencies represents the estimated value of contracts, which
may cover multiple future years, less revenues previously recognized on these contracts.
15 Negotiated unfunded contract backlog represents the estimated future revenues to be earned from negotiated contract awards for which funding has not been awarded or
authorized, and unexercised priced contract options. Negotiated unfunded contract backlog does not include any estimate of future potential task orders expected to be awarded under
indefinite delivery, indefinite quantity (IDIQ), U.S. General Services Administration (GSA) schedules or other master agreement contract vehicles.
16 Backlog coverage ratio is calculated by dividing trailing twelve months revenue by total contract backlog.
17 Book-to-bill ratio is calculated as the sum of the change in total contract backlog during the period plus revenues for the period, divided by revenues for the period.17
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