rhi-20220331

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 March 31, 2022


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

FOR THE TRANSITION PERIOD FROM to .

Commission File Number 1-10427

ROBERT HALF INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)


Delaware		94-1648752
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2884 Sand Hill Road
Suite 200
Menlo Park,	California	94025
(Address of principal executive offices)		(zip-code)

Registrant’s telephone number, including area code: (650) 234-6000


Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	RHI	New York Stock Exchange

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 and posted 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 and post 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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of April 30, 2022:

110,513,568 shares of $.001 par value Common Stock

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(in thousands, except share amounts)


	March 31, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	550,330	$	619,001
Accounts receivable, net	1,071,608		984,691
Employee deferred compensation trust assets	476,826		494,991
Other current assets	173,273		169,864
Total current assets	2,272,037		2,268,547
Property and equipment, net	96,423		93,403
Right-of-use assets	226,418		228,793
Other intangible assets, net	2,917		3,334
Goodwill	222,858		222,855
Noncurrent deferred income taxes	130,113		135,427
Total assets	$	2,950,766	$	2,952,359
LIABILITIES
Accounts payable and accrued expenses	$	169,034	$	183,796
Accrued payroll and benefit costs	499,810		540,183
Employee deferred compensation plan obligations	495,300		535,276
Income taxes payable	38,608		15,631

Current operating lease liabilities	86,279		83,787
Total current liabilities	1,289,031		1,358,673

Noncurrent operating lease liabilities	176,410		181,291
Other liabilities	32,557		31,344
Total liabilities	1,497,998		1,571,308
Commitments and Contingencies (Note J)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; authorized 5,000,000 shares; none issued	—		—
Common stock, $0.001 par value; authorized 260,000,000 shares; issued and outstanding 110,746,970 shares and 110,685,989 shares	111		111
Additional paid-in capital	1,251,086		1,235,903
Accumulated other comprehensive income (loss)	(23,574)		(22,622)
Retained earnings	225,145		167,659
Total stockholders’ equity	1,452,768		1,381,051
Total liabilities and stockholders’ equity	$	2,950,766	$	2,952,359

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)


	Three Months Ended March 31,
		2022		2021

Service revenues		$	1,814,834	$	1,398,380
Costs of services		1,042,988		836,669
Gross margin		771,846		561,711
Selling, general and administrative expenses		514,194		423,062
(Income) loss from investments held in employee deferred compensation trusts (which is completely offset by related costs and expenses - Notes A & I)		30,001		(11,988)
Amortization of intangible assets		417		576
Interest income, net		(166)		(45)
Income before income taxes		227,400		150,106
Provision for income taxes		59,161		39,508
Net income		$	168,239	$	110,598

Net income per share:
Basic		$	1.54	$	.99
Diluted		$	1.52	$	.98

Shares:
Basic		109,218		111,424
Diluted		110,591		112,496
Dividends declared per share		$	.43	$	.38

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)


	Three Months Ended March 31,
		2022		2021
COMPREHENSIVE INCOME (LOSS):
Net income		$	168,239	$	110,598
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		(968)		(8,837)
Foreign defined benefit plans, net of tax		16		40
Total other comprehensive income (loss)		(952)		(8,797)
Total comprehensive income (loss)		$	167,287	$	101,801

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except per share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Par Value
Balance at December 31, 2021	110,686	$	111	$	1,235,903	$	(22,622)	$	167,659	$	1,381,051
Net income	—	—		—		—		168,239		168,239
Other comprehensive income (loss)	—	—		—		(952)		—		(952)
Dividends declared ($.43 per share)	—	—		—		—		(48,413)		(48,413)
Net issuances of restricted stock	598	1		(1)		—		—		—
Stock-based compensation	—	—		15,184		—		—		15,184
Repurchases of common stock	(537)	(1)		—		—		(62,340)		(62,341)
Balance at March 31, 2022	110,747	$	111	$	1,251,086	$	(23,574)	$	225,145	$	1,452,768


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Par Value
Balance at December 31, 2020	113,128	$	113	$	1,179,972	$	(4,732)	$	29,936	$	1,205,289
Net income	—	—		—		—		110,598		110,598
Other comprehensive income (loss)	—	—		—		(8,797)		—		(8,797)
Dividends declared ($0.38 per share)	—	—		—		—		(43,300)		(43,300)
Net issuances of restricted stock	602	1		(1)		—		—		—
Stock-based compensation	—	—		14,182		—		—		14,182
Repurchases of common stock	(1,048)	(1)		—		—		(80,272)		(80,273)
Balance at March 31, 2021	112,682	$	113	$	1,194,153	$	(13,529)	$	16,962	$	1,197,699

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Three Months Ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	168,239	$	110,598
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses	2,065		3,157
Depreciation	11,080		13,962
Amortization of cloud computing implementation costs	7,113		9,957
Amortization of intangible assets	417		576
Realized and unrealized (gains) losses from investments held in employee deferred compensation trusts	30,296		(11,694)
Stock-based compensation	15,184		14,182
Deferred income taxes	5,493		2,584
Changes in operating assets and liabilities:
Accounts receivable	(89,597)		(95,024)
Capitalized cloud computing implementation costs	(9,464)		(8,488)
Accounts payable and accrued expenses	(14,072)		(6,603)
Accrued payroll and benefit cost	(39,435)		13,009
Employee deferred compensation plan obligations	(39,976)		2,586
Income taxes payable	35,310		25,409
Other assets and liabilities, net	(13,491)		(6,155)
Net cash flows provided by operating activities	69,162		68,056

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(14,987)		(9,739)
Investments in employee deferred compensation trusts	(33,913)		(28,509)
Proceeds from employee deferred compensation trust redemptions	21,782		22,799
Net cash flows used in investing activities	(27,118)		(15,449)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable	—		(58)
Repurchases of common stock	(62,062)		(79,465)
Dividends paid	(47,498)		(44,277)
Net cash flows used in financing activities	(109,560)		(123,800)
Effect of exchange rate fluctuations	(1,155)		(5,303)
Change in cash and cash equivalents	(68,671)		(76,496)
Cash and cash equivalents at beginning of period	619,001		574,426
Cash and cash equivalents at end of period	$	550,330	$	497,930

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Non-cash items:
Stock repurchases awaiting settlement	$	5,872	$	3,912
Fund exchanges within employee deferred compensation trusts	$	40,509	$	37,661

The accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

are an integral part of these financial statements.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2022

Note A—Summary of Significant Accounting Policies

Nature of Operations. Robert Half International Inc. (the “Company”) is a specialized talent solutions and business consulting firm that connects opportunities at great companies with highly skilled job seekers. Robert Half® offers contract talent solutions and permanent placement talent solutions for finance and accounting, technology, marketing and creative, legal, administrative and customer support roles. Robert Half is also the parent company of Protiviti®, a global consulting firm that provides internal audit, risk, business, and technology consulting solutions.

The Company recently completed a multiyear process to unify its family of Robert Half endorsed divisional brands to a single brand, Robert Half. This simplifies the Company's go-to-market brand structure for clients and candidates and provides leverage for greater brand awareness and allows future flexibility to expand the Company's existing functional specializations. In connection with this process, the Company's current financial statement disclosures reflect new names for its reportable segments, including contract talent solutions (formerly temporary and consultant staffing), permanent placement talent solutions (formerly permanent placement staffing) and Protiviti (formerly risk consulting and internal audit services). What was previously referred to as staffing operations is now referred to as talent solutions.

The presentation of contract talent solutions includes functional specializations rather than the previously branded divisions. The functional specializations are: finance and accounting, which combines the former Accountemps® and Robert Half® Management Resources divisions; administrative and customer support, which consists of the former OfficeTeam®; and technology, which includes the former Robert Half® Technology.

The Company operates in North America, South America, Europe, Asia and Australia. The Company is a Delaware corporation.

Basis of Presentation. The unaudited Condensed Consolidated Financial Statements (“Financial Statements”) of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). The comparative year-end Condensed Consolidated Statement of Financial Position data presented was derived from audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the financial position and results of operations for the periods presented have been included. These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of the Company for the year ended December 31, 2021, included in its Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for a full year. Certain reclassifications have been made to prior year’s Condensed Consolidated Financial Statements to conform to the 2022 presentation.

Principles of Consolidation. The Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As of March 31, 2022, such estimates include allowances for credit losses, variable consideration, workers’ compensation losses, accrued medical expenses, income and other taxes, assumptions used in the Company’s goodwill impairment assessment and in the valuation of stock grants subject to market conditions. We continue to monitor the global economic uncertainty as a result of coronavirus (“COVID-19”) to assess the impact on the Company’s results of operations, financial condition, and liquidity. Actual results and outcomes may differ from management’s estimates and assumptions.

Service Revenues. The Company derives its revenues from three segments: contract talent solutions, permanent placement talent solutions, and Protiviti. Revenues are recognized when promised goods or services are delivered to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. See Note C for further discussion of the revenue recognition accounting policy.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

Costs of Services. Direct costs of contract talent solutions consist of professional staff payroll, payroll taxes and benefit costs for the Company’s engagement professionals, as well as reimbursable expenses. Direct costs of permanent placement talent solutions consist of reimbursable expenses. Protiviti direct costs of services include professional staff payroll, payroll taxes and benefit costs, as well as reimbursable expenses.

Advertising Costs. The Company expenses all advertising costs as incurred. Advertising costs were $14.2 million and $8.4 million for the three months ended March 31, 2022 and 2021, respectively.

(Income) Loss from Investments Held in Employee Deferred Compensation Trusts. Under the Company’s employee deferred compensation plans, employees direct the investment of their account balances, and the Company invests amounts held in the associated investment trusts consistent with these directions. As realized and unrealized investment gains and losses occur, the Company’s deferred compensation obligation to employees changes accordingly. Changes in the Company’s deferred compensation obligations remain in selling, general and administrative expenses or, in the case of Protiviti, costs of services. The value of the related investment trust assets also changes by an equal and offsetting amount, leaving no net cost to the Company. The Company’s (income) loss from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments.

The following table presents the Company’s (income) loss from investments held in employee deferred compensation trusts (in thousands):


	Three Months Ended March 31,
		2022		2021
Dividend income		$	(295)	$	(294)
Realized and unrealized (gains) losses		30,296		(11,694)
(Income) loss from investments held in employee deferred compensation trusts		$	30,001	$	(11,988)

Comprehensive Income (Loss). Comprehensive income (loss) includes net income and certain other items that are recorded directly to stockholders’ equity. The Company’s only sources of other comprehensive income (loss) are foreign currency translation and foreign defined benefit plan adjustments.

Fair Value of Financial Instruments. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market to measure fair value, summarized as follows:

Level 1: observable inputs for identical assets or liabilities, such as quoted prices in active markets

Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly

Level 3: unobservable inputs in which there is little or no market data, which requires management’s best

estimates and assumptions that market participants would use in pricing the asset or liability

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value because of their short-term nature. The Company holds mutual funds and money market funds to satisfy its obligations under its employee deferred compensation plans, which are carried at fair value based on quoted market prices in active markets for identical assets (level 1).

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

The following table sets forth the composition of the underlying assets which comprise the Company’s deferred compensation trust assets (in thousands):


	Fair Value Measurements Using
	Balance at March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	71,511	$	71,511	—	—
Mutual funds - bond	29,442		29,442		—	—
Mutual funds - stock	285,364		285,364		—	—
Mutual funds - blend	90,509		90,509		—	—
	$	476,826	$	476,826	—	—

	Fair Value Measurements Using
	Balance at December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	66,700	$	66,700	—	—
Mutual funds - bond	30,750		30,750		—	—
Mutual funds - stock	303,277		303,277		—	—
Mutual funds - blend	94,264		94,264		—	—
	$	494,991	$	494,991	—	—

Certain items such as goodwill and other intangible assets are recognized or disclosed at fair value on a non-recurring basis. The Company determines the fair value of these items using level 3 inputs. There are inherent limitations when estimating the fair value of financial instruments, and the fair values reported are not necessarily indicative of the amounts that would be realized in current market transactions.

Allowance for Credit Losses. The Company is exposed to credit losses resulting from the inability of its customers to make required payments. The Company establishes an allowance for these potential credit losses based on its review of customers’ credit profiles, historical loss statistics, prepayments, recoveries, age of customer receivable balances, current business conditions and macro-economic trends. The Company considers risk characteristics of trade receivables based on asset type and geographical locations to evaluate trade receivables on a collective basis. The Company applies credit loss estimates to these pooled receivables to determine expected credit losses.

ROBERT HALF INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)

March 31, 2022

The following table sets forth the activity in the allowance for credit losses from December 31, 2021 through March 31, 2022 (in thousands):


	Allowance for Credit Losses




Balance as of December 31, 2021	$	21,530
Charges to expense	2,065
Deductions	(1,005)
Other, including translation adjustments	(123)
Balance as of March 31, 2022	$	22,467

Note B—New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Government Assistance. In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance" to increase the transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity’s method of accounting for government assistance and the effect of the assistance on an entity’s financial statements. This standard is effective for annual periods beginning after December 15, 2021. The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application, or (2) retrospectively to those transactions. The Company adopted this ASU in January 2022. The adoption of this guidance did not have a material impact on its financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

None.

Note C—Revenue Recognition

The Company derives its revenues from

SEC Form 10-Q filed by Robert Half International Inc.