Press release·02/24/2025 20:34:06

Overview of ASGN’s Financial Performance

ASGN is a leading provider of information technology (IT) services and solutions across the commercial and government sectors. The company operates through two main segments - Commercial and Federal Government.

In 2024, ASGN generated revenues of $4.1 billion, down 7.9% from the prior year. The Commercial segment, which accounts for 70% of total revenues, saw a 9.6% year-over-year decline. The Federal Government segment, 30% of total revenues, declined 3.5%.

Gross profit for the year was $1.18 billion, a 7.5% decrease from 2023. However, gross margin expanded slightly to 28.9% due to a higher mix of higher-margin commercial consulting revenues. Selling, general and administrative (SG&A) expenses decreased to 20.0% of revenues from 19.0% in the prior year.

Net income for 2024 was $175.2 million, down from $219.3 million in 2023. The decline was driven by lower revenues and profits across both business segments.

Revenue and Profit Trends

ASGN’s revenues have been impacted by softness in the macroeconomic environment, particularly in the more cyclical portions of the Commercial segment. Assignment revenues, which make up 42.5% of total revenues, declined 16.3% year-over-year.

In contrast, Commercial segment consulting revenues grew 3.0%, while Federal Government consulting revenues declined 3.5%. Overall, IT consulting services accounted for 57.5% of ASGN’s total revenues in 2024.

The company’s gross margin expanded slightly to 28.9%, up from 28.8% in the prior year. This was driven by the higher mix of commercial consulting revenues, which carry higher margins than assignment and federal government revenues. However, the decline in overall revenues led to a 7.5% drop in gross profit.

SG&A expenses decreased to 20.0% of revenues, down from 19.0% in 2023, primarily due to lower compensation-related costs. Amortization of intangible assets also declined year-over-year.

Interest expense, net, decreased to $64.3 million from $66.4 million in the prior year, driven by higher interest income and lower debt amendment fees. The effective tax rate rose slightly to 27.0% from 26.3% in 2023.

As a result of these factors, net income declined 20.1% to $175.2 million in 2024 compared to $219.3 million in the prior year.

Strengths and Weaknesses

Strengths:

• Diversified business model with exposure to both commercial and government sectors
• Strong position in IT consulting services, which make up the majority of revenues
• Expanding gross margins due to higher mix of commercial consulting work
• Disciplined cost management, as evidenced by declining SG&A expenses

Weaknesses:

• Sensitivity to macroeconomic cycles, as seen in the decline of assignment revenues
• Reliance on the more cyclical portions of the Commercial segment, which account for a significant portion of total revenues
• Declining revenues and profits across both business segments in 2024

Outlook and Future Prospects

Looking ahead, ASGN faces a challenging economic environment that has impacted both its Commercial and Federal Government segments. The company will need to navigate softness in the macroeconomic conditions that have weighed on its more cyclical assignment business.

However, ASGN’s focus on higher-margin IT consulting services, both in the commercial and government sectors, provides some insulation from these headwinds. The company’s disciplined cost management has also helped to partially offset the revenue declines.

ASGN’s strong cash flow generation and healthy balance sheet, with full availability under its $500 million revolving credit facility, provide the financial flexibility to weather the current environment. The company’s ongoing share repurchase program also demonstrates its commitment to returning capital to shareholders.

Overall, ASGN appears well-positioned to navigate the near-term challenges, but the company will need to closely monitor economic conditions and continue to adapt its business model to drive profitable growth in the years ahead.