ASGN Incorporated

and supplemental materials can be found in the investor relations section of our website at investors.asgn.com. Please also note that on this call, we will be referencing certain non-GAAP measures, such as adjusted EBITDA, adjusted net income, and free cash flow. These non-GAAP measures are intended to supplement the comparable GAAP measure. Reconciliations between the GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, President and Chief Executive Officer.

Thank you, Kimberly, and thank you for joining ASTN's first quarter 2021 earnings call. ASTN reported very strong results for the first quarter, with revenues adjusted EBITDA and adjusted EPS all exceeding the high end of our guidance ranges. I want to thank all of our incredible employees for making the first quarter such a success. especially as we continue to navigate the challenges of the pandemic. Revenues at $1,026,000,000 for the quarter were well ahead of our guidance range, representing the highest quarterly revenues ASGN has achieved to date. Our prior revenue record was set in the fourth quarter of 2019. Adjusted EBITDA of $108.6 million also topped expectations and improved 4.9% from the prior year quarter. With revenues topping a billion for the third consecutive quarter, there is no question that demand is returning to our business since the lows of last year, and I'm very pleased to report that we saw consistent month-to-month growth across all of our operating segments. Our commercial business, which includes the Apex and the Oxford segments, accounted for $767.9 million, or roughly 75% of consolidated revenues, while our government business, the ECS segment, accounted for 257.8 million, or approximately 25% of consolidated revenues. Commercial bookings, in particular, are on a very strong trajectory, with the growth rate of bookings as we enter the second quarter higher than that of which we saw going into Q1 of this year. Our significant exposure to mission-critical government work, combined with our ability to provide high-end digital transformation services to the commercial marketplace, has continued to support our growth. At the same time, our unique deployment model, combined with the increased penetration of our large accounts, has helped to propel the business forward. Our cash position also remains strong, with free cash flow totaling $110.5 million for the first quarter, an increase of 126.4% year over year. Our strong free cash flow generation supports investments in both our company's organic growth as well as in strategic tuck-in acquisitions. As I noted on our Q4 2020 call, ASGN remains acquisition-ready in 2021. Each of the companies we acquired last year, including Blackstone Federal, Leapfrog Systems, Skyris, and ISM, have been fully integrated and are performing in line with our expectations, if not better. With that said, let's now turn to our segment performance for the quarter, beginning with our commercial business. APEX, our largest segment, which includes APEX Systems and Creative Circles, services clients across multiple commercial and market. For the first quarter, the APEX segment generated revenues of $630.4 million, or 61.5% of revenues, up 0.2% year-over-year, or 1.8% on a day-adjusted basis. Our results for Q1 were higher than we had anticipated. Apex Systems improved 5.1% on a day-adjusted basis, while Creative Circle was down from the first quarter of 2020. Importantly, both Apex Systems and Creative Circle continued to grow off trough-level revenues in mid-second quarter of 2020, reporting the third straight quarter of sequential growth. Creative Circle's weekly volumes, while down year-over-year, exited the quarter well above expectations. Digital-related skill placements continue to drive Creative Circle's sequential growth. Both APEX Systems and the overall APEX segment have shown positive growth, not just on a year-over-year and sequential basis, but on a two-year comparison as well. Revenues for APEX Systems demonstrated some notable trends in the first quarter. They adjusted revenues in two of our five reported industries, including financial services and healthcare, exhibited positive growth year-over-year, leading to the aforementioned 5.1% day adjusted growth rate. Consumer and industrial industry accounts, though down from the first quarter of 2020, were up sequentially due to the strength in consumer staples, e-commerce, and utilities. And while retail, energy, hospitality, and transportation remained down from prior year quarter, It is important to note that each vertical continued to experience positive growth on a sequential basis. Our technology and telecommunications, or TMT, vertical was flat year over year on a day-adjusted basis. Within the vertical, technology accounts saw growth over Q1 2020, while telecommunication accounts declined year over year. Finally, government and business services, which was down low single digits, saw growth in aerospace and defense and government accounts over the first quarter of 2020, while business services accounts were down year-over-year. Overall, revenues in applications and project management skill areas like Agile, digital, ERP, and cloud continued to perform well, while infrastructure and scientific skill areas remained soft. Looking at the top accounts, top accounts achieved high single-digit growth rates for Q1, while retail and branch accounts remained down low single digits as compared to the prior year. From an industry perspective, top accounts revenue on a day-adjusted basis at Apex Systems was up in three of the five industry verticals we target, while Creative Circle posted positive growth across all of their top accounts in Q1 2021. Gross margins for the Apex segment were 28.9%, down roughly 40 basis points from Q1 2020 due to lower permanent placement business attributable to COVID-19. Gross margins at APEX Systems were flat with the prior year period, largely benefiting from higher margin consulting work. EBITDA margins were up year-over-year in the APEX segment based on higher productivity in our workforce. We also continue to grow our commercial consulting revenues, which totaled $137.7 million for the quarter, up 34% year-over-year. Additionally, our pipeline of consulting work grew again at high double-digit rates over the prior period and is trending very positively in the second quarter, as previously mentioned. ASGN's high-end consulting offering remains an important source of value we provide our clients, so we continue to identify acquisition opportunities that expand our consulting capabilities. As we grow our consulting revenues, we see an increasing amount of work in digital innovation and modern enterprise solutions across cloud, data, and analytics, and digital business transformation engagement, enabling us to implement many of the elements of our clients' individual roadmaps for the digitization of their businesses. Work in Agile and DevOps, in particular, is a large component of our support as our clients tie together applications and customer interface capabilities. This is especially true with applications such as Salesforce and ServiceNow. Let's now turn to ECS, which provides mission-critical solutions to the federal government, including the Department of Defense, intelligence agencies, and other civilian agencies. ECS recorded another quarter of strong revenue growth, with Q1 2021 revenues of 257.8 million, up 21.2% year-over-year. ECS's year-over-year improvement is primarily due to the government's continued high-demand artificial intelligence and machine learning services, a high volume of cloud services and solutions, and new opportunities presented through strategic M&A, such as through our recent acquisition of ISM. ECS's new business pipeline remains strong, with approximately 291.5 million in new business awarded in the first quarter and a book-to-bill of 1.1 to 1 for the quarter. Contract backlog totaled 2.7 billion at the end of the first quarter, or a healthy coverage ratio of 2.5 times ECS's trailing 12-month revenues. Our high-end solutions in cybersecurity, digital transformation, AIML, data science, and analytics remain areas of focus for the federal government. During the quarter, some of our new contract awards, including the expansion of AI ML activities across the DoD and intelligence community, including AI integration with intelligence, surveillance, and reconnaissance systems. We also continue to win programs that expand our ServiceNow modernization efforts, as well as the win of a ReCompete classified IT program. Last but not least, ECS expanded its reach at Department of Energy and the National Labs with three new contracts, most notably a contract at Cynthia National Labs to provide comprehensive enterprise and mission-embedded IT support. Turning to our last segment, Oxford. Oxford offers on-demand consulting talent for commercial IT, healthcare, life sciences, and engineering clients, as well as permanent placement talent through our CyberCoders division. The Oxford segment reported revenues of $137.5 million for the first quarter of 2021. And while down year-over-year, the segment was up 6.5% sequentially. Both Oxford and CyberCoders are seeing a very solid recovery from the low in the first half of 2020. I am very pleased with ASGN's first quarter performance. Between the organic growth of our commercial and government and markets, and the strong performance of our strategic acquisitions, our business continues to be positioned for success. It is clear that the marketplace is strengthening, with growth in bookings and some of our commercial industries accelerating even faster than that of revenue. To discuss this performance in further detail, I'll now turn the call over to Ed Pierce, our CFO. Ed?

Thanks, Ed. Good afternoon, everyone. As Ted mentioned, our financial performance for the quarter was above guidance estimates, reflecting better than anticipated sequential growth of our commercial business and double-digit year-over-year growth of our federal government business. Revenues for the quarter exceeded $1 billion for the third consecutive quarter and were up 3.6% year-over-year. This was achieved despite one fewer billable day in the quarter and the difficult prior year comp as the first quarter of last year was only minimally affected by COVID. Sequentially, commercial revenues were up 1.4%, reflecting continuation of the strong momentum of the business exiting Q4 last year. Net income and adjusted EBITDA for the quarter were up year over year and grew at a higher rate than revenues. Our adjusted EBITDA margin of 10.6% was up slightly from Q1 of last year and above the high end of our guidance estimates. Commercial revenues for the quarter were $767.9 million and were slightly up year over year after adjusting for one fewer billable day in the quarter. Sequentially, commercial revenues were up for the third consecutive quarter across all divisions. Federal government revenues for the quarter were $257.8 million, an increase of 21.2% year over year. This strong double-digit year over year growth was driven by a number of factors, including increased volume on certain existing programs, new contract awards, and the contribution from acquired businesses. Gross margin for the quarter was at the high end of our guidance estimate. On a year-over-year basis, gross margin was down due to business mix and higher state unemployment tax rates. Business mix changes included lower revenues from our high-margin creative marketing and permanent placement services and a higher mix of revenue from our federal government business which carries a lower gross margin than our commercial business. The effect of these changes was partially offset by the high growth of commercial consulting revenues, which grew 34% year-over-year and totaled $137.7 million for the quarter. SG&A expenses were 18.9% of revenues, down approximately 100 basis points year-over-year and up approximately 100 basis points sequentially. The year-over-year reduction in the SG&A expense margin reflected, among other things, lower travel and entertainment, healthcare, and headcount expenses. The sequential increase in the expense margin reflected the effects of the payroll tax reset, higher compensation expenses related to headcount additions to support the growth of the business, and higher incentive-based compensation related to improved growth and profitability. We anticipate our expense margin will gradually increase over the course of the year as COVID-related restrictions are relaxed, and we continue to make the necessary investments in our operating divisions to support higher growth in our business. Net income for the quarter was $48.7 million, up 11.2% year over year. Adjusted EBITDA for the quarter was up year over year, and our adjusted EBITDA margin was above our guidance estimates and up 10 basis points over Q1 of last year. Free cash flow for the quarter was 110.5 million. The conversion rate of adjusted EBITDA into free cash flow exceeded 100% and was well above our historical conversion rates. The higher than normal conversion rate mainly related to a reduction in the number of accounts receivable days sales outstanding. Over the course of the year, we expect the conversion rate will return to historical norms. The quarter end, Cash and cash equivalents were $386.5 million. There were no outstanding borrowings under our $250 million revolving credit facility, and our senior secured debt leverage ratio was 1.13 to 1. Our financial guidance estimates for the second quarter set forth in our earnings release and supplemental materials. These estimates are based on current production trends and assume no significant deterioration in the markets that we serve. For the second quarter of 2021, we estimate revenues of $1,058 million to $1,078 million, net income of $56.4 to $60.1 million, and adjusted EBITDA of $119 to $124 million. We expect all operating divisions will be up both year-over-year and sequentially. Our SG&A expense estimates include sequential increases for additional headcount investments to support the expected growth in our commercial business, as well as increases in other expenses that were curtailed due to COVID. Certain of these expenses, such as travel and entertainment, will be gradually reintroduced back into the business and will be weighted more to the second half of the year. For the full year 2021, we expect our cash SG&A expense margin will be slightly above our expense margin for 2020, but below our expense margin for 2019. We also expect our gross and adjusted EBITDA margins for the full year 2021 will be in line with the slightly below our margins for 2020. Thank you for your time, and I'll turn the call back over to Ted for some closing remarks.