Robert Half Inc.

Hello and welcome to the Robert Half second quarter 2026 conference call. Today's conference call is being recorded. If you'd like to ask a question during the Q&A portion of the call, please press star and the number one on your telephone keypad. Our hosts for today's call are Mr. Keith Waddell, President and Chief Executive Officer of Robert Half, and Mr. Michael Buckley, Chief Financial Officer. Mr. Waddell, you may begin.

Hello, everyone. We appreciate your time today. Before we get started, I'd like to remind you the comments made on today's call contain forward-looking statements, including predictions and estimates about our future performance. These statements represent our current judgment of what the future holds. However, they're subject to the risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are described in today's press release in our most recent 10-K and 10-Q filed with the SEC. We assume no obligation to update the statements made on today's call. During this presentation, we may refer to certain non-GAAP financial measures as adjusted. Adjusted revenue growth excludes the impact of building day variations and foreign currency exchange rates. adjusted gross margin, SG&A, and operating income reflect the combining of investment gains and losses related to employee deferred compensation plans with corresponding changes in those obligations. These items have no impact on reported net income. Reconciliations and additional information are included in the supplemental schedules to our earnings release. For your convenience, I've prepared remarks for today's call. are available at the investor center of our website, roberthalf.com. For the second quarter of 2026, global enterprise revenues were $1.336 billion, down 2% from last year's second quarter on a reported basis and down 3% on an adjusted basis. Talent Solutions delivered its third consecutive quarter of sequential revenue growth on an adjusted basis while its permanent placement operations also posted adjusted year-on-year revenue growth of 2.5%. Global enterprise revenues and earnings exceeded the midpoint of our second quarter guidance. Hiring demand continues to improve and market conditions are increasingly more supportive of our business. Our unique combination of award-winning high-tech capabilities and High Touch Expertise positions as well to help clients navigate a dynamic business environment and connect them with the specialized talent and consulting services they need. That income per share in the second quarter was 26 cents compared to 41 cents in the second quarter a year ago. As we discussed in last quarter's call, second quarter EPS was impacted by cost actions taken by productivity, which Mike which Mike will discuss further in a moment. Cash flow provided by operations during the quarter was 109 million. In June, we distributed a 59 cent per share cash dividend to our shareholders of record for a total cash outlay of 59 million. Return on invested capital for the company was 9% in the second quarter. Now I'll turn the call over to our CFO, Mike Buckley.

Thank you, Keith. As Keith noted, global revenues were $1.336 billion in the second quarter. On an adjusted basis, second quarter talent solutions revenues were down 2% year over year. U.S. talent solutions revenues were $660 million, down 1% from the prior year's second quarter. Non-U.S. talent solutions revenues were $205 million, down 4% year over year. We conduct talent solutions operations throughout offices in the United States and 18 other countries. In the second quarter of 2026, there were 63.1 billing days compared to 63.2 billing days in the second quarter one year ago. The third quarter of 2026 has 64.6 billing days compared to 64.2 billing days in the third quarter of 2025. Currency exchange rate movements during the second quarter had the effect of increasing reported year-over-year total revenues by $7 million, $6 million for Talent Solutions and $1 million for Protivity. Contract Talent Solutions bill rates for the second quarter increased 2.3% compared to one year ago, adjusted for changes in the mix of revenues by functional specialization, currency, and country. This rate for the first quarter was 2.6%. Now let's take a closer look at results for productivity. Global revenues in the second quarter were $471 million, $373 million of that is from the United States, and $98 million is from outside of the United States. On an adjusted basis, global second quarter productivity revenues were down 5% versus the year-ago period. U.S. productivity revenues were down 6% while non-U.S. productivity revenues were down 3% compared to one year ago. Productivity and its independently owned member firms serve clients through locations in the United States and 27 other countries. Turning now to gross margin, in contract talent solutions, Gross margin was 39.1% of applicable revenues in both the current quarter and the second quarter one year ago. Conversion, or contract to hire revenues, were 3.4% of contract revenues in both the current quarter and the second quarter of 2025. Our permanent placement revenues were 13.6% of consolidated talent solutions revenues in the current quarter and many more. and 19.7% in the second quarter one year ago. Adjusted gross margin for productivity was 18.5% for the quarter just ended compared to 22.3% last year. As we discussed in our last call, productivity revenue results reflect ongoing shifts in the U.S. financial services regulatory environment. As a result, cost actions were taken during the quarter including 7 million in severance costs which reduced adjusted gross margin by 1.4 percentage points or 4 cents per share. Enterprise SG&A costs were 40.1% of global revenues in the second quarter compared to 37.1% in the same quarter one year ago. Adjusted enterprise SG&A costs were 34.3% for the quarter just ended compared to 33.8% one year ago. Talent Solutions SG&A costs were 53% of Talent Solutions revenues in the second quarter versus 49.2% in the second quarter of 2025. Adjusted Talent Solutions SG&A costs were 44.1% for both the current quarter and the second quarter one year ago. Second quarter SG&A costs for productivity were 16.4% of productivity revenues compared to 15.7% for the same quarter one year ago. Reported operating income for the second quarter was negative 62 million. Adjusted operating income was positive 39 million in the quarter, or 2.9% of revenues. Second quarter adjusted operating income for talent solutions was $29 million or 3.3% of revenues. Adjusted operating income for productivity in the second quarter was $10 million or 2.1% of revenues. Our second quarter 2026 income statement includes a $101 million gain from investments held in employee deferred compensation trusts. This is completely offset by an equal amount of higher employee deferred compensation costs, which are reflected in SG&A expenses and direct costs. As such, it has no effect on our reported net income. Our second quarter tax rate was 35% compared to 33% one year ago. The increase in the tax rate is primarily the result of lower tax credits and the increased impact of non-deductible expenses relative to lower pre-tax income. At the end of the second quarter, accounts receivable were $821 million and implied day sales outstanding, or DSO, was 55.4 days. Before we move to third quarter guidance, let's review some of the monthly revenue trends we saw in the second quarter and so far in July, all adjusted for currency and billing days. Contract Talent Solutions exited the second quarter with June revenues down 2% versus the prior year, the same as the 2% decrease for the full quarter. Revenues for the first two weeks of July were down 1% compared to the same period last year. Permanent placement revenues in June were up 4% versus June of 2025. This compares to a 3% increase for the full quarter. For the first three weeks in July, permanent placement revenues were up 4% compared to the same period in 2025. We provide this information so that you have insight into some of the trends we saw during the second quarter and into July. But as you know, these are very brief time periods. We caution against reading too much into them. With that in mind, we offer the following third quarter guidance. Revenues. 1.31 billion to 1.41 billion. Income per share, 43 to 53 cents. Midpoint revenues of 1.36 billion are flat with the same period in 2025 on an adjusted basis. Our midpoint revenue guidance for the third quarter reflects year-over-year growth of 3% for talent solutions and 6% lower revenues for Protivity. Protivity's results continue to reflect the ongoing shifts in the U.S. financial services regulatory environment, which we discussed last quarter. The major financial assumptions underlying the midpoint of these estimates are as follows. Adjusted revenue growth year-over-year for talent solutions up 1 to 5 percent for Protivity Down 4% to 8%. Overall, down 2% to up 2%. Adjusted gross margin percentage for contract talent, 38% to 40%. For productivity, 23% to 25%. Overall, 38% to 40%. Adjusted SG&A as a percentage of revenue. For talent solutions, 42 to 44 percent. For productivity, 16 to 18 percent. And overall, 33 to 35 percent. Adjusted operating income as a percentage of revenue for talent solutions, 3 to 5 percent. For productivity, 6 to 8 percent. Overall, 4 to 6 percent. Tax rate, 33 to 35 percent and shares outstanding 100 to 101 million. 2026 capital expenditures and capitalized cloud computing costs of 50 to 70 million with 10 to 20 million during the third quarter. For the fourth quarter, we offer the following directional observations. Because of the November and December holidays, The fourth quarter has 61.1 billing days compared with 64.6 billing days in the third quarter, a quarter over quarter decrease of approximately 5%. This reduction is typically partially offset by seasonal growth in average same day billings, which has historically been in the low single digits. Lower sequential revenues result in negative operating leverage, such that fourth quarter operating margins have historically been 0.5 to 1.5 percentage points lower sequentially than third quarter margins. All estimates we provide on this call are subject to the risks mentioned in today's press release and in our SEC filing. Now I'll turn the call back over to Keith.