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Item 2. Management’s Discussion and Analysis

2021-10-29 compared with 2021-08-04 · 151 added, 153 removed, 248 unchanged (55% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain information contained in Management’s Discussion and Analysis and in other parts of this report may be deemed forward-looking statements regarding events and financial trends that may affect the Company’s future operating results or financial positions.

Certain information contained in Management’s Discussion and Analysis and in other parts of this report may be deemed forward-looking statements regarding events and financial trends that may affect the future operating results or financial positions of Robert Half International Inc.

(the "Company").

These statements may be identified by words such as “estimate”, “forecast”, “project”, “plan”, “intend”, “believe”, “expect”, “anticipate”, or variations or negatives thereof or by similar or comparable words or phrases.

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Executive Overview

The Company achieved record levels of service revenues and earnings in the second quarter due to a broad-based, global acceleration in demand for its staffing and business consulting services.

During the first half of 2021, service revenues were $2.98 billion, an increase of 14% from the prior year.

The Company achieved record levels of service revenues and earnings in the third quarter due to a broad-based, global acceleration in demand for its staffing and business consulting services.

During the first three quarters of 2021, service revenues were $4.69 billion, an increase of 23.3% from the prior year.

Net income increased 103.3% to $431 million and diluted net income per share increased 105.9% to $3.85.

The Company's staffing operations continue to reflect a faster pace of recovery than experienced in prior economic cycles.

Clients have lean staff levels as they begin to expand, which is exacerbated by generally higher levels of attrition.

Also, clients are elevating the skill and experience requirements for their job openings and are adding remotely located resources to fill their needs, which further adds to the demand for the Company's services.

The recovery is also broad-based and spans across industries, client size, skill levels, geographies, and lines of business.

Protiviti's multi-year record of consecutive growth continues to benefit from a highly diversified suite of solution offerings and client base.

The Company’s blended solutions pair Protiviti's world-class consulting talent with staffing's deep operational resources to provide a cost-effective solution to clients' skills and scalability needs.

The future of work increasingly includes flexible, hybrid and fully remote models and the Company can deliver deeper skills and more price-point choices to its clients by expanding candidate searches beyond local markets, leveraging its global office network and advanced AI-driven technologies.

This trend, together with elevated employee attrition rates at clients, has contributed to the Company's staffing results recovering from the recent downturn at a faster pace than experienced in the past.

Protiviti continues its trend of consecutive growth, with a highly diversified client base and suite of solution offerings.

The collaboration between Protiviti and staffing continues to be a strong differentiator, and growth remains strong across internal audit, technology consulting, risk and compliance consulting, and business performance improvement.

Demand for the Company’s temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services is largely dependent upon general economic and labor trends both domestically and abroad.

The United States economic backdrop as we ended the first half of 2021 showed signs of economic recovery as real gross domestic product (“GDP”) increased 6.5%, while the unemployment rate decreased from 6.7% in December 2020 to 5.9% at the end of the second quarter of 2021.

In the United States, the number of job openings exceeded the number of hires at the end of June 2021, creating competition for skilled talent that increases the Company's value to clients.

labor market remains robust, with significant demand due to talent shortages across our professional disciplines.

The United States economic backdrop throughout the first three quarters of 2021 was conducive to growth for the Company as real gross domestic product (“GDP”) grew 6.1%, 6.5%, and 2.0% for the first, second, and third quarter, respectively, while the unemployment rate decreased from 6.7% in December 2020 to 4.8% at the end of the third quarter of 2021.

In the United States, the number of job openings exceeded the number of hires at the end of September 2021, creating competition for skilled talent that increases the Company's value to clients.

labor market remains robust, with significant demand due to talent shortages across professional disciplines.

We monitor various economic indicators and business trends in all of the countries in which we operate to anticipate demand for the Company’s services.

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Accordingly, we typically assess headcount and other investments on at least a quarterly basis.

We continue to focus on the productivity levels of tenured staff and believe we have aligned staffing levels to drive increased profitability.

During the first half of 2021, headcount remained relatively flat for the staffing segments, while Protiviti headcount increased, when compared to prior year-end levels.

Capital expenditures, including $16.2 million for cloud computing arrangements, for the six months ended June 30, 2021, totaled $32.4 million, approximately 87% of which represented investments in software initiatives and technology infrastructure, both of which are important to the Company’s sustainability and future growth opportunities.

During the first three quarters of 2021, the Company increased headcount across all segments, when compared to prior year-end levels.

Capital expenditures, including $23.7 million for cloud computing arrangements, for the nine months ended September 30, 2021, totaled $48.5 million, approximately 84% of which represented investments in software initiatives and technology infrastructure, both of which are important to the Company’s sustainability and future growth opportunities.

Capital expenditures for cloud computing arrangements are included in cash flows from operating activities on the Company’s Condensed Consolidated Statements of Cash Flows.

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The Company’s most critical accounting policies and estimates are those that involve subjective decisions or assessments and are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

There were no material changes to the Company’s critical accounting policies or estimates for the six months ended June 30, 2021.

There were no material changes to the Company’s critical accounting policies or estimates for the nine months ended September 30, 2021.

Recent Accounting Pronouncements

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Because of the inherent difficulty in predicting economic trends, future demand for the Company’s services cannot be forecast with certainty.

The Company's technology investments have facilitated remote working models internally and, with the Company's advanced AI-driven capabilities, are providing clients with real-time choices of candidates across broader resource pools and geographies.

Bolstered by the strengths of the Company's brands, people, technology and professional business model, we are excited about our continued ability to find meaningful and exciting employment for the people we place and provide clients access to the specialized talent they need to grow and the deep subject matter expertise they need to confidently compete in a dynamic world.

Third quarter results show that the recovery from the recent economic downturn continues with strong momentum.

As we have done historically, the Company will continue to invest in its people, its technology, its brands and its business model to strengthen the ability to connect people to meaningful new work and provide clients with the talent and deep subject matter expertise they need to confidently compete and grow.

The Company’s temporary and permanent placement staffing business has 321 offices in 42 states, the District of Columbia and 17 foreign countries, while Protiviti has 63 offices in 24 states and 12 foreign countries.

Non-GAAP Financial Measures

The financial results of Robert Half International Inc.

(the “Company”) are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S.

Securities and Exchange Commission (“SEC”).

The financial results of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the SEC.

To help readers understand the Company’s financial performance, the Company supplements its GAAP financial results with the following non-GAAP measures:

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The Company provides these measures because they are used by management to review its operational results.

Combined segment income is income before income taxes adjusted for interest expense (income) and amortization of intangible assets.

Combined segment income is income before income taxes adjusted for interest income, net and amortization of intangible assets.

The Company provides combined segment income because it is how the Company evaluates segment performance.

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“Quantitative and Qualitative Disclosures About Market Risk” for further discussion of the impact of foreign currency exchange rates on the Company’s results of operations and financial condition.

Three Months Ended June 30, 2021 and 2020

The Company’s revenues were $1.58 billion for the three months ended June 30, 2021, increasing by 42.6% compared to $1.11 billion for three months ended June 30, 2020.

Revenues from foreign operations represented 22.8% of total revenues for three months ended June 30, 2021, up from 21.9% of total revenues for the three months ended June 30, 2020.

Three Months Ended September 30, 2021 and 2020

The Company’s revenues were $1.71 billion for the three months ended September 30, 2021, increasing by 43.9% compared to $1.19 billion for three months ended September 30, 2020.

Revenues from foreign operations represented 22.2% of total revenues for both the three months ended September 30, 2021 and 2020.

The Company analyzes its revenues for three reportable segments:

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Contributing factors for each reportable segment are discussed below in further detail.

Temporary and consultant staffing revenues were $978 million for the three months ended June 30, 2021, increasing by 29.9% compared to revenues of $753 million for the three months ended June 30, 2020.

Temporary and consultant staffing revenues were $1.05 billion for the three months ended September 30, 2021, increasing by 35.0% compared to revenues of $781 million for the three months ended September 30, 2020.

Key drivers of temporary and consultant staffing revenues include average hourly bill rates and the number of hours worked by the Company’s engagement professionals on client engagements.

On an as adjusted basis, temporary and consultant staffing revenues increased 27.2% for the second quarter of 2021, compared to the second quarter of 2020, due primarily to more hours worked by the Company’s engagement professionals on client engagements.

In the U.S., revenues in the second quarter of 2021 increased 27.5% on an as reported basis and 27.7% on an as adjusted basis, compared to the second quarter of 2020.

For the Company’s international operations, revenues for the second quarter of 2021 increased 38.6% on an as reported basis and increased 25.1% on an as adjusted basis, compared to the second quarter of 2020.

Permanent placement staffing revenues were $144 million for the three months ended June 30, 2021, increasing by 102.2% compared to revenues of $71 million for the three months ended June 30, 2020.

On an as adjusted basis, temporary and consultant staffing revenues increased 34.0% for the third quarter of 2021, compared to the third quarter of 2020, due primarily to more hours worked by the Company’s engagement professionals on client engagements.

In the U.S., revenues in the third quarter of 2021 increased 35.5% on both an as reported basis and on an as adjusted basis, compared to the third quarter of 2020.

For the Company’s international operations, revenues for the third quarter of 2021 increased 33.0% on an as reported basis and increased 29.1% on an as adjusted basis, compared to the third quarter of 2020.

Permanent placement staffing revenues were $156 million for the three months ended September 30, 2021, increasing by 79.4% compared to revenues of $87 million for the three months ended September 30, 2020.

Key drivers of permanent placement staffing revenues consist of the number of candidate placements and average fees earned per placement.

On an as adjusted basis, permanent placement staffing revenues increased 96.9% for the second quarter of 2021, compared to the second quarter of 2020, driven by an increase in number of placements.

In the U.S., revenues for the second quarter of 2021 increased 109.3% on an as reported basis and 109.6% on an as adjusted basis, compared to the second quarter of 2020.

For the Company’s international operations, revenues for the second quarter of 2021 increased 87.8% on an as reported basis and 70.5% on an as adjusted basis, compared to the second quarter of 2020.

Historically, demand for permanent placement staffing is even more sensitive to economic and labor market conditions than demand for temporary and consultant staffing and this is expected to continue.

Risk consulting and internal audit services revenues were $459 million for the three months ended June 30, 2021, increasing by 61.6% compared to revenues of $284 million for the three months ended June 30, 2020.

On an as adjusted basis, permanent placement staffing revenues increased 77.7% for the third quarter of 2021, compared to the third quarter of 2020, driven by an increase in number of placements.

In the U.S., revenues for the third quarter of 2021 increased 85.1% on both an as reported basis and on an as adjusted basis, compared to the third quarter of 2020.

For the Company’s international operations, revenues for the third quarter of 2021 increased 67.3% on an as reported basis and 62.1% on an as adjusted basis, compared to the third quarter of 2020.

Historically, demand for permanent placement staffing is even more

sensitive to economic and labor market conditions than demand for temporary and consultant staffing and this is expected to continue.

Risk consulting and internal audit services revenues were $501 million for the three months ended September 30, 2021, increasing by 56.1% compared to revenues of $321 million for the three months ended September 30, 2020.

Key drivers of risk consulting and internal audit services revenues are the billable hours worked by consultants on client engagements and average hourly bill rates.

On an as adjusted basis, risk consulting and internal audit services revenues increased 58.8% for the second quarter of 2021, compared to the second quarter of 2020, due primarily to an increase in billable hours.

In the U.S., revenues in the second quarter of 2021 increased 62.6% on an as reported basis and 62.8% on an as adjusted basis, compared to the second quarter of 2020.

The Company’s risk consulting and internal audit services revenues for the second quarter of 2021 from international operations increased 57.6% on an as reported basis and 43.5% on an as adjusted basis, compared to the second quarter of 2020.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended June 30, 2021, is presented in the following table:

On an as adjusted basis, risk consulting and internal audit services revenues increased 55.1% for the third quarter of 2021, compared to the third quarter of 2020, due primarily to an increase in billable hours.

In the U.S., revenues in the third quarter of 2021 increased 53.7% on both an as reported basis and on an as adjusted basis, compared to the third quarter of 2020.

The Company’s risk consulting and internal audit services revenues for the third quarter of 2021 from international operations increased 65.9% on an as reported basis and 61.4% on an as adjusted basis, compared to the third quarter of 2020.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the three months ended September 30, 2021, is presented in the following table:

Global United States International

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Gross Margin.

The Company’s gross margin dollars were $665 million for the three months ended June 30, 2021, increasing by 59.6% compared to $417 million for the three months ended June 30, 2020.

The Company’s gross margin dollars were $725 million for the three months ended September 30, 2021, increasing by 55.2% compared to $467 million for the three months ended September 30, 2020.

Contributing factors for each reportable segment are discussed below in further detail.

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and iii) conversion revenues, which are earned when a temporary position converts to a permanent position with the Company’s client.

Gross margin dollars for the Company’s temporary and consultant staffing division were $388 million for the three months ended June 30, 2021, increasing 38.9% compared to $279 million for the three months ended June 30, 2020.

As a percentage of revenues, gross margin for temporary and consultant staffing was 39.7% for the three months ended June 30, 2021, up from 37.1% for the three months ended June 30, 2020.

This year-over-year increase in gross margin percentage was primarily attributable to higher pay-bill spreads.

Gross margin dollars for the Company’s temporary and consultant staffing division were $421 million for the three months ended September 30, 2021, increasing 43.7% compared to $293 million for the three months ended September 30, 2020.

As a percentage of revenues, gross margin for temporary and consultant staffing was 40.0% for the three months ended September 30, 2021, up from 37.5% for the three months ended September 30, 2020.

This year-over-year increase in gross margin percentage was primarily attributable to higher pay-bill spreads and higher conversion revenues.

Gross margin dollars for permanent placement staffing represent revenues less reimbursable expenses.

Gross margin dollars for the Company’s permanent placement staffing division were $143 million for the three months ended June 30, 2021, increasing 102.3% from $71 million for the three months ended June 30, 2020.

Gross margin dollars for the Company’s permanent placement staffing division were $156 million for the three months ended September 30, 2021, increasing 79.4% from $87 million for the three months ended September 30, 2020.

Because reimbursable expenses for permanent placement staffing are de minimis, gross margin dollars are substantially explained by revenues previously discussed.

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and ii) staff utilization, which is the relationship of time spent on client engagements in proportion to the total time available for the Company’s risk consulting and internal audit services staff.

Gross margin dollars for the Company’s risk consulting and internal audit division were $133 million for the three months ended June 30, 2021, increasing 101% compared to $66 million for the three months ended June 30, 2020.

As a percentage of revenues, reported gross margin for risk consulting and internal audit services in the first three months of 2021 was 29.1%, up from 23.4% in the first three months of 2020.

As a percentage of revenues, adjusted gross margin dollars for risk consulting and internal audit services were 30.0% the second quarter of 2021, up from 25.7% in the second quarter of 2020.

The year-over-year increase in adjusted gross margin percentage was due primarily to higher staff utilization rates.

Gross margin dollars for the

Company’s risk consulting and internal audit division were $148 million for the three months ended September 30, 2021, increasing 69.8% compared to $87 million for the three months ended September 30, 2020.

As a percentage of revenues, reported gross margin for risk consulting and internal audit services in the third quarter of 2021 was 29.5%, up from 27.1% in the third quarter of 2020.

As a percentage of revenues, adjusted gross margin dollars for risk consulting and internal audit services were 29.4% in the third quarter of 2021, up from 28.1% in the third quarter of 2020.

The year-over-year improvement in gross margin percentage was primarily due to the relative composition of and number of professional staff and their respective pay and bill rates.

Selling, General and Administrative Expenses.

The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, variable overhead, depreciation, and occupancy costs.

The Company’s selling, general and administrative expenses were $488 million for the three months ended June 30, 2021, increasing 19.9% from $407 million for the three months ended June 30, 2020.

As a percentage of revenues, the Company’s reported selling, general and administrative expenses were 30.9% for the second quarter of 2021, down from 36.7% the second quarter of 2020.

As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.4% in the second quarter of 2021 compared to 32.9% in the second quarter of 2020.

The Company’s selling, general and administrative expenses were $496 million for the three months ended September 30, 2021, increasing 26.8% from $391 million for the three months ended September 30, 2020.

As a percentage of revenues, the Company’s reported selling, general and administrative expenses were 28.9% for the third quarter of 2021, down from 32.8% the third quarter of 2020.

As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.0% in the third quarter of 2021, down from 30.9% in the third quarter of 2020.

Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $315 million for the three months ended June 30, 2021, increasing 8.8% from $290 million for the three months ended June 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for temporary and consultant staffing were 32.2% in the second quarter of 2021, down from 38.4% in the second quarter of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for temporary and consultant staffing were 30.1% in the second quarter of 2021, down from 33.3% in the second quarter of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s permanent placement staffing division were $115 million for the three months ended June 30, 2021, increasing by 54.3% compared to $75 million for the three months ended June 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement staffing were 80.4% in the second quarter of 2021, down from 105.3% in the second quarter of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement staffing was 78.6% in the second quarter of 2021, down from 100.2% in the second quarter of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were $58 million for the three months ended June 30, 2021, increasing by 34.5% compared to $43 million for the three months ended June 30, 2020.

As a percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 12.5% in the second quarter of 2021, down from 15.1% in the second quarter of 2020 due primarily to positive leverage from an increase in revenues.

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the three months ended June 30, 2021 and 2020 is presented in the following table (in thousands):

Three Months Ended June 30, Relationships

Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $310 million for the three months ended September 30, 2021, increasing 14.9% from $270 million for the three months ended September 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for temporary and consultant staffing were 29.4% in the third quarter of 2021, down from 34.5% in the third quarter of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for temporary and consultant staffing were 29.5% in the third quarter of 2021, down from 31.9% in the third quarter of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s permanent placement staffing division were $125 million for the three months ended September 30, 2021, increasing by 57.8% compared to $79 million for the three months ended September 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement staffing were 79.9% in the third quarter of 2021, down from 90.8% in the third quarter of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement staffing was 80.0% in the third quarter of 2021, down from 88.2% in the third quarter of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were $61 million for the three months ended September 30, 2021, increasing by 45.3% compared to $42 million for the three months ended September 30, 2020.

As a percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 12.1% in the third quarter of 2021, down from 13.0% in the third quarter of 2020 due primarily to positive leverage from an increase in revenues.

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the three months ended September 30, 2021 and 2020 is presented in the following table (in thousands):

Three Months Ended September 30, Relationships

2021 2020 2021 2020 2021 2020

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Total $ 229,751 $ (1,759) $ 227,992 $ 76,547 $ 26,095 $ 102,642 13.4 % 6.4 % 13.3 % 8.6 %

Amortization of intangible assets 576 — 576 330 — 330 0.0 % 0.0 % 0.0 % 0.1 %

(Income) loss from investments held in

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1,759 (1,759) — (26,095) 26,095 — (0.1 %) 2.2 % 0.0 % 0.0 %

Interest expense (income), net 151 — 151 (105) — (105) 0.0 % 0.0 % 0.0 % 0.0 %

Amortization of intangible assets 572 — 572 334 — 334 0.0 % 0.0 % 0.0 % 0.0 %

Interest income, net (238) — (238) (202) — (202) 0.0 % 0.0 % 0.0 % 0.0 %

Income before income taxes $ 227,658 $ — $ 227,658 $ 102,510 $ — $ 102,510 13.3 % 8.6 % 13.3 % 8.6 %

(1) Changes in the Company’s deferred compensation obligations are included in selling, general and administrative expense or, in the case of Protiviti, costs of services, while the related investment income is presented separately.

The non-GAAP financial measures shown in the table above are adjusted to reclassify investment income from investments held in employee deferred compensation trusts to the same line item which includes the corresponding change in obligation.

The non-GAAP financial measures shown in the table above are adjusted to reclassify investment (income) loss from investments held in employee deferred compensation trusts to the same line item which includes the corresponding change in obligation.

These adjustments have no impact to income before income taxes.

Income from Investments Held in Employee Deferred Compensation Trusts .

(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.

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The value of the related investment trust assets also changes by the equal and offsetting amount, leaving no net costs to the Company.

The Company’s income from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments.

The Company’s income from investments held in employee deferred compensation trusts was $28 million and $49 million for the three months ended June 30, 2021 and 2020, respectively.

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 Company’s (income) loss from investments held in employee deferred compensation trusts was $2 million and ($26 million) for the three months ended September 30, 2021 and 2020, respectively.

Income Before Income Taxes and Segment Income.

The Company’s total income before income taxes was $204 million, or 12.9% of revenues, for the three months ended June 30, 2021, up from $58 million or 5.2% of revenues, for the three months ended June 30, 2020.

Combined segment income was $205 million, or 12.9% of revenues, for the three months ended June 30, 2021, up from $58 million or 5.3% of revenues, for the three months ended June 30, 2020.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended June 30, 2021 and 2020 (in thousands):

The Company’s total income before income taxes was $228 million, or 13.3% of revenues, for the three months ended September 30, 2021, up from $103 million or 8.6% of revenues, for the three months ended September 30, 2020.

Combined segment income was $228 million, or 13.3% of revenues, for the three months ended September 30, 2021, up from $103 million, or 8.6% of revenues, for the three months ended September 30, 2020.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the three months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended

September 30,

Income before income taxes $ 227,658 $ 102,510

Interest expense (income), net 151 (105)

Interest income, net (238) (202)

Amortization of intangible assets 572 334

Combined segment income $ 227,992 $ 102,642

For the Company’s temporary and consultant staffing division, segment income was $94 million, or 9.6% of applicable revenues, for the three months ended June 30, 2021, up from $28 million, or 3.8% of applicable revenues, for the three months ended June 30, 2020.

For the Company’s permanent placement staffing division, segment income was $31 million, or 21.3% of applicable revenues, for the three months ended June 30, 2021, up from segment loss of $0.2 million, or (0.3)% of applicable revenues, for the three months ended June 30, 2020.

For the Company’s risk consulting and internal audit services division, segment income was $80 million, or 17.4% of applicable revenues, for the three months ended June 30, 2021, up from segment income of $30 million or 10.6% of applicable revenues, for the three months ended June 30, 2020.

For the Company’s temporary and consultant staffing division, segment income was $110 million, or 10.4% of applicable revenues, for the three months ended September 30, 2021, up from $44 million, or 5.6% of applicable revenues, for the three months ended September 30, 2020.

For the Company’s permanent placement staffing division, segment income was $31 million, or 19.8% of applicable revenues, for the three months ended September 30, 2021, up from $10 million, or 11.6% of applicable revenues, for the three months ended September 30, 2020.

For the Company’s risk consulting and internal audit services division, segment income was $87 million, or 17.3% of applicable revenues, for the three months ended September 30, 2021, up from $49 million, or 15.2% of applicable revenues, for the three months ended September 30, 2020.

Provision for income taxes .

The provision for income taxes was 26.8% and 20.4% for the three months ended June 30, 2021 and 2020, respectively.

The comparative rate in 2020 was lower than normal due to adjustments made to the estimates of the pandemic impact to the 2020 tax rate.

Six Months Ended June 30, 2021 and 2020

The Company’s revenues were $2.98 billion for the six months ended June 30, 2021, increasing by 13.9% compared to $2.62 billion for the six months ended June 30, 2020.

Revenues from foreign operations represented 23% of total revenues for the six months ended June 30, 2021, up from 22% of total revenues for the six months ended June 30, 2020.

The provision for income taxes was 24.9% and 26.1% for the three months ended September 30, 2021 and 2020, respectively.

Nine Months Ended September 30, 2021 and 2020

The Company’s revenues were $4.69 billion for the nine months ended September 30, 2021, increasing by 23.3% compared to $3.80 billion for the nine months ended September 30, 2020.

Revenues from foreign operations represented 22.7% of total revenues for the nine months ended September 30, 2021, up from 22.0% of total revenues for the nine months ended September 30, 2020.

The Company analyzes its revenues for three reportable segments:

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Contributing factors for each reportable segment are discussed below in further detail.

Temporary and consultant staffing revenues were $1.87 billion for the six months ended June 30, 2021, increasing by 1.2% compared to revenues of $1.85 billion for the six months ended June 30, 2020.

Temporary and consultant staffing revenues were $2.92 billion for the nine months ended September 30, 2021, increasing by 11.2% compared to revenues of $2.63 billion for the nine months ended September 30, 2020.

Key drivers of temporary and consultant staffing revenues include average hourly bill rates and the number of hours worked by the Company’s engagement professionals on client engagements.

On an as adjusted basis, temporary and consultant staffing revenues were flat for the first half of 2021, compared to the first half of 2020.

In the U.S., revenues in the first half of 2021 decreased 0.8% on an as reported basis and decreased 0.1% on an as adjusted basis, compared to the first half of 2020.

For the Company’s international operations, revenues for the first half of 2021 increased 8.4% on an as reported basis and increased 0.3% on an as adjusted basis, compared to the first half of 2020.

Permanent placement staffing revenues were $255 million for the six months ended June 30, 2021, increasing by 33.3% compared to revenues of $192 million for the six months ended June 30, 2020.

On an as adjusted basis, temporary and consultant staffing revenues in the first three quarters of 2021 increased 10.1% compared to the first three quarters of 2020, due primarily to more hours worked by the Company’s engagement professionals on client engagements.

In the U.S., revenues in the first three quarters of 2021 increased 9.9% on an as reported basis and increased 10.4% on an as adjusted basis, compared to the first three quarters of 2020.

For the Company’s international operations, revenues for the first three quarters of 2021 increased 15.9% on an as reported basis and increased 9.2% on an as adjusted basis, compared to the first three quarters of 2020.

Permanent placement staffing revenues were $412 million for the nine months ended September 30, 2021, increasing by 47.7% compared to revenues of $279 million for the nine months ended September 30, 2020.

Key drivers of permanent placement staffing revenues consist of the number of candidate placements and average fees earned per placement.

On an as adjusted basis, permanent placement staffing revenues increased 30.9% for the first half of 2021, compared to the first half of 2020, driven by a increase in number of placements.

In the U.S., revenues for the first half of 2021 increased 31.2% on an as reported basis and 32.0% on an as adjusted basis, compared to the first half of 2020.

For the Company’s international operations, revenues for the first half of 2021 increased 38.2% on an as reported basis and 28.3% on an as adjusted basis, compared to the first half of 2020.

On an as adjusted basis, permanent placement staffing revenues increased 45.6% for the first three quarters of 2021, compared to the first three quarters of 2020, driven primarily by an increase in number of placements.

In the U.S., revenues for the first three quarters of 2021 increased 47.8% on an as reported basis and 48.4% on an as adjusted basis, compared to the first three quarters of 2020.

For the Company’s international operations, revenues for the first three quarters of 2021 increased 47.6% on an as reported basis and 39.3% on an as adjusted basis, compared to the first three quarters of 2020.

Risk consulting and internal audit services revenues were $856 million for the six months ended June 30, 2021, increasing by 48.1% compared to revenues of $578 million for the six months ended June 30, 2020.

Risk consulting and internal audit services revenues were $1.36 billion for the nine months ended September 30, 2021, increasing by 50.9% compared to revenues of $899 million for the nine months ended September 30, 2020.

Key drivers of risk consulting and internal audit services revenues are the billable hours worked by consultants on client engagements and average hourly bill rates.

On an as adjusted basis, risk consulting and internal audit services revenues increased 46.6% for the first half of 2021, compared to the first half of 2020, due primarily to an increase in billable hours.

In the U.S., revenues in the first half of 2021 increased 48.8% on an as reported basis and 49.7% on an as adjusted basis, compared to the first half of 2020.

The Company’s risk consulting and internal audit services revenues for the first half of 2021 from international operations increased 45.5% on an as reported basis and 34.8% on an as adjusted basis, compared to the first half of 2020.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the six months ended June 30, 2021, is presented in the following table:

On an as adjusted basis, risk consulting and internal audit services revenues increased 49.7% for the first three quarters of 2021, compared to the first three quarters of 2020, due primarily to an increase in billable hours.

In the U.S., revenues in the first three quarters of 2021 increased 50.6% on an as reported basis and 51.2% on an as adjusted basis, compared to the first three quarters of 2020.

The Company’s risk consulting and internal audit services revenues for the first three quarters of 2021 from international operations increased 52.4% on an as reported basis and 43.8% on an as adjusted basis, compared to the first three quarters of 2020.

A reconciliation of the non-GAAP year-over-year revenue growth rates to the as reported year-over-year revenue growth rates for the nine months ended September 30, 2021, is presented in the following table:

Global United States International

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Gross Margin.

The Company’s gross margin dollars were $1.23 billion for the six months ended June 30, 2021, increasing by 19% compared to $1.03 billion for the six months ended June 30, 2020.

The Company’s gross margin dollars were $1.95 billion for the nine months ended September 30, 2021, increasing by 30.3% compared to $1.50 billion for the nine months ended September 30, 2020.

Contributing factors for each reportable segment are discussed below in further detail.

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and iii) conversion revenues, which are earned when a temporary position converts to a permanent position with the Company’s client.

Gross margin dollars for the Company’s temporary and consultant staffing division were $733 million for the six months ended June 30, 2021, increasing 5.9% compared to $692 million for the six months ended June 30, 2020.

As a percentage of revenues, gross margin for temporary and consultant staffing was 39.2% for the six months ended June 30, 2021, up from 37.5% for the six months ended June 30, 2020.

This year-over-year increase in gross margin percentage was primarily attributable to higher pay-bill spreads.

Gross margin dollars for the Company’s temporary and consultant staffing division were $1.15 billion for the nine months ended September 30, 2021, increasing 17.1% compared to $986 million for the nine months ended September 30, 2020.

As a percentage of revenues, gross margin for temporary and consultant staffing was 39.5% for the nine months ended September 30, 2021, up from 37.5% for the nine months ended September 30, 2020.

This year-over-year increase in gross margin percentage was primarily attributable to higher pay-bill spreads and higher conversion revenues.

Gross margin dollars for permanent placement staffing represent revenues less reimbursable expenses.

Gross margin dollars for the Company’s permanent placement staffing division were $255 million for the six months ended June 30, 2021, increasing 33.4% from $191 million for the six months ended June 30, 2020.

Gross margin dollars for the Company’s permanent placement staffing division were $411 million for the nine months ended September 30, 2021, increasing 47.8% from $278 million for the nine months ended September 30, 2020.

Because reimbursable expenses for permanent placement staffing are de minimis, gross margin dollars are substantially explained by revenues previously discussed.

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Gross margin dollars for the Company’s risk consulting and internal audit division were $239 million for the six months ended June 30, 2021, increasing 61.8% compared to $147 million for the six months ended June 30, 2020.

As a percentage of revenues, reported gross margin for risk consulting and internal audit services in the first half of 2021 was 27.9%, up from 25.5% in the first half of 2020.

As a percentage of revenues, adjusted gross margin dollars for risk consulting and internal audit services were 28.6% the first half of 2021, up from 26.0% in the first half of 2020.

Gross margin dollars for the Company’s risk consulting and internal audit division were $386 million for the nine months ended September 30, 2021, increasing 64.8% compared to $234 million for the nine months ended September 30, 2020.

As a percentage of revenues, reported gross margin for risk consulting and internal audit services in the first three quarters of 2021 was 28.5%, up from 26.1% in the first three quarters of 2020.

As a percentage of revenues, adjusted gross margin dollars for risk consulting and internal audit services were 28.9% the first three quarters of 2021, up from 26.8% in the first three quarters of 2020.

The year-over-year increase in adjusted gross margin percentage was due primarily to higher staff utilization rates.

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The Company’s selling, general and administrative expenses consist primarily of staff compensation, advertising, variable overhead, depreciation, and occupancy costs.

The Company’s selling, general and administrative expenses were $911 million for the six months ended June 30, 2021, increasing 7.2% from $850 million for the six months ended June 30, 2020.

As a percentage of revenues, the Company’s reported selling, general and administrative expenses were 30.6% for the first half of 2021, down from 32.5% the first half of 2020.

As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.4% in the first half of 2021 down from 32.3% in the first half of 2020.

The Company’s selling, general and administrative expenses were $1.41 billion for the nine months ended September 30, 2021, increasing 13.4% from $1.24 billion for the nine months ended September 30, 2020.

As a percentage of revenues, the Company’s reported selling, general and administrative expenses were 30.0% for the first three quarters of 2021, down from 32.6% the first three quarters of 2020.

As a percentage of revenues, the Company’s adjusted selling, general and administrative expenses were 29.3% in the first three quarters of 2021 down from 31.9% in the first three quarters of 2020.

Contributing factors for each reportable segment are discussed below in further detail.

Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $594 million for the six months ended June 30, 2021, increasing 3.2% from $575 million for the six months ended June 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for temporary and consultant staffing were 31.8% in the first half of 2021, up from 31.2% in the first half of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for temporary and consultant staffing were 30.2% in the first half of 2021, down from 30.9% in the first half of 2020 due primarily to positive leverage from an increase in revenues and reduction in expenses from cost cutting initiatives implemented throughout 2020.

Selling, general and administrative expenses for the Company’s permanent placement staffing division were $210 million for the six months ended June 30, 2021, increasing by 16.2% compared to $181 million for the six months ended June 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement staffing were 82.4% in the first half of 2021, down from 94.5% in the first half of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement staffing was 81.0% in the first half of 2021, down from 94.3% in the first half of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were $107 million for the six months ended June 30, 2021, increasing by 14.3% compared to $94 million for the six months ended June 30, 2020.

As a percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 12.5% in the first half of 2021, down from 16.2% in the first half of 2020 due primarily to positive leverage from an increase in revenues.

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the six months ended June 30, 2021 and 2020 is presented in the following table (in thousands):

Six Months Ended June 30, Relationships

Selling, general and administrative expenses for the Company’s temporary and consultant staffing division were $904 million for the nine months ended September 30, 2021, increasing 6.9% from $845 million for the nine months ended September 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for temporary and consultant staffing were 30.9% in the first three quarters of 2021, down from 32.2% in the first three quarters of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for temporary and consultant staffing were 29.9% in the first three quarters of 2021, down from 31.2% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues and a continued reduction in expenses.

Selling, general and administrative expenses for the Company’s permanent placement staffing division were $335 million for the nine months ended September 30, 2021, increasing by 28.9% compared to $260 million for the nine months ended September 30, 2020.

As a percentage of revenues, reported selling, general and administrative expenses for permanent placement staffing were 81.4% in the first three quarters of 2021, down from 93.3% in the first three quarters of 2020.

As a percentage of revenues, adjusted selling, general and administrative expenses for permanent placement staffing was 80.6% in the first three quarters of 2021, down from 92.4% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues.

Selling, general and administrative expenses for the Company’s risk consulting and internal audit services division were $168 million for the nine months ended September 30, 2021, increasing by 23.9% compared to $135 million for the nine months ended September 30, 2020.

As a percentage of revenues, selling, general and administrative expenses for risk consulting and internal audit services were 12.4% in the first three quarters of 2021, down from 15.1% in the first three quarters of 2020 due primarily to positive leverage from an increase in revenues.

A reconciliation of the non-GAAP adjusted summary of operations to the reported summary of operations, for the nine months ended September 30, 2021 and 2020 is presented in the following table (in thousands):

Nine Months Ended September 30, Relationships

2021 2020 2021 2020 2021 2020

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Total $ 545,178 $ 38,039 $ 583,217 $ 257,405 $ 34,630 $ 292,035 11.6 % 6.8 % 12.4 % 7.7 %

Amortization of intangible assets 1,152 — 1,152 668 — 668 0.0 % 0.1 % 0.0 % 0.1 %

(Income) loss from investments held in

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(38,039) 38,039 — (34,630) 34,630 — 0.8 % 0.9 % 0.0 % 0.0 %

Interest expense (income), net 105 — 105 (1,062) — (1,062) 0.0 % 0.0 % 0.0 % 0.0 %

Amortization of intangible assets 1,724 — 1,724 1,002 — 1,002 0.0 % 0.0 % 0.0 % 0.0 %

Interest income, net (145) — (145) (1,264) — (1,264) 0.0 % 0.0 % 0.0 % 0.0 %

Income before income taxes $ 581,638 $ — $ 581,638 $ 292,297 $ — $ 292,297 12.4 % 7.7 % 12.4 % 7.7 %

These adjustments have no impact to income before income taxes.

Income from Investments Held in Employee Deferred Compensation Trusts .

(Income) Loss from Investments Held in Employee Deferred Compensation Trusts .

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The value of the related investment trust assets also changes by the equal and offsetting amount, leaving no net costs to the Company.

The Company’s income from investments held in employee deferred compensation trusts consists primarily of unrealized and realized gains and losses and dividend income from trust investments.

The Company’s income from investments held in employee deferred compensation trusts was $40 million for the six months ended June 30, 2021, up from $9 million for the six months ended June 30, 2020.

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 Company’s (income) loss from investments held in employee deferred compensation trusts was ($38 million) for the nine months ended September 30, 2021, up from ($35 million) for the nine months ended September 30, 2020.

The increase in income from trust investments was due to positive market returns in 2021.

Income Before Income Taxes and Segment Income.

The Company’s total income before income taxes was $354 million, or 11.9% of revenues, for the six months ended June 30, 2021, up from $190 million or 7.3% of revenues, for the six months ended June 30, 2020.

Combined segment income was $355 million, or 11.9% of revenues, for the six months ended June 30, 2021, up from $189 million or 7.2% of revenues, for the six months ended June 30, 2020.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the six months ended June 30, 2021 and 2020 (in thousands):

Six Months Ended

The Company’s total income before income taxes was $582 million, or 12.4% of revenues, for the nine months ended September 30, 2021, up from $292 million or 7.7% of revenues, for the nine months ended September 30, 2020.

Combined segment income was $583 million, or 12.4% of revenues, for the nine months ended September 30, 2021, up from $292 million, or 7.7% of revenues, for the nine months ended September 30, 2020.

The following table provides a reconciliation of the non-GAAP combined segment income to reported income before income taxes for the nine months ended September 30, 2021 and 2020 (in thousands):

Nine Months Ended

September 30,

Income before income taxes $ 581,638 $ 292,297

Interest expense (income), net 105 (1,062)

Interest income, net (145) (1,264)

Amortization of intangible assets 1,724 1,002

Combined segment income $ 583,217 $ 292,035

For the Company’s temporary and consultant staffing division, segment income was $170 million, or 9.1% of applicable revenues for the six months ended June 30, 2021, up from $122 million, or 6.6% of applicable revenues for the six months ended June 30, 2020.

For the Company’s permanent placement staffing division, segment income was $48 million, or 18.9% of applicable revenues in the first half of 2021, up from segment income of $11 million, or 5.6% of applicable revenues, in the first half of 2020.

For the Company’s risk consulting and internal audit services division, segment income was $137 million, or 16.0% of applicable revenues in the first half of 2021, compared to segment income of $57 million or 9.8% of applicable revenues, in the first half of 2020.

For the Company’s temporary and consultant staffing division, segment income was $280 million, or 9.6% of applicable revenues for the nine months ended September 30, 2021, up from $166 million, or 6.3% of applicable revenues for the nine months ended September 30, 2020.

For the Company’s permanent placement staffing division, segment income was $79 million, or 19.2% of applicable revenues in the first three quarters of 2021, up from segment income of $21 million, or 7.5% of applicable revenues, in the first three quarters of 2020.

For the Company’s risk consulting and internal audit services division, segment income was $224 million, or 16.5% of applicable revenues in the first three quarters of 2021, compared to segment income of $105 million, or 11.7% of applicable revenues, in the first three quarters of 2020.

Provision for income taxes .

The provision for income taxes was 26.6% and 28.3% for the six months ended June 30, 2021 and 2020, respectively.

The 2020 rate was elevated based on lesser coverage of non-deductible tax items due to lower estimated pandemic-impacted income.

The provision for income taxes was 26.0% and 27.5% for the nine months ended September 30, 2021 and 2020, respectively.

The 2020 rate was elevated based on lesser coverage of non-deductible tax items due to lower pandemic-impacted income.

Liquidity and Capital Resources

The change in the Company’s liquidity during the six months ended June 30, 2021 and 2020, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends.

Cash and cash equivalents were $543 million and $501 million at June 30, 2021 and 2020, respectively.

Operating activities provided $233 million during the six months ended June 30, 2021, offset by $31 million and $232 million of net cash used in investing activities and financing activities, respectively.

Operating activities provided $426 million during the six months ended June 30, 2020, offset by $43 million and $149 million of net cash used in investing activities and financing activities, respectively.

Operating activities—Net cash provided by operating activities for the six months ended June 30, 2021, was composed of net income of $260 million adjusted upward for non-cash items of $32 million, offset by net cash used in changes in working capital of $59 million.

Net cash provided by operating activities for the six months ended June 30, 2020, was composed of net income of $136 million adjusted upward for non-cash items of $62 million and net cash provided by changes in working capital of $228 million.

Investing activities—Cash used in investing activities for the six months ended June 30, 2021, was $31 million.

This was composed of capital expenditures of $16 million and investment in employee deferred compensation trusts of $42 million, offset by proceeds from employee deferred compensation trusts redemptions of $27 million.

Cash used in investing activities for the six months ended June 30, 2020, was $43 million.

This was composed of capital expenditures of $22 million and investment in employee deferred compensation trusts of $49 million, offset by proceeds from employee deferred compensation trusts redemptions of $28 million.

Financing activities—Cash used in financing activities for the six months ended June 30, 2021, was $232 million.

The change in the Company’s liquidity during the nine months ended September 30, 2021 and 2020, is primarily the net effect of funds generated by operations and the funds used for capital expenditures, investment in employee deferred compensation trusts, net of redemptions from employee deferred compensation trusts, repurchases of common stock, and payment of dividends.

Cash and cash equivalents were $634 million and $587 million at September 30, 2021 and 2020, respectively.

Operating activities provided $458 million during the nine months ended September 30, 2021, offset by $50 million and $341 million of net cash used in investing activities and financing activities, respectively.

Operating activities provided $565 million during the nine months ended September 30, 2020, offset by $43 million and $208 million of net cash used in investing activities and financing activities, respectively.

Operating activities—Net cash provided by operating activities for the nine months ended September 30, 2021 was composed of net income of $431 million adjusted upward for non-cash items of $49 million, offset by net cash used in changes in working capital of $22 million.

Net cash provided by operating activities for the nine months ended September 30, 2020 was composed of net income of $212 million adjusted upward for non-cash items of $52 million and net cash provided by changes in working capital of $301 million.

Investing activities—Cash used in investing activities for the nine months ended September 30, 2021 was $50 million.

This was composed of capital expenditures of $25 million and investments in employee deferred compensation trusts of $56 million, offset by proceeds from employee deferred compensation trusts redemptions of $31 million.

Cash used in investing activities for the nine months ended September 30, 2020 was $43 million.

This was composed of capital expenditures of $29 million and investments in employee deferred compensation trusts of $48 million, offset by proceeds from employee deferred compensation trusts redemptions of $34 million.

Financing activities—Cash used in financing activities for the nine months ended September 30, 2021 was $341 million.

This included repurchases of $212 million in common stock and $129 million in dividends paid to stockholders.

Cash used in financing activities for the six months ended June 30, 2020, was $149 million.

Cash used in financing activities for the nine months ended September 30, 2020 was $208 million.

This included repurchases of $91 million in common stock and $117 million in dividends paid to stockholders.

As of June 30, 2021, the Company is authorized to repurchase, from time to time, up to 8.4 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.

During the six months ended June 30, 2021 and 2020, the Company repurchased 1.5 million shares, at a cost of $124 million, and 1.0 million shares, at a cost of $51 million, on the open market, respectively.

As of September 30, 2021, the Company is authorized to repurchase, from time to time, up to 7.7 million additional shares of the Company’s common stock on the open market or in privately negotiated transactions, depending on market conditions.

During the nine months ended September 30, 2021 and 2020, the Company repurchased 2.3 million shares, at a cost of $200 million, and 1.4 million shares, at a cost of $75 million, on the open market, respectively.

Additional stock repurchases were made in connection with employee stock plans, whereby Company shares were tendered by employees for the payment of exercise price and applicable statutory withholding taxes.

During the six months ended June 30, 2021 and 2020, such repurchases totaled 0.3 million shares, at a cost of $19 million, and 0.3 million shares, at a cost of $12 million, respectively.

During the nine months ended September 30, 2021 and 2020, such repurchases totaled 0.3 million shares, at a cost of $20 million, and 0.3 million shares, at a cost of $12 million, respectively.

Repurchases of shares have been funded with cash generated from operations.

The Company’s working capital at June 30, 2021, included $543 million in cash and cash equivalents and $908 million in accounts receivable, both of which will be a significant source of ongoing liquidity and financial resilience.

The Company’s working capital at September 30, 2021 included $634 million in cash and cash equivalents and $1.01 billion in accounts receivable, both of which will be a significant source of ongoing liquidity and financial resilience.

The Company expects that internally generated cash will be sufficient to support the working capital needs of the Company, the Company’s fixed payments, dividends, and other obligations on both a short-term and long-term basis.

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The Company’s variable direct costs related to its temporary and consultant staffing business will largely fluctuate in relation to its revenues.

In May 2021, the Company entered into an amendment (“Amendment No.

1”) to extend the maturity of its $100 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024.

In May 2021, the Company entered into an amendment to extend the maturity of its $100 million unsecured revolving credit facility (the “Credit Agreement”) to May 2024.

Borrowings under the Credit Agreement will bear interest in accordance with the terms of the borrowing, which typically will be calculated according to the LIBOR, or an alternative base rate, plus an applicable margin.

The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of June 30, 2021.

There were no borrowings under the Credit Agreement as of June 30, 2021.

On August 3, 2021, the Company announced a quarterly dividend of $.38 per share to be paid to all shareholders of record as of August 25, 2021.

The dividend will be paid on September 15, 2021.

The Credit Agreement is subject to certain financial covenants and the Company was in compliance with these covenants as of September 30, 2021.

There were no borrowings under the Credit Agreement as of September 30, 2021.

On October 28, 2021, the Company announced a quarterly dividend of $.38 per share to be paid to all shareholders of record as of November 24, 2021.

The dividend will be paid on December 15, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis