Greetings. Welcome to the ASGN Incorporated Third Quarter 2023 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Kimberly Esterkin, Vice President, Investor Relations. You may begin. Good afternoon and thank you for joining us today for ASGN's Third Quarter 2023 conference Call. With me are Ted Hanson, Chief Executive Officer, Rand Blazer, President, and Marie Perry, Chief Financial Officer. Before we get started, I would like to remind everyone that our commentary contains forward-looking statements. Although we believe these statements are reasonable, they are subject to risks and uncertainties, and as such, our actual results could differ materially from those statements. Certain of these risks and uncertainties are described in today's press release and in our SEC filings. We do not assume any obligation to update these statements made on this call. For your convenience, our prepared remarks 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 GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, Chief Executive Officer. Thank you, Kim, and thank you for joining ASGN's Third Quarter 2023 Earnings Call. ASGN's performance for the third quarter 2023 was in line with our expectations, with results slightly ahead of or within our guidance ranges. Third quarter 2023 revenues of $1.12 billion were above the midpoint of our guidance, with IT consulting revenues reaching approximately 55% of the total, ahead of our 2024 goal. Adjusted EBITDA margin was 12.3% for the third quarter, above the top end of our guidance range. We continue to see opportunities for margin expansion as our Consulting revenues grow. With that as a background on our consolidated results, I'd like to turn to our industry performance. As we review our performance, three key themes will be consistent throughout the discussion. First, while the market for IT spend remains difficult, these headwinds will reverse, and ASGN's business is better positioned than it's ever been to capture in-demand IT opportunities. Second, the strength of our business lies in our large domestic enterprise account base. Our diversified client base across six critical industry verticals provides stability throughout market cycles. Third, our business continues to evolve toward IT Consulting, with more than half of our consolidated revenues now in the higher end, higher-value project and solution capabilities. This growth in Consulting revenues, along with the variable nature of our cost structure, supports our margins. I'll speak more about each of these topics as we review our quarterly performance, but let's begin by discussing the five industry verticals that comprise our Commercial segment. Our Commercial segment predominantly services large enterprise and Fortune 1000 companies. Commercial segment revenues for the quarter declined by low teens on a difficult year-over-year comparison. Revenues for the segment benefited from growth in our Consulting business, offset by double-digit declines in the more discretionary areas of our assignment business. For the quarter, Commercial Consulting revenues increased 2.1% year-over-year. Commercial Consulting bookings of $291 million translated to a book-to-bill of 1.1 x for the quarter and 1.2x on a trailing 12-month basis. Of the consulting work won during the quarter, bookings were again weighted toward renewals on existing projects, with a large portion of bookings coming in at the end of the third quarter, an indication that our clients remain cautious in their spend. Sales cycles are slow and project durations continue to be elongated, but our retention rates on existing deals remain strong as our clients continue to recognize the high value of and need for ASGN services. We are seeing anything with an immediate return on investment, specifically projects aimed at cost containment and those generating operational efficiencies, getting the green light from clients. I'll speak more on the work won during the quarter shortly. Turning to our vertical performance, our Consumer and Industrial and Healthcare verticals saw low single-digit revenue declines year-over-year. Within Consumer and Industrial, Consumer staples and utilities were bright spots, each experiencing low single-digit growth as compared to the third quarter of 2022. In the Healthcare vertical, provider accounts maintained their strength, and revenues were up double digits year-over-year. Technology, Media, and Telecommunications, or TMT, Business and Government services, and Financial services, our three remaining Commercial industry verticals, all saw continued revenue declines year-over-year, though each of these verticals displayed some resiliency in certain areas on a sequential basis. Within TMT, for example, Media and Entertainment account revenues remained relatively consistent with the second quarter of 2023, with the rate of decline slowing. Within our Financials vertical, big bank revenues were relatively flat sequentially, with small sequential revenue growth in diversified financials. Even in these more challenging macroeconomic conditions, as previously noted, our commercial bookings remain solid. We continue to make progress on the AI front across the Commercial segment, with generative AI accounting for many of the new opportunities in our pipeline, followed closely by work in machine learning. The vast majority of the generative AI projects for clients are exploratory at this time. We expect larger AI programs to follow once use cases that demonstrate value creation have been identified for our clients. At the same time, this AI exploration work is taking place, we're seeing strong demand for Data Engineering and Data Governance in support of AI use cases. These infrastructure needs are being driven by the desire to ensure that data is complete, accurate, and timely for training, testing, and deploying AI models in the future. One example of work is a Consulting project we won during the third quarter with a leading North American pet supply company. Our team was brought on to build out an end-to-end freight management system for our client, including the full Cloud Data platform for managing analytics and future AI and automation capabilities. We are responsible for ensuring the architecture, configuration, reporting, and analytics are properly set up in the new freight management tool. At the same time, we must ensure that the data is extracted correctly from the old tool and ingested into the new tool. We're using technology solutions such as Snowflake, Databricks, and Google Cloud as part of this end-to-end architecture to ensure the best outcome for our client. We also continue to excel in projects involving Engineering, Robotics, and Machine Learning capabilities. In another Consulting project won during the third quarter, we were hired to provide services to a leader in e-grocery technology. Under this contract, we're helping to drive the deployment of our client's robotic grocery fulfillment system, which are used to stock the warehouses of a major retailer nationwide. We are providing end-to-end provisioning, installation, quality assessment, and support for each warehouse deploying the new e-grocery technology. Let's now turn to our Federal Government segment, our sixth industry vertical, which provides mission-critical solutions to the Department of Defense, the Intelligence community, and Fed c ivilian agencies. Federal segment revenues for the quarter were up 12.3% year-over-year on an as-reported basis and up 4% organically. Contract backlog was roughly $3.3 billion at the end of the third quarter, or a healthy coverage ratio of 2.6 times the segment's trailing 12-month revenues. New awards were approximately $501.2 million, which translates to a book-to-bill of 1.5x for the quarter and 0.9x on a trailing 12-month basis. As we continued to secure work during the third quarter, we recognized the potential for some disruption in the procurement process should a government shutdown occur following the end of Q3. Our Government team proactively engaged in discussions with clients for several weeks leading up to October first, and reconfirmed that the vast majority of our work is mission-critical. We believe that 10% or less of our Federal Government work could be impacted in the case of an extended government shutdown. We're keeping track of budgetary developments. In the meantime, we remain heads down on providing leading IT solutions to our Government client base. Speaking of supporting our clients, in the third quarter, we won a combination of new and recompete contracts. Among the new work secured, we won two new Cybersecurity contracts with the U.S. House of Representatives and the Census Bureau. In addition, we secured a five-year data and AI contract to support the National Geospatial-Intelligence Agency, the Chief Digital and Artificial Intelligence Office, or CDAO, and the Army Research Laboratory. We also won a smaller contract from the CDAO to help establish a global AI innovation lab that will support academic research in artificial intelligence worldwide. Similar to the Commercial segment, much of our work in generative AI in the Government space remains exploratory at present. But with excellent qualifications in traditional forms of artificial intelligence, our federal and civilian customers continue to look to us to identify use cases that will increase their operational efficiency. In fact, on several DOD AI research and development programs, we are integrating generative AI and large language models into current solutions. With regards to project extensions, we won work with the U.S. Postal Service, supporting several key areas, including Advanced Data Management and Cybersecurity, and continued to support the Department of Veterans Affairs while adding new work in Strategic planning, C loud Advisory services, and AI technology implementation. The breadth of work just described is evidence of the countercyclical balance the Government industry vertical provides to our overall account portfolio. With that, I'll turn the call over to Marie to discuss the third quarter results and our fourth quarter 2023 guidance. ... Thanks, Ted. It's great to speak with everyone this afternoon. As Ted noted, our results for the quarter were in line with or exceeded our expectations. The third quarter revenues of $1.12 billion were down 6.8% year-over-year. Revenues for the Commercial segment were $782.4 million, down 13.1% compared to the prior year quarter. Revenues from Commercial Consulting, the largest of our high-margin revenue streams, totaled $274.2 million, up 2.1% year-over-year on a tough comparison of 43.2% growth in the third quarter of 2022. Growth in commercial consulting revenue was offset by 19.5% year-over-year decline in Assignment revenues, reflecting the continued softness in more discretionary and cyclical parts of our business. On a same billable day basis, adjusting for 1.5 fewer billable days in Q3 of 2023 compared to the prior year quarter, Assignment revenues declined 17.6%. Revenues from our Federal Government Segment were $334.4 million, up 12.3% year- over- year, including a $24.6 million contribution from Iron Vine. The growth in our Federal Government Segment, our sixth vertical, speaks directly to the benefits of maintaining a diverse client base across industries. Turning to margins. On a consolidated basis, gross margin was 28.9%, down 110 basis points over the third quarter of last year and flat sequentially. The year-over-year compression in gross margin was mainly related to business mix, including a lower mix of certain high-margin revenues within our Commercial segment and a higher mix of revenues from our Federal Government segment, which carry a lower gross margin than Commercial segment revenues. Gross margin for the Commercial segment was 32.5%, down 60 basis points year-over-year, primarily due to the lower mix of certain high-margin Assignment revenue streams, mainly Creative Digital Marketing and Permanent Placement revenues, which was partially offset by a higher mix of high-margin IT Consulting revenues with a year-over-year expansion in gross margin. Gross margin for the Federal Government segment was 20.4%, down 10 basis points year-over-year. SG&A expenses for the third quarter were $206 million, or 18.4% of revenues, as compared to $232.6 million, or 19.4% of revenues in the prior year period. SG&A expenses included $1.1 million in acquisition, integration, and strategic planning expenses, and a $2.7 million tentative legal settlement, both of which were not included in our guidance estimates. As expected, interest expense increased year-over-year related to rising interest rates and our recent refinancing. At the end of August, we completed a successful transaction that upsized and extended the maturities of our revolving credit facility and Term Loan B. Our revolving credit facility is now $500 million, with a five-year maturity extending to 2028. Our Term Loan B is also $500 million and extends seven years, maturing in 2030. Post-transaction, our net leverage remains low at 2x Adjusted EBITDA. Ted will speak further about this transaction shortly. Income from continuing operations was $59.4 million. Adjusted EBITDA was $137.5 million, and Adjusted EBITDA margin was 12.3%. At quarter end, cash and cash equivalents were $145.6 million, and we had full availability under our new $500 million senior secured revolver. Free Cash Flow for the quarter was $137.7 million, an increase of 73.2% year-over-year. We deployed $91.3 million in cash on the repurchase of 1.1 million shares during the third quarter at an average price of $79.63 per share. We have roughly $349.1 million remaining under our share repurchase authorization. With strong free cash flow generation and full availability under our revolver, we have ample dry powder to make strategic acquisitions once the M&A market improves. Turning to our guidance. Our financial estimates for the fourth quarter of 2023 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and do not take into account any possible revenue declines associated with the potential government shutdown in November. Our estimates assume 60 billable days in the fourth quarter, which is the same as the year ago period and 2.5 fewer billable days than Q3 of 2023. Guidance also takes into account seasonality, with the fourth quarter traditionally the second lowest quarter after the first quarter. We expect macro conditions to remain challenging in the fourth quarter. In our Commercial segment, we anticipate revenues to remain soft across both Assignment and Consulting. These declines are expected to be partially offset by growth in our Federal Government segment. We are expecting gross margins will decline year-over-year due to business mix similar to the more recent trends, including a greater mix of Federal Government work and continued softness in our more cyclical and discretionary Commercial businesses. This should be partially offset by improvement in our year-over-year cash SG&A expense margin. With this as background, for the fourth quarter, we are estimating revenues of $1.04 billion-$1.06 billion. We are estimating net income of $46.2 million-$49.1 million, Adjusted EBITDA of $115.5 million-$119.5 million, and Adjusted EBITDA margin of 11.1%-11.3%. Thank you. I'll now turn the call back over to Ted for some closing remarks. Thanks, Marie. ASGN's business is very well positioned when IT market demand and the overall economy improves. Consistent with our peer set and our clients, we remain cautious about the near-term market demand, given the uncertain macroeconomic conditions. Nevertheless, with great qualifications and growth across sought-after IT solutions and skill sets, ASGN is ready to leverage growth in IT spend in the future. As we proactively position our company for the future, as Marie noted, in the third quarter, we successfully completed a transaction to upsize and extend the maturities of our revolving credit facility and Term Loan B. This transaction increased our financial flexibility and provided us with significant dry powder for acquisitions as the M&A market strengthens. We continue to believe M&A is the best use of and highest return on our capital. Both the revolver and Term Loan B were oversubscribed, which we can attribute to the strength of our underlying business. The success of this refinancing was also due to the efforts of our treasury team, led by Jim Brill. Jim has been an integral part of the ASGN family for the past 16 years, but we knew the day would come when Jim would retire. Jim, it has been a pleasure to work alongside you all these years, and on behalf of our entire company, I want to thank you for your exceptional leadership and dedication to ASGN. You will be missed, and we wish you the very best in your well-deserved retirement. Transitioning into Jim's role as treasurer, we welcome Chris Donnini, who has served in a VP of Finance and Treasury role at ASGN since July. Chris has been shadowing Jim since day one. With an extensive background in finance and treasury for publicly traded companies, Chris brings a wealth of experience to ASGN. We're excited to have Chris on board and hope that many of you have the opportunity to meet him in the near future. That concludes our prepared remarks. I'd like to thank our entire ASGN team for your continued efforts this past quarter. Our ability to remain in the fast current of where IT spend is today and in the future is the result of your dedication and unwavering commitment to our clients. Thank you again for joining our third quarter call. Operator, please open the call to questions. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Tobey Sommer with Truist Securities. Please proceed with your question. Thank you. I was wondering if you could give us a little bit more color on what you're seeing in the commercial consulting arena in terms of the elongation of decision making and maybe the size of projects. Are they diminishing outright, or are customers sort of piecemealing them out in modules or phases, as opposed to signing up for sort of the whole end-to-end period for you? Thank you. Yeah. So, thanks for the question, Tobey. I'll let Rand kind of jump in here, too, but I'll tell you, I think in general, what we're seeing is there are solid bookings, a little bit more renewals than new work, but what I would call very solid bookings. You know, for this quarter, it was $291 million. We were at a 1.1 book-to-bill, which Q3 is always seasonally a little lighter, so I think we were, you know, generally pleased with that. We're definitely seeing clients elongate those. That reduces their spend, if you will, and our revenue. It's not a bill rate or a margin issue; it's mostly embedded in that. And Rand, size of project is generally similar, right? Yeah, except for the AI work, which you noted, Ted, tends to be smaller, but the normal flow of our consulting work is the larger, now seven-figure projects, you know, that have a 9 to 12-month duration. And Tobey, to your question of, is the client you know, piecing it out, if you will, to us, I think it's more as, an on-the-go scenario. In other words, as projects mature, they come to different milestones. You know, I think the clients generally, and some of this is seasonal, is not in a rush to finish, if you will, on nine-... suggesting that they don't think it's a priority. But, it's just, it's just being cautious, which they've been for some time now in the last quarter or two. So it's, it's not so much the way it's contracted, it's more the way it's executed. Did that answer your question? Sure. That provides helpful color. And then as a follow-up on the same theme, within that rate of bookings, and I understand most of it's renewals, do you think you're holding serve, you know, gaining share? How do you think you're doing relative to the market in the areas that you play? Rand? Well, Ted, I'll take the first shot, and we'll wait for our peer group to report, Tobey, over the next, what, days and weeks. But, I mean, I feel like we're holding court, if not expanding just a bit. Most of the work that we're seeing, by the way, is a lot in that data Ted mentioned in the notes, the data area. Data aggregation, data consolidation, data cleansing, data mapping, you know, these are fundamental steps you take in any kind of systems development, if you will. And I think a lot of clients are recognizing that this data work takes time, has to be pulled together, has to be meticulous, and it... Guess what? This all sets the stage for AI technology when it comes in. And Tobey, one other thing we watch is the technology that supports data mapping and data cleansing. They are beginning to pop up on the horizon, new pieces of technology to support that effort. But for the most part, it's still methodology and labor intensive, and it's prep work, important prep work for AI implementation to come. Thank you. If I could ask a question about M&A. I think you said, in your prepared remarks, when M&A - when sort of markets reopen, resume, revive, something like that. Did... What do you mean by that? Because certainly, it seems, based on your financing, you have the capital and appetite. Is it a question of multiples or fewer assets available out in the market? From many perspectives, one might think this would be a sort of a good time for you to lean in a bit. Well, I would agree with that. I would say, Tobey, we still see that high-quality assets are not stepping into the market because they still haven't, in their own mind, maybe reconciled, solved the valuation question. So, you know, while we see things flowing through the pipeline and we're prosecuting all of it, it's lesser quality- I would say more lesser quality assets than we would typically see. So, you know, I think it's more that than anything else. For a company that has great IT solution capabilities in some high-demand areas that we want to be in, they're performing maybe not as good as they were, but they're performing well, and I think they can afford to wait here. That's- I think it's mostly around that. That makes perfect sense. Last question from me. Could I get you to maybe give us a history lesson in how the government business performed and what the impacts were to top line contract awards and book-to-bill, as near as you could isolate those, in the last shutdown in 2018 that straddled into 2019? Because that may be informative as we perhaps experience some sort of volatility in government staying open over the next several months. Yeah. Well, Tobey, that's pretty far back, so I couldn't clearly give you an answer on that, but let us, let us follow up with you offline on that, if that's okay. Terrific. Thank you very much. Yeah. Our next question comes from the line of Maggie Nolan with William Blair. Please proceed with your question. Hi, Ted and Marie and Rand. Thanks for taking my questions. My first one is on the Commercial Consulting side of things. Can you share your initial impressions about the client's budgeting processes for 2024 and what that might mean for spending potential next year? Well, we're in the middle of that right now. Right. I will tell you on a macro basis, not client by client, but I mean, if you kind of follow Gartner, they're lowering IT spending growth here in this year. They're kind of down to 3% or 4% now, and they're expecting a higher number next year, right? So, I think that's an overall market comment. Rand, are we really kind of into that on the client side here enough to make a comment? Well, I would say there's two levels of client here, the technical client that runs the projects and has to get things accomplished, and the executive team that has to make a decision relative to their financials and their own outlook for the future. I can tell you at the technical client level, Maggie, it's let's talk about it, let's get the next stage going. As I just mentioned, a lot of the work is in what I call the prep phase for AI, before use cases get layered on. So, there's a lot of discussion at the technical level. I think the executive level, I can't speak to that, but I would sense if I were an executive of some of these businesses, if I'm a provider, it's full steam ahead. If I'm a big bank, earnings are looking up, maybe I'm thinking positively. If I'm technology, the ad money and the results we're seeing now that are coming out in the market are kind of giving us an indicator that earnings are moving up. So our thesis, as you know, has always been that IT spend's a function of earnings of the company. So, I think executives are watching what happens with the, I'm sure, the, Continuing Resolution with what's going on in the House. There's obviously going to be money spent on aid for, in the foreign world. And, I mean, I just think it's too early quite to tell, but we're optimistic, I would say. The bookings give us an indicator, Maggie, a little bit, right? I mean, we've had pretty solid bookings, and even as Ted said, the Q3 bookings were quite good. Usually, it's our lowest Commercial quarter. The Government side also had great bookings in the third quarter, so. That's helpful. Thank you. And then, I think it was Ted, in your prepared remarks, you mentioned maybe some opportunities for more margin expansion. Is that anything incremental to some of the opportunities that you've laid out in the past, like at your Investor Day? Or was that a comment on expected mix shift over time, or any comments you would have there over a kind of a multi-year timeframe would be helpful. Yeah, I think it's both of those, Maggie. I mean, we still we see in our numbers, and we still believe that as the consultative part of our business becomes bigger, it comes at a better gross margin and EBITDA margin, and that's levering up our margin profile. You know, even here, where some of our more cyclical businesses that have higher margins are down, we're still doing a good job, if that's the right way to say it, of generating a plus 12% EBITDA margin here in the third quarter. So, I think it's mostly around that. I mean, I've said before, our range that we gave in our three-year plan, which was about 12%-12.5%, is a short-term target, but, and with most quarters, we play within that range. But, you know, there's nothing that says in the future it won't continue to grow higher because of the things we laid out in our Investor Day and because of the kind of quarter-to-quarter mix shift that you can see in our Consulting business. Got it. Thank you so much. Our next question comes from the line of Mark Marcon with Baird. Please proceed with your question. Good afternoon, and thanks for taking my questions. On the margins, I mean, you've done a really nice job here in terms of protecting the EBITDA margins. Wondering how you're thinking about internal headcount going forward over the course of this coming year. How should we think about, you know, your priorities with regards to preserving the margin strength relative to building out capabilities that, you know, will probably benefit whenever the environment truly improves? Yeah. Well, good question, Mark. I mean, I think Rand and I both believe that we can pace this out. I mean, I don't think we have to sabotage margin to way invest at ahead of something. Our, you know, right now, our headcounts are coming down, incentives coming down. Those are some of the stabilizers that are part of our, you know, our business stabilizers, and it helps us protect the margin. But, as incentives come back and we need to add headcount, either in solution areas or in certain other areas, I think we'll pace those out. We've done it before. You know, we saw this in 2008, 2009. So again, I don't think we're, I don't think we're cutting our nose off to spite our face here. I mean, this is, this is something we feel pretty good about the balance. And the attrition that we're seeing is the natural attrition that's built into the business, and, you know, we're watching it. There's some areas where we're investing today, frankly. You know, there are other areas where we're letting natural attrition work, and so we're, you know, monitoring and wary of all that. That's great, and then- Mark, Ted, Ted and Mark, can I add real quickly? You can't talk about headcount without talking about productivity. And quietly, we've been continuing to upgrade, refit some of the technology we use in, in our areas, in recruiting area and certainly in our methodologies and the way we go to work, with the engagement. So there's room here also in productivity improvement to absorb, you know, some of the growth. So we're watching both of those things, okay? And investing in it, in fact. That's great. Do you, do you have any more perspective with regards to... and I know it's early days, but, you know, when the, the AI work could, you know, transition from being exploratory to larger engagements? And when it does become larger engagements, like, what, what sort of magnitudes are you thinking about, and would you be in a good position to be a prime on some of those? Rand? Well, the answer is yes. Mark, you know, we've, with you and others, we've talked about three layers of the road to AI, and that's the processing power and the work that's happening, not just in chips, but also in the software, enterprise software world. And you see, then the next layer is cloud and the data, and the data preparation and the data readiness. And the third is use cases. So there's a lot of work, obviously, for companies like us in that middle layer, in the data side. The use cases will be an application of that data. So I would think if I were a client, and I'm presuming this will happen, the client says: Look, you've done some great work with our data work. I need you to now extend it to our use cases and what we're trying to accomplish at the end of the day. By the way, we're building the data in a way that supports some of these use cases that are visioned and envisioned. So should we be a prime? Yes, because of our inroads with data and the cloud and the infrastructure of data, and should we also be smart on the technologies that continue to emerge? Not just the enterprise technology, but these newer technologies that are coming out. And we're doing both, you know, not just through our alliance relationships, but our experience. So I hope we are in great position to support them as we go. And if you remember, Gartner pointed out that they thought the customer experience was going to be the highest and best use cases for AI in the future, and our creative marketing team has done, cyber, Creative Circle has done a lot of work, both pioneering, working, articulating, and helping clients think about their use case strategy. So, I'm hoping we're in good position, but importantly, we're doing the building block work that we need to do to be in that position. I think one more point is, remember, remember, Mark, we've now for several years running, have been identified as the number one provider of AI capabilities in the Federal Government space. So that's an- Right. ...internal solution capability that not only supports our Federal customer, but we can leverage that know-how, you know, in certain Commercial areas. That's terrific. And then, can you talk a little bit about, like, the supply side in terms of... Obviously, you know, these skills are in really high demand. I'm wondering, like, what is the pipeline? Where are you getting the contractors that, you know, truly have the knowledge? What level do they have? And how are you thinking about the bill rates, and the margins given the scarcity relative to the demand? You know, it sounds like this should be over, who knows whether it's a year from now or three years from now, but a really promising area. Yeah. Well, remember, we're not just hiring one AI expert, right? There's multiple facets and layers to this, as Rand mentioned. Sure. I mean, today in the Data world, we have many of these people in our organization and working on other Data type projects that can port to these AI use cases and be effective there. So, I mean, I think a lot of these players will come from pools of solution capabilities that we already have in our business today, if you will. Great. And in terms of TMT, you, you know, you mentioned that, you know, the accounts look like they're a little bit stable, but TMT was down 27% versus 18%. Are you seeing sequential stability, like, on a week-to-week basis? Just wondering how you're, how you're thinking about that. Yeah. I'd say the answer is yes, but, Rand, do you want to comment on that one? Yeah, I think we're watching both, and we're watching what I call micro indicators. So, we watch certain things in the marketplace, things we've mentioned, you know, whether companies are having their earnings, are they growing themselves? Which products, if you will, in the technology and telecommunications area are growing? Where is ad spending being added in media to help those businesses? And you're seeing some of that starting to turn around. When we look at stability, you know, obviously, we've declined through the year. Keep in mind, our comps from a year ago were quite high. But definitely as we exited Q3 and we started in Q4, we see, which to us is a step in the right direction, you know, steadiness in the work and the workflow. But I think you look at these other indicators, and you see that, you know, there's maybe a light at the end of the tunnel coming. Great. And then one last... Tobey asked a history question. I've got one as well. You know, Rand, Ted, you've both, you know, been involved in this business for multiple cycles. How would you compare, you know, what we're seeing on the commercial side in terms of the trends right now relative to prior cycles? What elements feel different from your perspective? I my recollection was, you know, Apex actually navigated the GFC really well. And so I'm just wondering how does this compare? What how are you thinking about it? Yeah. Well, it's different for sure, right? A business cycle is a business cycle, but no two are kind of based on the same foundation or act in the same way. If you think about the great financial crisis, certainly that affect the big banks and the financial services industry, things related to the banks, predominantly, housing and mortgage, if you will, and the retail and the consumer got caught, you know, in some of that stuff. And I think that, you know, what's different this time is it's been two years now that we've been watching this interest rate increase, and in turn, been talking about an impending recession, and large enterprise accounts have slowly positioned themselves in a much more cautious way, and that's happened broadly across the board over a long period of time. And so instead of seeing kind of a faster ripple through certain industries, you've seen it, you know, broad-based over a long period of time in enterprise accounts. And I think that makes this cycle, if you will, a little more different. You know, that being said, how we manage through this is not too different. I mean, we've definitely done this various times before, so, you know, we have an understanding about how that business should operate and what the management actions are that we need to take. And we also kind of realize the things that, you know, sometimes lead you into these downturns are the things that lead you out. So, you know, certainly, you know, our TMT industry was one that really led, I think, you know, for many of us into this cycle. And while it's still not there, you know, you may be seeing, you know, signs that their businesses are returning to growth and better profitability, and that'll be good for us because they'll want to lean into more IT initiatives that they need us to be a part of. So, that'll be a positive thing for us. Great. Really appreciate the thoughtful answers. Thank you. Our next question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed with your question. Thank you so much. In your prepared remarks, and I'm going to quote, it says, "In our Commercial segment, we anticipate revenues to remain soft to both-- across both Assignment and Consulting," and this is referring to your guidance for the fourth quarter. Should I assume that means that you think both Assignment and Consulting will be down on a year-over-year basis in the fourth quarter? So, Jeff, thanks for the question. You know, I think that our guidance, you know, kind of reflects what I would call flat to very slightly down in the Commercial and up in the Federal. You know, if Marie were talking to you, that's what she would say. And then, you know, secondarily, I think we're taking also a little bit more conservative view of Permanent Placement and how that could influence the margins. So, I think those are the components on the Commercial side. Look, although there's no real material change in the operating environment, you know, the fourth quarter is always lower than the third quarter. So, the third quarter is always the strongest, and in the fourth quarter, you see a little softening, and that's because you've got holidays and less billable days. You also have various projects coming to natural end, customers working on budgets on things that they may not start until the next year. And then, you know, you have some clients who will get kind of into December and say, "Look, I'm not going to finish this by January 1. Let's just shut the lights off here for a week or 10 days, and let's come back at it, after the holidays." And so those are all natural things that happen here in the fourth quarter. So, that's what's underneath the guidance. I'll tell you, at a macro level, you know, in the Commercial markets, there's no real change in the operating environment. I think that's one thing that is kind of clear here, and we're coming out of Q3 and into Q4, things are, what we would say, is fairly steady. Our Q3 was a little bit better than expected, and, you know, that then translates into how we set Q4 guidance. No turn yet in the Commercial market. You know, the Commercial market is still not found an inflection point. You know, we've talked about little things on the call here that we are hopeful that, you know, they begin to lead us, as Rand said, to a little bit of life, but no turn yet. And the business stabilizers, obviously, are working in our business and continue to work, and we feel good about them, them maintaining, you know, EBITDA margin for us, even in the face of a, you know, really difficult Commercial market. Okay, I understand. Maybe I could shift gears to the Federal Government business. You know, I know you mentioned in terms of a potential government shutdown, it's, you know, I think it was less than 10% of your business will be impacted. But can we just talk about the mechanics? I mean, what happens if, God forbid, we do get a shutdown? Do all the projects stop? Contract negotiations stop? If you could just help me, you know, walk through what we could expect if that does happen. Well, I think in that, the first thing that happens in that is you immediately kind of come together close with your clients, and you determine what's critical and what's not, right? And thankfully, we've already started that process based on, you know, some of what was going on in that market, you know, leading into October. So, we've got a foot ahead on that, if you will, and we have a pretty good idea. Once you go through that, you continue work on the mission-critical stuff, and you make a determination, the client makes a determination on the few things that may not appear to be mission-critical, and so our client will do that in concert with us, and so we'll know that. And then what happens on new work is it pushes to the right. You know, awards that are in process get delayed a little bit, the adjudication of those, no matter what stage they're in, and things just slightly, you know, slip out into the first quarter or the first half of next year. Okay. That's, that's really helpful. Thanks so much. And, Jeff, maybe one thing, too, to note here, and, you know, who knows? It's been such a crazy turn of events here over the last few weeks in the, that Federal Government space with what's going on with the House. But, you know, it's not presupposed there's going to be a shutdown. I mean, we mentioned that in our, as a, as a caveat in our guide, but, you know, it looks like we could be moving here towards another, Continuing Resolution of some period of time, whether that's a short one or a long one. We're in one right now, and so, you know, we'll see how things develop on that front as we get a few more weeks down the road. Yeah, we finally have a speaker, so that's a good sign. All right. Thanks so much. Our next question comes from the line of Seth Weber with Wells Fargo. Please proceed with your question. Afternoon, everybody. Thank you. Rand, appreciate the comments about kind of stability here at the end of the third quarter. I'm just wondering, would you be willing to talk to- ... you know, kind of cadence of business through the quarter? Like, if things were just sort of stable through the third quarter, or did they go down and then get a little better? Did they get a little bit worse? I'm just wondering if you'd give any color on sort of the intra-quarter trajectory on the Commercial side. Thanks. Ted, do you want- You're talking about Q3? You're talking about Q3? I was talking about Q3. Yeah, just the, you know, kind of July, August, September trend, trend lines. Ted, I would say light waves, which is, that's, you know, we'd have sectors and client sectors where you'd have a little wave up, and then you'd have other sectors with a little wave down, but nothing too, too dramatic, I would say. So, it was more rolling waves through the quarter, but I think we were pleased, particularly. And, and I guess, Ted, I'd make this comment, in our more discretionary areas, like the, you know, the staffing, the perm placement work, the creative marketing work. The fact that it becomes a little more stable toward the end of the quarter, and you could almost predict week to week what you're going to see. And that was a good sign. Okay. And I just wanted to go back to the, to the comment, the Gartner forecast comment relative to, you know, your, your business. I mean, they, they are. Gartner is projecting a pretty big uptick next, you know, over the next couple of years. And so I, I, I'm just trying to tie that together. Are, are you- you're just not confident. You're not ready to make that call yet? Are you seeing any kind of green shoots that would, you know, lend you confidence that that's the actual right way to think about it? Or it's just too soon to, to make that call, because, I mean, Gartner has, does have that forecast out there. Right. It's such a broad forecast. I mean, if you start to break it down into areas, the software companies and the big tech companies, you know, providing cloud and now generative AI capabilities and other things, they're seeing pretty good growth rates. You know, the Consulting services and the IT services behind that are a little bit of a lead lag. So, I guess, Seth, I would probably lay it more on that, right? And I think what Gartner's capturing is a big, broad spend in all those categories. And Rand, would you say anything else? I think, Seth, we look at it by industry. You know, I appreciate what Gartner is saying, but we watch particularly the earnings of different industries and companies within these industries. So, you know, we were pleased that the banks had a good quarter this past quarter. It looks like big technology had a good quarter. I'm not sure telco is, you know, where they are for sure. I'm not worried—we're not worried about providers because we, the baby boomers, are demanding more services, and you have the flu season. And so, I mean, if you watch the earnings, you know, it's utilities, it's oil and gas, it's this consumer staples, assuming the consumer stays strong, are doing well. And by the way, we're doing well. If you believe that the banks can continue to improve their perf-- you know, build on their performance, I wouldn't say improve, build on it, then that's, for ten's a good thing. I think technology is claiming they're getting better in ve- advertising dollars, and, and they're getting better reach, and they're coming back. Obviously, the enterprise software guys are doing really well, right? Mostly because they're embedding AI, and they're raising the rate structure around that AI, which clients have to spend now, even if they're not putting it to full use till later. And that goes back to those three layers we talked about, processing power, data, and use cases. So, there are certainly indicators we watch in a macro sense around the industries to give us a sense of what the client spend will be. And we also know what they're worried about and what they're thinking about in terms of their initiatives, particularly in that middle layer, the data layer. So, I mean, I think those are things we look at, Ted, right? And it's, it's... You know, is anything conclusive yet from all that data? I think with stability in the Federal Government and interest rates, I think we might see something good, but what do I know? I mean, I'm certainly not a professional economist, and- Okay, that's helpful. Helpful perspective, guys. Thank you. All right, next question comes from the line of Josh Chan with UBS. Please proceed with your question. Hi, good afternoon, Ted, Marie, and Rand. Thanks for taking my questions. I guess you mentioned that, you know, on the Consulting side, there's some elongation of projects, and that's causing some of the softness. So historically, what typically gets the clients more confident that they will, I guess, recompress those project timelines again? Like, what are you looking for there? Well, look, I think it goes back to what Rand said. Yeah. When Rand is, you know, speaking about, hey, they're watching their bottom line, and they're measuring how much they're willing to burn and spend on projects in order to get to certain outcomes, they have to feel better about their own growth and, you know, pick up the pace, if you will, of investments and initiatives in IT. So, you know, they're hanging in there with the critical stuff. They're trying to measure it out and watch that. But I think it goes back to, again, we've said a few times today, and I think it applies to your question, Josh. They just have to feel better about where they're headed quarter to quarter and into 2024 to really lean in harder and speed up and, you know, take on more spend in IT. ... Thanks, Ted. Yeah, that's good color. Thank you. I guess I got my second question on margins. So, it looks like your SG&A is going down more than your revenue is. Is that just a function of mix as some of the businesses that are down more have higher SG&A, you know, composition? I guess, could you talk to the SG&A decline there? So Josh, on an SG&A, are you talking about year-over-year? Correct. Yes. Yeah. So, we kind of noted that as well. So, it really is a lower incentive comp associated really with our business stabilizers, right? So, kind of just the rate around the incentive comp is really what the change is on a year-over-year basis. I think, Marie, you know, I think to maybe just a second, you know, piece of detail under Marie's point is, if you think about last year, we were at full incentive levels in all kinds of different ways, you know, and so it. That in and of itself is a difficult comp on the expense side, right? Right. So, you were at full kind of max incentives, and now incentives are properly coming down with the, you know, to where the performance of the business is. Okay, that makes more sense. Ted, is it Josh? Josh, is it worth mentioning, we don't have two different workforces, one for staffing, one for consulting. That was sort of embedded in your question. We have one workforce. Our account managers provide support to our clients across the array of services. Our recruiting team supports not just staffing requirements, but our consulting team requirements, and our back office certainly does both. So, don't think of it as two different workforces, it's one workforce, and, and then what Marie and Ted said is just what's happening across the board. Oh, okay. Thanks for the color there, man. Okay. Appreciate it. Our next question comes from Heather Balsky with Bank of America. Please proceed with your question. Hi, thanks for taking my question. I wanted to first quickly ask about permanent staffing, including Creative Circle. Just if you could share kind of where you are, in terms of, I guess, normalized trends compared to pre-COVID, that would be helpful. Hi, Heather. How are you? So, for perm placement in Q3, it represents 2.6% of total revenues. If you kind of just look at from a dollar perspective, we're down 42%. Last year, we were at 4.2% of total revenues. So... Yeah. Honestly, when you look at it, if you mean just one other point, during COVID, the 2.6% is almost kind of close to our COVID levels. That's, that's really helpful. And then my other question is actually on government. Current sort of potential shutdown aside, just, you know, what you're seeing in terms of spend and procurement. I know if we go back a year ago, there had been some just delays in procurement. I'm curious if there's been any kind of inside improvement. You know, are they kind of back to a more normalized spending cycle? Or is all, you know, maybe bringing in the potential shutdown, is all the kind of stuff going on creating some disruption in how they're spending? I don't think the Continuing Resolutions have caused, that we're under right now, any kind of disruption, if you will. I think we saw a normal Q, as much as we could—it could be normal, a fairly normal end to the government fiscal year in Q3. Our bookings were higher, at $500 million. Our book-to-bill at 1.5 was a good number and, you know, a very good number and higher than we've been running and about as we anticipated. And we'll watch the other peer groups, peer companies release, but I expect them to have good results as it relates to new bookings. I think on that front, Heather, even though we've got some wobbliness here going on and, you know, what's going on with the Continuing Resolution and some of those uncertainties, that you saw a pretty healthy and good flow of contract awards in that Federal Government space, you know, during the third quarter, the end of the government fiscal year. That's helpful. Thank you. Our next question comes from Surinder Thind with Jefferies. Please proceed with your question. Thank you. I guess just a couple of clarifications on some earlier commentary. The first being the comments around just kind of clients elongating projects at this point. Are you able to quantify that in any manner? Are these 9 to 12-month projects that are now maybe being realized over 15 months? Or just how should we think about that, and then in terms of the context, obviously, around what - how to interpret the bookings number there? Yeah, well, I think that you for sure are seeing something like that. We've seen that typically we're around 12 months on these projects on average for the Commercial Consulting team. That now is lengthening further out, whether it's 15 months or 16 months or what have you. It's definitely slowing, and I think it correlates with the fact that we're still getting solid bookings.... and book-to-bill numbers, but it's just yielding a lower growth rate. And our bill rates, I will just tell you anecdotally, are slightly up, so it's not a bill rate issue with, it's hours applied or hours billed, phenomena there. Got it. And is it also, Surinder, worth mentioning that none of this is new? We reported the same thing in the second quarter, and by the way, as quickly as it could slow down, it could also accelerate. Got it. So, is the idea that the elongation process has stabilized at this point, or is it that, you know, if we were to rewind a year ago when this first kind of started, you know, the 12 months was, you know, 13 or 14 months, and now, and then last quarter was 14, 15 months, and now it's 15, 16 months. How should we think about that? Or is this- That's that would take a crystal ball, right? I think that's up to the client. I mean, I think we've seen for two quarters here a similar trend to Rand's point. We don't see that it'll change in the fourth quarter, so that will be three quarters. Although this, again, more to come. We'll have to watch this fourth quarter and see if it's consistent with the second and third, but we've got two quarters here where we've seen a fairly consistent trend. Understood. And then just follow up on the bill rate. Talked about a lot of renewal projects. It sounds like you're able to hold the line on pricing here, maybe even squeeze out a little bit more. Is that the right way to think about it? What exactly is the conversation there? Or is there some CPI? Is there some negotiation here? Is there a lot of pushback? How should we think about that part of the growth algorithm? So is that adding maybe a percentage point to growth at this point? How should we think about that? So, you're seeing very slight increases in bill rate, but a slight increase. You're seeing maintaining to slightly more in margin. And, Rand, what would you say to the back and forth with the client? Well, some of our work, a good portion of the work, are set bill rates that have escalators to them as you go out into the future. And then some of the escalation could be some change in the mix of the project during the course of the execution of the project. Maybe adding somebody with certain expertise or dropping somebody else out. So, there's a number of factors that go into it, but it's not, not really a negotiation at that point. It's a matter of what's the right skill set to finish the job or continue. I think, Surinder, one thing I would just add at a high level is, there you know, for in-demand IT professionals in all these critical skill areas, the client still realizes that they have to pay a market rate in order to get them. There's not a sale going on, if you will. Yeah. So, in those areas, there's a productive understanding between us and the client that those are to get the best capabilities there, that there's a certain rate for that. That's helpful. Then kind of the final question here, just revisiting Commercial Consulting. Revenues were down a few percentage points quarter-over-quarter. That was a surprise to me to see that, given how strong that business has been and the fact that it showed strong sequential growth last quarter. Just any color there, is that maybe a few projects that maybe kind of ended near the same time, or did clients just push out some work, or is it more broad-based than that? I'm just trying to understand how to interpret that and how we should think about that on a go-forward basis. Well, Ted, you want me to start? Well, I've got Commercial Consulting kind of flat quarter to quarter- Flat. ... sequentially. Right. You know, so, and Surinder, tell me the rest of your question there. Just the color around that. I mean, I'm trying to pull up the slide deck here. When I see the Commercial segment, I see Q2 at $281.1 million in your slide deck, and Q3 at $274.2 million. Yeah. I see that down 3 percentage points quarter-over-quarter for Commercial contract. Correct. Slightly down. Yeah. Yes. I think it can almost best be explained by summertime, okay? Q3 has summertime, and people take time off, and it's just... And the elongation of projects, you know, that may be decisions that they make in the summer, just like they're going to make in the fourth quarter around the holiday period. Ted mentioned earlier, some companies will make a decision here in the next three or four weeks to furlough people for five days or 10 days, just to kind of put a pause in it, let people enjoy the holiday and get started again on January first or second. So, I think it's nothing to read into it other than that. Yeah. Now, I would tell you, once you adjust for days, it's so minimal. Surinder, there's no- Minimal. ... you know, there would be no discerning factor. There'd be no big thing around bill rates or, you know, you know, hours or anything like that. I think it's just the vagaries of one quarter to another. Okay, thank you. And we have reached the end of the question- and- answer session. I'll now turn the call back over to CEO, Ted Hanson, for closing remarks. Great. Well, I want to thank everyone for their time and attention and questions today, and we look forward to speaking with you about our fourth quarter and full year 2023, you know, at the beginning of February. Thank you very much. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.