ASGN NYSE: EFOR, reporting its first quarterly results under the Everforth name, said second-quarter revenue exceeded $1 billion and adjusted EBITDA margin reached 9.6%, with both measures surpassing the high end of its guidance range.
Chief Executive Officer Ted Hanson said the performance reflected stronger commercial bookings, stabilization in staffing demand and better-than-expected federal revenue. Commercial consulting bookings rose by double digits from a year earlier, while the company’s enterprise platform business continued to ramp. Workday bookings exceeded management’s expectations, helping lift commercial trailing-12-month book-to-bill to 1.2x.
“We saw a meaningful acceleration in the business during the quarter,” Hanson said during the company’s earnings call. He said commercial order flow improved from the first quarter, while federal operations also outperformed expectations, aided by higher revenue from a Department of Homeland Security cybersecurity account.
Second-Quarter Financial Results
Everforth reported commercial-segment revenue of $701.7 million, down 0.9% year over year, and federal-government revenue of $305.3 million, down 2.3%. Total gross margin was 28.3%, including commercial gross margin of 32.1% and federal gross margin of 19.6%.
- Net income was $14.2 million.
- Adjusted EBITDA was $96.7 million.
- Adjusted EBITDA margin was 9.6%.
- Free cash flow was $46.3 million, equal to 48% of adjusted EBITDA.
Chief Financial Officer Marie Perry said the company repurchased 0.4 million shares during the quarter for $11.5 million, at an average price of $30.07 per share. About $923 million remained under its $1 billion share repurchase authorization at quarter-end.
Everforth ended the quarter with $152.9 million in cash and cash equivalents and a net leverage ratio of 3.1x. Following quarter-end, the company refinanced and increased its revolving credit facility, replacing its prior revolver and $100 million Term Loan A with a new five-year, $600 million facility. Perry said the transaction was leverage-neutral at 3.1x after closing.
The company plans to prioritize debt repayment following its Quinnox acquisition, then opportunistically repurchase shares. Everforth continues to target a net leverage ratio of 2.5x or below.
Commercial Recovery and Platform Demand
Management said all five commercial industry verticals posted sequential growth from the first quarter. Technology, media and telecommunications benefited from cloud and infrastructure work, while financial-services demand was led by application engineering, cloud and infrastructure, and data and AI services. Life sciences increased by the mid-teens sequentially, with work concentrated in application engineering.
President Shiv Iyer said enterprise platform trends improved during the quarter, with pipeline development and conversion of bookings to revenue moving closer to historical norms. In addition to Workday, he cited momentum with Salesforce and ServiceNow, as well as with Databricks, Snowflake, AWS and Microsoft.
Management said commercial bookings momentum had remained consistent into July. Hanson said the company expects commercial operations to return to year-over-year growth during the third quarter and expects that growth to be evident in the fourth quarter.
The integration of Quinnox, which provides enterprise platform, engineering and global delivery capabilities, is progressing as expected, according to management. Hanson said Quinnox contributed higher margins than the broader commercial business, with enterprise platform and digital engineering work carrying gross margins of roughly 40% or higher and EBITDA margins in the high teens to 20% range.
Federal Backlog, AI and Cybersecurity Work
Everforth’s federal segment received $169.3 million in new contract awards during the quarter. Its trailing-12-month book-to-bill was 0.8x, and federal backlog totaled about $2.7 billion at quarter-end, representing 2.3x trailing-12-month segment revenue.
Federal revenue increased sequentially, supported by DHS cybersecurity work and data-and-AI programs with the Navy. Iyer said the company is supporting the Navy’s Harbinger program through work to train and optimize AI-enabled sonar models for undersea detection and warning applications.
The company also secured a research and engineering contract for the Army’s Nautilus program. As prime contractor, Everforth said it will support the Department of Defense’s development, testing and operational integration of AI capabilities through AI development, software engineering, cybersecurity and field testing.
Hanson said the company has reorganized its federal operation, added leadership and increased its account-level focus. Submitted bids awaiting award have increased materially, he said, and management expects improved federal book-to-bill over the next several quarters. Federal revenue acceleration is expected to become more pronounced in the fourth quarter and into 2027.
Third-Quarter Outlook
For the third quarter, Everforth forecast revenue of $994 million to $1.024 billion, net income of $14.5 million to $23 million, adjusted EBITDA of $95 million to $105 million, and adjusted EBITDA margin of 9.6% to 10.3%.
The outlook includes $7.5 million to $9.5 million in strategic-planning expenses tied to its NextWave growth strategy. Perry said those costs have been declining, from $12.8 million in the first quarter to $9.8 million in the second quarter, and are expected to continue falling as the company executes targeted cost-saving initiatives.
Everforth maintained its full-year target for free-cash-flow conversion of 60% to 65% of adjusted EBITDA. Hanson said commercial momentum would be the primary factor driving results toward the high end of third-quarter guidance.
About ASGN (NYSE:EFOR)
ASGN is a provider of professional services that connects skilled talent with organizations seeking technology, digital, creative and engineering expertise. The firm focuses on staffing and workforce solutions, delivering contract and permanent placement services as well as project-based consulting and managed services to support clients’ technical and operational needs.
Its offerings commonly include IT consulting, digital transformation support, application development and maintenance, data and analytics, cybersecurity, cloud services and engineering resources.
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