ASGN Incorporated (ASGN) Q1 2013 Earnings Report, Transcript and Summary

Good afternoon. My name is Jennifer, and I will be your conference operator today. At this time, I would like to welcome everyone to the On Assignment First Quarter 2013 Earnings Call. [Operator Instructions] I will now turn the call over to our host, Mr. Ed Pierce, Chief Financial Officer. Sir, please go ahead.

Thank you. Good afternoon. Before we begin, I would like to remind everyone that our presentations contain predictions, estimates and other forward-looking statements, representing our current judgment of what the future holds. Although we believe these statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, and we do not assume the obligation to update statements made on this conference call. We describe some of these risks and uncertainties in today's press release and our filings with the Securities and Exchange Commission. I'd now like to turn -- introduce Peter Dameris, our CEO and President, who will provide an overview of our results for the quarter. Peter?

Thank you, Ed. Good afternoon. I would like to welcome everyone to the On Assignment 2013 First Quarter Earnings Conference Call. With Ed and me today is Rand Blazer, President of Apex Systems; and Michael McGowan, Chief Operating Officer of On Assignment and President of Oxford Global Resources. During our call today, I will give you a review of the markets we serve and our operational highlights, followed by a discussion of the performance of our operating segments by Rand and Mike. I will then turn the call over to Ed for a more detailed review and discussion of our first quarter financial performance and our estimates for the second quarter of 2013. We will then open the call up for questions. Now on to the first quarter results. All markets we serve remained productive and stable during and exiting the quarter. All of our divisions showed positive momentum exiting the first quarter. Once again, we saw a particularly strong growth and strength in the IT end markets. Our Healthcare groups continue to make solid progress in improving their operating performance. And in the first quarter, we saw solid execution in our Physician Staffing and Allied Healthcare groups. In the Physician group, Physician days sold increased 47.5% year-over-year in the first quarter, and 13.3% sequentially. During the first quarter, we also built on the increase end market demand in the Allied Healthcare. Based on days sold in the Physician group and our growth in professionals on billing in our Allied Healthcare group, we continue to believe that double-digit revenue growth will be achieved in 2013 for these groups. As we have mentioned many times in the past, we firmly believe that the Healthcare end markets will provide some of the greatest growth opportunities for our company in the future. As…

Great. Thank you, Peter. Apex Systems had a very solid Q1. Requisition flow was up year-over-year, and we turn that flow into year-over-year revenue and earnings growth. We posted revenues of $212.7 million, representing a 14.4% growth over the same period in 2012. Growth was paced by positive performance across our top 142 accounts, and we call that our top accounts program, in all 7 industry verticals. Our top accounts program represents just under 2/3 of our business. Our largest growth came from our top accounts in Healthcare, Telecommunications and Media and Consumer Industrial verticals. Of importance also was the positive growth in our Financial Services sector, which, I think, Peter alluded to earlier. Gross margins for the quarter were down slightly from a year ago. The ebb and flow of our business saw revenue growth coming from our top accounts and our industry verticals. With this performance, compared to growth in our branch retail accounts, which carry higher gross margins, we expected to see some shift in our margins, and we did. That ebb and flow in our revenue mix and the mix of skill sets required in those accounts impacted our gross margins. The pricing environment remained steady in the quarter, and we expect to see some increase in our gross margin, as the business makes shifts in the future quarters. Our conversion of revenue and gross margin to operating margins remained strong in the quarter, as we've continued to increase the percent of revenue and gross margin that falls to our operating margin. This increase in operating margin resulted from a continued increase in the productivity of our sales, recruiting and back-office teams. We continue to see a solid market environment for our business in the coming quarter and fully expect that our revenues and operating performance will continue to grow. All right. I'll now turn the call over to Mike McGowan to discuss Oxford's results and the other legacy On Assignment divisions.

Good. Thanks, Rand. Oxford had another strong quarter, with revenue of $95.3 million, 21% over the same period in 2012 and a 5.4% sequential growth over the fourth quarter of 2012. Demand for our services remains strong in all of our operating units, and we continue to reach all-time highs in terms of consultants on assignment. Oxford Healthcare IT business continues to be our fastest-growing division, and represents approximately 17% of total revenues in the first quarter of 2013, compared to 10% in the first quarter of 2012. The current revenue run rate for this division is approximately $70 million. Our first quarter gross margin decreased compared with first quarter of 2012. This compression was expected and was primarily related to a change in our overall business mix. The gross margin for our Healthcare IT division is about 400 basis points less than our other IT divisions, and as I just stated, is our fastest-growing. This lower margin is primarily attributable to the fact that we have some significant more competition within this segment from small private competitors and a higher mix of revenues related to reimbursable expenses, which Peter described earlier. We continue to believe that our gross margins within our high-end IT skill segments are at or near the highest in the industry. Regarding the second quarter, consultants on assignment have continued to grow. The Oxford Index, our forward-looking quarterly survey, suggests that consultant demand will be at approximately the same level in quarter 2 as it was this past quarter. Turning over to Life Sciences segment. Despite the continued challenges in Europe, this division recorded a slight sequential increase in revenues over the prior quarter. On a year-over-year basis, revenues were down due to the European economic challenges and the termination of a large, low-margin account in…

Great. Thanks, Mike. Before I review the results for the quarter, I'd like to draw your attention to a couple of financial statements that were -- that we added to the earnings release this quarter. The first is pro forma data by quarter for 2012, which shows that our operating results, on a pro forma basis, assuming the acquisition of Apex Systems, occurred at the beginning of 2012. The pro forma results do not include the results of the Nurse Travel division, which are treated as discontinued operations. Our discussion of operating results makes numerous comparisons at a pro forma results for Q1 of 2012. The second table shows the calculation of adjusted income from continuing operations, which we believe is a better indicator of operating performance than the GAAP amounts. The adjustments to the right, the adjusted amounts include add backs for the noncash amortization of intangible assets, and the cash income tax savings from the tax reductions from amortization of goodwill and trademarks, and a reduction for the excess of capital expenditures over depreciation net of tax. Now onto the review of the results for the quarter. As Peter mentioned, income from continuing operations for the quarter was $10.6 million or $0.20 per diluted share. Adjusted income from continuing operations was $18.8 million or $0.35 per diluted share. Revenues for the quarter were $389.2 million, up 30% year-over-year on a pro forma basis, and up 2.3% sequentially. All business segments reported year-over-year revenue growth in the first quarter, except Life Sciences, which was down modestly to a termination of a large low-margin account in 2012. Of the year-over-year increase, our Technology businesses: Apex Systems and Oxford, accounted for 93% of the total. Gross margin for the quarter was 29.1%, down approximately 130 basis points from Q4 of 2012.…

Thank you, Ed. We believe that we are well positioned to continue to take advantage of what we believe will be a historic secular and cyclical growth for the staffing industry over the next 3 to 5 years. While the entire On Assignment team is very proud of our performance, we remain focused on continuing to profitably grow our businesses. I would like to once again thank our many loyal, dedicated and talented employees, whose efforts have allowed us to progress to where we are today. I would like to now open up the call to participants for questions. Operator?

[Operator Instructions] Your first question comes from the line of A.J. Rice.

A couple of questions, if I might ask. First of all, I know in the press release, you got the comment that for the full year, the company expects to trend toward the higher end of previously announced full-year targets. It sounds like you should discuss the different business lines that you're feeling pretty good across the board. But I wondered in making that comment about the full year, are there -- is there particular strength in 1 or 2 business areas that are driving that? Or is that across the board you're feeling better?

A.J., if you read the press release and the bottom of the guidance, we tell you what the implicit growth rate is. So it's mid-teens growth for Apex and Oxford, mid-single digit for Life Sciences and then high-single digits. So order of strength of the industry in our current momentum, I would tell you is IT is first, Physician is second, Allied is third and Life Sciences is fourth, as far as strength of the market and forward momentum internally.

Okay. I guess maybe I misread that, then. And so those estimates are not just for second quarter. Those are sort of the full year type of that?

No, that's pretty much was implicit for the second quarter, but, I think, it carries forward for the full year. And to the extent that we say, I don't have a committed to memory first quarter, did we give that same editorial about the full year guidance? The new...

I think we said on the technology, that was 11% to 15%. I don't have that in front of me, but they're trading better than that.

Okay, that's good. You also have a comment in there that you see the potential for bill rates to improve in, particularly in the Engineering segment. And I'm wondering, is that particularly in the back half the year, is that across both Apex in Oxford or do you see more opportunity in one versus the other?

Well, some of this business model, A.J. Apex works more off of a bill rate card than Oxford does. So as the markets tighten, and they're having conversations with technical resources, they'll be keeping their customers up-to-date on that. The challenge of acquiring the talent timely, and whether they want to make some adjustments. But we make adjustments on the physicians and on the hiring IT skill sets and on the clinical research side on a realtime basis. What we're seeing in the marketplace on a realtime basis, we typically pass along realtime with the customer, and there's not a lag because of a conversion of a rate card. Rand, you want to add a little bit about the rate card and time for passing on increases of rate -- pay rate increases to the customer through bill rate?

Yes. Well, A.J., if I understand your question, you're asking whether bill rate improvement will see both in the Oxford and the On Assignment and the Apex teams. Is that what your question was?

That's right.

Yes. We expect bill rates went up this past quarter about a couple of percentage points, and we expect to see bill rates continue to improve. The type of the labor market, the opportunity to renegotiate and/or discuss with clients what the proper bill rates are -- becomes more real.

Okay. And then, just comments you made on the call, I was wondering about -- on Apex, one of the comments you made is they didn't have the permanent placement. There's only 1% of their business versus 3% on your other business lines. Is there any reason why that can't be improved to 3%? Or is that inherent within Apex's business?

No. I mean, we've probably stated that we do want to increase the percentage of revenue that we get from conversion and permanent placement fees on a consolidated basis. The railways in Apex hasn't been more of it. They just have a laser focus and discipline on contract labor, and they don't want that diluted in any fashion. We're working together to see how we can capture some of the inbound inquiries that Apex gets, and have it tossed over to our Centerpoint division and let them work on it, so there's no dilution at their focus on contract bills. And inherent market prohibitor because of Apex's business model -- it's just focus and discipline.

Right, right. I got it. And then just the last question, on the -- what you're doing with the credit facility. Can you remind me? Is $500 million what the current facility is? Or are you increasing that? And you sort of alluded to the greater flexibility, more covenants in line with what you're seeing in the marketplace. But is there any specific interesting new flexibility that you'll get under the new bank deal that wasn't available to you in the last one?

And yes, and Jim, correct me, where I'm wrong. But it's going to be a Term Loan A and a Term Loan B. It will not be drawn to $500 million at the time of closing. Some meaningful step-down on our cost of debt. The Term Loan B goes to covenant light on maintenance covenants. The Term Loan A will still have some maintenance covenants, and the greater flexibility is for us to be able to the have more standby gunpowder to do acquisitions and the ability to do up to $150 million or $100 million share repurchase if the Board so elects to do that.

Also we're increasing the revolver side, so the revolver goes to probably $125 million under this so...

Your next question comes from the line of Tobey Sommer.

Peter, I was going to see if you could elaborate a little bit more on your bill rate expectations. Is this something you're seeing in the market place currently and kind of you need to just have some older price on assignments roll off the books in new market pricing roll on to the books? Or is this an expectation for pricing that several months out to be different?

Tobey, because of our business model on the Physician and on the Oxford side, where it's really 2x2, 4x4 placements, so to speak, and each placement is individually negotiated, we're just seeing a tightening labor market, which inherently means that customers are going to become more realistic about what it takes to acquire the talent they need to perform their internal projects. With that said, there's a assumption on our part, very much like a lot economists have, that the second half of the year growth will be more robust than the first half. And we're then correlating that even the tighter labor market, which will permit us to have conversations with our customers about what it takes to get these orders filled quickly and appropriately. So on the Apex side, they have a split between retail and top accounts. The Top Account business is off of a rate card that has an annual kind of renewal refresh we look. And we think that there are 2 will have a more constructive conversation. And part of it is, there's been very little legislation over the last 4 or 5 years. And eventually, that spring is going to pop.

Excellent. I appreciate that. In the quarter, you cite some professional fees. And I was just wondering how -- did they seemed kind of onetime-ish in nature, and what would that have translated in terms of EPS?

We had, in the quarter, about $450,000 related to the consulting fees for the strategic planning projects. And it is going to be onetime this year. And at this point in time, we haven't -- it could be another $400,000 or $500,000 over the course of the year.

It's with the -- predominantly with the Parthenon Group, right?

Okay. And do you have -- what step and back and kind of thinking about strategy, is there any preliminary sort of trajectory that you could talk about? Or is it too early to discuss?

We'd rather not piecemeal it and just kind of have a thoughtful presentation of what we come up with. But it's a blend of things that we think are real world.

Okay, terrific. And my last question has to do with your uptake for capital deployment. With the refinancing and added flexibility, it seems like you've got, perhaps, more choices than you've had historically. What does the market look like on the acquisitions side, where you do apply your capital?

Crowded. There's more interest by private equity these days, which is kind of a continuation from calendar year 2012. But we continue to have thoughtful conversations over multiple months period of time with people and trying to find the right fit. But as you know, the staffing industry is highly fragmented. So there's plenty of targets. The larger the target becomes, the more activity from private equity gets involved. But all in all, I mean, it's not much different than what we've experienced historically. It's still a very fragmented market and plenty of opportunities.

I will sneak in one last question. What do you expect your internal staffing consultive headcount growth to be this year?

You know what, Tobey, we'll have to follow-up with you on that. We -- I don't have it. I mean, I think, at best we might be able to give you what the implicit growth rate is if people hire to what they budgeted in their branch expenses, but I don't have that off the top of my head. You can call back on that.

You're next question comes from the line of Sara Gubins.

In terms of your expectations for the full year, so you're expecting to be towards the higher-end of the original outlook. But I am wondering for gross margins, given the gross margin trend in the first quarter, do you think you'd be able to hit the low-end of the original target? I think it was 30.3%. Or should we expect that to, perhaps, be lower?

I think it's going to closely approximate the low-end of the range, just based on how we're currently trending.

I think, Sara, where it will ultimately tip one way or the other is whether conversion fees pick up, firm placement fees pick up and how fast the economy grows in the second half of the year and how that translates into pricing conversations we have with our customers.

Okay. And then your prepared comments, you talked about generally seeing an improvement versus the end of the first quarter, which is encouraging. I'm wondering, what do you think is driving this? And are clients talking at all or worrying at all about a near-term potential in slowdown in GDP, given sequestration and other macro factors?

For us, I really believe it's just people are proceeding through their fiscal year, and they're releasing their capital budgets and they're executing on their technology programs. And a lot of that is capital expenditure-driven versus GDP growth. And as you note, over 2/3 of our revenue comes from IT. So I think it's just really execution against CapEx budgets that large corporations had budgeted for 2013.

Okay, great. And then just one last follow-up kind of along those lines. I'm wondering what the best leading indicators that you use for IT temp demand are. We've seen some weakening software license sales, for example. I'm wondering how much of that applies to you, or if it's really CapEx budgets that are kind's of being sit around now for the rest of the year and perhaps maybe whether or not you're taking any share.

Well, we are taking share, because you've seen some very, very good company's report. And one of them, I think, grew 7% in their IT group. And we grew 14% and 21%. And then the other one, I don't know if they broke it out, but they're commercial staffer, my gut, it was not a big growth. But we are taking market share. If there's a slowdown and new software licenses, that would affect our ERP implementation business. And if there's a slowdown in CapEx, that would slow the overall demand for IT staffing. But the -- we use our Oxford Index, which we quoted you in our prepared remarks, which is basically flat with the first quarter, which, pretty much, to us, indicates that we'll have similar demand than as what we had in the first quarter.

Your next question comes from the line of Kim McHugh (sic) [Tim McHugh]. Timothy McHugh - William Blair & Company L.L.C., Research Division: Just want to ask one more thing around the gross margin topic here. You did a good job laying on a bunch of the moving parts in terms of the mix of revenue. But I guess stepping above that more anecdotally, in terms of the bill pay spread, I'm sure you're seeing upward pressure on the pay rate. How difficult is the conversation with clients at this point? I know you talked about getting easier maybe later this year. But are they completely closed off to that right now, is that an easy conversation to have? Where do we kind of sit on that pendulum?

Well, I'm just going to make a kind of a generic comment, and then I'm going to let Rand and Mike each talk to their divisions. There's still a lot of noise about the U.S. economy softening, sequestration, things like that. And that all filters down into the mindset of buyers and pricing power and things like that. But with that said, I do think people are realistic with regard to scarcity. At as it relates to our respective business models, I'll let Rand and Mike speak to what they're hearing from their customers. Rand, you want to go first and then pass it to Mike?

Well, listen, there's a couple of ways to respond to that. One way is, this is a real situation in the last month, where our client -- one of our major clients came to us and asked for bill rate concessions, which, obviously, would close our bill rate period differential. And at the rates they're proposing to us, we just said, "No, we really can't support you. We want to be your partner. We can't do it." And 4 weeks later, they came back to us. They couldn't find anybody else who could meet the requirement. And successfully, I said they could, but they couldn't successfully, so we got exclusive regrets in that area. So I think that reflects the fact that our clients aren't trying to gouge us or we're trying to gauge us or we're not trying to gauge them. We're trying to work together in the market place. We're tracking very closely pay rate scales. They're published in by region. So we know what the going rates are for different skill sets and different locations. And our clients are very open to -- if there's good empirical data that suggest we should be doing this or that, they're more than open to that. So I think it's a -- we're partners of theirs, and we're key component of the business so, it's not a contentious thing. Sometimes, clients get into pickles, they're trying to support their own earnings. They might ask for concessions even for a small, short-term period, but they expect to give us more volume or do other things to support their best vendors. So I wouldn't describe it as a contentious situation, it's an ebb and flow. Mike?

Yes, I would agree, Tim, with what Rand said, as well as Peter. And you in our business, in Oxford's business, it's a onesie-twosie game, and when you look across all of our disciplines, whether it's IT, it's software, hardware, it's engineering, it's regulatory, it's Healthcare IT, it really comes back for us primarily what's the client need? What's the criticality of their situation? Do they have a project undergoing right now that they need somebody on Monday? And in those kind of situations like that, it's a pretty easy discussion because of the need. If it's something they're trying to step 2 weeks out, 3 weeks out, et cetera, then it becomes a little more difficult. So it really is on a case by case basis. And as Rand said, it really isn't contentious, it's really the ebb and flow of their own business needs, as well as the availability in the market place, and that really means competitors. Can they get other suppliers to provide those kind of resources or not? Are they going to rely on Oxford, just a few of us?

And we just see the pricing environment stable. I mean, we were able to grow 3x faster than others. And really not have any sort of real pressure on our pricing. It was just a conscious decision that we shouldn't walk away from certain business and walk way from the opportunity to establish some major new relationships. But I believe that the future looks brighter than the past, and that would probably correlate to better pricing in the future. Timothy McHugh - William Blair & Company L.L.C., Research Division: Okay. An and then for Rand and Mike and Peter, as well I guess, for anyone who wants to answer. A bit of longer-term question is, there's been a bunch of debate lately on immigration reform and potentially changing some of the rules around visas for tech workers. To the extent you've -- it's knowable at this point, is that a positive or negative for the business? And just generally, how would it affect you?

Yes. So it's a net positive for us, Tim, because we're just not a big, big H-1B visa shop. I mean, Rand and Mike, if you know the numbers on the top of your head, you know on an approximate basis, share them with Tim, but we -- unlike AMASTAC [ph] or some of the other organizations, we don't have even hundreds of people on H-1B visas. It's much less thousands people like some of the other organizations. Rand, do you know how many H-1B visa people you have?

Well, of course, but we usually pursue this through associate vendors, so we're -- if you will not expose personally, but we do it through associate vendors. It's a 3% or 4% of our business is provided through the associate vendor base. So it's -- and I think Peter said the right thing. If they -- the legislation does say staffing firm should use H-1Bs, it'll be a boon to us, because we don't -- we have very strong internal U.S.-based recruiting capability. On the other side, if they say they want to keep going with it, I think we've found a workable model with a league of associate vendors, which we get a markup on, and we continue to move forward.

How about you, Mike?

yes. And, Tim, we're in the same situation. We sponsor no H-1Bs. And just like Rand, within Apex, occasionally, we'll work through a third party supplier and they may provide us a few H-1Bs, but it's a handful, at most, in terms of our business. Timothy McHugh - William Blair & Company L.L.C., Research Division: Okay. And then one last question. Just, Ed, is it fair to think of kind of $0.15 a quarter as the differential between kind of GAAP EPS and the adjusted EPS?

Yes. It's going to be pretty much the spread that you see, because the numbers really don't vary from period to period. At least, as it relates to the 2013.

Your next question comes from the line of Paul Ginocchio.

This is actually Ato Garrett on for Paul Ginocchio. First question is on debt refinancing. Can you size the step-down on the cost of debt? Do you guys wanted to pick up from refinancing your debt?

It's been launched, and I'm sure they'll be in the trade sheets to talk about. But it's about 100 basis points.

Okay, great. And looking at Apex's result, you've commented that the growth was better at large clients. I was wondering what drove the high -- the better growth of large clients, or was there something holding back the growth in your smaller accounts?

No. I mean, Rand, why don't you respond to that? I just think it was -- if he said the ebb and flow and larger budgets getting released quicker. But Rand?

I agree with what you said, Peter. The ebb and flows of the business, our larger accounts are in our top accounts program. But just released January 1, new fiscal year, they began to surge where our retail or bit market accounts. We're very strong last year in Q3, 4. They're still growing, even this year. But it's just the ebb and flow of the business.

Okay. And then finally, again, looking at the IT side of things, have you seen any change in your bill rates due to talent scarcity?

Not really. Balancing it, we have a -- the biggest inhibitors of growth right now are supply versus demand.

Your next question comes from the line of Edward Caso.

It's actually Rick Eskelsen on for Ed. Just a quick question. You were -- had some positive comments on Financial Services. I was wondering if you could just give a little more color about what you're seeing there from your clients in particular?

Yes. I mean, Rand, why don't you go first? And then I'll follow up, I think, if there's anything else that's meaningful to be added.

Well, I just think we have a number of accounts in the Financial Services industry sector and majority of those accounts are spending money both in their capital budgets, their operating systems, upgrading their infrastructures, and that continues to move forward. And Financial Services sector is a big -- they do embrace new technology and they do deploy technology to advance their business. So we see them doing more of that, and that's a good thing for us.

Yes. And some of these major organizations are further away from all the integration work they were doing in connection with the mergers that occurred in '09, '10 and '11. And they're focusing their attention on new regulatory reporting requirements like Dodd-Frank.

Okay, great. And then just on the -- to follow up on the debt facility, have you included the lower cost of debt in the Q2 guidance? And just remind to us if that was factored into previously to the guidance, or if it's new for the full year.

It has not been factored yet..

It is not? Okay.

No.

Your next question comes from the line of Jeff Silber.

Actually, just a follow-up to that question. So just to double check, you would have been confident that you're going to hit the high-end of your previous 2013 guidance regardless of the refinancing.

That is correct.

Okay. I just wanted to double check on that. And then actually a follow-up from the last question or previous question, talking about supply constraints. Are there any verticals where you're seeing the constraints being a little bit more heavier than the others?

IT and Physician Staffing.

And within IT, are there specific areas?

Yes. I think it's the Data Management, Data Warehousing and then Compliance. Rand, do you want to add? And Mike, do you want to add to that?

I think, Mobility is a big area for familiar with mobility systems and Java.net. Now these are always hot skill areas, and there's constant ebb and flow within these skill areas for available talent.

Okay, great. Just a couple of numbers questions. Are there any one-time costs associated with refinancing that we should be expecting this quarter?

Yes.

Well, in addition to that, Jeff, we will make an adjustment to our deferred costs, related to the current facility. We just don't know what those numbers are going to be yet. But those are good to be -- and just be a onetime adjustment.

And will you be telling us about that once the new facility is priced? Or are we going to have to wait until next quarter?

I think it's going to be discussed on the next conference call.

Okay, great. And then one of the number, capital spending guidance for the year?

It's still within the $15 million to $16 million We're anticipating about $5 million for the second quarter.

Your next question comes from the line of Randy Reece.

First of all, I was wondering if you could talk about, in the Healthcare IT staffing space, is -- first of all, is it significant to you, the percentage of revenue? And then, if there is any effect of sequestration on that kind of business?

Randy, it's 17% of Oxford's revenue. It's growing very nicely, and sequestration, really, isn't impacting us in that space, much less any of the spaces that we operate in at this point.

You've said some general things about the linearity of business year-to-date. I was just wondering what your -- how your mood and discussions have changed in your periodic management meetings since the last conference call.

We tried to reflect it in our prepared comments. We think that momentum continues. I think the implicit growth rates of second quarter guidance....

It's 14.3%.

It's 14.3%, which is faster growth than what we had in the first quarter. So the beat goes on.

Was that a straight line? Or is it then kind of mood swings?

I just think it's continued gradual progression of higher number of people on billing each week, as we move through the quarter.

And finally, what kind of cost leverage do you expect to get over recruitment advertising this year? It seems like that there's pretty decent price pressure in that category.

If you're referring to what our spend is, what people like Monster and careerbuilder, it's just falling through the floor. We're spending less and less every year with those companies, and we're spending more with people like LinkedIn and just more on proprietary research. So -- but I don't have the financial numbers, but what I can tell you is the spend is going down with Monster and careerbuilder pretty dramatically.

Your next question comes from the line of Patrick Abeln. Patrick R. Abeln - Robert W. Baird & Co. Incorporated, Research Division: It's Pat Abeln of Baird in for Mark Marcon. In terms of the gross profit conversion rates, those were quite a bit higher than we would have expected. But if I recall correctly, we've also been talking about pretty significant investments in the business. So can you just talk about how quickly those are ramping? And then what we should expect for the next couple of quarters?

I think we saw what we expect as far as ramp-up of new hires that we made in the fourth quarter and having some sort of marginal impact in the first at Apex and at Oxford. Life Sciences had some hires in the fourth, but more towards the end of the first and we really haven't received any meaningful impact from those hires. And then on the Physician Staffing side, majority of the hiring was done in the second and third quarter of last year, and I think you've seen a reacceleration of top line growth. So we are getting, probably, the biggest impact from new hires over the Physician side, followed by Oxford and then Apex and then Life Science. Patrick R. Abeln - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then following up on that Life Sciences point. I saw the growth rate expectations for the second quarter, but could you just give a little more color in how you see that on playing out over the year, given that, really, it's the only segment that hasn't turned quite yet?

Yes. So they're going to grow mid-digits year-over-year in second quarter 2013. We're working very, very hard to change the trajectory of that business. A big chunk of that division's revenue's lab support which is kind of classic, traditional scientific/laboratory staffing, is more directly correlated to GDP growth. So it probably just won't grow as fast as IT because of the dynamics of what drives business. And then the Clinical Research business tends to be lumpy based on how strong the pharmaceutical companies feel about their own prospects and their drug pipelines. So we think we can have growth for the first time in many years year-over-year and get closer to our 2007 revenue peak number in 2013. Patrick R. Abeln - Robert W. Baird & Co. Incorporated, Research Division: Okay. So is that second quarter range reasonable as kind of a starting point, unless we see a significant change in the broader GDP growth rate?

Sure hope so. That's what we're counting on. Patrick R. Abeln - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then if I can just sneak one more in there on Apex. I certainly appreciate the color in terms of the large clients versus the small. But if we talk about regions across the U.S., has there been any noticeable differences?

Not really.

There are no further telephone questions at this time.

Well, thank you for your attention and continued support, and we look forward to reporting our second quarter 2013 results in the ensuing months. Thank you very much.

This does conclude today's conference call. Thank you for your participation. You may now disconnect your line.