Edward L. Pierce - Chief Financial Officer, Principal Accounting Officer and Executive Vice President Peter T. Dameris - Chief Executive Officer, President, Director and Chairman of Stock Option Committee Randolph C. Blazer - Chief Operations Officer Michael J. McGowan - Chief Operating Officer and President of Oxford Global Resources Inc Mark S. Brouse - Former President of VISTA Staffing Solutions Inc.

Kevin D. McVeigh - Macquarie Research Albert J. Rice - UBS Investment Bank, Research Division Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division Sara Gubins - BofA Merrill Lynch, Research Division Keen Fai Tong - Piper Jaffray Companies, Research Division Jeffrey M. Silber - BMO Capital Markets U.S. Gary E. Bisbee - RBC Capital Markets, LLC, Research Division Timothy McHugh - William Blair & Company L.L.C., Research Division Paul Ginocchio - Deutsche Bank AG, Research Division Randle G. Reece - Avondale Partners, LLC, Research Division Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Ladies and gentlemen, thank you for standing by. Welcome to the third quarter earnings conference call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Ed Pierce, Chief Financial Officer. Please go ahead.

Good afternoon, and thank you for your time today. Before we get started, I would like to remind everyone that our presentation contains forward-looking statements representing our current judgment of what the future holds. Although we believe these statements are reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially from those statements. Some of the risks and uncertainties are described in today's press release and in our SEC filings. We do not assume the obligation to update statements made on this call. I will now -- I would now like to introduce Peter Dameris, our CEO and President, who will provide an overview of the results for the quarter. Peter?

Thank you, Ed. Good afternoon. I would like to welcome everyone to the On Assignment 2014 Third Quarter Earnings Conference Call. With Ed and me today are Rand Blazer, President of Apex Systems; and Mike McGowan, COO of On Assignment and President of Oxford Global Resources. During our call today, I will give 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 third quarter and our estimates for the fourth quarter of 2014. We will then open the call up for questions. Now on to the third quarter results. Revenues from continuing operations in the third quarter were $477.8 million, up 7.2% on a pro forma basis and up 13.4% on an as-reported basis year-over-year. Income from continuing operations, adjusted EBITDA and conversion of gross profit to adjusted EBITDA were well within our projections. Revenues generated outside the United States were $21.2 million or 4.4% of consolidated revenue in the third quarter versus $20.4 million or 4.8% in the third quarter of 2013. Adjusted EBITDA from continuing operations was $56.1 million or 11.74% of revenues, up from $51.9 million or 11.65% of revenues in the third quarter of 2013 on a pro forma basis. During the quarter, permanent placement services experienced the fastest growth, followed by scientific staffing, IT staffing and physician staffing, respectively. Spending amongst our local smaller customers grew about 20% with our larger account customer base, specifically financial services clients, growing at a slower rate. IDC, Gartner and other large IT service businesses have recently spoken about slower enterprise IT spending, and we believe this is temporary and not unusual. With that…

Great. Thank you, Peter. The Apex segment, consisting of the Apex and U.S. Lab Support business units, grew revenues by 10.5% in the third quarter over the third quarter of 2013. Revenue was $306 million. Gross profit for the quarter grew 10.7% on a year-over-year basis with the gross margin rising to 28.5%. Segment profit contribution grew faster than revenues as we continued to convert revenues and gross profit to earnings. Pace in Apex segment growth was third quarter year-over-year growth in our business services, health care, technology and lab support top accounts. Our mid-market accounts also posted solid revenue growth in the quarter. We saw measured spending by our clients and in the market overall in Q3 with corporate IT spending slowing on a year-over-year basis. We expect that spending environment will continue for Q4 2014. With that said, we expect our revenues and operating margins will grow in Q4 on a year-over-year and sequential basis. As Peter mentioned, we have increased the headcount of our sales and delivery teams and are executing on specific initiatives aimed at select markets throughout Q4 as we push for continued strong performance in Q4 and into 2015. I'll now turn the call over to Mike McGowan to discuss results of Oxford, Physician and European business segments. Mike?

Thanks, Rand. The Oxford segment, consisting of the Oxford and CyberCoders business units, grew revenue by 1.3% on a pro forma basis to $125.9 million. Gross profit for the third quarter increased 6.4% over the third quarter of 2013 on a pro forma basis, and gross margin for the quarter was 43.1%. CyberCoders had a very strong quarter with record revenues approximately 25% greater than the third quarter of last year. We continue to be very pleased with CyberCoders' performance and the integration with the Oxford business unit as the synergy between the 2 has resulted in incremental perm placements. We also remain optimistic regarding continued growth as we continue to add staff recruiters to the CyberCoders team. Oxford's core revenue for the third quarter was $104.9 million, down sequentially by 1.2% and 2.3% over the third quarter of 2013. Oxford's core gross margin for the third quarter remained strong at 34.3%. The decline in revenue has been primarily due to the completion of several large health care IT projects and very sluggish demand for new electronic medical record projects and actual EMR assignments. Based on feedback from our clients, we expect new EMR implementations, optimizations of previously installed systems and overall demand for consultant use to slowly start to increase in 2015. We are also in the process of adjusting our service offerings in terms of EMR optimization and other required areas to address the ever-changing needs of the health care industry. Based on the projection of increased consultant use in 2015, we are making additional investments in our health care IT sales and delivery staffs. Oxford's other core division, Oxford International, has shown slight improvement throughout 2014, primarily driven by our regulatory and compliance and our traditional engineering segments. As reported on prior calls, our ERP and software, hardware engineering segments have been relatively soft throughout the year. Overall, though, Oxford International has been impacted by measured IT spending and some of our high-end specialized skills. Just as Apex is making investments in additional sales and delivery staff, we are doing the same in select segments and geographical areas that have realized growth in 2014 and projecting the same for 2015. VISTA, our physician staffing segment, experienced a good quarter as revenue was up 3.8% sequentially and 4.1% on a pro forma basis with the addition of Whitaker Medical acquired in December of last year. In addition, we have discussed previously, government demand has been inconsistent, but it is beginning to show signs of stability. Demand from our commercial clients is also starting to improve, and excluding our government business, we grew 13.1% year-over-year. From an industry perspective, the overall physician staffing market continues to experience choppy growth in the near term, but the macroeconomics that drives supply and demand in the segment remains positive. And finally, our Life Science segment in Europe had a respectable quarter, reflective of the softness of the overall European economy. Ed, now over to you.

Thank you, Mike. Before I get started, I would like you to note that I'll be making references to pro forma results, which assumes the acquisition of CyberCoders and Whitaker occurred at the beginning of 2013. Turning to financial results for the quarter. Third quarter revenues were $477.8 million, up year-over-year at 13.4% on a reported basis and 7.2% on a pro forma basis. Adjusted income from continuing operations was $31.1 million or $0.57 per share, and adjusted EBITDA was $56.1 million or 11.74% of revenue. Cash flows from operating activities were $45.3 million, and capital expenditures were $4.6 million. These results were in line with our financial estimates for the quarter, except for revenues, which were below our estimate by less than 0.25 percentage point. Direct hire and conversion revenues for the quarter were $23.7 million or 5% of revenues, up from $20.5 million or 4.6% of revenues in Q3 of last year on a pro forma basis. CyberCoders accounted for $17.2 million of perm revenues for the quarter. Our gross margin for the quarter was 32.6%, up 2.4 percentage points year-over-year on a reported basis and 34 basis points on a pro forma basis. The expansion in margin on a pro forma basis was a result of the higher mix of direct hire and conversion revenues and slightly higher contract margins. SG&A expenses for the quarter were $108.7 million or 22.8% of revenues compared with $98.7 million or 22.2% of revenues in Q3 of last year on a pro forma basis. SG&A for the quarter included $1 million in acquisition and integration expenses, primarily related to our realignment and consolidation initiatives on our Lab Support business, which is now included in our Apex segment. Our conversion to gross profit into adjusted EBITDA, which is a measurement of our…

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

[Operator Instructions] And our first question comes from the line of Kevin McVeigh with Macquarie.

I wondered if you could give us a little more color on the new recruiters, the incremental 100 hires. With the P&L expense it'll be -- did we start to see that in Q3 and then ultimately into Q4 as well? Or -- and then ultimately, should we think about it in terms of the share buyback offsetting that incremental investment? And then how will those folks scale as we think about the revenue trajectory, Q4 into Q1 of next year?

Yes. So Tim, this is Peter. First of all, with regard to impact, we really don't expect a revenue or profit impact -- favorable profit impact in the fourth quarter. They typically takes, on the short end, 6 months, typically 9 to 12 months for someone to get kind of productive. As you know, in the staffing industry, most of these people are working on around a $40,000 to $50,000 base salary. But what I can share with you is that we said that the expense -- the branch expense is up about 1.9% over the fourth quarter of 2013. That's about $10 million. So that was budgeted...

On an annual basis.

On an annual basis. And so we're hiring -- some of this is truly incremental. Some of it, we would've been hiring based on our 2015 growth patterns. And most of it, really, is to go ahead and, as I said in my prepared comments, more fully address the entire market, more local, small account business versus just our larger enterprise accounts without losing any focus or quality of servicing to them. As it relates to the share repurchase, we'll continue to do that. We're generating a fair amount of cash. I think you saw that we purchased a lot. And our bank debt, plus any kind of commitment we have for earn-outs, only took it up to 2.06 versus 1.98 at the end of June. And so we have lots of capacity to continue to do that as we generate cash. And a full -- I think a full quarter impact, it's about $0.015 based on what we -- if we don't purchase anything else, which we fully assume we'll continue to purchase.

Got it, okay.

Did that answer your question?

Very helpful. Yes.

Our next question comes from the line of A.J. Rice with UBS.

First of all, maybe just a cleanup question on the recruiters. Just -- are they assigned to one of the 2 -- the broad divisions? Or are they more in the subgroups? Or how does a recruiter focus their time?

Yes, no, we're, A.J., organized by division. So each division has specific hiring plans, and they are solely focused within that division. So...

Any sense of how this 100 break down?

Yes. I would say -- think of it in terms of 70-30 Apex and the rest of the business.

Okay, okay. Can you just remind us on Apex and Oxford sort of the seasonality of the business? How much of what we're talking about reflect -- has some reflection of seasonality? Is there a normal -- -- I know spending it on IT capital can -- tend to be pushed it into the fourth quarter, because people are trying to make budgets, but I assume that's not how your business works. I'm just trying to remember seasonality for Apex and Oxford a little bit.

Yes. So I'll go first, and then I'll let Mike and Rand add anything that they feel is appropriate. But typically, the strength of the quarters is third, second, fourth and first. And most of that has to do with billable days -- number of billable days and weather and holidays, et cetera. With that said, in the IT world, you can have both positive and negative influences. You can have budget freezes if people see their business going wrong or you can have budget flushes, use it or lose it. We're not seeing any dramatic movement in either of those directions. It's just kind of steady-state. And what really drives what we're seeing right now is just the current projects and the release of projects, the number of consultants we have on billing. We're not seeing a deterioration. We're just not seeing, in some of the larger accounts, a particular strengthening above where we were. We're seeing it in pockets but not broad-based in the 2 IT divisions. And then you always have the overlay of, at times, consultants can, for their own personal reasons, get distracted and not may want to take more PTO time, which limits the amount of time we can bill our customers. Rand or Mike, do you want to add anything?

Well, the only thing I would say, A.J., is I agree 100% with what Peter was saying. The only thing in the Oxford business, sometimes, it would make a difference based upon, for instance, government decisions. As I mentioned in my prepared comments, the health care IT business, obviously, was impacted by some of the decisions the government made in terms of delay of some of the target dates. So that fact could impact it a little bit. But other than that, I agree with the seasonality that Peter commented on.

Okay. And then maybe last one on the comments that you do expect, the EMR convert assignments and generally HCIT. It sounds like those order flows to pick back up gradually over 2015. Can you just remind us how much of a lead time you get to see whether that assumption's right and those orders happen, and then you have to fill them pretty quickly? Or do you -- is there a fairly broad lead time there?

Mike?

Yes. Most of them are -- I mean, we're following a lot of job opportunities already. And a lot the of health systems are saying, "We think we're going to start in XYZ date, mid-December, mid-January or mid-February, et cetera." So we're following. We probably have, in most cases, 2 weeks to 30 days probably to actually fill them once they give us the go ahead, generally.

All right. So your comments were sort of based on the back-and-forth discussion-wise, but the orders are still sort of to come in the next month or 2, basically, it sounds like?

Yes. That's what they're saying. Some are saying in the first quarter. Some are saying, "We're going to wait and see." Some are saying, "We're finishing out the year." But generally, we believe they will start seeing some of those projects come to fruition in the first quarter.

A.J., I want to reiterate that our visibility in the health care IT implementation space is about as clear as mud right now. We have been consistently wrong, relying on customer saying it's going to come on because they -- we've had these rolling deferrals on stuff that we're following. So don't misunderstand those comments to mean that we're not positive about this space and is coming back and being a forceful area for us to have meaningful growth. It's just, in the short run, the visibility is very cloudy.

Our next question comes from the line of Tobey Sommer with SunTrust.

One question on the Physician business, VISTA. Is the new VA funding that emerged a few months ago when the VA was kind of prominently featured in the news in a negative light, is that the driver to stable government business? Or is there something else going on?

It's -- Tobey, that's incremental, but it's just -- I mean, take the state of California for an example. You got a booming stock market. You got a lot of state income tax that gets collected, and you have a booming IPO market. You have a lot of state income tax collected. So a lot of states' revenues have recovered, and they're spending more on social programs. So I think it goes beyond the VA funding. It's just a general economic recovery. Because whether tax rates have gone up or the stock market has gone up, states have greater collections in revenues, and they're spending it.

Okay. Kind of switching gears. In Oxford, during the discussion with HCIT in the prepared remarks, I think, if I heard correctly, you talked about maybe changing a little bit of, I don't know, internally or externally kind of how you go to market or package your offering. Could you -- if I did hear that correctly, could you elaborate a little bit?

Yes, I'll go first. Really, it's just a realization and it's a continued evolution that a lot of the first wave of implementations are behind us. So you're kind of on Phase 2, which is more optimization and beyond, just the self-attest Meaningful Use of installing an EMR system. So our -- what we're really doing is broadening the skill set that we provide around the electronic medical records and moving more into a sales focus of Phase 2 since the initial wave of implementation will be there but not as great a rate as they were in the last 2.5 years. Mike?

Yes, I would agree. That's what I meant by my comments, Tobey. And as Peter said, for instance, we need to make sure we've got the right skills, which we're working on now to do the optimization versus the initial installation. So we're needing to make sure, and we're recruiting those kind of consultants right now to be ready for that into next year.

Two little questions on Oxford. How did ERP perform in the quarter? Or what's -- and what's your expectation for the fourth quarter? And are you seeing any particular specialty or area within the IT and engineering arena in which growth is -- in urgency among clients, can kind of replace those 2 areas of what have been pretty good growth a year or 2 ago?

Mike?

Yes. I think where we're -- again, we're seeing, as I commented, the ERP and some of our more traditional software, hardware engineering has been relatively soft throughout the year. The thing that we're doing tonight, we commented remember even on the Analyst Day back in New York, was we're continually looking at new skill areas, and we're adding those at is it make sense in terms of the market demand, et cetera. So we're adding new things all the time in terms of, for instance, the security and cloud computing and all that stuff. Has it taken over the size of -- an ERP? No, it hasn't. And that's why we continually look for those new skill areas and then add them appropriately within our different segments.

Our next question will come from the line of Sara Gubins of Bank of America Merrill Lynch.

In terms of incremental sales expense in the fourth quarter, should we figure that if it's $10 million on an annualized basis that you'll do about half of that in the fourth quarter or a little over $1 million in the fourth quarter and then we'd need to add another $1 million in a quarter -- in the first quarter to get to the right run rate?

Well, Sara, those are -- it's included in our estimates, our SG&A estimate, and we're anticipating about $1.5 million.

$1.5 million, okay. So we need to add in a little -- about another $1 million into the first quarter to get it to the right run rate?

Yes. If you're going to normalized it, yes.

Okay. And then I know that it's early to think about 2015. But I'm wondering, do you think you can grow your margins next year, given the incremental sales cost and the delay in their ramp?

Well, my comment to that, Sara, would be, right now, we've been in the midst of moving some things around like Lab Support to Apex, and we told you on October 14, we completed the cutover. But we're still running, in the background, the old systems and things like that. We had hope there will be some incremental savings over time with regard to that as we fully sunset some things. We hope and believe, based on the production we're seeing, that the Apex business will improve. And we're generating these industry-leading EBITDA margins without there being the type of traditional operating leverage because of incremental revenue from Oxford and from the Physician group and also the European group. So if those groups start growing, we should have some operating leverage versus the negative operating leverage that we've had this year.

Okay, great. And then are there particular kinds of projects that some of your larger IT clients in Apex are thinking about for next year that gives you some confidence that you'll see a return to normal for those kinds of clients?

Yes. I mean, it's a rolling thing. We can't name names, but I can tell you that -- and Rand, why don't you pick up on this without giving the customer's name? We just won a major contract that'll start ramping up in the next 3 to 4 months that's in the kind of aerospace/manufacturing industry. Rand?

Yes. What you said is correct, Peter. And I think -- to answer your question, Sara, we have a pipeline set of information. So our pipelines continue to build. I think it's just when the clients pull triggers across different companies and different industries. So yes, our pipeline looks very healthy. And IT spending in enterprise accounts tend to spurt, and it will spurt. And we have good pipeline, expect things will pick up.

We really, Sara, haven't seen a decline in the amount of work that we can bid out -- bid on across the universe for new business. It's more so that some of our enterprise customers may be spending less at a particular time. Another company reported yesterday and had a very good quarter, and they said their financial services customers were spending very well in the third and fourth quarter. That's different than -- and we really don't a lot of crossover with them in major money center banks. But a couple of our large money center banks have even publicly stated that they're spending less currently. That's temporary, and it'll change. But not all enterprise accounts spend in their spending cycle the same way. But right now, it's stable. We grew 10.5%, but we didn't see an acceleration in spending of financial services.

Our next question comes from the line of George Tong with Piper Jaffray. Keen Fai Tong - Piper Jaffray Companies, Research Division: You've indicated you're seeing slower enterprise IT spending in some of your larger accounts and that it's temporary and not unusual. Can you comment on what trends you're seeing that gives you confidence this trend is, in fact, temporary? And when do you expect a turn in demand from some of your larger accounts?

Yes. I mean, I'll go first. But George, it's 35 years of experience and multi, multi-years, 10 years of experience with various customers. Our top 10 customers or top 20 customers, what was #1 in 2013 may be #8 in 2014 and maybe #3 in 2015. Their spending cycles just ebb and flow. As I said, the broader landscape in order to bid on work hasn't deteriorated significantly. I think our growth rate, revenues generated from financial services companies, actually shrunk 1% year-over-year -- quarter-over-quarter, year-over-year. And that wasn't because we lost to someone else. It was just temporary slower spending within those customers. With that said, we also pointed out that our local business and smaller number of placements per customer business grew north of 20%. So it's just -- it's an ebb and flow, it -- and that's how it's always worked for us. We're seeing new sizable work being awarded and allotted as we just mentioned in response to Sara. And we firmly believe, as long as the macroeconomic environment remains stable, which it is, that the broader IT spending market will be good. We're -- our comments about enterprise-wide spending has been anemic. It's not saying it's terrible. It's just -- there is just no exciting new technology that's in the midst of rapid deployment or major M&A integration that has been led to -- or at least that we've won that spikes the growth rate dramatically above the normal growth rate. Rand, what would you add?

Well, I wouldn't add anything. I think what you said is correct and George, the answer is we have lots of years' experience. We plot our growth rate quarter-by-quarter, and it spurts and then it kind of settles down and then it spurts again. We have pipeline data to look at, and I think we're very pleased with the portfolio of accounts we have in our key industries in our top accounts. And these have been long-term good clients, and we continue to build on that. So...

And rather than just waiting for them to turn on, we're -- what we're trying to say is that we think, without losing focus and quality of attention, that we can grow faster while these are -- these enterprise accounts are a little flat by picking up more of the local smaller number of placement-account type business. And we did -- we were very successful in the third quarter. It was 20% growth. But that type business makes up 30% of our revenue, not 70% of our revenue. Keen Fai Tong - Piper Jaffray Companies, Research Division: All right, that's very helpful. I'd like to go a bit deeper also into ERP spending within Oxford. How do you expect ERP demand trends to play out over the next several quarters? And when can your newer skills focus really start to kick in and supplement ERP trends?

Mike?

Yes. I mean, it -- on the ERP side, itself, it's very similar to what Peter and Rand just said. We have the same sort of thing, where we have a pipeline of clients that we're working with and projects and tracking and all that sort of thing. So it really is the same ebb and flow, if you will, in terms of our client spending that we experience in Apex. So that's on the ERP side. On the new skill areas, we actually have several projects underway now with some of those new skills, and we continually add in -- add new skills and take other skills away. If a skill becomes commoditized, we take it away. So it really is into next year. And again, a lot of it is going to depend on overall IT spending in terms of what specific skills our clients are going to need from that high-end urgent need, demand sort of perspective. Keen Fai Tong - Piper Jaffray Companies, Research Division: Yes, that's helpful. You've noted in your prepared remarks that the IT business continues to grow above industry rates. Can you comment on the competitive landscape and market share changes you've noticed that supports this trend?

Yes. So I think Robert Half said they grew about 11.8%, and we never compete with them because they're mostly lower bill rate and smaller-sized accounts, very good segment, nice business, but different than what we really -- I mean, they're really dealing with corporations that have less than $200 million, $300 million of revenue. And so it's more the customer size versus the number of placements within the customer and the skill set. But they grew 11.8% and said the small and medium-sized businesses growing faster. I think that's true. Kforce had a very nice quarter and said that their financial markets are growing. Like I said, I don't think we really share the same customers as it relates to the financial services industry. But they, I think, grew 12.4%, and we grew 10.5% in the quarter. And then the outliers are 2 large private companies, TEKsystems, which is owned by Allegis, and Insight Global, which is owned by private equity. And I think that they -- I don't have hard data, but I think they probably have grown a little bit faster than any of the public guys. And so if there's been any market share gain, maybe it's been from some of the private guys. But as I said, I think the industry-stated growth rate is 7%, and we grew 10.5%. We -- well, we're trying to be as transparent as possible on the up and down side. We just really haven't seen a sizable customer penetration in our dominant accounts by others, and this has been more just a overall lack of spending in our -- some of our enterprise customers in a particular period than someone else's doing the business versus us. Keen Fai Tong - Piper Jaffray Companies, Research Division: Right, that's helpful. And just 2 more quick ones. And in the past quarters, revenues were, to some extent, constrained by supply elements. In this quarter, would you say supply constrained revenue performance at all?

Not really, George. I think that there's always the very high-end skill sets. They are hard to come by. But this was more just timing of spend and current demand for particular skill set. So I wouldn't say it was supply constrained. Keen Fai Tong - Piper Jaffray Companies, Research Division: Got it. And then just last question. In terms of capital allocation, you've indicated in the past, your target debt multiple was around 2.5x EBITDA, and you're now at about 2.1x. Can you share your thoughts on potential increases in financial leverage to support further share repurchase activity or M&A?

Yes. So we constantly evaluate what's the best use of our shareholders' capital, and acquisitions would be at the top of the list, followed by share repurchases. And we're not going to do an acquisition that's not a good fit or well thought out, and we would go above 2.5x for an acquisition. But under 2.5x, we think that there's a better use of our shareholders' capital. And to the extent that we shoot through this remaining $30 million and we're generating cash, we'll have conversations with the board and look to replenish the share repurchase if that's the right thing.

Our next question comes from the line of Jeff Silber with BMO Capital Markets.

Peter, you mentioned something about the breakdown between your small and large customers. I think you said that your small customers are about 30% of your revenues. How do you define a small customer? And where do you think that percentage will grow over time?

Yes. So for us, a small customer is, typically, we'll put maybe 2, 3, 4 consultants on billing versus the size of the customer, and it's more of a local relationship than "an enterprise relationship." So -- and so that's how we really address it, and it's 30%. We look at quality of revenues as much as quantity of revenues, and these enterprise accounts can sway up and down. But we have a lot more intimacy with the customer when they're spending $30 million or $40 million a year with us than if they're just doing 6 placements that add up to $462,000 over a year. So we're not going to lose our focus on enterprise accounts, but that doesn't mean that we can't incrementally grow and pick up some of the business that maybe we weren't fully addressing because we were growing 15%, 16%, 17%, 18% previously.

Just so I understood, from a go-to-market strategy, you have separate salespeople for your enterprise accounts versus the smaller accounts, as you call them.

Typically, that is correct.

Okay, great. And can you also remind me in terms of your financial services exposure, roughly what that is?

Yes. Rand, wasn't that, at its peak, 29% of Apex's revenue?

Yes, at the peak. Now it's in the 20s, mid-20s.

And Jeff, at Oxford, it was less than 1% just because of the skill sets and the margin profile of financial services.

And that's still the case? All right, that's really helpful.

Our next question comes from the line of Gary Bisbee with RBC Capital Markets.

Just following up on the smaller account commentary. Can you give us any sort of high-level thoughts on how that 30% of your revenue is in terms of profitability and also productivity of the people you bring on as recruiters or salespeople?

Yes. So Gary, it's typically more profitable, and that's one of the reasons that the margin's up at Apex. And it typically is more labor-intensive, meaning that you don't get the same kind of leverage of exclusivity of awarded orders and focus on time to fill by the customer. So I would tell you better margin, more labor-intensive.

Okay, fair enough.

And that's standard for the entire industry.

Yes. Okay, all right. And then I appreciate the commentary in the press release about the fewer days sequentially, that, that impacts the revenue. How does that compare to what the sequential change in days was third quarter to the fourth quarter of last year? And is there -- has there been any big difference throughout the third quarter or fourth quarter that would impact year-over-year comparisons? Or is it pretty similar?

Gary, it's very similar. Last year, Q3, it was roughly 63.7 days, and it was down to 60.6 days in Q4, so very similar trends.

We're using the same methodology in '14 that we used in '13 to calculate billable days.

Okay, fair enough. So it's okay. And then just back to the financial services customers for a second. Is there any -- I assume you do a broad set of type of work within the banks. The -- is there any particular area that is weaker? Or has it just been across-the-board pulling back at spending, as you've described it thus far?

Rand, do you want to go first?

Well, listen, over a period of time, it ebbs and flows around. If they've had mergers and acquisition activity, then there's probably 2 or 3 years of heavy project work around that integration. When that settles down, then they go into more systems, system generation, systems maintenance and infrastructure around current systems and current operating systems, more around business intelligence, building mobility into their systems for their business base. So it varies depending on what activities the banks have been involved with in the first place. But I'd say, over time, the mergers and acquisition work has settled a little bit, and it's more operational and special consumer-oriented systems and system support and infrastructure.

Gary, I would add that -- not to confuse things, but clearly, we don't win everything we bid on. But I will tell you that we have elected not to renew a couple of contracts with some major money center banks that we may have done in the range of $10 million to $20 million with last year because the margin profile was just too low, considering what we think eventually will be available out there.

Okay. And just one last one, and then I'll pass it over. The one thing being in a huge bank and then having switch from one to another last year that seems clear, they're all spending an enormous amount of money on compliance. Have you been able to work in IT angle to get involved with the compliance work, which seems like it's probably going to accelerate as more and more of the Dodd-Frank stuff goes in? Or is that really more financial-oriented as opposed to IT?

No, no, no. It's IT-oriented. I mean, one of -- a very attractive piece of business that we did out here on the West Coast for a mortgage company was doing business analytics, data warehousing so that they could value their toxic assets for purposes of their capital base for Dodd-Frank compliance. So absolutely, that government regulation stimulates required spending by the major money center banks. So that has been a net positive, and we've participated in that space.

Peter, could I add to that for just a minute?

Yes, please.

Because I think it's a great question. And with our enterprise accounts and bank -- big bank accounts, compliance has always been a portion of our -- their spend with us and our support. But these compliance requirements are filtering down out of the mid-market banks and we've seen -- we -- Peter already reported, as we did, our mid-market accounts, including our financial services mid-market banks, is growing at a 20% rate, and some of it in that sector are around compliance issues, compliance opportunities. So it's kind of where that compliances is flowing as it's being pushed down from enterprise accounts into the mid-market area.

Our next question comes from the line of Tim McHugh with William Blair & Company. Timothy McHugh - William Blair & Company L.L.C., Research Division: I think you said earlier with regard to Apex that you expect the margins still to be up sequentially and year-over-year despite, I guess, increased sales force investment, but the guidance implies kind of overall EBITDA margins down close to 100 basis points. So is the drag is, in investment particularly, pronounced or creating a particular big drag as we think about the other segments? I guess, just trying to reconcile those 2 data points.

Well, couple of points. First of all, my reference about the margins being up were more related to the gross margin because of the mix of business, Tim, versus the EBITDA margin. You're correct that the guidance we gave implies a lower EBITDA margin as a percentage of revenue in the fourth quarter than what we posted in the third and lower than -- I think, if my memory is correct, lower than what we posted in the fourth quarter of '13. At the end of the year, we'll see what we spent, what the accruals for incentive comp are. We haven't adjusted that yet. So where the margin comes in is yet to be determined. It's probably more towards the upside than the downside. But the guidance does contemplate that there will be an erosion because of this hiring and no return on this hiring in the fourth quarter. Timothy McHugh - William Blair & Company L.L.C., Research Division: Okay, that's helpful. And then, Mike, I guess, you talked about health care IT being a pretty big drag. Can you give us roughly -- I mean, what's the -- what was the run rate of that business, I guess, in Q3? And I guess maybe any sense of how low that -- you're expecting that in the Q4 numbers? If we could just help us dissect that piece versus the rest of Oxford.

Mike, do you have that -- or you want Ed to do it?

Yes. If Ed got the specifics, that would be great.

Tim, that division peaked in Q2 with roughly $21 million of revenues.

Per quarter.

In Q2.

Yes, and in that quarter.

And then in Q3, fell off to roughly $16.9 million, and we're estimating $13.1 million in Q4.

So Tim, I think that's a good question to try to paint a picture about what's going on in Oxford because it's not all bad news. Oxford, unfortunately, on a consolidated basis, is probably going to shrink year-over-year about 2.8%, 3% for the full year, including the fall-off from health care IT. Health care IT, just a stand-alone practice, is probably going to be down 30% year-over-year. So the other business, although it's not growing as fast as we want, is not -- it's not this pervasive universal weakness at Oxford. It's pockets of weakness. And the pockets of strength, although they are improving, haven't been strong enough to offset this 30% fall-off in the health care IT group. Timothy McHugh - William Blair & Company L.L.C., Research Division: Okay, that's helpful. And then just one other question. I think you gave kind of the last couple weeks growth rate. I know that excludes perm, but it was -- I think it was a 4% growth rate versus kind of -- seems like pro forma kind of 6% or so you're guiding to for Q4.

Yes. Timothy McHugh - William Blair & Company L.L.C., Research Division: Is the difference between those the impact of perm? Is it that big? Or I guess -- or what's the bridge there? Do comps get easier as the quarter goes? Kinda talk about that.

Yes. So it was a strange measurement period. We fully believe that number will go up on -- and we've seen the percentage growth rate go up. I think it's a little bit of anomaly. But to make sure I'm clear, anytime we give that 2-week guidance, it never includes perm. So that's not skewing the number down or up in any particular period that we quoted, because we always exclude conversion and direct hire. So yes, I just think it's a billing time collection issue and that I don't -- our guidance doesn't reflect that we're going to grow 4% for the quarter. That just happened to be the raw data for those 2 weeks.

Our next question comes from the line of Paul Ginocchio with Deutsche Bank.

Peter, I just want to go back to the hiring, the question around 100 people. Is any of that to do with sort of taking a longer time to find candidates? Is that just -- is there any kind of impact from talent scarcity? Or is that all about reaching out to that -- the more retail or smaller clients?

Yes. I mean, it's a good question, and I'll let Rand talk about our success on fill rates. This isn't because we're losing business because other people are filling them faster. To the contrary, I think we've been more successful on filling what we call our B racks versus our A racks. We've increased that. This is really to focus on capturing a segment of the market that we were addressing, but we weren't as fully and forcefully addressing as we could and making sure that we don't get distracted in servicing our enterprise customers. Rand?

Well, that's correct. So the second part of that is no, we're having no trouble filling requirements. Our fill ratios are up quarter-over-quarter, year-over-year. We're doing very well in that side. To go back, Paul, our -- I know in Apex side, we're adding a significant number of heads. Vast majority are in the sales side, not on the recruiting sourcing side, okay?

Great, that's clear. And Peter, sorry if I missed this. What was perm growth? Or what was CyberCoders growth? I think it was 18% in the second quarter. What was it in a third?

I think it was 21%. And Paul...

No, it's 25% in the third.

Excuse me, 25%. And Paul, it was even higher than that. I don't want to confuse things, but CyberCoders had a small, very small piece of contract revenue, staffing revenue in their consolidated revenues when we acquired them. And we told them we want you all to start sunsetting that and really just focus on being a pure contingent search perm shop and not worry about getting $5 million or $10 million or $15 million of IT staffing revenue. So the IT staffing revenue there has been declining because we've been focusing them on perm. I think their perm, pure contingent search perm revenue grew north of 30%. Ed, is that correct?

25% I think.

That was the consolidated number. What was -- yes.

Hold on second, Peter. I'll get that number.

So Peter, in that nice acceleration you saw from the second quarter into the third, how much of that is because you're giving them better leads? Or are there some synergy with your existing business? Or how much that's just an improvement in the perm market?

Not to take away from the cooperation and the hard work that Oxford and, to lesser extent, Apex, but most of this has been on their back and, as you appropriately pointed out, the improvement in the perm market and then we've hired aggressively in that space. And we're still trying to tweak the referral bonuses and compensation to stimulate the right referral behavior. We helped them, but not significantly yet. But we still passionately believe that we can continue to improve the rack flow and the quality of the rack flow.

Pretty much last one. This is a little more complicated. But if I -- within Oxford, if I ignore CyberCoders, I just obviously get the moving piece of health care IT and the slowdown enterprise spending in ERP. But then obviously, we're starting to lap some of this. When do we -- when does everything lap? And when will we start to see more a normalized growth rate? How far out is that?

Oxford?

Correct.

Well, I'm not -- I hope I don't come across as being insensitive, but -- I mean, we're down to $13 million of quarterly revenue in the health care IT, so it's just can't hurt us as much. They actually -- Oxford, I think, our internal forecast is for them to actually be up on a consolidated basis, old Oxford to be up on a consolidated basis even with the dramatic fall-off of health care IT for the first time in the fourth quarter year-over-year. So things are starting to return to a more normal, at least, positive forward growth trajectory. Because remember, we told you -- Ed told you that we think that the health care IT group is going to do $13 million -- approximately $13 million in the fourth, and it did, what, $16 million...

Nine.

$16.9 million in the third. So Oxford is going to grow even with covering kind of a $4 million fall-off in quarterly revenue from health care IT. And the 10%-plus growth rate that we gave you for Apex, I'd point out that, although that's not our target long-term growth rate for them, that's a 10% growth rate off of a 20% fourth quarter 2013 growth rate.

All right. So if I just kind of delve back into -- sticking with Oxford. You had that large client send some temps back and that created -- that we kind of -- we've now -- I think cycle that in the fourth quarter. It sounds like we're cycling a lot of the health care IT spend reduction. Enterprise...

Yes. So that's -- first half of 2014, health care IT, I think we've reported, grew 12.12%. So there was like $20 million and $18 million of revenue in the first and second quarter of 20...

$20 million and $21 million.

$20 million and $21 million, and we'll be coming off of a $13 million quarter in the fourth quarter of '14. But what we're telling you is we think that the core business has now grown were we can deal with it.

Okay, great. It just sounds like for Oxford overall, x CyberCoders, second half growth of '15 looks a lot better than first half?

Well, yes, for -- unfortunately, the comps are easier. But beyond that, I -- we're hoping that you will see sequential growth on a same number of billable day basis.

Our next question comes from the line of Randy Reece with Avondale Partners.

What percentage, just all-in, was your non-U.S. revenue in the third quarter total revenue?

Yes. Randy, I think we quoted that -- and it was this quarter 4.4%, and it had a $750,000 negative currency translation.

Sequentially.

Sequentially.

And likely, a more negative effect on the fourth quarter, is that correct?

Well, we're anticipating, yes, basically, continuation to deterioration of the exchange rate in Europe.

In the -- in guidance, what is your assumptions for direct hire and conversion fees for the fourth quarter and -- versus staffing gross margins?

I think we pretty much -- I think our contingent search gross margin, Randy, is 100%, right?

Yes. But the temporary staffing gross margin versus the amount of direct hire and conversion fee dollars you're assuming in the fourth quarter guidance.

Well, in terms of fourth quarter guidance, Randy, we're -- the perm should come in above $16 million, okay?

Comparable with the...

It's -- just looking at CyberCoders, in particular. They're going to come in almost at $16 million, and the others probably in total or less than about $800,000 -- $800,000 to $900,000. In CyberCoders, we're estimating we'll grow year-over-year about 30% in Q4. Just the perm piece.

So when he quotes you those numbers, if I'm understanding it correctly, he's quoted you perm revenues, not CyberCoders revenues.

Yes.

The first time it was -- and then with CyberCoders.

Yes, it's -- so if we go past that and just look at assumptions for staffing, temporary staffing, contract staffing gross margins, Apex is a little bit lower than expected this quarter. Everything else was pretty much in line. As -- on a sequential basis, how do you expect staffing gross margins to behave?

Yes. It should be the same as maybe a tinge down just because of the holidays. But other than that, we're seeing a stable pricing environment.

Randy, as we mentioned we were up sequentially on the contract, our adjusted contract margins, and I believe that was about 10 basis points sequentially. So you would expect us to be down off of that in Q4.

Our press release says, "These estimates assumes year-over-year revenue growth of -- on a reported basis of approximately 10% for Apex." So pretty stable to what we reported for the third quarter, Randy, just now.

[Operator Instructions] And our next question comes from the line of Mark Marcon with RW Baird. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: I was wondering, if you could, a similar sort of dynamic for the ERP side of Oxford as you did on the health care IT side, just in terms of the revenue peaking.

We don't -- I don't know if we have that information, but what I could tell you is it's not nearly as dramatic, Mark. But I don't think we have that data breakout for you to show you where that peak, in what quarter of '13 or '14. But it's not nearly as dramatic. It's more of a flatness than a 30% down year-over-year. That's not what we're talking about in the ERP. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Okay. So that's way more stable?

Mike, turn that up for me, please?

Yes. It really is -- for the year, Mark, it really has been soft. We've actually seen a growth in consultants On Assignment since the 1st of January. Relatively flat since last year, but we're actually -- have been seeing growth throughout the entire year in the ERP space. So nothing like health care IT like Peter was saying. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Great. And then on -- just on the legacy Apex side. Are the gross margins basically flat year-over-year? Or are they -- or how are they trending? What are you seeing in terms of bill pay spreads?

Rand, you're on the call, you want to address that?

Yes. Our gross margin is up 20 basis points on a year-over-year basis, and we're seeing some improvement and continued improvement in bill rate, pay rate differential. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Great. And then with regards to the old scientific staffing, how is that going as part of the integration within Apex now? Just in terms of project leads and some of those bigger jobs.

Rand, do you want to go first?

Yes, I'm sorry. Just asset -- in the integration of Apex and Lab Support, some of the large accounts that we share between those 2 business units, the project lead generally includes a national account leader from one or the other group with coordination with the other. So -- if that's the question you're asking. And then there's a network of AMs, account managers, that will work in support of that. So we have a -- if you will, a consolidated lead. The national account leader that will take the biggest lead will be the one where we have the biggest amount of revenue, which typically is on the Apex side, but not always, depending on the nature of the account.

But Mark, I think I'm interpreting your question. It's actually gone pretty well. We've actually seen it go both ways. It's not one-for-one. But we've actually seen a couple of large bidding opportunities, where we were either invited to bid or our profile looks more attractive because we can offer both the scientific and the IT. And this new contract that we just won with the aerospace company is predominantly IT, but we also are getting scientific orders from it. So we still believe that the growth rate, I think, for the scientific business was 12.5% in the third, and so we've seen good growth. And we feel that our strategic analysis or assumptions about putting these companies together and then being able to help each other is being proven out as we're bidding on some larger pieces of business. Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division: Great. And that revenue hasn't kicked in yet, has it?

No.

Peter, I want to mention one thing. Just to give some clarification to some numbers. And this, Randy, is the response to the question you had about perm. So let me frame it up a little bit better than what I did earlier. We're estimating perm for the total company to be roughly $20 million in Q4, right? And of that, about $15.9 million will come from CyberCoders, and CyberCoders, that reflects about a 30% year-over-year pro forma growth rate.

And CyberCoders will generate additional revenue above perm per for contract assignment.

Yes.

But you're just quoting perm revenues.

And we have no further questions in queue.

All right. Well, we appreciate everyone's attention, and we look forward to speaking with you on our fourth quarter conference call. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.