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Greetings, and welcome to the ASGN Incorporated Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce your Kimberly Esterkin, Investor Relations. Thank you. You may begin.

Good afternoon. Thank you for joining us today for ASGN's Third Quarter 2024 Conference Call. With me are Ted Hanson, Chief Executive Officer; Rand Blazer, President; and Marie Perry, Chief Financial Officer. Before we get started, I would like to remind everyone that our commentary contains forward-looking statements. Although, we believe these statements are reasonable, they are subject to risks and uncertainties. And as such, our actual results could differ materially from those statements. Certain of these risks and uncertainties are described in today's press release and in our SEC filings. We do not assume any obligation to update statements made on this call. For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website at investors.asgn.com. Please also note that on this call, we will be referencing certain non-GAAP measures, such as adjusted EBITDA, adjusted net income and free cash flow. These non-GAAP measures are intended to supplement the comparable GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, Chief Executive Officer.

Thank you, Kim, and thank you for joining ASGN's third quarter 2024 earnings call. Market demand for ASGN's services remained stable in the third quarter. Q3 2024 revenues of $1.031 billion were similar to the second quarter and within our guidance range. In terms of profitability, adjusted EBITDA margin of 11.3% was at the midpoint of our guidance range and reflects the continued evolution of our business toward higher-end, high-value consulting solutions. IT consulting is now approaching 60% of total revenues. We had 57.9% of third quarter 2024 revenues in commercial and government consulting, up from 54.5% of revenues in the year ago period. Despite relatively consistent top line results, global economic uncertainty remains. As a result, we have yet to see a meaningful increase in client IT services spending. This caution, however, is not meant to imply that our commercial enterprise and federal government customers have deviated from their long-term digital transformation paths. Rather, our clients know that advancing their IT road maps is crucial to maintaining their competitive advantage. Strong commercial and government bookings in the third quarter demonstrate the continued need for ASGN's IT services and are a sign of the pent-up demand within our customer base. As we progress through the final quarter of the year and prepare for an improved IT spending environment, we continue to develop our solutions, capabilities in core areas of interest to our Fortune 1000 and federal government clients, including data and analytics, cloud, cybersecurity and early-on AI applications. We are differentiating our business by bringing to bear unique solution capabilities across industry verticals, while at the same time being fast adopters of new technologies. I will provide some examples of these efforts as we review ASGN's third quarter segment performance. So let's begin with our largest segment by revenue, Commercial. Our Commercial Segment services Fortune 1000 and large mid-market companies. Commercial Segment revenues for the quarter were driven by growth in our commercial consulting business. Commercial consulting revenues improved 3.9 percent year-over-year and were also up 1.2 percent sequentially. Commercial consulting bookings of $282.5 million put our book-to-bill at 1.1 times on a trailing twelve-month basis. Although consulting bookings remain more weighted toward renewals than new work, our new work is growing each quarter. Looking at the total Commercial Segment, from an industry perspective, we saw year-over-year growth in two of our five commercial verticals. TMT revenues improved 10.9 percent compared with the third quarter of 2023, led by double-digit growth in software and services and e-Commerce. Consumer & Industrial accounts are returning to modest growth year-over-year, driven by double-digit growth in Utilities and Materials. On a sequential basis, we also saw growth in two commercial industry verticals. Consumer & Industrial accounts improved low single digits, driven by growth in Consumer Staples and Materials, which improved mid-single-digits sequentially, as well as Energy and Utilities, which were up high-single-digits from the prior quarter. The Financial Services vertical also saw slight growth sequentially. This modest quarter-over-quarter improvement was driven by Regional Banks, which improved mid-single-digits, and Insurance Services, which improved high-single-digits from the second quarter. Notably, within Financial Services, Big Banks were flat, quarter-over-quarter after four consecutive quarters of decline. Although the Healthcare industry vertical remained down year-over-year and sequentially, within the vertical, Healthcare Payers were up mid-single-digits from the second quarter. As we continue to mature our consulting practice, we are selectively adding new skill sets to our project teams, including solution architects. Adding these high-end solutions capabilities provides us with the opportunity to strengthen our work and thereby improve our margins, expand our contract sizes and lengths, and enhance the industry vertical performance I just described. We are aligning our solutions architects with services of greatest interest to our clients. Solutions that are seeing the most traction of late include application development and modernization, cloud migration and modernization, data platforms and products, and cybersecurity advisory and support. These services are all foundational to realizing the value of generative AI. While there is still much data readiness and infrastructure work that needs to be completed before our clients can deploy enterprise-wide applications of GenAI, they are, however, beginning to implement specific AI models in portions of their organizations by leveraging ASGN's core data and analytics capabilities. Let me provide a few examples. During the third quarter, one of our clients, a Fortune 500 multinational department store, came to our Data & AI Team looking for a way to improve staff utilization at its global distribution centers. Leveraging machine learning and AI to analyze historical and real-time data, our team built a time-series model that can produce a 26-week labor forecast compared to the client's legacy manual staffing model. This new model significantly reduces our client's costs by more accurately forecasting labor demands using internal and industry-wide data. For another client, a Midwest public utility, our Data and AI Team was brought in to develop an automated solution to verify customer addresses. The new system would need to process large datasets with limited manual intervention. With a focus on automation and scalability, our team built a predictive analytics solution that automated the entire address validation process, thereby, reducing manual intervention by 50% and enabling better decision making, smoother logistics, and enhanced customer satisfaction. Achieving customer satisfaction is always top of mind. One key way we are earning accolades from our clients is by providing them with a one-stop shop, onshore and near-shore for their technical needs. For a large financial advisory client facing data integrity complications, we brought together a team of commercial and government consultants in the US, along with engineers out of our Mexico Delivery Center, to assess our client's data systems' security and accuracy as well as to provide gap reporting and offer strategies to improve their systems' integrity. This cross-border, cross-segment, engagement team combined expertise from our application development, data analytics, and cybersecurity solutions. This opportunity offers multiple years of expansion work that will deepen our saturation within the client, all while increasing our technical qualifications. Speaking of technical qualifications, we've strengthened our commercial governance, risk, and compliance practice, or GRC practice, by joining the strengths of our commercial and government cybersecurity resources to support our commercial industry clients. In a recent GRC engagement, we offered strategic advisory and engineering talent to help a major financial institution fortify its data security defenses. We also renewed a multi-year partnership with a key healthcare client, working closely to enhance its cybersecurity framework to comply with industry regulations. Also in the healthcare industry, one of the largest public hospital systems in the country turned to our consultants at GlideFast to reimplement their entire instance of ServiceNow. Our team won this highly competitive pursuit by understanding the challenges and restraints of the system's prior installation and offering the client a shared vision for how to deliver value across every phase of the project. This win reinforces GlideFast's position as an elite ServiceNow provider, and our team now has the opportunity for continued client partnership by implementing additional ServiceNow modules as the project matures and progresses. Each of these aforementioned consulting projects illustrates ASGN's unique ability to integrate comprehensive solutions to address our clients' IT needs. We complement our internal capabilities by partnering with technology industry leaders, such as ServiceNow, Salesforce, Snowflake, Databricks, Microsoft Azure, and AWS, amongst others, knowing that being a fast adopter of the latest technological advancements is vital to our success. And, as we move with the fast currents of IT, we are strategically positioning ourselves within our clients' organizations, enabling us to grow and expand our relationships over years and decades to come. Let's now turn to our Federal Government Segment, which provides advanced IT solutions to the Department of Defense, the intelligence community, and federal civilian agencies. The Federal Segment's revenues for the quarter improved 1% sequentially. Net new contract awards were $666.4 million, putting our book-to-bill at 2.1x for the third quarter and 0.9x on a trailing 12-month basis. Contract backlog was over $3.1 billion at the end of the third quarter or a coverage ratio of 2.5x the segment's trailing 12-month revenues. As is evident from our quarterly book-to-bill, the pace of task orders has increased. We began to see this trend in July at the same time of our second quarter earnings call, and this continued throughout Q3 as we were awarded work under previously won contracts, including several IDIQs. At the same time, task order volume increased, so too did our recompete win rate, which reached 100% for the quarter. By increasing our market focus and rigor, we boosted our win rate and expanded our average deal size. For example, in September, our federal government team was awarded a $528 million, six-year single-award data services IDIQ with the Department of Homeland Securities, Cybersecurity and Infrastructure Security Agency, or CIF. Under this new award, a portion of which is included in our third quarter bookings, our team will design, develop and deliver solutions that will standardize the integration of cybersecurity data across dozens of federal civilian executive branch agencies. This award is a true testament to our team's exceptional cybersecurity qualifications as well as our long-standing relationship with and institutional knowledge of CISA. Given our partnership with CISA and having passed other prerequisite steps, our team was asked to compete against other companies to deliver CISA a prototype of cybersecurity threat intelligence platform. This platform will allow civilian agencies, along with state and local government and critical infrastructure entities to streamline the generation, use and sharing of cybersecurity threat intelligence to increase the resiliency of US national security. By being a part of this important prototype, ECS has the opportunity to assume a key advantage on a large future contract with CISA's Threat Intelligence Enterprise Service program. During the third quarter, we also won task orders on a number of previously secured contracts and IDIQs. For a premier law enforcement agency, we were awarded our first two task orders, which expanded our current work providing advanced architecture, engineering and operation for the agency's important cybersecurity domain. For the National Institutes of Health, we won several task orders to support patient-centric solutions and for Veterans Affairs, we won multiple task orders to provide enhanced veterans experience, including supporting key applications used for accessing veterans health care information. While it took some time to see task orders flow through, as we predicted, we are gaining traction and our pipeline of new work and recompetes continues to grow. Importantly, our diversified government portfolio of critical customer accounts with national priorities, along with our focus on mission-enabling IT solutions, mitigates the potential impact to our business that risk from macroeconomic conditions, geopolitical conditions or the upcoming presidential election may pose. Before Marie discusses our third quarter results in more detail, I'd be remiss if I did not speak about our growing AI/ML work for the defense and intelligence community. As one example, in the third quarter, the National Security and Intelligence Division provided us with funding for work related to AI-enabled operations and exercises, autonomous systems deployment, AI algorithm and software deployment, and AI-enabled publicly available information tool kits and training programs. ASGN has been a top AI/ML contractor for the government for many years, and in August, ECS was named a top five federal AI/ML provider by Deltek for the third year in a row. While our talented professionals and qualifications are certainly being recognized by the industry, to ensure that we stay ahead of the latest development in AI and GenAI, we continue to expand our core team of practitioners to provide solution architecture, engineering and business growth support. With that, I'll now turn the call over to Marie to discuss the third quarter results and our fourth quarter guidance.

Thanks, Ted. It's great to speak to everyone this afternoon. Third quarter revenues were $1.031 billion, a decrease of 7.7% year-over-year, but essentially flat to the second quarter. Revenues from the Commercial segment were $718.8 million, a decrease of 8.1% as compared to the prior year. As Ted noted, revenues from commercial consulting, the largest of our high-margin revenue streams, totaled $285 million, up 3.9% year-over-year and up 1.2% sequentially. Revenues from our Federal Government segment were $312.2 million, a decrease of 6.6% year-over-year, but up 1% sequentially. As we noted in our second quarter call, the year-over-year decline in Federal segment revenues can largely be attributed to fewer license revenues compared to the prior year. Excluding these licenses, Federal segment revenues improved low single digits year-over-year. Turning to margins. Gross margin for the third quarter of 2024 was 29.1%, an increase of 20 basis points from the third quarter of last year and at the top end of our guidance range for the quarter. Gross margin for the Commercial segment was 32.8%, up 30 basis points year-over-year, reflecting a higher mix of consulting revenues as well as margin expansion in these revenues. Gross margin for the Federal Government segment was 20.7%, also up 30 basis points year-over-year, primarily due to a higher mix of direct labor, which is higher margin work, along with lower license revenues mentioned previously. SG&A expense for the quarter was $207.5 million, compared to $206 million in the third quarter of 2023. SG&A expense also included $1.1 million in acquisition, integration and strategic planning expenses and a $3.6 million legal settlement accrual, both of which were not included in our guidance estimates. For the quarter, net income was $47.5 million, adjusted EBITDA was $116.9 million, and adjusted EBITDA margin was 11.3%. Turning to free cash flow. Free cash flow for the quarter was $127.9 million, or a conversion rate of approximately 109% of adjusted EBITDA. At quarter end, cash and cash equivalents were $166.6 million, and we had full availability under our $500 million senior secured revolver, and our net leverage ratio was 1.9 times. Our robust free cash flow provides a strategic advantage that enables ASGN to fund key growth initiatives and opportunistically repurchase shares to return value to stockholders, while maintaining a healthy and resilient balance sheet. By following a disciplined and balanced approach to capital allocation, we can invest in high-return opportunities and prudently manage our leverage, driving sustainable long-term value to our stockholders. Given the market opportunity, we deployed $95.6 million for the repurchase of roughly one million shares at an average price of $92.26. We have approximately $573 million remaining under our $750 million share repurchase authorization. With solid free cash flow generation and full availability under our revolver, we have ample dry powder to make strategic acquisitions when opportunities become more readily available. Turning to guidance. Our financial estimates for the fourth quarter of 2024 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and assume 61 Billable Days in the fourth quarter, which is one more day than the year-ago period and 2.5 days fewer than the third quarter. The fewer billable days in the fourth quarter generates a sequential headwind that equates to about 4% of revenues. We expect market conditions and demand for our services in the fourth quarter to be similar to that of the third quarter. While third quarter bookings indicate a solid pipeline of work, we do not anticipate an uptick in our clients' IT spend in the fourth quarter. With regards to EBITDA margin, the fourth quarter typically sees a decrease in margin sequentially due to client furloughs and fewer Billable Days along with traditional seasonal softness in perm placement revenues. With this background, for Q4 2024, we are estimating: revenues of $990 million to $1.01 billion, net income of $39.2 million to $42.1 million, Adjusted EBITDA of $103.0 million to $107.0 million, and Adjusted EBITDA margin of 10.4% to 10.6%. Thank you. I'll now turn the call back to Ted for some closing remarks.

Thanks, Marie. Last quarter, I ended our discussion by reviewing ASGN's core values, including our belief in the IT services sector, our move to become more consultative, and our focus on supporting large, industry diverse, commercial enterprise and federal government clients. Another core value to include on that same list, that I hinted at the start of today's call is being a fast adopter of new technologies to bring to our clients. A differentiator of our business model, ASGN strategically pivots as technology advances, so that we can drive our clients' IT roadmaps while competitively positioning our own business. AI is undoubtedly a central focus of the IT roadmaps of corporate enterprises and federal agencies alike, making the investment and integration of GenAI a top priority for our clients. The Global ISG Index, one of the leading sources of market intelligence on the IT and business services sector, anticipates that global spending on GenAI will increase by 50% in 2025 and represent upwards of 7% of companies' total IT spend by year end. While leveraging data and AI will enable companies to unlock increased value, before that value can be realized, company tech stacks need to be improved. Businesses must enhance their data management capabilities as well as their cloud and cybersecurity infrastructures in order to fully leverage the benefits of Gen AI across our enterprises. With that in mind, there remains a lot of foundational work that needs to be completed for modernizing and cleaning up data lakes and enhancing cybersecurity frameworks to driving automation and ensuring regulatory compliance. All of these areas are core to ASGN's differentiated service offerings and with strong bookings and a diverse client base across six key industry verticals, ASGN is positioned to take advantage of the opportunities to support our clients' IT roadmaps now and for many years to come. That concludes our prepared remarks. I want to extend my heartfelt gratitude to everyone at ASGN for your support this past quarter your dedication to fostering deep, long-standing client relationships is truly commendable and no doubt places us at the forefront of the IT industry. Thank you again for joining our third quarter 2024 call. Operator please open the call to questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And our first question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed with your question.

Hey thanks so much. This is Ryan on for Jeff. Just curious what you need to see and what trends you are monitoring that would make you more bullish on the IT spending environment and the digital transformation environment ahead? Thank you.

Ryan thanks for the question. I mean look I think in the long-term, we're bullish. There's a lot of underpinnings here that are going to be drivers of our business as we help our clients back to the end of the remarks there to drive their IT roadmaps over a period of time. I think in the near-term what we're watching here is just -- again this is confidence so that our clients have confidence to begin to invest at more normal levels in their IT needs. And so that's a balance of two things here. I think there's -- I think we're making progress. There are some things in the economy overall like the interest rate cycle like the elections. Some of the other things going on in inflation and otherwise that have clients remaining cautious, but are beginning to move through and pass some of those things hopefully and that's going to create business confidence and with business confidence will come a heavier investment in their IT roadmaps and we'll be right there to serve them.

Great. Thank you. And then just for the follow-up Do you think the growth trend in commercial consulting has troughed at this point now that you're past kind of the tougher comps from last year? I was just curious how you expect that to trend relative to the core assignment over the next couple of quarters? Thank you.

Well, I think we're at we're kind of at low single-digit growth rates here. It seems over the past few quarters that we are in a stable place quarter-to-quarter if you adjust for billing days and those other things. So, bookings also remained very solid. We were at 1:1 I think here in the last quarter and that portends growth going forward. So I think if you look at the metrics around book-to-bill and you look at the past performance here over several quarters where we've kind of consistently put up single low single-digit growth that -- we're at a place where we can begin to grow at higher rates. But that again goes back to what we just discussed around our customers and for them to be able to open up and invest more fully in all the things they want to accomplish. So the book-to-bill tells us there's good demand and our pipeline tells us good demand. So I think it's not if it's more of a win.

Understood. Thank you very much.

Thank you. Our next question comes from the line of Maggie Nolan with William Blair. Please proceed with your question.

Hi. Thank you. Can you elaborate on what may be different in terms of your strategy when you emphasize the solution architect additions? Is this representing a shift in go-to-market or how you secure and manage talent for your projects?

Well I'll let Rand take that. I would call it more of an enhancement Maggie than anything else right, Rand?

There's absolutely our go-to-market features the accounts we focus on the portfolio and the growth in the accounts and the intimacy with the account. Supporting that is an evolution of our solution strength and that evolves as technology and the needs of our clients change Maggie. So for example AI we're -- in past quarters was more around governance requirements. And today as you saw featured in Ted's remarks we're getting more into actually building algorithms for forecasting searches and updates better security and security algorithms. So that just requires continued solution strength in support of that account portfolio. But it's definitely accounts first, solution second and we have to be good at both.

Thank you. That's helpful. And then to build on the first set of questions you kind of alluded to some of this but maybe I'll just explicitly ask about anything that you can share with us about your expectations for 2025 in terms of that IT spending environment and maybe how you perceive the current client sentiment on 2025 budgets?

Yes. Well I can't really comment on IT spending rates in 2025. But I can tell you that – go back to what the first set of questions was there is good demand both in our pipeline and in our bookings. So it would portend stronger growth in the future. I think the question is when and how does that develop? And it's a little early to tell that. But I think the positive news here is that we like what we see in our bookings and we like what we see in pipeline and we'll have to keep monitoring this to just begin to see when we can really expect what I'll call spending at more normal or higher rates.

Fair enough. Thanks, Ted. Thanks, Rand.

Thank you. Our next question comes from the line of Surinder Thind with Jefferies. Please proceed with your question.

Thank you. Can you maybe provide some additional color on just the assignment business maybe any signs of stabilization that you might be seeing there or just the trends there whether it's within the IT business or Creative Circle? Any color will be helpful?

Yes. I mean, I would say, generally adjusted for billing days Surinder, we're seeing stability quarter-to-quarter. That's not new. We saw it develop here in the first part of the year. It's kind of carried through perm placement. It's gotten a little bit weaker. So that part of the assignment business as we've gotten deeper into the year has gotten a little bit weaker. We expect it to be the same in the fourth just because that's not a strong quarter for that part of the business. But look I think, what we're seeing in the assignment business for customers is again that's the primary place where they go to control their spending levels. And so they've continued to keep their foot on the break there for a bit here. And while we're seeing some stability, we're looking for signs that they want to open up spending. Again this is about IT spending more than anything else both in the consulting part of the business and in the assignment piece.

That's helpful. And then following up on the idea that this is – the assignment business is an area where I guess clients look for efficiencies. How are you thinking about the staffing model going forward in the context of Gen AI productivity improvements? Is there a risk that maybe clients more aggressively look for solutions there to offset some of the cost meaning less need for head count from a support perspective relative to historical levels?

I mean I think always Surinder, as technologies change you'll see the clients the skill sets that they need change and evolve. Some things will go to legacy. Other things will become more modern and in demand if you will. But I think the clients need for talent is still going to be there. Opportunity for us is to deploy some of these next-generation AI opportunities inside of our own business which we're already doing today in order to make ourselves more productive. And so I think we'll be doing that on behalf of our customers. But our customers are still going to need both great solutions to their business needs and they're also going to need great technical talent to address all of those opportunities.

Thank you.

Thank you. Our next question comes from the line of Joseph Vafi with Canaccord Genuity. Please proceed with your question.

Good afternoon. Nice to see your steady results. I thought we drill down a little bit more in the financial services vertical and maybe sort of the flip like incrementally better there. Was that – is there anything to in terms of consulting or assignment or any demand drivers? Or is it [indiscernible]

Yes. So Joe, I'm going to let Rand take this one. Rand, Joe is asking about financial services and puts and takes or color on performance there in both consulting and in the assignment part of the business.

Yes. Joe, yes, and you were breaking up there a little bit. But notwithstanding, as you know this is a big and important sector not just for us but for IT spend. So we're buoyed by the fact that the big banks have reported recently some pretty good results. We're happy that the Regional Bank segment, which Ted featured was improving. I think we're -- well I know, we're penetrating these accounts with now consulting and that the -- if you will the tip of the spear. The staffing thing, I think is a function of just -- that our thesis is that they feel like they can start spending more money, we'll see higher staffing opportunities, which I think we're at the doorstep too. I mean, we like the sequential numbers, we have in some of these segments. We're still year-over-year down. Ted said in the comments, except for in regional banking. But we want to capture it on both ends, the staffing side and the consulting, and the fact that many of these accounts we've now cracked into the resulting side of the business is important to us, and we're watching that very carefully.

Great. Thanks for that color, Rand. Hopefully, you can hear me, a little better. But and then also on, it does feel like enterprises do have some budget left over for the year just based on your discussions with them, do you think they just kind of kick the can down the road with that budget for next year? Or do you think there's any kind of chance of any year-end flush year or anything? Or how they're kind of thinking about, what's remaining in the budget for this year? Thanks a lot, guys.

Yes. Rand, do you want to finish up that one?

Well, listen in the government, we're seeing some spending and hence our bookings and our -- some emergence of growth. On the commercial side, listen, I think it's I don't know what to tell you Joe, maybe Ted you have some other thoughts, but we don't hear anything from our clients that feel like, I have to press now in the last 1.5 months of the year, two months of the year. I think everybody is kind of assuming, there's some things going on in the election January 1 turns a new page, and off we go. I think they're doing, if you look at our AI spend Joe, for example, the character of the work has changed a little bit, which I featured and we featured in Ted's comments. I think they're getting themselves in a position where they're getting a better feel for what they want to do, not just what I call desktop productivity using Gen AI, but rather big-ticket AI. Kind of coming up with the ROI associated with that, is also part of the drill that they're going through now. So they're doing the prep work. That's not to mention the data side, which is a tremendous -- that's where all of us are still seeing the bulk of our work, in depth and data, data preparation, data validity, data quality, accessibility of data, faster processing of data, mixing internal data with public data and benchmark information is also on their mind. So, I think there's a lot on their mind. I don't think the spicket [ph] to spend has necessarily been turned on. Ted, would you add to that?

No, I think that's perfect.

Great. Thanks for that color, Rand. And thanks everyone.

Thank you. Our next question comes from the line of Tobey Sommer with Truist Securities. Please proceed with your question.

Good afternoon. This is Jasper Bibb on for Tobey. Good quarter for ECS bookings north of 2 times book-to-bill there. And obviously, you get some seasonal benefit in the third quarter, but just kind of hoping, you could expand on what you've done to boost win rates? And then, separately maybe you could clarify how much of the $530 million data services likes, you mentioned was booked in the third quarter?

Yes. So, I think this has just been really good hard spadework and focus on the accounts and the contract opportunities Jasper that we've been working on here. We had some nice wins on IDIQ contracts, where we had good client intimacy at the end of 2023. Those were slower to pick up, but we knew task orders would be coming out on that. Finally those began to drop, and we're winning our share of that, which is good to see. It was maybe -- it took a little longer to develop, all the way into the third quarter here of this year, but that was our expectation. We don't talk about gross to net on contracts. Obviously, you book on a net basis what you think you have a high probability of working through over the life of the contract, and we're middle-of-the-road or conservative on that. And so there's always a certain amount of the total contract value that doesn't get booked. And then in certain situations, if you have a contract that might be -- a small part of that that's falling off or something that didn't get spent all the way through, you have to realize the net of that as well. So we've done all that. Our bookings presented here are on the net basis. And so that's about all I can say on that.

Okay. That makes sense. Just kind of curious, you've been managing capacity levels in your consulting business as growth has moderated there. I guess, has the mix of personnel that are full time versus temp or maybe based out of your offshore delivery centers changed really in the last couple of quarters?

Yes. Rand, do you want to take that? I mean the one thing I'll say, Jasper, this is the highlight of our model here, that most all of our resources on the consulting work do come on the back of our IT staffing capabilities since that gives us an advantage as our business either slopes up or slopes down in order to deal with maintaining productivity and profitability in that unit. Rand, do you want to talk about that?

I think, Ted, that's -- Jasper, that says it all. Remember, we're using contingent labor for arms and legs on consulting work. So we don't have an overblown bench that we have to mix and match and reallocate in our professional teams and our leadership team and our SMEs, if you will, and the people that are the architects, developers of our methodology are pretty much intact. On the Mexican side, we've been growing throughout all these quarters. So, and now as you know, we've also started some Indian offshore pointed directly towards ServiceNow, which is a capability that we've come into and it's been more in a growth mode than not. So I think Ted said it right. When you have this model, this is a hallmark of our model. We use contingent labor, and from our point of view, it's working very well.

Thanks. If I could slip one more in here at the end. Maybe following up on a prior question, just hoping you could stratify what you're seeing for demand in temp IT relative to Creative Circle and assignment? Thanks.

Yeah. Again, Jasper, I'll just go back and say that this has been fairly consistent. Although, our creative digital marketing unit, if you go back into 2023, was the first to kind of fall because it's the most sensitive to discretionary spend, it's been as stable as the rest of our assignment business here over the previous few quarters.

Okay. Thank you for taking the questions.

Thank you. Our next question comes from the line of Kevin McVeigh with UBS. Please proceed with your question.

Great. Thanks so much. The 1 million shares repurchased in the quarter, is that a way to think about kind of what the quarterly cadence should look like? Or just any thoughts on that or just congratulations on that by the way? Thanks.

Yes. So to think about our share repurchase, our strategy is really to use the free cash flow we generate in the quarter to show certain [Technical Difficulty] around M&A. So, that is probably the right way to think about it.

Look, I think Kevin that we kind of call that as we go. M&A opportunities have been less. So obviously, we've been kind of working diligently through free cash flow each quarter on our authorization. We'll just have to keep our eyes on that as things develop and see if our posture changes at all. But that's, obviously, our approach. You know that it's been that for a long time here.

Yes. Got it. That's helpful. And then just, Ted, you mentioned this earlier but just to follow-up. The Gen AI opportunity internally kind of where are you through that process, and does it vary on the federal side as opposed to commercial as opposed to more the kind of traditional assignment business? Just any thoughts around that?

Yes. Rand, do you want to take that one?

Well, Kevin, are you asking our internal deployment of AI inside our business? Or are you talking about just generally providing an AI solution to our client base?

I think internal end, internal.

Internal. Okay. Well, the internal -- the AI deployment is happening in both our federal and commercial and where we can it will benefit both sides. So for example, our cybersecurity AI, which continues to be enhanced internally, is provided by ECS for the entire of ASGN. So, it supports both the commercial and the government business. We have new proposal development teams at qualification creation capability, which is being spearheaded by our government team, which will be used and is being used by our commercial teams. In the recruiting area, we use AI to support mixing and matching our searches for the right candidates and building pipeline of different skill bases, that's being used more predominantly on our commercial side but being benefited to government [ph] side. So those are just examples. Our employee center is again shared technology across government commercial and where we can use AI to help respond or anticipate questions and respond to them whether it's about benefits or other things as being shared. So does that give you a sense?

Very helpful. And then I guess just philosophically, the expense savings, does that go to reinvestment back in the business or to shareholders? I mean that may be a little bit early but just any thoughts around that?

Yes. This is part Kevin of just being more productive as a business right? I mean I think as we -- our strategy is that as we evolve our business to be more consultative, obviously, we're trying to drive both higher growth rate, a higher gross margin profile, and a higher EBITDA margin profile. And some of that will come in the value proposition of the work we do down to the EBITDA lines, others has to come from being more productive. And so, I think these things in AI but contribute to providing better services to whoever our constituent is internally in these areas, to having a foundation of AI learning that we can then translate to our customer, and then, yes, being able to translate some of those savings and productivity to the bottom line to go together with all the rest of it. So there's a lot of ends to meet here but we are where our customers are with these things where piloting. We're trying things. Some things are going into production. Other things we're having to work through further. We're having to think about our own data and security and all the different things they are. So I would say in many ways we're right where they are.

That’s very helpful. Thank you.

Thank you. Our next question comes from the line of Mark Marcon with Baird. Please proceed with your question.

Hi, good afternoon everybody. On M&A, how are you -- what sort of opportunities are you seeing? Is the pricing getting a little bit more reasonable? I mean we take a look at your balance sheet, leverage is well-controlled. Free cash flow continues to be really strong. Have the prices become more reasonable at this point? Or how are you thinking about that?

Well, Mark there's probably not enough data points out there to say that pricing is becoming more reasonable. There's enough data points to say there's fewer transactions going on. Look we note there's some -- there's a little pickup here and things going on in the M&A market. Most of what we're seeing are small things. They may be more about delivery. They may be non-US focused, but there are some small things getting done. I don't think generally there's nothing going on to say there's a new data point on valuations and that sellers are really willing to come off of the type of assets that we would be looking for. But we're seeing a little bit more flow through the pipeline. And so we'll -- we continue to work through those. We agree with you the balance sheet is in great shape where we got some cash on the balance sheet in addition to be modestly leveraged on a net basis. And so -- and we also know exactly what we're looking for. So we're in the market calling through opportunities for those things. But it's a -- we're just -- it's a little bit of a process here for lack of a better word.

All right. Appreciate that. And then on the federal government side, I mean, congratulations on the wins and the 100% on the recompete. When do you think these wins would convert to revenue? How should we think about that? And what should investors think about just in terms of the election? Obviously nobody knows exactly who's going to win, but how would you advise investors to think about how the government business is going to perform over the next year?

So two good questions Mark. I think on the first one, these wins are slowly contributing to revenue here in the fourth, but I wouldn't say materially. So I expect most of the contribution from the various wins that we announced in the third quarter to have a bigger impact on 2025 than they will on the fourth quarter. As it relates to the election, I mean I think its the thing that everybody is watching especially enterprise customers in federal and in commercial. But you can see in federal, it didn't slow anything down during the quarter. I think the industry overall is going to have a strong third quarter in bookings leading up to the election. And I think in the commercial enterprise space while customers are focused on things like the regulatory environment and the M&A environment and where it's -- where our policy is going to be, there's definitely a pent-up demand around IT spending. And I don't think one party or the other, we don't think is really going to change customer posture on spending on key IT initiatives. So while it's a little bit slow as we go here through the end of this year, I expect when there's better confidence among our customers and some of these things that are unknowns are water under the bridge, you'll see them off of that confidence, begin to spend more on a lot of these key initiatives.

That's great. And then with regards to -- on the commercial consulting side on IT, I know it's still relatively early days, but you have talked a lot about how much you're doing in terms of helping clients clean up the data in preparation for bigger AI initiatives. Is there any way to quantify like what you're doing on the consulting side that would be either data cleanup, data restructuring in order to take advantage of AI and then how much you're actually doing in actual AI assignments at this point?

Yeah. So I'll let Rand take that. We're not releasing bookings or revenue in the AI or AI-enabled category, but Rand can give us some color and speak to data specifically, Rand?

Yeah, Mark, I'm kind of smiling. It's a good question. We definitely -- we break it into two categories, what we call AI or pure AI and AI extended. So we know when we're doing work that supports AI implementation in the future, if you will, and we know the difference between that and what we call pure AI applications today. We -- I think as Ted featured in the opening remarks, we're seeing AI is still a small percent of our total revenues. The data side and the work we're doing on the data side is a much larger part of our revenues. But we definitely watch both, and we need to tool ourselves to make sure that we can not just prepare data, qualify data, bridge data, but actually get it in effective use for the client as AI applications come in. So we're very mindful of the question you asked. We have a way of measuring that in terms of revenue. And we're -- it's slowly moving the way it should.

That's great. Thank you.

Thank you. And we have reached the end of the Q&A session. I would now like to turn the floor back to Ted Hanson for closing remarks.

Great. Well, thank you, operator, and thank, everyone, for participating today. We look forward to being with you in the first quarter of 2025 to talk about our fourth quarter results. Have a great day.