Harold Messmer - Chairman & Chief Executive Officer Keith Waddell - Vice Chairman, President & Chief Financial Officer.

Mark Marcon - R.W. Baird Kevin McVeigh - Deutsche Bank Henry Chen - BMO Capital Markets Tim McHugh - William Blair and Company Anj Singh - Credit Suisse Manav Patnaik - Barclays Gary Bisbee - RBC Capital Markets Tobey Sommer - SunTrust Randy Reece - Avondale Partners Hamzah Mazari - Macquarie Capital Adrian Paz - Piper Jaffray.

Hello and welcome to the Robert Half Q4 2016 Earnings Call. Our hosts for today’s call are Mr. Max Messmer, Chairman and CEO of Robert Half; and Mr. Keith Waddell, Vice Chairman, President and Chief Financial Officer. Mr. Messmer, you may begin..

Thank you, and good afternoon, everyone. Thank you for joining us. As is our custom, I would like to remind you there are comments on the call today that contain predictions, estimates, and other forward-looking statements.

These statements represent our current judgment of what the future holds and include words such as forecast, estimate, project, expect, believe, guidance and similar such expressions. We believe these remarks to be reasonable.

However, they are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Some of these risks and uncertainties are described in today’s press release and in our SEC filings, including our 10-Ks, 10-Qs and today’s 8-K.

We assume no obligation to update the statements made on today’s call. For your convenience, our prepared remarks also are available on our website at www.roberthalf.com. From the About Us tab, go to our Investor Center, where you will find the Quarterly Conference Calls link.

Now let's review our fourth quarter results, quarterly revenues were $1.265 billion down 1% on a same day constant currency basis and down 3% on a reported basis from the year ago period. Income per share was $0.61, cash flow from operations was $82 million in the fourth quarter and capital expenditures were $20 million.

We returned $28 million to our shareholders during the quarter through a $0.22 per share cash dividend. We also repurchased 1.1 million Robert Half shares for $51 million. We have 6.4 million shares available for repurchase under our board approved stock repurchase plan; these results were within the range of guidance we provided last quarter.

Robert Half continued to benefit from a tightening job market and solid service demand domestically and in our non-US markets during the fourth quarter. International staffing operations performed particularly well, and Protiviti also reported year-over-year revenue gains.

For a while now, we have highlighted on these calls our unlevered return on equity, which remained strong during the fourth quarter at 29 %. I will turn the call over to Keith now for a closer look at our fourth-quarter results..

Revenue, 1.250 billion to 1.310 billion; Income per share, $0.55 to $0.61. The midpoint of our guidance implies year-over-year revenue declines of 2% on both a reported and same-day, constant-currency basis, including Protiviti, and an EPS decline of 9%. We limit our guidance to one quarter.

All estimates we provide on this call are subject to the risks mentioned in today’s press release and in our SEC filings. Now, I’ll turn the call back over to Max..

Thank you, Keith. We ended the year with annual revenues that once again surpassed $5 billion and, in fact, reached an all-time high. We saw solid demand across the board for our professional staffing and consulting divisions, although clients were more cautious during the quarter, particularly in December. All indications are that the U.S.

job market continues to tighten. Unemployment for college -degreed workers 25years and older is just 2.5% today. This is placing pressure on the labor supply, particularly at higher skill levels. And the number of temporary workers as a percentage of the overall U.S.

workforce remains near an all time high, a sign employers are building flexible staffing options into their human resources plans with increasing frequency.

We are also encouraged by recent data from the National Federation of Independent Business that showed that, while hiring levels did not increase in the fourth quarter, small business optimism reached its highest level since December 2004. Outside of the United States, we also see improving markets.

Our international staffing operations had a solid fourth quarter. As we look at the coming year, we are optimistic about the technology investments we have made, which are designed to foster and accelerate continued innovation.

In 2016, we migrated our global staffing teams to a new unified front office CRM system, and we moved Protiviti’s North American operations to a new resource management system. Going forward, we will continue to expand our client and candidate facing digital functionality.

We have already introduced new online services, including the ability to search candidate profiles on our websites. To serve up the best matches, we have developed intelligent matching algorithms based on nearly 70 years of placement experience. And we are constantly working to improve these algorithms through machine learning.

We offer innovative matching technology to find temporary and full-time job candidates with the right skills, but technology alone cannot produce the right fit.

There are many steps in the staffing and on boarding processes, including assessing the chemistry and business culture fit between the employer and the job candidate and, in the case of temporary assignments, the person’s availability.

Our major competitive advantage lies in the combination of technology and personal service that we provide, because it gives our clients the best opportunity to avoid costly and disruptive staffing mistakes and find the right person every time for their business needs. Finally, a few closing notes about Protiviti, which had a solid fourth quarter.

We are optimistic about the considerable opportunities in the year ahead for this business. Protiviti has focused on diversifying its service offerings, developing and growing a loyal client base, and hiring and rewarding great talent all with very good results. This business is seeing solid demand across all practice areas right now.

At this time, Keith and I would be happy to respond to your questions. We ask that you please limit yourself as usual to one question and a single follow-up, as needed. If time permits, we will certainly try to return to you if you have additional questions. Thank you..

[Operator Instructions] Your first question comes from the line of Mark Marcon from R.W. Baird..

Good afternoon. Thanks for taking my question. I was wondering if we could talk about the U.S. staffing trends just a little more color there. Can you discuss on to what extent do you think it was driven by caution among potential employers and if there was any sort of vertical concentration in terms of that caution.

And then two what extent would you attribute the trends to both tightness of the labor supply and the ability to fill the orders? Thank you..

Sure. Mark. As it relates to U.S. trends and toner business, on the one hand conversationally our people would tell you that client optimism, client sentiment has clearly and markedly improved. With that said when you look at their actual activity levels as we speak.

There is a little sense of urgency, they are waiting for the perfect candidate, they take more time to that, more time to interview, it's more a wait and see and show me as it relates to the more optimistic view that they have, as confirmed by the NFIB study that we cited, the University of Michigan Sentiment Index, the PMI services that came out today.

So our clients clearly feel better, they are more optimistic but that's in the future and they are waiting to see more activity in their business before their hiring activity reflects that.

I would say there is not a particular vertical concentration it's pretty much across the board, our clients across our verticals are pretty much middle market companies. From a supply and demand standpoint, we would observe it’s more about demand than it is supply.

On the one hand, when they wait for the perfect candidate you have fewer perfect candidates than you have candidates overall. That said, if there was more urgency in their need, they would be more accepting of the best candidate available.

So our people would tell you between having more A level orders versus having more candidates, they would take more orders than they would take candidates. Having said that, we would observe that our order levels have improved in the New Year, which would be expected following the holidays, which we have experienced again this year.

So tone of business, the conversations are more upbeat, there is more optimism, but as far as actual hard making placements, getting starts on the temp side, it remains sluggish..

I appreciate the color, just with regards to the comment that you made about the orders picking up, obviously seasonally that would occur. Is it also, are the orders improving on a year-over-year basis relative to the recent trend.

And typically when you start hearing some more positive chatter from the clients, is there a historical precedent that you would say here is the rough benchmark between the time that they start chattering a little bit more positively versus real action. Thank you..

Well we have never gotten too granular with order data, because kind of the quality of the order and the urgency of the order is just as important as the quantity of the order, there is no question there is a lag between better order activity and actual hours billed and that lag also changes over time.

So we don't want to make too much of the fact that order activity has improved, because some of that is seasonal, that said it's certainly consistent with the better optimism and the better sentiment that anecdotally our people are seeing with their clients..

Terrific. Thank you..

Your next question comes from the line of Kevin McVeigh from Deutsche Bank. Your line is open please go ahead..

Great thanks and very helpful commentary. Keith it looks like the revenue guide is pretty close to Q4 and kind of a Q1 which typically there is some seasonality where I know where but I would have typically expected a step down, but there is a delta in the EPS, can we just kind of walk through what the delta on the EPS.

Is it kind of payroll tax reset, is that additional investments in sales force as you position for this optimism, is there any way to frame kind of the bridge between the EPS guide relative to the revenue and again the revenue seems relatively consistent with Q4, but there is a delta on the EPS..

Well the revenue, the midpoint of the revenue pretty much assumes that the trends existed in the latter part of the fourth quarter continue into the first.

Gross margin, we don’t have in the first quarter the payroll tax and insurance true up credits that we had in the fourth quarter, and those credits are about 68 basis points when you add workers’ comp to state and federal unemployment.

So the absence of those credits impacts profitability clearly, further your SG&A dollars are about even year-on-year, but your slightly lower revenues give you some negative leverage and then Protiviti seasonally the first quarter is their seasonally slowest quarter, so if we are looking sequentially they never do in their first quarter what they do in their fourth, but I will say this, if you look at that sequential trend there is less falloff in our guidance in Q1 2017 sequentially in their operating income then was the case in Q1 2016 so that's a good thing.

So, generally speaking, it's less revenue, it's the absence of the true up credits, the tax rate will be higher, so the tax rate for the fourth quarter was 37.6 which was a little under trend which is 38ish.

Our tax rate guidance for the first quarter is somewhere between 38.75, 38.5 and there is always volatility there so little of its tax rate as well, but it's mostly revenues, a couple of points lower, gross margin, the absence of the credits, SG&A a little negative leverage because of the revenues and a higher tax rate..

Got it. I mean it sounds like fundamentally things are in this holding pattern until we get one way or the other from the macro perspective.

Just real quick if I could, with the new administration and there is been talk about H1Bs and stuff like that going away, how does that impact the model particularly as we think about the IT business?.

Well first of all we do virtually no H1B directly as far as the people that we supply to the extent that the industry uses fewer H1Bs, and therefore everybody focuses on the domestic supply, potentially that tightens the supply and generally speaking, we would think that's a good thing.

I mean it's already tight at the high end on the development side, but as I said earlier, if you ask our people technology included, technology development included, they would tell you that they take more orders if they had to choose between more orders and more supply.

So, we don't expect that the supply thing is growth constraining to a significant degree and H1B certainly directly won't impact our business, potentially they could indirectly impact it..

Super. Thank you..

Your next question comes from the line of Jeff Silber from BMO. Your line is open. Please go ahead..

Hey good afternoon, it's Henry Chen calling for Jeff. Just had a follow-up question on the impact of the new administration. I'm just curious what type of initiatives that are you most paying attention to from the new Trump administration or policies? Thanks..

Well I think the most directly impactful would be the discussed reduction in corporate tax rates. Understand that we are a full tax rate company; we pay 35 federal, 3.5 state to get you to the 38.5 I just talked about. Further understand that about 97% of our global income is taxed at U.S. rates. So, not only is our U.S. income taxed at U.S.

rates, much of our non-U.S. income gets taxed at U.S. rates as well, and further I would say to the extent there have been discussions about the new tax plan having offset we would have no interest deductibility offset.

We would have essentially no deemed repatriation tax offset, we would have no order adjustment or order tax adjustment offset, so frankly based on everything discussed so far we get all the benefit and none of the offset..

Got it, okay. And just a question on your hiring outlook if trends kind of stay in this kind of sluggish environment how you are thinking about hiring or adapting the temp business in this kind of environment? Thanks..

So I would say it's a little bit bifurcated, non-U.S. things are improving particularly Germany, Belgium. There we are adding to headcounts in support of that growth in the U.S. where our growth rates are a bit negative were essentially holding the line.

Particularly given the optimism in the air that we hope converts into actual hours billed and placements we are holding the line. So you are going to get a little bit in negative leverages I just talked about and the short-term, but we think prudent given anticipated market conditions..

Got it, okay. Thanks for the color..

Your next question comes from the line of Tim McHugh from William Blair and Company. Your line is open. Please go ahead..

Thanks. Just want to ask a little more in productivity the gross margin being down year-over-year. It was a tough comp but there is also a comment I think Max in your prepared remarks by trying at the first business and investing in it.

So I guess how do we think about the gross margin kind of there and the margin profile more so that I know you talked about first quarter but just more broadly how we think forward from it on that business?.

And so Tim the Protiviti gross margin came in very close to what we have predicted it would the issue year-on-year is the mix of business where as a year-ago we had a higher mix of higher margin FSI regulatory compliance work versus this year we have a lower mix of that and that which we do have has a lower margin than it did a year ago, although that margin is still higher than our average margin.

So it’s essentially a mix matter, it's a matter we have done with now for a few quarters. The good news is staring in Q1 2017 you are anniversaring that mix issue such that in Q1 2017, we think the gross margin percentage will be flattish versus down year-on-year, which it has been for a few quarters now because of that mix issue..

Okay, and you are not is there any reason to think that mix will continue to change I guess would be and I guess your answer says no, but just to make sure..

Mix is stabilized FSI regulatory has flat now it actually got a little better quite frankly. So we are optimistic that in worst case it's stabilize and it maybe it's gets a little better..

Okay, and then just the follow-up on second question. The new tools you Max refer to them in the comments they both internal as well as some of the things you put on the website. The market is obviously not great.

So I guess it's maybe tough to tell, but anything you can tell us about to the extent they are having a difference internal operations efficiency, kind of lead flow or is it just too hard to tell too early to tell in this environment?.

I guess what we can say is we track the extent to which we are getting leads that then converts to revenue from our digital sources what is hard to know is how much of that would you have gotten anyway.

So if you look just at the absolute numbers they are encouraging, particularly how early day it is and particularly how we hadn’t rolled it out thoroughly to all location. So we feel good about to the extent to which we are interacting with our clients in a digital way, which is significantly more than we ever have before..

I would just add what Keith said, it's early and I think the feel will get better and better at using these tools as we go forward, but results to-date are encouraging..

Okay, thank you..

Your next question comes from the line of Anj Singh from Credit Suisse. Your line is open. Please go ahead..

Hi thanks for taking my questions. First a follow-up on Protiviti.

With some of the potential changes in the regulatory landscape under the new administration what is your outlook on the strength this business has been seeing from increased regulatory scrutiny in areas like financial services and could you update us on perhaps Protiviti's end market mix as it stands today..

Okay, as to changes in the regulatory landscape as we talked about before on these calls, FSI regulatory for Protiviti is principally anti money laundering and consumer lending practices and regulation thereof.

So the view of Protiviti is the anti money laundering piece of what they do probably doesn't get impacted very much by proposed changes to regulations if anything to the extent it relates to protecting our border, it might get better before it gets worse.

On the consumer lending side while there is some discussion about relaxing the CFPB and other consumer lending, the thought there is based on what has been proposed at least, there is not a view that there would be a significant impact.

On the positive side the discussions about cyber and the importance of cyber and the regulations related to cyber particularly for FSI would be an opportunity for us, because of the technology consulting practice that Protiviti has is very focused on security and cyber would be right in their wheelhouse.

Further Protiviti typically works with the largest of the money center banks and it's viewed that the banks that would most benefit from a relaxed regulatory environment would be more the middle market the non money-center banks to the extent CIPI designation moves to a larger size and probably isn't going to impact Protiviti's clients as much as they would smaller financial institutions.

So net-net it’s the view internally at least as to what's understood today is that it shouldn't have significant negative impact and on the cyber side there could be some upside..

Okay, got it, that's super helpful, and then Max wanted to get your thoughts on the earlier comments made on the disconnect between the small business optimism and the lack of increase in hiring levels. As you see this translate to actual hard making of placements as referenced by Keith earlier.

Do you anticipate this to show up more markedly, for your temp business or your perm business considering that the tightness in the labor market where temp penetration stands today..

I think to some extent we are speculating, I'm personally not surprised that you haven't seen a big pickup yet in terms of the NFIB report for example. Optimism has to precede hiring and if you looked at the fourth quarter through much of the quarter people seem to be in a very bad mood, negative about the election and so forth.

At the end of the day our types of clients are the types that they want to, they are from [indiscernible], wait and see, show me and so forth.

So I think that the good news is the optimism is up as they start seeing more activity and so forth among their own clients, I think their hiring levels will pick up they'll move more rapidly our placement processes might get condensed. so if you want to be an optimist there is a lot to be optimistic about.

And when Keith talked about the tax proposals that the Trump administration, I have to admit it’s hard for us to constrain ourselves because I don’t see anything negative at all in any of that for us, so that would be a very good thing for us.

But I think we'll just have to wait and see what happens, we are optimistic though that these changes if they continue in terms of optimism and so forth will need to increase the placement activity as well as temporary activity..

Okay thank you and one last quick housekeeping question from me.

Could you just comment on bill pay spreads in the quarter and conversions at both Q4 and Q3?.

So bill pay spreads were stronger during the quarter, the conversions which often follow permanent placement per se were softer during the quarter they were around 2.9% of revenue which was down 20 basis points from the third quarter, so conversion softer, pay bill spread stronger.

When you put the package together with the credit, the true up credits we got on the pay roll taxes overall they were up. Our guidance for the first quarter is that year-on-year you will get 10 to 30 basis points of improvement, which is principally higher pay bills spreads, for the moment and we have held everything else pretty constant..

Okay, thanks so much I appreciate it..

Your next question comes from the line of Manav Patnaik from Barclays. Your line is open. Please go ahead..

Thank you. Good evening gentlemen.

I guess the near-term trends still look like they're tough to you guys, but there were signs of optimism thinking out a little further ahead, and the one question I had around that was capacity like, I guess how should we think about the utilization that was today if things do start getting better like you need to ramp up, do you have the capacity, any way to think about that?.

I would say that in the short-term particularly we are carrying capacity, we have pretty much held our U.S. headcounts level for a few quarters, we have added to headcounts modestly outside the U.S., but in the short-term if we see an increase in the activity levels in the U.S.

I think there would be a few quarters where you could do that without a commensurate increase in our staff levels..

Okay that’s helpful, and I guess just the follow-up was just around the ACA, when that first come out there was a lot of noise around your stock and what that could mean.

I guess it ended up being not much of an impact really, but just curious on if how you guys think about whether the repeal and replace if that will have any impact on the other side?.

So, early on there was optimism about the revenue, the incremental revenue we would get because of ACA with smaller companies trying to avoid thresholds by using temporaries, that never really came to pass.

On the flip side, there was concern that many of our temporaries would qualify for medical insurance that theretofore had not, that never really came to fruition either, because those they qualified tended not to elect the coverage.

So, frankly just like there ultimately wasn't much impact initially we don't think there would be much impact by the replace and repeal, or appeal or replace..

Okay. All right. Thanks guys..

Your next question comes from the line of Gary Bisbee of RBC Capital Markets. Your line is open. Please go ahead..

Hi good afternoon. On the perm business, I guess I just wanted to ask what is implied at the midpoint of the guide or the range of outcomes for Q1.

Normally that improves sequentially on a dollar basis as you get into budget year, and is that happening or should we think that the weak start to January that you referenced is an indication that you haven't seen that normal seasonal but I realize it's early but?.

So, the first thing we would say about the January start and if you look back in history, the perm start relative to the ultimate quarter is the least predictive of all and so you don't have to look back to many quarters where you see us down double-digits, where we end up down much less than that or even up.

So, we read very little into the start, particularly when the start includes a couple of holidays, which it always does in January, the holidays they fall on different days, peoples patterns about the time they take off differs to some degree based on which day of the week the holiday falls, so it's a noisy start, it's always noisy, but it's even noisier based on day of week.

Our guidance assumes a little bit of sequential dollar growth, a little bit but less than what we have seen in the past, and therefore year-on-year the growth rate would be more negative in our guidance for Q1 than what we just saw..

Okay thanks and then just a follow-up, on Protiviti, outside of the financial regulatory, which you have talked a lot about in recent quarters can you just give us some color on how the rest of the business is doing should we think that.

I think IT and some of the other areas that you have talked about in the past that have been doing well are those slowing as well as it is just a comps issues or just any update on demand outside of financial regulatory? Thank you..

The story is good there the two other major practice areas Protiviti are internal audit and the other one is technology, which is principally security and those have been very solid.

The one that's been the most volatile has been the FSI regulatory compliance consulting area, but internal audit done very well, you still got PCA or B hammering external audit firms about their client controls, which ultimately trickles down to the benefit of internal audit that Protiviti benefits from IT security, cyber hardly a day goes by where there is it some kind of reach something in that areas that needs attention.

So we have very solid a year or two or three in internal audit and in technology security and we remain positive into 2017..

Thank you..

Your next question comes from the line of Tobey Sommer from SunTrust. Your line is open. Please go ahead..

Thank you. Question for you about the changes to the tax code that are being discussed.

I think you addressed it from your own internal cash flow perspective, but historically when you have seen kind of broad changes to the tax code what has been the impact on demand for your services and kind of where if anywhere have you felt change in demand as a result of these kinds of changes that are being discussed currently? Thanks..

Well tax code changes, changes are always good, in that clients have to figure out what is new, what is different, and comply with the new regs. So change is always good.

The more the change the better from the standpoint that you need help to comply, has it been a major driver of incremental revenue no, but at the margin it’s good more so than it's bad..

Okay, in terms of the tax page. Have you been hearing from your customers an increased tenancy for kind of domestic labor there seems to be a lot of push back against off shoring into the extent that of that occurs less over the next four years.

Do you have any expectations what that can do for other demand protect and or kind of bill rate and growth rates? Thanks..

Well, first of all because we deal primarily with middle market companies, there has never been that much appetite from our clients for off-shoring and therefore it's never had that begin impact. Clearly you hear more about reassuring, your hear more about insuring there is several terms that get used for domestic.

But other than the extent to which it pressures supply, we don’t think our business would be that impacted one way or the other..

Your next question comes from the line of Randy Reece from Avondale Partners. Your line is open. Please go ahead..

Good afternoon.

I wanted to ask about how labor supply is affecting your growth potential in your view first then you asking them outside the U.S.?.

So it is true that as clients take more time they are more selective and they want only what they view is the perfect candidate and clearly our supply of perfect candidates is different than our supply of solid candidates and therefore one could say that our growth is being constrained by candidate supply.

However we wouldn't really articulate it that way, because in a normal demand environment where there is more sense of urgency to get your projects done, to get your people hired, they are more flexible in adjusting to market conditions the candidates that are available.

So as we said earlier, if we were given a choice today between more quality orders and more quality supply we would take the order side. If we had to choose, we will take both but if we have to choose we will take more quality orders.

Non-US while supply is always an issue it certainly hasn't risen to the level of significantly growth constraining issue..

Very good, thank you..

Your next question comes from the line of Hamzah Mazari from Macquarie, your line is open please go ahead..

Hi, this is [indiscernible] queuing in for Hamzah.

You guys had a cultural base as you guys have mentioned it's mostly small mid-sized companies can you give us a sense of whether there is a correlation to your sales from small business competency mix, because that's been up recently and you guys see that impacting either presently or going into a 2017..

I don't think there is a hard correlation if you are talking about NFIB optimism index, there is certainly a directional correlation and therefore we are encouraged to see the optimism index improve and in fact improve significantly based on what it had.

I think if you look at NFIB, if you look at University of Michigan Sentiment they're both back to 2004 levels, that's a really good thing and we are encouraged by that.

But if you do a Lee Squares correlation on that index versus or either those index versus our revenues, I don't think you are going to find a number that's going to be that meaningful overall, but again directionally I do think it's helpful and I do think it's predictive..

All right. Thank you..

Your next question comes from the line of George Tong from Piper Jaffray, your line is open please go ahead..

Hi this is Adrian Paz on for George Tong. I just wanted to touch on account temp specifically and see if you could discuss trends that you are seeing for the U.S. and if there is any specific areas or weakness or increasing competition or if there is a, you know just a broad based slowdown..

So similar to the other divisions, account temps flattened out during the fourth quarter, didn't go down in an absolute sense, it flattened out based on where it had been in the third quarter and that compares to a typical fourth quarter where you get some sequential lift, therefore the year-over-year comparison is a negative, but in an absolute sense it’s not negative it’s flat.

If you look at the components of account temps the accounting operations portion of account temps which is accounts payable, accounts receivable, payroll the transactional [physicians] (Ph), they are the most impacted, that's expected, that's consistent they are the most macro sensitive positions within account temps.

Our guidance for the first quarter is that on a sequential basis they decline a little going into the first quarter but not significantly but you're still going to get a year over year negative from that phenomenon..

Thanks and can you discuss pricing trends in the temp segment and how you balance between pushing bill rates and margins versus targeting higher bill rates..

So our bill rate for the quarter were up 3.6% year-over-year that's very consistent with last quarter, which was 3.5%. You are always balancing pricing and volume. We provide our people with a lot of authority, a lot of autonomy in that way, but 3.5ish up to 4% bill rate/wage inflation has been pretty consistent last few quarters..

Do you think that's impacting placement negotiations, or your placement for temps?.

Well they are always part of a negotiation, but with a middle market client they typically need one or two people for a few months, and the bill rate is rarely the most important part of that discussion, not that it's not important.

I think you will find that our pricing power has been intact for almost 30 years that’s now something we are quite proud of, but it's also a function of the [1sy, 2sy] (Ph) nature of the volumes at which we place as well as the middle market accounts that we deal with..

Great. Thanks for the color..

And our final question will come from the line of [indiscernible]. Your line is open. Please go ahead..

Thanks for taking my question.

We have a very pro-growth President, I mean this seems unprecedented, I mean do you think there is any chance we would be getting into a new cycle or do you see this just a continuation of the prior cycle?.

I'm not sure you can parse a reacceleration as to whether that means it's new or whether it's a continuation of the prior. As long as it gets better frankly it doesn't really matter what you want to label it. We will take and our clients feel better, they do, our clients are more optimistic. You just don’t see it yet.

But we are encouraged that our clients are encouraged, we would be more encouraged if our clients were actually acting on it, but they need to get to encouraged before they start acting on it. So, we will take what we can get..

Thank you and as a follow-up if we did get a tax reform, what would you do with the cash?.

As is consistent with our practice for many-many years we first look into the needs of our business from a capital standpoint, we deal with those, our cash flow has always been in excess of that, the residue, we typically return to shareholders with more dividends, with more repurchases and it would be our expectation is that's what we would do with any tax savings that we have.

There have been a few questions about whether that tax savings would be competed away by our competitors essentially returning that through lower bill rates back to the clients.

I will tell you in 30 years we have never seen anything like that, nor would it be our expectation that that be the case here, particularly since it's an income tax and not a payroll tax.

If it were a payroll tax it would be more germane to the discussion with our clients, but since we are talking about an income tax it's our view that it would not get competed away and that we would - then our cash flow would benefit which could ultimately benefit the level of repurchases and dividends we could do with that cash flow..

Excellent. Thank you very much..

Yes, the bottom line as Keith said it there would be more money for dividends and repurchases. That was our last question; we would like to thank everyone again for joining us on today's call. We appreciate it..

This concludes today's teleconference. If you missed any part of the call, it will be archived in audio format in the Investor Center of Robert Half's website at www.roberthalf.com. You can also dial the conference call replay. Dial-in details and the conference ID are contained in the company's press release issued earlier today..