Harold Messmer - Chairman and CEO Keith Waddell - Vice Chairman, President and CFO.

Kevin McVeigh - Deutsche Bank Mark Marcon - R. W. Baird Andrew Steinerman - JPMorgan Tim McHugh - William Blair & Company Anjaneya Singh - Credit Suisse Manav Patnaik - Barclays Gary Bisbee - RBC Capital Markets Tobey Sommer - SunTrust David Silver - Morningstar.

Hello and welcome to the Robert Half Second Quarter 2017 Conference 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..

Good afternoon everyone and thank you for joining us. Before we begin I want 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 roberthalf.com. From the About Us tab, go to our Investor Center, where you will find the Quarterly Conference Calls link. Let's review our second quarter financial results.

Revenues were $1.308 billion, down 1% on a same-day constant-currency basis and down 3% on a reported basis from the second quarter of 2016. Income per share was $0.64, both revenues and EPS were slightly above the midpoint of our previous guidance for this quarter. Cash flow from operations was $253 million, capital expenditures were $11 million.

During the quarter we returned $31 million to our stockholders through a $0.24 per share cash dividend. We also repurchased 1 million Robert Half shares for $47 million during the quarter. We have 4.2 million shares available for repurchase under our board-approved stock repurchase plan.

Second quarter revenues were strongest internationally, but we were also pleased with the quarter-over-quarter sequential performance of our domestic staffing operations. Every U.S. staffing line of business reported higher sequential revenue growth this year than the same period a year ago. Sequential revenue growth for overall U.S.

staffing operations was 2% in the second quarter versus a sequential decline of 1% a year ago. Robert Half return on invested capital was 29% during the second quarter. I'll turn the call over to Keith now for a closer look at our results..

As Max noted, global revenues were $1.308 billion in the second quarter. This is down 3% from a year ago on a reported basis and down 1% on a same-day constant-currency basis. Revenues for our staffing businesses were down 1% year-over-year on a same-day constant-currency basis. U.S. staffing revenues were $872 million, down 3% on a same-day basis.

Non-U.S. staffing revenues were $239 million, up 7% when adjusted for billing days and currency exchange rates. We have 325 staffing locations worldwide, including 83 locations in 17 countries outside the United States. The second quarter had 63.3 billing days compared to 63.9 days in the second quarter of 2016.

The current third quarter has 63.1 billing days compared to 64.1 days in the third quarter of last year. Accompanying our earnings release is a supplemental schedule showing year-over-year revenue growth rates on both a reported and same-day, constant-currency basis. This data is further broken out by U.S. and non-U.S. operations.

This is a non-GAAP financial measure that offers insight into certain revenue trends in our operations. The effect of currency exchange rates decreased our reported year-over-year staffing revenues by $9 million in the second quarter which decreased year-over-year reported staffing growth rates by 0.7%.

Global revenues for Protiviti were $197 million in the second quarter with $164 million coming from revenues in the United States and $33 million from revenues outside the United States. Protiviti revenues were up 1% year-over-year on a same-day, constant-currency basis. U.S.

Protiviti revenues were up 2% from the prior year on a same-day basis and non-U.S. revenues were down 1%. Exchange rates had the effect of decreasing year-over-year Protiviti revenues by $1 million in the second quarter and decreasing the year-over-year reported growth rate by 0.7%.

Protiviti and its independently owned Member Firms serve clients through a network of 75 locations in 25 countries. Now let’s turn to gross margin. Gross margin in our temporary and consulting staffing operations in the second quarter was 37.4% of applicable revenues.

This is a 20 basis point decline from the same period one year ago primarily due to the absence of prior year workers compensation credits of $1.4 million and slight lower due to higher conversions.

Revenues for our permanent placement operations were 10.1% of consolidated staffing revenues in the second quarter, which is up compared to last year's 9.9%. Together with temporary and consulting gross margin, overall staffing gross margin fell 10 basis points versus a year ago to 43.7%.

Second quarter gross margin for Protiviti was $53 million or 26.7% of Protiviti revenues. A year ago, Protiviti gross margin was $56 million or 28.1% of Protiviti revenues. In the second quarter staffing SG&A costs were 33.5% of staffing revenues versus 32.3% in the second quarter of 2016.

Second quarter SG&A costs for Protiviti were 18.3% of Protiviti revenues compared to 19.1% of Protiviti revenues in the year-ago period. Operating income from our staffing divisions was $114 million in the second quarter, down 13% from the prior year. Operating margin was 10.3%.

Our temporary and consulting staffing divisions reported $93 million in operating income. This was a decrease of 13% from 2016 and resulted in an operating margin of 9.3%. Second quarter operating income for our permanent placement division was $21 million, down 14% from the prior year and producing an operating margin of 18.7%.

Operating profit for Protiviti was $17 million in the second quarter, a decrease of 7% from 2016, producing an operating margin of 8.4%. At the end of the second quarter, accounts receivable were $708 million. Implied day sales outstanding, DSO, was 49.3 days.

Before we move to third quarter guidance, let's review the monthly revenue trends we saw in the second quarter and so far in July, all adjusted for currency. Our temporary and consulting staffing divisions exited the second quarter with June revenues down with 2% versus the prior year compared to a 1.6% decline for the full quarter.

Revenue growth for the first two weeks of July was down 2.9% compared to the prior year. For our permanent placement operations June revenues were up 5.4% versus last year compared to a 1.4% increase reported for the full quarter. For the first three weeks in July, permanent placement revenues were up 9.8% compared to the same period last year.

This information covers trends we saw during the second quarter and in July. But as you know, we hesitate to read too much into these numbers as they represent very brief periods of time and include holiday impacts from the 4th of July.

With that said, we offer the following third quarter guidance, revenues, $1,305,000,000 to $1,365,000,000; income per share, $0.66 to $0.72. The midpoint of our Q3 guidance implies reported revenues are down slightly or negative 0.3% on a year-over-year basis. However, revenues are up 1.1% adjusted for days and currencies. EPS is down 2.5%.

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 our SEC filings. Now I'll turn the call back over to Max..

Thank you, Keith. We were encouraged by the second quarter results particularly the continued strength in our non-U.S. staffing operations and the sequential progress of our U.S. operations. Although GDP growth in the United States has been sluggish the business outlook is positive since the start of 2017 U.S.

business leaders particularly owners of small and mid size companies have expressed confidence in their prospects. If GDP growth improves, we believe hiring activity should not be far behind.

The Fed Reserve Beige Book report that economic activity expanded across all 12 Fed Reserve districts in June with the pace of growth ranging from slight to moderate. Fed also reported that employment across most of the nation maintained a modest to moderate pace of expansion.

The common thread among many of these business sentiment surveys is concerned over the lack of available talent, as skill shortage has become more pronounced to professional occupations. Robert Half is positioned to help companies locate and hire that’s hard to find talent, it is what we do best.

We’re investing continually in technology innovation to better serve our customers, but technology has it’s limitation and a great many steps in the hiring process require human skill and judgment we believe Robert Half’s competitive difference is our ability to offer both innovative technology solutions and personal attention backed by our nearly 70 years of experience.

Protiviti also had a solid quarter, particularly its U.S. internal audit and risk and compliance practices. We believe Protiviti is well positioned in the market place. Keith and I would be happy to answer your questions. We ask if you please limit yourself as usual to one question and a single follow-up as needed.

If time permits, we'll return to you if you have additional questions. Thank you..

[Operator Instructions] Your first question comes from Kevin McVeigh from Deutsche Bank. Your line is open..

Great, thanks. Hey Keith, I wonder if you could just help us, I mean, seems like you've seen a nice uptick in then revenue. I think if memory serves me right, you went three quarters of literally the same revenue range and now you're seeing a kind of an uptick in that, which you're seeing some leverage, their earnings.

Any sense of kind of some of the puts and takes, the low end versus the high end and then what tax rates implied in the EPS guidance?.

Okay. First of all the tax rate is 37.5%, which is a little lower than Q2, we're going to get some credits in the third quarter. Puts and takes on low and high end. So, generally when are talking staffing now, tone of business clients remain wait and see, they remain measured, although Sentiment does remain high, hiring is selective, it's methodical.

We are seeing sequential demand improving slowly, perm a little better than temp. Candidates have many options and must be sold on the opportunities presented. Europe remains strong.

So, the third quarter guidance, we focus first on sequential progress given the trends, the second quarter June was a little softer than the first two months but not significantly so. There is a lot of noise in the post quarter because of the force. So, we believe that starting in the U.S.

will continue to have a little more sequential improvement that's dialed into the midpoint. U.S. remain strong led by continental Europe particularly Germany and Belgium. We expect that would continue so that year-on-year for the first time in several quarters adjusted for days in currency will actually show positive revenue growth.

As we talked earlier, it is one day shorter than the quarter a year ago, so there's a differential between report and same day. But generally speaking, the second quarter wasn’t that different from the first, it was a little better.

And our expectation at the midpoint of our guidance is that the third quarter gets a little better than the second quarter just reported..

That's super helpful.

And then just one quick one, any thoughts on why the perm basin's been so much stronger than temp, just on a relative basis?.

And that's its relatively new, we've had several quarters were perm was weaker than temp. We've now had a few rather where it's a bit stronger than temp.

the thinking is there is pent up demand clients have differed hiring and as things begin looking a little better, they're now more willing to pull the trigger and catch up what they had differed and procrastinated on.

Generally speaking, we think perm and temp are highly correlated and we would expect temp to follow perm but it is true for the last few quarters perm has been stronger than temp and that continued right through the post quarter period we just talked about..

Thank you..

Your next question comes from Mark Marcon from R. W. Baird. Your line is open..

Good afternoon. I was wondering if you could talk a little bit about philosophically how you would think about investing on a go forward basis. Assuming that the trends don’t change materially, so maybe they are going on an upward slope but it's a slower grind.

In other words, when we think about the SG&A, how should we think about that and operating margin expectations given kind of this kind of slow growth environment?.

And so, on a go forward basis from an SG&A standpoint you've got two things going on. First of all with Europe earlier cycle growing nicely, we're aggressively adding to headcount. In the U.S.

which is slightly negative, we're continuing to pretty much hold the line such that when you put the two together, we got compensation cost growing faster than revenue growth. Further in the internal technology arena, we continue to invest heavily in our digital initiatives.

Many of those are expensed rather than capitalized because their improvements of existing solutions rather than brand new solutions. So, together you've got some negative leverage from SG&A because of the headcount, because of the technology spending.

And by the way, a lot of what we've done in the past, in the recent past from a technology standpoint, has been software as a service, so we're having to pay those license fees currently which are expense as well.

So, when you put it all together as we said in our guidance, at our midpoint, same day constant currency, revenues were up 1% and EPS is down 2.5%, so there are some negative leverage one to the other but they're not totally out of balance..

No, they're not. That was very helpful. I mean, what level of and this is obviously on the whole and it would matter depending which segment.

But what level of revenue growth which you need to get to in order to think about margins basically stand stable given the current pace?.

I mean, low to mid-single-digits would certainly get us there. And a lot of what we're talking about investment wise is discretionary. So, we can always throttle lever down but given current conditions given the outlook, given the still the possibility of regulatory reform in the United States, given all of those things, we're thinking as I described.

But to the extent we can get mid low to mid-single and this quarter at midpoint we're talking about 1% growth. So, we're getting there. Things are improving, they're not getting worse, they're improving from a mix standpoint more with perm that's higher margin, so that's helpful. So, we're getting there..

Great, thank you..

Your next question comes from Andrew Steinerman with JPMorgan. Your line is open..

Hey, Keith. I don’t remember in past second quarters you're being so emphatic about saying watch out for the timing of July 4th.

I guess we understand why you would say that in the second quarter but it doesn't seem like it's your usual transcript type comments and what I look at the temp revenues' being down in July, yet your total revenue being up in the guide. I just don’t quite get it, is it that maybe after July 4th like last week you saw an inflection positive.

So, is it kind of looking at the individual weeks that make you feel like we're nudging positive?.

Well, the July 4th, Andrew simply put an exclamation point on, it's a short period, it's two weeks..

Yes..

And the two weeks was inclusive of July 4, which fell on Tuesday rather than Monday a year ago and there are 1000 theories out there about whether Tuesday's better than Monday that we don’t need to go there..

Right..

But the point is the post quarter, we view as noise. And so, just like last quarter where we had a great March that we didn’t totally roll into our guidance. This quarter June was so-so, and we didn’t totally roll that into our guidance either.

We've gone through the same bottom up process, discussions with all our key field people, Protiviti and staffing alike and based on that we've come up with a guidance that we have. But clearly, the guidance is more positive than the month of June or the start in July..

Uh-huh, right.

And could you just make a quick comment about Protiviti in the guide?.

So, Protiviti internal audit's strong, staged strong, companies continued to focus on stricting their controls. The growth there has been moderating because they've had some large consulting project ends that they hadn’t yet fully replaced. Those are in the technology area as well as the risk in compliance area.

The international zone for Protiviti had some monster comps a year ago if you look and some of those projects are ending which will have to be replaced. So, net net our guide for Protiviti is that revenues year-on-year will be flat to slightly negative and that's principally about replacing the large project ends.

And as you know in the consulting business, you can't perfectly time the new projects versus the ends of the old projects..

Okay, thank you..

Your next question comes from Tim McHugh with William Blair & Company. Your line is open..

Thanks. Just I want to ask maybe on June.

What was the feedback from the reviews you did with the field staff, was there any difference in behavior, any kind of reason that you kind of gain from those conversations?.

There was nothing earth shattering, Tim. It I mean, there are some give and take month-to-month. The improvement has been a bit uneven, it's not happening in a straight line. That said, notwithstanding June and notwithstanding the early July, everybody standing by their guidance for the third quarter.

Where generally speaking the United States included, things are getting a little better..

Okay. And then can you talk about the tax segment in more detail what you're seeing there. I think a year ago you talked about kind of one large customer that you'd kind of I think walked away from or something like that if I recall right. But I think we should be getting close to anniversering that.

So, just can you elaborate what you're seeing within that vertical?.

Well, certainly it's there's no one large customer impact. I would say generally we find with our middle market companies that their tech spending has a larger discretionary element than is the case for their accounting and finance spending. In accounting finance, you got closes that you have to do, you've got filings that you have to do.

In tech, particularly in tech support, you don’t have those same deadlines, further there is more discretion as to when you start new projects. So, generally speaking we're finding there is more discretion in our clients tech spending and therefore the revenues are a bit more impacted than is the case in accounting finance.

Now, that said, again looking sequentially, tech we had growth there as well as we talked about every single one of our lines of business including in the U.S. did have sequential growth. That would include tech and we were encouraged by that..

Okay, thank you..

Your next question comes from Jeff Silber with BMO. Your line is open..

Hi guys, good afternoon. It's Henry Chien calling for Jeff. Just a question on the sequential improvement in the U.S. and what's implied in the guide.

Is that more a function of the environment improving or is there anything internal that you've done that you can point to drive some of that improvement?.

Well, you never know for sure. We're always trying to get better internally and the further away we get from the sales force conversion last August, the more that's in their rear view mirror. But generally speaking, we would observe that the environment has got a little better.

And to me, perm is usually more economically sensitive than as temp and it seems to be what's leading at the moment which is which boards well for the environment..

Got it, okay.

And specifically for account temp, but is there anything that you're looking forward to release within this year or next year like the part, like greater demand for accounting sense?.

Well, in accounting there are always change. So, we have got wherever that change going on as we speak. You've got lease accounting which is expected to be more process intensive and impact a broader number of companies than REVRAC [ph] has. So, we have that to look forward to. But there is always something going on in accounting.

So, there is nothing that's going to move the needle in a major way. But change is good and there is always change and there is change on the horizon. And those are two examples that come to mind..

Okay, great. Thanks, so much..

Your next question comes from Anjaneya Singh with Credit Suisse. Your line is open..

Hi, thanks for taking my questions. This has kind of been touched upon in some of the earlier questions, but just wanted some more thoughts. Are you actually feeling the business pick up or is it just easier comps, I know you mentioned perm as a leading indicator. But you're implying a 2% acceleration from 2Q to 3Q midpoint.

I mean, your comp is also easing by 2.5 points. So, maybe as it relates to what you're assuming for contribution from U.S.

temp, how much of this is just easier comps versus actual strengthening of business?.

Well, one reason we talk sequential rather than year-on-year is because it takes the comps out of the argument. So, clearly the year-on-year comps are getting easier as you described but when you're looking sequentially, we're talking about the third quarter versus the second quarter just ended.

So, the comps are a lesser part of the story when you look sequentially. So, we do think things are slowly picking up.

Slowly picking up and the comps do get easier year-on-year and part of the reason, one of the reasons why year-on-year you're seeing improvement is because the comps get easier but the other reason you're seeing year-on-year improvement is because we're growing sequentially.

If you grew sequentially every quarter, you wouldn’t have to worry about year-over-year, it takes care of itself..

Okay, got it. And then for my second question, realizing you guys don’t really guide more than a quarter out, but in light of Protiviti margins year-to-date and what you mentioned with regards to your growth outlook there.

How should we be thinking about what you've stated in the past that you can do sort of double digit margins in that business on a full year sort of basis.

Is that realistic for this year and any reason why you didn’t show the typical seasonal uptick in Protiviti margins at 2Q?.

So, Protiviti margins given their revenue performance, I would consider strong. And in fact, the big sequential increase for Protiviti comes in the third quarter as many companies do their annual Sarbanes-Oxley compliance work for the quarter.

We do expect Protiviti operating margins for the quarter to be well into double digits and our expectation is for the full year and long term it's a double digit operating margin business. We've just got some noise around replacing older larger projects with newer projects and their puts and takes always in that way.

But we haven’t in any way reduced our margin expectations long term for Protiviti..

Okay, got it. Thanks, so much..

Your next question comes from Manav Patnaik with Barclays. Your line is open..

Hi, this is Ryan Leonard filling in for Manav. You mentioned beginning of the call talking about the confidence in the U.S. has improved notably since 2017. You mentioned that there has been some perm hiring as people are kind of really taking action on a pipeline that they let build up a little bit.

So, I guess what are the take for that increased optimism in some of hiring perm to then kind of filter in to the temp side. I mean, your conversation with clients, is it are they supply issues or are they still waiting for regulatory clarity, I think you can broaden on your client conversations, would be helpful..

Well, on supply what's interesting is is that there is no question that supply is tight. But what's interesting is our temp bill rates were up 2.5% this quarter on a year-over-year basis. So, we now had four or five quarters in a row where we have less wage inflation than we've had the immediately prior quarter.

So, what we're seeing is that our clients they're just unwilling to pay more because they don’t believe they can pass it through in what they bill their clients. So, it's actually pretty unprecedented in our experience that on the one hand the labor market tightens, on the other hand wage inflation declines.

So, what we need to see more temp growth, we need to see clients with more activities themselves like and their wait and see, when they see it they'll do it the transactional accounting operations positions that are a big part of Accountemps, they need more transaction volumes at our clients which follow Sentiment.

So, regulatory reform would definitely help. It's clearly been delayed as everyone knows. But if you look at our chart over 10 years, you'll see perm and temp are highly correlated. Perm's getting better, we would expect temp to get better..

So, I guess to follow-up on that, I mean you did say that it's unprecedented. So, historically they have been indicators. But what data are you looking at that will cause you to go out and hire a lot of recruiters saying we think things are getting better and we talked about the trough in 1Q.

So, I mean what is that you think would indicate the underlying volume is picking up?.

We would see weekly ours billed pick up, we then measure productivity per person internally. We would see that getting stretched and as we saw that getting stretched, we would begin to add to headcount, which is what we're doing outside of U.S. or simply holding the line in the U.S..

Helpful, thank you..

Your next question comes from Gary Bisbee with RBC Capital Markets. Your line is open..

Hi guys, good afternoon. Any more margin commentary you can provide about just thinking through the guidance, sometimes you give a little more color by segment or some of the puts and takes. Thank you..

From a margin standpoint, we think our gross margins will stay flat, we did not get the workers comp lift this quarter that we've got in prior quarters. To keep the gross margins where they are, they're at pretty high levels. So, we're not unhappy to keep gross margins flat both year-on-year and sequentially.

SG&A as we talked about, is a bit pressured from the aggressive addition to heads outside the U.S. coupled with holding the line in the U.S. We continue to make internal tech investments that we talked about, such that year-on-year there is some margin compression on the staffing side. Protiviti, there's a little margin compression year-on-year.

But sequentially there is a nice improvement in the third quarter which is seasonally their best quarter such that when you put it all together from an operating margin standpoint, you will see some delusion year-on-year less than a percentage point. And sequentially you'll see some improvement led by Protiviti sequential lift..

Great, thanks. And then, how meaningful is the incremental margin on the lost revenue from the change in number of days on EPS.

I guess, really what I’m getting at is, was it a meaningful impact in Q2 and well at being Q3 the fact that you’re facing down year-over-year number of billing days to EPS?.

Well clearly, it has an impact all your fixed costs are the same yet your cover was less margin because of the shorter quarter. So it’s impactful and it’s more impactful than your average margin because your fixed costs are your fixed costs. So clearly, more days is better than fewer and this quarter we’ve got one fewer than a year ago..

Okay, fair enough, thanks..

Your next question comes from Tobey Sommer with SunTrust. Your line is open..

Thank you. Within PERM I was wondering if you could compare and contrast the performance within the various signs for the accounting occupations that you traffic in with IT and perhaps demand in the creative group as well? Thanks..

We never breakout per say the components of PERM, I would say the improvement in PERM demand is broad based and it includes all of the segments that you talk about, but we don’t specifically comment on one versus the other inside of PERM..

Okay.

And then, growth within the creative group is it comparable to the segment growth or somehow different?.

And again, we do not breakout for materiality reasons the results of the creative group, but it’s doing fine..

So to be on the better side?.

It’s doing fine..

Okay, thank you very much..

Your next question comes from Hamzah Mazari with Macquarie Capital. Your line is open..

Hi, this is Kim filling in for Hamzah. You made some comments about the strength in the non-U.S. staffing operations.

Could you maybe give us a little more color around that in terms of what you’re seeing in the international staffing markets, where do you, is there any particular countries or geographies that you see moving in and out of any cycles?.

The story is almost all good we’re led by Germany and Belgium on the continent. France has certainly picked up nicely. Canada doing well, U.K. flattish as Brexit impacts at least Centamin in the U.K. Australia doing well as well. So outside the U.S. pretty much across the board with the U.K.

being flat everybody else growing nicely and continently the Europe the best of all. And the nice part of that is we get our best margins, non-U.S. margins in Germany and Belgium and they’re two of the strongest markets that we have. Further you got the euro appreciating relative to the dollar and so that’s even more icing..

That’s really helpful, thanks Wad.

And maybe follow up to that is, on the regulatory side is there any changes in the international space that either you’re on the lookout for positive or negative impact?.

No. I know there is discussion in France out sometime in the distance about changes and their payroll laws, labor laws. France is of that bigger deal to us one way or the other so I don’t totally understand what’s being proposed. But from the standpoint of its impact on Robert Half it would be de-minimus.

There is nothing else that moved the needle, I mean there are always some changes back and forth, there is some anti-money laundering regs come in non-U.S. I mean, there are some things happening but nothing that moves a needle in a major way..

Okay, thank you so much..

Your last question comes from David Silver with Morningstar. Your line is open..

Yes, hi, thank you. I guess, I would like to just maybe go back to the question about the differential performance offshore as opposed to the U.S. and I think couple of your peers have also noted stronger results in Europe in particular.

And I hope I’m not splitting hairs, but would you say there is something just basically economics driven to the differential performance here or would you say it’s something I don’t know either regulatory or cultural in other words typical large employers let’s say in Germany or Belgium are structurally more likely to utilize the services of staffing company relative to those in the U.S.

In other words keep their full time employment levels down or prefer to use Robert Half as a conduit let’s say between the employee and the employer? Thank you..

We would observe that cultural differences haven’t changed much off late and that [indiscernible] results favoring non-U.S. are more macroeconomic than anything else. All of the cultural differences you noted are true, but they haven’t really changed that much in the last few quarters.

But what has changed is that the macro in particularly Canada and Europe is currently improving and staffing is participating that’s true at Robert Half, that’s true in the industry generally..

Okay, thank you for that and just one last question. Big picture it’s been kind of a turbulent legislative session in Washington this year and number of companies had hopes for economic legislation or economic incentives or reforms.

From Robert Half’s perspective are there one or two key legislative proposals or legislative issues where a change in the momentum in Washington would make a difference in the perspective of your customers in terms of pulling the trigger on more of that backlog or that potential hiring pool that you’ve cited?.

Well, I think if you survey that clients and there are many surveys out there, they would tell you two things. They would tell you tax reform and they would tell you regulatory reform and regulatory reform has happened to some degree. Tax reform has not but many shareholders have hope that it will as I said earlier.

The sentiment remains high amongst our middle market client base, but they’re wait and see type companies and they’re still waiting to see. That said, things are getting a little bit better.

They progressively gotten a little bit better over the course of the year and we expect that momentum to carry over into the third quarter and it’s that foundation that we use to give our guidance for the third quarter which says things get a little bit better..

That’s it, thank you very much..

Could I add a comment to that and that is that as a full taxpayer with no debt of course, Robert Half itself would benefit greatly from tax reform as with our small to mid size clients.

On your first point, I agree with Keith at the end of the day we think we’re very well positioned to the extent that GDP growth in the United States picks up, you should see us pick up. Nothing would help us and our clients more than a pickup in GDP right now..

Thank you..

Thank you. I think that was our last question, we appreciate everyone being with us on the call today..

This concludes today’s teleconference, if you have missed any part of the call it will be archived in audio format in the investor center of Robert Half’s website at www.roberthald.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. Thank you..