Good afternoon. Thank you for joining us today for ASGN's Fourth Quarter and Full Year 2023 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 uncertainty. 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 these 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 fourth quarter and full-year 2023 earnings call. ASGN achieved solid results in the fourth quarter with revenues, gross margin, and adjusted EBITDA margin all at the top end of or above our guidance ranges. During 2023, revenues totaled approximately $4.5 billion, of which $2.4 billion was in commercial and government IT consulting work. Highlights of our annual performance, commercial consulting revenues reached a new high-water mark, surpassing $1 billion. From a profitability perspective, ongoing expense management, along with our business stabilizers, contributed to an adjusted EBITDA margin of 11.6% for the year. With that as background on our results, I'd like to highlight a few key themes to keep in mind as we review our segment performance. To start, 2023 was the first time we tested our current revenue mix and operating model in a difficult economy. Today's business is not the same as during the Great Financial Crisis or the pandemic. Therefore, we had yet to witness our current operations in an economic slowdown. However, as evidenced by our full-year results, I can confidently say that ASGN made solid progress despite macro challenges. Our unique go-to-market strategy and variable cost structure supported the business and our margins throughout the year. Second, not only do we demonstrate that our operating model works, but we also showed that we have the right mix of businesses. Our federal government services provide countercyclical support to balance out our five diverse commercial industry verticals. Third, our long-standing, trusted client relationships drove the growth of our IT consulting revenues. And in the fourth quarter, we officially surpassed 55% of consolidated revenues in IT consulting, a full year ahead of our target. These achievements resulted from proactive efforts to strategically shape and purposely build a business that can perform well throughout market cycles. Our federal government services offered countercyclical balance to our more cyclical commercial businesses. Importantly, we are evolving our revenue mix, moving up the pyramid to provide higher-end, higher-value IT consulting work that is typically longer in duration and provides us with greater visibility and margin potential. I am certain that our operating model is well positioned as IT services demand recovers. With these themes in mind, let's turn to our segment performance, beginning with our largest segment by revenue, Commercial. Our Commercial Segment services large enterprises and Fortune 1000 companies across five diverse industry verticals. Commercial Segment revenues for the quarter declined by low teens year-over-year. Revenues for this segment benefited from growth in our consulting business, offset by double-digit declines in the more cyclical areas of our assignment business. Commercial consulting revenues increased roughly 2% for the quarter compared to the year-ago period, solid growth given the macro challenges and a difficult year-over-year comparison. Favorable commercial consulting bookings of approximately $312 million translated to a book-to-bill of 1.2x on a trailing 12-month basis. Another positive, we continue to add new Fortune 1000 clients through our consulting roster. Beyond new work, client retention rates on existing contracts remain strong, and customers are engaging our teams on longer consulting projects. Similar to the third quarter, we saw bookings weighted slightly more towards renewals than new work opportunities. As we enter the first quarter of 2024, many of our clients remain deliberate in their IT investments for the year, and their spending on certain consulting contracts remains extended. Nevertheless, the growth in our bookings during the fourth quarter clearly indicates that our clients continue to recognize the value of ASGN’s services. Our teams and operating model are well positioned to support our clients' IT roadmaps as they ramp up their spend. Turning to our vertical performance. All five commercial industry verticals declined year-over-year. That said, we saw sequential growth on a billable-day adjusted basis in two verticals, Consumer & Industrial and TMT, and relatively flat sequential performance on a billable-day adjusted basis in the Healthcare vertical. Sequential improvements in sub-verticals included Utilities, Consumer Discretionary, Healthcare Providers, Telecom, Media, E-Commerce, and Software and Services accounts. Our commercial bookings remained solid, with work won across multiple service areas. Our pipeline of AI work continues to grow as our clients focus on data preparation, developing use cases, and implementing their AI platforms. As such, we continue to hire subject matter experts, train our current teams, and develop AI accelerator programs, each with our customer needs in mind. For example, Apex Systems’ Application Development Team is leveraging our partnership with Microsoft to upscale our developers to become even more productive for our clients. Microsoft technology, in another example, enabled us to significantly shorten new code generation timelines for an automotive and aerospace parts manufacturer. In another instance, with the help of Microsoft CoPilot, our team substantially reduced data review time at a digital health services provider. In addition to Microsoft, Apex Systems is collaborating with several other companies' generative AI technologies. Leveraging both Salesforce and ServiceNow's generative AI technologies, we've been able to gain a holistic view of our customers' IT journeys to refine their AI roadmaps, automate solutions, and build personalized data-driven marketing campaigns and IT schedules with improved productivity. Our team of data scientists, engineers, developers, and technical project managers have also used the combination of Microsoft Azure, Databricks, and Snowflake to help a Fortune 50 telecom company with personalization, predictive modeling, and increased revenue generation for its mass marketing campaigns. With AI gaining traction, cybersecurity needs are also increasing. In the fourth quarter, we worked with a Fortune 25 healthcare insurer to mitigate cybersecurity risk associated with its newly acquired entities. We partnered closely with our clients' IT integration team to rapidly assess and remediate over 1,000 vulnerabilities in cloud platforms ahead of their planned integration timeline. By leveraging our deep expertise in Amazon Web Services, Microsoft Azure, and hybrid cloud environments, we meaningfully reduced our clients' regulatory compliance and data breach risk during this critical transaction period. We've also integrated our public sector cybersecurity DNA to help grow our commercial work. Our professionals at ECS have developed proprietary methods for intelligence gathering, security instrumentation, and incident response, each of which has been battle-tested by the Department of Defense and is now being leveraged by our commercial clients. We believe that our combined credentials, expertise, and past qualifications will continue to drive our cybersecurity efforts across our Fortune 1000 client list. Speaking of our public sector services, let's now turn to our Federal Government Segment, our sixth industry vertical, which provides mission-critical solutions to the Department of Defense, the intelligence community, and federal civilian agencies. Federal Segment revenues for the fourth quarter were up 9.2% year-over-year. Contract backlog was $3 billion at the end of the quarter, or a healthy coverage ratio of 2.4x the segment's trailing twelve-month revenues. New awards were approximately $56 million, translating to a book-to-bill of 0.8x on a trailing twelve-month basis. Bookings this past quarter were soft due to a combination of traditional seasonality and greater-than-anticipated award deferrals into the first half of 2024. Our pipeline, as well as bids submitted and awaiting award, are each near the highest levels they have ever been. The lower bookings in Q4 resulted from a timing issue rather than lost work opportunities, and we already see a pickup in contract activity in the New Year. We expect stronger bookings in the first half of 2024. In the fourth quarter, bookings were led by work with the U.S. Intelligence Community and several civilian agencies. For example, we continue to manage the FBI's Cybersecurity Red and Blue Program and in Q4 we won additional work under this contract. This mission-based work is designed to secure and monitor the FBI networks from external threats and internal vulnerabilities. In addition to work booked in the fourth quarter, ECS also announced two large multiple-award IDIQ contracts this past November that allow our government team to bid on new work in the future. With the Veterans Affairs Office of Information and Technology, we won a $60.7 billion prime IDIQ contract. ECS has partnered with the VA since 2009, but this is the first time we won a prime contract with this office. Under this contract, ECS will provide a full range of IT services, including technical support, project management, strategy planning, systems/software engineering, enterprise networking, and cybersecurity, amongst other services. Task orders under this IDIQ are expected to come out in the third quarter of this year and be awarded in the fourth quarter. We also won a $1.25 billion prime IDIQ contract with the Defense Advanced Research Projects Agency, DARPA, to provide technical, analytical, and program support. An agency of the U.S. Department of Defense, DARPA’s mission is to develop breakthrough technologies for national security, by working with partners inside and outside the federal government. ECS has been a well-respected partner of DARPA for more than 30 years, and in 2018, was one of seven awardees on a $850 million IDIQ. Success under this previous contract helped lead us to our award under this new, larger prime contract. With that, I'll now turn the call over to Marie to discuss the fourth quarter results and our first quarter 2024 guidance.

Thanks, Ted. It's great to speak with everyone this afternoon. As Ted noted, revenue exceeded our expectations for the quarter. Fourth quarter revenues of $1.1 billion were above the top end of our guidance range due to continued commercial contract engagement during the holiday season, growth in our commercial consulting business, and continued strength in our Federal Government Segment. Revenues from the Commercial Segment were $748.6 million, down 12.2% compared to the prior-year quarter. Revenues from commercial consulting, the largest of our high-margin revenue streams, totaled $268.5 million, up 1.7% year-over-year despite difficult market conditions and a tough comparison of 37.8% growth in the fourth quarter of 2022. For the full year, commercial consulting revenues improved 14.2% on an as-reported basis and improved 8.6% organically. With this solid growth in our commercial consulting revenues for the year, we reached over $1 billion in commercial consulting revenues in 2023, as Ted previously noted. Growth in commercial consulting revenues was offset by an 18.4% year-over-year decline in assignment revenues, reflecting continued softness in the more cyclical parts of our businesses. For the full year, assignment revenues declined 16.0% compared to 2022. Revenues from our Federal Government Segment were $325.5 million, up 9.2% year-over-year. For the full year, Federal Government Segment revenues improved by 11.4% on an as-reported basis, or 4.9% organically. Turning to margins. On a consolidated basis, gross margin was 28.4%, down 120 basis points over the fourth quarter of last year. The year-over-year compression in gross margin was largely related to business mix, including a lower mix of certain high-margin revenues within our Commercial Segment and a higher mix of lower-margin revenues from our Federal Government Segment. Gross margin for the Commercial Segment was 32.1%, down 10 basis points year-over-year primarily due to the lower mix of certain high-margin assignment revenue streams, namely creative digital marketing and permanent placement revenues, mostly offset by a higher mix of high-margin IT consulting revenues. Gross margin for the Federal Government Segment was 19.9%, down 220 basis points year-over-year due to a higher mix of lower-margin licensing revenues. SG&A expenses for the fourth quarter were $203.6 million, or 19% of revenues, compared to $229.9 million, or 20% of revenues, in the prior year. This improvement was mainly due to lower incentive compensation expenses. SG&A expenses also included $1.6 million in acquisition, integration, and strategic planning expenses that were not included in our guidance estimates. As expected, interest expense increased year-over-year related to rising interest rates and our refinancing this past August. Net income was $50.3 million, adjusted EBITDA was $121 million, and adjusted EBITDA margin was 11.3%. At quarter end, cash and cash equivalents were $175.9 million, and we had full availability under our new $500 million senior secured revolver. Free cash flow for the quarter was $109.2 million, an increase of 68.5% year-over-year. We deployed $75.4 million in cash on the repurchase of approximately 872,000 shares during the fourth quarter at an attractive average price of $86.37. For the full year, free cash flow totaled $417 million, an increase of 54.3% year-over-year. We deployed $273.1 million in cash in 2023 on the repurchase of 3.4 million shares at an average price of $79.89. We have roughly $273.7 million remaining under our share repurchase authorization. With strong free cash flow generation and full availability under our revolver, we have ample dry powder to make strategic acquisitions once the M&A market improves. Turning to guidance. Our financial estimates for the first quarter of 2024 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions. Our estimates assume 62.75 Billable Days in the first quarter, 0.25 Billable Days fewer than the year-ago period and 2.75 Billable Days more than Q4 of 2023. Guidance also considers seasonality, with the first quarter traditionally the lowest of the year. It is also important to remember that the payroll tax reset occurs at the beginning of every calendar year, having approximately 100 basis points of downward impact on adjusted EBITDA margins as we move from the fourth to the first quarter. We expect market conditions to remain challenging in the first quarter. In our Commercial Segment, we anticipate revenues will remain soft across assignment and consulting. Declines in commercial revenues are expected to be partially offset by continued growth in our Federal Government Segment. We expect gross margins to decline year-over-year due to a business mix similar to current trends, including a greater mix of federal government revenues and continued softness in our more cyclical commercial businesses. Our cash SG&A margin will remain relatively consistent year-over-year. In lieu of M&A, we expect to continue to allocate our free cash flow toward share repurchase. With this background, we are estimating revenues of $1.032 billion to $1.052 billion for the first quarter. We are estimating net income of $37.7 million to $41.3 million, adjusted EBITDA of $104.5 million to $109.5 million, and adjusted EBITDA margin of 10.1% to 10.4%.

Thanks, Marie. While we are positive about the future, all signs indicate continued softness in the near term. However, a difficult market does not mean we've taken a backseat to our client relationships. Rather, as is evident in our resilient financial performance this past year, we've worked even harder, proactively staying close to each of our clients and continuing to hold regular strategic discussions about their IT roadmaps. I cannot thank our teams enough for your hard work these past twelve months. Each and every one of you has helped position ASGN as an IT industry leader, continuing to develop yourselves and our service offerings so that we are primed to support our clients' ongoing digital transformation needs. And while certain IT projects have naturally been pushed to the right, they are not completely off the table. The need for IT services will be strong, and ASGN is one of the fastest ways for our clients to ramp up their investments and reengage more fully in their IT roadmaps. Our domestic footprint is as solid as it has ever been, and now, with our nearshore capabilities in Mexico also of scale, we are able to provide a deep talent pool that is highly skilled and competitively priced across multiple geographies. As I highlighted at the start of today's call, ASGN's business today is the result of several years of thoughtful and proactive planning. We've shaped our service offerings and business segments to reflect increasing IT demand, and our competitive industry position and differentiated go-to-market strategy are aligned with our clients' needs. We will focus our efforts in 2024 on further strengthening our IT consulting capabilities, taking advantage of opportunities as we pursue higher-end, higher-value projects that drive our clients' IT efforts and position ASGN for success. Thank you again for joining our fourth quarter and full-year 2023 call. Operator, please open the call to questions.

And our first question comes from the line of Maggie Nolan with William Blair.

Can you provide any additional information on how demand and revenue have evolved from October through January and what you've observed?

Maggie, this is Ted. Thanks for the question. I would say demand throughout the fourth quarter, you said October through January was pretty steady. We had some program maybe for a little softer last couple of weeks in the form of furloughs or slowing in spending. And I would say that for the most part, it hung together better than we thought. And therefore, we were a little bit ahead of our number. Not a whole lot other than that. I think the quarter was a similar demand quarter to the third quarter. And as you can see in our guidance, although seasonally, it's a little slower start always in the first quarter, we're predicting about the same based on what we can see right now.

Got it. And then, Marie, I think in your prepared remarks, you mentioned some of the gross margin impacts from the mix within the Commercial segment, in particular. What surprised you about that mix? And what is your outlook for how mix may impact margins over the coming quarters?

Maggie, a couple of things as it relates to mix. And so there are some things that will definitely carry forward from what we saw in the fourth quarter to the first quarter. The first is really the higher government segment, which has a lower mix than the Commercial. And so with the countercyclical aspect of the government, we are just seeing that. And then on the commercial side, we've just highlighted especially those discretionary areas just softer from a margin perspective.

Market demand is softer in some of those areas. And the creative digital marketing in the perm. But yes, I would highlight what Marie said, it’s mostly being driven by higher-than-expected growth in the federal segment, and you’ll see that in the first quarter.

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

You cited a couple of verticals. I think it was Commercial, Industrial, and TMT segments. I might have gotten those wrong, but forgive me. That saw sequential growth on a billable-day base, still a day adjusted basis. What's going on in those markets that are different from some of the other verticals that you're seeing?

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

Yes. Well, I think, first of all, if you look within those sectors, Jeff, and you see what comprises them, for example, utilities and energies remain strong and grew sequentially in that quarter. We actually had 12 of our sectors growing mostly in the consumer industrial and the TMT area. Healthcare also kind of held its own, particularly in the provider space. So I think when you look further below just the general industry and you look at specific areas, which we've enumerated some in the text, you can see that those sectors are fairly healthy and continuing to move along. And it was nice to see more of them grow in the fourth quarter sequentially over the third quarter than we saw in the previous quarter.

Okay. That's helpful. And I can move on to the federal government sector, you talked about some projects or some timing of starts being deferred, and hopefully, you're not going to catch up on those. But I'm just curious, as we go through the rest of the year, considering it is an election year, with all the uncertainty going on in Washington, do you think that kind of mindset will continue? Should we expect those kinds of deferrals and delays in the rest of the year?

Well, I think on the one hand, the administration would like to get as much out on the street to say it's possible to do a good job. On the other hand, they're dealing with a continuing resolution. And to the extent they continue dealing with that, we'll continue to perform on the work that we have. But some of the bigger decisions on new work may be delayed. And I think we saw the start of that year in the fourth quarter. So as we said in our remarks, it wasn't an issue of lost work; our submitted waiting awards as a part of our pipeline is as high as it's ever been, but we're going to see most of those things adjudicated, we hope in the first two quarters here, some of those that do not get decided on in the fourth.

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

In the Commercial consulting area, you mentioned that renewals are performing better, with over 50% coming from new business. However, is that consistent with the performance from the past quarter or two? Or is the balance more equal, with new business growing slightly better than it did three or six months ago?

Rand, it's pretty much the same as the previous quarter, right?

That's correct. It was a little bit more. It's always been in balance between 60-40 and 40-60. And maybe earlier in the year '23, there was a little bit of new work, which probably is typical of the beginning of a business cycle, but for the year. But yes, it was consistent with Q3.

Project sizes having any variance in there? 18 months ago, you saw project sizes coming down, maybe as customers were piecemealing out projects rather than doing it out all at once. Any changes that you perceive?

I would say project size is still experiencing a slight upward trend. The elongation of spending that is stretching out the project a bit began at the end of last year and has continued through the fourth quarter. So yes, the project sizes are definitely acceptable. In fact, Ted mentioned that on the AI side, we secured some work in both the third and fourth quarters, and we are exploring larger projects in AI. This reflects a shift where we now have the processing power due to advancements in chip technology, along with applications incorporating AI. There's significant data migration and cloud infrastructure development happening. Additionally, we are seeing an increase in data preparation, use cases, and algorithm development. We are getting closer to integrating AI into our clients' business areas, and as we engage more in data preparation and execution of use cases, we can expect to see more work.

Okay. And I want to kind of double-click on the government ECS business. Your treasury outlays have actually been good and several of the larger focused companies on that, that trade publicly had substantially better book-to-bills and underlying contracting trends than you're seeing. How do I square the discrepancy between the performance here and what we've seen from a broader lens?

Tobey, I think we haven't detailed the government peers' release, but for some of the ones that we track, they are seasonally below one like we are for Q4. I think it’s the vagary of what are we bidding on versus what are they bidding on and where our relationships versus theirs. But I take a lot of confidence in the size of our submitted waiting award number and in places where we have real relationships. And so while we might have been a little closer to one in a typical quarter, we still would have been below it in our fourth quarter. So we’re positive about the things that we have out there and that we’re waiting to be adjudicated, and we’ll have to see how they go here in the first quarter and into the second.

Our next question comes from the line of Joseph Vafi with Canaccord Genuity.

I was wondering if we could start by discussing the assignment side and whether there are any signs of improvement, or if it's too soon to tell. I know this is a leading indicator, so could you provide some additional insights on what you're observing in assignments across different sectors? I also have some follow-up questions.

So Joe, I think I’ll begin, and Rand can add as well. I wouldn't say there are signs of growth yet, but there is some steadiness. We can observe this in various ways by looking at our order flow and comparing it to industry performance. As Rand mentioned earlier, we now have two industries that are showing sequential growth on an adjusted basis, and one that remains flat. This is an improvement from nine out of five, but we need more than just two. So, I would characterize it as steady rather than indicating growth, and we will need to see how this quarter unfolds. Typically, in the assignment part of the business, we experience a slight decline coming out of Q4 and entering Q1, which aligns with what we observed last year. There hasn’t been much change in that regard. During the first quarter, companies generally start to regain momentum as they release budgets and begin spending. So that’s what we are keeping an eye on moving forward. Rand, would you like to add anything else?

Well, Ted and Joe, I want to share my thoughts. In consulting, we are noticing positive signs because clients are discussing their plans and upcoming projects. We are seeing some preliminary processes leading to the issuance of requests for proposals, or opportunities for new work that we can bid on and possibly secure. In the staffing side of our business, transactions occur quickly. Clients have specific needs, and once their budgets are approved and they receive the go-ahead from corporate, they will release those requirements. This will lead to a flow of RFPs, which is quite different from what we've experienced in the past year. The environment is more transactional and rapid. The positive signs mainly stem from an organized and proactive approach toward achieving goals. Additionally, in terms of permanent placement revenue, activity will be on hold until corporate gives the approval to hire internal staff.

Sure, that's helpful information. Let's delve a bit deeper into the Mexico delivery center. It's clear that digital transformation cannot remain stagnant because the world is constantly evolving, and companies must continue to progress. Additionally, any changes in the business model are noteworthy as we observe how other service providers are leveraging lower-cost regions, which may be aiding consulting to maintain an upward trend.

I think that's right, Joe. Our clients are seeking to either continue critical projects or start new vital ones, finding ways to achieve these goals despite tight budgets. They are aware that they haven't fully released their plans yet. Consequently, they are exploring delivery opportunities like our Mexico delivery center, which has seen full utilization. In the past few years, our headcount there has grown tenfold, which is a strong example of our progress. Here in the U.S., clients are increasingly looking at lower-cost markets and are open to assembling project teams in these areas. They no longer feel the need to have certain developers based in Jersey City at high hourly rates; they are simply considering options differently. There is definitely movement in this direction. However, I want to emphasize that clients are taking more time to finalize their budgets and plans for this year before starting to release them. I believe it’s just a matter of time.

Ted, can I add something to that? If you wouldn't mind, Joe?

Yes, sure. Absolutely, Rand.

There is AI insertion in our clients' enterprise architecture. And then there's AI insertion in our own services that we have to do to stay competitive, cost competitive for our clients. And everything Ted said is correct. We made a big investment in Mexico. He talked about all that we've seen since we've done that and the growth of our Mexico Development Center. But we're now implementing better techniques, AI techniques with which to code in new languages, the modern language, and the large languages. So the fact that our Mexican center is moving out in these AI adoption of these AI techniques makes us even more competitive in Mexico. And it's interesting, our clients are asking about that. They want to talk about that and understand that, which I think is a good sign for us that we're on the right path, not just because we have the center, but we're keeping the center up to date with the latest technologies, which makes them more efficient for our clients.

That's helpful. Additionally, I’d like to ask about capital allocation. The free cash flow is impressive, and it's encouraging to see the share buybacks. I'm curious about the current M&A landscape, as I recall Marie mentioning that it's not very favorable right now. Are you finding that potential targets are hesitant to sell at this time? What’s the situation there? It seems like it could be an opportune moment for some bolt-on acquisitions.

Ted, want me to take it?

So Joe, you're right. We would love to be allocating capital to strategic acquisition opportunities right now. However, there is a lack of high-quality opportunities in the market. We have a very defined shopping list and understand what we can fulfill and invest in organically. We also know what we would like to invest in to support our clients' needs. This will require a better flow, which means it will take a bit more time. There are various underlying reasons, such as private equity holding on to assets due to valuation concerns and the state of the debt markets. Nevertheless, we remain committed and will be ready. In the meantime, we will continue focusing on share repurchases, which our Board fully supports, while we monitor the situation.

Our next question comes from the line of Andre Childress with Baird.

This is Andre on for Mark Marcon. So my first question is just a follow-up to something Rand said earlier about some of the green shoots on the consulting side. It sounds like your clients in general have roadmaps that they want to execute on. But based on your conversations with those clients, what needs to change in the environment for them to actually unleash some of those RFPs and execute on those roadmaps?

Rand, do you want to follow up on that?

Yes. I mean, our thesis has been ever since we've been a public company that IT spending is a function of corporate earnings. So I think when companies feel like their earnings are secure and then they have good runway ahead, they're going to spend more on IT. Ted, I think we would say our hope is that what we saw from the consumer industrial side of our sectors and the healthcare providers, as well as the TMB segment, that they're feeling more secure and they're going to start spending more. We saw that sequentially. That's a small data point; it's not conclusive. But I think it all goes back to corporate earnings and the security they feel about that. Ted, do you want to add to that?

No, that's correct.

Makes a lot of sense. And then I guess switching over to margins. You guys did a fantastic job at preserving your margins, even considering the mix shift. And you guys talked about your natural or automatic stabilizers, but how should we think about margins for 2024? Should we expect them to be relatively steady as the stabilizers continue to kick in? Or is there anything to call out for the full year?

Marie?

Yes. So kind of implied in our guidance for Q1, our cash SG&A margin is about 18%. And so as we think about the full year of 2024, that's probably a pretty good run rate, if you will, from a margin perspective.

You're doing the first quarter with the payroll tax reset, right? That's going to influence it a little higher. But look, I mean, our SG&A margins here have been fairly consistent outside of the first quarter. So look to this year; I think they were kind of right at adjusted for below-the-line stuff, just over 17%, and you should expect about the same thing, Andre.

Our next question comes from the line of Seth Weber with Wells Fargo.

This is John on for Seth. Maybe if we could just talk a little bit more about TMT. It sounds like the cyber efforts have been bearing fruit. And maybe if you could just give us some more information about kind of the cross-pollination between kind of the federal side and the commercial side with cyber and maybe what clients are looking for as we enter the new year?

Rand, do you want to talk about that?

Well, I'll start. I think the man on the street would say the federal government is probably stronger in cybersecurity and protection of our systems and our data than in the commercial segment. If you look at the past years, there have been breaches of big commercial companies. So I guess I'm laying the groundwork here for the federal government has great calls and a great track record in cybersecurity. Our ECS team has had great calls and a great track record in cybersecurity for some very important agencies in the federal government. That's transferable to the commercial sector. And I think when we take our technologies over in our center over to them, it's resonating with them because of that backdrop that I just mentioned. So I would say it’s simple as that, okay?

Great. And then maybe a quick follow-up on Creative Circle. Could you just comment on any trends seen in the digital marketing space and potentially any kind of viewing outlook in terms of '24 given the election year, anything we should be cognizant of?

Rand?

I just spoke with the CMO of a Fortune 1000 company a couple of hours ago, and it was a fascinating conversation. CMOs are closely monitoring their spending based on corporate earnings and their market position. This reflects the market in which our Creative Circle operates. It's evident that fundamental aspects like creativity remain integral to our offerings. Utilizing AI enables mass production and personalization of our services. We're also discussing various technologies with our clients. Additionally, there's the challenge of determining which channels to use for personalized messaging and whether to present it across multiple formats for a single client. There are many opportunities available, and companies are navigating their way through them to find the optimal strategy. This is evident in the mixed reports from technology firms, where ad spending is fluctuating. The streaming landscape is evolving, with changes in how services are offered, whether with or without ads. The marketing sector is experiencing significant transformation that requires careful analysis and adjustment. Once companies feel more secure in their positions, I believe we will see a wealth of opportunities emerge. As mentioned earlier, some sectors like consumer goods, utilities, and certain media companies are progressing in this direction.

Our next question comes from the line of Surinder Thind with Jefferies.

Just a big picture question here in terms of the delivery model as you continue to build up the commercial consulting part of the business. Can you maybe talk about how you're thinking about headcount growth versus the use of temporary resources in terms of delivering those projects? And the reason I ask that is just from a competitive positioning perspective in the sense that you talked earlier about investing in kind of building out your talent pool, but if a large percentage of your delivery is not owned by you guys. How do you guys manage that?

We currently have over 600 professionals established with strong connections to Fortune 1000 companies. These relationships have evolved from our traditional IT staffing services to encompass all aspects of customers' IT needs, including consulting. This foundation remains unchanged. We focus on identifying client opportunities rather than expanding our workforce unnecessarily. If additional resources are needed, we can scale up as required. In terms of consulting, we assemble project teams primarily sourced from our contingent workforce, constituting about 80% to 85% of our team members. We also have a knowledgeable team with industry expertise that helps design solutions tailored to our clients' needs. This approach has proven effective, and we intend to maintain it. Our strategy involves deploying contingent labor in project teams, as they offer the right skills at the right price point, ensuring a good fit for every team. This has been advantageous for our clients, providing competitive all-in costs. We secure projects not only due to pricing but also because of the expertise we deliver. We are committed to continuing this strategy.

Excellent. And then in terms of just, I guess, following up on the price point question here. How much of a difference is there between what you're able to bill for your consulting services versus the staffing services? I assume it's material at this point? How should we think about the difference? And then maybe just some commentary on kind of the bill rate trends, I guess, at this point in terms of how that maybe trended over '23? And what's your outlook for '24?

Well, for sure, the bill rate is better and it's evidenced by the fact we can get a better margin, right? So we tell you that our margin in consulting is 300 or 400 basis points better than what we get in IT staffing. And it is because we're taking on some responsibility here for a certain amount of light or deliverables or milestones. And so from that, we're able to get a better bill rate. I mean, there's no question about that. And what was the second part of your question, Surinder, I'm sorry.

In terms of the outlook for '24 pricing and the conversations that you're having with clients, I mean, are clients asking for better rates? Or are you able to kind of hold rates steady? Or as you talk about in wanting to do more AI projects, can you maybe use that to your advantage to get a little bit better rate because those are harder skill sets to find?

I believe that when we have a harder skill set to find, we can achieve better rates, particularly when it involves a higher-end solution orientation. Our margins and markups have remained stable, and our billing rates are seeing a slight increase. This is connected to the growing amount of consultative work we are undertaking. Additionally, as we engage more in AI projects, it will further enhance and support our position.

Got it. So I apologize if I didn't ask the question. I wasn't referring to the mix. I was actually referring to the actual apples-to-apples comparison of what you could charge for a certain level of engineer in '23 versus what you think you may be able to charge them in '24?

We're not observing a downward trend. Generally, I anticipate a modest increase in our bill rates year-over-year. I expect this for 2024 compared to 2023. At this moment, we don't see any factors that suggest otherwise.

Keep in mind, as our consulting business grows and grows, it's cost per job, not cost per hour, and staffing, its cost per hour. There are built-in escalators to bill rates, and there are exceptions to the bill rates depending on skill types, the status of availability of skills, important projects. But a lot of what you're asking applies more to staffing, where bill rates for an individual hour are highly discussed, and it's consulting that grows with us. It's discussing what the cost of the job is and what are the benefits associated with that.

And our next question comes from the line of Emily Marzo with Bank of America.

I was wondering if you could talk to us about what you're seeing in permanent staffing. And what was the percentage of sales you saw for staffing this quarter?

Yes, definitely. For the fourth quarter, permanent staffing accounted for 2.4% of total revenue.

And I think what you're seeing there, Heather, again, it's very steady. I mean I'd say it's not historic low percent of the mix, and there's really no change, if you will, from the third to the fourth or our expectation here for the first quarter is in similar ranges.

And we have reached the end of our question-and-answer session. I'll now turn the call back over to Ted Hanson for closing remarks.

Great. Well, I appreciate everyone’s attention here today for the release of our fourth quarter and Q&A that followed, and we look forward to being with you very soon to discuss our first-quarter 2024 results.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.