Robert Half International Earnings Call Nuggets: The Affordable Care Act and Demand Trends in Europe

Robert Half International Inc. (NYSE:RHI) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

The Affordable Care Act

Mark Marcon – Robert. W. Baird: One question and one follow-up. The first question has to do with the U.S. Specifically, there has been an increasing level of investor dialog regarding the potential ramifications of the Affordable Care Act and how it could potentially influence the penetration rate on a go-forward basis? Keith, I know you’ve done a lot of work on this. There’s obviously been a lot of dialog between the regulatory agencies regarding a look back period. Wondering if you can give us your latest sense for what the potential impact would be?

Markets are at 5-year highs! Discover the best stocks to own. Click here for our fresh Feature Stock Pick now!

M. Keith Waddell – Vice Chairman, President and CFO: Well, the potential impact of – I think you have to look at two sides of it; one is the potential revenue opportunity and the other is the potential internal cost. On the potential revenue opportunity, clearly firms that have 50 or fewer employees that do not presently offer coverage to their employees will be particularly interested in the Healthcare Act which requires those with over 50 to comply. We are already getting inquiries from our client base for companies in and around 50 asking us to help them understand this legislation and to inquire as to how we might be helpful. Our response is that we can legally help them remain under 50 since we are the employer of record for the temporaries we provide to them and that we have every intention of ourselves legally complying with the act on a go-forward basis. As you talked about as to the cost side of the equation for our temporary employees, there is a 12-month period after we first hire them where they essentially audition to be full-time followed by a 12-month period if one’s qualified, we have to pay or pay for coverage or pay a penalty. It’s our intention to offer coverage to those qualifying temporaries. We’ve done a fair amount of work as to what those costs might be. They require us to estimate the percentage that will qualify as full-time, the percentage that we’ll accept and decline coverage, what the cost of that coverage might be as well as the number of months during that second 12-month period where they would remain an employee. It’s our estimate at this early time that the increase to our costs would be a small single-digit percentage increase to the overall pay rates we provide. So, we believe based on what we know today and clearly it’s somewhat early and subject to those assumptions, we think that cost side will be manageable. Back to the revenue side, we certainly see it as an opportunity or in somewhat of an investigation stage by many of our clients we are getting enquiries. We do expect to add the demand. It’s very difficult to project what that added demand would be. It’s estimated that there are 130,000 firms with 50 or fewer employees that over half of them do not provide coverage to their employees. The good part of the new health care legislation would be those employees who have a new place to go called the state exchange to provide coverage for themselves, but again, long story short, an opportunity hard to quantify at this point, on the cost side, we believe it’s manageable based on our current estimates.