10-Q 1 asgn-20220930.htm 10-Q asgn-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2022
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 001-35636
 
ASGN Incorporated
(Exact name of registrant as specified in its charter)
Delaware95-4023433
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
 

4400 Cox Road, Suite 110
Glen Allen, Virginia 23060
(Address, including zip code, of Principal Executive Offices)
(888) 482-8068
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common StockASGNNYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes No 
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  Yes No 
 
At October 31, 2022, the total number of outstanding shares of the Common Stock of ASGN Incorporated (the "Company") ($0.01 par value) was 49.9 million.




ASGN INCORPORATED AND SUBSIDIARIES

INDEX
 
 

 
 
 
 


2


PART I FINANCIAL INFORMATION

Item 1 — Condensed Consolidated Financial Statements (Unaudited)


ASGN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except share data)
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$211.2 $529.6 
Accounts receivable, net877.9 708.2 
Prepaid expenses and income taxes15.3 41.2 
Other current assets15.6 30.4 
Total current assets1,120.0 1,309.4 
Property and equipment, net62.3 55.0 
Operating lease right-of-use assets55.4 57.1 
Identifiable intangible assets, net545.4 487.9 
Goodwill1,805.9 1,569.5 
Other non-current assets22.2 23.9 
Total assets$3,611.2 $3,502.8 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$33.5 $20.1 
Accrued payroll329.2 305.5 
Operating lease liabilities23.5 23.3 
Other current liabilities106.1 102.0 
Total current liabilities492.3 450.9 
Long-term debt1,080.8 1,033.9 
Operating lease liabilities37.2 40.2 
Deferred income tax liabilities98.2 89.0 
Other long-term liabilities13.6 23.4 
Total liabilities1,722.1 1,637.4 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 1.0 million shares authorized; no shares issued
  
Common stock, $0.01 par value; 75.0 million shares authorized; 50.0 million and 51.8 million shares outstanding at September 30, 2022 and December 31, 2021, respectively
0.5 0.5 
Paid-in capital702.7 690.8 
Retained earnings1,190.1 1,174.4 
Accumulated other comprehensive loss(4.2)(0.3)
Total stockholders’ equity1,889.1 1,865.4 
Total liabilities and stockholders’ equity$3,611.2 $3,502.8 

See notes to condensed consolidated financial statements.





3




ASGN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
(in millions, except per share data)
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Revenues$1,197.9 $1,073.8 $3,430.7 $2,955.7 
Costs of services839.0 765.1 2,401.2 2,127.0 
Gross profit358.9 308.7 1,029.5 828.7 
Selling, general and administrative expenses232.6 192.7 665.1 533.4 
Amortization of intangible assets17.9 15.9 45.3 39.9 
Operating income108.4 100.1 319.1 255.4 
Interest expense(12.1)(9.6)(31.5)(28.2)
Income before income taxes96.3 90.5 287.6 227.2 
Provision for income taxes25.2 24.2 76.3 60.8 
Income from continuing operations71.1 66.3 211.3 166.4 
Income from discontinued operations, net of income taxes2.1 145.7 1.2 158.5 
Net income$73.2 $212.0 $212.5 $324.9 
Earnings per share:
Basic —
Continuing operations$1.42 $1.26 $4.15 $3.14 
Discontinued operations0.04 2.76 0.02 2.99 
$1.46 $4.02 $4.17 $6.13 
Diluted —
Continuing operations$1.40 $1.24 $4.09 $3.10 
Discontinued operations0.04 2.73 0.02 2.95 
$1.44 $3.97 $4.11 $6.05 
Shares and share equivalents used to calculate earnings per share:
Basic50.1 52.7 50.9 53.0 
Diluted50.7 53.4 51.6 53.7 
Reconciliation of net income to comprehensive income:
Net income$73.2 $212.0 $212.5 $324.9 
Foreign currency translation adjustment(2.2)2.6 (3.9)0.7 
Comprehensive income$71.0 $214.6 $208.6 $325.6 

 See notes to condensed consolidated financial statements.
 
 

 

4


ASGN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(in millions)
Common StockPaid-in CapitalRetained EarningsOtherTotal
SharesPar Value
Three Months Ended September 30, 2022
Balance at June 30, 2022
50.4 $0.5 $692.1 $1,165.5 $(2.0)$1,856.1 
Stock-based compensation expense— — 11.9 — — 11.9 
Issuances under equity plans0.2 — 8.5 — — 8.5 
Tax withholding on restricted stock vesting — (1.6)— — (1.6)
Stock repurchases and retirement of shares(0.6)— (8.2)(48.6)— (56.8)
Other— — — — (2.2)(2.2)
Net income— — — 73.2 — 73.2 
Balance at September 30, 2022
50.0 $0.5 $702.7 $1,190.1 $(4.2)$1,889.1 
Three Months Ended September 30, 2021
Balance at June 30, 2021
53.2 $0.5 $683.0 $1,039.2 $(2.9)$1,719.8 
Stock-based compensation expense— — 20.5 — — 20.5 
Issuances under equity plans0.1 — 6.6 — — 6.6 
Tax withholding on restricted stock vesting0.2 — (6.7)— — (6.7)
Stock repurchases and retirement of shares(1.2)— (14.7)(105.7)— (120.4)
Other— — — — 2.6 2.6 
Net income— — — 212.0 — 212.0 
Balance at September 30, 2021
52.3 $0.5 $688.7 $1,145.5 $(0.3)$1,834.4 
Common StockPaid-in CapitalRetained EarningsOtherTotal
SharesPar Value
Nine Months Ended September 30, 2022
Balance at December 31, 2021
51.8 $0.5 $690.8 $1,174.4 $(0.3)$1,865.4 
Stock-based compensation expense— — 35.9 — — 35.9 
Issuances under equity plans0.4 — 18.9 — — 18.9 
Tax withholding on restricted stock vesting — (12.9)— — (12.9)
Stock repurchase and retirement of shares(2.2)— (30.0)(196.8)— (226.8)
Other— — — — (3.9)(3.9)
Net income— — — 212.5 — 212.5 
Balance at September 30, 2022
50.0 $0.5 $702.7 $1,190.1 $(4.2)$1,889.1 
Nine Months Ended September 30, 2021
Balance at December 31, 2020
52.9 $0.5 $661.3 $926.3 $(1.0)$1,587.1 
Stock-based compensation expense— — 41.7 — — 41.7 
Issuances under equity plans0.2 — 14.3 — — 14.3 
Tax withholding on restricted stock vesting0.4 — (13.9)— — (13.9)
Stock repurchase and retirement of shares(1.2)— (14.7)(105.7)— (120.4)
Other— — — — 0.7 0.7 
Net income— — — 324.9 — 324.9 
Balance at September 30, 2021
52.3 $0.5 $688.7 $1,145.5 $(0.3)$1,834.4 
 
See notes to condensed consolidated financial statements.
5



ASGN INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
September 30,
20222021
Cash Flows from Operating Activities
Net income$212.5 $324.9 
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of discontinued operations (218.6)
Depreciation and amortization64.8 67.5 
Stock-based compensation35.9 41.7 
Deferred income taxes0.3 (42.4)
Other6.5 3.7 
Changes in operating assets and liabilities, net of effects of acquisitions and divestiture:
Accounts receivable(154.2)(99.5)
Prepaid expenses and income taxes26.4 12.6 
Accounts payable10.0 (12.0)
Accrued payroll20.0 75.3 
Income taxes payable15.1 130.6 
Other(4.8)(7.9)
Net cash provided by operating activities232.5 275.9 
Cash Flows from Investing Activities
Cash paid for property and equipment(27.0)(25.6)
Cash paid for acquisitions, net of cash acquired(351.8)(224.4)
Cash received from sale of the Oxford business9.8 499.1 
Other2.4 0.1 
Net cash provided by (used in) investing activities(366.6)249.2 
Cash Flows from Financing Activities
Proceeds from long term debt46.0  
Proceeds from employee stock purchase plan18.9 14.3 
Repurchases of common stock(227.6)(118.4)
Payment of employment taxes related to release of restricted stock awards(12.9)(13.9)
Payment of contingent consideration(8.1) 
Debt issuance and amendment costs (1.4)
Net cash used in financing activities(183.7)(119.4)
Effect of exchange rate changes on cash and cash equivalents(0.6)(0.7)
Net increase (decrease) in cash and cash equivalents(318.4)405.0 
Cash and cash equivalents at beginning of year 529.6 274.4 
Cash and cash equivalents at end of period$211.2 $679.4 
Supplemental Disclosure of Cash Flow Information
Cash paid for —
Income taxes$33.4 $39.6 
Interest$23.6 $20.1 
Operating leases$20.4 $25.3 
Noncash transactions —
Operating lease right of use assets obtained in exchange for operating lease liabilities$15.5 $3.4 


See notes to condensed consolidated financial statements.
6


ASGN INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General

Basis of presentation — The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The December 31, 2021 balance sheet was derived from audited financial statements. The financial statements include adjustments consisting of normal recurring items, which, in the opinion of management, are necessary for a fair presentation of the financial position of ASGN Incorporated and its subsidiaries ("ASGN" or the "Company") and its results of operations for the interim dates and periods set forth herein. The results for any of the interim periods are not necessarily indicative of the results to be expected for the full year or any other period. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 10-K").

2. Accounting Standards Update

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-08, Business Combinations (Topic 805) Accounting for Acquired Contract Assets and Contract Liabilities, which requires an acquirer to recognize and measure contract assets and liabilities in a business combination in accordance with Accounting Standards Codification Topic 606 Revenue from Contracts with Customers, rather than adjust them to fair value at the acquisition date. The Company early adopted this standard and it had no impact on the condensed consolidated financial statements.

3. Acquisitions

On July 6, 2022, the Company acquired GlideFast Holdings, LLC and affiliated entities ("GlideFast"), a ServiceNow consulting company, for $351.8 million in cash. GlideFast is part of the Commercial Segment and its results of operations are included in the consolidated results of the Company from the date of its acquisition. The purchase accounting for this acquisition remains incomplete with respect to the provisional fair value of assets acquired and liabilities assumed, as management continues to gather and evaluate information about circumstances that existed as of the acquisition date. Measurement period adjustments will be recognized prospectively within 12 months from the date of acquisition. The preliminary fair value of the identifiable intangible assets related to this acquisition totaled $102.8 million, including a trademark of $30.2 million which has an indefinite life. Other acquired identifiable intangible assets have useful lives ranging from three to nine years.

In 2021, the Company acquired three consulting services businesses for $221.3 million in cash. These acquisitions increased the Company's investment in IT consulting in its Commercial and Federal Government segments. The fair values allocated to the assets and liabilities for these acquisitions have been finalized.

4. Goodwill and Identifiable Intangible Assets

The following table summarizes the activity related to the carrying amount of goodwill by segment since December 31, 2020 (in millions).
CommercialFederal GovernmentTotal
Balance as of December 31, 2020
$778.6 $642.1 $1,420.7 
2021 acquisitions
51.1 94.8 145.9 
Purchase price adjustments 3.3 3.3 
Translation adjustment(0.4) (0.4)
Balance as of December 31, 2021
829.3 740.2 1,569.5 
2022 acquisition
246.9  246.9 
Purchase price adjustments0.4 (8.5)(8.1)
Translation adjustment(2.4) (2.4)
Balance as of September 30, 2022
$1,074.2 $731.7 $1,805.9 
________________________________

Approximately $163.6 million and $127.2 million of the goodwill for the 2022 and 2021 acquisitions, respectively, is deductible for income tax purposes.

7



Acquired identifiable intangible assets consisted of the following (in millions):
September 30, 2022December 31, 2021
Estimated Useful Life in YearsGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Customer and contractual relationships
7 - 13
$555.9 $299.7 $256.2 $493.9 $260.2 $233.7 
Contractor relationships4   45.5 45.5  
Contract Backlog
1 - 3
34.8 33.8 1.0 34.8 31.0 3.8 
Non-compete agreements
1 - 7
39.7 24.3 15.4 29.4 21.6 7.8 
630.4 357.8 272.6 603.6 358.3 245.3 
Not subject to amortization:
Trademarks272.8 — 272.8 242.6 — 242.6 
Total$903.2 $357.8 $545.4 $846.2 $358.3 $487.9 

Estimated future amortization expense follows (in millions): 
Remainder of 2022$17.8 
202359.3 
202449.8 
202541.8 
202635.4 
Thereafter68.5 
$272.6 

5. Discontinued Operations

On August 17, 2021, the Company sold its Oxford business to an affiliate of H.I.G. Capital for $525.0 million. Included in the nine months ended September 30, 2021, was a $218.6 million ($149.3 million net of income taxes) gain from the sale. The financial results of that business are reported as discontinued operations in the accompanying condensed consolidated statements of operations.

There were no significant operating results from discontinued operations subsequent to December 31, 2021. The following table summarizes the results of operations of the Oxford business (in millions):

Three Months EndedNine Months Ended
September 30, 2021September 30, 2021
Revenues$71.6 $324.3 
Costs of services49.0 223.0 
Gross profit22.6 101.3 
Selling, general and administrative expenses27.5 89.9 
Amortization of intangible assets0.1 0.4 
Income (loss) before income taxes(5.0)11.0 
Provision (benefit) for income taxes(1.4)1.8 
Gain on sale, net of income taxes149.3 149.3 
Income from discontinued operations, net of income taxes$145.7 $158.5 

8


During the nine months ended September 30, 2022, the Company received $9.8 million related to the finalization of the purchase price. The following table provides select cash flow information related to the Oxford business for the nine months ended September 30, 2021 (in millions):

Net cash provided by operating activities$8.2 
Net cash provided by (used in) investing activities
   Cash received from sale of discontinued operations499.1 
Other(3.9)
$495.2 

6. Long-Term Debt

Long-term debt consisted of the following (in millions):
September 30,
2022
December 31,
2021
Senior Secured Credit Facility:
Borrowings under $250 million revolving credit facility, due 2024$46.0 $ 
Term B loan facility, due 2025490.8 490.8 
Unsecured Senior Notes, due 2028550.0 550.0 
1,086.8 1,040.8 
Unamortized deferred loan costs(6.0)(6.9)
$1,080.8 $1,033.9 

Senior Secured Credit Facility — The senior secured credit facility consists of a term B loan and a $250.0 million revolving credit facility. Borrowings under the term B loan bear interest at LIBOR plus 1.75 percent, or the bank’s base rate plus 0.75 percent. Borrowings under the revolver bear interest at LIBOR plus 1.25 to 2.25 percent, or the bank’s base rate plus 0.25 to 1.25 percent, depending on leverage levels. A commitment fee of 0.20 to 0.35 percent is payable on the undrawn portion of the revolver. There are no required minimum payments on the facility. The revolver is limited to a maximum ratio of senior secured debt to trailing 12-months of lender-defined consolidated EBITDA of 3.75 to 1, which was 0.96 to 1 at September 30, 2022. The facility is secured by substantially all of the Company's assets and includes various restrictive covenants. At September 30, 2022, the Company was in compliance with its debt covenants. In July 2021, the Company amended its facility to, among other things, permit the sale of its Oxford business and allow the net cash proceeds (approximately $0.4 billion) to be used for future acquisitions and other permitted investments. With the acquisition of GlideFast on July 6, 2022 (see Note 3. Acquisitions) and other investments of the net cash proceeds, no debt prepayments were required.

Unsecured Senior Notes — The Company has $550.0 million of unsecured senior notes, which bear interest at 4.625 percent payable semiannually in arrears on May 15 and November 15. These notes are unsecured obligations and are subordinate to the senior secured credit facility. These notes also contain certain customary limitations including, the Company's ability to incur additional indebtedness, engage in mergers and acquisitions, transfer or sell assets and make certain distributions.

7. Commitments and Contingencies

The Company is involved in various legal proceedings, claims and litigation arising in the ordinary course of business. The Company does not believe that the disposition of matters that are pending or asserted will have a material effect on its financial statements.
8. Income Taxes

For interim reporting periods, the Company’s provision for income taxes is calculated using its annualized estimated effective tax rate for the year. This rate is based on its estimated full year income and the related income tax expense for each jurisdiction in which the Company operates. The effective tax rate can be affected by changes in the geographical mix, permanent differences and the estimate of full year pretax accounting income. This rate is adjusted for the effects of discrete items occurring in the period.

9


9. Earnings per Share

The following table shows the calculation of basic and diluted earnings per share (in millions, except per share data).
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Income from continuing operations$71.1 $66.3 $211.3 $166.4 
Income from discontinued operations, net of income taxes2.1 145.7 1.2 158.5 
Net income
$73.2 $212.0 $212.5 $324.9 
Weighted-average number of common shares outstanding — basic
50.1 52.7 50.9 53.0 
Dilutive effect of common share equivalents0.6 0.7 0.7 0.7 
Weighted-average number of common shares and share equivalents outstanding — diluted
50.7 53.4 51.6 53.7 
Basic earnings per share:
Continuing operations$1.42 $1.26 $4.15 $3.14 
Discontinued operations0.04 2.76 0.02 2.99 
$1.46 $4.02 $4.17 $6.13 
Diluted earnings per share:
Continuing operations$1.40 $1.24 $4.09 $3.10 
Discontinued operations0.04 2.73 0.02 2.95 
$1.44 $3.97 $4.11 $6.05 


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10. Segment Reporting

ASGN provides IT services and solutions and creative digital marketing services across the commercial and government sectors. ASGN operates through its Commercial and Federal Government segments. Virtually all of the Company's revenues are generated in the United States.

The Commercial Segment provides IT services and solutions, and creative digital marketing services to Fortune 1000 and mid-market clients across the United States, Canada and Europe. The Federal Government Segment delivers advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization, science and engineering to defense, intelligence and federal civilian agencies. Management evaluates the performance of each segment primarily based on revenues, gross profit and operating income derived directly from internal financial reporting of the segments used for corporate management purposes, which is presented below by segment (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Commercial
Revenues$900.0 $774.9 $2,583.5 $2,136.7 
Gross profit297.8 251.1 852.1 678.1 
Operating income108.7 98.5 319.6 258.8 
Depreciation5.0 3.5 12.0 10.4 
Amortization9.9 7.3 21.1 18.6 
Federal Government
Revenues$297.9 $298.9 $847.2 $819.0 
Gross profit61.1 57.6 177.4 150.6 
Operating income23.0 23.3 66.4 56.8 
Depreciation1.3 2.3 4.2 6.8 
Amortization8.0 8.6 24.2 21.3 
Consolidated
Revenues$1,197.9 $1,073.8 $3,430.7 $2,955.7 
Gross profit358.9 308.7 1,029.5 828.7 
Operating income108.4 100.1 319.1 255.4 
Depreciation7.2 7.1 19.5 21.7 
Amortization17.9 15.9 45.3 39.9 
_______
Consolidated operating income includes corporate operating expenses, which are not allocated to the segments. These include stock-based compensation expense, depreciation expense, compensation for corporate employees, acquisition, integration and strategic planning expenses and public company expenses.
    

11



Substantially all of the revenues from the Commercial Segment are generated from time-and-materials ("T&M") contracts where payments are based on fixed hourly rates for each direct labor hour expended and reimbursements for allowable material costs and out-of-pocket expenses. Revenues from the Federal Government Segment are generated from: (i) firm-fixed-price, (ii) T&M and (iii) cost reimbursable contracts. Virtually all of the Company's revenues are recognized over time. Revenues by segment and by type are as follows (in millions):

Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Commercial
Assignment$631.4 $587.3 $1,888.0 $1,687.2 
Consulting268.6 187.6 695.5 449.5 
900.0 774.9 2,583.5 2,136.7 
Federal Government
Firm-fixed-price91.7 94.5 242.9 217.0 
Time and materials113.7 106.0 338.5 296.9 
Cost reimbursable92.5 98.4 265.8 305.1 
297.9 298.9 847.2 819.0 
Consolidated$1,197.9 $1,073.8 $3,430.7 $2,955.7 

Federal Government Segment revenues by customer type are as follows (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Department of Defense and Intelligence Agencies$165.5 $166.0 $458.4 $450.8 
Federal Civilian124.8 112.1 361.9 303.5 
Other7.6 20.8 26.9 64.7 
$297.9 $298.9 $847.2 $819.0 

11. Fair Value Measurements

Recurring Fair Value Measurements — The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued payroll and contract professional pay approximate their fair value based on their short-term nature. The carrying amount of long-term debt recorded in the Company’s accompanying condensed consolidated balance sheet at September 30, 2022 was $1.1 billion (see Note 6. Long-Term Debt) and its fair value was $1.0 billion. The fair value for the term B loan and senior notes was determined using quoted prices in active markets for identical liabilities (Level 1 inputs) and the carrying value of the revolving credit facility approximates its fair value.

Certain acquisition agreements contained provisions requiring the Company to pay contingent consideration in the event the underlying acquired business achieved certain specified earnings results or obtained certain contract awards. Contingent consideration liabilities had a fair value of $15.1 million at December 31, 2021, of which $8.1 million was paid and the remaining amount was reduced to zero as a measurement period adjustment, with no effect on results of operations. There were no contingent consideration liabilities at September 30, 2022.

Nonrecurring Fair Value Measurements — Certain assets, such as goodwill and trademarks, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as, when there is evidence of impairment. There were no fair value adjustments for non-financial assets or liabilities during the three and nine months ended September 30, 2022.

12. Subsequent Events

On October 3, 2022, the Company acquired Iron Vine Security, LLC ("Iron Vine") a leading cybersecurity company that designs, implements and executes cybersecurity programs for federal customers. The results of operations of Iron Vine will be included in the Federal Government Segment from the date of acquisition.



12


Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The information in this discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations, as well as management's beliefs and assumptions and involve a high degree of risk and uncertainty. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Statements that include the words "believes," "anticipates," "plans," "expects," "intends," and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences include those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 10-K"). In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and we assume no obligation to update any forward-looking statements or the reasons why our actual results may differ.

OVERVIEW

ASGN provides IT services and solutions and creative digital marketing services across the commercial and government sectors. ASGN operates through its Commercial and Federal Government segments. Virtually all of the Company's revenues are generated in the United States.

The Commercial Segment provides IT services and solutions, and creative digital marketing services to Fortune 1000 and mid-market clients across the United States, Canada and Europe. The Federal Government Segment delivers advanced solutions in cloud, cybersecurity, artificial intelligence, machine learning, application and IT modernization, science and engineering to defense, intelligence and federal civilian agencies.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 2021

Revenues

Revenues for the quarter were $1.2 billion, up 11.6 percent over the third quarter of last year. Revenues for the quarter included approximately $34.2 million from businesses acquired in the last twelve months. Excluding the contributions from acquisitions, revenue growth was 8.4 percent year-over-year. The table below shows our revenues by segment for the three months ended September 30, 2022 and 2021 (in millions).
<
% of Total
20222021Change20222021Change
Commercial
Assignment$631.4 $587.3 7.5 %52.7 %54.7 %-2.0 %
Consulting268.6 187.6 43.2 %22.4 %17.5 %4.9 %
900.0 774.9 16.1 %75.1 %72.2 %2.9 %