ASGN Inc.

02/25/2026 | Press release | Distributed by Public on 02/25/2026 05:02

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the other sections of this 2025 10-K, including the Special Note on Forward-Looking Statements andPart I, Item 1A. Risk Factors.
OVERVIEW
ASGN provides IT solutions across the commercial and government sectors. ASGN operates through two segments, Commercial and Federal Government. The Commercial Segment, which is the largest segment, provides consulting, creative digital marketing, and permanent placement services primarily to Fortune 1000 and large mid-market companies. The Federal Government Segment provides advanced IT solutions in data and AI, cybersecurity, and enterprise transformation to some of the world's leading agencies in the public and private sectors. Virtually all of the Company's revenues are generated in the United States.
Critical Accounting Policies and Estimates
Our financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"), which require us to make certain assumptions and related estimates affecting the amounts reported in the consolidated financial statements. Actual results could differ from those estimates.
Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and results and require our most difficult, subjective or complex judgments, often because we must make estimates about matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. We believe the accounting policies and estimates most critical in understanding the judgments involved in preparing our financial statements are goodwill and acquired intangible assets.
Recognition of Goodwill and Acquired Intangible Assets- Determining the fair value of goodwill and intangible assets requires management's judgment, the use of significant estimates and assumptions and, in some cases, the utilization of independent valuation experts. The most critical assumptions utilized in this determination are the future cash flow estimates associated with the acquired businesses, as well as discount rates and royalty rates applied to those cash flow estimates.
Recoverability of Goodwill and Trademarks- Goodwill and trademarks are evaluated for impairment annually on October 31st, or more frequently if an event occurs or circumstances change, including but not limited to, a significant decrease in expected revenues or cash flows;
an adverse change in the business environment, regulatory environment or legal factors; or a substantial sustained decline in the market capitalization of our stock. Goodwill is tested at the reporting unit level, which is generally an operating segment or one level below the operating segment level, where a business operates and for which discrete financial information is available and reviewed by segment management. The Company's only identifiable indefinite-lived intangible assets are its trademarks.
When evaluating goodwill and trademarks for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that there has been an impairment. A qualitative assessment takes into consideration (i) macroeconomic, industry and market conditions; (ii) cost factors; (iii) overall financial performance compared with prior projections, including changes in assumptions since the last quantitative assessment; (iv) future performance and projections; (v) the excess of fair value over carrying value as of the most recent quantitative assessment performed; and (vi) other relevant entity-specific events. The decision to perform a qualitative assessment in a given year is influenced by a number of factors including the significance of the excess of the estimated fair value over carrying amount at the last quantitative assessment date and the amount of time between quantitative fair value assessments. If the Company decides not to perform a qualitative assessment, or if it determines that it is more likely than not that the carrying amount of goodwill or trademarks exceeds their fair value, a quantitative assessment is performed to determine the estimated fair value of the reporting unit or trademark.
To estimate the fair value of a reporting unit, quantitative analysis would generally include a combination of a discounted cash flow ("DCF") model and a market approach. Key inputs to the DCF model would include (i) future revenues; (ii) earnings before interest, taxes, depreciation and amortization; and (iii) the weighted average cost of capital discount rate. As a result of a quantitative assessment, if the carrying amount exceeds the estimated fair value, an impairment charge would be recorded to reduce the carrying amount of goodwill.
To estimate the fair value of a trademark, quantitative analysis would generally include, an income approach, specifically a relief-from-royalty method. As a result of a quantitative assessment, if the carrying amount exceeds the estimated fair value, an impairment charge would be recorded to reduce the carrying amount of the trademark.
For the 2025 impairment test of goodwill and trademarks, the Company performed a qualitative assessment and determined there were no indicators of impairment and it was more likely than not that the fair value of its two reporting units, Commercial and Federal Government, and its trademarks, exceeded their respective carrying amounts.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2025 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2024
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared with the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared with the year ended December 31, 2023, please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operationsin our Annual Report on Form 10-K for the year ended December 31, 2024.
Revenues
Revenues for the year were $4.0 billion, down 2.9 percent year-over-year. The table below shows our revenues by segment (in millions).
% of Total
2025
2024
Change 2025 2024 Change
Commercial:
Consulting $ 1,290.1 $ 1,128.2 14.4 % 32.4 % 27.5 % 4.9 %
Assignment 1,500.1 1,740.5 (13.8) % 37.7 % 42.5 % (4.8) %
2,790.2 2,868.7 (2.7) % 70.1 % 70.0 % 0.1 %
Federal Government 1,190.2 1,231.0 (3.3) % 29.9 % 30.0 % (0.1) %
Consolidated $ 3,980.4 $ 4,099.7 (2.9) % 100.0 % 100.0 %
Commercial Segment revenues (70.1 percent of total revenues) were down 2.7 percent year-over-year and are categorized into five industries: (i) Consumer and Industrial, (ii) Financial Services, (iii) Technology, Media and Telecom ("TMT"), (iv) Healthcare, and (v) Business Services. The Consumer and Industrials industry was up low-teens and Healthcare was up low single digits, while the remaining three industries declined. Federal Government Segment revenues (29.9 percent of total revenues) were down 3.3 percent year-over-year. Federal Government Segment revenues are categorized into four customer types: (i) Defense and Intelligence, (ii) National Security, (iii) Civilian, and (iv) other clients. Federal Civilian and Defense and Intelligence both declined year-over-year, while National Security was up.
Total IT consulting services revenues were $2.5 billion (62.3 percent of total revenues), up 5.1 percent year-over-year. Commercial Segment consulting revenues were $1.3 billion, up 14.4 percent year-over-year. Federal Government Segment revenues, which are all consulting revenues, were $1.2 billion, down 3.3 percent year-over-year mainly related to the loss of certain contracts as a result of initiatives associated with DOGE. Assignment revenues, which totaled $1.5 billion (37.7 percent of total revenues), were down 13.8 percent year-over-year, reflecting continued softness in the portions of the Commercial Segment Business that are more sensitive to changes in the macroeconomic cycles.
Gross Profit and Gross Margin
The table below shows gross profit and gross margin by segment (in millions).
Gross Profit Gross Margin
2025 2024 Change 2025 2024 Change
Commercial $ 914.4 $ 932.9 (2.0) % 32.8 % 32.5 % 0.3 %
Federal Government 234.7 250.8 (6.4) % 19.7 % 20.4 % (0.7) %
Consolidated $ 1,149.1 $ 1,183.7 (2.9) % 28.9 % 28.9 % - %
Gross profit is comprised of revenues, less costs of services, which consist primarily of compensation for our billable professionals, other direct costs, and reimbursable out-of-pocket expenses.
Consolidated gross profit declined 2.9 percent consistent with the decline in revenues, resulting in a consistent gross margin of 28.9 percent in each year. Gross margin for the Commercial Segment was up 30 basis points, reflecting a higher mix of consulting revenues. Gross margin for the Federal Government Segment was down 70 basis points,primarily due to a higher volume of revenues from low-margin software licenses, the loss of certain higher margin contracts as a result of initiatives associated with DOGE, and higher rates of fringe benefits.
Selling, General, and Administrative Expenses
Selling, general, and administrative ("SG&A") expenses consist primarily of compensation expense for our field operations and corporate staff, rent, information systems, marketing, telecommunications, public company expenses, and other general and administrative expenses. SG&A expenses were $854.0 million (21.5 percent of revenues), compared with $821.2 million (20.0 percent of revenues) in 2024. SG&A expenses for the year ended December 31, 2025 included $26.5 million in acquisition, integration, and strategic planning expenses, inclusive of $5.2 million in charges related to strategic workforce optimization initiatives. Additionally, in 2025, there was a $4.4 million write-off charge related to previously capitalized costs for software enhancements that will no longer be placed into service.
Amortization of Intangible Assets
Amortization of intangible assets was $64.8 million, up from $58.1 million in 2024. The increase relates to amortization of intangible assets associated with the acquisition of TopBloc (see Note 6. Acquisitionin Item 8. Financial Statements and Supplementary Data), partially offset by lower amortization from older intangible assets that are reaching, or have reached, the end of their useful lives.
Interest Expense, Net
Interest expense, net, which consists primarily of cash-based interest expense, amortization and adjustments to deferred loan costs, and interest income, was $67.7 million, up from $64.3 million in 2024. The increase was due to higher outstanding borrowings. The weighted-average outstanding borrowings for 2025 and 2024 were $1.21 billion and 5.6 percent, and $1.05 billion and 6.0 percent, respectively.
Provision for Income Taxes
The provision for income taxes was $49.1 million, down from $64.9 million in 2024 due to lower income before income taxes. The effective tax rate of 30.2 percent was higher than the effective tax rate of 27.0 percent in 2024. The increase in the effective income tax rate was primarily due to higher non-deductible executive compensation related to the termination of the Company's deferred compensation plan (see Note 12. Stock-Based Compensation and Other Employee Benefit PlansinItem 8. Financial Statements and Supplementary Data), and tax shortfalls related to stock-based compensation arrangements.
Net Income
Net income was $113.5 million, down from $175.2 million in 2024.
Commercial Segment - Consulting Metrics
Commercial consulting bookings are the value of new contracts entered into during a specified period, including adjustments for the effects of changes in contract scope and contract terminations ("Bookings"). The underlying contracts are terminable by the client on short notice with little or no termination penalties. Measuring Bookings involves the use of estimates and judgments and there are no independent standards or requirements governing the calculation of bookings. Information regarding Bookings is not comparable to, nor should it be substituted for, an analysis of reported revenues. The book-to-bill ratio for our commercial consulting revenues is the ratio of Bookings to commercial consulting revenues for a specified period.
Year Ended December 31,
(Dollars in millions)
2025 2024 2023
Bookings $ 1,522.8 $ 1,281.3 $ 1,351.9
Book-to-Bill Ratio
1.2 to 1
1.1 to 1
1.2 to 1
Federal Government Segment Metrics
Contract backlog for our Federal Government Segment represents the estimated amount of future revenues to be recognized under awarded contracts, including task orders and options, at a point in time ("Contract Backlog"). These estimates are subject to change and may be affected by the execution of new contracts, the extension or early termination of existing contracts, the non-renewal or completion of current contracts, and adjustments to estimates for previously included contracts. There is no assurance our contract backlog will result in future revenues. The timing of the execution of new contracts and other changes are affected by the funding cycles of the government and can vary from quarter to quarter. New contract awards are the estimated amount of future revenues to be recognized under contracts awarded during a specified period, including adjustments to estimates for contracts awarded in previous periods ("New Contract Awards"). Information regarding New Contract Awards is not comparable to, nor should it be substituted for, an analysis of reported revenues. Due to variability, New Contract Awards are presented on a trailing-twelve-months ("TTM") basis. The book-to-bill ratio for our Federal Government Segment is the ratio of New Contract Awards to revenues for a specified period. Contract backlog coverage ratio is calculated as total Contract Backlog divided by TTM revenues.
Year Ended December 31,
(Dollars in millions) 2025 2024 2023
New Contract Awards $ 1,020.3 $ 1,340.5 $ 1,022.2
Book-to-Bill Ratio
0.9 to 1
1.1 to 1
0.8 to 1
December 31,
(Dollars in millions) 2025 2024 2023
Funded Contract Backlog
$ 492.9 $ 529.0 $ 543.5
Negotiated Unfunded Contract Backlog
2,455.6 2,589.6 2,466.0
Contract Backlog
$ 2,948.5 $ 3,118.6 $ 3,009.5
Contract Backlog Coverage Ratio
2.5 to 1
2.5 to 1
2.4 to 1
Liquidity and Capital Resources
Our working capital, which is current assets less current liabilities, at December 31, 2025 was $491.9 million, and our cash and cash equivalents were $161.2 million. Our cash flows from operating activities have been our primary source of liquidity and have been sufficient to meet our working capital and capital expenditure needs. At December 31, 2025, we had approximately $455.0 million available under the $500.0 million revolving credit facility. We believe that our cash and cash equivalents on hand, expected operating cash flows, and availability under our revolving credit facility will be sufficient to fulfill our obligations, working capital requirements, capital expenditures, and anticipated acquisitions (see Note 17. Subsequent Eventsin Item 8. Financial Statements and Supplementary Data) for the next 12 months and beyond.
Net cash provided by operating activities was $327.9 million in 2025, compared with $400.0 million in 2024. The year-over-year decrease primarily relates to changes in operating assets and liabilities which generated net cash outflow of $3.5 million in 2025 compared with net cash inflow of $46.1 million in 2024. These changes are mainly attributable to accounts receivable days sales outstanding which increased in 2025 and decreased in 2024. The year-over-year decrease was also due to lower net cash provided by operating activities before changes in operating assets and liabilities, which was $331.4 million in 2025, compared with $353.9 million in 2024.
Net cash used in investing activities in 2025 was $343.9 million, comprised of $304.1 million used to acquire TopBloc (see Note 6. Acquisitionin Item 8. Financial Statements and Supplementary Data) and $39.8 million used for capital expenditures. Net cash used in investing activities in 2024 was $35.3 million related to capital expenditures.
Net cash used in financing activities in 2025 was $29.4 million and primarily consisted of $170.1 million to repurchase the Company's common stock, offset by net borrowings under the senior secured credit facility totaling $138.7 million. Net cash used in financing activities in 2024 was $333.2 million and primarily consisted of $327.2 million to repurchase the Company's common stock.
For details on the Company's senior secured credit facility, comprised of a revolving credit facility, term loan A, term loan B, and unsecured senior notes, see Note 9. Long-Term Debt in Item 8. Financial Statements and Supplementary Data.
Commitments and Contingencies - The following table sets forth, on an aggregate basis, the amounts of specified contractual cash obligations required to be paid in the future periods (in millions):
Less than
1 year 		1-3 years 3-5 years More than
5 years 		Total
Long-term debt obligations(1)
$ 68.8 $ 796.1 $ 516.6 $ - $ 1,381.5
Operating Leases(2)
23.8 31.3 11.9 2.0 69.0
Purchase obligations(3)
81.3 96.1 39.8 - 217.2
$ 173.9 $ 923.5 $ 568.3 $ 2.0 $ 1,667.7
_______
(1)Long-term debt obligations include principal payments and estimated interest and fees calculated based on the rates in effect at December 31, 2025.
(2) Represents the future minimum lease payments for non-cancelable operating leases.
(3) Purchase obligations include non-cancelable job board service agreements, outsourcing services, software maintenance and license agreements and software subscriptions. In the fourth quarter of 2025, the Company entered into a multi-year contract for outsourcing services.
For additional information about these contractual cash obligations, see Notes 5. Leases, 9. Long-Term Debt, and10. Commitments and Contingenciesin Item 8. Financial Statements and Supplementary Data.
We have retention policies for our workers' compensation liability exposures. The workers' compensation loss reserves are based upon an actuarial report obtained from a third party and are determined based on claims filed and claims incurred but not reported. We account for claims incurred but not yet reported based on estimates derived from historical claims experience and current trends of industry data. Changes in estimates, differences in estimates, and actual payments for claims are recognized in the period that the estimates changed or the payments were made. The workers' compensation loss reserves were $2.2 million and $2.8 million, net of anticipated insurance and indemnification recoveries of $9.5 million and $10.5 million, at December 31, 2025 and 2024, respectively. We have undrawn stand-by letters of credit outstanding to secure obligations for workers' compensation claims and other obligations. The undrawn stand-by letters of credit were $3.7 million at December 31, 2025 and 2024.
During the second quarter of 2025, the Company terminated its deferred compensation plan ("DCP"). The final distribution of all participant account assets will occur in June 2026. As of December 31, 2025, the plan assets and liabilities were $19.1 millionand were included in other current assets and other current liabilities on the consolidated balance sheet. As of December 31, 2024, the plan assets and liabilities were $17.8 million, of which $1.7 million was included in other current assets and other current liabilities, and the remaining $16.1 million was included in other non-current assets and other long-term liabilities on the consolidated balance sheet.
Off-Balance Sheet Arrangements
As of December 31, 2025, we had no off-balance sheet arrangements.
Accounting Standards Updates
See Note 3. Accounting Standards UpdateinItem 8. Financial Statements and Supplementary Datafor a discussion of new accounting pronouncements.
ASGN Inc. published this content on February 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 25, 2026 at 11:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]