Robert Half's New Credit Facility: A Lifeline in Uncertain Times

The staffing industry giant Robert Half Inc. (RHI) has secured a $100 million credit facility with Bank of America, N.A., marking a strategic move to bolster financial flexibility amid declining revenues and a challenging economic environment. This agreement, effective May 28, 2025, replaces its 2020 credit facility and underscores the company's proactive stance toward managing debt and liquidity. But what does this mean for investors? Let's dissect the implications.

The Credit Facility: A Shield Against Volatility

The new revolving credit line, structured with interest tied to the Term SOFR Screen Rate plus an applicable margin, offers RHI critical breathing room. While the exact terms of the margin and maturity date remain undisclosed, the agreement's termination of the prior facility without penalties signals confidence in RHI's ability to navigate current headwinds. Crucially, three subsidiaries (Protiviti Inc., RH-TM Resources Inc., and Protiviti Government Services Inc.) have provided unconditional guarantees, reinforcing investor trust in RHI's operational stability.

This move is not merely defensive. In an era where staffing firms face headwinds—from AI-driven automation to volatile hiring cycles—access to low-cost liquidity can be the difference between survival and stagnation. The SOFR-based structure aligns borrowing costs with market rates, minimizing exposure to rising interest environments.

Revenue Declines: A Temporary Setback or Structural Issue?

Recent earnings data paints a mixed picture. RHI's Q1 2025 revenue of $1.35 billion missed estimates by 3.38%, marking a 9% year-over-year decline. Earnings per share (EPS) plummeted to $0.17 versus $0.61 in Q1 2024, prompting a Zacks Rank #5 (Strong Sell) rating. Analysts cite weak demand and industry-wide challenges as culprits, with staffing firms ranking in the bottom 10% of Zacks industries.

Yet beneath the surface, RHI's balance sheet remains a fortress: $342.5 million in cash, $1.31 billion in equity, and 0% debt. This liquidity buffer, combined with the new credit line, allows RHI to weather downturns without compromising its $0.59 quarterly dividend, a pillar of shareholder trust.

Why This Matters for Investors

The credit agreement is a masterstroke of financial engineering. By securing a revolving facility now, RHI avoids the risk of higher borrowing costs later and retains flexibility to:
1. Acquire talent or technology to counter automation threats.
2. Reposition its portfolio toward high-demand sectors like AI and cybersecurity.
3. Withstand prolonged economic softness without diluting equity.

While revenue declines are concerning, they are not unprecedented. RHI's adjusted revenue metrics—excluding billing-day and currency fluctuations—show operational resilience. Management's focus on non-GAAP measures highlights a commitment to long-term value over short-term noise.

Risks and Opportunities

The risks are clear: industry-wide declines, dividend sustainability concerns, and a stock down 34.4% year-to-date. But consider this:
- RHI's dividend yield of 3.2% (vs. a 10-year average of 2.5%) offers downside protection.
- Its $70 price target implies 20% upside from current levels, assuming a recovery in staffing demand.
- Competitors like DLH Holdings (DLHC) face similar struggles, but RHI's scale and cash reserves give it an edge.

Final Call: Buy the Dip, but Stay Vigilant

The new credit facility is RHI's insurance policy against uncertainty. For income investors, the dividend—funded by a strong cash position—offers a compelling yield. For growth investors, the company's adaptability in a shifting workforce market positions it to rebound once demand stabilizes.

Action to take: Accumulate RHI shares gradually, targeting dips below $55. Monitor cash reserves and revenue trends closely. This is a “buy the dip” opportunity in a defensive industry leader.

Backtest the performance of RHI (Robert Half Inc.) when 'buy condition' is triggered after a quarterly earnings miss with cash reserves exceeding $300 million, and hold for 30 trading days, from 2020 to 2025.

Historical data underscores the need for caution. From 2020 to 2025, a similar strategy—buying after an earnings miss with cash reserves over $300 million—yielded a cumulative loss of -10.23% over 30 days, with a peak drawdown of -59.65%. These results highlight the importance of risk management, such as stop-loss limits or dollar-cost averaging, to mitigate volatility.

In conclusion, Robert Half's credit agreement isn't just a financial tool—it's a signal of resilience. In turbulent times, liquidity is power. RHI has secured its. Now, it's time for investors to do the same.