Press Releases
Kforce Fourth Quarter Revenues of $342.6 Million Exceeds Guidance; Fourth Quarter EPS of $0.24; Adjusted EPS of $0.45
Mr. Liberatore noted additional operational results for the fourth quarter include:
- Flex revenues of
$332.4 million in Q4 2017 increased 4.4%, on a billing day basis, from$328.9 million in Q3 2017 and increased 5.6%, from$314.7 million in Q4 2016. - Quarterly year-over-year growth in Flex revenues for Tech, FA and GS was 5.4%, 0.3% and 25.7%, respectively.
Highlights for the fourth quarter include:
- Tech Flex gross profit margin of 27.2% in Q4 2017 increased 20 basis points from 27.0% in Q3 2017 and decreased 30 basis points from 27.5% in Q4 2016.
- Selling, general and administrative expense as a percentage of revenues in Q4 2017 was 24.0% which remained flat as compared to Q3 2017 and is down 120 basis points from 25.2% in Q4 2016.
- Operating cash flows in Q4 2017 were
$23.7 million compared to$10.1 million in Q4 2016. - We repurchased approximately 451 thousand shares of common stock on the open market at a total cost of approximately
$10.8 million during Q4 2017.
Looking forward to the first quarter of 2018, there will be 64 billing days, as compared to 61 billing days in the fourth quarter of 2017, and 64 billing days in the first quarter of 2017. Current estimates for the first quarter of 2018 are:
- Revenues of
$343 million to $347 million - Earnings per share of
$0.35 to $0.38 - Gross profit margin of 29.0% to 29.2%
- Flex gross profit margin of 26.5% to 26.7%
- SG&A expense as a percent of revenue of 24.4% to 24.6%
- Operating margin of 3.8% to 4.2%
- Effective tax rate of 26.0%
On Tuesday, February 6, 2018,
The dial-in number is (877) 344-3890. The conference passcode is
This call is being webcast by Shareholder.com and can be accessed at Kforce’s web site at www.kforce.com (select “Investor Relations”). The webcast replay will be available until February 13, 2018.
Our 2018 Annual Meeting of
About
Certain of the above statements contained in this press release, including earnings projections, are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions, growth in temporary staffing and the general economy; competitive factors, risks due to shifts in the market demand; a reduction in the supply of candidates or the Firm's ability to attract such candidates; the success of the Firm in attracting and retaining revenue generating talent; changes in the service mix; ability of the Firm to repurchase shares; the effect of adverse weather conditions; changes in our effective tax rate; changes in government regulations, laws and policies that are adverse to our businesses; risk of contract performance, delays or termination or the failure to obtain awards, task orders or funding under contracts; changes in client demand; and the risk factors listed from time to time in the Firm’s reports filed with the Securities and
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Three Months Ended | ||||||||||||
| Dec. 31, 2017 | Sept. 30, 2017 | Dec. 31, 2016 | ||||||||||
| Revenue by segment: | ||||||||||||
| Technology | $ | 227,816 | $ | 229,281 | $ | 216,807 | ||||||
| Finance & accounting | 85,349 | 85,225 | 85,794 | |||||||||
| Government solutions | 29,421 | 26,547 | 23,397 | |||||||||
| Total Net service revenues | 342,586 | 341,053 | 325,998 | |||||||||
| Direct costs of services | 239,959 | 236,678 | 226,350 | |||||||||
| Gross profit | 102,627 | 104,375 | 99,648 | |||||||||
| GP % | 30.0 | % | 30.6 | % | 30.6 | % | ||||||
| Flex GP % | 27.8 | % | 28.0 | % | 28.1 | % | ||||||
| Selling, general and administrative expenses | 82,067 | 81,921 | 82,010 | |||||||||
| Depreciation and amortization | 2,042 | 2,110 | 2,047 | |||||||||
| Income from operations | 18,518 | 20,344 | 15,591 | |||||||||
| Other expense, net | 629 | 1,364 | 824 | |||||||||
| Income before income taxes | 17,889 | 18,980 | 14,767 | |||||||||
| Income tax expense | 11,749 | 8,881 | 5,528 | |||||||||
| Net income | $ | 6,140 | $ | 10,099 | $ | 9,239 | ||||||
| Earnings per share - diluted | $ | 0.24 | $ | 0.40 | $ | 0.36 | ||||||
| Weighted average shares outstanding - diluted | 25,462 | 25,535 | 25,821 | |||||||||
| Adjusted EBITDA | $ | 23,183 | $ | 24,238 | $ | 19,283 | ||||||
| Billing days | 61 | 63 | 61 | |||||||||
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Twelve Months Ended | ||||||||
| Dec. 31, 2017 | Dec. 31, 2016 | |||||||
| Revenue by segment: | ||||||||
| Technology | $ | 907,511 | $ | 883,477 | ||||
| Finance & accounting | 346,135 | 337,601 | ||||||
| Government solutions | 104,294 | 98,628 | ||||||
| Total Net service revenues | 1,357,940 | 1,319,706 | ||||||
| Direct costs of services | 949,884 | 911,207 | ||||||
| Gross profit | 408,056 | 408,499 | ||||||
| GP % | 30.0 | % | 31.0 | % | ||||
| Flex GP % | 27.5 | % | 28.2 | % | ||||
| Selling, general and administrative expenses | 331,172 | 340,742 | ||||||
| Depreciation and amortization | 8,255 | 8,701 | ||||||
| Income from operations | 68,629 | 59,056 | ||||||
| Other expense, net | 4,535 | 3,101 | ||||||
| Income before income taxes | 64,094 | 55,955 | ||||||
| Income tax expense | 30,809 | 23,182 | ||||||
| Net income | $ | 33,285 | $ | 32,773 | ||||
| Earnings per share - diluted | $ | 1.30 | $ | 1.25 | ||||
| Weighted average shares outstanding - diluted | 25,586 | 26,274 | ||||||
| Adjusted EBITDA | $ | 85,241 | $ | 74,506 | ||||
| Billing days | 252 | 253 | ||||||
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 379 | $ | 1,482 | ||||
| Trade receivables, net of allowances | 225,865 | 206,361 | ||||||
| Income tax refund receivable | 7,116 | 172 | ||||||
| Prepaid expenses and other current assets | 12,085 | 10,691 | ||||||
| Total current assets | 245,445 | 218,706 | ||||||
| Fixed assets, net | 39,680 | 43,145 | ||||||
| Other assets, net | 38,598 | 30,511 | ||||||
| Deferred tax asset, net | 11,316 | 23,449 | ||||||
| Intangible assets, net | 3,297 | 3,642 | ||||||
| Goodwill | 45,968 | 45,968 | ||||||
| Total assets | $ | 384,304 | $ | 365,421 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | 34,873 | $ | 37,230 | ||||
| Accrued payroll costs | 46,886 | 44,137 | ||||||
| Other current liabilities | 1,960 | 1,765 | ||||||
| Income taxes payable | — | 221 | ||||||
| Total current liabilities | 83,719 | 83,353 | ||||||
| Long-term debt - credit facility | 116,523 | 111,547 | ||||||
| Long-term debt - other | 2,597 | 3,984 | ||||||
| Other long-term liabilities | 47,188 | 44,801 | ||||||
| Total liabilities | 250,027 | 243,685 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 715 | 713 | ||||||
| Additional paid-in capital | 437,394 | 428,212 | ||||||
| Accumulated other comprehensive income | 100 | 184 | ||||||
| Retained earnings | 195,143 | 174,967 | ||||||
| Treasury stock, at cost | (499,075 | ) | (482,340 | ) | ||||
| Total stockholders’ equity | 134,277 | 121,736 | ||||||
| Total liabilities and stockholders’ equity | $ | 384,304 | $ | 365,421 | ||||
Key Statistics
(Unaudited)
| Q4 2017 | Q3 2017 | Q4 2016 | ||||||||||
| Total Firm | ||||||||||||
| Flex revenue (000’s) | $ | 332,416 | $ | 328,904 | $ | 314,714 | ||||||
| Hours (000’s) | 5,483 | 5,646 | 5,598 | |||||||||
| Flex GP % | 27.8 | % | 28.0 | % | 28.1 | % | ||||||
| Direct Hire revenue (000’s) | $ | 10,170 | $ | 12,149 | $ | 11,284 | ||||||
| Placements | 816 | 881 | 876 | |||||||||
| Average fee | $ | 12,469 | $ | 13,784 | $ | 12,891 | ||||||
| Billing days | 61 | 63 | 61 | |||||||||
| Technology | ||||||||||||
| Flex revenue (000’s) | $ | 223,897 | $ | 224,148 | $ | 212,437 | ||||||
| Hours (000’s) | 3,101 | 3,299 | 3,152 | |||||||||
| Flex GP % | 27.2 | % | 27.0 | % | 27.5 | % | ||||||
| Direct Hire revenue (000’s) | $ | 3,919 | $ | 5,133 | $ | 4,370 | ||||||
| Placements | 225 | 303 | 260 | |||||||||
| Average fee | $ | 17,423 | $ | 16,917 | $ | 16,831 | ||||||
| Finance & Accounting | ||||||||||||
| Flex revenue (000’s) | $ | 79,098 | $ | 78,209 | $ | 78,880 | ||||||
| Hours (000’s) | 2,382 | 2,347 | 2,446 | |||||||||
| Flex GP % | 28.5 | % | 29.0 | % | 29.1 | % | ||||||
| Direct Hire revenue (000’s) | $ | 6,251 | $ | 7,016 | $ | 6,914 | ||||||
| Placements | 591 | 578 | 616 | |||||||||
| Average fee | $ | 10,583 | $ | 12,139 | $ | 11,230 | ||||||
| Government Solutions | ||||||||||||
| Flex revenue (000’s) | $ | 29,421 | $ | 26,547 | $ | 23,397 | ||||||
| Flex GP % | 30.3 | % | 34.3 | % | 30.3 | % | ||||||
Revenue Growth Rates
(Unaudited)
| Year-Over-Year Growth Rates | |||||||||||||||
| (Per Billing Day) | |||||||||||||||
| Q4 2017 | Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | |||||||||||
| Tech Flex | 5.4 | % | 3.3 | % | 1.5 | % | 2.7 | % | 1.4 | % | |||||
| Tech Direct Hire | (10.3 | )% | 1.3 | % | 9.3 | % | (4.1 | )% | (13.1 | )% | |||||
| Total Tech | 5.1 | % | 3.3 | % | 1.7 | % | 2.5 | % | 1.1 | % | |||||
| FA Flex | 0.3 | % | 4.1 | % | 4.3 | % | 7.5 | % | 2.1 | % | |||||
| FA Direct Hire | (9.6 | )% | (9.0 | )% | (2.4 | )% | (11.7 | )% | (15.4 | )% | |||||
| Total FA | (0.5 | )% | 2.9 | % | 3.6 | % | 5.8 | % | 0.4 | % | |||||
| Total Staffing (Total Tech and FA) | 3.5 | % | 3.2 | % | 2.2 | % | 3.4 | % | 0.9 | % | |||||
| GS | 25.7 | % | 0.6 | % | (6.4 | )% | 6.6 | % | 4.0 | % | |||||
| Total Firm | 5.1 | % | 3.0 | % | 1.6 | % | 3.7 | % | 1.1 | % | |||||
Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
(Unaudited)
The following non-GAAP financial measures presented may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. The Company views these non-GAAP financial measures as supplemental and they are not intended to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.
Free Cash Flow
“Free Cash Flow”, a non-GAAP financial measure, is defined by
| (In Thousands) | Twelve Months Ended | |||||||
| Dec. 31, 2017 | Dec. 31, 2016 | |||||||
| Net income | $ | 33,285 | $ | 32,773 | ||||
| Non-cash provisions and other | 29,134 | 21,093 | ||||||
| Changes in operating assets/liabilities | (33,080 | ) | (14,043 | ) | ||||
| Net cash provided by operating activities | 29,339 | 39,823 | ||||||
| Capital expenditures | (5,846 | ) | (12,420 | ) | ||||
| Free cash flow | 23,493 | 27,403 | ||||||
| Change in debt | 4,976 | 31,075 | ||||||
| Repurchases of common stock | (14,622 | ) | (46,013 | ) | ||||
| Cash dividend | (12,144 | ) | (12,447 | ) | ||||
| Other | (2,806 | ) | (33 | ) | ||||
| Change in cash and cash equivalents | $ | (1,103 | ) | $ | (15 | ) | ||
Adjusted EBITDA
“Adjusted EBITDA”, a non-GAAP financial measure, is defined by
| (In Thousands) | Three Months Ended | |||||||||||
| Dec. 31, 2017 | Sept. 30, 2017 | Dec. 31, 2016 | ||||||||||
| Net income | $ | 6,140 | $ | 10,099 | $ | 9,239 | ||||||
| Depreciation and amortization | 2,135 | 2,165 | 2,094 | |||||||||
| Stock-based compensation expense | 1,933 | 1,798 | 1,663 | |||||||||
| Interest expense, net | 1,226 | 1,295 | 759 | |||||||||
| Income tax expense | 11,749 | 8,881 | 5,528 | |||||||||
| Adjusted EBITDA | $ | 23,183 | $ | 24,238 | $ | 19,283 | ||||||
| (In Thousands) | Twelve Months Ended | |||||||
| Dec. 31, 2017 | Dec. 31, 2016 | |||||||
| Net income | $ | 33,285 | $ | 32,773 | ||||
| Depreciation and amortization | 8,508 | 8,796 | ||||||
| Stock-based compensation expense | 7,600 | 6,705 | ||||||
| Interest expense, net | 5,039 | 3,050 | ||||||
| Income tax expense | 30,809 | 23,182 | ||||||
| Adjusted EBITDA | $ | 85,241 | $ | 74,506 | ||||
Adjusted Financial Performance Measures
The "Adjusted Financial Performance Measures" present non-GAAP financial information and should not be considered a measure of financial performance under generally accepted accounting principles. These measures are presented as a supplemental method for assessing the Company’s operating results by adjusting for the impact of certain non-recurring, infrequent or unusual items in a manner that is focused on the performance of our underlying operations. Each of these measures are intended to provide greater consistency, comparability and clarity of our results. Management uses this non-GAAP financial information to assess the Company's core operating results and consequently, management believes it is similarly useful information to investors. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP.
| (In Thousands, Except Per Share Amounts) |
Three Months Ended December 31, | |||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Reported (GAAP) |
Adjustments (1) |
Adjusted (Non-GAAP) |
Reported (GAAP) (2) |
|||||||||||||
| Reconciliation of Tax Impact and Profitability: | ||||||||||||||||
| Income before income taxes | $ | 17,889 | $ | — | $ | 17,889 | $ | 14,767 | ||||||||
| Income tax expense | $ | 11,749 | $ | (5,360 | ) | $ | 6,389 | $ | 5,528 | |||||||
| Effective tax rate | 65.7 | % | (30.0 | )% | 35.7 | % | 37.4 | % | ||||||||
| Net income | $ | 6,140 | $ | 5,360 | $ | 11,500 | $ | 9,239 | ||||||||
| Earnings per share - diluted | $ | 0.24 | $ | 0.21 | $ | 0.45 | $ | 0.36 | ||||||||
(1) The
(2) For the three months ended
| (In Thousands, Except Per Share Amounts) |
Twelve Months Ended | |||||||||||
| December 31, 2017 | ||||||||||||
| Reported (GAAP) |
Adjustments | Adjusted (Non-GAAP) |
||||||||||
| Reconciliation of Revenue and Gross Profit: | ||||||||||||
| Net service revenues (3) | $ | 1,357,940 | $ | 1,000 | $ | 1,358,940 | ||||||
| Gross profit (3) | $ | 408,056 | $ | 713 | $ | 408,769 | ||||||
| GP % | 30.0 | % | 0.1 | % | 30.1 | % | ||||||
| Flex GP % | 27.5 | % | — | % | 27.5 | % | ||||||
| Reconciliation of SG&A and Operating Margin: | ||||||||||||
| Selling, general & administrative expenses (4) | $ | 331,172 | $ | 1,156 | $ | 332,328 | ||||||
| SG&A as a percentage of net service revenues | 24.4 | % | 0.1 | % | 24.5 | % | ||||||
| Income from operations | $ | 68,629 | $ | (443 | ) | $ | 68,186 | |||||
| Operating margin | 5.1 | % | (0.1 | )% | 5.0 | % | ||||||
| Reconciliation of Tax Impact and Profitability: | ||||||||||||
| Income before income taxes | $ | 64,094 | $ | (443 | ) | $ | 63,651 | |||||
| Income tax expense (5) | $ | 30,809 | $ | (7,200 | ) | $ | 23,609 | |||||
| Effective tax rate | 48.1 | % | (11.0 | )% | 37.1 | % | ||||||
| Net income | $ | 33,285 | $ | 6,757 | $ | 40,042 | ||||||
| Earnings per share - diluted | $ | 1.30 | $ | 0.27 | $ | 1.57 | ||||||
(3) The
(4) The
(5) Adjustments to income tax expense include (i) tax expense of
| (In Thousands, Except Per Share Amounts) |
Twelve Months Ended | |||||||||||
| December 31, 2016 | ||||||||||||
| Reported (GAAP) |
Adjustments | Adjusted (Non-GAAP) |
||||||||||
| Reconciliation of SG&A and Operating Margin: | ||||||||||||
| Selling, general & administrative expenses (6) | $ | 340,742 | $ | (6,015 | ) | $ | 334,727 | |||||
| SG&A as a percentage of net service revenues | 25.8 | % | (0.4 | )% | 25.4 | % | ||||||
| Income from operations | $ | 59,056 | $ | 6,015 | $ | 65,071 | ||||||
| Operating margin | 4.5 | % | 0.4 | % | 4.9 | % | ||||||
| Reconciliation of Tax Impact and Profitability: | ||||||||||||
| Income before income taxes | $ | 55,955 | $ | 6,015 | $ | 61,970 | ||||||
| Income tax expense (7) | 23,182 | 681 | 23,863 | |||||||||
| Effective tax rate | 41.4 | % | (2.9 | )% | 38.5 | % | ||||||
| Net income | $ | 32,773 | $ | 5,334 | $ | 38,107 | ||||||
| Earnings per share - diluted | $ | 1.25 | $ | 0.20 | $ | 1.45 | ||||||
(6) The
(7) The income tax expense reconciling item is composed of (i) an income tax expense of
AT THE FIRM
Chief Corporate Development Officer
(813) 552-2927
Source: Kforce, Inc.