Press Releases

Kforce Reports Second Quarter Revenue of $246.1 Million and EPS of $0.13

Aug 3, 2010

Aug 3, 2010 (GlobeNewswire via COMTEX News Network) --

  --  Total Revenue Increased 8.9% Year Over Year
  --  Net Income Increased 31.7% Year Over Year


TAMPA, Fla., Aug. 3, 2010 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its second quarter of 2010. Revenue for the quarter ended June 30, 2010 was $246.1 million compared to $226.7 million for the quarter ended March 31, 2010, an increase of 8.6%, and compared to $226.0 million for the quarter ended June 30, 2009, an increase of 8.9%. For the quarter ended June 30, 2010, Kforce reported net income of $5.1 million, or $0.13 per share, versus $2.7 million, or $0.07 per share, for the quarter ended March 31, 2010, an increase of 90.0% in net income and 85.7% in earnings per share. Net income for the quarter ended June 30, 2009 was $3.9 million, or $0.10 per share, an increase of 31.7% in net income and 30.0% in earnings per share.

"We are pleased with our second quarter results, particularly the 11.6% sequential and 17.1% year-over-year increase in Tech flex, our largest revenue stream. We are also very pleased with the increase in permanent placement revenues of 25.0% sequentially and 48.9% over the second quarter of 2009, which we believe reflects our clients rebuilding core staff after significant reductions throughout the recent economic recession. We believe our diverse portfolio of service offerings and flexible delivery platform will allow us to continue to take advantage of the improving climate for professional and specialty staffing. Kforce is aggressively pursuing business opportunities with the goal of continuing to gain customer and market share," said David L. Dunkel, Chairman and CEO.

William L. Sanders, President, said, "Discussions with clients, as well as our internal key performance indicators (KPI's), indicate that demand continues to strengthen, particularly in Tech and F&A. Accordingly, the Firm continued to expand the Strategic Accounts team and has further invested in its National Recruiting Center as well as our field sales team to take advantage of this strengthening demand. We believe that Kforce has both the great people and the operating platform to continue delivering exceptional results for both our clients and our shareholders."

Mr. Sanders noted additional operational results of the second quarter include:

  --  Flex revenue of $236.3 million in Q2 '10 increased 8.0% from $218.8
      million in Q1 '10 and increased 7.7% from $219.3 million in Q2 '09.
  --  Sequential percentage increases in Flex revenue by segment were 11.6%
      for Tech, 6.8% for F&A, 2.6% for HLS and 2.1% for Government Solutions.
  --  Search revenue of $9.9 million in Q2 '10 increased 25.0% from $7.9
      million in Q1 '10 and increased 48.9% from $6.6 million in Q2 '09.
  --  Sales headcount increased 3.2% sequentially in Q2 '10 reflecting an
      investment in field sales, Strategic Accounts and our National
      Recruiting Center.


Joe Liberatore, Chief Financial Officer, said, "The Firm continued to perform well in Q2 '10, both in terms of revenue and earnings per share. Q2 '10 contained 64 billing days compared to 62 billing days in Q1 '10, and 64 billing days in Q2 '09. We believe our second quarter results reflect our strong culture and a continued focus on execution in all aspects of the business, including improving client relationships, balancing bill/pay rate spreads, solid expense management and optimizing cash flow."

Financial highlights for the second quarter include:

  --  Flex gross profit increased 150 basis points to 29.0% in Q2 '10 from
      27.5% in Q1 '10 and decreased 60 basis points from 29.6% in Q2 '09.
  --  Selling, general and administrative ("SG&A") expenses as a percentage of
      revenue remained constant at 26.9% for Q2 '10 and Q1 '10 and decreased
      60 basis points from 27.5% in Q2 '09.
  --  EBITDA for Q2 '10 was $13.7 million, an increase of 60.2% from $8.6
      million in Q1 '10 and an increase of 22.9% from $11.2 million in Q2 '09.
  --  Earnings per share for Q2 '10 was $0.13, an increase of 85.7% from $0.07
      per share in Q1'10 and an increase of 30.0% from $0.10 in Q2 '09.
  --  Bank debt at the end of Q2 '10 was $38.0 million, reflecting an increase
      of $18.8 million from $19.2 million at the end of Q1 '10. This increase
      was primarily related to the $28.5 million acquisition of our corporate
      headquarters offset by strong cash flow.


Mr. Liberatore stated, "Looking forward to the third quarter of 2010, we expect revenue may be in the $252 million to $258 million range and earnings per share in the range of $0.14 to $0.16. The second and third quarter of 2010 each have 64 billing days."

On Tuesday, August 3, 2010, Kforce will host a conference call to discuss these results. The call will begin at 5:00 p.m. Eastern Time. The dial-in number is 877-857-6163. The replay of the call will be available from 7:00 p.m. Eastern Time Tuesday, August 3 to August 17, 2010 by dialing 888-203-1112, passcode 1471028.

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 August 17, 2010.

About Kforce

Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing flexible and permanent staffing solutions in the skill areas of technology, finance & accounting, and health and life sciences. Backed by approximately 2,000 associates and approximately 8,800 consultants on assignment, Kforce is committed to "Great People = Great Results" for our valued clients and candidates. Kforce operates with 64 offices located throughout the United States and two offices in the Philippines. For more information, please visit our Web site at http://www.kforce.com/.

The Kforce Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3749

About Kforce Government Solutions (KGS)

KGS provides innovative technology, financial management, data architecture and continuous process improvement and finance and accounting solutions primarily to federal government clients. KGS, with approximately 700 professionals currently on assignment, has been partnering with our clients since 1970 to successfully solve their challenges. KGS' in-depth operational knowledge and understanding of Federal Agencies, the Defense Department, Homeland Security and industry best practices, combined with expert and highly-skilled professionals, have resulted in a comprehensive portfolio of technology advanced and innovative consulting solutions designed to guide clients through today's environment of complex challenges, risk, and cost. For more information, visit http://www.kforcegov.com.

Certain of the above statements contained in this press release 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 Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions and growth in the staffing industry and general economy; competitive factors, risks due to shifts in the market demand, including, without limitation, shifts in demand for our Technology, Finance and Accounting, Health and Life Sciences and Government Solutions segments, as well as the market for search and flexible staffing assignments; changes in the service mix; ability of the Firm to complete acquisitions; and the risk factors listed from time to time in the Firm's reports filed with the Securities and Exchange Commission, as well as assumptions regarding the foregoing. In particular, there can be no assurance that we will continue to increase our market share, successfully manage risks to our revenue stream and successfully put into place the people and processes that will create future success. The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. The Firm undertakes no obligation to publicly update or revise any forward-looking statements. As a result, such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

                           Kforce Inc.
                     Summary of Operations
            (In Thousands, Except Per Share Amounts)
                           (Unaudited)


                                    Three Months Ended
                            ----------------------------------

                             Jun. 30,    Mar. 31,    Jun. 30,

                               2010        2010        2009
                            ----------  ----------  ----------

  Revenue by function:
    Technology               $ 134,091   $ 119,676   $ 113,478
    Finance & Accounting        43,434      40,143      41,096
    Health & Life Sciences      41,521      40,299      41,722

    Government Solutions        27,091      26,538      29,656
                            ----------  ----------  ----------
  Total revenue                246,137     226,656     225,952

  Revenue by time:
   Flexible                    236,270     218,763     219,326

   Perm                          9,867       7,893       6,626
                            ----------  ----------  ----------
  Total revenue                246,137     226,656     225,952


  Costs of services            167,742     158,511     154,331
                            ----------  ----------  ----------
  Gross profit                  78,395      68,145      71,621
   GP %                          31.9%       30.1%       31.7%
   Flex GP %                     29.0%       27.5%       29.6%

  Selling, general &
   administrative expenses      66,222      60,940      62,084
  Depreciation &
   amortization                  3,137       2,976       2,885
                            ----------  ----------  ----------

  Income from operations         9,036       4,229       6,652


  Other expense, net               269         374         275
                            ----------  ----------  ----------

  Income before income
   taxes                         8,767       3,855       6,377


  Income tax expense             3,623       1,147       2,470
                            ----------  ----------  ----------


  Net income                   $ 5,144     $ 2,708     $ 3,907
                            ==========  ==========  ==========

  Earnings per share -
   diluted                      $ 0.13      $ 0.07      $ 0.10
  EBITDA per share              $ 0.34      $ 0.21      $ 0.29
  Shares outstanding -
   diluted                      40,532      40,387      38,988

  EBITDA                      $ 13,734     $ 8,574    $ 11,178

  Other information:
   Capital expenditures       $ 31,340     $ 1,858     $ 1,170
   Equity-based
    compensation expense,
    net                        $ 1,096     $ 1,025       $ 736

  Selected balance sheet
   information:
   Cash and cash
    equivalents                  $ 410     $ 1,143       $ 467
   Accounts receivable,
    less allowances          $ 142,912   $ 141,866   $ 127,844
   Total assets              $ 386,067   $ 360,328   $ 343,902
   Current liabilities        $ 78,711    $ 76,832    $ 80,602
   Bank debt                  $ 38,000    $ 19,199    $ 24,863
   Other long-term
    liabilities               $ 29,981    $ 31,719    $ 23,766
   Total stockholders'
    equity                   $ 239,375   $ 232,578   $ 214,671

  Billing days                      64          62          64


                        Kforce Inc.
                       Key Statistics
                        (Unaudited)


                        Q2 2010     Q1 2010     Q2 2009
                       ----------  ----------  ----------


       Total Firm
  -------------------
  Flex revenue
   (000's)              $ 236,270   $ 218,763   $ 219,326
  Revenue per billing
   day (000's)            $ 3,692     $ 3,528     $ 3,427
  Sequential flex
   revenue change            8.0%        0.7%       -1.9%
  Hours (000's)             4,014       3,710       3,714
  Flex GP %                 29.0%       27.5%       29.6%

  Search revenue
   (000's)                $ 9,867     $ 7,893     $ 6,626
  Placements                  751         640         575
  Average fee            $ 13,134    $ 12,336    $ 11,526
  Billing days                 64          62          64


       Technology
  -------------------
  Flex revenue
   (000's)              $ 129,961   $ 116,466   $ 111,022
  Revenue per billing
   day (000's)            $ 2,031     $ 1,878     $ 1,735
  Sequential flex
   revenue change           11.6%       -0.3%       -3.4%
  Hours (000's)             2,065       1,849       1,766
  Flex GP %                 27.5%       26.4%       27.3%

  Search revenue
   (000's)                $ 4,130     $ 3,210     $ 2,456
  Placements                  275         224         179
  Average fee            $ 14,990    $ 14,362    $ 13,709


       Finance &
       Accounting
  -------------------
  Flex revenue
   (000's)               $ 38,152    $ 35,730    $ 37,139
  Revenue per billing
   day (000's)              $ 596       $ 576       $ 580
  Sequential flex
   revenue change            6.8%        0.8%        3.2%
  Hours (000's)             1,157       1,092       1,096
  Flex GP %                 29.7%       27.4%       31.3%

  Search revenue
   (000's)                $ 5,282     $ 4,413     $ 3,957
  Placements                  453         397         377
  Average fee            $ 11,665    $ 11,107    $ 10,503


     Health & Life
        Sciences
  -------------------
  Flex revenue
   (000's)               $ 41,066    $ 40,029    $ 41,509
  Revenue per billing
   day (000's)              $ 642       $ 646       $ 649
  Sequential flex
   revenue change            2.6%        7.6%       -6.9%
  Hours (000's)               491         483         519
  Flex GP %                 30.6%       29.5%       29.3%

  Search revenue
   (000's)                  $ 455       $ 270       $ 213
  Placements                   23          19          19
  Average fee            $ 19,858    $ 14,206    $ 11,208


       Government
        Solutions
  -------------------
  Flex revenue
   (000's)               $ 27,091    $ 26,538    $ 29,656
  Revenue per billing
   day (000's)              $ 423       $ 428       $ 463
  Sequential flex
   revenue change            2.1%       -4.4%        6.1%
  Hours (000's)               301         286         333
  Flex GP %                 32.6%       29.9%       36.9%


                        Kforce Inc.
          Key Statistics - Health & Life Sciences
                        (Unaudited)


                           Q2 2010    Q1 2010    Q2 2009
                          ---------  ---------  ---------


     Clinical Research
  ----------------------
  Flex revenue (000's)     $ 27,488   $ 26,966   $ 27,588
  Revenue per billing
   day (000's)                $ 430      $ 435      $ 431
  Sequential flex
   revenue change              1.9%      12.9%      -6.6%
  Hours (000's)                 295        292        326
  Flex GP %                   29.0%      27.0%      25.7%

  Search revenue (000's)      $ 203       $ 83       $ 59
  Placements                      9          4          3
  Average fee              $ 22,517   $ 20,625   $ 19,634


        Healthcare
  ----------------------
  Flex revenue (000's)     $ 13,578   $ 13,063   $ 13,921
  Revenue per billing
   day (000's)                $ 212      $ 211      $ 218
  Sequential flex
   revenue change              3.9%      -2.0%      -7.7%
  Hours (000's)                 196        191        193
  Flex GP %                   33.9%      34.4%      36.3%

  Search revenue (000's)      $ 252      $ 187      $ 154
  Placements                     14         15         16
  Average fee              $ 18,137   $ 12,494    $ 9,628


                                               Kforce Inc.
                            Selected Financial Information and Reconciliations
                                 (In Thousands, Except Per Share Amounts)
                                               (Unaudited)

  EBITDA

                                                                  Three Months Ended
                                               ---------------------------------------------------------
                                                    Jun. 30,            Mar. 31,           Jun. 30,

                                                      2010                2010               2009
                                               ------------------  -----------------  ------------------

                                                            Per                Per                 Per
                                                   $       share      $       share       $       share
                                               ---------  -------  --------  -------  ---------  -------

  Net income                                     $ 5,144   $ 0.13   $ 2,708   $ 0.07    $ 3,907   $ 0.10
   Intangible assets impairment, pre-tax              --       --        --       --        870     0.02
   Depreciation & amortization                     3,137     0.08     2,976     0.07      2,885     0.07
   Amortization of stock options & SARS               --       --        --       --         56     0.00
   Amortization of restricted stock & PARS         1,511     0.03     1,395     0.03        660     0.02
   Interest expense and other                        319     0.01       348     0.01        330     0.01

   Income tax expense                              3,623     0.09     1,147     0.03      2,470     0.07
                                               ---------  -------  --------  -------  ---------  -------

  EBITDA                                        $ 13,734   $ 0.34   $ 8,574   $ 0.21   $ 11,178   $ 0.29
                                               =========  =======  ========  =======  =========  =======

  Weighted average shares outstanding -
   diluted                                        40,532             40,387              38,988

  EBITDA, a non-GAAP financial measure, is defined as net income before non-cash impairment charges,
   interest, income taxes, depreciation and amortization and amortization of stock-based compensation
   expense. EBITDA should not be considered a measure of financial performance under generally accepted
   accounting principles. Items excluded from EBITDA are significant components in understanding and
   assessing financial performance.

  Net Income before Equity-Based Compensation Expense


                                                                  Three Months Ended
                                               ---------------------------------------------------------
                                                    Jun. 30,            Mar. 31,           Jun. 30,

                                                      2010                2010               2009
                                               ------------------  -----------------  ------------------

                                                            Per                Per                 Per
                                                   $       share      $       share       $       share
                                               ---------  -------  --------  -------  ---------  -------

  Net income                                     $ 5,144   $ 0.13   $ 2,708   $ 0.07    $ 3,907   $ 0.10
  Equity-based compensation expense, net:
   Alternative LTI valuation expense                 280     0.01       280     0.01        513     0.01
   Amortization of stock options & SARS               --       --        --       --         56     0.00
   Amortization of restricted stock & PARS         1,511     0.03     1,395     0.03        660     0.02

   Income tax benefit                              (695)   (0.02)     (650)   (0.02)      (493)   (0.01)
                                               ---------  -------  --------  -------  ---------  -------

   Equity-based compensation expense, net          1,096     0.02     1,025     0.02        736     0.02
                                               ---------  -------  --------  -------  ---------  -------
  Net income before equity-based compensation
   expense                                       $ 6,240   $ 0.15   $ 3,733   $ 0.09    $ 4,643   $ 0.12
                                               =========  =======  ========  =======  =========  =======

  Weighted average shares outstanding -
   diluted                                        40,532             40,387              38,988

  "Net Income before Equity-Based Compensation Expense", a non-GAAP financial measure, is defined as net
   income before compensation expense incurred in conjunction with share-based payment awards and
   alternative long-term incentive awards. Kforce measures the cost of employee services received in
   exchange for an equity based award based on the grant-date fair value of the award (with limited
   exceptions). That cost is recognized over the period in which the employee is required to provide
   service in exchange for the award, which is usually the vesting period.

  EBITDA and Net Income before Equity-Based Compensation Expense are key measures used by management to
   evaluate its operations and to provide useful information to investors. These measures should not be
   considered in isolation or as an alternative to net income, cash flows data or other financial
   statement information presented in the consolidated financial statements as indicators of financial
   performance or liquidity. These measurements are not determined in accordance with generally accepted
   accounting principles and are thus susceptible to varying calculations. The measures as presented may
   not be comparable to similarly titled measures of other companies.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Kforce Inc.

CONTACT:  Kforce Inc.
Michael Blackman, Chief Corporate Development Officer
(813) 552-2927

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