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Kforce Reports Third Quarter Results

TAMPA, Fla., Nov. 1, 2011 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its third quarter of 2011. Revenue for the quarter ended September 30, 2011 was $289.0 million compared to $274.0 million for the quarter ended June 30, 2011, an increase of 5.5% and compared to $259.5 million for the quarter ended September 30, 2010, an increase of 11.4%. For the quarter ended September 30, 2011, Kforce reported net income of $8.4 million, or $0.22 per share, versus $6.8 million, or $0.17 per share, for the quarter ended June 30, 2011, an increase of 24.5% in net income and 29.4% in EPS. Net income and EPS for the third quarter of 2011 increased 31.1% and 37.5%, respectively, versus the third quarter of 2010, which had net income of $6.4 million, or $0.16 per share.

"We are very pleased with our third quarter results, particularly our record quarterly revenues of $289.0 million. In addition, Flex revenues for our Tech, FA and HLS segments experienced year-over-year increases of 16.7%, 8.1% and 9.5%, respectively. Also, total Flex revenues increased 5.8% sequentially and increased across all segments, including a 6.9% increase in Tech Flex, our largest revenue stream. We believe that the secular shift towards a flexible staffing model in this temporary employment-led recovery, as evidenced by a disproportionate increase of job creation occurring in temporary staffing, has contributed to our growth as we continue to see solid demand across all our service lines in an uncertain macroeconomic and regulatory environment. Additionally, of the 13.1% of shares repurchased year to date, the Firm repurchased 4.6 million shares equal to approximately 10.8% of the shares outstanding during the third quarter of 2011. I wish to thank all of our employees, consultants and clients for making the third quarter of 2011 a very successful quarter for Kforce, and we remain optimistic about the Firm's prospects," said David L. Dunkel, Chairman and CEO.

William L. Sanders, President, said, "Our key performance indicators and discussions with clients indicate that demand continues to be solid. Flex margins increased 50 basis points sequentially as the spread between bill rates and pay rates increased for both Tech and FA. Kforce continues to aggressively pursue business opportunities with the goal of continuing to gain client and market share."

Mr. Sanders noted additional operational results for the third quarter include:

Joseph J. Liberatore, Chief Financial Officer, said, "The Firm performed well in Q3 '11. Q3 '11, Q2 '11 and Q3 '10 each contained 64 billing days. We believe our third quarter results reflect improving client relationships, solid expense management, an improving pricing environment and continued efficiencies and operating leverage provided by the NRC and Strategic Accounts. We are also excited to announce that the Firm entered into an amended and restated Credit Facility in September 2011, which we believe provides access to adequate capital to execute on the Firm's strategic vision going forward. Additionally, the Board of Directors increased the existing authorization for repurchases of Kforce common stock by $75.0 million in October 2011."

Financial highlights for the third quarter include:

Mr. Liberatore stated, "In addition, looking forward to the fourth quarter of 2011, we expect revenue may be in the $278 million to $285 million range and earnings per share in the range of $0.17 to $0.20. The fourth quarter of 2011 has 61 billing days versus 64 billing days in the third quarter of 2011."

On Tuesday, November 1, 2011, 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 877-344-3890. The replay of the call will be available from 8:00 p.m. Eastern Time Tuesday, November 1 to November 15, 2011 by dialing (800) 642-1687, passcode 51841288.

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 November 15, 2011.

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 more than 2,200 associates and approximately 10,600 consultants on assignment, Kforce is committed to "Great People = Great Results" for our valued clients and candidates. Kforce operates with 63 offices located throughout the United States and one office 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 600 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 technologically 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 Exchange 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
       
  Sept. 30,
2011
Jun. 30,
2011
Sept. 30,
2010
       
Revenue by function:      
 Technology   $ 165,476  $ 154,534  $ 141,930
 Finance & accounting   54,297  54,774  50,170
 Health & life sciences   45,337  42,735  41,229
 Government solutions   23,881  21,946  26,190
Total revenue 288,991 273,989 259,519
       
Revenue by time:      
Flex 277,123 261,808 248,960
Search 11,868 12,181 10,559
Total revenue 288,991 273,989 259,519
       
Costs of services 196,953 187,341 176,054
Gross profit  92,038  86,648  83,465
GP % 31.8% 31.6% 32.2%
Flex GP % 28.9% 28.4% 29.3%
       
Selling, general & administrative expenses 75,134 72,163 69,321
Depreciation & amortization 3,072 3,211 3,236
       
Income from operations 13,832 11,274 10,908
       
Other expense, net 301 335 387
       
Income before income taxes 13,531 10,939 10,521
       
Income tax expense 5,085 4,154 4,077
       
Net income   $ 8,446  $ 6,785  $ 6,444
       
Earnings per share - diluted  $ 0.22  $ 0.17  $ 0.16
Adjusted EBITDA per share  $ 0.52  $ 0.43  $ 0.39
Shares outstanding - diluted  38,228 40,465 40,384
       
Adjusted EBITDA   $ 20,084  $ 17,276  $ 15,710
       
Other information:      
Capital expenditures  $ 2,113  $ 1,400  $ 3,345
Equity-based compensation expense, net  $ 1,931  $ 1,762  $ 1,171
Working capital  $ 100,766  $ 71,969  $ 76,762
       
Selected balance sheet information:    
Cash and cash equivalents  $ 1,025  $ 685  $ 454
Accounts receivable, less allowances  $ 186,843  $ 166,724  $ 154,160
Total assets  $ 420,397  $ 404,923  $ 392,949
Bank debt  $ 59,384  $ 18,934  $ 20,000
Total liabilities  $ 193,747  $ 147,061  $ 145,286
Total stockholders' equity  $ 226,650  $ 257,862  $ 247,663
       
Billing days  64  64  64
       
       
Kforce Inc.
Key Statistics
(Unaudited)
       
       
  Q3 2011 Q2 2011 Q3 2010
       
Total Firm      
Flex revenue (000's)  $ 277,123  $ 261,808  $ 248,960
Revenue per billing day (000's)  $ 4,330  $ 4,091  $ 3,890
Sequential flex revenue change 5.8% 3.8% 5.4%
Hours (000's)  4,486  4,318  4,019
Flex GP % 28.9% 28.4% 29.3%
       
Search revenue (000's)  $ 11,868  $ 12,181  $ 10,559
Placements   884  933  824
Average fee  $ 13,424  $ 13,058  $ 12,819
Billing days  64  64  64
       
Technology      
Flex revenue (000's)  $ 160,285  $ 149,997  $ 137,326
Revenue per billing day (000's)  $ 2,504  $ 2,344  $ 2,146
Sequential flex revenue change 6.9% 7.6% 5.7%
Hours (000's)  2,520  2,403  2,186
Flex GP % 27.7% 27.1% 28.0%
       
Search revenue (000's)  $ 5,191  $ 4,537  $ 4,604
Placements   354  313  311
Average fee  $ 14,682  $ 14,488  $ 14,822
       
Finance & Accounting      
Flex revenue (000's)  $ 48,046  $ 47,522  $ 44,437
Revenue per billing day (000's)  $ 751  $ 743  $ 694
Sequential flex revenue change 1.1% -0.7% 16.5%
Hours (000's)  1,406  1,393 1,340
Flex GP % 30.1% 29.5% 30.9%
       
Search revenue (000's)  $ 6,251  $ 7,252  $ 5,733
Placements   499  594  497
Average fee  $ 12,516  $ 12,218  $ 11,533
       
Health & Life Sciences      
Flex revenue (000's)  $ 44,911  $ 42,343  $ 41,007
Revenue per billing day (000's)  $ 702  $ 662  $ 641
Sequential flex revenue change 6.1% 1.6% -0.1%
Hours (000's)  560  522  493
Flex GP % 30.2% 30.4% 28.8%
       
Search revenue (000's)  $ 426  $ 392  $ 222
Placements  31  26  16
Average fee  $ 13,695  $ 15,004  $ 13,876
       
Government Solutions      
Flex revenue (000's)  $ 23,881  $ 21,946  $ 26,190
Revenue per billing day (000's)  $ 373  $ 343  $ 409
Sequential flex revenue change 8.8% -6.0% -3.3%
Flex GP % 32.3% 31.7% 34.3%
       
       
Kforce Inc.
Key Statistics - Health & Life Sciences
(Unaudited)
       
       
  Q3 2011 Q2 2011 Q3 2010
       
Clinical Research      
Flex revenue (000's)  $ 27,703  $ 25,742  $ 26,331
Revenue per billing day (000's)  $ 433  $ 402  $ 412
Sequential flex revenue change 7.6% 0.0% -4.2%
Hours (000's)  297  270  282
Flex GP % 26.2% 26.7% 26.6%
       
Search revenue (000's)  $ 264  $ 224  $ 92
Placements   10  10  5
Average fee  $ 26,393  $ 22,433  $ 18,333
       
Health Information Management      
Flex revenue (000's)  $ 17,208  $ 16,601  $ 14,676
Revenue per billing day (000's)  $ 269  $ 260  $ 229
Sequential flex revenue change 3.7% 4.2% 8.1%
Hours (000's)  263  252  211
Flex GP % 36.6% 36.2% 32.8%
       
Search revenue (000's)  $ 162  $ 168  $ 130
Placements   21  16  11
Average fee  $ 7,678  $ 10,408  $ 11,850
             
             
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
             
Quarterly Adjusted EBITDA            
  Three Months Ended
  Sept. 30,
2011
Jun. 30,
2011
Sept. 30,
2010
  $ Per share $ Per share $ Per share
             
Net income  $ 8,446  $ 0.22  $ 6,785  $ 0.17  $ 6,444  $ 0.16
Depreciation & amortization  3,072  0.08  3,211  0.08  3,236  0.08
Amortization of restricted stock & PARS  3,088  0.08  2,837  0.07  1,631  0.04
Interest expense and other  393  0.01  289  0.01  322  0.01
Income tax expense  5,085  0.13  4,154  0.10  4,077  0.10
Adjusted EBITDA  $ 20,084  $ 0.52  $ 17,276  $ 0.43  $ 15,710  $ 0.39
             
Weighted average shares outstanding - diluted  38,228    40,465    40,384  
             
Adjusted 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. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. 
             
             
Quarterly Net Income before Equity-Based Compensation Expense            
             
  Three Months Ended
  Sept. 30,
2011
Jun. 30,
2011
Sept. 30,
2010
  $ Per share $ Per share $ Per share
             
Net income  $ 8,446  $ 0.22  $ 6,785  $ 0.17  $ 6,444  $ 0.16
Equity-based compensation expense, net:            
Alternative LTI expense  5  0.00  4  0.00  281  0.01
Amortization of restricted stock & PARS  3,088  0.08  2,837  0.07  1,631  0.04
Income tax benefit  (1,162)  (0.03)  (1,079)  (0.03)  (741)  (0.02)
Equity-based compensation expense, net  1,931  0.05  1,762  0.04  1,171  0.03
Net income before equity-based compensation expense  $ 10,377  $ 0.27  $ 8,547  $ 0.21  $ 7,615  $ 0.19
             
Weighted average shares outstanding - diluted  38,228    40,465    40,384  
             
             
"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. 
             
Adjusted 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.
CONTACT: Michael R. Blackman

         Chief Corporate Development Officer

         (813) 552-2927

Kforce Inc. Logo

Source: Kforce Inc.

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