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Kforce Reports Revenues of $274.1 Million and EPS of $0.24 Before Impairment Charge for the Second Quarter of 2012

TAMPA, Fla., July 31, 2012 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its second quarter of 2012.  Revenue from continuing operations for the quarter ended June 30, 2012 was $274.1 million compared to $268.4 million for the quarter ended March 31, 2012, an increase of 2.2% and compared to $248.0 million for the quarter ended June 30, 2011, an increase of 10.5%. Excluding the non-cash goodwill impairment charge (the "impairment charge") recorded in the quarter ended June 30, 2012, Kforce reported net income of $8.9 million, or $0.24 per share, versus $4.1 million, or $0.12 per share, for the quarter ended March 31, 2012. Excluding the impairment charge, net income and earnings per share for the second quarter of 2012 increased 30.7% and 41.2%, respectively, versus the second quarter of 2011, which had net income of $6.8 million, or $0.17 per share. On a GAAP basis, Kforce reported a net loss for the quarter ended June 30, 2012 of $33.2 million, or a loss of $0.90 per share.

During the quarter ended June 30, 2012, Kforce recorded a pre-tax impairment charge in its Government Solutions (GS) reporting unit of $65.3 million. The income tax benefit associated with this impairment charge was $23.3 million, resulting in an after-tax impairment charge of $42.0 million or $1.14 per share.

David L. Dunkel, Chairman and CEO, said, "We are pleased with our Q2 '12 results as Kforce reported revenue for the quarter of $274.1 million, a year-over-year increase of 10.5%. Additionally, earnings per share of $0.24, excluding the impairment charge, came in above guidance. The strong bottom line results were driven by improving bill/pay spreads across all of our staffing businesses, strong performance in search and continued SG&A discipline. We are particularly pleased with the year-over-year Flex revenue increases in HIM, FA and Tech of 19.1%, 12.7% and 10.7%, respectively. We believe our diverse service offerings and highly elastic front and back office platforms position Kforce well to navigate through the significant uncertainties that exist in the macroeconomic environment.  I want to thank all of our employees, consultants and clients for making Q2 '12 another successful quarter for Kforce."

William L. Sanders, President, said, "The Firm continued its solid performance in the second quarter of 2012, where we experienced sequential increases in total Firm Flex and Search revenues of 1.4% and 19.9%, respectively. We were able to continue to take advantage of our highly advanced sales and delivery platform that leverages our field associates, Strategic Accounts strategy and the National Recruiting Center to profitably grow revenues with both large and small clients. Discussions with our clients and certain key performance indicators indicate demand for temporary staffing to be stable, though growth is being impacted by prolonged decision making from our clients as well as an increase in conversions. 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 second quarter include:

Joseph J. Liberatore, Chief Financial Officer, said, "The Firm continued to perform well in Q2 '12.  Q2 '12, Q1 '12 and Q2 '11 each contained 64 billing days.  We believe our second quarter results reflect our strong culture, tenured sales associate population and a continued focus on execution in all aspects of the business, including improving client relationships, solid expense management and continued efficiencies and operating leverage provided by the NRC."

Financial highlights for the second quarter include:

Mr. Liberatore stated, "In addition, looking forward to the third quarter of 2012, we expect revenues may be in the $271 million to $277 million range and earnings per share in the range of $0.23 to $0.25.  The third quarter of 2012 has 63 billing days, one less than the second quarter of 2012.

On Tuesday, July 31, 2012, 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 conference passcode is Kforce. The replay of the call will be available from 8:00 p.m. EDT, Wednesday, August 1, 2012 through August 15, 2012 by dialing (855) 859-2056, passcode 43180942.

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 15, 2012.

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 information management.  Backed by more than 2,200 associates and approximately 10,500 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.

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 Information Management 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
  June 30, 2012 March 31, 2012 June 30, 2011
       
Revenue by function:      
 Technology   $ 171,739  $ 165,655  $ 154,534
 Finance & accounting   60,867  60,256  54,774
 Health information management   19,978  19,451  16,769
 Government solutions   21,545  22,988  21,946
Total revenue 274,129 268,350 248,023
       
Costs of services 184,363 187,525 168,464
Gross profit  89,766  80,825  79,559
GP % 32.7% 30.1% 32.1%
Flex GP % 29.3% 27.1% 28.6%
       
Selling, general & administrative expenses 71,414 108,115 68,402
Goodwill impairment 65,300 -- --
Depreciation & amortization 2,877 2,882 3,179
       
(Loss) income from operations (49,825) (30,172) 7,978
       
Other expense, net 265 392 321
       
(Loss) income from continuing operations before income taxes (50,090) (30,564) 7,657
       
Income tax (benefit) expense (16,908) (12,837) 2,817
       
(Loss) income from continuing operations  $ (33,182)  $ (17,727)  $ 4,840
       
Income from discontinued operations, net of income taxes  15  21,803  1,945
       
Net (loss) income  $ (33,167)  $ 4,076  $ 6,785
       
       
Earnings (loss) per share - diluted  $ (0.90)  $ 0.12  $ 0.17
Adjusted EBITDA per share  $ 0.50  $ (0.05)  $ 0.34
Shares outstanding - diluted  36,712 34,703  40,465
       
Adjusted EBITDA   $ 18,325  $ (1,747)  $ 13,908
       
Other information:      
Capital expenditures  $ 2,519  $ 959  $ 1,400
Equity-based compensation expense, net  $ --   $ 20,541  $ 1,771
Working capital  $ 105,436  $ 83,273  $ 71,969
       
Selected balance sheet information:      
Cash and cash equivalents  $ 812  $ 862  $ 685
Accounts receivable, less allowances  $ 179,408  $ 173,125  $ 166,724
Total assets  $ 369,467  $ 409,409  $ 404,923
Bank debt  $ 10,992  $ --   $ 18,934
Total liabilities  $ 153,128  $ 159,506  $ 147,061
Total stockholders' equity  $ 216,339  $ 249,903  $ 257,862
       
Billing days  64  64  64
 
 
Kforce Inc.
Key Statistics
(Unaudited)
       
       
  Q2 2012 Q1 2012 Q2 2011
       
Total Firm      
Flex revenue (000's)  $ 260,925  $ 257,342  $ 236,066
Revenue per billing day (000's)  $ 4,077  $ 4,021  $ 3,690
Sequential flex revenue change 1.4% 3.3% 4.2%
Hours (000's)  4,411  4,369  4,048
Flex GP % 29.3% 27.1% 28.6%
       
Search revenue (000's)  $ 13,204  $ 11,008  $ 11,957
Placements   956  799  923
Average fee  $ 13,817  $ 13,778  $ 12,957
Billing days  64  64  64
       
Technology      
Flex revenue (000's)  $ 166,044  $ 160,394  $ 149,997
Revenue per billing day (000's)  $ 2,594  $ 2,506  $ 2,344
Sequential flex revenue change 3.5% 2.5% 7.6%
Hours (000's)  2,532  2,459  2,403
Flex GP % 27.9% 25.3% 27.1%
       
Search revenue (000's)  $ 5,695  $ 5,261  $ 4,537
Placements   354  337  313
Average fee  $ 16,076  $ 15,624  $ 14,488
       
Finance & Accounting      
Flex revenue (000's)  $ 53,562  $ 54,638  $ 47,522
Revenue per billing day (000's)  $ 837  $ 854  $ 743
Sequential flex revenue change -2.0% 7.3% -0.7%
Hours (000's)  1,585  1,615  1,393
Flex GP % 31.0% 29.1% 29.5%
       
Search revenue (000's)  $ 7,305  $ 5,618  $ 7,252
Placements   593  441  594
Average fee  $ 12,330  $ 12,734  $ 12,218
       
Health Information Management      
Flex revenue (000's)  $ 19,774  $ 19,322  $ 16,601
Revenue per billing day (000's)  $ 309  $ 302  $ 260
Sequential flex revenue change 2.3% 4.8% 4.2%
Hours (000's)  294  295  252
Flex GP % 36.5% 32.9% 36.2%
       
Search revenue (000's)  $ 204  $ 129  $ 168
Placements  9  21  16
Average fee  $ 22,739  $ 6,121  $ 10,408
       
Government Solutions      
Flex revenue (000's)  $ 21,545  $ 22,988  $ 21,946
Revenue per billing day (000's)  $ 337  $ 359  $ 343
Sequential flex revenue change -6.3% -1.2% -6.0%
Flex GP % 30.0% 30.6% 31.7%
 
 
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
     
Adjusted Net Income and Earnings Per Share Before Impairment Charge  
  Three Months Ended
June 30, 2012
  $ Per share
Net Loss  $ (33,167)  $ (0.90)
Goodwill impairment, pre-tax  65,300  1.77
Tax benefit from impairment charge  (23,265)  (0.63)
Goodwill impairment, after-tax  42,035  1.14
Adjusted net income and earnings per share before impairment charge  $ 8,868  $ 0.24
     
Weighted average shares outstanding - basic  36,712  
Weighted average shares outstanding - diluted  36,807  
     
"Adjusted Net Income and Earnings Per Share Before Impairment Charge", a non-GAAP financial measure, is defined as net income before the non-cash impairment charges related to goodwill. "Adjusted Net Income and Earnings Per Share Before Impairment Charge" should not be considered a measure of financial performance under generally accepted accounting principles and has been provided for consistency and comparability of the 2012 results with net income and earnings per share from prior periods. 
             
Quarterly Adjusted EBITDA            
  Three Months Ended
  June 30, 2012 March 31, 2012 June 30, 2011
  $ Per share $ Per share $ Per share
             
Net (loss) income  $ (33,167)  $ (0.90)  $ 4,076  $ 0.12  $ 6,785  $ 0.17
Income from discontinued operations, net of income taxes 15  0.00 21,803 0.63 1,945 0.05
(Loss) income from continuing operations  $ (33,182)  $ (0.90)  $ (17,727)  $ (0.51)  $ 4,840  $ 0.12
Goodwill impairment, pre-tax  65,300  1.77  --   --   --   -- 
Depreciation & amortization  2,877  0.08  2,882  0.08  3,179  0.08
Acceleration of restricted stock & PARS  --   --   22,158  0.64  --   -- 
Amortization of restricted stock & PARS  --   --   3,439  0.10  2,798  0.07
Interest expense and other  238  0.01  338  0.01  274  0.00
Income tax (benefit) expense  (16,908)  (0.46)  (12,837)  (0.37)  2,817  0.07
Adjusted EBITDA  $ 18,325  $ 0.50  $ (1,747)  $ (0.05)  $ 13,908  $ 0.34
             
Weighted average shares outstanding - basic  36,712    34,703    39,531  
Weighted average shares outstanding - diluted  36,807    34,703    40,465  
             
Adjusted EBITDA, a non-GAAP financial measure, is defined as earnings before discontinued operations, non-cash impairment charges, interest, income taxes, depreciation and amortization and 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 and Impairment Charge          
             
  Three Months Ended
  June 30, 2012 March 31, 2012 June 30, 2011
  $ Per share $ Per share $ Per share
             
Net (loss) income  $ (33,167)  $ (0.90)  $ 4,076  $ 0.12  $ 6,785  $ 0.17
Income from discontinued operations, net of income taxes 15 0.00 21,803 0.63 1,945 0.05
(Loss) income from continuing operations  $ (33,182)  $ (0.90)  $ (17,727)  $ (0.51)  $ 4,840  $ 0.12
Goodwill impairment, net of income taxes  42,035  1.14  --   --   --   -- 
Equity-based compensation expense, net:            
Alternative LTI expense  --   --   1,465  0.04  4  0.00
Acceleration of alternative LTI expense  --   --   8,354  0.24  --   --
Acceleration of restricted stock & PARS  --   --   22,158  0.64  --   --
Amortization of restricted stock & PARS  --   --   3,439  0.10  2,798  0.07
Income tax benefit  --   --   (14,875)  (0.43)  (1,031)  (0.03)
Equity-based compensation expense, net  --   --   20,541  0.59  1,771  0.04
Net income before equity-based compensation expense and impairment charge  $ 8,853  $ 0.24  $ 2,814  $ 0.08  $ 6,611  $ 0.16
             
Weighted average shares outstanding - basic  36,712    34,703    39,531  
Weighted average shares outstanding - diluted  36,807    34,703    40,465  
             
             
"Net Income before Equity-Based Compensation Expense and Impairment Charge", a non-GAAP financial measure, is defined as (loss) income from continuing operations before compensation expense incurred in conjunction with share-based payment awards, alternative long-term incentive awards and non-cash impairment charges. 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 Net Income and Earnings Per Share Before Impairment Charge, Adjusted EBITDA and Net Income before Equity-Based Compensation Expense and Impairment Charge 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:  AT THE FIRM

          Michael R. Blackman

          Chief Corporate Development Officer

          (813) 552-2927

Kforce Inc. Logo

Source: Kforce Inc.

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