Press Releases
Kforce Reports First Quarter Revenues of $322.2 Million
First Quarter Adjusted Net Income of
"The overall demand environment remains strong. We have begun to see a gradual reacceleration of activity in those few large clients that have slowed their usage of flexible staffing due to transactions, and conversations with representatives at these clients suggest a strong pipeline of projects. Additionally, as we further deepen relationships more broadly in our portfolio, we continue to identify new opportunities, though building significant presence within these large customers will happen gradually and take some time."
Mr. Liberatore noted additional operational results for the first quarter include:
- Flex revenues of
$309.6 million in Q1 ‘16 increased 3.0% from$300.5 million in Q1 ‘15. - Year-over-year growth in Flex revenue for Tech and FA was 1.3% and 13.8%, respectively, while Government Solutions
experienced a decline of 10.7%.
- Direct Hire revenues of
$12.6 million in Q1 ‘16 increased 4.0% from$12.1 million in Q1 ‘15. - Revenue-generating associates increased 10.6% year-over-year.
Highlights for the first quarter include:
- Flex gross profit margin decreased 20 basis points to 27.3% in Q1
‘16 from 27.5% in Q1 ‘15.
- Selling, general and administrative ("SG&A") expenses as a percentage of revenues for Q1 ‘16 was 26.6% compared to 26.3% for Q1 ‘15. Excluding the severance costs recorded in Q1 ‘16, SG&A as a percentage of revenues was 26.0%, which is a decrease of 30 basis points versus Q1 ‘15.
- We repurchased approximately 1.1 million shares of common stock on the open market at a total cost of approximately
$19.8 million .
Looking forward to the second quarter of 2016, there will be 64 billing days, which is the same as the preceding and prior year quarters. Current estimates for the second quarter of 2016 are:
- Revenues of
$332 million to$337 million - Earnings per share of
$0.39 to$0 .42 - Gross profit margin of 31.4% to 31.6%
- Operating margin of 5.2% to 5.5%
- SG&A expense as a percent of revenue of 25.3% to 25.5%
- Effective tax rate of 39.3%
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About
The
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 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 and Government Solutions segments, as well as the market for direct hire and flexible staffing assignments; a reduction in the supply of candidates for temporary employment 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; ability of the Firm to complete and integrate acquisitions; 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; and the risk factors listed from time to time in the Firm's reports filed with the
| Summary of Operations | ||||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| Revenue by function: | ||||||||||||
| Technology | $ | 216,588 | $ | 218,026 | $ | 213,639 | ||||||
| Finance & accounting | 82,492 | 86,816 | 73,072 | |||||||||
| Government solutions | 23,121 | 22,857 | 25,900 | |||||||||
| Total revenue | 322,201 | 327,699 | 312,611 | |||||||||
| Direct costs of services | 225,012 | 224,184 | 217,871 | |||||||||
| Gross profit | 97,189 | 103,515 | 94,740 | |||||||||
| GP % | 30.2 | % | 31.6 | % | 30.3 | % | ||||||
| Flex GP % | 27.3 | % | 28.7 | % | 27.5 | % | ||||||
| Selling, general & administrative expenses | 85,568 | 80,702 | 82,352 | |||||||||
| Depreciation & amortization | 2,327 | 2,429 | 2,397 | |||||||||
| Income from operations | 9,294 | 20,384 | 9,991 | |||||||||
| Other expense, net | 555 | 288 | 453 | |||||||||
| Income before income taxes | 8,739 | 20,096 | 9,538 | |||||||||
| Income tax expense | 5,089 | 8,195 | 3,753 | |||||||||
| Net income | $ | 3,650 | $ | 11,901 | $ | 5,785 | ||||||
| Earnings per share - diluted | $ | 0.14 | $ | 0.43 | $ | 0.20 | ||||||
| Weighted average shares outstanding - diluted | 26,842 | 27,793 | 28,475 | |||||||||
| Adjusted EBITDA per share | $ | 0.51 | $ | 0.88 | $ | 0.48 | ||||||
| Adjusted EBITDA | $ | 13,599 | $ | 24,556 | $ | 13,742 | ||||||
| Billing days | 64 | 62 | 63 | |||||||||
| Consolidated Balance Sheets | ||||||||
| (In Thousands) | ||||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 920 | $ | 1,497 | ||||
| Trade receivables, net of allowances | 210,444 | 198,933 | ||||||
| Income tax refund receivable | 67 | 526 | ||||||
| Deferred tax assets, net | 3,815 | 4,518 | ||||||
| Prepaid expenses and other current assets | 10,463 | 9,060 | ||||||
| Total current assets | 225,709 | 214,534 | ||||||
| Fixed assets, net | 37,599 | 37,476 | ||||||
| Other assets, net | 28,474 | 28,671 | ||||||
| Deferred tax assets, net | 18,298 | 20,938 | ||||||
| Intangible assets, net | 4,043 | 4,235 | ||||||
| 45,968 | 45,968 | |||||||
| Total assets | $ | 360,091 | $ | 351,822 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | 35,667 | $ | 39,227 | ||||
| Accrued payroll costs | 50,537 | 46,125 | ||||||
| Other current liabilities | 1,368 | 1,287 | ||||||
| Income taxes payable | 1,621 | 1,107 | ||||||
| Total current liabilities | 89,193 | 87,746 | ||||||
| Long-term debt - credit facility | 103,454 | 80,472 | ||||||
| Long-term debt - other | 3,546 | 3,351 | ||||||
| Other long-term liabilities | 42,311 | 40,626 | ||||||
| Total liabilities | 238,504 | 212,195 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 710 | 705 | ||||||
| Additional paid-in capital | 422,862 | 420,276 | ||||||
| Accumulated other comprehensive income | 315 | 318 | ||||||
| Retained earnings | 155,456 | 155,096 | ||||||
| (457,756 | ) | (436,768 | ) | |||||
| Total stockholders' equity | 121,587 | 139,627 | ||||||
| Total liabilities and stockholders' equity | $ | 360,091 | $ | 351,822 | ||||
| Key Statistics | ||||||||||||
| (Unaudited) | ||||||||||||
| Q1 2016 | Q4 2015 | Q1 2015 | ||||||||||
| Total Firm | ||||||||||||
| Flex revenue (000's) | $ | 309,636 | $ | 314,286 | $ | 300,532 | ||||||
| Hours (000's) | 5,451 | 5,603 | 5,073 | |||||||||
| Flex GP % | 27.3 | % | 28.7 | % | 27.5 | % | ||||||
| Direct Hire revenue (000's) | $ | 12,565 | $ | 13,413 | $ | 12,079 | ||||||
| Placements | 912 | 995 | 869 | |||||||||
| Average fee | $ | 13,785 | $ | 13,484 | $ | 13,909 | ||||||
| Billing days | 64 | 62 | 63 | |||||||||
| Technology | ||||||||||||
| Flex revenue (000's) | $ | 211,209 | $ | 212,917 | $ | 208,438 | ||||||
| Hours (000's) | 3,129 | 3,158 | 3,074 | |||||||||
| Flex GP % | 26.7 | % | 27.5 | % | 26.4 | % | ||||||
| Direct Hire revenue (000's) | $ | 5,379 | $ | 5,109 | $ | 5,201 | ||||||
| Placements | 317 | 323 | 330 | |||||||||
| Average fee | $ | 16,992 | $ | 15,822 | $ | 15,785 | ||||||
| Finance & Accounting | ||||||||||||
| Flex revenue (000's) | $ | 75,306 | $ | 78,512 | $ | 66,194 | ||||||
| Hours (000's) | 2,322 | 2,445 | 1,999 | |||||||||
| Flex GP % | 28.7 | % | 29.9 | % | 28.4 | % | ||||||
| Direct Hire revenue (000's) | $ | 7,186 | $ | 8,304 | $ | 6,878 | ||||||
| Placements | 595 | 672 | 539 | |||||||||
| Average fee | $ | 12,078 | $ | 12,360 | $ | 12,760 | ||||||
| Government Solutions | ||||||||||||
| Flex revenue (000's) | $ | 23,121 | $ | 22,857 | $ | 25,900 | ||||||
| Flex GP % | 28.4 | % | 34.9 | % | 34.1 | % | ||||||
| Revenue Growth Rates | |||||||||||||||
| (Per Billing Day) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Year-Over-Year Growth Rates | |||||||||||||||
| (Per Billing Day) | |||||||||||||||
| Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | |||||||||||
| Tech Flex | (0.3 | )% | 0.2 | % | 6.6 | % | 9.6 | % | 8.3 | % | |||||
| Tech Direct Hire | 1.8 | % | 7.8 | % | 6.7 | % | 24.9 | % | 29.8 | % | |||||
| Total Tech | (0.2 | )% | 0.4 | % | 6.6 | % | 9.9 | % | 8.7 | % | |||||
| FA Flex | 12.0 | % | 15.7 | % | 19.4 | % | 21.2 | % | 15.9 | % | |||||
| FA Direct Hire | 2.8 | % | 15.7 | % | 17.9 | % | 7.9 | % | 21.0 | % | |||||
| Total FA | 11.1 | % | 15.7 | % | 19.2 | % | 19.7 | % | 16.4 | % | |||||
| Total Staffing | 2.7 | % | 4.3 | % | 9.8 | % | 12.3 | % | 10.6 | % | |||||
| GS | (12.1 | )% | (13.9 | )% | (1.8 | )% | 1.3 | % | 13.7 | % | |||||
| Total Firm | 1.5 | % | 2.8 | % | 8.8 | % | 11.4 | % | 10.8 | % | |||||
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 does not consider these non-GAAP financial measures 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.
Adjusted Net Income and Adjusted Net Income Per Share
"Adjusted Net Income", a non-GAAP financial measure, is defined as net income adjusted for certain non-recurring charges. "Adjusted Net Income Per Share", a non-GAAP financial measure, is Adjusted Net Income divided by the number of diluted weighted average shares outstanding. Adjusted Net Income and Adjusted Net Income Per Share should not be considered a measure of financial performance under generally accepted accounting principles and are presented as an alternative method for assessing the Company's operating results in a manner that is focused on the performance of our ongoing operations and to provide consistency and comparability. Adjusted Net Income and Adjusted Net Income Per Share are key measures used by management and provide useful information by excluding certain non-recurring charges that we believe are not indicative of the Company's core operating results, consequently, management believes they are useful information to investors.
| Three Months Ended | ||||||||||||||||||||||||
| $ | Per share | $ | Per share | $ | Per share | |||||||||||||||||||
| Net income | $ | 3,650 | $ | 0.14 | $ | 11,901 | $ | 0.43 | $ | 5,785 | $ | 0.20 | ||||||||||||
| Non-recurring charges, pre-tax | ||||||||||||||||||||||||
| Severance costs | 1,742 | 0.06 | — | — | — | — | ||||||||||||||||||
| Non-recurring charges, pre-tax | 1,742 | 0.06 | — | — | — | — | ||||||||||||||||||
| Income tax expense * | 974 | 0.04 | — | — | — | — | ||||||||||||||||||
| Adjusted net income | 6,366 | $ | 0.24 | 11,901 | $ | 0.43 | 5,785 | $ | 0.20 | |||||||||||||||
| Weighted average shares outstanding - basic | 26,693 | 27,430 | 28,276 | |||||||||||||||||||||
| Weighted average shares outstanding - diluted | 26,842 | 27,793 | 28,475 | |||||||||||||||||||||
* The income tax expense reconciling item is composed of (i) an income tax expense of
Adjusted EBITDA and Adjusted EBITDA Per Share
"Adjusted EBITDA", a non-GAAP financial measure, is defined by
| Three Months Ended | ||||||||||||||||||||||||
| $ | Per share | $ |
Per share | $ | Per share | |||||||||||||||||||
| Net income | $ | 3,650 | $ | 0.14 | $ | 11,901 | $ | 0.43 | $ | 5,785 | $ | 0.20 | ||||||||||||
| Depreciation & amortization | 2,337 | 0.09 | 2,429 | 0.09 | 2,397 | 0.08 | ||||||||||||||||||
| Stock-based compensation expense | 1,944 | 0.07 | 1,558 | 0.05 | 1,291 | 0.05 | ||||||||||||||||||
| Interest expense and other | 579 | 0.02 | 473 | 0.02 | 516 | 0.02 | ||||||||||||||||||
| Income tax expense | 5,089 | 0.19 | 8,195 | 0.29 | 3,753 | 0.13 | ||||||||||||||||||
| Adjusted EBITDA | $ | 13,599 | $ | 0.51 | $ | 24,556 | $ | 0.88 | $ | 13,742 | $ | 0.48 | ||||||||||||
| Weighted average shares outstanding - basic | 26,693 | 27,430 | 28,276 | |||||||||||||||||||||
| Weighted average shares outstanding - diluted | 26,842 | 27,793 | 28,475 | |||||||||||||||||||||
Free Cash Flow
"Free Cash Flow", a non-GAAP financial measure, is defined by
| Three Months Ended | ||||||||
| 2016 | 2015 | |||||||
| Net income | $ | 3,650 | $ | 5,785 | ||||
| Non-cash provisions and other | 8,419 | 5,791 | ||||||
| Changes in operating assets/liabilities | (9,013 | ) | (168 | ) | ||||
| Capital expenditures | (1,294 | ) | (1,389 | ) | ||||
| Free cash flow | 1,762 | 10,019 | ||||||
| Change in debt | 22,982 | 993 | ||||||
| Repurchases of common stock | (22,084 | ) | (8,507 | ) | ||||
| Cash dividend | (3,146 | ) | (3,112 | ) | ||||
| Other | (91 | ) | 1,297 | |||||
| Change in cash | $ | (577 | ) | $ | 690 | |||
AT THE FIRM Michael R. Blackman Chief Corporate Development Officer (813) 552-2927
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