Press Releases
Kforce Reports Fourth Quarter 2020 Revenue of $354.0 Million; EPS of $0.86 per Share, Up 30.3% Year-Over-Year; Tech Flex Growth Accelerates 5.7% Sequentially on a Billing Day Basis; Board of Directors Approves 15% Increase in Dividend
Fourth Quarter 2020 Financial Highlights
- Revenue for the quarter ended
December 31, 2020 was$354.0 million compared to$336.2 million for the quarter endedDecember 31, 2019 , an increase of 5.3%. - Year-over-year growth in Flex revenue for Tech was 0.8%, while FA experienced an increase of 26.0%. Revenues from our COVID-19 business positively impacted the year-over-year growth in FA Flex by 43.4%.
- Gross profit margin decreased 80 basis points year-over-year in the quarter ended
December 31, 2020 . - Selling, general and administrative expense as a percentage of revenue in the quarter ended
December 31, 2020 was 21.2%, which decreased 170 basis points from the quarter endedDecember 31, 2019 . - Income from continuing operations for the quarter ended
December 31, 2020 was$18.3 million , or$0.86 per share, as compared to$14.6 million , or$0.66 per share, for the quarter endedDecember 31, 2019 . These represent increases of 25.2% and 30.3%, respectively.
Full Year 2020 Financial Highlights
- Revenue for the year ended
December 31, 2020 of$1.40 billion increased 3.3%, on a billing day basis, from$1.35 billion for the year endedDecember 31, 2019 . - Tech Flex revenue decreased 0.8%, on a billing day basis, to
$1.03 billion in 2020 from$1.04 billion in 2019. - Income from continuing operations for the year ended
December 31, 2020 increased 2.7% to$56.0 million , or$2.62 per share, from$54.6 million , or$2.29 per share, for the year endedDecember 31, 2019 . - We repurchased approximately 1.0 million shares of common stock on the open market at a total cost of approximately
$29.4 million during the year endedDecember 31, 2020 . - Operating cash flows for the year ended
December 31, 2020 were$109 .2 million versus$66 .6 million for the year endedDecember 31, 2019 . Net cash was$3 .5 million as ofDecember 31, 2020 versus net debt of$45.2 million as ofDecember 31, 2019 .
Management Commentary
First Quarter 2021 - Guidance
Looking forward to the first quarter of 2021, there will be 63 billing days, as compared to 62 billing days in the fourth quarter of 2020, and 64 billing days in the first quarter of 2020. Revenue per billing day in the fourth quarter of 2020 was
- Revenue of
$354 million to$364 million - Earnings per share of
$0.57 to$0.65 - Gross profit margin of 27.4% to 27.6%
- Flex gross profit margin of 25.4% to 25.6%
- SG&A expense as a percent of revenue of 21.6% to 21.8%
- Operating margin of 5.2% to 5.6%
- Effective tax rate of 28.0%
Full Year 2021 – Financial Expectations
The information below reflects our 2021 financial expectations, which assumes continued strong growth in our technology business and takes into account the revenue declines from the COVID-19 revenues and the strategic alignment of our FA business into higher-skilled areas such as analytical and decision support. Our expectations also reflect an expectation of improved profitability levels. We expect that our business mix as we enter 2022 will be comprised of roughly 85% of technology revenues.
- Revenue of
$1.368 billion to$1.430 billion - Operating margin of 6.0% to 6.3%
- Earnings per share of
$2.68 to$3.00
For 2021, there will be 252 billing days as compared to 254 billing days in 2020. There is one less billing day in the first and fourth quarters of 2021 compared to 2020. Included below is a table of revenue ranges for 2021:
Range of Revenue Assumptions | ||||
Billing Day % | $ | |||
Technology | 8.0% to 12.0% | |||
Finance & Accounting | -3.0% to -12.0% | |||
COVID | -65.0% | |||
Overall | -1.3% to 3.0% |
Conference Call and Annual Meeting
On
The replay of the call will be available from
Our 2021 Annual Meeting of
About Kforce
(813) 552-2927
Cautionary Note Regarding Forward-Looking Statements
All statements in this press release, other than those of a historical nature, are forward-looking statements including, but not limited to, the Firm's guidance for the first quarter of 2021, its financial expectations for the year ended
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended | ||||||||||||
Revenue | $ | 354,048 | $ | 365,424 | $ | 336,230 | ||||||
Direct costs | 253,587 | 261.546 | 238,205 | |||||||||
Gross profit | 100,461 | 103,878 | 98,025 | |||||||||
Selling, general and administrative expenses | 75,099 | 75,852 | 77,114 | |||||||||
Depreciation and amortization | 1,174 | 1,308 | 1,431 | |||||||||
Income from operations | 24,188 | 26,718 | 19,480 | |||||||||
Other expense, net | 1,298 | 938 | 1,219 | |||||||||
Income from continuing operations, before income taxes | 22,890 | 25,780 | 18,261 | |||||||||
Income tax expense | 4,605 | 7,017 | 3,652 | |||||||||
Income from continuing operations | 18,285 | 18,763 | 14,609 | |||||||||
Loss from discontinued operations, net of tax | — | (401 | ) | |||||||||
Net income | $ | 18,285 | $ | 18,763 | $ | 14,208 | ||||||
Earnings per share - diluted: | ||||||||||||
Continuing operations | $ | 0.86 | $ | 0.89 | $ | 0.66 | ||||||
Discontinued operations | — | — | (0.02 | ) | ||||||||
Earnings per share - diluted | $ | 0.86 | $ | 0.89 | $ | 0.64 | ||||||
Weighted average shares outstanding - diluted | 21,377 | 21,180 | 22,266 | |||||||||
Adjusted EBITDA | $ | 28,259 | $ | 30,948 | $ | 23,356 | ||||||
Billing days | 62 | 64 | 62 |
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Year Ended | ||||||||
Revenue | $ | 1,397,700 | $ | 1,347,387 | ||||
Direct costs | 1,001,476 | 952,349 | ||||||
Gross profit | 396,224 | 395,038 | ||||||
Selling, general and administrative expenses | 310,713 | 314,167 | ||||||
Depreciation and amortization | 5,255 | 6,050 | ||||||
Income from operations | 80,256 | 74,821 | ||||||
Other expense, net | 5,044 | 3,425 | ||||||
Income from continuing operations, before income taxes | 75,212 | 71,396 | ||||||
Income tax expense | 19,173 | 16,830 | ||||||
Income from continuing operations | 56,039 | 54,566 | ||||||
Income from discontinued operations, net of tax | — | 76,296 | ||||||
Net income | $ | 56,039 | $ | 130,862 | ||||
Earnings per share - diluted: | ||||||||
Continuing operations | $ | 2.62 | $ | 2.29 | ||||
Discontinued operations | — | 3.21 | ||||||
Earnings per share - diluted | $ | 2.62 | $ | 5.50 | ||||
Weighted average shares outstanding - diluted | 21,395 | 23,772 | ||||||
Adjusted EBITDA | $ | 97,139 | $ | 90,688 | ||||
Billing days | 254 | 253 |
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
2020 | 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 103,486 | $ | 19,831 | ||||
Trade receivables, net of allowances | 228,373 | 217,929 | ||||||
Prepaid expenses and other current assets | 7,033 | 7,475 | ||||||
Total current assets | 338,892 | 245,235 | ||||||
Fixed assets, net | 26,804 | 29,975 | ||||||
Other assets, net | 77,575 | 72,838 | ||||||
Deferred tax asset, net | 10,738 | 8,037 | ||||||
25,040 | 25,040 | |||||||
Total assets | $ | 479,049 | $ | 381,125 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and other accrued liabilities | $ | 35,533 | $ | 33,232 | ||||
Accrued payroll costs | 65,849 | 44,001 | ||||||
Current portion of operating lease liabilities | 5,520 | 5,685 | ||||||
Other current liabilities | 300 | 1,168 | ||||||
Income taxes payable | 964 | 878 | ||||||
Total current liabilities | 108,166 | 84,964 | ||||||
Long-term debt - credit facility | 100,000 | 65,000 | ||||||
Other long-term liabilities | 90,948 | 63,898 | ||||||
Total liabilities | 299,114 | 213,862 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock | 726 | 722 | ||||||
Additional paid-in capital | 472,378 | 459,545 | ||||||
Accumulated other comprehensive loss | (4,423 | ) | (1,526 | ) | ||||
Retained earnings | 388,645 | 350,545 | ||||||
(677,391 | ) | (642,023 | ) | |||||
Total stockholders’ equity | 179,935 | 167,263 | ||||||
Total liabilities and stockholders’ equity | $ | 479,049 | $ | 381,125 |
Key Statistics
(Unaudited)
Q4 2020 | Q3 2020 | Q4 2019 | ||||||||||
Total Firm | ||||||||||||
Total Revenue (000's) | $ | 354,048 | $ | 365,424 | $ | 336,230 | ||||||
GP % | 28.4 | % | 28.4 | % | 29.2 | % | ||||||
Flex revenue (000’s) | $ | 344,884 | $ | 356,687 | $ | 325,700 | ||||||
Hours (000’s) | 5,697 | 6,325 | 5,145 | |||||||||
Flex GP % | 26.5 | % | 26.7 | % | 26.9 | % | ||||||
Direct Hire revenue (000’s) | $ | 9,164 | $ | 8,737 | $ | 10,530 | ||||||
Placements | 537 | 522 | 644 | |||||||||
Average fee | $ | 17,065 | $ | 16,722 | $ | 16,227 | ||||||
Billing days | 62 | 64 | 62 | |||||||||
Technology | ||||||||||||
Total Revenue (000's) | $ | 266,843 | $ | 260,251 | $ | 264,912 | ||||||
GP % | 27.4 | % | 27.7 | % | 28.0 | % | ||||||
Flex revenue (000’s) | $ | 262,266 | $ | 256,118 | $ | 260,153 | ||||||
Hours (000’s) | 3,312 | 3,207 | 3,391 | |||||||||
Flex GP % | 26.1 | % | 26.5 | % | 26.4 | % | ||||||
Direct Hire revenue (000’s) | $ | 4,577 | $ | 4,133 | $ | 4,759 | ||||||
Placements | 232 | 206 | 250 | |||||||||
Average fee | $ | 19,701 | $ | 20,045 | $ | 19,064 | ||||||
Finance and Accounting | ||||||||||||
Total Revenue (000's) | $ | 87,205 | $ | 105,173 | $ | 71,318 | ||||||
GP % | 31.4 | % | 30.3 | % | 34.8 | % | ||||||
Flex revenue (000’s) | $ | 82,618 | $ | 100,569 | $ | 65,547 | ||||||
Hours (000’s) | 2,385 | 3,118 | 1,754 | |||||||||
Flex GP % | 27.5 | % | 27.2 | % | 28.5 | % | ||||||
Direct Hire revenue (000’s) | $ | 4,587 | $ | 4,604 | $ | 5,771 | ||||||
Placements | 305 | 316 | 394 | |||||||||
Average fee | $ | 15,055 | $ | 14,557 | $ | 14,637 |
Revenue Growth Rates
(Unaudited)
Year-Over-Year Revenue Growth Rates | |||||||||||||||||||
(Per Billing Day) | |||||||||||||||||||
Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||
Billing days | 62 | 64 | 64 | 64 | 62 | ||||||||||||||
Tech Flex | 0.8 | % | (4.2 | ) | % | (3.0 | ) | % | 3.3 | % | 4.8 | % | |||||||
FA Flex | 26.0 | % | 51.6 | % | 28.7 | % | (3.4 | ) | % | (7.6 | ) | % | |||||||
Total Flex | 5.9 | % | 6.9 | % | 3.4 | % | 1.9 | % | 2.1 | % |
Supplemental FA Flex Information
(Unaudited)
Kforce secured large contracts to support government-sponsored COVID-19 related initiatives, which materially positively impacted our FA segment and specifically our FA Flex business. Given the contribution of the COVID-19 business, we are providing this supplemental information to better understand the performance of our FA Flex business.
Three Months Ended |
||||||||||||
Total | COVID FA | Core FA | ||||||||||
Supplemental FA Flex Information | ||||||||||||
Flex revenue (000’s) | $ | 82,618 | $ | 28,474 | $ | 54,144 | ||||||
Flex GP % | 27.5 | % | 26.9 | % | 27.9 | % | ||||||
Hours (000’s) | 2,385 | 913 | 1,472 |
Three Months |
||||||||||||
Total | COVID FA | Core FA | ||||||||||
Supplemental FA Flex Information | ||||||||||||
Flex revenue (000’s) | $ | 100,569 | $ | 51,090 | $ | 49,479 | ||||||
Flex GP % | 27.2 | % | 25.1 | % | 29.3 | % | ||||||
Hours (000’s) | 3,118 | 1,778 | 1,340 |
FA Flex gross profit percentage includes estimates for payroll taxes, benefits and other costs calculated using a consistently applied allocation.
Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
(Unaudited)
In addition to our financial results presented in accordance GAAP, Kforce may use certain non-GAAP financial measures, which we believe provide useful information to investors in evaluating our core operating performance. 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 Kforce as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities including investing in our business, making acquisitions, repurchasing common stock or paying dividends. Free Cash Flow is limited, however, because it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view Free Cash Flow as a complement to (but not a replacement of) our Consolidated Statements of Cash Flows. For the years ended
(In Thousands) | Year Ended | |||||||||
Net income | $ | 56,039 | $ | 130,862 | ||||||
Non-cash provisions and other | 27,582 | (51,650 | ) | |||||||
Changes in operating assets/liabilities | 25,538 | (12,595 | ) | |||||||
Net cash provided by operating activities | 109,159 | 66,617 | ||||||||
Capital expenditures | (6,475 | ) | (10,359 | ) | ||||||
Free cash flow | 102,684 | 56,258 | ||||||||
Equity method investment | (4,000 | ) | (9,000 | ) | ||||||
Change in debt | 35,000 | (6,800 | ) | |||||||
Repurchases of common stock | (35,613 | ) | (124,453 | ) | ||||||
Cash dividends | (16,787 | ) | (16,608 | ) | ||||||
Net proceeds from the sale of assets held for sale | 3,548 | 122,544 | ||||||||
Other | (1,177 | ) | (2,222 | ) | ||||||
Change in cash and cash equivalents | $ | 83,655 | $ | 19,719 |
Adjusted EBITDA
“Adjusted EBITDA”, a non-GAAP financial measure, is defined by Kforce as net income before (loss) income from discontinued operations, net of tax, depreciation and amortization, stock-based compensation expense, interest expense, net, income tax expense and loss from equity method investment. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations and management believes it provides a good metric of our core profitability in comparing our performance to our competitors, as well as our performance over different time periods. Consequently, management believes it is useful information to investors. The measure should not be considered in isolation or as an alternative to net income, cash flows or other financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. The measure is not determined in accordance with GAAP and is thus susceptible to varying calculations. Also, Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.
In addition, although we excluded amortization of stock-based compensation expense because it is a non-cash expense, we expect to continue to incur stock-based compensation in the future and the associated stock issued may result in an increase in our outstanding shares of stock, which may result in the dilution of our stockholder ownership interest. We suggest that you evaluate these items and the potential risks of excluding such items when analyzing our financial position.
Three Months Ended | |||||||||||||
(In Thousands) | |||||||||||||
Net income | $ | 18,285 | $ | 18,763 | $ | 14,208 | |||||||
Loss from discontinued operations, net of tax | — | — | (401 | ) | |||||||||
Income from continuing operations | 18,285 | 18,763 | 14,609 | ||||||||||
Depreciation and amortization | 1,174 | 1,308 | 1,431 | ||||||||||
Stock-based compensation expense | 2,889 | 2,908 | 2,443 | ||||||||||
Interest expense, net | 862 | 849 | 749 | ||||||||||
Income tax expense | 4,605 | 7,017 | 3,652 | ||||||||||
Loss from equity method investment | 444 | 103 | 472 | ||||||||||
Adjusted EBITDA | $ | 28,259 | $ | 30,948 | $ | 23,356 |
Years Ended |
|||||||
(In Thousands) | 2020 | 2019 | |||||
Net income | $ | 56,039 | $ | 130,862 | |||
Income from discontinued operations, net of tax | — | 76,296 | |||||
Income from continuing operations | 56,039 | 54,566 | |||||
Depreciation and amortization | 5,255 | 6,050 | |||||
Stock-based compensation expense | 11,595 | 9,825 | |||||
Interest expense, net | 3,396 | 2,586 | |||||
Income tax expense | 19,173 | 16,830 | |||||
Loss from equity method investment | 1,681 | 831 | |||||
Adjusted EBITDA | $ | 97,139 | $ | 90,688 |
Adjusted EBITDA, for the year ended
Source: Kforce, Inc.