Press Releases
Kforce Reports Second Quarter 2018 Revenues of $358.6 Million; Net Income of $16.3 Million; EPS of $0.65 Per Share, an Increase of 48% Year-Over-Year; Tech Flex Accelerates to 9.8% Year-Over-Year Growth; Board of Directors Approves 50% Increase in Quarter
Mr. Liberatore noted additional operational results for the second quarter include:
- Flex revenues of
$342.1 million in Q2 2018 increased 5.6% from$324.0 million in Q2 2017. - Quarterly year-over-year growth in Flex revenues for Tech and GS was 9.8% and 18.2%, respectively, while FA experienced a decrease of 9.4%.
Mr. Kelly continued, "Operating cash flows were
Looking forward to the third quarter of 2018, there will be 63 billing days, which is the same as the third quarter of 2017, as compared to 64 billing days in second quarter of 2018. The revenue per billing day in the second quarter of 2018 was
- Revenue of
$359 million to $364 million - Earnings per share of
$0.65 to $0.67 - Gross profit margin of 29.7% to 29.9%
- Flex gross profit margin of 26.9% to 27.1%
- SG&A expense as a percent of revenue of 22.7% to 22.9%
- Operating margin of 6.4% to 6.6%
- Effective tax rate of 25.7%
On Wednesday, August 1, 2018,
The dial-in number is (877) 344-3890. The conference passcode is
This call is being webcast by Shareholder.com and can be accessed on the Investor Relations page of the
About
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, growth in temporary staffing and the general economy; competitive factors, risks due to shifts in the market demand; a reduction in the supply of candidates 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; the occurrence of unanticipated expenses; 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; changes in client demand and our ability to adapt to such changes; continued performance of and improvements to our enterprise information systems, 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 | ||||||||||||
June 30, 2018 | Mar. 31, 2018 | June 30, 2017 | ||||||||||
Revenue by segment: | ||||||||||||
Technology | $ | 249,763 | $ | 236,497 | $ | 228,369 | ||||||
Finance and accounting | 79,772 | 80,944 | 88,266 | |||||||||
Government solutions | 29,089 | 28,852 | 23,674 | |||||||||
Total Revenue | 358,624 | 346,293 | 340,309 | |||||||||
Direct costs | 251,141 | 246,105 | 236,390 | |||||||||
Gross profit | 107,483 | 100,188 | 103,919 | |||||||||
GP % | 30.0 | % | 28.9 | % | 30.5 | % | ||||||
Flex GP % (1) | 27.1 | % | 26.3 | % | 27.4 | % | ||||||
Selling, general and administrative expenses | 82,448 | 84,592 | 82,506 | |||||||||
Depreciation and amortization | 1,937 | 2,008 | 2,053 | |||||||||
Income from operations | 23,098 | 13,588 | 19,360 | |||||||||
Other expense, net | 1,256 | 1,339 | 1,357 | |||||||||
Income before income taxes | 21,842 | 12,249 | 18,003 | |||||||||
Income tax expense | 5,570 | 3,074 | 6,859 | |||||||||
Net income | $ | 16,272 | $ | 9,175 | $ | 11,144 | ||||||
Earnings per share - diluted | $ | 0.65 | $ | 0.37 | $ | 0.44 | ||||||
Weighted average shares outstanding - diluted | 25,178 | 25,094 | 25,482 | |||||||||
Adjusted EBITDA | $ | 27,428 | $ | 17,921 | $ | 23,258 | ||||||
Billing days | 64 | 64 | 64 | |||||||||
(1) Beginning in Q1 2018, Flex GP% excludes GS Product; prior quarters have been adjusted to align with this presentation.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 473 | $ | 379 | |||
Trade receivables, net of allowances | 239,083 | 225,865 | |||||
Income tax refund receivable | 946 | 7,116 | |||||
Prepaid expenses and other current assets | 13,988 | 12,085 | |||||
Total current assets | 254,490 | 245,445 | |||||
Fixed assets, net | 38,568 | 39,680 | |||||
Other assets, net | 40,491 | 38,598 | |||||
Deferred tax assets, net | 11,578 | 11,316 | |||||
Intangible assets, net | 3,125 | 3,297 | |||||
Goodwill | 45,968 | 45,968 | |||||
Total assets | $ | 394,220 | $ | 384,304 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and other accrued liabilities | $ | 37,960 | $ | 34,873 | |||
Accrued payroll costs | 46,603 | 46,886 | |||||
Other current liabilities | 1,824 | 1,960 | |||||
Income taxes payable | 5,387 | — | |||||
Total current liabilities | 91,774 | 83,719 | |||||
Long-term debt – credit facility | 100,600 | 116,523 | |||||
Long-term debt – other | 2,114 | 2,597 | |||||
Other long-term liabilities | 49,426 | 47,188 | |||||
Total liabilities | 243,914 | 250,027 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 716 | 715 | |||||
Additional paid-in capital | 442,460 | 437,394 | |||||
Accumulated other comprehensive income | 797 | 100 | |||||
Retained earnings | 214,143 | 195,143 | |||||
Treasury stock, at cost | (507,810 | ) | (499,075 | ) | |||
Total stockholders’ equity | 150,306 | 134,277 | |||||
Total liabilities and stockholders’ equity | $ | 394,220 | $ | 384,304 | |||
Key Statistics
(Unaudited)
Q2 2018 | Q1 2018 | Q2 2017 | ||||||||||
Total Firm | ||||||||||||
Total Revenue (000’s) | $ | 358,624 | $ | 346,293 | $ | 340,309 | ||||||
GP % | 30.0 | % | 28.9 | % | 30.5 | % | ||||||
Flex revenue (000’s) (1) | $ | 342,105 | $ | 332,817 | $ | 324,015 | ||||||
Flex GP % (1) | 27.1 | % | 26.3 | % | 27.4 | % | ||||||
Direct Hire revenue (000’s) | $ | 12,536 | $ | 11,395 | $ | 13,853 | ||||||
Placements | 847 | 853 | 974 | |||||||||
Average fee | $ | 14,802 | $ | 13,362 | $ | 14,227 | ||||||
Product revenue (000's) | $ | 3,983 | $ | 2,081 | $ | 2,441 | ||||||
Billing days | 64 | 64 | 64 | |||||||||
Technology | ||||||||||||
Flex revenue (000’s) | $ | 244,509 | $ | 231,496 | $ | 222,744 | ||||||
Hours (000’s) | 3,294 | 3,178 | 3,234 | |||||||||
Flex GP % | 27.2 | % | 26.1 | % | 26.9 | % | ||||||
Direct Hire revenue (000’s) | $ | 5,254 | $ | 5,001 | $ | 5,625 | ||||||
Placements | 282 | 278 | 317 | |||||||||
Average fee | $ | 18,635 | $ | 18,021 | $ | 17,753 | ||||||
Finance and Accounting | ||||||||||||
Flex revenue (000’s) | $ | 72,490 | $ | 74,550 | $ | 80,038 | ||||||
Hours (000’s) | 2,076 | 2,196 | 2,398 | |||||||||
Flex GP % | 29.1 | % | 27.9 | % | 28.8 | % | ||||||
Direct Hire revenue (000’s) | $ | 7,282 | $ | 6,394 | $ | 8,228 | ||||||
Placements | 565 | 575 | 657 | |||||||||
Average fee | $ | 12,889 | $ | 11,115 | $ | 12,526 | ||||||
Government Solutions | ||||||||||||
Total Revenue (000's) | $ | 29,089 | $ | 28,852 | $ | 23,674 | ||||||
GP % | 25.0 | % | 26.6 | % | 29.8 | % | ||||||
Flex revenue (000’s) (1) | $ | 25,106 | $ | 26,771 | $ | 21,233 | ||||||
Flex GP% (1) | 19.8 | % | 24.5 | % | 26.7 | % | ||||||
Product revenue (000's) | $ | 3,983 | $ | 2,081 | $ | 2,441 | ||||||
Product GP % | 57.2 | % | 54.3 | % | 56.8 | % | ||||||
(1) Beginning in Q1 2018, Flex revenue and Flex GP% exclude GS Product; prior quarters have been adjusted to align with this presentation.
Revenue Growth Rates
(
(Unaudited)
Year-Over-Year Revenue Growth Rates | |||||||||||||||
(Per Billing Day) | |||||||||||||||
Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2017 | |||||||||||
Billing days | 64 | 64 | 61 | 63 | 64 | ||||||||||
Tech Flex | 9.8 | % | 6.7 | % | 5.4 | % | 3.3 | % | 1.5 | % | |||||
FA Flex | (9.4 | )% | (7.9 | )% | 0.3 | % | 4.1 | % | 4.3 | % | |||||
GS Flex (1) | 18.2 | % | 24.5 | % | 27.9 | % | 12.7 | % | 1.2 | % | |||||
Total Flex (1) | 5.6 | % | 4.2 | % | 5.5 | % | 4.2 | % | 2.2 | % | |||||
Total Firm | 5.4 | % | 3.7 | % | 5.1 | % | 3.0 | % | 1.6 | % | |||||
(1) Beginning in Q1 2018, Flex revenue excludes GS Product; prior quarters have been adjusted to align with this presentation.
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 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
Six Months Ended | |||||||
June 30, | |||||||
2018 | 2017 | ||||||
Net income | $ | 25,447 | $ | 17,046 | |||
Non-cash provisions and other | 10,545 | 12,451 | |||||
Changes in operating assets/liabilities | 2,267 | (23,958 | ) | ||||
Net cash provided by operating activities | 38,259 | 5,539 | |||||
Capital expenditures | (3,116 | ) | (4,344 | ) | |||
Free cash flow | 35,143 | 1,195 | |||||
Change in debt | (15,923 | ) | 12,582 | ||||
Repurchases of common stock | (12,129 | ) | (2,952 | ) | |||
Cash dividends | (5,943 | ) | (6,080 | ) | |||
Other | (1,054 | ) | (2,695 | ) | |||
Change in cash and cash equivalents | $ | 94 | $ | 2,050 | |||
Adjusted EBITDA
“Adjusted EBITDA”, a non-GAAP financial measure, is defined by
Three Months Ended, | ||||||||||||
June 30, 2018 | Mar. 31, 2018 | June 30, 2017 | ||||||||||
Net income | $ | 16,272 | $ | 9,175 | $ | 11,144 | ||||||
Depreciation and amortization | 2,057 | 2,115 | 2,105 | |||||||||
Stock-based compensation expense | 2,292 | 2,260 | 1,805 | |||||||||
Interest expense, net | 1,237 | 1,297 | 1,345 | |||||||||
Income tax expense | 5,570 | 3,074 | 6,859 | |||||||||
Adjusted EBITDA | $ | 27,428 | $ | 17,921 | $ | 23,258 | ||||||
AT THE FIRM
Chief Corporate Development Officer
(813) 552-2927
Source: Kforce, Inc.