Attached files

file filename
8-K - FORM 8 K - KFORCE INCd8k.htm

EXHIBIT 99.1

Kforce Inc.

1001 East Palm Ave.

Tampa, FL 33605

(NASDAQ: KFRC)

AT THE FIRM

Michael Blackman

Chief Corporate Development Officer

(813) 552-2927

Kforce Reports Fourth Quarter Revenue of $258.5 Million and EPS of $0.16

 

 

Total Fourth Quarter Revenue Increased 15.1% Year-Over-Year

 

Flex Revenues Per Billing Day Increased 4.3% Sequentially

 

Record Quarterly Revenues for Total Tech and Tech Flex

TAMPA, Fla., Feb. 8, 2011 (GLOBE NEWSWIRE) — Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its fourth quarter of 2010. Revenue for the quarter ended December 31, 2010 was $258.5 million compared to $259.5 million for the quarter ended September 30, 2010, a decrease of 0.4%, and compared to $224.6 million for the quarter ended December 31, 2009, an increase of 15.1%. For the quarter ended December 31, 2010, Kforce reported net income of $6.3 million, or $0.16 per share, versus $6.4 million, or $0.16 per share, for the quarter ended September 30, 2010, a decrease of 1.6% in net income while EPS was flat. Net income and earnings per share for the fourth quarter of 2010 increased 79.4% and 77.8%, respectively, versus the fourth quarter of 2009, which had net income of $3.5 million and $0.09 per share.

Kforce reported total revenue for the year ended December 31, 2010 of $990.8 million compared to $910.1 million for 2009, an increase of 8.9%. Net income was $20.6 million, or $0.51 per share, for the year ended December 31, 2010, compared to net income of $12.9 million, or $0.33 per share, for 2009, which represents an increase of 60.3% in net income and 54.5% in earnings per share.

“We are pleased with our fourth quarter results, particularly the year-over-year increases in Tech Flex and FA Flex of 18.5% and 34.1%, respectively, as we continue to leverage our National Recruiting Center (NRC) and Strategic Accounts groups to capture revenue opportunities. We also continue to perform well in permanent placement with a year-over-year increase of 49.4%. The U.S. economic environment in 2010 was unique in that we have seen a disproportionate amount of private sector hiring coming through the temporary portion of payroll. We believe Kforce is well positioned to service our clients’ increasing desire for a more flexible workforce during this unique temporary employment led recovery, which we believe may continue to contribute to a sustained secular shift toward a flexible staffing model. We believe that we will surpass prior peak earnings earlier in the cycle with a higher quality revenue stream that is less dependent upon permanent placement revenue. We are proud of our 2010 results and we remain optimistic about the Firm’s prospects. I want to thank all of our employees, consultants and clients for making 2010 a successful year for Kforce,” said David L. Dunkel, Chairman and CEO.


William L. Sanders, President, said, “Discussions with clients, as well as our internal key performance indicators (KPI’s), indicate that demand continues to accelerate, particularly in Tech and FA. Accordingly, the Firm continues to focus its efforts on the optimization of the NRC, Strategic Accounts and field sales teams to take advantage of this strengthening demand. We believe that our strong sales and delivery operating platform and highly tenured sales population provides exceptional service to our clients. 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 fourth quarter include:

 

   

Flex revenue per billing day of $4.1 million in Q4 ‘10 increased 4.3% over Q3 ‘10 and increased 13.9% over Q4 ‘09.

 

   

Flex revenue of $247.4 million in Q4 ‘10 decreased 0.6% from $249.0 million in Q3 ‘10 and increased 13.9% from $217.2 million in Q4 ‘09.

 

   

Sequential percentage changes in Flex revenue on a billing day basis by segment were a 12.2% increase for FA, 5.8% increase for Tech, 2.5% decrease for HLS and 6.6% decrease for Government Solutions.

 

   

Search revenue of $11.1 million in Q4 ‘10 increased 4.7% from $10.6 million in Q3 ‘10 and 49.4% from $7.4 million in Q4 ‘09.

 

   

Sales associate headcount increased 0.3% sequentially and 7.6% year-over-year in Q4 ‘10 reflecting selective investments in our field sales, Strategic Accounts and NRC teams.

Joe Liberatore, Chief Financial Officer, said, “The Firm continued to perform well in Q4 ‘10, both in terms of revenue and earnings per share. Q4 ‘10 and Q4 ‘09 each contained 61 billings days while Q3 ‘10 contained 64 billing days. We believe our fourth 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, expanding bill/pay rate spreads, solid expense management and optimizing cash flow.”

Mr. Liberatore indicated financial highlights for the fourth quarter to include:

 

   

Flex gross profit decreased 50 basis points to 28.8% in Q4 ‘10 from 29.3% in Q3 ‘10 and increased 10 basis points from 28.7% in Q4 ‘09.

 

   

Flex gross profit for Tech and FA in Q4 ‘10 increased 100 basis points and 80 basis points, respectively, as compared to Q4 ‘09.

 

   

Selling, general and administrative (SG&A) expenses as a percentage of revenue for fiscal 2010 was 26.8% compared to 27.6% for fiscal 2009, reflecting a decrease of 80 basis points.

 

   

Adjusted EBITDA for fiscal 2010 was $53.2 million, an increase of 26.3% from $42.1 million in fiscal 2009.

 

   

Earnings per share for fiscal 2010 was $0.51, an increase of 54.5% from $0.33 per share in fiscal 2009.

Mr. Liberatore stated, “Looking forward to the first quarter of 2011, we expect revenue may be in the $259 million to $265 million range and earnings per share in the range of $0.12 to $0.14 per share, which reflects an impact of approximately $0.05 per share of payroll taxes. The first quarter of 2011 has 63 versus 61 billing days in the fourth quarter of 2010.”

On Tuesday, February 8, 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 7:00 p.m. Eastern Time Tuesday, February 8 to February 23, 2011 by dialing 800-642-1687, passcode 16895536.

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 February 22, 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 and government solutions. Backed by approximately 2,100 associates and approximately 10,400 consultants on assignment, Kforce is committed to “Great People = Great Results” for our valued clients and candidates. Kforce operates with 65 offices located throughout the United States and two offices in the Philippines. For more information, please visit our Web site at http://www.kforce.com.

About Kforce Government Solutions (KGS)

KGS provides innovative technology, financial management, data architecture 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 technology 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 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  
     Dec. 31,
2010
    Sept. 30,
2010
    Dec. 31,
2009
 

Revenue by function:

      

Technology

   $ 142,869      $ 141,930      $ 119,478   

Finance & Accounting

     53,449        50,170        39,896   

Health & Life Sciences

     38,864        41,229        37,481   

Government Solutions

     23,313        26,190        27,747   
                        

Total revenue

     258,495        259,519        224,602   

Revenue by time:

      

Flexible

     247,437        248,960        217,199   

Perm

     11,058        10,559        7,403   
                        

Total revenue

     258,495        259,519        224,602   

Costs of services

     176,086        176,054        154,781   
                        

Gross profit

     82,409        83,465        69,821   

GP %

     31.9     32.2     31.1

Flex GP %

     28.8     29.3     28.7

Selling, general & administrative expenses

     68,700        69,321        60,645   

Depreciation & amortization

     3,262        3,236        2,919   
                        

Income from operations

     10,447        10,908        6,257   

Other expense, net

     266        387        249   
                        

Income before income taxes

     10,181        10,521        6,008   

Income tax expense

     3,843        4,077        2,475   
                        

Net income

   $ 6,338      $ 6,444      $ 3,533   
                        

Earnings per share - diluted

   $ 0.16      $ 0.16      $ 0.09   

Adjusted EBITDA per share

   $ 0.37      $ 0.39      $ 0.24   

Shares outstanding - diluted

     40,848        40,384        39,803   

Adjusted EBITDA

   $ 15,207      $ 15,710      $ 9,628   

Other information:

      

Capital expenditures

   $ 3,314      $ 3,345      $ 1,304   

Equity-based compensation expense, net

   $ 1,383      $ 1,171      $ 606   

Billing days

     61        64        61   


Kforce Inc.

Summary of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

       Twelve Months Ended        
       Dec. 31,
2010
           Dec. 31,
2009
       

Revenue by function:

            

Technology

  

   $ 538,566         $ 467,824     

Finance & Accounting

  

     187,196           162,856     

Health & Life Sciences

  

     161,913           164,933     

Government Solutions

  

     103,132           114,523     
                        

Total revenue

  

     990,807           910,136     

Revenue by time:

            

Flexible

  

     951,430           881,734     

Perm

  

     39,377           28,402     
                        

Total revenue

  

     990,807           910,136     

Costs of services

  

     678,393           624,157     
                        

Gross profit

  

     312,414           285,979     

GP %

  

     31.5        31.4  

Flex GP %

  

     28.7        29.2  

Selling, general & administrative expenses

  

     265,183           251,268     

Depreciation & amortization

  

     12,611           11,673     
                        

Income from operations

  

     34,620           23,038     

Other expense, net

  

     1,296           1,145     
                        

Income before income taxes

  

     33,324           21,893     

Income tax expense

  

     12,690           9,020     
                        

Net income

  

   $ 20,634         $ 12,873     
                        

Earnings per share - diluted

  

   $ 0.51         $ 0.33     

Adjusted EBITDA per share

  

   $ 1.31         $ 1.07     

Shares outstanding - diluted

  

     40,503           39,330     

Adjusted EBITDA

  

   $ 53,225         $ 42,145     

Other information:

            

Capital expenditures

  

   $ 39,857         $ 4,935     

Equity-based compensation expense, net

  

   $ 4,705         $ 5,197     

Billing days

  

     251           251     


Kforce Inc.

Key Statistics

(Unaudited)

 

     Q4 2010     Q3 2010     Q4 2009  

Total Firm

      

Flex revenue (000’s)

   $ 247,437      $ 248,960      $ 217,199   

Revenue per billing day (000’s)

   $ 4,056      $ 3,890      $ 3,561   

Sequential flex revenue change

     -0.6     5.4     -2.0

Hours (000’s)

     4,427        4,303        3,713   

Flex GP %

     28.8     29.3     28.7

Search revenue (000’s)

   $ 11,058      $ 10,559      $ 7,403   

Placements

     811        824        607   

Average fee

   $ 13,633      $ 12,819      $ 12,197   

Billing days

     61        64        61   

Technology

      

Flex revenue (000’s)

   $ 138,467      $ 137,326      $ 116,817   

Revenue per billing day (000’s)

   $ 2,270      $ 2,146      $ 1,915   

Sequential flex revenue change

     0.8     5.7     1.8

Hours (000’s)

     2,233        2,186        1,888   

Flex GP %

     28.0     28.0     27.0

Search revenue (000’s)

   $ 4,402      $ 4,604      $ 2,661   

Placements

     309        311        205   

Average fee

   $ 14,257      $ 14,822      $ 12,964   

Finance & Accounting

      

Flex revenue (000’s)

   $ 47,512      $ 44,437      $ 35,432   

Revenue per billing day (000’s)

   $ 779      $ 694      $ 581   

Sequential flex revenue change

     6.9     16.5     -5.8

Hours (000’s)

     1,447        1,340        1,103   

Flex GP %

     30.7     30.9     29.9

Search revenue (000’s)

   $ 5,937      $ 5,733      $ 4,464   

Placements

     472        497        381   

Average fee

   $ 12,570      $ 11,533      $ 11,727   

Health & Life Sciences

      

Flex revenue (000’s)

   $ 38,145      $ 41,007      $ 37,203   

Revenue per billing day (000’s)

   $ 625      $ 641      $ 610   

Sequential flex revenue change

     -7.0     -0.1     -7.4

Hours (000’s)

     504        493        416   

Flex GP %

     27.7     28.8     28.8

Search revenue (000’s)

   $ 719      $ 222      $ 278   

Placements

     30        16        21   

Average fee

   $ 23,962      $ 13,876      $ 13,216   

Government Solutions

      

Flex revenue (000’s)

   $ 23,313      $ 26,190      $ 27,747   

Revenue per billing day (000’s)

   $ 382      $ 409      $ 455   

Sequential flex revenue change

     -11.0     -3.3     -4.9

Hours (000’s)

     243        284        306   

Flex GP %

     32.0     34.3     34.7


Kforce Inc.

Key Statistics - Health & Life Sciences

(Unaudited)

 

     Q4 2010     Q3 2010     Q4 2009  

Clinical Research

      

Flex revenue (000’s)

   $ 22,497      $ 26,331      $ 23,874   

Revenue per billing day (000’s)

   $ 369      $ 412      $ 391   

Sequential flex revenue change

     -14.6     -4.2     -10.1

Hours (000’s)

     249        282        262   

Flex GP %

     24.2     26.6     26.2

Search revenue (000’s)

   $ 491      $ 92      $ 111   

Placements

     12        5        6   

Average fee

   $ 40,895      $ 18,333      $ 18,526   

Health Information Management

      

Flex revenue (000’s)

   $ 15,648      $ 14,676      $ 13,329   

Revenue per billing day (000’s)

   $ 256      $ 229      $ 219   

Sequential flex revenue change

     6.6     8.1     -2.1

Hours (000’s)

     255        211        154   

Flex GP %

     32.7     32.8     33.3

Search revenue (000’s)

   $ 228      $ 130      $ 167   

Placements

     18        11        15   

Average fee

   $ 12,674      $ 11,850      $ 11,092   


Kforce Inc.

Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 

     Dec. 31,
2010
    Dec. 31,
2009
 
ASSETS     

Current Assets:

    

Cash and cash equivalents

   $ 1,055      $ 2,812   

Trade receivables, net of allowances

     148,507        123,144   

Income tax refund receivable

     5,675        246   

Deferred tax asset, net

     4,950        6,011   

Prepaid expenses and other current assets

     5,014        4,924   
                

Total current assets

     165,201        137,137   

Fixed assets, net

     38,130        11,407   

Other assets, net

     32,941        32,914   

Deferred tax asset, net

     8,907        10,380   

Intangible assets, net

     7,787        10,075   

Goodwill

     138,078        137,912   
                

Total assets

   $ 391,044      $ 339,825   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current Liabilities:

    

Accounts payable and other accrued liabilities

   $ 30,602      $ 25,437   

Accrued payroll costs

     54,461        50,690   

Current debt - credit facility

     10,825        —     

Other current liabilities

     4,185        2,807   

Income taxes payable

     250        279   
                

Total current liabilities

     100,323        79,213   

Long-term debt - credit facility

     —          3,000   

Long-term debt - other

     2,103        1,784   

Other long-term liabilities

     34,801        29,103   
                

Total liabilities

     137,227        113,100   

Commitments and contingencies

    

Stockholders’ Equity:

    

Preferred stock

     —          —     

Common stock

     646        633   

Additional paid-in capital

     355,888        338,890   

Accumulated other comprehensive loss

     (1,480     (1,213

Retained earnings

     61,979        41,345   

Treasury stock, at cost

     (163,216     (152,930
                

Total stockholders’ equity

     253,817        226,725   
                

Total liabilities and stockholders’ equity

   $ 391,044      $ 339,825   
                


Kforce Inc.

Selected Financial Information and Reconciliations

(In Thousands, Except Per Share Amounts)

(Unaudited)

Quarterly Adjusted EBITDA

 

 
      Three Months Ended  
    

Dec. 31,

2010

    

Sept. 30,

2010

    

Dec. 31,

2009

 
     $      Per
share
     $      Per
share
     $      Per
share
 

Net income

   $ 6,338       $ 0.16       $ 6,444       $ 0.16       $ 3,533       $ 0.09   

Depreciation & amortization

     3,262         0.08         3,236         0.08         2,919         0.07   

Amortization of restricted stock & PARS

     1,499         0.03         1,631         0.04         413         0.01   

Interest expense and other

     265         0.01         322         0.01         288         0.01   

Income tax expense

     3,843         0.09         4,077         0.10         2,475         0.06   
                                                     

Adjusted EBITDA

   $ 15,207       $ 0.37       $ 15,710       $ 0.39       $ 9,628       $ 0.24   
                                                     

Weighted average shares outstanding - diluted

     40,848            40,384            39,803      

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  
     Dec. 31,
2010
           Sept. 30,
2010
           Dec. 31,
2009
 
     $            Per
share
           $            Per
share
           $            Per
share
 

Net income

   $ 6,338         $ 0.16         $ 6,444         $ 0.16         $ 3,533         $ 0.09   

Equity-based compensation expense, net:

                           

Alternative LTI expense

     722           0.02           281           0.01           617           0.01   

Amortization of restricted stock & PARS

     1,499           0.03           1,631           0.04           413           0.01   

Income tax benefit

     (838        (0.02        (741        (0.02        (424        (0.01
                                                               

Equity-based compensation expense, net

     1,383           0.03           1,171           0.03           606           0.01   
                                                               

Net income before equity-based compensation expense

   $ 7,721         $ 0.19         $ 7,615         $ 0.19         $ 4,139         $ 0.10   
                                                               

Weighted average shares outstanding - diluted

     40,848                40,384                39,803        

“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.


Kforce Inc.

Selected Financial Information and Reconciliations

(In Thousands, Except Per Share Amounts)

(Unaudited)

Year to Date Adjusted EBITDA

     Twelve Months Ended  
     Dec. 31,
2010
     Dec. 31,
2009
 
     $      Per
share
     $      Per
share
 

Net Income

   $ 20,634       $ 0.51       $ 12,873       $ 0.33   

Intangible Asset Impairment, Pre-Tax

     —           —           870         0.02   

Depreciation & Amortization

     12,611         0.31         11,673         0.30   

Acceleration of PARS & SARS

     —           —           3,624         0.09   

Amortization of Stock Options & SARS

     —           —           127         0.00   

Amortization of Restricted Stock & PARS

     6,036         0.15         2,620         0.07   

Interest Expense and Other

     1,254         0.03         1,338         0.03   

Income Tax Expense

     12,690         0.31         9,020         0.23   
                                   

Adjusted EBITDA

   $ 53,225       $ 1.31       $ 42,145       $ 1.07   
                                   

Weighted Average Shares Outstanding - Diluted

     40,503            39,330      

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.


Year to Date Net Income before Equity-Based Compensation Expense

 

     Twelve Months Ended  
     Dec. 31,
2010
    Dec. 31,
2009
 
     $     Per
share
    $     Per
share
 

Net Income

   $ 20,634      $ 0.51      $ 12,873      $ 0.33   

Equity-Based Compensation Expense, Net:

        

Alternative LTI Expense

     1,563        0.04        2,467        0.06   

Acceleration of PARS & SARS

     —          —          3,624        0.09   

Amortization of Stock Options & SARS

     —          —          127        0.00   

Amortization of Restricted Stock & PARS

     6,036        0.15        2,620        0.07   

Income Tax Benefit

     (2,894     (0.07     (3,641     (0.09
                                

Equity-Based Compensation Expense, Net

     4,705        0.12        5,197        0.13   
                                

Net Income before Equity-Based Compensation Expense

   $ 25,339      $ 0.63      $ 18,070      $ 0.46   
                                

Weighted Average Shares Outstanding - Diluted

     40,503          39,330     

“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.