* Record Quarterly Revenue of $262.1 Million * Record Income From Operations of $19.3 Million * Record EBITDA of $24.0 Million
TAMPA, Fla., Oct. 30, 2007 (PRIME NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a professional staffing and solutions firm, today announced results for the third quarter of 2007. Revenues for the quarter ended September 30, 2007 were an all time quarterly high of $262.1 million compared to $238.7 million for the quarter ended September 30, 2006 and $259.9 million for the quarter ended June 30, 2007. The Firm reported net income for the third quarter of 2007 of $11.0 million or $.26 per share versus net income of $8.8 million or $.21 per share for the third quarter of 2006, representing a year-over-year improvement of 24.7% in net income. Net income for the quarter ended June 30, 2007 was $10.6 million or $.25 per share.
"We are very pleased to again report a record revenue quarter. This is also our highest third quarter EPS, which we believe further demonstrates the enhanced operating leverage of the Firm," said David L. Dunkel, Chairman and CEO. Continued Mr. Dunkel, "We believe the environment for professional staffing and government solutions remains positive, particularly in the skilled niches we serve. We continue to see strong demand for highly skilled workers both on a permanent and flexible basis. We believe this demand is being driven by both secular and cyclical trends that bode well for the future of Kforce."
William L. Sanders, President said, "Q3 2007 was the seventh consecutive quarter of record Firm revenue, and many other Firm milestones as well. We are extremely pleased with the progress we are making on all fronts as we continue to gain momentum during phase two of our current three year strategic plan. We are pleased that we are meeting our objective for 2007 to be a year of profitable growth."
"Our vision is to be the Firm most respected by those we serve. A key aspect of our vision is building a Firm that delivers sustainable and consistent revenue and earnings performance. Total revenues of $262.1 million in Q3 2007 represents a 0.8% increase sequentially on one less billing day than Q2 and a 9.8% increase year-over-year. We are particularly excited by the continued strong performance of our largest operating segment, Technology, which has now grown 11 consecutive quarters, as well as another good quarter of growth from our Clinical Research, Health Information Management and Government Solutions groups. With Q3 2007 results and what we believe are positive trends to begin Q4 2007, we believe that 2007 will be our year to hit $1.0 billion in total revenues."
Mr. Sanders noted additional operational highlights of the third quarter include:
* Record revenue per billing day of $4.2 million in Q3 '07 improved 2.4% from $4.1 million in Q2 '07 and 9.8% from $3.8 million in Q3 '06 * Flex revenue of $241.7 million increased 10.3% from $219.2 million in Q3 '06 * Search revenue of $20.4 million improved 4.6% from $19.5 million in Q3 '06 * Revenues for Government Solutions were $15.8 million in Q3 '07, up 4.0% sequentially and 148.2% year-over-year, fueled by our Bradson acquisition * Total gross profit percentage improved 90 basis points to 36.7% in Q3 '07 from 35.8% in Q3 '06 * Flex gross profit percentage improved 130 basis points to 31.4% in Q3 '07 from 30.1% in Q3 '06
Joe Liberatore, Chief Financial Officer said, "We continue to translate revenue growth into improving bottom line results, as net income has increased 24.7% year over year. We believe we are making excellent progress toward achieving our goal of 10 percent operating margins at the peak of the current cycle."
Financial highlights for the third quarter include:
* Income from operations of $19.3 million or 7.4% improved 80 basis points from 6.6% or $15.7 million in Q3 '06 * Earnings per share before the impact of equity-based compensation expense of $.27, a 22.7% increase from $.22 in Q3 '06 * EBITDA in Q3 '07 of $24.0 million increased 27.1% year-over year * Bank debt at the end of the third quarter of $54.3 million, reflecting a reduction of $11.2 million from $65.5 million at the end of the second quarter
Mr. Liberatore continued, "Looking forward to the fourth quarter of 2007, we expect revenues to be impacted by the reduction in billing days and anticipated holiday slowdowns which particularly impact our CRS and government businesses. The fourth quarter of 2007 has 61 billing days versus 63 billing days in the third quarter of 2007. We expect revenues may be in the $256 million to $262 million range, and earnings per share of $0.24 to $0.26 which reflects approximately 42.5 million weighted average diluted shares outstanding."
On Wednesday, October 31, 2007, Kforce will host a conference call to discuss these results. The call will begin at 8:30 a.m. Eastern Time. The dial-in number is 888-593-6050. The replay of the call will be available from 10:30 a.m. Eastern Time Wednesday, October 31 to November 15, 2007, by dialing 888-203-1112, passcode 3540996.
This call is being webcast by CCBN and can be accessed at Kforce's web site at www.kforce.com (select "Investor Relations"). The webcast replay will be available until November 14, 2007.
About Kforce
Kforce (Nasdaq:KFRC) is a professional staffing firm providing flexible and permanent staffing solutions for commercial and governmental organizations in the skill areas of technology, finance & accounting, and health and life sciences. Backed by over 2,000 staffing specialists, Kforce operates with 68 offices in 41 markets in North America. For more information, please visit our Web site at www.kforce.com.
The Kforce Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3749
About Kforce Government Solutions
Kforce Government Solutions provides innovative technology and finance and accounting solutions to federal government clients. For more information, visit 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 Kforce Government Solutions, Health and Life Sciences, Finance and Accounting and Technology groups, 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 the above estimates of revenues and earnings per share will be achieved or that the Firm will reach $1.0 billion in revenue in 2007. 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)
Quarter Ended
-----------------------------------
Sept. 30, June 30, Sept. 30,
2007 2007 2006
--------- --------- ---------
Revenue by Function:
Technology $ 132,340 $ 130,318 $ 118,137
Finance & Accounting 56,028 59,174 64,066
Health & Life Sciences 57,868 55,213 50,122
Government Solutions 15,824 15,219 6,375
--------- --------- ---------
Total Revenue 262,060 259,924 238,700
Revenue by Time:
Perm 20,377 20,243 19,488
Flexible 241,683 239,681 219,212
--------- --------- ---------
Total Revenue 262,060 259,924 238,700
Cost Of Sales 165,783 165,806 153,299
--------- --------- ---------
Gross Profit 96,277 94,118 85,401
GP % 36.7% 36.2% 35.8%
Flex GP% 31.4% 30.8% 30.1%
Selling, General &
Administrative 73,146 71,850 66,872
Depreciation & Amortization 3,842 3,498 2,798
--------- --------- ---------
Income from Operations 19,289 18,770 15,731
Other Expense 1,069 1,256 820
--------- --------- ---------
Earnings Before Taxes 18,220 17,514 14,911
Income Tax Expense 7,196 6,937 6,069
--------- --------- ---------
Net Income $ 11,024 $ 10,577 $ 8,842
========= ========= =========
Earnings Per Share - Diluted $ 0.26 $ 0.25 $ 0.21
EBITDA Per Share $ 0.56 $ 0.54 $ 0.45
Shares Outstanding - Diluted 42,544 42,407 42,091
EBITDA $ 24,033 $ 23,066 $ 18,913
Selected Cash Flow Information:
Bad Debt Expense (Recovery) $ 21 $ 422 $ (485)
Capital Expenditures $ 3,221 $ 4,481 $ 2,923
Selected Balance Sheet
Information:
Total Cash and Short-term
Investments $ 1,052 $ 1,322 $ 782
Accounts Receivable, less
allowances $ 166,465 $ 152,170 $ 146,939
Total Assets $ 476,075 $ 464,768 $ 391,464
Bank Debt $ 54,320 $ 65,530 $ 38,315
Other Current Liabilities $ 93,715 $ 86,220 $ 83,088
Other Long-Term Liabilities $ 26,726 $ 25,099 $ 16,758
Total Stockholders' Equity $ 301,314 $ 287,919 $ 253,303
Other Information:
Equity-Based Compensation
Expense, net $ 492 $ 814 $ 265
Billing Days 63 64 63
Kforce Inc.
Key Statistics
(Unaudited)
Q3 2007 Q2 2007 Q3 2006
-------- -------- --------
Total Firm
----------
Flex Revenue (000's) $241,683 $239,681 $219,212
Revenue per billing day (000's) $ 3,836 $ 3,745 $ 3,480
Sequential Flex Revenue Change 0.8% 2.8% 1.1%
Hours (000's) 4,271 4,338 4,247
Flex GP % 31.4% 30.8% 30.1%
Search Revenue (000's) $ 20,377 $ 20,243 $ 19,488
Placements 1,411 1,366 1,440
Average Fee $ 14,438 $ 14,819 $ 13,531
Billing days 63 64 63
Technology
----------
Flex Revenue (000's) $124,373 $122,765 $110,720
Revenue per billing day (000's) $ 1,974 $ 1,918 $ 1,758
Sequential Flex Revenue Change 1.3% 5.0% 3.2%
Hours (000's) 1,863 1,838 1,714
Flex GP % 29.3% 28.9% 28.2%
Search Revenue (000's) $ 7,967 $ 7,553 $ 7,417
Placements 492 441 524
Average Fee $ 16,184 $ 17,137 $ 14,148
Finance & Accounting
--------------------
Flex Revenue (000's) $ 45,082 $ 47,698 $ 53,329
Revenue per billing day (000's) $ 716 $ 745 $ 846
Sequential Flex Revenue Change -5.5% -6.3% 2.8%
Hours (000's) 1,251 1,345 1,499
Flex GP % 34.2% 33.4% 33.3%
Search Revenue (000's) $ 10,946 $ 11,476 $ 10,737
Placements 811 825 816
Average Fee $ 13,501 $ 13,905 $ 13,172
Health & Life Sciences
----------------------
Flex Revenue (000's) $ 56,404 $ 53,999 $ 48,788
Revenue per billing day (000's) $ 895 $ 844 $ 775
Sequential Flex Revenue Change 4.5% 5.9% -2.3%
Hours (000's) 988 986 958
Flex GP % 31.6% 30.1% 30.9%
Search Revenue (000's) $ 1,464 $ 1,214 $ 1,334
Placements 108 100 100
Average Fee $ 13,519 $ 12,150 $ 13,280
Government Solutions
--------------------
Flex Revenue (000's) $ 15,824 $ 15,219 $ 6,375
Revenue per billing day (000's) $ 251 $ 238 $ 101
Sequential Flex Revenue Change 4.0% 6.6% -17.0%
Hours (000's) 169 169 76
Flex GP % 39.1% 40.9% 29.6%
Kforce Inc.
Key Statistics - Health & Life Sciences
(Unaudited)
Q3 2007 Q2 2007 Q3 2006
-------- -------- --------
Clinical Research
-----------------
Flex Revenue (000's) $ 24,913 $ 23,324 $ 20,703
Revenue per billing day (000's) $ 395 $ 364 $ 329
Sequential Flex Revenue Change 6.8% 7.5% -4.1%
Hours (000's) 299 303 284
Flex GP % 30.2% 26.3% 29.2%
Search Revenue (000's) $ 686 $ 401 $ 662
Placements 38 19 36
Average Fee $ 18,047 $ 21,120 $ 18,313
Health Information Management
-----------------------------
Flex Revenue (000's) $ 16,450 $ 14,890 $ 10,840
Revenue per billing day (000's) $ 261 $ 233 $ 172
Sequential Flex Revenue Change 10.5% 11.0% -4.1%
Hours (000's) 236 226 165
Flex GP % 35.8% 36.3% 37.9%
Search Revenue (000's) $ 229 $ 127 $ 61
Placements 16 10 5
Average Fee $ 14,353 $ 12,686 $ 12,260
Healthcare-Nursing
------------------
Flex Revenue (000's) $ 8,075 $ 9,067 $ 9,122
Revenue per billing day (000's) $ 128 $ 142 $ 145
Sequential Flex Revenue Change -10.9% -1.2% -1.7%
Hours (000's) 197 219 218
Flex GP % 29.4% 30.0% 28.0%
Search Revenue (000's) $ (1) $ 23 $ 38
Placements -- 6 3
Average Fee N/A $ 3,912 $ 12,611
Scientific
----------
Flex Revenue (000's) $ 6,966 $ 6,718 $ 8,123
Revenue per billing day (000's) $ 111 $ 105 $ 129
Sequential Flex Revenue Change 3.7% 0.5% 5.0%
Hours (000's) 256 238 291
Flex GP % 28.9% 29.4% 29.5%
Search Revenue (000's) $ 550 $ 663 $ 573
Placements 54 65 56
Average Fee $ 10,125 $ 10,203 $ 10,176
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
EBITDA
Q3 2007 Q2 2007 Q3 2006
---------------- ---------------- ----------------
Per Per Per
$ share $ share $ share
---------------- ---------------- ----------------
EBITDA $ 24,033 $ 0.56 $ 23,066 $ 0.54 $ 18,913 $ 0.45
Depreciation &
Amortization (3,842) (0.09) (3,498) (0.08) (2,798) (0.07)
Amortization of
Stock Options
& SARS (594) (0.01) (554) (0.01) (13) (0.00)
Amortization of
Restricted
Stock & PARS (302) (0.01) (245) (0.01) (281) (0.01)
Interest
Expense and
Other (1,075) (0.02) (1,255) (0.03) (910) (0.02)
Tax Expense (7,196) (0.17) (6,937) (0.16) (6,069) (0.14)
---------------- ---------------- ----------------
Net Income $ 11,024 $ 0.26 $ 10,577 $ 0.25 $ 8,842 $ 0.21
================ ================ ================
Outstanding
Shares -
Diluted 42,544 42,407 42,091
EBITDA, a non-GAAP financial measure, is defined as earnings before interest, income taxes, depreciation and amortization, including amortization of stock-based compensation. EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from EBITDA are significant components in understanding and assessing financial performance.
Net Income before Equity-Based Compensation Expense
Q3 2007 Q2 2007 Q3 2006
---------------- ---------------- ----------------
Per Per Per
$ share $ share $ share
---------------- ---------------- ----------------
Net Income
before
Equity-Based
Compensation
Expense $ 11,516 $ 0.27 $ 11,391 $ 0.27 $ 9,107 $ 0.22
Equity-Based
Compensation
Expense, net:
Alternative
LTI
Valuation
Expense 85 0.00 (548) (0.01) (146) (0.00)
Amortization
of Stock
Options &
SARS (594) (0.01) (554) (0.01) (13) (0.00)
Amortization
of
Restricted
Stock & PARS (302) (0.01) (245) (0.01) (281) (0.01)
Tax Benefit 319 0.01 533 0.01 175 0.00
Equity-Based
Compensation
---------------- ---------------- ----------------
Expense, net (492) (0.01) (814) (0.02) (265) (0.01)
---------------- ---------------- ----------------
Net Income $ 11,024 $ 0.26 $ 10,577 $ 0.25 $ 8,842 $ 0.21
================ ================ ================
Outstanding
Shares -
Diluted 42,544 42,407 42,091
"Net Income before Equity-Based Compensation Expense", a non-GAAP financial measure, is defined as net income before compensation expense incurred in conjunction with awards accounted for under Statement of Financial Accounting Standards No. 123R "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires Kforce to measure 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.
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.