* Flex Revenue of $235.4 Million, 3.9% Increase Year Over Year * Net Income of $7.9 Million, EPS of $0.20
TAMPA, Fla., Oct. 28, 2008 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for the third quarter of 2008. Revenue from continuing operations for the quarter ended September 30, 2008 was $250.9 million compared to $246.5 million for the quarter ended September 30, 2007, an increase of 1.8%, and compared to $255.1 million for the quarter ended June 30, 2008, a decrease of 1.7%. Net income for the quarter ended September 30, 2008 was $7.9 million, or $0.20 per share, compared to $11.0 million for the quarter ended September 30, 2007, or $0.26 per share, representing a year over year decline in net income and earnings per share of 28.4% and 23.1%, respectively. Net income for the quarter ended June 30, 2008 was $8.7 million, or $0.22 per share.
"The Firm delivered solid performance in the third quarter during a period where there were extraordinary concerns and significant deterioration in the macroeconomic environment," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "While there remains uncertainty about the length and depth of this recession, we believe the secular drivers for professional staffing and solutions remain intact. We have and intend to continue to make adjustments, as necessary, to put Kforce in a position to perform well as we navigate through this recessionary environment and for continued strong performance when the economy improves. We believe Kforce has an experienced management team and a strong balance sheet, which allows us to be flexible from an operational and financial standpoint. During this phase of the economic cycle, our priorities are to maintain positive cash flow and retain the highly talented people that are the backbone of our future success. We will use free cash flow for debt retirement, share repurchases and acquisitions that meet very high thresholds. We also believe that our concerted efforts to maintain a professional staffing and solutions revenue stream that is almost entirely domestic and well-diversified from a client perspective has positioned Kforce well for the future."
William L. Sanders, President, said, "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. We are extremely pleased that our quarterly flex staffing revenues have now increased sequentially for eleven straight quarters.
From our experience in past recessions, we are well aware of the risks to our revenue stream, particularly in permanent placement. We believe that steps taken during the past six years have prepared the Firm for this economic downcycle. Our mix of service offerings has a significantly lower exposure to permanent placement than the last downcycle. We have exited businesses that were not aligned with our operating model. It also appears that clients have been far more rational in their hiring during the past upcycle, particularly in Technology. In addition, the completion of our upgraded technology platform, the creation of our centralized National Recruiting Center and the implementation of a volume account strategy have, we believe, enhanced operating leverage and positioned the Firm well."
Mr. Sanders continued, "We are particularly pleased with the year over year flex revenue performance of our Health and Life Sciences ("HLS") and Government Solutions ("GS") segments, which achieved growth of 19.1% and17.1%, respectively. These segments continue to demonstrate growth and we remain optimistic about their prospects going forward. We are also encouraged by the stability in our Technology ("Tech") flexible staffing revenues, our largest product line, as it appears that the Tech staffing environment has been much more stable in this cycle."
Mr. Sanders noted additional results from continuing operations for the third quarter:
* Revenue per billing day of $3.9 million increased 0.2% in Q3 '08 over the comparable period in 2007, * Sequential decline in gross margin percentage of 130 basis points, * Year over year revenue changes by segment for Q3 '08 were as follows: 18.3% increase for HLS; 17.1% increase for GS; 0.9% decrease for Tech and a 8.6% decrease for FA, * Flex revenue of $235.4 million increased 3.9% from $226.6 million in Q3 '07.
Joe Liberatore, Chief Financial Officer said, "We are pleased to report our strong earnings results for Q3 '08. We believe the earnings results were driven by the efforts of the Firm in recent years to enhance our operating leverage as well as the extensive experience senior management has managing operations through different economic scenarios. In addition, the Firm has used this past cycle to limit real estate exposure through shorter leases and greatly enhanced leveraging of centralized resources for both sales and shared services and support functions. "
Additional financial results for the third quarter included:
* Cash flows from operations for the nine months ended September 30, 2008 of $64.9 million increased 55.4% over the comparable period in 2007, * Adjusted EBITDA per share for Q3 '08 of $0.41 represents a decrease of 22.6% over the comparable period in 2007, * Total Firm bill rate for Q3 '08 increased 2.3% over Q3 '07, * The Firm reduced outstanding borrowings under the Credit Facility by $21.0 million to $12.0 million at the end of Q3 '08, or 63.6%. * The Firm repurchased 0.8 million and 3.2 million shares of common stock during the three and nine months ended September 30, 2008, respectively, at a total cost of $7.2 million and $28.0 million, respectively."
Mr. Liberatore continued, "Looking forward to the fourth quarter, we expect revenue may be in the $230 million to $238 million range. Total Firm earnings per share may be between 10 and 14 cents. The fourth quarter of 2008 reflects 62 billing days versus 64 billing days for the third quarter of 2008."
On Tuesday, October 28, 2008, 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 888-609-5693. The replay of the call will be available from 8:00 p.m. Eastern Time Tuesday, October 28, 2008 to November 15, 2008, by dialing 888-203-1112, passcode 4135180.
This call is being webcast by CCBN and can be accessed at Kforce's web site at http://www.kforce.com/ (select "Investor Relations"). The webcast replay will be available until November 15, 2008.
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 57 offices in 41 markets in North America and two in the Philippines. For more information, please visit our Web site at http://www.kforce.com/.
The Kforce Inc. logo is available at http://www.globenewswire.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 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 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 revenue and earnings per share will be achieved. 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
2008 2008 2007
--------- --------- ---------
Revenue by Function:
Technology $ 131,203 $ 131,783 $ 132,340
Finance & Accounting 51,182 56,067 56,028
Health & Life Sciences 50,005 48,376 42,278
Government Solutions 18,528 18,907 15,824
--------- --------- ---------
Total Revenue 250,918 255,133 246,470
Revenue by Time:
Perm 15,487 19,951 19,828
Flexible 235,431 235,182 226,642
--------- --------- ---------
Total Revenue 250,918 255,133 246,470
Costs Of Services 164,351 163,769 155,132
--------- --------- ---------
Gross Profit 86,567 91,364 91,338
GP% 34.5% 35.8% 37.1%
Flex GP% 30.2% 30.4% 31.6%
Selling, General & Administrative 71,613 78,697 69,505
Depreciation & Amortization 3,028 3,670 3,842
--------- --------- ---------
Income from Operations 11,926 8,997 17,991
Other Expense, Net 422 552 922
--------- --------- ---------
Income from Continuing
Operations Before Income Taxes 11,504 8,445 17,069
Income Tax Expense 4,522 3,330 6,742
--------- --------- ---------
Income from Continuing
Operations 6,982 5,115 10,327
Income from Discontinued
Operations, Net of Income Taxes 910 3,585 697
--------- --------- ---------
Net Income $ 7,892 $ 8,700 $ 11,024
========= ========= =========
Earnings Per Share - Diluted $ 0.20 $ 0.22 $ 0.26
Adjusted EBITDA Per Share $ 0.41 $ 0.51 $ 0.53
Shares Outstanding - Diluted 39,977 40,317 42,544
Adjusted EBITDA $ 16,421 $ 20,499 $ 22,733
Selected Cash Flow Information:
Adjusted Bad Debt Expense
(Recovery) $ 3,789 $ 556 $ (72)
Capital Expenditures $ 2,371 $ 3,706 $ 3,221
Selected Balance Sheet
Information:
Total Cash and Cash Equivalents $ 921 $ 2,056 $ 1,052
Accounts Receivable, Less
Allowances $ 140,483 $ 151,282 $ 166,465
Total Assets $ 448,031 $ 461,918 $ 476,075
Total Current Liabilities $ 84,189 $ 81,853 $ 93,715
Long-Term Debt - Credit Facility $ 12,000 $ 33,000 $ 54,320
Other Long-Term Liabilities $ 29,863 $ 29,927 $ 26,726
Total Stockholders' Equity $ 321,979 $ 317,138 $ 301,314
Other Information:
Equity-Based Compensation
Expense, Net $ 885 $ 4,741 $ 493
Billing Days 64 64 63
Kforce Inc.
Key Statistics
(Unaudited)
Q3 2008 Q2 2008 Q3 2007
--------- --------- ---------
Total Firm
----------
Flex Revenue (000's) $ 235,431 $ 235,182 $ 226,642
Revenue per billing day (000's) $ 3,679 $ 3,675 $ 3,597
Sequential Flex Revenue Change 0.1% 1.3% 1.2%
Hours (000's) 3,862 3,879 3,817
Flex GP % 30.2% 30.4% 31.6%
Search Revenue (000's) $ 15,487 $ 19,951 $ 19,828
Placements 1,120 1,341 1,357
Average Fee $ 13,825 $ 14,879 $ 14,612
Billing days 64 64 63
Technology
----------
Flex Revenue (000's) $ 125,019 $ 123,884 $ 124,373
Revenue per billing day (000's) $ 1,953 $ 1,936 $ 1,974
Sequential Flex Revenue Change 0.9% 2.6% 1.3%
Hours (000's) 1,926 1,906 1,863
Flex GP % 27.4% 27.5% 29.3%
Search Revenue (000's) $ 6,184 $ 7,899 $ 7,967
Placements 407 478 492
Average Fee $ 15,179 $ 16,538 $ 16,184
Finance & Accounting
--------------------
Flex Revenue (000's) $ 42,604 $ 44,651 $ 45,082
Revenue per billing day (000's) $ 666 $ 698 $ 716
Sequential Flex Revenue Change -4.6% -6.2% -5.5%
Hours (000's) 1,181 1,224 1,251
Flex GP % 34.0% 33.6% 34.2%
Search Revenue (000's) $ 8,578 $ 11,416 $ 10,946
Placements 675 821 811
Average Fee $ 12,712 $ 13,901 $ 13,501
Health & Life Sciences
----------------------
Flex Revenue (000's) $ 49,280 $ 47,740 $ 41,363
Revenue per billing day (000's) $ 770 $ 746 $ 657
Sequential Flex Revenue Change 3.2% 4.2% 8.2%
Hours (000's) 553 549 534
Flex GP % 30.7% 32.0% 32.4%
Search Revenue (000's) $ 725 $ 636 $ 915
Placements 38 42 54
Average Fee $ 19,077 $ 15,137 $ 16,953
Government Solutions
--------------------
Flex Revenue (000's) $ 18,528 $ 18,907 $ 15,824
Revenue per billing day (000's) $ 289 $ 295 $ 251
Sequential Flex Revenue Change -2.0% 4.5% 4.0%
Hours (000's) 202 200 169
Flex GP % 39.0% 37.3% 39.1%
Kforce Inc.
Key Statistics - Health & Life Sciences
(Unaudited)
Q3 2008 Q2 2008 Q3 2007
--------- --------- ---------
Clinical Research
-----------------
Flex Revenue (000's) $ 29,980 $ 29,437 $ 24,913
Revenue per billing day (000's) $ 468 $ 460 $ 396
Sequential Flex Revenue Change 1.8% 2.8% 6.8%
Hours (000's) 332 331 299
Flex GP % 27.5% 29.0% 30.2%
Search Revenue (000's) $ 490 $ 344 $ 686
Placements 23 20 38
Average Fee $ 21,311 $ 17,190 $ 18,047
Health Information Management
-----------------------------
Flex Revenue (000's) $ 19,300 $ 18,303 $ 16,450
Revenue per billing day (000's) $ 302 $ 286 $ 261
Sequential Flex Revenue Change 5.4% 6.5% 10.5%
Hours (000's) 221 218 235
Flex GP % 35.5% 36.6% 35.8%
Search Revenue (000's) $ 235 $ 292 $ 229
Placements 15 22 16
Average Fee $ 15,653 $ 13,270 $ 14,343
Kforce Inc.
Selected Financial Information
(In Thousands, Except Per Share Amounts)
(Unaudited)
Adjusted EBITDA
Q3 2008 Q2 2008 Q3 2007
--------------- ---------------- --------------
Per Per Per
$ share $ share $ share
------- ------ ------- ------ ------- ------
Net Income $ 7,892 $ 0.20 $ 8,700 $ 0.22 $11,024 $ 0.26
Income from
Discontinued
Operations, Net
of Income Taxes 910 0.02 3,585 0.09 697 0.02
------- ------ ------- ------ ------- ------
Income from
Continuing
Operations $ 6,982 $ 0.18 $ 5,115 $ 0.13 $10,327 $ 0.24
Depreciation &
Amortization 3,028 0.08 3,670 0.09 3,842 0.09
Acceleration of
SARS & PARS -- -- 6,009 0.15 -- --
Amortization of
Stock Options &
SARS 668 0.01 716 0.02 595 0.01
Amortization of
Restricted Stock
& PARS 791 0.02 1,102 0.02 302 0.01
Interest Expense
and Other 430 0.01 557 0.01 925 0.02
Income Tax Expense 4,522 0.11 3,330 0.09 6,742 0.16
------- ------ ------- ------ ------- ------
Adjusted EBITDA $16,421 $ 0.41 $20,499 $ 0.51 $22,733 $ 0.53
======= ====== ======= ====== ======= ======
Weighted Average
Shares
Outstanding -
Diluted 39,977 40,317 42,544
Adjusted EBITDA, a non-GAAP financial measure, is defined as
earnings before income from discontinued operations, 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.
Net Income before Equity-Based Compensation Expense
Q3 2008 Q2 2008 Q3 2007
--------------- ---------------- --------------
Per Per Per
$ share $ share $ share
------- ------ ------- ------ ------- ------
Net Income $ 7,892 $ 0.20 $ 8,700 $ 0.22 $11,024 $ 0.26
Income from
Discontinued
Operations, Net
of Income Taxes 910 0.02 3,585 0.09 697 0.02
------- ------ ------- ------ ------- ------
Income from
Continuing
Operations $ 6,982 $ 0.18 $ 5,115 $ 0.13 $10,327 $ 0.24
Equity-Based
Compensation
Expense, Net:
Alternative LTI
Valuation Expense
(Income) -- -- -- -- (85) --
Acceleration of
SARS & PARS -- -- 6,009 0.15 -- --
Amortization of
Stock Options &
SARS 668 0.01 716 0.02 595 0.01
Amortization of
Restricted Stock
& PARS 791 0.02 1,102 0.02 302 0.01
Income Tax Expense (574) (0.01) (3,086) (0.08) (319) (0.01)
------- ------ ------- ------ ------- ------
Equity-Based
Compensation
Expense, Net 885 0.02 4,741 0.11 493 0.01
------- ------ ------- ------ ------- ------
Net Income before
Equity-Based
Compensation
Expense $ 7,867 $ 0.20 $ 9,856 $ 0.24 $10,820 $ 0.25
------- ------ ------- ------ ------- ------
Weighted Average
Shares
Outstanding -
Diluted 39,977 40,317 42,544
"Net Income before Equity-Based Compensation Expense", a non-GAAP
financial measure, is defined as income from continuing operations
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.
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.