* 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.