* Flex Revenue of $246.3 Million, up 5.7% Year over Year * Net Income of $7.2 Million, EPS of $0.18 * Sold Scientific Unit and Pursuing Strategic Alternatives for Nursing
TAMPA, Fla., April 29, 2008 (PRIME NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional and technical specialty staffing services and solutions, today announced results for the first quarter of 2008. Revenues for the quarter ended March 31, 2008 were an all time high of $264.5 million compared to $252.3 million for the quarter ended March 31, 2007, an increase of 4.8%, and compared to $262.6 for the quarter ended December 31, 2007, an increase of 0.7%. Net income for the quarter ended March 31, 2008 was $7.2 million, or $0.18 per share, compared to $8.8 million for the quarter ended March 31, 2007, or $0.21 per share, representing a year over year decline in net income and earnings per share of 18.4% and 14.3%, respectively. Net income for the quarter ended December 31, 2007 was $10.0 million, or $0.24 per share.
"The first quarter ended March 31, 2008 was a solid one for the Firm in which we achieved record revenue of $264.5 million and also achieved EPS of $0.18 during a period where there were growing concerns about the macroeconomic environment," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "As the quarter unfolded, our clients became increasingly cautious, which dampened the normal post year-end acceleration. We are making adjustments to position Kforce for continued strong performance in the future as the economy improves. We believe our diversified revenue stream and demand environment for professional staffing and government solutions that is underpinned by solid secular trends, have 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 revenues have now increased sequentially for nine straight quarters."
Mr. Sanders continued, "We are pleased with the year over year flex revenue performance of Technology ("Tech"), our largest operating segment, as well as our Health and Life Sciences ("HLS") and Government Solutions ("GS") segments, which achieved growth of 3.2%, 17.5% and 26.8%, respectively. We are also pleased with the flex revenue growth demonstrated by our Finance and Accounting ("FA") segment, which increased 3.1% sequentially."
Mr. Sanders noted additional operational highlights for the first quarter included:
* Revenue per billing day of $4.2 million in Q1 '08 improved 4.8% from $4.0 million in Q1 '07, * Sequential revenue changes by segment for Q1 '08 were as follows: 2.7% decline for Tech; 4.5% increase for HLS; 2.1% increase for FA and 10.0% increase for GS, * Flex revenue of $246.3 million increased 5.7% from $233.1 million in Q1 '07, and * Search revenue of $18.2 million was essentially flat over Q4 '07.
Continued Mr. Sanders, "The Firm has concluded a review of the services we offer clients. The outcome was the sale of our Scientific unit today. In addition, we are evaluating strategic alternatives for our Nursing unit."
Joe Liberatore, Chief Financial Officer said, "We are pleased to report earnings results for Q1 '08 that were in line with the guidance provided in our 2007 year-end press release despite coming in slightly below our revenue guidance for the quarter. We believe the earnings results were driven by the efforts of the Firm in recent years to enhance the operating leverage as well as the extensive experience senior management has managing operations through different economic scenarios. Additionally, the Firm repurchased 1.5 million shares of common stock during Q1 '08 at a total cost of $13.0 million."
Financial highlights for the first quarter included:
* Cash flow from operations for Q1 '08 of $14.2 million compared to $9.4 million for Q1 '07, an increase of 51.0%, * Total Firm bill rate for Q1 '08 of $56.07 compared to $52.75 for Q1 '07, an increase of 6.3%, * Including the aforementioned stock repurchases, the Firm's outstanding borrowings under the Credit Facility at the end of Q1 '08 were $53.0 million compared to $50.3 at the end of 2007.
Mr. Liberatore continued, "Looking forward to the second quarter, we expect revenue may be in the $250 million to $256 million range. We have excluded revenues from our Scientific business, which was sold today. We have also excluded Nursing revenues from the guidance as we evaluate strategic alternatives; however, no decision has been made as to the ultimate outcome of our Nursing business. The midpoint of revenue guidance assumes flat sequential search revenue and flat sequential flex revenue per billing day. Total Firm earnings per share may be between 18 and 22 cents. The first quarter of 2008 had 63 billing days versus 64 billing days in the second quarter of 2008."
On Wednesday, April 30, 2008, 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 888-609-5693. The replay of the call will be available from 10:30 a.m. Eastern Time Wednesday, April 30, 2008 to May 21, 2008, by dialing 888-203-1112, passcode 8124851.
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 May 21, 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 67 offices in 41 markets in North America and two in the Philippines. 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 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 -------------------------------- March 31 December 31 March 31 2008 2007 2007 -------- -------- -------- Revenue by Function: Technology $128,100 $131,664 $124,466 Finance & Accounting 57,582 56,392 61,531 Health & Life Sciences 60,729 58,116 52,041 Government Solutions 18,093 16,451 14,270 -------- -------- -------- Total Revenue 264,504 262,623 252,308 Revenue by Time: Perm 18,202 18,195 19,252 Flexible 246,302 244,428 233,056 -------- -------- -------- Total Revenue 264,504 262,623 252,308 Costs of Services 174,266 169,116 163,867 -------- -------- -------- Gross Profit 90,238 93,507 88,441 GP% 34.1% 35.6% 35.1% Flex GP% 29.2% 30.8% 29.7% Selling, General & Administrative 73,550 72,452 68,921 Depreciation & Amortization 3,952 3,687 3,460 -------- -------- -------- Income from Operations 12,736 17,368 16,060 Other Expense 936 1,191 1,524 -------- -------- -------- Income Before Income Taxes 11,800 16,177 14,536 Income Tax Expense 4,622 6,206 5,741 -------- -------- -------- Net Income $ 7,178 $ 9,971 $ 8,795 ======== ======== ======== Earnings Per Share - Diluted $ 0.18 $ 0.24 $ 0.21 EBITDA Per Share $ 0.45 $ 0.52 $ 0.48 Shares Outstanding - Diluted 40,900 42,209 42,182 EBITDA $ 18,540 $ 21,980 $ 20,345 Selected Cash Flow Information: Bad Debt Expense $ 1,046 $ 72 $ 699 Capital Expenditures $ 2,820 $ 3,533 $ 3,579 Selected Balance Sheet Information: Cash and Cash Equivalents $ 834 $ 1,083 $ 566 Accounts Receivable, less allowances $163,715 $166,777 $150,645 Total Assets $473,040 $476,136 $457,208 Bank Debt $ 53,000 $ 50,330 $ 80,515 Other Current Liabilities $ 84,009 $ 85,566 $ 82,275 Other Long-Term Liabilities $ 27,416 $ 27,772 $ 21,911 Total Stockholders' Equity $308,615 $312,468 $272,507 Other Information: Equity-Based Compensation Expense, net $ 1,058 $ 426 $ 733 Billing Days 63 61 63 Kforce Inc. Key Statistics (Unaudited) Q1 2008 Q4 2007 Q1 2007 -------- -------- -------- Total Firm ---------- Flex Revenue (000's) $246,302 $244,428 $233,056 Revenue per billing day (000's) $ 3,910 $ 4,007 $ 3,699 Sequential Flex Revenue Change 0.8% 1.1% 3.1% Hours (000's) 4,290 4,277 4,323 Flex GP % 29.2% 30.8% 29.7% Search Revenue (000's) $ 18,202 $ 18,195 $ 19,252 Placements 1,365 1,379 1,431 Average Fee $ 13,331 $ 13,193 $ 13,457 Billing days 63 61 63 Technology ---------- Flex Revenue (000's) $120,731 $124,897 $116,931 Revenue per billing day (000's) $ 1,916 $ 2,047 $ 1,856 Sequential Flex Revenue Change -3.3% 0.4% 2.4% Hours (000's) 1,855 1,881 1,784 Flex GP % 26.7% 28.0% 27.9% Search Revenue (000's) $ 7,369 $ 6,767 $ 7,535 Placements 477 468 501 Average Fee $ 15,438 $ 14,463 $ 15,059 Finance & Accounting -------------------- Flex Revenue (000's) $ 47,591 $ 46,163 $ 50,881 Revenue per billing day (000's) $ 756 $ 757 $ 808 Sequential Flex Revenue Change 3.1% 2.4% 0.3% Hours (000's) 1,308 1,277 1,431 Flex GP % 32.4% 33.8% 32.1% Search Revenue (000's) $ 9,991 $ 10,229 $ 10,650 Placements 806 797 839 Average Fee $ 12,390 $ 12,825 $ 12,692 Health & Life Sciences ---------------------- Flex Revenue (000's) $ 59,887 $ 56,917 $ 50,974 Revenue per billing day (000's) $ 951 $ 933 $ 809 Sequential Flex Revenue Change 5.2% 0.9% 6.5% Hours (000's) 940 947 944 Flex GP % 29.8% 32.7% 28.9% Search Revenue (000's) $ 842 $ 1,199 $ 1,067 Placements 82 114 91 Average Fee $ 10,306 $ 10,544 $ 11,713 Government Solutions -------------------- Flex Revenue (000's) $ 18,093 $ 16,451 $ 14,270 Revenue per billing day (000's) $ 287 $ 270 $ 226 Sequential Flex Revenue Change 10.0% 4.0% 6.7% Hours (000's) 187 172 164 Flex GP % 35.9% 37.4% 38.0% Kforce Inc. Key Statistics - Health & Life Sciences (Unaudited) Q1 2008 Q4 2007 Q1 2007 -------- -------- -------- Clinical Research ----------------- Flex Revenue (000's) $ 28,636 $ 24,676 $ 21,694 Revenue per billing day (000's) $ 454 $ 404 $ 344 Sequential Flex Revenue Change 16.0% -1.0% 11.8% Hours (000's) 316 277 288 Flex GP % 28.4% 31.7% 25.9% Search Revenue (000's) $ 209 $ 439 $ 387 Placements 12 27 20 Average Fee $ 17,247 $ 16,143 $ 19,340 Health Information Management ----------------------------- Flex Revenue (000's) $ 16,931 $ 17,114 $ 13,418 Revenue per billing day (000's) $ 269 $ 281 $ 213 Sequential Flex Revenue Change -1.1% 4.0% 14.7% Hours (000's) 201 224 200 Flex GP % 34.8% 36.9% 34.9% Search Revenue (000's) $ 182 $ 219 $ 137 Placements 13 16 10 Average Fee $ 14,029 $ 13,683 $ 13,694 Healthcare-Nursing ------------------ Flex Revenue (000's) $ 7,917 $ 8,120 $ 9,178 Revenue per billing day (000's) $ 126 $ 133 $ 146 Sequential Flex Revenue Change -2.5% 0.6% 1.8% Hours (000's) 192 197 222 Flex GP % 26.3% 29.0% 28.1% Search Revenue (000's) $ 31 $ 14 $ 8 Placements 5 3 2 Average Fee $ 6,164 $ 4,834 $ 3,876 Scientific ---------- Flex Revenue (000's) $ 6,403 $ 7,007 $ 6,684 Revenue per billing day (000's) $ 102 $ 115 $ 106 Sequential Flex Revenue Change -8.6% 0.6% -13.8% Hours (000's) 231 249 234 Flex GP % 27.5% 30.0% 28.1% Search Revenue (000's) $ 420 $ 527 $ 535 Placements 52 68 59 Average Fee $ 8,142 $ 7,799 $ 9,061 Kforce Inc. Selected Financial Information (In Thousands, Except Per Share Amounts) (Unaudited) Pro Forma Revenue and Flex GP Total Revenue Flex GP Flex GP % ------------- --------- ---------- Q1 2008 - Actual $264,504 $ 72,036 29.2% Less: Nursing and Scientific 14,771 3,843 0.2% ------------- --------- ---------- Q1 2008 - Pro Forma $249,733 $ 68,193 29.4% ============= ========= ========== Q2 2008 Pro Forma Guidance: Low End $250,000 $ 69,500 29.9% High End $256,000 $ 70,800 29.9% The "Pro Forma" financial information provided above for our first quarter ended March 31, 2008, a non-GAAP financial measure, excludes the results of our Scientific business, which was sold today. It also excludes the results of our Nursing business as we evaluate strategic alternatives; however, no decision has been made as to the ultimate outcome of our Nursing business. Pursuant to Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets," discontinued operations treatment for these businesses was not required based on an evaluation of the facts and circumstances that existed as of March 31, 2008. The guidance provided by management to our shareholders for Q2 2008 also excludes the results for these businesses. Management has elected to provide the pro forma financial information for Q1 2008, as presented above, solely so that our shareholders can more clearly understand our guidance. Management does not anticipate providing this non-GAAP financial measure in the future. This measure should not be considered in isolation or as an alternative to the financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. This measure is not determined in accordance with generally accepted accounting principles. EBITDA Q1 2008 Q4 2007 Q1 2007 ---------------- --------------- ---------------- Per Per Per $ share $ share $ share ---------------- --------------- ---------------- EBITDA $18,540 $ 0.45 $21,980 $ 0.52 $20,345 $ 0.48 Depreciation & Amortization (3,952) $(0.10) (3,687) $(0.09) (3,460) $(0.08) Amortization of Stock Options & SARS (832) $(0.02) (611) $(0.01) (552) $(0.01) Amortization of Restricted Stock & PARS (908) $(0.02) (303) $(0.01) (270) $(0.01) Interest Expense and Other (1,048) $(0.02) (1,202) $(0.03) (1,527) $(0.03) Income Tax Expense (4,622) $(0.11) (6,206) $(0.14) (5,741) $(0.14) ---------------- --------------- ---------------- Net Income $ 7,178 $ 0.18 $ 9,971 $ 0.24 $ 8,795 $ 0.21 ================ =============== ================ Outstanding Shares - Diluted 40,900 42,209 42,182 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 Q1 2008 Q4 2007 Q1 2007 --------------- --------------- --------------- Per Per Per $ share $ share $ share --------------- --------------- --------------- Net Income $ 7,178 $ 0.18 $ 9,971 $ 0.24 $ 8,795 $ 0.21 Equity-Based Compensation Expense, net: Alternative LTI Valuation Expense -- -- (213) 0.00 390 0.01 Amortization of Stock Options & SARS 832 0.02 611 0.01 552 0.01 Amortization of Restricted Stock & PARS 908 0.02 303 0.01 270 0.01 Income Tax Expense (682) (0.02) (275) (0.01) (479) (0.01) --------------- --------------- --------------- Equity-Based Compensation Expense, net 1,058 0.02 426 0.01 733 0.02 --------------- --------------- --------------- Net Income before Equity-Based Compensation Expense $ 8,236 $ 0.20 $10,397 $ 0.25 $ 9,528 $ 0.23 =============== =============== =============== Outstanding Shares - Diluted 40,900 42,209 42,182 "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.