Kforce(KFRC)

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Kforce(KFRC) - 2024 Q1 - Earnings Call Transcript
2024-04-30 02:28
Financial Data and Key Metrics Changes - Total revenues for Q1 2024 were $352 million, down 7.7% sequentially and 13.3% year-over-year [64] - Earnings per share for Q1 2024 were $0.58, at the midpoint of expectations [79] - Operating margin for Q1 was 4.5%, toward the high end of expectations, with an effective tax rate of 27.1% [59][79] - Flex margins in the Technology business declined 10 basis points sequentially and 60 basis points year-over-year to 25.3% [6] Business Line Data and Key Metrics Changes - The Technology business experienced a revenue decline of 6.9% sequentially and 11.4% year-over-year [64] - The FA business, which constitutes 8.5% of total revenues, declined approximately 16% sequentially and 27% year-over-year [58] - Average bill rates in the Technology business remained stable at approximately $90 per hour [70] Market Data and Key Metrics Changes - The client portfolio is primarily composed of large, market-leading companies that continue to prioritize technology investments [65] - Stability was observed in retail, transportation, and manufacturing verticals, while financial services faced headwinds [66] Company Strategy and Development Direction - The company is focused on retaining productive associates and advancing enterprise initiatives to drive long-term growth [8] - There is a commitment to returning capital to shareholders, with over $900 million returned since 2007 [9] - The company aims to achieve double-digit operating margins at slightly over $2 billion in annual revenues [10] Management's Comments on Operating Environment and Future Outlook - The current operating environment is more stable than in 2023, but clients remain cautious about initiating new technology investments [62] - Management remains optimistic about the strategic position and ability to deliver above-market performance despite macro uncertainties [78] - The company is well-prepared to capitalize on market demand when it accelerates, having retained critical resources [72] Other Important Information - The company has returned approximately $9 million to shareholders through dividends and share repurchases in Q1 2024 [59] - The company continues to broaden service offerings beyond traditional staffing to include managed teams and project solutions [57] Q&A Session Summary Question: What areas are seeing strength in leading indicators? - Management noted that leading indicators showed improvement, particularly in client visits and job order flow, which were at pre-pandemic levels [82] Question: How are pay rates and bill rates trending? - Average bill rates have remained stable, with slight declines noted, but overall stability is seen as a positive sign [70] Question: What is the outlook for talent availability? - The company indicated that highly skilled talent remains difficult to find, and there is a consistent demand for such talent [91] Question: How is the competitive landscape evolving? - Management stated that there have been no significant changes in the competitive landscape, with large clients continuing to seek reliable service providers [38] Question: What is the expectation for revenue growth and margin expansion? - Management anticipates a seasonal improvement in profitability and operating margins as revenue increases, with a gradual improvement expected [103]
Kforce (KFRC) Q1 Earnings Meet Estimates
Zacks Investment Research· 2024-04-29 22:35
Kforce (KFRC) came out with quarterly earnings of $0.58 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.82 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this staffing company would post earnings of $0.79 per share when it actually produced earnings of $0.82, delivering a surprise of 3.80%.Over the last four quarters, the company has surpassed consensus EPS estimates two times.Kforce, which belongs to the Zac ...
Kforce(KFRC) - 2024 Q1 - Quarterly Results
2024-04-29 20:05
Exhibit 99.1 KFORCE REPORTS FIRST QUARTER 2024 REVENUE OF $351.9 MILLION AND EPS OF $0.58 TAMPA, FL, April 29, 2024 — Kforce Inc. (Nasdaq: KFRC), a solutions firm that specializes in technology and other professional staffing services, today announced results for the first quarter of 2024. Joseph J. Liberatore, President and Chief Executive Officer, said, "Our first quarter performance was generally consistent with our expectations, and we were encouraged by March trends in our Technology business. Operatin ...
Kforce Reports First Quarter 2024 Revenue of $351.9 Million and EPS of $0.58
Newsfilter· 2024-04-29 20:02
TAMPA, Fla., April 29, 2024 (GLOBE NEWSWIRE) -- Kforce Inc. (NASDAQ:KFRC), a solutions firm that specializes in technology and other professional staffing services, today announced results for the first quarter of 2024. Joseph J. Liberatore, President and Chief Executive Officer, said, "Our first quarter performance was generally consistent with our expectations, and we were encouraged by March trends in our Technology business. Operating trends over the past two quarters and discussions with our clients in ...
Kforce(KFRC) - 2023 Q4 - Annual Report
2024-02-23 21:06
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________________________ FORM 10-K _____________________________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...
Kforce(KFRC) - 2023 Q3 - Quarterly Report
2023-11-01 20:07
[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents Kforce Inc.'s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Kforce reported Q3 2023 revenue of $373.1 million and net income of $10.6 million, with similar declines for the nine-month period compared to 2022 Q3 and Nine Months Financial Performance (in thousands, except EPS) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $373,122 | $437,620 | $1,168,309 | $1,291,103 | | **Gross Profit** | $103,461 | $126,670 | $327,703 | $381,628 | | **Income from Operations** | $16,033 | $31,319 | $65,369 | $92,912 | | **Net Income** | $10,575 | $22,262 | $45,359 | $68,359 | | **Diluted EPS** | $0.54 | $1.09 | $2.31 | $3.31 | [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, Kforce's total assets decreased to $369.8 million from $392.0 million at year-end 2022, with corresponding reductions in liabilities and equity Balance Sheet Summary (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $257,911 | $277,760 | | **Total Assets** | $369,762 | $392,004 | | **Total Current Liabilities** | $119,272 | $131,433 | | **Total Liabilities** | $190,810 | $209,806 | | **Total Stockholders' Equity** | $178,952 | $182,198 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash provided by operating activities for the nine months ended September 30, 2023, was $69.1 million, with significant cash used in financing activities due to stock repurchases and dividends Nine-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $69,056 | $78,063 | | **Cash used in investing activities** | ($2,532) | ($9,656) | | **Cash used in financing activities** | ($66,523) | ($160,307) | | **Change in cash and cash equivalents** | $1 | ($91,900) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies, segment reporting, and key financial events, including the sale of WorkLLama interest and the impact of the stock repurchase excise tax - On February 23, 2023, Kforce sold its 50% noncontrolling interest in WorkLLama and settled an outstanding Note Receivable for total proceeds of **$6.0 million**[37](index=37&type=chunk) - The Inflation Reduction Act of 2022 imposed a new 1% excise tax on stock repurchases, resulting in a charge of **$0.4 million** for the nine months ended September 30, 2023[38](index=38&type=chunk) - On April 20, 2023, shareholders approved the 2023 Stock Incentive Plan, reserving approximately **3.2 million shares** for issuance. As of September 30, 2023, total unrecognized stock-based compensation expense was **$29.5 million**[53](index=53&type=chunk)[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the financial results for Q3 and the first nine months of 2023, highlighting revenue decreases, segment performance, and capital allocation strategies [Executive Summary](index=17&type=section&id=Executive%20Summary) For the nine months ended September 30, 2023, revenue decreased 9.5% to $1.17 billion, and net income fell 33.6% to $45.4 million, primarily due to macroeconomic conditions Nine-Month Performance Highlights (YTD Sep 30, 2023 vs 2022) | Metric | YTD 2023 | Change vs YTD 2022 | | :--- | :--- | :--- | | **Revenue** | $1.17 billion | -9.5% | | **Net Income** | $45.4 million | -33.6% | | **Diluted EPS** | $2.31 | -30.2% | | **Gross Profit Margin** | 28.0% | -160 bps | | **Flex Revenue** | $1.14 billion | -8.5% | | **Direct Hire Revenue** | $30.1 million | -35.3% | - The company returned **$62.9 million** to shareholders during the first nine months of 2023, consisting of **$42.0 million** in stock repurchases and **$20.9 million** in dividends[65](index=65&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Total revenue for Q3 2023 decreased 14.7% year-over-year, driven by declines in both Technology and FA segments, impacting gross profit margins and increasing SG&A expenses Revenue Change by Segment (Q3 2023 vs Q3 2022) | Segment | Q3 2023 Revenue (in thousands) | % Change YoY | | :--- | :--- | :--- | | **Technology** | $338,289 | -13.4% | | **FA** | $34,833 | -26.1% | | **Total** | $373,122 | -14.7% | - The company took actions in Q3 2023 to realign its organization and reduce costs, which are expected to lower annual operating costs by at least **$14.0 million**[69](index=69&type=chunk) - SG&A expenses for Q3 2023 included **$8.4 million** in costs related to organizational realignment activities and legal settlements, which increased SG&A as a percentage of revenue by **150 basis points** compared to Q3 2022[82](index=82&type=chunk) [Non-GAAP Financial Measures](index=22&type=section&id=Non-GAAP%20Financial%20Measures) The company reports Free Cash Flow of $63.0 million and Adjusted EBITDA of $89.6 million for the nine months ended September 30, 2023, both lower than the prior year Non-GAAP Financial Measures (in thousands) | Measure | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | **Free Cash Flow** | $62,980 | $73,407 | | **Adjusted EBITDA** | $89,584 | $117,536 | [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Kforce maintains liquidity through operating cash flows and its credit facility, having returned $62.9 million to shareholders through repurchases and dividends in the first nine months of 2023 - As of September 30, 2023, Kforce had **$21.4 million** outstanding under its credit facility and borrowing availability of **$177.4 million**[92](index=92&type=chunk)[98](index=98&type=chunk) - In the first nine months of 2023, Kforce repurchased **722 thousand shares** for approximately **$42.0 million**. As of September 30, 2023, **$66.8 million** remained available under the stock repurchase program[101](index=101&type=chunk) - Quarterly dividends paid during the first nine months of 2023 totaled **$20.9 million** (**$1.08 per share**), a **20% increase** on a per-share basis from the prior year[96](index=96&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) There have been no material changes to the market risk disclosures previously reported in the company's 2022 Annual Report on Form 10-K - There have been no material changes to the disclosures about market risk from those included in the 2022 Annual Report on Form 10-K[107](index=107&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - Based on an evaluation as of September 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[108](index=108&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[109](index=109&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and other general information not included in the financial statements [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings in the ordinary course of business, which are not expected to have a material effect on its financial position - The company is involved in legal proceedings from the ordinary course of business but does not currently expect them to have a material financial impact[113](index=113&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors from those previously disclosed in the company's 2022 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2022 Annual Report on Form 10-K[114](index=114&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During Q3 2023, Kforce repurchased 306,001 shares for $60.20 per share, with $66.8 million remaining available under the repurchase program Q3 2023 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share ($) | Value Remaining in Plan ($) | | :--- | :--- | :--- | :--- | | **July 2023** | 4,806 | $63.45 | $84,852,288 | | **August 2023** | 82,250 | $61.86 | $79,851,735 | | **September 2023** | 218,945 | $59.51 | $66,822,516 | | **Total Q3** | 306,001 | $60.20 | $66,822,516 | - In February 2023, the Board of Directors increased the stock repurchase authorization to **$100.0 million**[116](index=116&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information.) No officers or directors adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q3 2023 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the three months ended September 30, 2023[119](index=119&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes required CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[120](index=120&type=chunk)
Kforce(KFRC) - 2023 Q2 - Quarterly Report
2023-08-02 20:34
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________________________________________________________________________ FORM 10-Q ________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ...
Kforce(KFRC) - 2023 Q1 - Quarterly Report
2023-05-09 20:50
[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides Kforce Inc.'s unaudited condensed consolidated financial statements and management's discussion for Q1 2023 [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) Presents Kforce Inc.'s unaudited condensed consolidated financial statements for Q1 2023 and 2022, with accompanying notes [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) Presents Kforce Inc.'s unaudited condensed consolidated statements of operations and comprehensive income for Q1 2023 and 2022 | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Revenue | $406.0M | $417.0M | | Direct costs | $292.0M | $293.1M | | Gross profit | $114.0M | $123.9M | | Selling, general and administrative expenses | $89.3M | $95.0M | | Income from operations | $23.4M | $27.7M | | Net income | $16.2M | $19.2M | | Earnings per share – diluted | $0.82 | $0.93 | [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Presents Kforce Inc.'s unaudited condensed consolidated balance sheets as of March 31, 2023, and December 31, 2022 | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Total assets | $385.2M | $392.0M | | Total liabilities | $199.4M | $209.8M | | Total stockholders' equity | $185.7M | $182.2M | [Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) Details changes in Kforce Inc.'s stockholders' equity for the three months ended March 31, 2023 | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Balance, December 31, 2022 | $182.2M | N/A | | Net income | $16.2M | N/A | | Stock-based compensation expense | $4.3M | N/A | | Dividends ($0.36 per share) | $(7.0M) | N/A | | Repurchases of common stock | $(10.2M) | N/A | | Balance, March 31, 2023 | $185.7M | N/A | - The company declared and paid quarterly dividends of **$0.36 per share** for the three months ended March 31, 2023, totaling **$7.0 million**[18](index=18&type=chunk) - Common stock repurchases amounted to **$10.2 million** for the three months ended March 31, 2023[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Presents Kforce Inc.'s unaudited condensed consolidated statements of cash flows for Q1 2023 and 2022 | Cash Flow Activity | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | Change (YoY) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :----------- | | Net cash provided by operating activities | $19.1M | $38.7M | (50.8)% | | Cash provided by (used in) investing activities | $2.4M | $(2.7M) | N/A | | Cash used in financing activities | $(21.4M) | $(16.4M) | 30.9% | | Change in cash and cash equivalents | $0.1M | $19.6M | (99.7)% | | Cash and cash equivalents, end of period | $0.2M | $116.6M | (99.8)% | - Cash provided by operating activities significantly decreased by **50.8% year-over-year**, primarily due to lower profitability levels, the timing of payments, and a reduction in deferred tax liability given the sale of our joint venture[90](index=90&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Details significant accounting policies, segment information, and other financial disclosures for the interim period - The unaudited condensed consolidated financial statements have been prepared pursuant to SEC rules for interim financial reporting, condensing certain GAAP information[23](index=23&type=chunk) - Quarterly operating results are affected by the number of billing days, seasonality of clients' businesses, and increased holiday/vacation days, with higher costs typically in the first quarter due to employment tax resets[24](index=24&type=chunk) [Note A - Summary of Significant Accounting Policies](index=9&type=section&id=Note%20A%20-%20Summary%20of%20Significant%20Accounting%20Policies) Summarizes Kforce Inc.'s significant accounting policies, covering health insurance claims, joint venture sale, and excise tax on stock repurchases - Kforce retains the risk of loss per participant for health insurance claims up to **$600 thousand annually**, and an aggregate annual loss of **$280 thousand** for claims exceeding **$600 thousand**[27](index=27&type=chunk) - On February 23, 2023, Kforce sold its **50% noncontrolling interest** in WorkLLama to an unaffiliated third party for **$6.0 million** (net proceeds **$5.1 million**), settling the outstanding Note Receivable[31](index=31&type=chunk) - For the three months ended March 31, 2023, Kforce recorded **$0.1 million** in excise tax related to the U.S. Federal 1% nondeductible excise tax on stock repurchases under the Inflation Reduction Act of 2022[32](index=32&type=chunk) [Note B - Reportable Segments](index=10&type=section&id=Note%20B%20-%20Reportable%20Segments) Provides financial information for Kforce Inc.'s Technology and Finance and Accounting (FA) reportable segments - Kforce provides services through its Technology and Finance and Accounting ("FA") segments[34](index=34&type=chunk) | Segment | Revenue (Q1 2023, in millions) | Revenue (Q1 2022, in millions) | Gross Profit (Q1 2023, in millions) | Gross Profit (Q1 2022, in millions) | | :-------- | :-------------------------------- | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Technology | $364.8M | $359.9M | $98.4M | $102.5M | | FA | $41.2M | $57.1M | $15.6M | $21.4M | | Total | $406.0M | $417.0M | $114.0M | $123.9M | [Note C - Disaggregation of Revenue](index=11&type=section&id=Note%20C%20-%20Disaggregation%20of%20Revenue) Details Kforce Inc.'s revenue disaggregation by service type (Flex and Direct Hire) across Technology and FA segments | Revenue Type | Technology (Q1 2023, in millions) | Technology (Q1 2022, in millions) | FA (Q1 2023, in millions) | FA (Q1 2022, in millions) | Total (Q1 2023, in millions) | Total (Q1 2022, in millions) | | :------------- | :----------------------------------- | :----------------------------------- | :------------------------- | :------------------------- | :---------------------------- | :---------------------------- | | Flex revenue | $359.5M | $351.7M | $36.0M | $50.2M | $395.5M | $401.9M | | Direct Hire revenue | $5.3M | $8.2M | $5.1M | $6.9M | $10.5M | $15.1M | | Total Revenue | $364.8M | $359.9M | $41.2M | $57.1M | $406.0M | $417.0M | [Note D - Allowance for Credit Losses](index=11&type=section&id=Note%20D%20-%20Allowance%20for%20Credit%20Losses) Explains the methodology and changes in Kforce Inc.'s allowance for credit losses on trade receivables - The allowance for credit losses on trade receivables is determined by estimating and recognizing lifetime expected losses[37](index=37&type=chunk) | Metric | Amount (in millions) | | :---------------------------------------------------------------- | :-------------------- | | Allowance for credit losses, January 1, 2023 | $1.0M | | Current period provision | $0.4M | | Write-offs charged against the allowance, net of recoveries of amounts previously written off | $(0.4M) | | Allowance for credit losses, March 31, 2023 | $0.9M | [Note E - Other Assets, Net](index=12&type=section&id=Note%20E%20-%20Other%20Assets,%20Net) Details the composition of Kforce Inc.'s other assets, net, including Rabbi Trust, right-of-use assets, and capitalized software | Asset Category | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Assets held in Rabbi Trust | $34.3M | $32.0M | | Right-of-use assets for operating leases, net | $16.5M | $17.1M | | Capitalized software, net | $14.8M | $16.1M | | Notes receivable, net | $0 | $4.8M | | Other non-current assets | $5.2M | $4.8M | | Total Other assets, net | $71.7M | $75.8M | - Notes receivable, net decreased from **$4.8 million** at December 31, 2022, to **$0** at March 31, 2023, due to the settlement of the Note Receivable from the sale of the joint venture[40](index=40&type=chunk)[41](index=41&type=chunk) [Note F - Current Liabilities](index=12&type=section&id=Note%20F%20-%20Current%20Liabilities) Presents Kforce Inc.'s current liabilities, including accounts payable, accrued payroll, and operating lease liabilities | Liability Category | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Accounts payable and other accrued liabilities | $69.6M | $72.8M | | Accrued payroll costs | $46.9M | $48.4M | | Current portion of operating lease liabilities | $3.8M | $4.6M | | Income taxes payable | $5.4M | $5.7M | | Total current liabilities | $125.8M | $131.4M | [Note G - Credit Facility](index=12&type=section&id=Note%20G%20-%20Credit%20Facility) Details Kforce Inc.'s credit facility, including borrowing capacity, outstanding amounts, and compliance with covenants - Kforce has a maximum borrowing capacity of **$200.0 million** under its Amended and Restated Credit Facility, which matures on October 20, 2026[43](index=43&type=chunk) | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Outstanding under credit facility | $22.3M | $25.6M | - As of March 31, 2023, the company was in compliance with all financial covenants contained in the Amended and Restated Credit Facility[43](index=43&type=chunk) [Note H - Other Long-Term Liabilities](index=13&type=section&id=Note%20H%20-%20Other%20Long-Term%20Liabilities) Outlines Kforce Inc.'s other long-term liabilities, including deferred compensation and operating lease liabilities | Liability Category | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Deferred compensation plan | $36.8M | $36.4M | | Operating lease liabilities | $14.5M | $16.4M | | Other long-term liabilities | $33 thousand | $3 thousand | | Total Other long-term liabilities | $51.4M | $52.8M | [Note I - Stock-based Compensation](index=13&type=section&id=Note%20I%20-%20Stock-based%20Compensation) Describes Kforce Inc.'s stock-based compensation plans, including the 2023 Stock Incentive Plan and restricted stock activity - Kforce's shareholders approved the 2023 Stock Incentive Plan, reserving approximately **3.2 million shares** for various stock-based awards[46](index=46&type=chunk) | Restricted Stock Activity (Q1 2023, in thousands) | Number of Restricted Stock | Weighted-Average Grant Date Fair Value | | :------------------------------------------------ | :------------------------- | :------------------------------------- | | Outstanding at December 31, 2022 | 911 | $54.42 | | Granted | 6 | $54.92 | | Forfeited | (1) | $75.22 | | Vested | (8) | $25.71 | | Outstanding at March 31, 2023 | 908 | $54.64 | - Total unrecognized stock-based compensation expense related to restricted stock was **$41.2 million** as of March 31, 2023, to be recognized over a weighted-average remaining period of **4.1 years**[47](index=47&type=chunk) [Note J - Derivative Instrument and Hedging Activity](index=13&type=section&id=Note%20J%20-%20Derivative%20Instrument%20and%20Hedging%20Activity) Discusses Kforce Inc.'s past interest rate swap instruments used for hedging and their current status - Kforce previously maintained two interest rate swap instruments (Swap A and Swap B) designated as cash flow hedges to mitigate interest rate risk[49](index=49&type=chunk) - Swap A matured in April 2022 and Swap B was terminated in May 2022; as of March 31, 2023, the Firm did not have any outstanding derivative instruments[49](index=49&type=chunk) [Note K - Fair Value Measurements](index=14&type=section&id=Note%20K%20-%20Fair%20Value%20Measurements) Explains Kforce Inc.'s fair value measurements, including the inputs used for financial instruments - Interest rate swaps were previously measured at fair value using Level 2 inputs[51](index=51&type=chunk) - There were no transfers into or out of Level 1, 2, or 3 assets or liabilities during the three months ended March 31, 2023[52](index=52&type=chunk) [Note L - Commitments and Contingencies](index=14&type=section&id=Note%20L%20-%20Commitments%20and%20Contingencies) Outlines Kforce Inc.'s potential liabilities from executive employment agreements and the status of legal proceedings - Potential liability from executive employment agreements could be approximately **$40.4 million** following a change in control and termination without cause, or **$17.4 million** without a change in control[53](index=53&type=chunk) - Several legal proceedings, including PAGA and FLSA class actions, were settled and dismissed in March 2023 or February 2023, with no material adverse effect on the company's financial position or operations[56](index=56&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's discussion and analysis of Kforce's financial condition and results of operations for Q1 2023 [Executive Summary](index=16&type=section&id=EXECUTIVE%20SUMMARY) Provides a high-level overview of Kforce Inc.'s key financial performance metrics and operational highlights for Q1 2023 | Metric | Q1 2023 | Q1 2022 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Total Revenue | $406.0M | $417.0M | (2.6)% | | Technology Revenue | +1.4% | N/A | +1.4% | | FA Revenue | (27.9)% | N/A | (27.9)% | | Flex Revenue | $395.5M | $401.9M | (1.6)% | | Direct Hire Revenue | $10.5M | $15.1M | (30.7)% | | Gross Profit Margin | 28.1% | 29.7% | (160 bps) | | Net Income | $16.2M | $19.2M | (15.5)% | | Diluted EPS | $0.82 | $0.93 | (11.8)% | | Capital Returned to Shareholders | $17.0M | N/A | N/A | | Cash Provided by Operating Activities | $19.1M | $38.7M | (50.8)% | - The decline in gross profit margin was attributed to a decrease in Direct Hire revenue mix and a decline in our Flex gross profit margin[63](index=63&type=chunk) - SG&A expenses as a percentage of revenue decreased due to lower performance-based compensation, reduced lease expense from real estate portfolio streamlining, and lower professional fees[63](index=63&type=chunk) [Results of Operations](index=17&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes Kforce Inc.'s operating results, including revenue, gross profit, and expenses, for Q1 2023 and 2022 - Kforce is a leading domestic provider of technology and finance and accounting talent solutions, focusing on Fortune 500 and other large consumers of its services[64](index=64&type=chunk) - The national unemployment rate remained flat at **3.5%** at the end of March 2023[65](index=65&type=chunk) - Staffing Industry Analysts (SIA) estimates technology temporary staffing to grow **5% in 2023** and **7% in 2024**, and finance and accounting temporary staffing to grow **6% in 2023** and **5% in 2024**[65](index=65&type=chunk) [Business Overview](index=17&type=section&id=Business%20Overview) Provides an overview of Kforce Inc.'s workforce, including the number of associates and consultants on assignment - As of March 31, 2023, Kforce employed approximately **2,000 associates** and **9,500 consultants** on assignment[64](index=64&type=chunk) [Operating Results - Three Months Ended March 31, 2023 and 2022](index=17&type=section&id=Operating%20Results%20-%20Three%20Months%20Ended%20March%2031,%202023%20and%202022) Presents a comparative analysis of Kforce Inc.'s operating results as a percentage of revenue for Q1 2023 and 2022 | Metric (% of Revenue) | Q1 2023 | Q1 2022 | | :-------------------------------- | :------ | :------ | | Technology Revenue | 89.9% | 86.3% | | FA Revenue | 10.1% | 13.7% | | Flex Revenue | 97.4% | 96.4% | | Direct Hire Revenue | 2.6% | 3.6% | | Gross profit | 28.1% | 29.7% | | Selling, general and administrative expenses | 22.0% | 22.8% | | Income from operations | 5.8% | 6.7% | | Net income | 4.0% | 4.6% | [Revenue Analysis](index=18&type=section&id=Revenue) Analyzes Kforce Inc.'s revenue performance by segment and service type (Flex and Direct Hire) for Q1 2023 and 2022 | Segment/Type | Q1 2023 Revenue (in millions) | Q1 2022 Revenue (in millions) | YoY Change (%) | | :---------------- | :------------------------------- | :------------------------------- | :------------- | | Technology Flex | $359.5M | $351.7M | 2.2% | | Technology Direct Hire | $5.3M | $8.2M | (35.0)% | | Total Technology | $364.8M | $359.9M | 1.4% | | FA Flex | $36.0M | $50.2M | (28.2)% | | FA Direct Hire | $5.1M | $6.9M | (25.6)% | | Total FA | $41.2M | $57.1M | (27.9)% | | Total Flex | $395.5M | $401.9M | (1.6)% | | Total Direct Hire | $10.5M | $15.1M | (30.7)% | | Total Revenue | $406.0M | $417.0M | (2.6)% | | Flex Revenue Growth Rates (Per Billing Day) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :------------------------------------------ | :------ | :------ | :------ | :------ | :------ | | Billing Days | 64 | 61 | 64 | 64 | 64 | | Technology | 2.2% | 8.5% | 15.7% | 23.3% | 26.0% | | FA | (28.2)% | (28.8)% | (30.7)% | (49.0)% | (37.6)% | | Total Flex | (1.6)% | 3.1% | 8.7% | 7.2% | 11.8% | [Flex Revenue](index=18&type=section&id=Flex%20Revenue) Examines the drivers of Kforce Inc.'s Flex revenue changes, including volume, bill rates, and billable expenses, by segment - Technology Flex revenue increased **2.2% year-over-year**, driven by a **4.7% increase in average bill rates**, partially offset by a decrease in consultants on assignment[68](index=68&type=chunk) - FA Flex revenue decreased **28.2% year-over-year**, primarily due to business repositioning towards high-skilled roles and macroeconomic uncertainty, though average bill rates improved **10.4% year-over-year**[69](index=69&type=chunk) | Key Drivers - Change in Flex Revenue (Q1 2023 vs. Q1 2022, in millions) | Technology | FA | | :---------------------------------------------------------------------- | :--------- | :--------- | | Volume - hours billed | $(7.7M) | $(17.5M) | | Bill rate | $16.0M | $3.4M | | Billable expenses | $(0.5M) | $(9 thousand) | | Total change in Flex revenue | $7.8M | $(14.1M) | | Flex Hours Billed (in thousands) | Q1 2023 | Q1 2022 | YoY Change (%) | | :------------------------------- | :------ | :------ | :------------- | | Technology | 4,032 | 4,122 | (2.2)% | | FA | 748 | 1,150 | (35.0)% | | Total Flex hours billed | 4,780 | 5,272 | (9.3)% | [Direct Hire Revenue](index=19&type=section&id=Direct%20Hire%20Revenue) Discusses the decrease in Kforce Inc.'s Direct Hire revenue for Q1 2023 compared to the same period in 2022 - Direct Hire revenue decreased **30.7%** during the three months ended March 31, 2023, as compared to the same period in 2022, primarily driven by a decrease in placements[72](index=72&type=chunk) [Gross Profit Analysis](index=19&type=section&id=Gross%20Profit) Analyzes Kforce Inc.'s gross profit percentages by segment and overall, highlighting factors influencing changes | Gross Profit Percentage | Q1 2023 | Q1 2022 | YoY Change (%) | | :---------------------- | :------ | :------ | :------------- | | Technology | 27.0% | 28.5% | (5.3)% | | FA | 37.8% | 37.6% | 0.5% | | Total gross profit percentage | 28.1% | 29.7% | (5.4)% | - The total gross profit percentage for the three months ended March 31, 2023, decreased **160 basis points**, primarily due to a decline in Direct Hire revenue mix and a decline in our Flex gross profit margin[74](index=74&type=chunk) | Flex Gross Profit Percentage | Q1 2023 | Q1 2022 | YoY Change (%) | | :--------------------------- | :------ | :------ | :------------- | | Technology | 25.9% | 26.8% | (3.4)% | | FA | 28.9% | 29.0% | (0.3)% | | Total Flex gross profit percentage | 26.2% | 27.1% | (3.3)% | - Overall, our Flex gross profit percentage decreased **90 basis points**, primarily due to a tighter pricing environment and business mix changes within our client portfolio in our Technology business[76](index=76&type=chunk) [SG&A Expenses Analysis](index=20&type=section&id=SG%26A%20Expenses) Examines Kforce Inc.'s selling, general, and administrative (SG&A) expenses, including components and their percentage of revenue | SG&A Component | Q1 2023 (in millions) | % of Revenue (Q1 2023) | Q1 2022 (in millions) | % of Revenue (Q1 2022) | | :------------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Compensation, commissions, payroll taxes and benefits costs | $75.6M | 18.6% | $80.2M | 19.2% | | Other | $13.7M | 3.4% | $14.8M | 3.6% | | Total SG&A | $89.3M | 22.0% | $95.0M | 22.8% | - SG&A as a percentage of revenue decreased **80 basis points**, driven by lower performance-based compensation, cost efficiencies from reducing leased office space, and lower professional fees[79](index=79&type=chunk) - Due to the softening demand environment, the company is prioritizing continued investments in strategic initiatives and exercising tighter discretionary spend control[79](index=79&type=chunk) [Depreciation and Amortization Analysis](index=20&type=section&id=Depreciation%20and%20Amortization) Details Kforce Inc.'s depreciation and amortization expenses for fixed assets and capitalized software | Category | Q1 2023 (in millions) | Q1 2022 (in millions) | YoY Change (%) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | | Fixed asset depreciation | $0.6M | $0.7M | (6.4)% | | Capitalized software amortization | $0.6M | $0.4M | 44.2% | | Total Depreciation and amortization | $1.2M | $1.1M | 12.9% | [Other Expense, Net Analysis](index=20&type=section&id=Other%20Expense,%20Net) Reviews Kforce Inc.'s other expense, net, primarily consisting of interest expense and losses from equity method investment | Metric | Q1 2023 (in millions) | Q1 2022 (in millions) | | :-------------------------------- | :----------------------- | :----------------------- | | Other expense, net | $1.0M | $1.4M | | Loss from equity method investment | $0.8M | $0.8M | - Other expense, net primarily includes interest expense and losses related to the equity method investment, which was **$0.8 million** for both periods[80](index=80&type=chunk)[81](index=81&type=chunk) [Income Tax Expense Analysis](index=20&type=section&id=Income%20Tax%20Expense) Presents Kforce Inc.'s effective tax rate for the three months ended March 31, 2023 and 2022 | Metric | Q1 2023 | Q1 2022 | | :-------------------------------- | :------ | :------ | | Effective tax rate | 27.5% | 27.1% | [Non-GAAP Financial Measures](index=20&type=section&id=Non-GAAP%20Financial%20Measures) Defines and reconciles Kforce Inc.'s non-GAAP financial measures, including Free Cash Flow and Adjusted EBITDA - Non-GAAP financial measures like Free Cash Flow and Adjusted EBITDA are used by management to assess operations and provide additional insights for investors, complementing GAAP results[83](index=83&type=chunk)[86](index=86&type=chunk) [Free Cash Flow](index=20&type=section&id=Free%20Cash%20Flow) Defines and presents Kforce Inc.'s Free Cash Flow for Q1 2023 and 2022 - Free Cash Flow is defined as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures[83](index=83&type=chunk) | Metric | Q1 2023 (in millions) | Q1 2022 (in millions) | | :-------------------------------- | :----------------------- | :----------------------- | | Net cash provided by operating activities | $19.1M | $38.7M | | Capital expenditures | $(1.9M) | $(2.2M) | | Free cash flow | $17.2M | $36.5M | [Adjusted EBITDA](index=21&type=section&id=Adjusted%20EBITDA) Defines and presents Kforce Inc.'s Adjusted EBITDA for Q1 2023 and 2022 - Adjusted EBITDA is defined as net income before depreciation and amortization, stock-based compensation expense, interest expense, net, income tax expense, loss from equity method investment and certain other items[85](index=85&type=chunk) | Metric | Q1 2023 (in millions) | Q1 2022 (in millions) | | :-------------------------------- | :----------------------- | :----------------------- | | Net income | $16.2M | $19.2M | | Depreciation and amortization | $1.2M | $1.1M | | Stock-based compensation expense | $4.3M | $4.4M | | Interest expense, net | $0.3M | $0.6M | | Income tax expense | $6.1M | $7.1M | | Loss from equity method investment | $0.8M | $0.8M | | Adjusted EBITDA | $28.7M | $33.3M | [Liquidity and Capital Resources](index=22&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses Kforce Inc.'s liquidity and capital resources, including cash flows, credit facility, and stock repurchases - Kforce primarily relies on operating cash flows and borrowings under its credit facility to meet capital and liquidity requirements[88](index=88&type=chunk) - The company believes that existing cash and cash equivalents, operating cash flows, and available borrowings under its Credit Facility will be adequate to meet capital expenditure and working capital requirements for at least the next 12 months[93](index=93&type=chunk) [Cash Flows](index=22&type=section&id=Cash%20Flows) Analyzes Kforce Inc.'s cash flow activities from operations, investing, and financing for Q1 2023 and 2022 | Cash Flow Activity | Q1 2023 (in millions) | Q1 2022 (in millions) | YoY Change (%) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | | Cash provided by operating activities | $19.1M | $38.7M | (50.8)% | | Cash provided by investing activities | $2.4M | $(2.7M) | N/A | | Cash used in financing activities | $(21.4M) | $(16.4M) | 30.9% | - The year-over-year decrease in cash provided by operating activities was primarily driven by lower profitability levels, the timing of payments, and a reduction in our deferred tax liability given the sale of our joint venture[90](index=90&type=chunk) - Cash provided by investing activities in Q1 2023 was **$2.4 million**, primarily from the **$5.1 million** proceeds from the sale of a joint venture interest, partially offset by **$1.9 million** in capital expenditures[91](index=91&type=chunk) | Common Stock Repurchase Activity (in millions) | Q1 2023 | Q1 2022 | | :---------------------------------------------- | :-------- | :-------- | | Open market repurchases | $11.0M | $10.1M | | Repurchase of shares related to tax withholding requirements | $0.1M | $0.2M | | Total cash flow impact of common stock repurchases | $11.1M | $10.3M | - Quarterly dividends increased by **20% per share**, from **$0.30 in Q1 2022** to **$0.36 in Q1 2023**, totaling **$7.0 million**[92](index=92&type=chunk) [Credit Facility](index=22&type=section&id=Credit%20Facility) Provides an update on Kforce Inc.'s credit facility, including outstanding amounts and borrowing availability - As of March 31, 2023, **$22.3 million** was outstanding under the credit facility, with **$176.5 million** of borrowing availability[94](index=94&type=chunk) - The company expects to maintain compliance with its credit facility covenants[94](index=94&type=chunk) [Stock Repurchases](index=23&type=section&id=Stock%20Repurchases) Details Kforce Inc.'s stock repurchase program, including authorization increases and shares purchased during Q1 2023 - In February 2023, the Board approved an increase in the stock repurchase authorization, bringing the total authorization to **$100.0 million**[96](index=96&type=chunk) | Repurchase Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | | January 1, 2023 to January 31, 2023 | 138,318 | $55.67 | $33.6M | | February 1, 2023 to February 28, 2023 | 42,248 | $58.02 | $98.8M | | March 1, 2023 to March 31, 2023 | — | — | $98.8M | | Total | 180,566 | $56.22 | $98.8M | - During Q1 2023, Kforce repurchased approximately **178 thousand shares** of common stock for **$10.0 million**, with **$98.8 million** remaining available under the authorization[96](index=96&type=chunk) - A **1% nondeductible excise tax** on certain stock repurchases was recorded due to the IRA, but it is not expected to have a material impact on cash flows, results of operations, or financial position[97](index=97&type=chunk) [Contractual Obligations and Commitments](index=23&type=section&id=Contractual%20Obligations%20and%20Commitments) States that there have been no material changes to Kforce Inc.'s contractual obligations since the 2022 Annual Report - There have been no material changes to contractual obligations previously disclosed in the 2022 Annual Report on Form 10-K, other than those described elsewhere in this report[98](index=98&type=chunk) [Critical Accounting Estimates](index=23&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Highlights Kforce Inc.'s critical accounting estimates and the inherent uncertainties in financial reporting - The preparation of financial statements requires management to make assumptions and estimates, particularly for allowance for credit losses, income taxes, self-insured health liabilities, and the impairment of goodwill and other long-lived assets[26](index=26&type=chunk)[99](index=99&type=chunk) - Actual results could differ materially from these estimates due to the inherent uncertainty of future events[99](index=99&type=chunk) [New Accounting Standards](index=23&type=section&id=NEW%20ACCOUNTING%20STANDARDS) Discusses Kforce Inc.'s adoption of new FASB guidance for reference rate reform and its expected impact - Kforce adopted FASB guidance for reference rate reform as of January 1, 2023, extending the final sunset date to December 31, 2024, with no material impact expected on consolidated financial statements[33](index=33&type=chunk)[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes to Kforce Inc.'s quantitative and qualitative disclosures about market risk since the 2022 Annual Report on Form 10-K - There have been no material changes to the information included in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022[101](index=101&type=chunk) [Item 4. Controls and Procedures.](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures.) Details the evaluation of Kforce Inc.'s disclosure controls, internal control over financial reporting, inherent limitations, and CEO/CFO certifications [Evaluation of Disclosure Controls and Procedures](index=23&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Reports on the effectiveness of Kforce Inc.'s disclosure controls and procedures as of March 31, 2023 - The CEO and CFO concluded that the design and operation of the company's disclosure controls and procedures were effective as of March 31, 2023[102](index=102&type=chunk) [Changes in Internal Control over Financial Reporting](index=23&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) States that no material changes in Kforce Inc.'s internal control over financial reporting occurred during the last fiscal quarter - Management concluded that no material changes in internal control over financial reporting occurred during the last fiscal quarter[103](index=103&type=chunk) [Inherent Limitations of Internal Control Over Financial Reporting](index=23&type=section&id=Inherent%20Limitations%20of%20Internal%20Control%20Over%20Financial%20Reporting) Acknowledges the inherent limitations of internal control over financial reporting in preventing or detecting all material misstatements - Due to inherent limitations, internal control over financial reporting may not prevent or detect all material misstatements due to error or fraud on a timely basis[104](index=104&type=chunk) [CEO and CFO Certifications](index=24&type=section&id=CEO%20and%20CFO%20Certifications) Confirms the inclusion of CEO and CFO certifications as required by Section 302 of the Sarbanes-Oxley Act of 2002 - Certifications by the CEO and CFO are included as Exhibits 31.1 and 31.2, as required by Section 302 of the Sarbanes-Oxley Act of 2002[105](index=105&type=chunk) [PART II - OTHER INFORMATION](index=24&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings.](index=24&type=section&id=Item%201.%20Legal%20Proceedings.) Refers to Note L for legal proceedings, noting that while outcomes are uncertain, they are not expected to materially affect financial position - The company is involved in legal proceedings, claims, and administrative matters that arise in the ordinary course of business, which are not expected to have a material effect on its financial position[107](index=107&type=chunk) [Item 1A. Risk Factors.](index=24&type=section&id=Item%201A.%20Risk%20Factors.) No material changes in Kforce Inc.'s risk factors previously disclosed in the 2022 Annual Report on Form 10-K - There have been no material changes in the risk factors previously disclosed in our 2022 Annual Report on Form 10-K[108](index=108&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) Details Kforce Inc.'s common stock repurchases during Q1 2023 under its publicly announced repurchase program | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :-------------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------- | | January 1, 2023 to January 31, 2023 | 138,318 | $55.67 | $33.6M | | February 1, 2023 to February 28, 2023 | 42,248 | $58.02 | $98.8M | | March 1, 2023 to March 31, 2023 | — | — | $98.8M | | Total | 180,566 | $56.22 | $98.8M | - In February 2023, the Board approved an increase in the stock repurchase authorization, increasing the available authorization to **$100.0 million**[110](index=110&type=chunk) - All dollar amounts presented exclude the **1% nondeductible excise tax** imposed by the IRA on the net value of certain open market stock repurchases made after December 31, 2022[110](index=110&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) States that there were no defaults upon senior securities - No defaults upon senior securities were reported[111](index=111&type=chunk) [Item 4. Mine Safety Disclosures.](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) States that there are no mine safety disclosures - No mine safety disclosures were reported[112](index=112&type=chunk) [Item 5. Other Information.](index=24&type=section&id=Item%205.%20Other%20Information.) States that there is no other information to disclose - No other information was reported[113](index=113&type=chunk) [Item 6. Exhibits.](index=25&type=section&id=Item%206.%20Exhibits.) Lists the exhibits filed as part of the Form 10-Q, including corporate documents, stock incentive plans, certifications, and XBRL data - The report includes various exhibits such as Amended and Restated Articles of Incorporation, Bylaws, the 2023 Stock Incentive Plan, and CEO/CFO certifications[114](index=114&type=chunk) - XBRL formatted financial statements and related notes are provided as Exhibit 101.1[114](index=114&type=chunk) [SIGNATURES](index=26&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q filing - The report is signed by David M. Kelly, Executive Vice President, Chief Financial Officer, and Jeffrey B. Hackman, Senior Vice President, Finance and Accounting, on May 9, 2023[118](index=118&type=chunk)
Kforce(KFRC) - 2022 Q4 - Annual Report
2023-02-24 21:36
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________________________ FORM 10-K _____________________________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ...
Kforce(KFRC) - 2022 Q4 - Earnings Call Transcript
2023-02-07 01:22
Financial Data and Key Metrics Changes - In 2022, the company achieved revenues of approximately $1.71 billion, representing an increase of nearly 8% year-over-year, with GAAP earnings per share at $3.68 and adjusted earnings per share of $4.25, improving approximately 20% year-over-year [67][41][51] - Operating cash flows were $90.8 million for 2022, and when adjusted for certain cash outflows, would have been approximately $130 million [70][50] - The company returned in excess of $830 million in capital to shareholders since 2007, representing approximately 75% of the cash generated [70] Business Line Data and Key Metrics Changes - The Technology business grew revenues by 18% in 2022, with a year-over-year growth of nearly 8% in the fourth quarter [41][120] - Flex margins in the Technology business were 26.1% in the fourth quarter, increasing 10 basis points sequentially but declining 30 basis points year-over-year [49] - The average bill rate in Technology improved to approximately $90 per hour, with a 1.7% sequential growth [20] Market Data and Key Metrics Changes - The company noted broad-based demand across various industries, with no specific vertical experiencing acute reductions in demand as of early 2023 [122][120] - The competitive landscape remains stable among larger players, while smaller operators are under pressure due to economic conditions [11][12] Company Strategy and Development Direction - The company is focused on advancing its integrated sales strategy and transforming its back office to sustain long-term growth ambitions and achieve double-digit operating margins [118][132] - There is a commitment to continue investing in managed teams and project solutions, which are expected to bring higher margins [125][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of technology spending, noting that critical technology initiatives are still being pursued despite economic uncertainty [20][115] - The company has a strong balance sheet with virtually no debt and is well-positioned to navigate potential economic challenges [34][117] Other Important Information - The company has reduced its real estate footprint by approximately 40%, leading to lower overall costs [69] - A 20% increase in the dividend to $1.44 per share was approved, reflecting confidence in the business [51] Q&A Session All Questions and Answers Question: Changes in client behavior and demand - Management noted that while there has been a higher level of project scrutiny from clients, they continue to invest in critical technology projects, particularly in cloud and digital transformation [85][86] Question: Impact of AI on business opportunities - Management acknowledged the buzz around AI and its potential to create new business opportunities, though it is still early to assess the full impact [75][78] Question: Expectations for bill rates and margins - The company expects stability in bill rates and margins, with minor fluctuations anticipated in the current economic environment [74] Question: Labor market tightness - The IT labor market remains tight, with clients being selective in hiring, but no significant changes in candidate supply are expected [82][83] Question: Insights on managed teams and project solutions - The company indicated that managed teams and project solutions engagements are in demand and typically yield higher margins compared to traditional services [88][125]