Table of Contents Exact name of registrant as specified in its charter _______________________________________________________________ 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, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the t ...

Financial Data and Key Metrics Changes - Second quarter revenues were $436.5 million, an increase of 8.2% year-over-year, with earnings per share at $1.30, reflecting a 30% year-over-year increase [22][28] - Gross margins increased by 50 basis points year-over-year to 30.0%, primarily due to a greater mix of direct hire revenues [23] - Operating margin was 7.8%, slightly improved over the prior year after normalizing for a prior gain [27] Business Line Data and Key Metrics Changes - Technology business grew approximately 7% sequentially and 24% year-over-year, with organic growth of almost 50% over the last two years [12][13] - FA business declined 44% year-over-year, with a 10.7% decline when excluding COVID-related revenues [19][20] - Average bill rates in Technology increased by 2.4% sequentially and over 8% year-over-year to approximately $87 per hour [15] Market Data and Key Metrics Changes - Demand in technology remains strong, with clients continuing to invest in digital transformation initiatives [6][16] - Financial services, as the largest vertical, is experiencing good growth, driven by investments in technology platforms [60][62] - The overall demand environment is still above pre-pandemic levels, with strong growth across most industries supported [14][17] Company Strategy and Development Direction - The company is focused on providing domestic technology talent solutions, which is seen as having the greatest prospects for sustained growth [11][32] - A hybrid office model called "office-occasional" has been implemented to provide flexibility and attract top talent [10][59] - The strategic decision to focus on technology has positioned the company as a top performer, with plans to continue investing in technology and people [5][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite macroeconomic uncertainties, citing a debt-free balance sheet and improved profitability [5][32] - The company expects third quarter revenues in the Technology business to grow in the mid-teen range year-over-year [18] - Management noted that while wage inflation has moderated, it remains a factor, and the company is well-positioned to manage it [45][46] Other Important Information - The company generated significant operating cash flows of $32 million in the second quarter and prioritized returning capital to shareholders through dividends and stock repurchases [28][29] - The average length of assignments in the technology business has doubled over the last five years, indicating strong client retention [52][53] Q&A Session Summary Question: What types of activity saw a slowdown in the second quarter? - Management noted growth in all industries except for a slight dip in healthcare, which was client-specific, and overall demand remains strong [36][37] Question: How does the macro environment impact third quarter guidance? - Management indicated that while the demand environment is not at the heightened levels of the past year, it remains strong and above pre-pandemic levels [38][39] Question: What is the outlook on wage inflation? - Wage inflation has moderated compared to the previous year, but remains a factor, with stable margins expected [44][46] Question: How competitive is the talent market? - The technology talent market remains extremely competitive, with negative unemployment, but the company is confident in its recruitment capabilities [48][49] Question: What is the visibility on assignment duration? - Assignment duration continues to expand as clients retain talent for critical projects, with conversions of consultants to full-time roles up 37% year-over-year [52][54] Question: What is the company's stance on acquisitions? - The company has not made an acquisition in over a dozen years, focusing instead on organic growth in technology, with a high bar for any potential acquisitions [56][57] Question: How is the office-occasional model performing? - The office-occasional strategy has exceeded expectations, with positive feedback from employees and successful technology integration [59] Question: What is the outlook for the financial services segment? - Demand in financial services remains strong, driven by technology investments, with no expected changes in growth [60][62] Question: What is the expected trend for the repositioned FA business? - The FA business is expected to continue declining in the short term as resources are focused on technology, but this is seen as a strategic long-term decision [63][64]

Kforce Overview - Kforce's market capitalization is $1.5 billion [5] - Kforce generates 100% of its revenue domestically with approximately 2,000 associates across the U S [6] - Kforce serves approximately 70% of Fortune-ranked companies [7, 12] - Technology constitutes 86% of Kforce's focus today, compared to 50% in 2007 [8] Financial Performance - Q1 2022 TTM revenues grew 14.6% year-over-year to $1.63 billion [9, 13] - Q1 2022 revenues increased 13% year-over-year to $417 million [9, 13] - Technology revenues grew 26.7% year-over-year in Q1 2022 and 35% over Q1 2020 [9, 13] - Kforce returned $16.2 million in capital to shareholders in Q1 2022 [16] Future Expectations - Kforce anticipates Q2 2022 revenues between $436 million and $444 million [24] - Kforce expects full-year 2022 revenue of at least $1.7 billion [27]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Kforce reported strong Q1 2022 financial results with increased revenues, net income, assets, and operating cash flow, while returning capital to shareholders [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Kforce's Q1 2022 operations saw revenues rise to $417.0 million, driving net income to $19.2 million and diluted EPS to $0.93 Consolidated Statements of Operations (Q1 2022 vs Q1 2021) | Financial Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Revenue** | $416,967 | $363,225 | | Gross profit | $123,886 | $98,682 | | Income from operations | $27,744 | $19,451 | | **Net income** | $19,181 | $13,261 | | **Earnings per share – diluted** | $0.93 | $0.62 | [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Kforce's balance sheet as of March 31, 2022, shows total assets increased to $529.5 million, with stockholders' equity rising to $198.2 million Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Total current assets** | $405,454 | $372,111 | | **Total assets** | $529,494 | $503,401 | | **Total current liabilities** | $183,198 | $160,431 | | Long-term debt – credit facility | $100,000 | $100,000 | | **Total liabilities** | $331,289 | $314,995 | | **Total stockholders' equity** | $198,205 | $188,406 | [Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $198.2 million in Q1 2022, driven by net income, partially offset by stock repurchases and dividends - Paid dividends of **$0.30 per share**, totaling **$6.1 million** for the quarter[18](index=18&type=chunk) - Repurchased **147,000 shares** of common stock for a total of **$10.3 million**[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 saw cash from operations increase to $38.7 million, with a net cash increase of $19.6 million after investing and financing activities Condensed Statements of Cash Flows (Q1 2022 vs Q1 2021) | Cash Flow Item | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Cash provided by operating activities** | $38,742 | $22,426 | | Cash used in investing activities | ($2,721) | ($3,350) | | Cash used in financing activities | ($16,383) | ($21,221) | | **Change in cash and cash equivalents** | $19,638 | ($2,145) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, segment performance with Technology growth and FA decline, legal proceedings, and a new corporate headquarters lease - The company's two reportable segments are **Technology** and **Finance and Accounting (FA)**[35](index=35&type=chunk) - Kforce holds a **50% noncontrolling interest** in the WorkLLama, LLC joint venture, contributing **$0.5 million** in Q1 2022[39](index=39&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The company is involved in several legal proceedings, primarily California labor law claims, with some cases reaching preliminary settlement[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - A lease agreement for a new corporate headquarters in Tampa, Florida, was signed, with payments commencing July 1, 2023[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights 13.0% revenue growth driven by Technology, improved gross profit margin, strong liquidity, and significant shareholder returns [Executive Summary](index=16&type=section&id=Executive%20Summary) Q1 2022 saw Kforce's revenue increase 13.0% to $417.0 million, driven by Technology growth, with improved margins and diluted EPS - Revenue increased **13.0%** to **$417.0 million**, with Technology up **26.7%** and FA down **32.9%** on a billing day basis[71](index=71&type=chunk) - Gross profit margin increased **250 basis points** to **29.7%**, and Flex gross profit margin increased **190 basis points** to **27.1%**[71](index=71&type=chunk) - Net income increased **44.6%** to **$19.2 million**, or **$0.93 per share**[71](index=71&type=chunk) - Returned **$16.2 million** to shareholders, comprising **$10.1 million** in stock repurchases and **$6.1 million** in dividends[71](index=71&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Q1 2022 total revenue grew 14.8% to $417.0 million, driven by Technology segment growth, while FA declined and gross profit margin improved Revenue by Segment (Q1 2022 vs Q1 2021) | Segment | Q1 2022 Revenue (in thousands) | % Change YoY | Q1 2021 Revenue (in thousands) | | :--- | :--- | :--- | :--- | | Technology | $359,905 | 28.7% | $279,560 | | FA | $57,062 | (31.8)% | $83,665 | | **Total** | **$416,967** | **14.8%** | **$363,225** | Revenue by Type (Q1 2022 vs Q1 2021) | Revenue Type | Q1 2022 Revenue (in thousands) | % Change YoY | Q1 2021 Revenue (in thousands) | | :--- | :--- | :--- | :--- | | Flex revenue | $401,866 | 13.6% | $353,847 | | Direct Hire revenue | $15,101 | 61.0% | $9,378 | | **Total** | **$416,967** | **14.8%** | **$363,225** | - Technology Flex revenue growth was driven by increased consultants and a **6.3% YoY increase** in average bill rates to approximately **$85 per hour**[77](index=77&type=chunk) - FA Flex revenue declined **37.6%** (billing day basis) primarily due to the anticipated fall-off in COVID-19 related business[78](index=78&type=chunk) - SG&A as a percentage of revenue increased **130 basis points**, primarily due to higher performance-based compensation and increased credit expense[85](index=85&type=chunk) [Non-GAAP Financial Measures](index=22&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show Q1 2022 Free Cash Flow at $36.5 million and Adjusted EBITDA at $33.3 million, indicating strong liquidity and core profitability Free Cash Flow Reconciliation | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,742 | $22,426 | | Capital expenditures | ($2,221) | ($1,350) | | **Free cash flow** | **$36,521** | **$21,076** | Adjusted EBITDA Reconciliation | Metric (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $19,181 | $13,261 | | Depreciation and amortization | $1,093 | $1,202 | | Stock-based compensation expense | $4,437 | $3,403 | | Interest expense, net | $608 | $797 | | Income tax expense | $7,130 | $4,905 | | Loss from equity method investment | $825 | $491 | | **Adjusted EBITDA** | **$33,274** | **$24,059** | [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Kforce maintains strong liquidity with $116.6 million in cash and $98.6 million available credit, while actively returning capital to shareholders - As of March 31, 2022, the company held **$116.6 million** in cash and cash equivalents, with **$100.0 million** outstanding on its credit facility[93](index=93&type=chunk) - The Board increased stock repurchase authorization to **$100.0 million** in February 2022, with **$98.8 million** remaining available as of March 31, 2022[103](index=103&type=chunk) - Quarterly dividends increased **30%** to **$0.30 per share** compared to the prior year[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported since the 2021 Annual Report on Form 10-K - No material changes to market risk information have occurred since the 2021 Annual Report on Form 10-K[108](index=108&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[109](index=109&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[110](index=110&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, with no material financial impact currently expected - The company is involved in ordinary course legal proceedings, detailed in Note K - "Commitments and Contingencies"[114](index=114&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors were reported since the 2021 Annual Report on Form 10-K - No material changes in risk factors were reported since the 2021 Annual Report on Form 10-K[115](index=115&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) The Board increased stock repurchase authorization to $100.0 million in February 2022, with $98.8 million remaining after Q1 repurchases Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | Jan 2022 | 91,594 | $70.45 | $23,641,727 | | Feb 2022 | 55,073 | $69.32 | $98,787,598 | | Mar 2022 | 0 | $0.00 | $98,787,598 | | **Total** | **146,667** | **$70.02** | **$98,787,598** | - In February 2022, the Board increased the stock repurchase authorization to **$100.0 million**[116](index=116&type=chunk) [Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[117](index=117&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - None[118](index=118&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No other information was reported - None[119](index=119&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and CEO/CFO certifications - Lists filed exhibits, including CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[120](index=120&type=chunk) [Signatures](index=28&type=section&id=SIGNATURES) - The report was signed on **May 4, 2022**, by David M. Kelly (EVP, CFO) and Jeffrey B. Hackman (SVP, Finance and Accounting)[125](index=125&type=chunk)

Kforce Inc. (NYSE:KFRC) Q1 2022 Earnings Conference Call May 2, 2022 5:00 PM ET Company Participants Joe Liberatore – President and Chief Executive Officer Kye Mitchell – Executive Vice President and Chief Operations Officer Dave Kelly – Executive Vice President, Chief Financial and Administrative Officer Conference Call Participants Mark Marcon – Baird Marc Riddick – Sidoti Tobey Sommer – Truist Securities Kartik Mehta – Northcoast Research Operator Ladies and gentlemen, thank you for standing by. My name ...

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, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ...

KFORCE Q4 2021 INVESTOR PRESENTATION Kforce | 1 Forward Looking Statements All of the information presented that is not historical in nature should be considered to be forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors, including but not limited to the specific factors discussed in the Firm's periodic filings with the SEC. Should one or more of these risks, uncertainties or other factors materialize, or should underlying as ...

Kforce Inc. (NYSE:KFRC) Q4 2021 Earnings Conference Call February 7, 2022 5:00 PM ET Company Participants Joe Liberatore - President and Chief Executive Officer Kye Mitchell - Chief Operations Officer David Kelly - Chief Financial Officer Conference Call Participants Josh Vogel - Sidoti & Company Mark Marcon - Baird Tim Mulrooney - William Blair Tobey Sommer - Truist Securities Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within ...

KFORCE Q4 2021 INVESTOR PRESENTATION Kforce | 1 Forward Looking Statements All of the information presented that is not historical in nature should be considered to be forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors, including but not limited to the specific factors discussed in the Firm's periodic filings with the SEC. Should one or more of these risks, uncertainties or other factors materialize, or should underlying as ...

PART I FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for Kforce Inc [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents Kforce Inc.'s unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, with accompanying notes [Statements of Operations and Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Kforce reported Q3 2021 revenue of **$402.7 million** and net income of **$20.2 million**, with nine-month revenue at **$1.17 billion** Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $402,725 | $365,424 | $1,169,564 | $1,043,652 | | **Gross Profit** | $119,264 | $103,878 | $336,877 | $295,763 | | **Income from Operations** | $29,266 | $26,718 | $81,840 | $56,068 | | **Net Income** | $20,168 | $18,763 | $54,617 | $37,754 | | **Earnings per Share – diluted** | $0.96 | $0.89 | $2.57 | $1.77 | [Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$522.6 million** as of September 30, 2021, driven by cash and receivables, with total liabilities at **$332.7 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $393,585 | $338,892 | | **Total Assets** | $522,626 | $479,049 | | **Total Current Liabilities** | $161,579 | $108,166 | | **Long-term Debt** | $100,000 | $100,000 | | **Total Liabilities** | $332,657 | $299,114 | | **Total Stockholders' Equity** | $189,969 | $179,935 | [Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was **$59.9 million** for the nine months ended September 30, 2021, with **$59.5 million** used in financing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $59,943 | $93,871 | | **Cash provided by (used in) investing activities** | $11,716 | $(4,248) | | **Cash used in financing activities** | $(59,514) | $(8,181) | | **Change in cash and cash equivalents** | $12,145 | $81,442 | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, segment reporting, asset sales, employee benefits, and commitments, including subsequent events - The company operates through two reportable segments: Technology ("Tech") and Finance and Accounting ("FA") For the nine months ended Sep 30, 2021, Tech revenue was **$927.5 million** and FA revenue was **$242.0 million**[35](index=35&type=chunk) - On May 19, 2021, Kforce sold its corporate headquarters for net proceeds of **$23.7 million**, recognizing a gain of **$2.0 million**[39](index=39&type=chunk) - Effective April 30, 2021, the company terminated its Supplemental Executive Retirement Plan (SERP), resulting in a net loss of **$1.8 million** and an aggregate obligation of **$20.0 million** to be paid out in 2022[45](index=45&type=chunk)[47](index=47&type=chunk) - Subsequent to the quarter end, on October 20, 2021, the company entered into an amended and restated credit agreement, providing a maximum borrowing capacity of **$200.0 million** with a maturity date of October 20, 2026[69](index=69&type=chunk) [Management's Discussion and Analysis (MD&A)](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's discussion analyzes financial condition and operating results by segment, liquidity, capital resources, and non-GAAP measures [Executive Summary](index=20&type=section&id=Executive%20Summary) Total revenue increased **12.1%** to **$1.17 billion** for the nine months, driven by **18.5%** Tech segment growth, with **$59.3 million** returned to shareholders - Revenue for the nine months ended Sep 30, 2021, increased **12.1%** to **$1,169.6 million**, with Tech revenue up **18.5%** and FA revenue down **7.2%**[74](index=74&type=chunk) - Direct Hire revenue for the nine months increased **44.0%** to **$35.2 million**[74](index=74&type=chunk) - The company returned **$59.3 million** to shareholders during the first nine months of 2021, consisting of **$44.5 million** in share repurchases and **$14.8 million** in dividends[74](index=74&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Tech segment revenue grew **29.6%** in Q3 2021, while FA declined **37.7%** due to COVID-19 business wind-down, improving gross profit margin Revenue Growth by Segment (Y-o-Y) | Segment | Q3 2021 vs Q3 2020 | Nine Months 2021 vs 2020 | | :--- | :--- | :--- | | **Tech** | +29.6% | +18.5% | | **FA** | -37.7% | -7.2% | | **Total Revenue** | +10.2% | +12.1% | - The decline in FA segment revenue was primarily driven by a decrease in government-sponsored COVID-19 related business, which was **$7.5 million** in Q3 2021 compared to **$51.1 million** in Q3 2020[74](index=74&type=chunk)[84](index=84&type=chunk) - The company is implementing a "Kforce Reimagined" initiative to create a more flexible, hybrid "Office Occasional" work environment for its associates, with a remote-first approach[78](index=78&type=chunk) - SG&A as a percentage of revenue decreased to **21.5%** for the nine-month period from **22.6%** in the prior year, attributed to revenue leverage, productivity improvements, and a gain on the sale of the corporate headquarters[95](index=95&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) Definitions and reconciliations for non-GAAP measures show Free Cash Flow of **$54.9 million** and Adjusted EBITDA of **$93.7 million** Non-GAAP Financial Measures (in thousands) | Measure | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Free Cash Flow** | $54,917 | $88,575 | | **Adjusted EBITDA** | $93,653 | $68,880 | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Kforce held **$115.6 million** in cash and **$100.0 million** in credit facility debt, with **$44.5 million** in stock repurchases - As of September 30, 2021, the company had **$115.6 million** in cash and cash equivalents and **$100.0 million** outstanding under its credit facility[105](index=105&type=chunk) - During the nine months ended September 30, 2021, Kforce repurchased **0.8 million** shares of common stock for a total cost of **$44.5 million**[117](index=117&type=chunk) - The company declared and paid quarterly dividends totaling **$14.8 million** (**$0.72** per share) during the first nine months of 2021, a **20%** increase in the per share payment from the prior year[111](index=111&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes to market risk disclosures were reported from the 2020 Annual Report on Form 10-K - There have been no material changes to the information regarding quantitative and qualitative disclosures about market risk from the company's 2020 Annual Report on Form 10-K[122](index=122&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting - Based on an evaluation as of September 30, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[123](index=123&type=chunk)[124](index=124&type=chunk) - Management concluded that no changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[125](index=125&type=chunk) PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and exhibits [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in ordinary course legal proceedings, not expected to materially affect its financial position - The company is involved in several legal proceedings and claims, including class action complaints related to alleged violations of the Fair Labor Standards Act (FLSA) and California labor laws concerning overtime pay and employee classification[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Management believes that the outstanding legal matters are unlikely to have a material adverse effect on the company's business, financial position, results of operations, or cash flows[58](index=58&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to risk factors were reported from the 2020 Annual Report on Form 10-K - There have been no material changes in the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K[130](index=130&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company repurchased **248,818** shares at an average of **$60.29** in Q3 2021, with **$40.0 million** remaining for repurchases Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Plan | | :--- | :--- | :--- | :--- | | July 2021 | 94,958 | $61.43 | $49,115,641 | | August 2021 | 57,656 | $58.65 | $45,803,109 | | September 2021 | 96,204 | $60.14 | $40,017,182 | | **Total** | **248,818** | **$60.29** | **$40,017,182** | [Exhibits](index=32&type=section&id=Item%206.%20Exhibits.) Exhibits include CEO and CFO certifications under Sarbanes-Oxley Act and XBRL data files - The exhibits filed with this report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[135](index=135&type=chunk)