Kforce(US:KFRC)2025-11-05 22:55Financial Performance - Revenue for Q3 2025 was $332,645, a decrease of 5.8% compared to $353,319 in Q3 2024[14] - Gross profit for Q3 2025 was $92,257, down 6.5% from $98,567 in Q3 2024[14] - Net income for the nine months ended September 30, 2025, was $29,662, a decline of 24.7% from $39,353 in the same period of 2024[20] - Earnings per share (EPS) for Q3 2025 was $0.63, compared to $0.76 in Q3 2024, reflecting a decrease of 17.1%[14] - Revenue for the nine months ended September 30, 2025, decreased 6.1% to nearly $1.00 billion from $1.06 billion in the comparable period in 2024[55] - Flex revenue for the nine months ended September 30, 2025, decreased 6.0% to $0.98 billion from $1.04 billion in the comparable period in 2024[55] - Direct Hire revenue for the nine months ended September 30, 2025, decreased 11.0% to $19.7 million from $22.2 million in the comparable period in 2024[55] - Net income for the nine months ended September 30, 2025, decreased 24.6% to $29.7 million, or $1.66 diluted earnings per share, from $39.4 million, or $2.08 diluted earnings per share, for the nine months ended September 30, 2024[55] - Free Cash Flow for the nine months ended September 30, 2025, was $30.1 million, down from $56.6 million in 2024[79] - Adjusted EBITDA for the nine months ended September 30, 2025, was $56.0 million, compared to $69.1 million in 2024[81] Assets and Liabilities - Total assets increased to $374,152 as of September 30, 2025, up from $357,834 at the end of 2024[16] - Cash and cash equivalents rose to $1,252 as of September 30, 2025, compared to $349 at the end of 2024[16] - Long-term debt increased significantly to $65,000 from $32,700 at the end of 2024, indicating a rise in leverage[16] - The company had $65.0 million outstanding under the Amended and Restated Credit Facility as of September 30, 2025, up from $32.7 million at December 31, 2024[43] - As of September 30, 2025, the company had $65.0 million outstanding under its Amended and Restated Credit Facility, with $134.0 million available for borrowing[82] Cash Flow and Dividends - Cash provided by operating activities for the nine months ended September 30, 2025, was $41,937, down from $65,084 in 2024[20] - The company declared and paid quarterly dividends totaling $20.8 million for the nine months ended September 30, 2025, representing a 3% increase per share[87] - Dividends paid in Q3 2025 amounted to $20,778, slightly lower than $21,282 in Q3 2024[20] - The Firm returned $61.9 million of capital to shareholders in the form of open market repurchases totaling $41.1 million and quarterly dividends totaling $20.8 million during the nine months ended September 30, 2025[55] Stock Repurchase and Authorization - The company repurchased $41,450 worth of common stock during the nine months ended September 30, 2025[20] - The total authorization for the stock repurchase program was increased to $100.0 million in October 2025[32] - The company repurchased approximately 950 thousand shares of common stock at a total cost of approximately $41.1 million during the nine months ended September 30, 2025[32] - The company repurchased a total of 295,374 shares of common stock during the three months ended September 30, 2025, at an average price of $32.02 per share[105] - The total dollar value of shares that may yet be purchased under the repurchase plan is $22,347,693[105] Operational Performance - Selling, general and administrative expenses for the three months ended September 30, 2025, were $75.884 million, compared to $78.308 million for the same period in 2024[36] - The company reported income before income taxes of $14.244 million for the three months ended September 30, 2025, down from $18.287 million in the same period of 2024[36] - Total gross profit percentage decreased by 20 basis points for the three months and 40 basis points for the nine months ended September 30, 2025, compared to the same periods in 2024[67] - Technology Flex revenue decreased by 5.2% year-over-year for the nine months ended September 30, 2025[77] - FA Flex revenue saw a significant decline of 16.0% year-over-year for the nine months ended September 30, 2025[77] - Total Flex revenue experienced a year-over-year decrease of 6.0% for the nine months ended September 30, 2025[77] Credit Facilities and Financial Controls - The Firm entered into a senior secured credit facility with a maximum borrowing capacity of $200.0 million on November 5, 2025[50] - The company has a maximum borrowing capacity of $200 million under a new senior secured credit facility, with a maturity date of November 5, 2030[108] - The new credit facility includes a $10 million sublimit for standby and commercial letters and a $10 million sublimit for swingline loans[108] - The company maintains a fixed charge coverage ratio of not less than 1.25 to 1.00 and a total leverage ratio of no greater than 3.50 to 1.00 under the new credit facility[111] - The applicable margin for Term SOFR loans ranges from 1.250% to 1.625% based on the firm's total leverage ratio[110] Internal Controls and Risk Factors - As of September 30, 2025, the CEO and CFO concluded that the design and operation of the company's Disclosure Controls were effective[97] - No changes in internal control over financial reporting have materially affected the company's internal control during the last fiscal quarter[98] - The company has made accruals for certain legal proceedings, but does not expect these to have a material effect on its financial statements[102] - There have been no material changes in the risk factors previously disclosed in the 2024 Annual Report[103] Strategic Initiatives - The company continues to prioritize investments in strategic initiatives, including the implementation of Workday and leveraging AI capabilities[73]