Kforce(US:KFRC)2023-02-24 21:36Financial Performance - Kforce reported revenue of $1,710.8 million for the year ended December 31, 2022, an increase of 8.3% compared to $1,579.9 million in 2021[192]. - Gross profit for Kforce was $501.1 million in 2022, representing a gross margin of 29.3%, up from $456.9 million in 2021[192]. - Net income for Kforce increased slightly to $75.4 million in 2022, compared to $75.2 million in 2021, resulting in a net income margin of 4.4%[192]. - Kforce's basic earnings per share (EPS) for 2022 was $3.76, a 3.0% increase from $3.65 in 2021[192]. - Kforce's comprehensive income for 2022 was $74.8 million, a decrease from $80.2 million in 2021[192]. - Cash provided by operating activities increased to $90,805 thousand in 2022 from $72,898 thousand in 2021, marking a rise of 24.5%[200]. - The total income tax expense for 2022 was $27,011 thousand, with an effective tax rate of 26.4%[258]. - The company reported operating income of $102,442 thousand for 2022, compared to $99,267 thousand in 2021, indicating a growth of 2.2%[253]. Expenses and Liabilities - Selling, general and administrative expenses for Kforce were $379.8 million in 2022, up from $345.7 million in 2021, reflecting a 9.8% increase[192]. - Long-term debt decreased significantly from $100,000 thousand in 2021 to $25,600 thousand in 2022, a decrease of 74.4%[195]. - Total current liabilities decreased from $160,431 thousand in 2021 to $131,433 thousand in 2022, a reduction of about 18.1%[195]. - Stockholders' equity slightly decreased from $188,406 thousand in 2021 to $182,198 thousand in 2022, a decline of 3.5%[197]. - Accounts payable increased from $40.2 million in 2021 to $49.6 million in 2022, while total accrued liabilities decreased from $81.4 million in 2021 to $72.8 million in 2022[267]. - Total other long-term liabilities decreased from $54.6 million in 2021 to $52.8 million in 2022, with deferred compensation plan liabilities accounting for $36.4 million in 2022[269]. Investments and Impairments - The company recorded an other-than-temporary impairment of $13.7 million related to its equity method investment in WorkLLama, resulting in a complete write-off of the investment[188]. - The company recorded a loss related to its equity method investment of $3.8 million for the year ended December 31, 2022, compared to a loss of $2.5 million in 2021[229]. - An impairment loss of $13.7 million was recognized for the equity method investment as of December 31, 2022, reducing its balance to nil[232]. - Total other assets, net decreased from $92.6 million in 2021 to $75.8 million in 2022, primarily due to an impairment related to equity method investment[263]. - Kforce recognized an impairment loss of the full balance of the equity method investment as of December 31, 2022, due to strategic decisions regarding WorkLLama[294]. Cash and Stock Transactions - Cash and cash equivalents at the end of 2022 were $121 thousand, down from $96,989 thousand in 2021, a decrease of 99.9%[200]. - The company repurchased common stock amounting to $74,913 thousand in 2022, compared to $66,210 thousand in 2021, an increase of 13.0%[200]. - Dividends paid increased from $20,120 thousand in 2021 to $24,027 thousand in 2022, an increase of 19.0%[200]. - The company reported a stock-based compensation expense of $17,655 thousand in 2022, up from $13,999 thousand in 2021, an increase of 26.0%[200]. - Stock-based compensation expense for the year ended December 31, 2022, was $17.7 million, an increase from $14.0 million in 2021 and $11.6 million in 2020[297]. Legal Matters - A complaint was filed against Kforce and its client Verity Health System alleging violations of the Labor Code, with claims for civil penalties and attorney's fees[308]. - A class action lawsuit was amended to include claims under PAGA and the Fair Labor Standards Act, seeking recovery of unpaid wages and benefits, penalties, and liquidated damages[309]. - The lawsuit challenges the exempt classification of certain recruiters, with plaintiffs seeking damages for unpaid wages and statutory penalties[310]. - A collective action complaint was filed for alleged violations of the FLSA, seeking unpaid wages and liquidated damages for failure to properly classify recruiters[311]. - Preliminary agreements have been reached to resolve multiple lawsuits, which are subject to final court approval[309][310][311]. - Kforce has set reserves in anticipation of potential settlements related to these lawsuits[309][310][311]. - The company believes these legal matters are unlikely to have a material adverse effect on its consolidated financial position or cash flows[309][310][311]. Operational Insights - The company maintained effective internal control over financial reporting as of December 31, 2022, according to the independent auditor's opinion[179]. - The allowance for credit losses for trade receivables was less than 1% of gross trade receivables as of December 31, 2022 and 2021[225]. - The allowance for credit losses on trade receivables decreased to $1,006 thousand in 2022 from $1,729 thousand in 2021[256]. - The company executed a Note Receivable to its joint venture for up to $7.5 million, with $6.8 million funded as of December 31, 2022[230]. - The company recorded a credit loss on the Note Receivable of $1.9 million for the year ended December 31, 2022[233]. - The company has purchase commitments amounting to approximately $21.9 million as of December 31, 2022, with $15.8 million expected to be paid in 2023[302].