0000930420-17-000103.txt : 20170502 0000930420-17-000103.hdr.sgml : 20170502 20170502160912 ACCESSION NUMBER: 0000930420-17-000103 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20170502 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170502 DATE AS OF CHANGE: 20170502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KFORCE INC CENTRAL INDEX KEY: 0000930420 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 593264661 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26058 FILM NUMBER: 17805075 BUSINESS ADDRESS: STREET 1: 1001 EAST PALM AVENUE STREET 2: SUITE CITY: TAMPA STATE: FL ZIP: 33605 BUSINESS PHONE: 8135525000 MAIL ADDRESS: STREET 1: 1001 EAST PALM AVENUE STREET 2: SUITE CITY: TAMPA STATE: FL ZIP: 33605 FORMER COMPANY: FORMER CONFORMED NAME: KFORCE INC DATE OF NAME CHANGE: 20000517 FORMER COMPANY: FORMER CONFORMED NAME: ROMAC INTERNATIONAL INC DATE OF NAME CHANGE: 19950502 8-K 1 a201710-qx8xkearningsrelea.htm FORM 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
___________________________________________ 
FORM 8-K
 
 ___________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2017
 
___________________________________________ 
Kforce Inc.
(Exact name of registrant as specified in its charter)
 
___________________________________________ 
 
Florida
 
000-26058
 
59-3264661
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
1001 East Palm Avenue, Tampa, Florida 33605
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (813) 552-5000
N/A
(Former name or former address, if changed since last report)

 ___________________________________________
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (Section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (Section 240.12b-2 of this chapter).
Emerging growth company
 
¨
  
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 





Item 2.02 Results of Operations and Financial Condition.
On May 2, 2017, Kforce Inc. issued a press release regarding its earnings for the quarter ended March 31, 2017. A copy of this press release is furnished as Exhibit 99.1 to this Report and is incorporated into this Report by reference.
The information furnished herewith pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in this Form 8-K and in the accompanying exhibit shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by Kforce Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished herewith:
 
Exhibit
Number
  
Description
 
 
99.1
  
Earnings Release of Kforce Inc. dated 5/2/2017.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
KFORCE INC.
 
 
 
 
(Registrant)
 
 
 
 
May 2, 2017
 
 
 
By:
 
/s/ DAVID M. KELLY
 
 
 
 
 
 
David M. Kelly,
 
 
 
 
 
 
Senior Vice President, Chief Financial Officer
 
 
 
 
 
 
(Principal Financial Officer)
 
 
 
 
 
 
 
KFORCE INC.
 
 
 
 
(Registrant)
 
 
 
 
May 2, 2017
 
 
 
By:
 
/s/ JEFFREY B. HACKMAN
 
 
 
 
 
 
Jeffrey B. Hackman,
 
 
 
 
 
 
Senior Vice President, Finance & Accounting
 
 
 
 
 
 
(Principal Accounting Officer)


EX-99.1 2 exhibit991-2017q110xqpress.htm EARNINGS RELEASE Exhibit


Exhibit 99.1
 
 
  
Kforce Inc.
1001 East Palm Ave.
Tampa, FL 33605
(NASDAQ: KFRC)
 
 
AT THE FIRM
Michael R. Blackman
Chief Corporate Development Officer
(813) 552-2927
KFORCE REPORTS FIRST QUARTER REVENUES OF $334.0 MILLION AND EPS OF $0.23
YEAR-OVER-YEAR FLEX REVENUE GROWTH ACCELERATES TO 4.2%
TAMPA, FL, May 2, 2017 (GLOBE NEWSWIRE) — Kforce Inc. (Nasdaq: KFRC), a provider of professional staffing services and solutions, today announced results for its first quarter of 2017. Revenues for the quarter ended March 31, 2017 were $334.0 million compared to $326.0 million for the quarter ended December 31, 2016, an increase of 2.5%, and compared to $322.2 million for the quarter ended March 31, 2016, an increase of 3.7%. Net income for the quarter ended March 31, 2017 was $5.9 million, or $0.23 per share, as compared to $9.2 million, or $0.36 per share, for the quarter ended December 31, 2016, and compared to $3.7 million, or $0.14 per share, for the quarter ended March 31, 2016.
David L. Dunkel, Chairman and CEO, said, “We are pleased with the progress we have made to reaccelerate year-over-year revenue growth rates in each of our Flex businesses in the first quarter of 2017 compared to the fourth quarter of 2016. Our view of the strength of the demand environment within our lines of business, especially in Tech, has not changed. We believe the secular drivers of demand in Tech continue to intensify as companies increasingly look to technology to provide internal operating efficiencies, enhance competitive position and enable sustained market relevance in today's rapidly changing and evolving marketplace. Our focus continues to be on further accelerating our top line growth in an increasingly competitive market and making prudent investments in our business to generate long-term shareholder value.”
Joseph J. Liberatore, President, said, “We believe we are pursuing the mix of business that will lead to the greatest long-term success. We remain very focused on the actions necessary to further accelerate revenue growth, particularly in our Tech Flex business. We are very excited to have gone live in April 2017 with the initial pilot of our new CRM system, which we anticipate to be fully deployed this year. This is a significant component of a multi-year effort to replace and upgrade our technology platforms geared towards better equipping our people to deliver exceptional service to our clients and consultants and building upon other investments to enhance associate productivity.”
Mr. Liberatore noted additional operational results for the first quarter include:
Flex revenues of $322.5 million in Q1 ‘17 increased 4.2% from $309.6 million in Q1 ‘16.
Quarterly year-over-year growth rates in Flex revenues for Tech, FA and GS were 2.7%, 7.5% and 6.6%, respectively.
Direct Hire revenues of $11.5 million in Q1 ‘17 decreased 8.4% from $12.6 million in Q1 ‘16.
David M. Kelly, Chief Financial Officer, said, “We expect to continue to invest in our business to take advantage of the positive demand environment. We remain confident that we will meet our 7.5% operating margin target when $1.6 billion in annualized revenue is reached. We also still expect to achieve an operating margin of at least 6.3% at $1.4 billion in annualized revenue. We are pleased to announce that our Board of Directors declared a second quarter cash dividend on Kforce common stock of $0.12 per share. The cash dividend will be payable on June 23, 2017 to shareholders of record as of the close of business on June 9, 2017.”
Highlights for the first quarter include: 
Flex gross profit margin decreased 70 basis points to 26.6% in Q1 ‘17 from 27.3% in Q1 ‘16.
Selling, general and administrative expense as a percentage of revenues for Q1 ‘17 was 25.4% which is down 110 basis points as compared to 26.5% in Q1 ‘16.
Adjusted EBITDA in Q1 ‘17 was $14.6 million as compared to $13.7 million in Q1 ‘16.





Looking forward to the second quarter of 2017, there will be 64 billing days, which is the same as the preceding and prior year quarters. Current estimates for the second quarter of 2017 are:
Revenues of $342 million to $347 million
Earnings per share of $0.45 to $0.47
Gross profit margin of 30.2% to 30.4%
Flex gross profit margin of 27.5% to 27.7%
SG&A expense as a percent of revenue of 23.8% to 24.0%
Operating margin of 5.7% to 6.0%
Effective tax rate of 38.4%
On Tuesday, May 2, 2017, Kforce will host a conference call to discuss these results. The call will begin at 5:00 p.m. Eastern Time. The prepared remarks for this call are available on the Investor Relations page of the Kforce Inc. website (http://investor.kforce.com/) in the Download Library under Shareholder Tools.
The dial-in number is (877) 344-3890. The conference passcode is Kforce. The replay of the call will be available from 8:00 p.m. EST, Tuesday, May 2, 2017 through May 9, 2017 by dialing (855) 859-2056, passcode 6054056.
This call is being webcast by Shareholder.com and can be accessed at Kforce’s web site at www.kforce.com (select “Investor Relations”). The webcast replay will be available until May 9, 2017.
About Kforce
Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing temporary and permanent staffing solutions in the skill areas of technology and finance & accounting. Backed by nearly 2,800 associates and over 11,000 consultants on assignment, Kforce is committed to “Great People = Great Results” for our valued clients and consultants. Kforce operates with 61 offices located throughout the United States and one office in the Philippines. For more information, please visit our Web site at http://www.kforce.com.
The Kforce Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3749.
Certain of the above statements contained in this press release, including earnings projections, are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions and growth in the staffing industry and general economy; competitive factors, risks due to shifts in the market demand; a reduction in the supply of candidates for temporary employment or the Firm's ability to attract such candidates; the success of the Firm in attracting and retaining revenue-generating talent; changes in the service mix; ability of the Firm to repurchase shares; the effect of adverse weather conditions; changes in our effective tax rate; changes in government regulations, laws and policies that are adverse to our businesses; risk of contract performance, delays or termination or the failure to obtain awards, task orders or funding under contracts; changes in client demand for our services such as the resulting impact of any significant organizational changes within our largest clients; and the risk factors listed from time to time in the Firm’s reports filed with the Securities and Exchange Commission, including the Firm’s Form 10-K for the fiscal year ending December 31, 2016, as well as assumptions regarding the foregoing. In particular, the Firm makes no assurances that the estimates of continuing operations will be achieved or that we will continue to increase our market share, successfully manage risks to our revenue stream, successfully put into place the people and processes that will create future success or further accelerate our revenue. The words “should,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “foresee,” “plan” and similar expressions and variations thereof contained in this press release identify certain of such forward-looking statements, which speak only as of the date of this press release. The Firm undertakes no obligation to publicly update or revise any forward-looking statements. As a result, such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.






Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
 
 
Three Months Ended
 
 
Mar. 31, 2017
 
Dec. 31, 2016
 
Mar. 31, 2016
Revenue by function:
 
 
 
 
 
 
 Technology
 
$
222,045

 
$
216,807

 
$
216,588

 Finance & accounting
 
87,295

 
85,794

 
82,492

 Government solutions
 
24,652

 
23,397

 
23,121

Total revenue
 
333,992

 
325,998

 
322,201

Direct costs of services
 
236,857

 
226,350

 
225,012

Gross profit
 
97,135

 
99,648

 
97,189

GP %
 
29.1
%
 
30.6
%
 
30.2
%
Flex GP %
 
26.6
%
 
28.1
%
 
27.3
%
Selling, general & administrative expenses
 
84,678

 
82,009

 
85,455

Depreciation & amortization
 
2,050

 
2,047

 
2,327

Income from operations
 
10,407

 
15,592

 
9,407

Other expense, net
 
1,185

 
825

 
668

Income before income taxes
 
9,222

 
14,767

 
8,739

Income tax expense
 
3,320

 
5,528

 
5,089

Net income
 
$
5,902

 
$
9,239

 
$
3,650

 
 
 
 
 
 
 
Earnings per share - diluted
 
$
0.23

 
$
0.36

 
$
0.14

 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
 
25,509

 
25,821

 
26,842

Adjusted EBITDA
 
$
14,562

 
$
19,283

 
$
13,712

 
 
 
 
 
 
 
Billing days
 
64

 
61

 
64






Kforce Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
 
March 31, 2017
 
December 31, 2016
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
2,738

 
$
1,482

Trade receivables, net of allowances
227,634

 
206,361

Income tax refund receivable
898

 
172

Prepaid expenses and other current assets
10,709

 
10,691

Total current assets
241,979

 
218,706

Fixed assets, net
42,732

 
43,145

Other assets, net
32,767

 
30,511

Deferred tax assets, net
21,991

 
23,449

Intangible assets, net
3,556

 
3,642

Goodwill
45,968

 
45,968

Total assets
$
388,993

 
$
365,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts payable and other accrued liabilities
$
34,212

 
$
37,230

Accrued payroll costs
45,603

 
44,137

Other current liabilities
1,920

 
1,765

Income taxes payable
843

 
221

Total current liabilities
82,578

 
83,353

Long-term debt – credit facility
131,966

 
111,547

Long-term debt – other
3,734

 
3,984

Other long-term liabilities
45,508

 
44,801

Total liabilities
263,786

 
243,685

Commitments and contingencies
 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock

 

Common stock
713

 
713

Additional paid-in capital
431,345

 
428,212

Accumulated other comprehensive income
179

 
184

Retained earnings
177,199

 
174,967

Treasury stock, at cost
(484,229
)
 
(482,340
)
Total stockholders’ equity
125,207

 
121,736

Total liabilities and stockholders’ equity
$
388,993

 
$
365,421








Kforce Inc.
Key Statistics
(Unaudited)
 
 
 
Q1 2017
 
Q4 2016
 
Q1 2016
Total Firm
 
 
 
 
 
 
Flex revenue (000’s)
 
$
322,487

 
$
314,714

 
$
309,636

Hours (000’s)
 
5,713

 
5,598

 
5,451

Flex GP %
 
26.6
%
 
28.1
%
 
27.3
%
Direct Hire revenue (000’s)
 
$
11,505

 
$
11,284

 
$
12,565

Placements
 
823

 
876

 
912

Average fee
 
$
13,981

 
$
12,891

 
$
13,785

Billing days
 
64

 
61

 
64

Technology
 
 
 
 
 
 
Flex revenue (000’s)
 
$
216,886

 
$
212,437

 
$
211,209

Hours (000’s)
 
3,245

 
3,152

 
3,129

Flex GP %
 
25.8
%
 
27.5
%
 
26.7
%
Direct Hire revenue (000’s)
 
$
5,159

 
$
4,370

 
$
5,379

Placements
 
294

 
260

 
317

Average fee
 
$
17,537

 
$
16,831

 
$
16,992

Finance & Accounting
 
 
 
 
 
 
Flex revenue (000’s)
 
$
80,949

 
$
78,880

 
$
75,306

Hours (000’s)
 
2,468

 
2,446

 
2,322

Flex GP %
 
27.6
%
 
29.1
%
 
28.7
%
Direct Hire revenue (000’s)
 
$
6,346

 
$
6,914

 
$
7,186

Placements
 
529

 
616

 
595

Average fee
 
$
12,002

 
$
11,230

 
$
12,078

Government Solutions
 
 
 
 
 
 
Flex revenue (000’s)
 
$
24,652

 
$
23,397

 
$
23,121

Flex GP %
 
29.9
%
 
30.3
%
 
28.4
%
Kforce Inc.
Revenue Growth Rates
(Per Billing Day)
(Unaudited)

 
 
Year-Over-Year Growth Rates
 
 
(Per Billing Day)
 
 
Q1 2017
 
Q4 2016
 
Q3 2016
 
Q2 2016
 
Q1 2016
Tech Flex
 
2.7
 %
 
1.4
 %
 
(2.7
)%
 
(2.9
)%
 
(0.3
)%
Tech Direct Hire
 
(4.1
)%
 
(13.1
)%
 
(10.2
)%
 
(18.2
)%
 
1.8
 %
Total Tech
 
2.5
 %
 
1.1
 %
 
(2.8
)%
 
(3.3
)%
 
(0.2
)%
FA Flex
 
7.5
 %
 
2.1
 %
 
(0.5
)%
 
5.5
 %
 
12.0
 %
FA Direct Hire
 
(11.7
)%
 
(15.4
)%
 
(6.9
)%
 
3.4
 %
 
2.8
 %
Total FA
 
5.8
 %
 
0.4
 %
 
(1.2
)%
 
5.3
 %
 
11.1
 %
Total Staffing
 
3.4
 %
 
0.9
 %
 
(2.4
)%
 
(1.1
)%
 
2.7
 %
GS
 
6.6
 %
 
4.0
 %
 
10.1
 %
 
4.2
 %
 
(12.1
)%
Total Firm
 
3.7
 %
 
1.1
 %
 
(1.5
)%
 
(0.7
)%
 
1.5
 %






Kforce Inc.
Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
(Unaudited)

The following non-GAAP financial measures presented may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. The Company does not consider these non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.
Adjusted EBITDA
“Adjusted EBITDA”, a non-GAAP financial measure, is defined by Kforce, and consistent with the definition included in our credit facility, as net income before depreciation and amortization, stock-based compensation expense, interest expense, net and income tax expense and is a key metric in our covenant calculations. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations and management believes it provides a good metric of our core profitability in comparing our performance to our competitors. Consequently, management believes it is useful information to investors.
 
 
Three Months Ended
 
 
Mar. 31, 2017
 
Dec. 31, 2016
 
Mar. 31, 2016
Net income
 
$
5,902

 
$
9,239

 
$
3,650

Depreciation & amortization
 
2,103

 
2,094

 
2,337

Stock-based compensation expense
 
2,064

 
1,663

 
1,944

Interest expense, net
 
1,173

 
759

 
692

Income tax expense
 
3,320

 
5,528

 
5,089

Adjusted EBITDA
 
$
14,562

 
$
19,283

 
$
13,712






Free Cash Flow
“Free Cash Flow”, a non-GAAP financial measure, is defined by Kforce as net cash (used in) provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities including investing in our business, making acquisitions, repurchasing common stock or paying dividends. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view free cash flow as a complement to our financial statements.
 
Three Months Ended
 
March 31,
 
2017
 
2016
Net income
$
5,902

 
$
3,650

Non-cash provisions and other
6,932

 
8,704

Changes in operating assets/liabilities
(23,347
)
 
(9,013
)
Net cash (used in) provided by operating activities
(10,513
)
 
3,341

Capital expenditures
(2,272
)
 
(1,294
)
Free cash flow
(12,785
)
 
2,047

Change in debt
20,419

 
22,982

Repurchases of common stock
(2,887
)
 
(22,084
)
Cash dividend
(3,037
)
 
(3,146
)
Other
(454
)
 
(376
)
Change in cash
$
1,256

 
$
(577
)