EX-99.2 3 dex992.htm PRESS RELEASE OF KFORCE INC., RELATED TO THE THIRD QUARTER EARNINGS Press Release of Kforce Inc., related to the Third Quarter Earnings

Exhibit 99.2

 

Kforce Inc.
1001 East Palm Ave.
Tampa, FL 33605
(NASDAQ: KFRC)

 

AT THE COMPANY
Michael Blackman
Vice President – Investor Relations
(813) 552-2927

 

KFORCE INC. REPORTS THIRD QUARTER REVENUE OF $188.9 MILLION

EPS of $0.16 EXCEEDS RANGE

 

TAMPA, FL – October 26, 2004 – Kforce Inc. (NASDAQ: KFRC), a professional staffing firm, today announced results for the third quarter of 2004. Revenue for the quarter ended September 30, 2004 was $188.9 million compared to $123.0 million for the third quarter of 2003 and $152.2 million for the quarter ended June 30, 2004. The Firm reported earnings for the third quarter of 2004 of $6,047,000 or $.16 per share compared to $1,354,000 or $.04 per share in the third quarter of 2003 and $251,000 or $.01 per share in the second quarter of 2004.

 

“We are very pleased with our third quarter results. We continued to see growth throughout the quarter in both flexible staffing and permanent placement. The third quarter of 2004 marks the fourth continuous quarter of sequential search improvement. Recently released Bureau of Labor statistics indicate that the unemployment rate of college educated workers dropped in September to 2.6%. Compared to past expansions, the data suggests that we are still early in the job creation cycle. It is also interesting to note that one-third of the total jobs created in September were in flexible staffing,” said David L. Dunkel, Kforce’s Chairman and Chief Executive Officer. “We believe our results for the third quarter are indicative of the focus and discipline that we maintained throughout the acquisition and integration of Hall Kinion/OnStaff during which time we have continued to grow our business. We also believe that the acquisition has resulted in new revenue opportunities and we are able to capitalize on our expanded footprint and enhanced capabilities. Third quarter results produced by our team are an example of our guiding principle that Great People = Great Results SM.”

 

William L. Sanders, President, added, “In the third quarter we began to see the many benefits of our expanded operating platform. We continued to see growth in the third quarter for each of our business units with particular strength in the Finance and Accounting group. Q3 marks the sixth straight quarter of improvement in Technology flexible staffing, which we believe, may be further strengthened as the environment in 2005 improves. Weekly revenue continued to improve post-merger with the week of September 26th being the highest revenue week of the year for the Firm. This fact is even more significant as we had eliminated approximately $4 million (quarterly) of Technology staffing revenue in the prior weeks that failed to meet Kforce margin requirements.”

 

“Revenue in the third quarter of $188.9 million represents a 24.1% increase from Q2 and includes a full quarter of revenue from the Hall Kinion/OnStaff acquisition. Search revenue, which was minimally impacted by the transaction, increased 16.2% sequentially to $11.5 million. As expected, operating expenses decreased to 27.4% in Q3, down from 30.6% in Q2, reflecting


increased operating leverage and less transaction related expenses. The fourth quarter contains less actual billing days than in the third quarter, as well as client shutdowns in the Clinical Research and Scientific sectors around the holidays, which will result in three less billing days in the fourth quarter. We are encouraged by the positive revenue trends in the first weeks of the fourth quarter and expect sequential growth on a billing day basis of three to five percent.”

 

“If current trends were to continue, and reflecting the loss of a low margin client ($4 million per quarter) and less billing days in Q4 as previously noted, we believe the fourth quarter revenue may be in the range of $185 to $188 million. Earnings from operations may be 11 to 14 cents which includes approximately 7 cents for incremental severance costs, re-branding costs associated with the Hall Kinion/OnStaff acquisition, expenses to re-engineer our order to cash process and the addition of 25 percent more search sales associates.”

 

Kforce will host a conference call today to discuss these results. The call will begin at 5:00 p.m. EDT. The dial-in number is 1-617-786-2961, pass code 82882448. The replay of the call will be available from 6:00 p.m. EDT Tuesday, October 26 through November 2, 2004, by dialing 1-617-801-6888, passcode 85551351.

 

It will also be Webcast live at www.kforce.com (select “Investor Relations”) and will be available for Webcast replay until November 30, 2004.

 

The webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN’s individual investor center at www.fulldisclosure.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected event management site, StreetEvents (www.streetevents.com).

 

About Kforce

 

Kforce (NASDAQ: KFRC) is a professional staffing firm providing flexible and permanent staffing solutions for organizations in the skill areas of technology, finance & accounting, and health and life sciences. Backed by more than 1,400 staffing specialists, Kforce operates in 45 markets in North America. For more information, please visit our Web site at www.kforce.com.

 

Certain of the above statements contained in this press release 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 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, including, without limitation, shifts in demand for our Health and Life Sciences, Finance and Accounting and Technology Groups, as well as the market for search and flexible staffing assignments; changes in the service mix; ability of the Firm to complete acquisitions; and the risk factors listed from time to time in the Firm’s reports filed with the Securities and Exchange Commission, as well as assumptions regarding the foregoing. In particular, any statement related to Kforce’s expected revenues or earnings or Kforce being well positioned for future profitability and growth are forward-looking statements. The words “should,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “foresee,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. 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

(000’s Omitted)

(Unaudited)

 

     Quarter Ended

 
     September 30,
2004


    June 30,
2004


    September 30,
2003


 

Revenue by Function:

                        

Technology

   $ 89,671     $ 70,177     $ 55,779  

Finance/Accounting

     57,496       42,480       30,477  

Health and Life Sciences

     41,695       39,505       36,702  
    


 


 


Total Revenue

     188,862       152,162       122,958  

Revenue by Time:

                        

Perm

     11,463       9,868       6,837  

Flexible

     177,399       142,294       116,121  
    


 


 


Total Revenue

     188,862       152,162       122,958  

Cost Of Sales

     130,987       104,901       85,109  

Gross Profit

     57,875       47,261       37,849  

GP %

     30.6 %     31.1 %     30.8 %

Flex GP%

     26.2 %     26.3 %     26.7 %

Selling, General & Admin.

     50,131       45,410       35,175  

Deprec. & Amort.

     1,556       1,209       1,051  
    


 


 


Income from Operations

     6,188       642       1,623  

Other Expense

     480       391       267  
    


 


 


Earnings Before Taxes

     5,708       251       1,356  

Income Tax Benefit (Expense)

     339       —         (2 )
    


 


 


Net Income

   $ 6,047     $ 251     $ 1,354  
    


 


 


Earnings Per Share - Diluted

   $ 0.16     $ 0.01     $ 0.04  

EBITDA Per Share

   $ 0.21     $ 0.06     $ 0.09  

Shares Outstanding - Diluted

     38,314       34,374       31,873  

EBITDA

   $ 7,893     $ 1,995     $ 2,904  

Selected Cash Flow Information:

                        

Bad Debt Expense (Recovery)

   $ 1,035     $ 219     $ (735 )

Capital Expenditures

   $ 987     $ 1,061     $ 615  

Selected Balance Sheet Information:

                        

Total Cash and Cash Equivalents

   $ 2,907     $ 509     $ 13,227  

Accounts Receivable, less allowance

   $ 102,131     $ 94,784     $ 63,965  

Total Assets

   $ 273,310     $ 263,554     $ 161,447  

Current Liabilities

   $ 67,228     $ 62,105     $ 42,618  

Long-Term Liabilities

   $ 52,749     $ 55,564     $ 30,777  

Total Stockholders’ Equity

   $ 153,333     $ 145,885     $ 88,052  

Other Information:

                        

Billing Days

     64       64       64  


Kforce Inc.

Key Statistics

(Unaudited)

 

     Q3 2004

    Q2 2004

    Q3 2003

 

Total Company

                        

Flex Revenue (000’s)

   $ 177,399     $ 142,294     $ 116,121  

Revenue per billing day (000’s)

   $ 2,771     $ 2,223     $ 1,814  

Sequential Revenue Change

     24.7 %     16.8 %     0.8 %

Hours (000’s)

     4,284       3,381       2,653  

Flex GP %

     26.2 %     26.3 %     26.7 %

Search Revenue (000’s)

   $ 11,463     $ 9,868     $ 6,837  

Placements

     1,001       826       608  

Average Fee

     11,548       12,009     $ 11,294  

Billing days

     64       64       64  

Technology

                        

Flex Revenue (000’s)

   $ 86,364     $ 67,650     $ 54,402  

Revenue per billing day (000’s)

   $ 1,349     $ 1,057     $ 850  

Sequential Revenue Change

     27.7 %     17.4 %     1.6 %

Hours (000’s)

     1,484       1,219       939  

Flex GP %

     24.9 %     24.8 %     25.5 %

Search Revenue (000’s)

   $ 3,307     $ 2,527     $ 1,377  

Placements

     254       192       111  

Average Fee

   $ 13,116     $ 13,266     $ 12,379  

Finance and Accounting

                        

Flex Revenue (000’s)

   $ 50,440     $ 36,119     $ 25,934  

Revenue per billing day (000’s)

   $ 788     $ 564     $ 405  

Sequential Revenue Change

     39.7 %     26.7 %     4.5 %

Hours (000’s)

     1,900       1,315       912  

Flex GP %

     27.5 %     27.8 %     28.2 %

Search Revenue (000’s)

   $ 7,056     $ 6,361     $ 4,543  

Placements

     643       541       414  

Average Fee

   $ 11,086     $ 11,826     $ 11,038  
Health & Life Sciences                         

Flex Revenue (000’s)

   $ 40,595     $ 38,525     $ 35,785  

Revenue per billing day (000’s)

     634       602     $ 559  

Sequential Revenue Change

     5.4 %     7.8 %     -2.9 %

Hours (000’s)

     900       847       802  

Flex GP %

     27.2 %     27.3 %     27.4 %

Search Revenue (000’s)

   $ 1,100     $ 980     $ 917  

Placements

     104       93       83  

Average Fee

   $ 10,600     $ 10,494     $ 11,114  


Kforce Inc.

Key Statistics - Health & Life Sciences

 

(Unaudited)

 

     Q3 2004

    Q2 2004

    Q3 2003

 
Healthcare-Nursing                         

Flex Revenue (000’s)

   $ 10,751     $ 9,960     $ 9,634  

Revenue per billing day (000’s)

   $ 168     $ 155     $ 151  

Sequential Revenue Change

     7.9 %     5.5 %     -5.9 %

Hours (000’s)

     286       253       243  

Flex GP %

     25.5 %     26.1 %     25.8 %

Search Revenue (000’s)

   $ 79     $ 91     $ 99  

Placements

     12       11       9  

Average Fee

   $ 6,531     $ 8,234     $ 10,962  
Healthcare - Non Nursing                         

Flex Revenue (000’s)

   $ 7,507     $ 6,441     $ 6,240  

Revenue per billing day (000’s)

   $ 117     $ 101     $ 97  

Sequential Revenue Change

     16.6 %     18.6 %     0.5 %

Hours (000’s)

     119       102       93  

Flex GP %

     30.5 %     30.4 %     29.4 %

Search Revenue (000’s)

   $ 52     $ 65     $ 113  

Placements

     6       6       12  

Average Fee

   $ 8,614     $ 10,877     $ 9,410  
Clinical Research                         

Flex Revenue (000’s)

   $ 13,829     $ 13,801     $ 12,430  

Revenue per billing day (000’s)

   $ 216     $ 216     $ 194  

Sequential Revenue Change

     0.2 %     -0.1 %     -2.4 %

Hours (000’s)

     187       186       171  

Flex GP %

     27.8 %     27.6 %     28.8 %

Search Revenue (000’s)

   $ 576     $ 403     $ 410  

Placements

     33       27       25  

Average Fee

   $ 17,463     $ 14,705     $ 16,418  
Scientific                         

Flex Revenue (000’s)

   $ 8,508     $ 8,323     $ 7,481  

Revenue per billing day (000’s)

   $ 133     $ 130     $ 117  

Sequential Revenue Change

     2.2 %     17.9 %     -2.3 %

Hours (000’s)

     308       306       295  

Flex GP %

     25.5 %     26.0 %     25.5 %

Search Revenue (000’s)

   $ 393     $ 421     $ 295  

Placements

     53       49       37  

Average Fee

   $ 7,459     $ 8,582     $ 8,078  


Kforce Inc.

EBITDA Reconciliation

(000’s Omitted)

(Unaudited)

 

     Q3 2004

    Q2 2004

    Q3 2003

 
     $

    Per share

    $

    Per share

    $

    Per share

 

EBITDA

   $ 7,893     $ 0.21     $ 1,995     $ 0.06     $ 2,904     $ 0.09  

Depreciation and Amortization

     (1,556 )     (0.04 )     (1,209 )     (0.03 )     (1,051 )     (0.03 )

Interest Expense and Other

     (629 )     (0.02 )     (535 )     (0.02 )     (497 )     (0.02 )

Tax Benefit (Expense)

     339       0.01       —         —         (2 )     —    
    


 


 


 


 


 


Net Income

   $ 6,047     $ 0.16     $ 251     $ 0.01     $ 1,354     $ 0.04  
    


 


 


 


 


 


Outstanding Shares - Diluted

     38,314               34,374               31,873          

 

EBITDA, a non-GAAP financial measure, is defined as earnings before interest, income taxes, depreciation, amortization and change in accounting principle. EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from EBITDA are significant components in understanding and assessing financial performance. EBITDA is a key measure used by management to evaluate its operations and to provide useful information to investors. EBITDA should not be considered in isolation or as an alternative to net income, cash flows data or other financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations. EBITDA as presented may not be comparable to similarly titled measures of other companies.