EX-99.1 3 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

Kforce Inc.

1001 East Palm Ave.

Tampa, FL 33605

(NASDAQ: KFRC)

 

AT THE FIRM

Michael Blackman

Vice President – Investor Relations

(813) 552-2927

 

KFORCE INC. REPORTS RECORD REVENUE FOR THE THIRD QUARTER

AND EPS OF 17 CENTS

 

ANNOUNCES AMENDED CREDIT FACILITY

 

TAMPA, FL – November 1, 2005 – Kforce Inc. (NASDAQ: KFRC), a professional staffing firm, today announced results for the third quarter of 2005. Revenues for the quarter ended September 30, 2005 were at an all time high of $207.3 million compared to $188.9 million for the quarter ended September 30, 2004 and $198.5 million for the quarter ended June 30, 2005. Revenues for the nine months ended September 30, 2005 of $598.7 million were $127.4 million or 27.0% greater than for the same period last year of $471.2 million. The Firm reported net income for the third quarter of 2005 of $6.7 million or 17 cents per share. Net income for the nine months ended September 30, 2005 of $15.5 million was 110% greater than the same period last year of $7.4 million. Earnings per share for the nine months ended September 30, 2005 of 38 cents was 81% greater than the same period last year of 21 cents.

 

“Revenue and earnings exceeded the top end of analyst expectations which, we believe, reflects strong execution and enhanced operating leverage. Positive operating trends for the Firm continued in Q3 as revenues grew sequentially for the eighth straight quarter and are now at the highest quarterly level in the Firm’s history. Search revenues increased for the eighth straight quarter and gross margins continue to improve.” said David L. Dunkel, Kforce’s Chairman and Chief Executive Officer.

 

Mr. Dunkel continued; “We are also excited to announce that the Firm recently amended and extended our Credit Facility for another five years with our current bank syndicate at improved pricing and terms. The amended $100 million Credit Facility also contains an accordion feature that allows for a $40 million increase in borrowing capacity to $140 million.”

 

William L. Sanders, President said; “We are very pleased with our record revenues in the third quarter, as each business unit grew revenue and improved profitability sequentially and year-over-year. This sustained improvement in productivity and excellent execution resulted in the following highlights:

 

    Revenue growth continued in the third quarter of 2005, with sequential growth of 4.4% over the second quarter of 2005 and growth of 9.8% over the third quarter of 2004.


    All business units experienced sequential flex revenue growth in Q3 ‘05.

 

    Search revenue continued its growth into the third quarter of 2005, for the eighth straight quarter, with sequential growth of 1.5% and growth of 23.1% over the third quarter of 2004. The hiring of additional search associates remains a high priority.

 

    We continue to see improvement in our margins as Flex Gross Profit increased by 90 basis points to 28.1% in Q3 ‘05 from 27.2% in Q2 ‘05 and has improved 190 basis points year-over-year driven by continued improvement in the spread between bill rate and pay rate.

 

    Gross Profit increased by 70 basis points to 33.0% in Q3 ‘05 from 32.3% in Q2 ‘05 and has improved 240 basis points year-over-year from 30.6% in Q3 ‘04.”

 

Joe Liberatore, Chief Financial Officer added; “Positive operating trends for the Firm continued in Q3 as total revenues, search revenues and gross margins all again improved as demonstrated by the following highlights:

 

    Nine months of 2005 revenues of $598.7 million have increased by $127.4 million or 27.0% over 2004 revenues of $471.2 million for the same period.

 

    Nine months of 2005 operating income of $27.2 million has increased $19.6 million, or 257% over 2004 operating income of $7.6 million for the same period.

 

    Cash flows provided by operating activities for the nine months ended September 30, 2005 of $26.6 million were $25.3 million greater than for the same period last year of $1.3 million.

 

    EBITDA in Q3 ‘05 of $14.2 million, or $0.35 per share, increased 79.7% year-over-year from $7.9 million, or $0.21 per share in Q3 ‘04.

 

    Operating expenses year to date 2005 have declined 130 basis points to 27.6% of revenue, from 28.9% of revenues in 2004. Operating expenses in Q3 2005 remained flat compared to Q2 2005, and Q3 2004, at 27.4%.

 

    Days sales outstanding (“DSO”) of accounts receivable was 36.4 days at the end of Q3 2005.

 

    Bank debt balance decreased by $8.0 million from Q2 ‘05 to $22.0 million.

 

    Earnings per Share of $0.17 exceeded the consensus estimate of $0.15 and was above our guidance of $0.14 – $0.16.

 

    Kforce has reported positive earnings for eleven straight quarters.”


Mr. Liberatore continued; “Looking forward to the fourth quarter, we expect to continue to realize the benefits of the leverage in our operating platform. We believe revenues may be in the $203 million to $208 million range with earnings per share for Q4 of $0.15 to $0.17 cents. This reflects approximately 40.5 million weighted average diluted shares outstanding.”

 

Kforce will host a conference call today to discuss these results. The call will begin at 5:00 p.m. Eastern Time. The dial-in number is 1-617-786-2963, pass code 72302390. The replay of the call will be available from 7:00 p.m. Eastern Time Tuesday, November 1 through November 8, 2005, by dialing 1-617-801-6888, pass code 45854786.

 

It will also be Webcast live at www.kforce.com (select “Investor Relations”) and will be available for Webcast replay until December 1, 2005.

 

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.earnings.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 1,600 staffing specialists, Kforce operates with 74 offices in 43 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, there can be no assurance that the above estimates of revenues and earnings per share for the third quarter will be achieved. 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 integrations 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

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

    

Quarter Ended
September 30,

2005


   

Quarter Ended
June 30,

2005


   

Quarter Ended
September 30,

2004


 

Revenue by Function:

                        

Technology

   $ 95,074     $ 92,263     $ 89,671  

Finance/Accounting

     63,058       59,929       57,496  

Health and Life Sciences

     49,161       46,278       41,695  
    


 


 


Total Revenue

     207,293       198,470       188,862  

Revenue by Time:

                        

Perm

     14,107       13,894       11,463  

Flexible

     193,186       184,576       177,399  
    


 


 


Total Revenue

     207,293       198,470       188,862  

Cost Of Sales

     138,904       134,406       130,987  

Gross Profit

     68,389       64,064       57,875  

GP %

     33.0 %     32.3 %     30.6 %

Flex GP %

     28.1 %     27.2 %     26.2 %

Selling, General & Admin.

     54,584       52,417       50,120  

Deprec. & Amort.

     2,194       2,022       1,567  
    


 


 


Income from Operations

     11,611       9,625       6,188  

Other Expense

     477       496       480  
    


 


 


Earnings Before Taxes

     11,134       9,129       5,708  

Income Tax Expense (Benefit)

     4,421       3,460       (339 )
    


 


 


Net Income

   $ 6,713     $ 5,669     $ 6,047  
    


 


 


Earnings (Loss) Per Share - Diluted

   $ 0.17     $ 0.14     $ 0.16  

EBITDA Per Share

   $ 0.35     $ 0.30     $ 0.21  

Shares Outstanding - Diluted

     40,447       40,104       38,314  

EBITDA

   $ 14,202     $ 12,044     $ 7,904  

Selected Cash Flow Information:

                        

Bad Debt Expense (Recovery)

   $ 274     $ (126 )   $ 1,035  

Capital Expenditures

   $ 1,921     $ 3,889     $ 987  

Selected Balance Sheet Information:

                        

Total Cash and Short-term Investments

   $ 2,118     $ 601     $ 2,907  

Accounts Receivable, less allowances

   $ 110,057     $ 105,478     $ 102,131  

Total Assets

   $ 305,554     $ 304,561     $ 273,310  

Bank Debt

   $ 22,000     $ 30,000     $ 39,000  

Other Current Liabilities

   $ 65,339     $ 65,690     $ 67,228  

Other Long-Term Liabilities

   $ 15,684     $ 15,032     $ 13,749  

Total Stockholders’ Equity

   $ 202,531     $ 193,839     $ 153,333  

Other Information:

                        

Billing Days

     64       64       64  


Kforce Inc.

Key Statistics

(Unaudited)

 

     Q3 2005

    Q2 2005

    Q3 2004

 
Total Firm                         

Flex Revenue (000’s)

   $ 193,186     $ 184,576     $ 177,399  

Revenue per billing day (000’s)

   $ 3,019     $ 2,884     $ 2,771  

Sequential Flex Revenue Change

     4.7 %     2.9 %     24.7 %

Hours (000’s)

     4,225       4,211       4,284  

Flex GP %

     28.1 %     27.2 %     26.2 %

Search Revenue (000’s)

   $ 14,107     $ 13,894     $ 11,463  

Placements

     1,130       1,178       1,000  

Average Fee

   $ 12,447     $ 11,850     $ 11,548  

Billing days

     64       64       64  
Technology                         

Flex Revenue (000’s)

   $ 90,281     $ 87,956     $ 86,364  

Revenue per billing day (000’s)

   $ 1,411     $ 1,374     $ 1,349  

Sequential Flex Revenue Change

     2.6 %     3.5 %     27.7 %

Hours (000’s)

     1,473       1,477       1,484  

Flex GP %

     26.9 %     25.9 %     24.9 %

Search Revenue (000’s)

   $ 4,793     $ 4,307     $ 3,307  

Placements

     334       326       253  

Average Fee

   $ 14,371     $ 13,299     $ 13,116  
Finance and Accounting                         

Flex Revenue (000’s)

   $ 54,998     $ 51,627     $ 50,440  

Revenue per billing day (000’s)

   $ 859     $ 807     $ 788  

Sequential Flex Revenue Change

     6.5 %     0.7 %     39.7 %

Hours (000’s)

     1,767       1,811       1,900  

Flex GP %

     29.5 %     28.6 %     27.5 %

Search Revenue (000’s)

   $ 8,060     $ 8,302     $ 7,056  

Placements

     689       743       643  

Average Fee

   $ 11,615     $ 11,221     $ 11,086  
Health & Life Sciences                         

Flex Revenue (000’s)

   $ 47,907     $ 44,993     $ 40,595  

Revenue per billing day (000’s)

   $ 749     $ 703     $ 634  

Sequential Flex Revenue Change

     6.5 %     4.2 %     5.4 %

Hours (000’s)

     985       923       900  

Flex GP %

     28.7 %     28.1 %     27.2 %

Search Revenue (000’s)

   $ 1,254     $ 1,285     $ 1,100  

Placements

     107       109       104  

Average Fee

   $ 11,713     $ 11,795     $ 10,600  


Kforce Inc.

Key Statistics - Health & Life Sciences

(Unaudited)

 

     Q3 2005

    Q2 2005

    Q3 2004

 
Healthcare-Nursing                         

Flex Revenue (000’s)

   $ 11,088     $ 10,995     $ 10,751  

Revenue per billing day (000’s)

   $ 173     $ 172     $ 168  

Sequential Flex Revenue Change

     0.8 %     4.1 %     7.9 %

Hours (000’s)

     285       284       286  

Flex GP %

     27.0 %     25.1 %     25.5 %

Search Revenue (000’s)

   $ 116     $ 81     $ 79  

Placements

     10       9       12  

Average Fee

   $ 11,415     $ 9,049     $ 6,531  
Health Information Mgmt                         

Flex Revenue (000’s)

   $ 9,780     $ 8,246     $ 7,507  

Revenue per billing day (000’s)

   $ 153     $ 129     $ 117  

Sequential Flex Revenue Change

     18.6 %     10.3 %     16.6 %

Hours (000’s)

     150       128       119  

Flex GP %

     32.8 %     31.8 %     30.5 %

Search Revenue (000’s)

   $ 48     $ 40     $ 52  

Placements

     5       1       6  

Average Fee

   $ 9,532     $ 40,223     $ 8,614  
Clinical Research                         

Flex Revenue (000’s)

   $ 18,731     $ 17,492     $ 13,829  

Revenue per billing day (000’s)

   $ 293     $ 273     $ 216  

Sequential Flex Revenue Change

     7.1 %     4.2 %     0.2 %

Hours (000’s)

     249       220       187  

Flex GP %

     28.2 %     28.7 %     27.8 %

Search Revenue (000’s)

   $ 477     $ 555     $ 576  

Placements

     29       29       33  

Average Fee

   $ 16,449     $ 19,156     $ 17,463  
Scientific                         

Flex Revenue (000’s)

   $ 8,308     $ 8,260     $ 8,508  

Revenue per billing day (000’s)

   $ 130     $ 129     $ 133  

Sequential Flex Revenue Change

     0.6 %     -1.2 %     2.2 %

Hours (000’s)

     301       291       308  

Flex GP %

     27.2 %     26.9 %     25.5 %

Search Revenue (000’s)

   $ 613     $ 609     $ 393  

Placements

     63       70       53  

Average Fee

   $ 9,751     $ 8,696     $ 7,459  


Kforce Inc.

Summary of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

     9 Months
September 30,
2005


    9 Months
September 30,
2004


 

Revenue by Function:

                

Technology

   $ 276,890     $ 219,497  

Finance/Accounting

     182,016       133,932  

Health and Life Sciences

     139,757       117,803  
    


 


Total Revenue

     598,663       471,232  

Revenue by Time:

                

Perm

     41,487       29,681  

Flexible

     557,176       441,551  
    


 


Total Revenue

     598,663       471,232  

Cost Of Sales

     406,182       327,388  

Gross Profit

     192,481       143,844  

GP %

     32.2 %     30.5 %

Flex GP %

     27.1 %     25.9 %

Selling, General & Admin.

     159,286       132,773  

Deprec. & Amort.

     5,971       3,445  
    


 


Income from Operations

     27,224       7,626  

Other Expense

     1,477       1,161  
    


 


Earnings Before Taxes

     25,747       6,465  

Income Tax Expense (Benefit)

     10,286       (901 )
    


 


Net Income

   $ 15,461     $ 7,366  
    


 


Earnings Per Share - Diluted

   $ 0.38     $ 0.21  

EBITDA Per Share

   $ 0.85     $ 0.35  

Shares Outstanding - Diluted

     40,472       35,201  

EBITDA

   $ 34,392     $ 12,191  

Selected Cash Flow Information:

                

Bad Debt Expense

   $ 569     $ 1,028  

Capital Expenditures

   $ 7,737     $ 3,497  

Other Information:

                

Billing Days

     191       192  


Kforce Inc.

Selected Financial Information

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

EBITDA Reconciliation

 

     Q3 2005

    Q2 2005

    Q3 2004

 
     $

    Per share

    $

    Per share

    $

    Per share

 

EBITDA

   $ 14,202     $ 0.35     $ 12,044     $ 0.30     $ 7,904     $ 0.21  

Depreciation and Amortization

     (2,194 )     (0.05 )     (2,022 )     (0.05 )     (1,567 )     (0.04 )

Interest Expense and Other

     (874 )     (0.02 )     (893 )     (0.02 )     (629 )     (0.02 )

Tax Benefit (Expense)

     (4,421 )     (0.11 )     (3,460 )     (0.09 )     339       0.01  
    


 


 


 


 


 


Net Income

   $ 6,713     $ 0.17     $ 5,669     $ 0.14     $ 6,047     $ 0.16  
    


 


 


 


 


 


Outstanding Shares - Diluted

     40,447               40,104               38,314          

 

     YTD 2005

    YTD 2004

 
     $

    Per share

    $

    Per share

 

EBITDA

   $ 34,392     $ 0.85     $ 12,191     $ 0.35  

Depreciation and Amortization

     (5,971 )     (0.15 )     (3,445 )     (0.10 )

Interest Expense and Other

     (2,674 )     (0.07 )     (2,281 )     (0.07 )

Tax Benefit (Expense)

     (10,286 )     (0.25 )     901       0.03  
    


 


 


 


Net Income

   $ 15,461     $ 0.38     $ 7,366     $ 0.21  
    


 


 


 


Outstanding Shares - Diluted

     40,472               35,201          

 

EBITDA, a non-GAAP financial measure, is defined as earnings before interest, income taxes, depreciation and amortization. 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.