EX-99.1 2 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

Senior Vice President – Investor Relations

(813) 552-2927

KFORCE INC. REPORTS RECORD REVENUE AND 97% NET

EARNINGS GROWTH FOR THE FIRST QUARTER OF 2006

 

    EARNINGS PER SHARE OF $0.15

 

    SEARCH REVENUE INCREASED 25.4% SEQUENTIALLY

TAMPA, FL – May 2, 2006 – Kforce Inc. (NASDAQ: KFRC), a professional staffing firm, today announced results for the first quarter of 2006. Revenues for the quarter ended March 31, 2006 were $222.3 million compared to $192.9 million for the quarter ended March 31, 2005 and $203.6 million for the quarter ended December 31, 2005. The Firm reported net income for the first quarter of 2006 of $6.1 million or 15 cents per share versus net income of $3.1 million or 8 cents per share for the first quarter of 2005 representing a year-over-year improvement of 97%. Net income was $6.9 million or 17 cents per share for the fourth quarter of 2005.

“We are pleased with our first quarter results which, we believe, demonstrate the Firm’s operating leverage as evidenced by earnings per share that exceeded the top of our guidance. Our quarterly revenue of $222.3 million is a record for the Firm. Our search revenue sequential improvement of 25.4% was the highest sequential search increase in the Firm’s history. We believe the search environment remains positive, particularly in the skilled niches, as college educated unemployment is at 2.2%. Total Firm revenue per billing day of $3.5 million in the first quarter was also a Firm record,” said David L. Dunkel, Kforce’s Chairman and Chief Executive Officer. “We were pleased to finalize the acquisition of Pinkerton Computer Consultants, Inc. and join forces with highly talented field professionals who we have welcomed to the Kforce family.” Continued Mr. Dunkel, “We believe it is increasingly clear that professional and technical staffing are the sweet spots of the staffing sector. We move forward with confidence and believe Kforce is better prepared than ever before to take advantage of changes in the marketplace and deliver exceptional results to our customers and shareholders. We believe our diverse professional and technical service offerings uniquely position Kforce in the areas that will be in greatest demand for the foreseeable future.”

William L. Sanders, President said: “We continued to make progress across the business during the first quarter. We are particularly pleased to have hit another all time high in total Firm revenue. Our sustained improvement in productivity and strong execution resulted in the following operating highlights:

 

    Gross Profit percentage of 33.3% in Q1 ‘06 has improved 220 basis points year-over-year from 31.1% in Q1 ’05 and increased by 10 basis points from 33.2% in Q4 ’05.


    Flex Gross Profit percentage of 27.8% in Q1 ’06 has improved 190 basis points from 25.9% in Q1 ’05 and declined by 70 basis points from 28.5% in Q4 ‘05, driven by the impact of first quarter payroll related taxes.

 

    The Firm’s average hourly bill rate has increased $6.74 (16.0%) year-over-year. The increase has been evidenced across all business lines, with year-over-year improvements of $4.73 (8.0%) in Tech, $6.12 (22.4%) in FA and $3.04 (6.7%) in HLS.”

Continued Mr. Sanders, “We remain focused on client selection and profitability and believe this focus has enabled us to continue to achieve improving results. We have achieved record revenues in this quarter and improved gross margins 360 basis points over the last two years. Consequently, our operating margins continue to improve. As we look forward, we believe our recent aggressive hiring, especially in search, should allow us to take advantage of a strong staffing environment. We believe an intense focus on direct hire revenues, strong pricing discipline and superior execution will allow us to drive revenue growth with margin expansion and significant returns for our shareholders.

Joe Liberatore, Chief Financial Officer added: “Overall, positive operating trends for the Firm continued in Q1 2006, reflective of our improving profitability. We continue to make excellent progress toward achieving our target earnings before taxes of 8-10% of revenues.

Financial highlights for Q1 include:

 

    Revenue of $222.3 million represents a 15.2% year-over-year growth from Q1 ’05 and a 9.2% sequential increase over Q4 ’05.

 

    Search revenue of $16.8 million increased year-over-year by 24.5%, and was up sequentially by 25.4%, representing the highest sequential increase in Firm history.

 

    Search increased as a percentage of total revenue to 7.6% as compared to 7% a year ago.

 

    Revenue per billing day in Q1 ’06 increased year-over-year by 15.2% to an all time Firm high of $3.5 million from $3.1 million in Q1 ’05 and was up sequentially by 5.7%.

 

    Net Income in Q1 ’06 of $6.1 million increased 97% year-over-year from $3.1 million in Q1 ’05.

 

    EPS of $.15 exceeded our guidance of $.11 - $.14.

 

    EBITDA in Q1 ’06 of $13.9 million, or $.34 per share, increased 70.7% year-over-year from $8.1 million, or $.20 per share in Q1 ’05 and decreased sequentially by 5.5% driven by first quarter payroll related taxes and integration expenses.

 

    DSO in AR remains at low levels at 39.9 days in Q1 ’06. DSO in AR was 37 days in Q4 ’05.”

Mr. Liberatore continued: “Looking forward to the second quarter, we believe revenues may be in the $230 million to $235 million range and earnings per share for Q2 of $0.19 to $0.22 cents, which reflects approximately 41.5 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. EST. The dial-in number is 888-593-6050 (please request to be connected to the Kforce Earnings Call). The replay of the call will be available from 7:00 p.m. EST Tuesday, May 2nd through May 16, 2006, by dialing 888-203-1112, passcode 1500458.


It will also be webcast live at www.kforce.com (select “Investor Relations”) and will be available for webcast replay until May 16, 2006.

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 1,800 staffing specialists, Kforce operates with 75 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 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 integration of Pinkerton Computer Consultants and Kforce and the leveraging of Pinkerton professionals 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  
     March 31,
2006
    December 31,
2005
    March 31,
2005
 

Revenue by Function:

      

Technology

   $ 109,518     $ 93,890     $ 89,553  

Finance/Accounting

     63,001       61,691       59,029  

Health and Life Sciences

     49,779       48,021       44,318  
                        

Total Revenue

     222,298       203,602       192,900  

Revenue by Time:

      

Perm

     16,786       13,387       13,486  

Flexible

     205,512       190,215       179,414  
                        

Total Revenue

     222,298       203,602       192,900  

Cost Of Sales

     148,296       136,094       132,872  

Gross Profit

     74,002       67,508       60,028  

GP %

     33.3 %     33.2 %     31.1 %

Flex GP%

     27.8 %     28.5 %     25.9 %

Selling, General & Admin.

     60,482       53,438       52,285  

Deprec. & Amort.

     2,506       2,312       1,755  
                        

Income from Operations

     11,014       11,758       5,988  

Other Expense

     807       340       503  
                        

Earnings Before Taxes

     10,207       11,418       5,485  

Income Tax Expense

     4,150       4,558       2,406  
                        

Net Income

   $ 6,057     $ 6,860     $ 3,079  
                        

Earnings Per Share - Diluted

   $ 0.15     $ 0.17     $ 0.08  

EBITDA Per Share

   $ 0.34     $ 0.36     $ 0.20  

Shares Outstanding - Diluted

     41,411       41,015       40,026  

EBITDA

     13,902       14,708       8,145  

Selected Cash Flow Information:

      

Bad Debt Expense (Recovery)

   $ 1,005     $ (531 )   $ 421  

Capital Expenditures

   $ 964     $ 2,955     $ 1,926  

Selected Balance Sheet Information:

      

Total Cash and Short-term Investments

   $ 427     $ 37,104     $ 189  

Accounts Receivable, less allowances

   $ 130,191     $ 99,354     $ 108,227  

Total Assets

   $ 379,806     $ 324,746     $ 309,014  

Bank Debt

   $ 62,421     $ 35,000     $ 35,530  

Other Current Liabilities

   $ 78,092     $ 63,020     $ 65,843  

Other Long-Term Liabilities

   $ 15,649     $ 16,024     $ 14,831  

Total Stockholders’ Equity

   $ 223,644     $ 210,702     $ 192,810  

Other Information:

      

Billing Days

     63       61       63  


Kforce Inc.

Key Statistics

(Unaudited)

 

     Q1 2006     Q4 2005     Q1 2005  
Total Firm       

Flex Revenue (000’s)

   $ 205,512     $ 190,215     $ 179,414  

Revenue per billing day (000’s)

   $ 3,262     $ 3,118     $ 2,848  

Sequential Flex Revenue Change

     8.0 %     -1.5 %     0.5 %

Hours (000’s)

     4,137       4,088       4,203  

Flex GP %

     27.8 %     28.5 %     25.9 %

Search Revenue (000’s)

   $ 16,786     $ 13,387     $ 13,486  

Placements

     1,287       1,081       1,201  

Average Fee

   $ 13,156     $ 12,457     $ 11,362  

Billing days

     63       61       63  
Technology       

Flex Revenue (000’s)

   $ 104,028     $ 89,544     $ 84,961  

Revenue per billing day (000’s)

   $ 1,652     $ 1,467     $ 1,349  

Sequential Flex Revenue Change

     16.2 %     -0.8 %     2.4 %

Hours (000’s)

     1,625       1,478       1,437  

Flex GP %

     26.1 %     26.8 %     24.4 %

Search Revenue (000’s)

   $ 5,490     $ 4,346     $ 4,592  

Placements

     350       288       381  

Average Fee

   $ 15,909     $ 15,092     $ 12,092  
Finance and Accounting       

Flex Revenue (000’s)

   $ 52,888     $ 53,970     $ 51,279  

Revenue per billing day (000’s)

   $ 839     $ 885     $ 814  

Sequential Flex Revenue Change

     -2.0 %     -1.9 %     -5.6 %

Hours (000’s)

     1,581       1,666       1,873  

Flex GP %

     30.5 %     30.6 %     27.3 %

Search Revenue (000’s)

   $ 10,113     $ 7,721     $ 7,750  

Placements

     832       677       706  

Average Fee

   $ 12,193     $ 11,490     $ 11,177  
Health & Life Sciences       

Flex Revenue (000’s)

   $ 48,596     $ 46,701     $ 43,174  

Revenue per billing day (000’s)

   $ 771     $ 766     $ 685  

Sequential Flex Revenue Change

     4.1 %     -2.5 %     4.8 %

Hours (000’s)

     931       944       893  

Flex GP %

     28.7 %     29.1 %     27.5 %

Search Revenue (000’s)

   $ 1,183     $ 1,320     $ 1,144  

Placements

     105       116       114  

Average Fee

   $ 11,616     $ 11,357     $ 10,046  


Kforce Inc.

Key Statistics - Health & Life Sciences

(Unaudited)

 

     Q1 2006     Q4 2005     Q1 2005  
Healthcare-Nursing       

Flex Revenue (000’s)

   $ 9,660     $ 9,677     $ 10,559  

Revenue per billing day (000’s)

   $ 153     $ 159     $ 168  

Sequential Flex Revenue Change

     -0.2 %     -12.7 %     2.0 %

Hours (000’s)

     230       231       253  

Flex GP %

     24.8 %     27.1 %     23.6 %

Search Revenue (000’s)

   $ 113     $ 87     $ 190  

Placements

     9       10       20  

Average Fee

   $ 12,604     $ 8,675     $ 9,553  
Health Information Management       

Flex Revenue (000’s)

   $ 10,299     $ 9,689     $ 7,476  

Revenue per billing day (000’s)

   $ 163     $ 159     $ 119  

Sequential Flex Revenue Change

     6.3 %     -0.9 %     -1.0 %

Hours (000’s)

     152       148       118  

Flex GP %

     36.1 %     34.6 %     32.8 %

Search Revenue (000’s)

   $ 78     $ 132     $ 126  

Placements

     5       12       13  

Average Fee

   $ 15,838     $ 10,985     $ 9,711  
Clinical Research       

Flex Revenue (000’s)

   $ 21,153     $ 19,201     $ 16,780  

Revenue per billing day (000’s)

   $ 336     $ 315     $ 266  

Sequential Flex Revenue Change

     10.2 %     2.5 %     12.3 %

Hours (000’s)

     281       271       213  

Flex GP %

     27.6 %     28.1 %     28.8 %

Search Revenue (000’s)

   $ 431     $ 669     $ 221  

Placements

     24       39       14  

Average Fee

   $ 19,698     $ 17,165     $ 15,760  
Scientific       

Flex Revenue (000’s)

   $ 7,484     $ 8,134     $ 8,359  

Revenue per billing day (000’s)

   $ 119     $ 133     $ 132  

Sequential Flex Revenue Change

     -8.0 %     -2.1 %     0.0 %

Hours (000’s)

     268       294       309  

Flex GP %

     26.5 %     27.3 %     24.9 %

Search Revenue (000’s)

   $ 561     $ 432     $ 607  

Placements

     67       55       67  

Average Fee

   $ 8,430     $ 7,823     $ 9,056  


Kforce Inc.

Selected Financial Information

(In Thousands, Except Per Share Amounts)

(Unaudited)

EBITDA Reconciliation

 

     Q1 2006     Q4 2005     Q1 2005  
     $     Per share     $     Per share     $     Per share  

EBITDA

   $ 13,902     $ 0.34     $ 14,708     $ 0.36     $ 8,145     $ 0.20  

Depreciation and Amortization

     (2,885 )     (0.07 )     (2,928 )     (0.07 )     (2,148 )   $ (0.05 )

Interest Expense and Other

     (810 )     (0.02 )     (362 )     (0.01 )     (512 )   $ (0.01 )

Tax Expense

     (4,150 )     (0.10 )     (4,558 )     (0.11 )     (2,406 )   $ (0.06 )
                                                

Net Income

   $ 6,057     $ 0.15     $ 6,860     $ 0.17     $ 3,079     $ 0.08  
                                                

Outstanding Shares - Diluted

     41,411         41,015         40,026    

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