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8-K - FORM 8 K - KFORCE INCd296856d8k.htm

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 FOURTH QUARTER AND FULL YEAR 2011 RESULTS

 

   

FOURTH QUARTER REVENUES OF $285.6 MILLION AND EPS OF $0.20

 

   

FLEX REVENUES PER BILLING DAY INCREASED 4.2% SEQUENTIALLY

 

   

TOTAL 2011 REVENUE AND EPS GROWTH OF 12.1% AND 37.3%

TAMPA, FL, February 7, 2012 (GLOBE NEWSWIRE) — Kforce Inc. (Nasdaq: KFRC), a provider of professional staffing services and solutions, today announced results for its fourth quarter of 2011. Revenue for the quarter ended December 31, 2011 was $285.6 million compared to $289.0 million for the quarter ended September 30, 2011, a decrease of 1.2% and compared to $258.5 million for the quarter ended December 31, 2010, an increase of 10.5%. For the quarter ended December 31, 2011, Kforce reported net income of $7.1 million, or $0.20 per share, versus $8.4 million, or $0.22 per share, for the quarter ended September 30, 2011, a decrease of 16.1% in net income and 9.1% in earnings per share, respectively. Net income and earnings per share for the fourth quarter of 2011 increased 11.8% and 25.0%, respectively, versus the fourth quarter of 2010, which had net income of $6.3 million, or $0.16 per share.

Kforce reported total revenue for the year ended December 31, 2011 of $1.1 billion as compared to $990.8 million for 2010, an increase of 12.1%. Net income was $27.2 million, or $0.70 per share, for the year ended December 31, 2011, versus net income of $20.6 million, or $0.51 per share, for 2010, which represents an increase of 31.6% in net income and 37.3% in earnings per share.

“We are very pleased with both Q4 and full year 2011 results. Fourth quarter revenues of $285.6 million and earnings per share of $0.20 were both at the top end of our guidance. In the quarter, the Firm also achieved several milestones, establishing record quarterly revenue per billing day for total Firm, total Firm Flex, total Tech, Tech Flex and HIM Flex. Additionally, full year 2011 total Firm Flex revenue increased 12.1%,” said David L. Dunkel, Chairman and Chief Executive Officer. “Looking at our service lines, Flex revenues for our Tech, FA, Clinical Research and HIM segments for 2011 experienced increases of 16.1%, 17.2%, 1.8% and 19.7%, respectively, while Government Solutions declined 10.4%. We believe that the secular shift towards a flexible staffing model in this temporary employment-led recovery, as evidenced by a disproportionate increase of job creation occurring in temporary staffing, has contributed to our growth in what remains an uncertain macroeconomic environment. In addition, with college educated unemployment at 4.1%, there remains significant demand for professional talent. I wish to thank all of our employees, consultants and clients for making 2011 a very successful year for Kforce and we remain optimistic about the Firm’s prospects.”


William L. Sanders, President, said, “We are very pleased with the results for the fourth quarter, where we experienced a sequential revenue increase in all Flex business lines on a billing day basis, except for Clinical Research, which is impacted by paid time off around the holidays. We were able to continue to take advantage of our highly advanced sales and delivery platform that leverages the combination of our field associates, strategic accounts executives and National Recruiting Center to profitably grow revenue with both large and small clients. Our key performance indicators and discussions with clients indicate that demand continues to be solid. Kforce continues to aggressively pursue business opportunities with the goal of continuing to gain client and market share.”

Mr. Sanders noted additional operational results for the fourth quarter include:

 

   

Flex revenue per billing day of $4.5 million in Q4 ‘11 increased 4.2% over Q3 ‘11 and increased 11.2% over Q4 ‘10.

 

   

Flex revenue of $275.2 million in Q4 ‘11 decreased 0.7% from $277.1 million in Q3 ‘11 and increased 11.2% from $247.4 million in Q4 ‘10.

 

   

Sequential percentage changes in Flex revenue on a billing day basis by segment were: 12.3% increase for HIM, 11.2% increase for FA, 2.5% increase for Tech, 2.4% increase for Government Solutions and a 1.6% decrease for Clinical Research.

 

   

Search revenue of $10.4 million in Q4 ‘11 decreased 12.4% from $11.9 million in Q3 ‘11 and decreased 6.0% from $11.1 million in Q4 ‘10.

Joseph J. Liberatore, Chief Financial Officer, said, “The Firm performed well in Q4 ‘11. We believe our fourth quarter results reflect strong client relationships, and an improving pricing environment Q4 ‘11 and Q4 ‘10 each contained 61 billing days while Q3 ‘11 contained 64 billing days.”

Mr. Liberatore continued, “From a financial standpoint, 2011 provided the opportunity for the Firm to take advantage of our flexibility and capacity to gain market share while protecting our strong balance sheet and delivering solid results. Cash flow and EBITDA continued to be strong in 2011. During 2011, the Firm repurchased approximately 5.7 million shares of Kforce common stock which represented 13.8% of outstanding shares at December 31, 2010. We will continue to be opportunistic in future repurchases as cash flow and market conditions warrant. We believe we are well positioned to take advantage of available opportunities in 2012 and return strong results to our shareholders.”


Financial highlights for the fourth quarter and 2011 include:

 

   

Flex gross profit decreased 30 basis points to 28.6% in Q4 ‘11 from 28.9% in Q3 ‘11 and decreased 20 basis points from 28.8% in Q4 ‘10.

 

   

Selling, general and administrative expenses as a percentage of revenue for fiscal 2011 was 26.0% compared to 26.8% for fiscal 2010, reflecting a decrease of 80 basis points.

 

   

Adjusted EBITDA for fiscal 2011 was $69.3 million, an increase of 30.2% from $53.2 million in fiscal 2010.

 

   

Earnings per share for fiscal 2011 was $0.70, an increase of 37.3% from $0.51 per share in fiscal 2010.

 

   

Bank debt at the end of Q4 ‘11 was $49.5 million, reflecting a decrease of $9.9 million from $59.4 million at the end of Q3 ‘11.

Mr. Liberatore stated, “In addition, looking forward to the first quarter of 2012, we expect revenues may be in the $293 million to $300 million range and earnings per share in the range of $0.14 to $0.16, which reflects an impact of approximately $0.07 per share of payroll taxes. The first quarter of 2012 has 64 billing days versus 61 billing days in the fourth quarter of 2011.”

On Tuesday, February 7, 2012, Kforce will host a conference call to discuss these results. The call will begin at 5:00 p.m. Eastern Time. The dial-in number is 877-344-3890. The replay of the call will be available from 8:00 p.m. Eastern Time Tuesday, February 7 to February 21, 2012 by dialing (800) 642-1687, passcode 51845786.

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 February 21, 2012.


About Kforce

Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing flexible and permanent staffing solutions in the skill areas of technology, finance & accounting, and health and life sciences. Backed by more than 2,200 associates and approximately 11,100 consultants on assignment, Kforce is committed to “Great People = Great Results” for our valued clients and candidates. Kforce operates with 63 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 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, including, without limitation, shifts in demand for our Technology, Finance and Accounting, Clinical Research, Health Information Management and Government Solutions segments, 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 we will continue to increase our market share, successfully manage risks to our revenue stream and successfully put into place the people and processes that will create future success. 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. 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  
     Dec. 31,     Sept. 30,     Dec. 31,  
     2011     2011     2010  

Revenue by function:

      

Technology

   $ 160,822      $ 165,476      $ 142,869   

Finance & accounting

     56,672        54,297        53,449   

Health information management

     18,578        17,370        15,876   

Clinical research

     26,210        27,967        22,988   

Government solutions

     23,269        23,881        23,313   
  

 

 

   

 

 

   

 

 

 

Total revenue

     285,551        288,991        258,495   

Revenue by time:

      

Flex

     275,154        277,123        247,437   

Search

     10,397        11,868        11,058   
  

 

 

   

 

 

   

 

 

 

Total revenue

     285,551        288,991        258,495   

Costs of services

     196,447        196,953        176,086   
  

 

 

   

 

 

   

 

 

 

Gross profit

     89,104        92,038        82,409   

GP %

     31.2     31.8     31.9

Flex GP %

     28.6     28.9     28.8

Selling, general & administrative expenses

     74,461        75,134        68,700   

Depreciation & amortization

     3,075        3,072        3,262   
  

 

 

   

 

 

   

 

 

 

Income from operations

     11,568        13,832        10,447   

Other expense, net

     365        301        266   
  

 

 

   

 

 

   

 

 

 

Income before income taxes

     11,203        13,531        10,181   

Income tax expense

     4,118        5,085        3,843   
  

 

 

   

 

 

   

 

 

 

Net income

   $ 7,085      $ 8,446      $ 6,338   
  

 

 

   

 

 

   

 

 

 

Earnings per share - diluted

   $ 0.20      $ 0.22      $ 0.16   

Adjusted EBITDA per share

   $ 0.50      $ 0.52      $ 0.37   

Shares outstanding - diluted

     35,709        38,228        40,848   

Adjusted EBITDA

   $ 17,866      $ 20,084      $ 15,207   

Other information:

      

Capital expenditures

   $ 2,445      $ 2,113      $ 3,314   

Equity-based compensation expense, net

   $ 2,061      $ 1,931      $ 1,383   

Billing days

     61        64        61   


Kforce Inc.

Summary of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

 

     Twelve Months Ended  
     Dec. 31,     Dec. 31,  
     2011     2010  

Revenue by function:

    

Technology

   $ 624,012      $ 538,566   

Finance & accounting

     219,575        187,196   

Health information management

     68,711        57,763   

Clinical research

     106,172        104,150   

Government solutions

     92,449        103,132   
  

 

 

   

 

 

 

Total revenue

     1,110,919        990,807   

Revenue by time:

    

Flexible

     1,066,374        951,430   

Perm

     44,545        39,377   
  

 

 

   

 

 

 

Total revenue

     1,110,919        990,807   

Costs of services

     764,616        678,393   
  

 

 

   

 

 

 

Gross profit

     346,303        312,414   

GP %

     31.2     31.5

Flex GP %

     28.3     28.7

Selling, general & administrative expenses

     288,981        265,183   

Depreciation & amortization

     12,694        12,611   
  

 

 

   

 

 

 

Income from operations

     44,628        34,620   

Other expense, net

     1,317        1,296   
  

 

 

   

 

 

 

Income before income taxes

     43,311        33,324   

Income tax expense

     16,155        12,690   
  

 

 

   

 

 

 

Net income

   $ 27,156      $ 20,634   
  

 

 

   

 

 

 

Earnings per share - diluted

   $ 0.70      $ 0.51   

Adjusted EBITDA per share

   $ 1.79      $ 1.31   

Shares outstanding - diluted

     38,831        40,503   

Adjusted EBITDA

   $ 69,314      $ 53,225   

Other information:

    

Capital expenditures

   $ 7,662      $ 39,857   

Equity-based compensation expense, net

   $ 7,534      $ 4,705   

Billing days

     252        251   


Kforce Inc.

Key Statistics

(Unaudited)

 

     Q4 2011     Q3 2011     Q4 2010  
Total Firm       

Flex revenue (000’s)

   $ 275,154      $ 277,123      $ 247,437   

Revenue per billing day (000’s)

   $ 4,511      $ 4,330      $ 4,056   

Sequential flex revenue change

     -0.7     5.8     -0.6

Hours (000’s)

     4,515        4,486        4,184   

Flex GP %

     28.6     28.9     28.8

Search revenue (000’s)

   $ 10,397      $ 11,868      $ 11,058   

Placements

     769        884        811   

Average fee

   $ 13,525      $ 13,424      $ 13,633   

Billing days

     61        64        61   
Technology       

Flex revenue (000’s)

   $ 156,543      $ 160,285      $ 138,467   

Revenue per billing day (000’s)

   $ 2,566      $ 2,504      $ 2,270   

Sequential flex revenue change

     -2.3     6.9     0.8

Hours (000’s)

     2,420        2,520        2,233   

Flex GP %

     27.8     27.7     28.0

Search revenue (000’s)

   $ 4,279      $ 5,191      $ 4,402   

Placements

     280        354        309   

Average fee

   $ 15,318      $ 14,682      $ 14,257   
Finance & Accounting       

Flex revenue (000’s)

   $ 50,926      $ 48,046      $ 47,512   

Revenue per billing day (000’s)

   $ 835      $ 751      $ 779   

Sequential flex revenue change

     6.0     1.1     6.9

Hours (000’s)

     1,517        1,406        1,447   

Flex GP %

     30.0     30.1     30.7

Search revenue (000’s)

   $ 5,746      $ 6,251      $ 5,937   

Placements

     450        499        472   

Average fee

   $ 12,759      $ 12,516      $ 12,570   
Clinical Research       

Flex revenue (000’s)

   $ 25,971      $ 27,703      $ 22,497   

Revenue per billing day (000’s)

   $ 426      $ 433      $ 369   

Sequential flex revenue change

     -6.3     7.6     -14.6

Hours (000’s)

     290        297        249   

Flex GP %

     25.5     26.2     24.2

Search revenue (000’s)

   $ 239      $ 264      $ 491   

Placements

     10        10        12   

Average fee

   $ 23,876      $ 26,393      $ 40,895   
Health Information Management       

Flex revenue (000’s)

   $ 18,445      $ 17,208      $ 15,648   

Revenue per billing day (000’s)

   $ 302      $ 269      $ 256   

Sequential flex revenue change

     7.2     3.7     6.6

Hours (000’s)

     288        263        255   

Flex GP %

     34.6     36.6     32.7

Search revenue (000’s)

   $ 133      $ 162      $ 228   

Placements

     29        21        18   

Average fee

   $ 4,582      $ 7,678      $ 12,674   
Government Solutions       

Flex revenue (000’s)

   $ 23,269      $ 23,881      $ 23,313   

Revenue per billing day (000’s)

   $ 382      $ 373      $ 382   

Sequential flex revenue change

     -2.6     8.8     -11.0

Flex GP %

     29.5     32.3     32.0


Kforce Inc.

Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 

     Dec 31,
2011
    Dec 31,
2010
 

ASSETS

    

Current Assets:

    

Cash and cash equivalents

   $ 939      $ 1,055   

Trade receivables, net of allowances

     174,764        148,507   

Income tax refund receivable

     250        5,675   

Deferred tax asset, net

     4,694        4,950   

Prepaid expenses and other current assets

     5,592        5,014   
  

 

 

   

 

 

 

Total current assets

     186,239        165,201   

Fixed assets, net

     36,124        38,130   

Other assets, net

     32,554        32,941   

Deferred tax asset, net

     10,042        8,907   

Intangible assets, net

     6,635        7,787   

Goodwill

     138,078        138,078   
  

 

 

   

 

 

 

Total assets

   $ 409,672      $ 391,044   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current Liabilities:

    

Accounts payable and other accrued liabilities

   $ 26,314      $ 30,602   

Accrued payroll costs

     55,151        54,461   

Current debt - credit facility

     —          10,825   

Other current liabilities

     1,463        4,185   

Income taxes payable

     236        250   
  

 

 

   

 

 

 

Total current liabilities

     83,164        100,323   

Long-term debt - credit facility

     49,526        —     

Long-term debt - other

     1,609        2,103   

Other long-term liabilities

     42,258        34,801   
  

 

 

   

 

 

 

Total liabilities

     176,557        137,227   

Commitments and contingencies

    

Stockholders’ Equity:

    

Preferred stock

     —          —     

Common stock

     686        665   

Additional paid-in capital

     372,212        355,869   

Accumulated other comprehensive loss

     (4,050     (1,480

Retained earnings

     89,135        61,979   

Treasury stock, at cost

     (224,868     (163,216
  

 

 

   

 

 

 

Total stockholders’ equity

     233,115        253,817   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 409,672      $ 391,044   
  

 

 

   

 

 

 


Kforce Inc.

Selected Financial Information and Reconciliations

(In Thousands, Except Per Share Amounts)

(Unaudited)

Quarterly Adjusted EBITDA

 

     Three Months Ended  
     Dec. 31,      Sept. 30,      Dec. 31,  
     2011      2011      2010  
     $      Per
share
     $      Per
share
     $      Per
share
 

Net income

   $ 7,085       $ 0.20       $ 8,446       $ 0.22       $ 6,338       $ 0.16   

Depreciation & amortization

     3,075         0.09         3,072         0.08         3,262         0.08   

Amortization of restricted stock & PARS

     3,230         0.09         3,088         0.08         1,499         0.03   

Interest expense and other

     358         0.01         393         0.01         265         0.01   

Income tax expense

     4,118         0.11         5,085         0.13         3,843         0.09   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 17,866       $ 0.50       $ 20,084       $ 0.52       $ 15,207       $ 0.37   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding - diluted

        35,709            38,228            40,848   

Adjusted EBITDA, a non-GAAP financial measure, is defined as net income before non-cash impairment charges, interest, income taxes, depreciation and amortization and amortization of stock-based compensation expense. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance.

Quarterly Net Income before Equity-Based Compensation Expense

 

     Three Months Ended  
     Dec. 31,     Sept. 30,     Dec. 31,  
     2011     2011     2010  
     $     Per
share
    $     Per
share
    $     Per
share
 

Net income

   $ 7,085      $ 0.20      $ 8,446      $ 0.22      $ 6,338      $ 0.16   

Equity-based compensation expense, net:

            

Alternative LTI expense

     28        0.00        5        0.00        722        0.02   

Amortization of restricted stock & PARS

     3,230        0.09        3,088        0.08        1,499        0.03   

Income tax benefit

     (1,197     (0.03     (1,162     (0.03     (838     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity-based compensation expense, net

     2,061        0.06        1,931        0.05        1,383        0.03   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income before equity-based compensation expense

   $ 9,146      $ 0.26      $ 10,377      $ 0.27      $ 7,721      $ 0.19   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - diluted

       35,709          38,228          40,848   

Net Income before Equity-Based Compensation Expense, a non-GAAP financial measure, is defined as net income before compensation expense incurred in conjunction with share-based payment awards and alternative long-term incentive awards. Kforce measures the cost of employee services received in exchange for an equity based award based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period in which the employee is required to provide service in exchange for the award, which is usually derived based on the terms of the award but may be the vesting period.

Adjusted EBITDA and Net Income before Equity-Based Compensation Expense are key measures used by management to evaluate its operations and to provide useful information to investors. These measures 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. These measurements are not determined in accordance with generally accepted accounting principles and are thus susceptible to varying calculations. The measures as presented may not be comparable to similarly titled measures of other companies.


Kforce Inc.

Selected Financial Information and Reconciliations

(In Thousands, Except Per Share Amounts)

(Unaudited)

Year to Date Adjusted EBITDA

 

     Twelve Months Ended  
     Dec. 31,      Dec. 31,  
     2011      2010  
     $      Per
share
     $      Per
share
 

Net Income

   $ 27,156       $ 0.70       $ 20,634       $ 0.51   

Depreciation & amortization

     12,694         0.33         12,611         0.31   

Amortization of restricted stock & PARS

     11,976         0.31         6,036         0.15   

Interest expense and other

     1,333         0.03         1,254         0.03   

Income tax expense

     16,155         0.42         12,690         0.31   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 69,314       $ 1.79       $ 53,225       $ 1.31   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding - diluted

        38,831            40,503   

Adjusted EBITDA, a non-GAAP financial measure, is defined as net income before non-cash impairment charges, interest, income taxes, depreciation and amortization and amortization of stock-based compensation expense. Adjusted EBITDA should not be considered a measure of financial performance under generally accepted accounting principles. Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance.

Year to Date Net Income before Equity-Based Compensation Expense

 

     Twelve Months Ended  
     Dec. 31,     Dec. 31,  
     2011     2010  
     $     Per
share
    $     Per
share
 

Net income

   $ 27,156      $ 0.70      $ 20,634      $ 0.51   

Equity-based compensation expense, net:

        

Alternative LTI expense

     40        0.00        1,563        0.04   

Amortization of restricted stock & PARS

     11,976        0.31        6,036        0.15   

Income tax benefit

     (4,482     (0.12     (2,894     (0.07
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity-based compensation expense, net

     7,534        0.19        4,705        0.12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income before equity-based compensation expense

   $ 34,690      $ 0.89      $ 25,339      $ 0.63   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - diluted

       38,831          40,503   

Net Income before Equity-Based Compensation Expense, a non-GAAP financial measure, is defined as net income before compensation expense incurred in conjunction with share-based payment awards and alternative long-term incentive awards. Kforce measures the cost of employee services received in exchange for an equity based award based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period in which the employee is required to provide service in exchange for the award, which is usually derived based on the terms of the award but may be the vesting period.

Adjusted EBITDA and Net Income before Equity-Based Compensation Expense are key measures used by management to evaluate its operations and to provide useful information to investors. These measures 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. These measurements are not determined in accordance with generally accepted accounting principles and are thus susceptible to varying calculations. The measures as presented may not be comparable to similarly titled measures of other companies.