Kforce Reports Third Quarter Results
Kforce Reports Third Quarter Results
Record Revenue of $289.0 Million
Earnings Per Share of $0.22
Sequential Flex Revenue Increase of 5.8%
In 2011, Kforce Repurchased 13.1% of Shares Outstanding at December 31, 2010
Repurchase Authorization Increased by $75.0 Million
Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its third quarter of 2011. Revenue for the quarter ended September 30, 2011 was $289.0 million compared to $274.0 million for the quarter ended June 30, 2011, an increase of 5.5% and compared to $259.5 million for the quarter ended September 30, 2010, an increase of 11.4%. For the quarter ended September 30, 2011, Kforce reported net income of $8.4 million, or $0.22 per share, versus $6.8 million, or $0.17 per share, for the quarter ended June 30, 2011, an increase of 24.5% in net income and 29.4% in EPS. Net income and EPS for the third quarter of 2011 increased 31.1% and 37.5%, respectively, versus the third quarter of 2010, which had net income of $6.4 million, or $0.16 per share.
"We are very pleased with our third quarter results, particularly our record quarterly revenues of $289.0 million. In addition, Flex revenues for our Tech, FA and HLS segments experienced year-over-year increases of 16.7%, 8.1% and 9.5%, respectively. Also, total Flex revenues increased 5.8% sequentially and increased across all segments, including a 6.9% increase in Tech Flex, our largest revenue stream. 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 as we continue to see solid demand across all our service lines in an uncertain macroeconomic and regulatory environment. Additionally, of the 13.1% of shares repurchased year to date, the Firm repurchased 4.6 million shares equal to approximately 10.8% of the shares outstanding during the third quarter of 2011. I wish to thank all of our employees, consultants and clients for making the third quarter of 2011 a very successful quarter for Kforce, and we remain optimistic about the Firm's prospects," said David L. Dunkel, Chairman and CEO.
William L. Sanders, President, said, "Our key performance indicators and discussions with clients indicate that demand continues to be solid. Flex margins increased 50 basis points sequentially as the spread between bill rates and pay rates increased for both Tech and FA. 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 third quarter include:
Flex revenue per billing day of $4.3 million in Q3 '11 increased 5.8% over Q2 '11 and increased 11.3% over Q3 '10.
Sequential percentage increases in Flex revenue by segment were 8.8% for Government Solutions, 6.9% for Tech, 6.1% for HLS and 1.1% for FA.
Search revenue of $11.9 million in Q3 '11 decreased 2.6% from $12.2 million in Q2 '11 and increased 12.4% from $10.6 million in Q3 '10.
Total Tech revenue of $165.5 million and total Tech Flex revenue of $160.3 million surpassed the prior records of $154.5 million and $150.0 million, respectively, which were achieved in Q2 '11.
Joseph J. Liberatore, Chief Financial Officer, said, "The Firm performed well in Q3 '11. Q3 '11, Q2 '11 and Q3 '10 each contained 64 billing days. We believe our third quarter results reflect improving client relationships, solid expense management, an improving pricing environment and continued efficiencies and operating leverage provided by the NRC and Strategic Accounts. We are also excited to announce that the Firm entered into an amended and restated Credit Facility in September 2011, which we believe provides access to adequate capital to execute on the Firm's strategic vision going forward. Additionally, the Board of Directors increased the existing authorization for repurchases of Kforce common stock by $75.0 million in October 2011."
Financial highlights for the third quarter include:
Flex gross profit increased 50 basis points to 28.9% in Q3 '11 from 28.4% in Q2 '11 and decreased 40 basis points from 29.3% in Q3 '10.
Selling, general and administrative expenses as a percentage of revenue decreased 30 basis points to 26.0% in Q3 '11 from 26.3% in Q2 '11 and decreased 70 basis points from 26.7% in Q3 '10.
Adjusted EBITDA for Q3 '11 was $20.1 million, an increase of 16.3% from $17.3 million in Q2 '11 and an increase of 27.8% from $15.7 million in Q3 '10.
Bank debt at the end of Q3 '11 was $59.4 million, reflecting an increase of $40.5 million from $18.9 million at the end of Q2 '11. This increase was primarily related to the repurchase of 4.6 million shares of common stock during the third quarter.
Mr. Liberatore stated, "In addition, looking forward to the fourth quarter of 2011, we expect revenue may be in the $278 million to $285 million range and earnings per share in the range of $0.17 to $0.20. The fourth quarter of 2011 has 61 billing days versus 64 billing days in the third quarter of 2011."
On Tuesday, November 1, 2011, 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, November 1 to November 15, 2011 by dialing (800) 642-1687, passcode 51841288.
This call is being webcast by Shareholder.comand can be accessed at Kforce's web site at www.kforce.com(select "Investor Relations"). The webcast replay will be available until November 15, 2011.