Kforce Inc. Reports Revenues of $265.6 Million
Kforce Inc. Reports Revenues of $265.6 Million
Kforce Inc. has announced results for its first quarter of 2013. Revenues for the quarter ended March 31, 2013 were $265.6 million compared to $269.8 million for the quarter ended December 31, 2012, a decrease of 1.6%, and compared to $268.4 million for the quarter ended March 31, 2012, a decrease of 1.0%. In the quarter ended March 31, 2013, Kforce reported net income of $3.1 million, or $0.09 per share, versus $8.6 million, or $0.24 per share, excluding the goodwill impairment charge, for the quarter ended December 31, 2012. Net income and earnings per share for the first quarter of 2013 decreased 24.1% and 25.0%, respectively, versus net income of $4.1 million, or $0.12 per share, for the first quarter of 2012.
"The Firm's results in the first quarter did not meet our expectations and we are not satisfied. Our Technology and Government businesses performed near anticipated levels however, due to shortfalls primarily in our Finance and Accounting and Health Information Management businesses, our top line results were slightly below our expectations. We believe the significant investment in sales associates at the end of 2012, which has continued in the first quarter at more measured levels, is taking hold, and we are making progress toward our goal of accelerating revenue growth in the second half of this year," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "We believe our diverse service offerings, as well as our highly elastic front and back office, position Kforce well. Demand for our services, particularly in Technology, remains solid. In addition, we continue to see a secular shift where our clients are increasingly seeking a higher degree of variability in the composition of their workforce as they look to mitigate economic uncertainty and the increasing complexity and costs of employment due to regulatory changes. There are significant opportunities as Kforce has only approximately a 3% market share in a growing domestic professional staffing market. I want to thank all of our employees and consultants for their hard work, dedication and progress this past quarter."
Joseph J. Liberatore, President, said, "The Firm continued to make progress in the first quarter of 2013, where we experienced a Flex gross profit increase of 120 basis points year-over-year, which was primarily driven by Tech, our largest segment. We continued to execute using our highly advanced sales platform by leveraging our field associates, Strategic Accounts and the National Recruiting Center to improve growth and profitability with both large and small clients. Kforce continues to aggressively pursue business opportunities to gain client and market share."
Mr. Liberatore noted additional operational results for the first quarter include:
Flex revenue of $254.1 million in Q1 '13 decreased 1.8% from $258.7 million in Q4 '12 and decreased 1.3% from $257.3 million in Q1 '12.
Search revenues of $11.6 million in Q1 '13 increased 4.1% from $11.1 million in Q4 '12 and increased 4.9% from $11.0 million in Q1 '12.
Year-over-year changes in Flex revenue on a billing day basis were: 3.2% increase in Tech, 0.8% increase in Government Solutions, 2.6% decrease in HIM and a 7.3% decrease in FA.
Revenue responsible headcount increased 3.2% sequentially and 23.2% year-over-year.
David M. Kelly, Chief Financial Officer, said, "We are making progress toward our goal of accelerating revenue growth in the back half of the year, but there remains much work to do. Q1 '13 contained 63 billing days while Q4 '12 and Q1 '12 contained 62 and 64 billing days, respectively. We expect to continue making selective human capital investments to drive top line performance as we continue to see positive indicators for the demand in our business. We remain confident in our strategy and long term prospects and expect to capitalize on the operating platform we have built to grow revenue and generate operating leverage."
Financial highlights for the first quarter include:
Flex gross profit increased 120 basis points to 28.3% in Q1 '13 from 27.1% in Q1 '12.
Selling, general and administrative expenses as a percentage of revenues were 28.5% in Q1 '13 as compared to 26.9% in Q4 '12 and 28.6% in Q1 '12, excluding the charges related to the acceleration of certain long-term incentive awards in Q1 '12.
During Q1 '13, the Firm repurchased approximately 410,000 shares of common stock for $5.9 million $83.9 million remains available for future repurchases under the Board authorization.
The Firm had bank debt of $39.5 million at the end of Q1 '13 as compared to $21.0 million at the end of Q4 '12. The increase is primarily attributable to the timing of certain annual payments and the $5.9 million in common stock repurchases.
Mr. Kelly stated, "In addition, looking forward to the second quarter of 2013, we expect revenues may be in the $277 million to $281 million range and earnings per share in the range of $0.19 to $0.21. The second quarter of 2013 has 64 billing days, as compared to 63 billing days in the first quarter of 2013.