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Kforce Inc. Reports Revenues of $283.7 Million and Earnings of $0.21 Per Share

Kforce Inc. Reports Revenues of $283.7 Million and Earnings of $0.21 Per Share

Tech Flex Revenue Up 7.6% Sequentially

Total Firm Revenues Up 6.8% Sequentially With All Segments Showing Sequential Growth

Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its second quarter of 2013. Revenues for the quarter ended June 30, 2013 were $283.7 million compared to $265.6 million for the quarter ended March 31, 2013, an increase of 6.8%, and compared to $274.1 million for the quarter ended June 30, 2012, an increase of 3.5%. For the quarter ended June 30, 2013, Kforce reported net income of $6.9 million, or $0.21 per share, versus $3.1 million, or $0.09 per share, for the quarter ended March 31, 2013, an increase of 124.6% in net income and 133.3% in earnings per share. Net income and earnings per share for the second quarter of 2013 decreased 21.7% and 12.5%, respectively, versus net income of $8.9 million, or $0.24 per share, excluding the after-tax goodwill impairment charge, for the second quarter of 2012.

"We are pleased with our second quarter results as we experienced sequential Flex revenue increases across all of our segments, including a sequential increase of 7.6% for Tech and 6.2% for Finance and Accounting. Our investment in revenue responsible headcount is beginning to take hold, as we made progress toward our goal of accelerating revenue growth going into the second half of this year. In addition, we are also taking steps to improve operating margins and further accelerate leverage as we layer additional revenue on our operating platform," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "Demand for our services, particularly in Technology, remains strong. We also 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. As Kforce has approximately a 3% market share, we believe there are significant opportunities in the 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 second quarter of 2013. We are particularly pleased with the growth in Tech, our largest business unit, which experienced a strong finish to the quarter and continued strength into July. While we executed well across our entire customer base, our larger client revenue growth was particularly strong during the second quarter. In addition, we are pleased with the progress of our new hires against a backdrop of strong demand for our services. We are confident in the course we have set and we will continue to aggressively pursue business opportunities to gain client and market share."

Mr. Liberatore noted additional operational results for the second quarter include:

Flex revenue of $270.4 million in Q2 '13 increased 6.4% from $254.1 million in Q1 '13 and increased 3.6% from $260.9 million in Q2 '12.

Search revenues of $13.3 million in Q2 '13 increased 15.2% from $11.6 million in Q1 '13 and increased 0.8% from $13.2 million in Q2 '12.

Sequential changes in Flex revenues on a billing day basis by segment were: 5.9% increase for Tech, 4.4% increase for FA, 0.7% increase for HIM and a 0.6% increase for Government Solutions.

Year-over-year changes in Flex revenues by segment were: 5.5% increase in Tech, 1.1% decrease in FA, 4.3% decrease in HIM and 8.1% increase in Government Solutions.

Revenue-responsible headcount increased 17.7% year-over-year.

David M. Kelly, Chief Financial Officer, said, "We have made significant progress towards our goal of accelerating revenue growth in the second half of the year. Q2 '13 and Q2 '12 each contained 64 billing days while Q1 '13 contained 63 billing days. 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 additional operating leverage."

Financial highlights for the second quarter include:

Flex gross profit increased 110 basis points to 29.4% in Q2 '13 from 28.3% in Q1 '13 and increased 10 basis points from 29.3% in Q2 '12.

Selling, general and administrative expenses as a percentage of revenues was 27.7% in Q2 '13 as compared to 28.5% in Q1 '13 and 26.1% in Q2 '12.

In the second quarter of 2013, the Firm repurchased 1.02 million shares for $14.8 million $69.1 million remains available for future repurchases under the Board authorization.

Bank debt under the Credit Facility increased to $50.1 million at the end of Q2 '13 as compared to $39.5 million at the end of Q1 '13, which was primarily attributable to the common stock repurchases.

Mr. Kelly stated, "In addition, looking forward to the third quarter of 2013, we expect revenues may be in the $293 million to $297 million range and earnings per share in the range of $0.26 to $0.28. The third quarter of 2013 has 64 billing days, the same as the second quarter of 2013.

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