Kforce reports Q4 earnings & record annual revenues of $1.22bn
Revenues from continuing operations for the quarter ended December 31, 2014 were $318.7 million compared to $313.8 million for the quarter ended September 30, 2014.
This is an increase of 4.9% on a billing day basis, and compared to $282.1 million for the quarter ended December 31, 2013, an increase of 13.0%.
Income from continuing operations for the quarter ended December 31, 214 was $9.1 million as compared to $8.0 million for the quarter ended September 30, 2014, and compared to a loss from continuing operations of $9.7 million for the quarter ended December 31, 2013.
In the quarter ended December 31, 2014, Kforce reported net income (inclusive of discontinued operations) of $8.9 million, or a $0.30 per share, versus net income of $65.0 million, or $2.06 per share, for the quarter ended September 30, 2014, and a net loss for the quarter ended December 31, 2013 of $8.2 million, or $0.25 per share.
Continuing operations for the quarters ended September 30, 2014 and December 31, 2013 were impacted by non-recurring charges in SG&A of $2.4 million and $11.9 million, respectively. Additionally, results for the third quarter of 2014 were impacted by the $56.1 million net gain on the sale of Kforce Healthcare, Inc. which is reported in discontinued operations and the results for the fourth quarter of 2013 were impacted by a goodwill impairment charge of $14.5 million.
Kforce reported total revenues from continuing operations for the year ended December 31, 2014 of $1.22 billion as compared to $1.07 billion for 2013, an increase of 13.4%. Income from continuing operations for the year ended December 31, 2014 was $29.4 million as compared to $5.3 million for 2013.
Adjusted income from continuing operations for the year ended December 31, 2014 was $30.9 million or $0.97 per share, versus adjusted income from continuing operations of $22.7 million, or $0.67 per share for 2013.
For the year ended December 31, 2014, Kforce reported net income of $90.9 million, or $2.87 per share, and for the year ended December 31, 2013 net income of $10.8 million, or $0.32 per share.
David L. Dunkel, Chairman and CEO, said, "We are pleased with our performance in the fourth quarter of 2014 and for the year ended December 31, 2014 where we achieved record revenue. Year-over-year flex revenue for our Tech and FA reporting segments increased 14.3% and 16.9%, respectively, when compared to fiscal year 2013.
We are also very pleased with KGS, which has now posted four consecutive quarters of sequential growth and has now grown 22.4% when compared to Q4 2013. We believe these growth rates continue to demonstrate our relentless pursuit of gaining customer share coupled with a strong demand environment. Against a backdrop of a non-traditional economic recovery, we continue to see a disproportionate share of job growth coming from the temporary staffing sector."
Dunkel added, "We are very excited about our prospects, particularly with recent actions to further refine our focus around our Tech and FA service lines. We remain committed to enhancing shareholder value, and in 2014 we repurchased 4.8 million shares in the open market for $101.6 million, representing 14.3% of total shares outstanding as of December 31, 2013. I want to thank all of our clients, consultants and employees for making 2014 a very successful year for Kforce."
Joseph J. Liberatore, president, said, "I am very pleased to see another strong quarter from our team particularly in a year with success as broad-based as this one, where we saw our flex business grow 14.2% year-over-year. Our actions in this New Era of Kforce are continuing to drive results and I am proud of the team's execution in meeting the needs of our clients, consultants and employees."
Liberatore noted additional operational results for the fourth quarter include:
Flex revenues of $306.8 million in Q4 '14 increased 5.1% on a billing day basis, from $301.3 million in Q3 '14 and increased 13.4% from $270.5 million in Q4 '13.
Year-over-year changes in Flex revenue for Q4 were a 9.9% increase in Tech, 22.2% increase in FA, and a 22.4% increase in GS.
Search revenues of $11.9 million in Q4 '14 decreased 4.7% from $12.5 million in Q3 '14 and increased 2.9% from $11.6 million in Q4 '13.
Revenue-generating headcount increased 6.3% year-over-year. The firm expects to continue investing in revenue-generating headcount during 2015.
David M. Kelly, Chief Financial Officer, said, "We have made significant progress towards our revenue and earnings goals. Q4 '14 and Q4 '13 each contained 62 billing days while Q3 '14 contained 64 billing days." Mr. Kelly continued, "We believe that we are still on track to reach operating margins of 7.5% as annualized revenues approach $1.6 billion through a combination of several factors, including increasing productivity from our revenue-generating team and continuing to capitalize on additional efficiencies in our support structure. We believe we have set the stage for further revenue and operating leverage growth, which we believe will ultimately drive increased value to our shareholders."
Highlights for the fourth quarter include:
Flex gross profit margin from continuing operations decreased 30 basis points to 28.2% in Q4 '14 from 28.5% in Q3 '14 and decreased 60 basis points from 28.8% in Q4 '13.
Selling, general and administrative expense as a percentage of revenues from continuing operations for Q4 '14 was 25.5% compared to 26.2% for Q3 '14 and 30.6% for Q4 '13.
The Firm repurchased 1.9 million shares for $42.4 million during the fourth quarter of 2014.
During the fourth quarter of 2014, the Firm increased the cash dividend 10% to $0.11 per share from $0.10 per share for the first three quarters of 2014.
The Firm amended its Credit Facility to increase borrowing capacity to $170 million and extended the term five years.
Kelly stated, "In addition, looking forward to the first quarter of 2015, we expect revenues from continuing operations may be in the $312 million to $317 million range and earnings per share from continuing operations in the range of $0.17 to $0.19. The first quarter of 2015 has 63 billing days, as compared to 62 billing days in the fourth quarter of 2014."