Kforce reports record Q2 revenues of $337.4m
The US staffing firm confirmed revenues from continuing operations for the quarter ended 30th June 2015 were $337.4m compared to $312.6m for the quarter ended March 31, 2015, an increase of 7.9%, and compared to $302.8 million for the quarter ended June 30, 2014, an increase of 11.4%. Income from continuing operations for the quarter ended June 30, 2015 was $11.6 million, or $0.41 per share, as compared to $5.8 million, or $0.20 per share, for the quarter ended March 31, 2015, and compared to $8.0 million, or $0.24 per share, for the quarter ended June 30, 2014.
David L. Dunkel, chairman and CEO, said, "We are very pleased with our second quarter results, which represent our eighth consecutive quarter of double digit year-over-year organic revenue growth and the achievement of a significant operating margin benchmark on the path to our longer term profitability goals.
"Second quarter revenues of $337.4 million and earnings per share of $0.41 both exceeded our expectations and consensus estimates, and are new records for the Firm. Our operating margin this quarter of 6.1% confirms that our plan for reaching an operating margin of 7.5% at $1.6 billion of annualized revenues is working. Strong growth was seen across our staffing business lines and profitability has also improved through both expanding gross margins and improving SG&A leverage.
"Against the backdrop of a non-traditional economic recovery, secular drivers continue to be key factors in flexible staffing growth as a disproportionate share of job growth continues to come from the temporary staffing sector, with temporary penetration rates remaining above prior peak cycle levels."
Dunkel added, "With our balanced revenue growth across both Tech and FA, we continue to invest in revenue-generating talent to sustain this broad-based growth given the excellent market opportunities that we see. Demand remains strong across all industries and geographies in both Tech and FA. We are also very pleased to be celebrating our 20th year as a public company by ringing the closing bell at Nasdaq on August 6th. I want to thank all of our clients, consultants and employees for making the second quarter of 2015 a very successful quarter for Kforce."
Joseph J. Liberatore, president, said, "I am very pleased with our performance in the second quarter, as we delivered revenue that exceeded expectations across the spectrum of our offerings. We are now two and a half years into the New Era. The simplification of our business model continues to provide a platform focused on execution to better serve and delight our clients, consultants and candidates. This has and will continue to be critical to our success in delivering above market revenue growth and improving profitability."
Liberatore noted additional operational results for the second quarter include:
• Flex revenues of $322.9 million in Q2 '15 increased 7.4% from $300.5 million in Q1 '15 and increased 11.3% from $290.2 million in Q2 '14.
• Year-over-year growth in Flex revenue was 9.6% for Tech, 21.2% for FA, and 1.3% for GS.
• Direct Hire revenues of $14.4 million in Q2 '15 increased 19.6% from $12.1 million in Q1 '15 and increased 14.7% from $12.6 million in Q2 '14.
• Revenue-generating headcount increased 7.7% year-over-year. The Firm expects to continue investing in revenue-generating headcount for the foreseeable future.
Highlights for the second quarter include:
• Flex gross profit margin from continuing operations increased 90 basis points to 28.4% in Q2 '15 from 27.5% in Q1 '15 and increased 20 basis points from 28.2% in Q2 '14.
• Selling, general and administrative expense as a percentage of revenues from continuing operations for Q2 '15 was 24.7% compared to 26.3% for Q1 '15 and 25.9% for Q2 '14.
• Operating margin of 6.1% in Q2 '15 increased 290 basis points from 3.2% in Q1 '15 and increased 160 basis points from 4.5% in Q2 '14.
• Adjusted EBITDA of $24.0 million, or $0.85 per share, for Q2 '15 increased 74.5%, or 77.1% per share, from $13.7 million, or $0.48 per share, for Q1 '15, and increased 45.0%, or 66.7% per share, from $16.5 million, or $0.51 per share, for Q2 '14.
Current estimates of continuing operations for the third quarter of 2015 are:
• Revenues of $344 million to $349 million
• Earnings per share of $0.45 to $0.47
• Operating margin of 6.3% to 6.5%
• Gross profit margin of 31.6% to 31.8%
• SG&A expense as a percent of revenue of 24.5% to 24.7%
• Effective tax rate of 40.1%