Kforce reports record Q3 revenues of $341.6m
Year-on-year revenues increased 8.8%, from $313.8m for the quarter ended 30th September 2014.
Net income for the quarter ended September 30, 2015 was $13.5 million, or $0.48 per share, as compared to $11.6 million, or $0.41 per share, for the quarter ended June 30, 2015. Income from continuing operations was $8.0 million, or $0.25 per share, for the quarter ended September 30, 2014. Adjusted income from continuing operations, as adjusted for non-recurring charges, for the quarter ended September 30, 2014 was $9.4 million, or $0.30 per share.
David L. Dunkel, chairman and CEO, said, "Third quarter revenues of $341.6m and earnings per share of $0.48 are new records for the Firm. Our operating margin this quarter of 6.8% confirms that our plan for reaching an operating margin of 7.5% at $1.6bn of annualized revenues is on track. Growth was seen across our staffing business lines as our combined Flex staffing revenue grew 9.6% year-over-year, led by another strong performance in FA Flex of 19.4% revenue growth year-over-year.
The deceleration in Tech Flex revenues, which grew 6.6% year-over-year, is the result of client-specific issues and not the result of any fundamental changes in market demand. We believe the overall demand for highly skilled Tech resources remains strong and the many drivers in this space remain firmly intact. In addition, secular drivers continue to be a key factor in flexible staffing growth, driven both by the project nature of work as well as our clients' desire to minimize employment risk. I want to thank all of our clients, consultants and employees for making the third quarter of 2015 a successful quarter for Kforce."
Joseph J. Liberatore, president, said, "Our key performance indicators, such as job orders, remain strong in both Tech and FA. We believe that the client-specific issues that slowed our Tech Flex growth in the third quarter are unique and short-term in nature and not indicative of the broader demand for highly skilled Tech resources. We are seeing strong demand across many industries, such as Financial Services, Insurance Services, Computer Manufacturing and Retail which all continue to out pace our overall Tech Flex growth rates. This continued strength in demand suggests we have additional opportunity to further penetrate our expansive client base and, as a result, we plan to more aggressively add to our Tech Flex sales associate population. We continue to focus on our client, consultant and core associate relationships to drive results, and expect to drive forward with momentum as we head into 2016."
Flex gross profit margin increased 70 basis points to 29.2% in Q3 '15 from 28.5% in Q3 '14. Selling, general and administrative expense as a percentage of revenues for Q3 '15 was 24.6% compared to 26.2% for Q3 '14. Selling, general and administrative expense as a percentage of revenues, as adjusted for non-recurring charges, for Q3 '14 was 25.5%. Operating margin of 6.8% in Q3 '15 increased 250 basis points from 4.3% in Q3 '14. Operating margin, as adjusted for non-recurring charges, in Q3 '14 was 5.1%. Operating cash flows for Q3 '15 were $29.2 million. Adjusted EBITDA of $27.0 million, or $0.96 per share, for Q3 '15 increased 59.6%, or 77.8% per share, from $16.9 million, or $0.54 per share, for Q3 '14. Looking forward to the fourth quarter of 2015, there will be 62 billing days, as compared to 64 billing days in the third quarter of 2015, and 62 billing days in the fourth quarter of 2014.
Current estimates for the fourth quarter of 2015 are:
• Revenues of $333 million to $338 million
• Earnings per share of $0.43 to $0.45
• Gross profit margin of 31.7% to 31.9%
• Operating margin of 6.0% to 6.2%
• SG&A expense as a percent of revenue of 24.8% to 25.0%
• Effective tax rate of 38.8%