Market Overview

Kforce Reports Third Quarter 2019 Revenue of $345.6 Million, EPS From Continuing Operations of $0.68 per Share; Tech Flex Year-Over-Year Growth Accelerates to 6.5%, on a Billing Day Basis; Repurchased 1.2 Million Shares of Stock for $40.0 Million During the Quarter


TAMPA,Fla., Oct. 30, 2019 (GLOBE NEWSWIRE) -- Kforce Inc. (NASDAQ:KFRC), a professional staffing services and solutions firm, today announced results for the third quarter of 2019. Unless indicated otherwise, the commentary within this release relates only to the results of our continuing operations and excludes the results of our Government Solutions ("GS") segment, which is reported as a discontinued operation.

Financial Highlights

  • Revenue for the quarter ended September 30, 2019 was $345.6 million compared to $326.6 million for the quarter ended September 30, 2018, an increase of 4.2% on a billing day basis.
  • Flex revenue of $333.7 million in the quarter ended September 30, 2019 increased 3.9%, on a billing day basis, from $316.1 million in the quarter ended September 30, 2018. Year-over-year growth for Tech Flex was 6.5% on a billing day basis, while FA Flex declined 5.3% on a billing day basis.
  • Direct Hire revenue of $11.9 million in the quarter ended September 30, 2019 increased 13.6% from $10.5 million for the quarter ended September 30, 2018.
  • Operating margin for the quarter ended September 30, 2019 was 6.4%, an increase of 30 basis points from the comparable period in 2018.
  • Income from continuing operations for the quarter ended September 30, 2019 was $15.9 million, or $0.68 per share, versus $14.2 million, or $0.56 per share, in the comparable period in 2018.
  • We returned $44.0 million of capital to our shareholders in the form of dividends of $4.0 million and open market stock repurchases of $40.0 million during the quarter ended September 30, 2019.

Management Commentary

David L. Dunkel, Chairman and Chief Executive Officer, commented, "We are very pleased with our performance in the third quarter as our results exceeded guidance for both revenue and earnings per share. We are particularly pleased with the acceleration in the growth rate of our largest business, Tech Flex, which has outpaced the market for the eighth consecutive quarter. This growth was primarily due to an increase in new assignment starts in the second half of the third quarter. Our Tech Flex business continues to benefit from longer assignment durations, which we believe is related to the acute labor shortage, especially with highly-skilled technology resources. We believe the secular drivers of technology are transcending traditional cyclical patterns as business models are transformed. The pace of digital transformation continues to be rapid, forcing organizations across all industries to increase their technology investments."

Joseph J. Liberatore, President, said, "Our efforts over the last several years, to better segment our client portfolio and optimize the alignment of our associates within the portfolio, continues to benefit our results. Consequently, our strongest growth continues to come from clients that are significant users of the services we provide and where we have long-standing relationships. We continue to take the actions we believe are necessary to improve associate productivity."

David M. Kelly, Chief Financial Officer, said, "Our results in the third quarter continue to demonstrate our ability to deliver above-market Tech Flex revenue growth while also making progress against our operating margin commitments. We believe that our strong cash flows and balance sheet offers us an excellent opportunity to continue investing in our future growth, returning capital to our shareholders and maintaining sufficient flexibility to make strategic investments.

During the third quarter of 2019, we repurchased 1.2 million shares on the open market at a total cost of approximately $40.0 million.  In early October 2019, we completed the full deployment of the estimated $102 million in net proceeds from the divestiture of our GS segment. We are also pleased to announce that our Board of Directors approved a fourth quarter cash dividend of $0.18 per share, which will be payable on December 20, 2019 to shareholders of record as of the close of business on December 6, 2019."

Q4 2019 Guidance and 2020 Perspective

Looking forward to the fourth quarter of 2019, there will be 62 billing days, as compared to 64 billing days in the third quarter of 2019 and 62 billing days in fourth quarter of 2018. Revenue per billing day in the third quarter of 2019 was $5.4 million. Current estimates for the fourth quarter of 2019 are:

  • Revenue of $336 million to $341 million
  • Earnings per share of $0.65 to $0.69
  • Gross profit margin of 29.2% to 29.4%
  • Flex gross profit margin of 26.8% to 27.0%
  • SG&A expense as a percent of revenue of 23.0% to 23.2%
  • Operating margin of 5.7% to 5.9%
  • Effective tax rate of 19.7%

Our forward-looking financial perspective for 2020 is included as a supplemental table.

Conference Call

On Wednesday, October 30, 2019, Kforce will host a conference call at 8:30 a.m. E.T. to discuss these results. The dial-in number is (877) 344-3890 and the conference passcode is Kforce. The prepared remarks for this call and webcast are available on the Investor Relations page of the Kforce Inc. website ( in the Events & Presentations section.

The replay of the call will be available from 11:30 a.m. E.T., Wednesday, October 30, 2019 through November 6, 2019 by dialing (855) 859-2056, passcode 4832018.

About Kforce, Inc.

Kforce Inc. is a professional staffing services and solutions firm that specializes in the areas of Technology and Finance and Accounting. Each year, our network of 50 offices and two national recruiting centers provide opportunities for 34,000 highly skilled professionals who work with over 4,000 clients, including 70% of the Fortune 100. At Kforce, our promise is to deliver great results through strategic partnership and knowledge sharing. For more information, please visit our Web site at

Michael R. Blackman, Chief Corporate Development Officer
(813) 552-2927

Cautionary Note Regarding Forward-Looking Statements
Certain of the above statements contained in this press release, including the statements regarding the secular drivers of technology, the pace of digital transformation, the Firm's opportunity to continue investing in its future growth, returning capital to its shareholders, and maintaining sufficient flexibility to make strategic investments, the outlook for financial performance for the fourth quarter of 2019 and the quarterly and full year financial perspective for 2020, are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions, growth rate in temporary staffing and the general economy; competitive factors, risks due to shifts in the market demand; a reduction in the supply of candidates or the Firm's ability to attract such candidates; the success of the Firm in attracting and retaining revenue-generating talent; changes in the service mix; ability of the Firm to repurchase shares; the occurrence of unanticipated expenses; the effect of adverse weather conditions; changes in our effective tax rate; changes in government regulations, laws and policies that are adverse to our businesses; risk of contract performance, delays or termination or the failure to obtain new assignments or contracts, or funding under contracts; changes in client demand and our ability to adapt to such changes; continued performance of and improvements to our enterprise information systems, and the risk factors listed from time to time in the Firm's reports filed with the Securities and Exchange Commission, including the Firm's Form 10-K for the fiscal year ending December 31, 2018, as well as assumptions regarding the foregoing. In particular, the Firm makes no assurances that the estimates of continuing operations will be achieved or that we will continue to increase our market share, successfully manage risks to our revenue stream, successfully put into place the people and processes that will create future success or further accelerate our revenue. The terms "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof contained in this press release identify certain of such forward-looking statements, which speak only as of the date of this press release. As a result, such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Future events and actual results may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and the Firm undertakes no obligation to update any forward-looking statements.


Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)

  Three Months Ended
  Sept. 30, 2019   June 30, 2019   Sept. 30, 2018
Revenue by segment:                      
 Technology $ 271,999     $ 265,305     $ 251,079  
 Finance and accounting   73,559       73,556       75,505  
Total Revenue   345,558       338,861       326,584  
Direct costs   242,747       237,835       230,539  
Gross profit   102,811       101,026       96,045  
GP %   29.8 %     29.8 %     29.4 %
Flex GP %   27.2 %     26.9 %     27.1 %
Selling, general and administrative expenses   79,223       78,017       74,398  
Depreciation and amortization   1,427       1,542       1,700  
Income from operations   22,161       21,467       19,947  
Other expense, net   880       403       1,052  
Income from continuing operations, before income taxes   21,281       21,064       18,895  
Income tax expense   5,374       4,988       4,739  
Income from continuing operations   15,907       16,076       14,156  
(Loss) income from discontinued operations, net of tax   (967 )     58,783       2,021  
Net income $ 14,940     $ 74,859     $ 16,177  
Earnings per share – diluted:                      
Continuing operations $ 0.68     $ 0.66     $ 0.56  
Discontinued operations   (0.04 )     2.40       0.08  
Earnings per share – diluted $ 0.64     $ 3.06     $ 0.64  
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