Kforce Reports Fourth Quarter and Full Year 2012 Results

Kforce Reports Fourth Quarter and Full Year 2012 Results

  *Fourth Quarter Revenues of $269.8 Million
  *Fourth Quarter Net Income of $8.6 Million, or $0.24 Per Share, Excluding
    Non-Cash Impairment Charge

TAMPA, Fla., Feb. 5, 2013 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a
provider of professional staffing services and solutions, today announced
results for its fourth quarter of 2012. Revenue from continuing operations for
the quarter ended December 31, 2012 was $269.8 million compared to $270.2
million for the quarter ended September 30, 2012, a decrease of 0.1% and
compared to $259.3 million for the quarter ended December 31, 2011, an
increase of 4.0%. Excluding the after-tax non-cash impairment charge of $2.5
million related to the completion of the Q2 '12 impairment test for our
Government Solutions reporting unit, which was recorded during the quarter
ended December 31, 2012, Kforce reported net income of $8.6 million, or $0.24
per share, versus $9.3 million, or $0.26 per share, for the quarter ended
September 30, 2012. Excluding the impairment charge, net income and earnings
per share for the fourth quarter of 2012 increased 21.0% and 20.0%,
respectively, versus the fourth quarter of 2011, which had net income of $7.1
million, or $0.20 per share. 

Kforce reported total revenue from continuing operations for the year ended
December31, 2012 of $1.08 billion as compared to $1.00 billion for 2011, an
increase of 7.7%. Excluding the after-tax non-cash goodwill impairment charge
of $44.5 million recorded during the year ended December 31, 2012 related
toour Government Solutions reporting unit, Kforce reported net income of
$30.8 million, or $0.85 per share, for the year ended December31, 2012,
versus net income of $27.2 million, or $0.70 per share, for 2011, which
represents an increase of 13.4% in net income and 21.4% in earnings per share.

David L. Dunkel, Chairman and CEO, said, "The Firm continued to perform well
in the fourth quarter.We have continued to see consistent demand for our
services and have been able to capitalize on this demand through both
increases in revenue and improvements in operating margins. Total Tech revenue
for 2012 of $675.6 million represents historically high revenues for that
business unit.We also experienced a sequential revenue increase during Q4 in
all our Flex business lines on a billing day basis.During the fourth quarter,
we significantly intensified our focus on accelerating future revenue growth
by adding a significant number of sales associates as a result of our view
that we will remain in a positive environment for professional temporary
staffing for the foreseeable future.I want to thank all of our employees,
consultants and clients for making 2012 another successful year for Kforce."

Joseph J. Liberatore, President, said, "Our foundation of great people,
processes and flexible operating model along with our tenured leadership and
sales teams, drove revenues from continuing operations of $1.08 billion in
2012 while setting annual revenue records for Tech and HIM. In the fourth
quarter of 2012, the Firm continued its solid performance driving
year-over-year Flex margin increases across all segments, which aggregated to
a 100 basis point improvement on a total Firm basis, primarily driven by the
increase in the spread between our bill and pay rates. We were able to
profitably grow revenues with both large and small clients. Discussions with
our clients and certain key performance indicators indicate consistent demand
for our service offerings, particularly in Technology. With a renewed emphasis
on Focus, Simplicity and Accountability, Kforce intends to continue to
aggressively pursue business opportunities with the goal of gaining
significant client and market share."

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

  *Flex revenue per billing day of $4.2 million in Q4 '12 increased 2.0% from
    $4.1 million in Q3 '12 and increased 2.2% from $4.1 million in Q4 '11.
  *Sequential percentage changes in Flex revenue on a billing day basis by
    segment were: 8.7% increase for HIM, 8.3% increase for Government
    Solutions, 2.1% increase for FA, and a 0.3% increase for Tech.
  *Year-over-year changes in Flex revenue on a billing day basis were a 3.3%
    increase in HIM, 2.7% increase in Tech, 2.1% increase in Government
    Solutions, and a 0.2% increase in FA.
  *Search revenue of $11.1 million in Q4 '12 decreased 10.3% from $12.4
    million in Q3 '12 and increased 9.2% from $10.2 million in Q4 '11.

David M. Kelly, Chief Financial Officer, said, "The Firm continued to perform
well in Q4 '12.Q4 '12 contained 62 billing days while Q3 '12 contained 63
billing days and Q4 '11 contained 61 billing days." Mr. Kelly continued, "In
2012, the Firm took advantage of our flexibility and capacity to gain market
share while protecting our strong balance sheet and delivering solid financial
results. Cash flow and EBITDA continued to be strong in 2012. During 2012, the
Firm repurchased approximately 3.4million shares of Kforce common stock which
represented 8.9% of outstanding shares at December31, 2011. We will continue
to be opportunistic in future repurchases as cash flow and market conditions
warrant. On February 1, 2013, the Kforce Board of Directors increased the
outstanding stock repurchase authorization by $50.0 million to $89.9 million.
The Firm also issued a special dividend of $1.00 per share during December
2012, which we believe provided a significant return to our shareholders. We
believe we are well positioned to take advantage of available opportunities in
2013 and grow revenues and profitability."

Financial highlights for the fourth quarter and 2012 include:

  *Flex gross profit increased 30 basis points to 29.9% in Q4 '12 from 29.6%
    in Q3 '12 and increased 100 basis points from 28.9% in Q4 '11.
  *Selling, general and administrative expenses as a percentage of revenues
    for Q4 '12 was 26.9% compared to 27.3% for Q4 '11.
  *At the end of Q4 '12, the Firm had bank debt of $21.0 million, which was a
    result of the special dividend issued in December 2012 of $35.2 million
    and $19.0 million of open market repurchases of Kforce common stock during
    Q4 '12. There was no bank debt at the end of Q3 '12.
  *Net income from continuing operations in Q4 '12 before the impact of the
    impairment charge was $8.4 million, or $0.24 per share, an increase of
    64.6% and 71.4%, respectively, from Q4 '11 which had net income of $5.1
    million, or $0.14 per share.

Mr. Kelly stated, "In addition, looking forward to the first quarter of 2013,
we expect revenues may be in the $268 million to $274 million range and
earnings per share in the range of $0.09 to $0.12.The first quarter of 2013
has 63 billing days, one more than the fourth quarter of 2012.Implicit in the
first quarter's guidance is a $0.09-$0.10 sequential impact from payroll taxes
anda $0.03-$0.04 impact from human capital investments."

On Tuesday, February 5, 2013, Kforce will host a conference call to discuss
these results. The call will begin at 5:00 p.m. Eastern Time.

The dial-in number is (877) 344-3890.The conference passcode is Kforce.The
replay of the call will be available from 8:00 p.m. EST, Wednesday, February
6, 2013 through February 20, 2013 by dialing (855) 859-2056, passcode
43184399.

This call is being webcast by Shareholder.com and can be accessed at Kforce's
web site at www.kforce.com (select "Investor Relations").The webcast replay
will be available until February 20, 2013.

About Kforce

Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing
flexible and permanent staffing solutions in the skill areas of technology,
finance& accounting, health information management and government
solutions.Backed by more than 2,500 associates and approximately 10,700
consultants on assignment, Kforce is committed to "Great People = Great
Results" for our valued clients and candidates.Kforce operates with 63
offices located throughout the United States and one office in the
Philippines. For more information, please visit our Web site at
http://www.kforce.com.

The Kforce Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3749.

Certain of the above statements contained in this press release are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements are within the meaning of that term in
Section27A of the Securities Act of 1933, as amended, and Section21E of the
Securities Exchange Act of 1934, as amended. Factors that could cause actual
results to differ materially include the following: business conditions and
growth in the staffing industry and general economy; competitive factors,
risks due to shifts in the market demand, including, without limitation,
shifts in demand for our Technology, Finance and Accounting, Health
Information Management and Government Solutions segments, as well as the
market for search and flexible staffing assignments; changes in the service
mix; ability of the Firm to complete acquisitions; and the risk factors listed
from time to time in the Firm's reports filed with the Securities and Exchange
Commission, as well as assumptions regarding the foregoing. In particular,
there can be no assurance that we will continue to increase our market share,
successfully manage risks to our revenue stream and successfully put into
place the people and processes that will create future success. The words
"should," "believe," "estimate," "expect," "intend," "anticipate," "foresee,"
"plan" and similar expressions and variations thereof identify certain of such
forward-looking statements, which speak only as of the dates on which they
were made. The Firm undertakes no obligation to publicly update or revise any
forward-looking statements. As a result, such forward looking statements are
not guarantees of future performance and involve risks and uncertainties, and
actual results may differ materially from those indicated in the
forward-looking statements as a result of various factors. Readers are
cautioned not to place undue reliance on these forward-looking statements.

                                                                 
                                                                 
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                 
                                             Three Months Ended
                                                                 
                                             Dec. 31,   Sept. 30,  Dec. 31,
                                              2012       2012       2011
                                                                 
Revenue by function:                                              
Technology                                  $167,616 $170,577 $160,822
Finance & accounting                        58,624    58,729    56,672
Health information management               19,406    18,157    18,578
Government solutions                        24,193    22,698    23,269
Total revenue                                 269,839    270,161    259,341
                                                                 
Costs of services                             181,259    181,399    177,091
Gross profit                                  88,580    88,762    82,250
GP %                                          32.8%      32.9%      31.7%
Flex GP %                                     29.9%      29.6%      28.9%
                                                                 
Selling, general & administrative expenses    72,540     70,367     70,849
Goodwill impairment                           3,858     --       --
Depreciation & amortization                   2,371      2,659      3,013
                                                                 
Income from operations                        9,811      15,736     8,388
                                                                 
Other expense, net                            171        288        349
                                                                 
Income from continuing operations, before     9,640      15,448     8,039
income taxes
                                                                 
Income tax expense                            3,718      6,173      2,952
                                                                 
Income from continuing operations             5,922    9,275    5,087
                                                                 
Income (loss) from discontinued operations,   198       (7)       1,998
net of income taxes
                                                                 
Net income                                    $6,120   $9,268   $7,085
                                                                 
                                                                 
Earnings per share - diluted                  $0.17    $0.26    $0.20
Adjusted EBITDA per share                     $0.45    $0.51    $0.41
Shares outstanding - diluted                 35,573     36,243     35,709
                                                                 
Adjusted EBITDA                              $16,070  $18,415  $14,584
                                                                 
Other information:                                                
Capital expenditures                          $1,472   $1,568   $2,445
Equity-based compensation expense, net of     $33      $23      $2,037
income taxes
                                                                 
Billing days                                  62         63         61

                                                                  
                                                                  
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                  
                                                       Twelve Months Ended
                                                                  
                                                       Dec. 31,    Dec. 31,
                                                        2012        2011
                                                                  
Revenue by function:                                               
Technology                                            $675,587  $624,012
Finance & accounting                                  238,476    219,575
Health information management                         76,992     68,711
Government solutions                                  91,424     92,449
Total revenue                                           1,082,479   1,004,747
                                                                  
Costs of services                                       734,546     687,000
Gross profit                                            347,933    317,747
GP %                                                    32.1%       31.6%
Flex GP %                                               29.0%       28.5%
                                                                  
                                                                  
Selling, general & administrative expenses              322,436     274,072
Goodwill impairment                                     69,158      --
Depreciation & amortization                             10,789      12,505
                                                                  
(Loss) income from operations                           (54,450)    31,170
                                                                  
Other expense, net                                      1,116       1,256
                                                                  
(Loss) income from continuing operations, before income (55,566)    29,914
taxes
                                                                  
Income tax (benefit) expense                            (19,854)    10,858
                                                                  
(Loss) income from continuing operations                (35,712)  19,056
                                                                  
Income from discontinued operations, net of income      22,009     8,100
taxes
                                                                  
Net (loss) income                                       $(13,703) $27,156
                                                                  
Earnings (loss) per share - diluted                     $(0.38)   $0.70
Adjusted EBITDA per share                               $1.42     $1.43
Shares outstanding - diluted                           35,791      38,831
                                                                  
Adjusted EBITDA                                        $51,063   $55,510
                                                                  
Other information:                                                 
Capital expenditures                                    $6,518    $7,662
Equity-based compensation expense, net of income taxes  $16,587   $7,529
                                                                  
Billing days                                            253        252

                                                   
                                                   
Kforce Inc.
Key Statistics
(Unaudited)
                                                   
                                                   
                               Q4 2012    Q3 2012    Q4 2011
                                                   
Total Firm                                          
Flex revenue (000's)            $258,743 $257,790 $249,183
Revenue per billing day (000's) $4,173   $4,092   $4,085
Sequential flex revenue change  0.4%       -1.2%      -0.1%
Hours (000's)                   4,405     4,328     4,225
Flex GP %                       29.9%      29.6%      28.9%
                                                   
Search revenue (000's)          $11,096  $12,371  $10,158
Placements                     791       856       759
Average fee                     $14,027  $14,456  $13,389
Billing days                    62        63        61
                                                   
Technology                                          
Flex revenue (000's)            $163,282 $165,342 $156,543
Revenue per billing day (000's) $2,634    $2,625   $2,566
Sequential flex revenue change  -1.2%      -0.4%      -2.3%
Hours (000's)                   2,511     2,520     2,420
Flex GP %                       28.4%      28.4%      27.8%
                                                   
Search revenue (000's)          $4,334   $5,235   $4,279
Placements                     290       337       280
Average fee                     $14,960  $15,536  $15,318
                                                   
Finance & Accounting                                
Flex revenue (000's)            $51,936  $51,661  $50,926
Revenue per billing day (000's) $837     $820     $835
Sequential flex revenue change  0.5%       -3.5%      6.0%
Hours (000's)                   1,607     1,545     1,517
Flex GP %                       30.8%      30.9%      30.0%
                                                   
Search revenue (000's)          $6,688   $7,068   $5,746
Placements                     498       513       450
Average fee                     $13,434  $13,783  $12,759
                                                   
Health Information Management                       
Flex revenue (000's)            $19,332  $18,089  $18,445
Revenue per billing day (000's) $312     $287     $302
Sequential flex revenue change  6.9%       -8.5%      7.2%
Hours (000's)                   287       263       288
Flex GP %                       35.2%      35.9%      34.6%
                                                   
Search revenue (000's)          $74      $68      $133
Placements                      3         6         29
Average fee                     $21,043  $11,384  $4,582
                                                   
Government Solutions                                
Flex revenue (000's)            $24,193  $22,698  $23,269
Revenue per billing day (000's) $390     $360     $382
Sequential flex revenue change  6.6%       5.4%       -2.6%
Flex GP %                       34.3%      30.5%      29.5%

                                                             
                                                             
Kforce Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                                                             
                                              Dec. 31, 2012 Dec. 31, 2011
ASSETS                                                      
                                                             
Current Assets:                                             
Cash and cash equivalents                    $1,381        $939
Trade receivables, net of allowances         151,570         174,764
Income tax refund receivable                 1,750           250
Deferred tax asset, net                      9,494           4,694
Prepaid expenses and other current assets    7,364           5,592
Total current assets                         171,559        186,239
                                                             
Fixed assets, net                            34,883         36,124
Other assets, net                            28,038         32,554
Deferred tax asset, net                      21,523         10,042
Intangible assets, net                       5,736          6,635
Goodwill                                     63,410         138,078
Total assets                                 $325,149      $409,672
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY         
                                                             
Current Liabilities:                                        
Accounts payable and other accrued            $36,205       $26,314
liabilities
Accrued payroll costs                        50,063         55,151
Other current liabilities                    11,564         1,463
Income taxes payable                         1,042          236
Total current liabilities                    98,874         83,164
                                                             
Long-term debt - credit facility             21,000         49,526
Long-term debt - other                       1,144          1,609
Other long-term liabilities                  34,285         42,258
Total liabilities                            155,303        176,557
                                                             
Commitments and contingencies                               
                                                             
Stockholders' Equity:                                       
Preferred stock                              --             --
Common stock                                 685            686
Additional paid-in capital                   400,688        372,212
Accumulated other comprehensive loss         (2,713)        (4,050)
Retained earnings                            40,203         89,135
Treasury stock, at cost                      (269,017)      (224,868)
Total stockholders' equity                   169,846        233,115
Total liabilities and stockholders' equity   $325,149      $409,672

                                                                 
                                                                 
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
                                                                 
Adjusted Net
Income and
Earnings Per                                                      
Share Before
Impairment
Charge
                Three Months Ended    Twelve Months Ended            
                 Dec. 31, 2012         Dec. 31, 2012
                $           Per share $           Per share          
Net income       $6,120    $0.17   $(13,703) $(0.38)          
(loss)
Goodwill
impairment,      3,858      0.11     69,158     1.93              
pre-tax
Tax benefit from
impairment       (1,405)    (0.04)   (24,670)   (0.69)            
charge
Goodwill
impairment,      2,453      0.07     44,488     1.24              
after-tax
Earnings Per
Share Adjustment --        --      --        (0.01)            
(*)
Adjusted net
income and
earnings per     $8,573    $0.24   $30,785   $0.85            
share before
impairment
charge
                                                                 
Weighted average
shares           35,530              35,791                       
outstanding -
basic
Weighted average
shares           35,573              36,025                       
outstanding -
diluted
                                                                 
"Adjusted Net Income and Earnings Per Share Before Impairment Charge," a
non-GAAP financial measure, is defined as net income before the non-cash
impairment charges related to goodwill. "Adjusted Net Income and Earnings Per
Share Before Impairment Charge" should not be considered a measure of
financial performance under generally accepted accounting principles and has
been provided for consistency and comparability of the 2012 results with net
income and earnings per share from prior periods.
                                                                 
(*) This earnings per share adjustment is necessary to properly reconcile net
loss per share on a GAAP basis to Adjusted Net Income per share. Earnings Per
Share Before Impairment Charge, a non-GAAP financial measure, is based on Net
Income Before Impairment Charge and diluted weighted average shares
outstanding; however, the reconciling items within the table above are based
on basic weighted average shares outstanding, as the inclusion of dilutive
securities such as stock options and stock awards would have an anti-dilutive
effect on loss per share.
                                                                 
                                                                 
Quarterly                                                         
Adjusted EBITDA
                Three Months Ended
                Dec. 31,              Sept. 30,             Dec. 31,
                 2012                  2012                  2011
                $           Per share $           Per share $         Per
                                                                       share
                                                                 
Net income       $6,120    $0.17   $9,268    $0.26   $7,085  $0.20
Income (loss)
from
discontinued     198         0.00     (7)         (0.00)    1,998     0.06
operations, net
of income taxes
Income from
continuing       $5,922    $0.17   $9,275    $0.26   $5,087  $0.14
operations
Goodwill
impairment,      3,858      0.11     --        --      --      --
pre-tax
Depreciation &   2,371      0.07     2,659      0.07     3,013    0.09
amortization
Amortization of
restricted stock 53         0.00     38         0.00     3,190    0.09
& PARS
Interest expense 148        0.00     270        0.01     342      0.01
and other
Income tax       3,718      0.10     6,173      0.17     2,952    0.08
expense
Adjusted EBITDA  $16,070   $0.45   $18,415   $0.51   $14,584 $0.41
                                                                 
Weighted average
shares           35,530              36,204              34,549   
outstanding -
basic
Weighted average
shares           35,573              36,243              35,709   
outstanding -
diluted
                                                                 



                                                              
                                                              
                                                              
Full Year Adjusted                                             
EBITDA
                        Twelve Months Ended
                        Dec. 31,                    Dec. 31,
                         2012                        2011
                        $              Per share    $            Per share
                                                              
Net (loss) income        $(13,703)    $(0.38)    $27,156    $0.70
Income from discontinued
operations, net of       22,009         0.62        8,100        0.21
income taxes
(Loss) income from       $(35,712)    $(1.00)    $19,056    $0.49
continuing operations
Goodwill impairment,     69,158        1.93        --         --
pre-tax
Depreciation &           10,789        0.30        12,505      0.32
amortization
Acceleration of          22,158        0.62        --         --
restricted stock & PARS
Amortization of          3,530         0.10        11,819      0.30
restricted stock & PARS
Interest expense and     994           0.03        1,272       0.04
other
Income tax (benefit)     (19,854)      (0.55)      10,858      0.28
expense
Earnings Per Share       --           (0.01)      --         --
Adjustment (*)
Adjusted EBITDA          $51,063      $1.42      $55,510    $1.43
                                                              
Weighted average shares  35,791                    37,835      
outstanding - basic
Weighted average shares  36,025                    38,831      
outstanding - diluted
                                                              
Adjusted EBITDA, a non-GAAP financial measure, is defined as earnings before
discontinued operations, non-cash impairment charges, interest, income taxes,
depreciation and amortization and stock-based compensation expense.Adjusted
EBITDA should not be considered a measure of financial performance under
generally accepted accounting principles.Items excluded from Adjusted EBITDA
are significant components in understanding and assessing financial
performance.
                                                              
(*) This earnings per share adjustment is necessary to properly reconcile net
loss per share on a GAAP basis to Adjusted Net Income per share. Earnings Per
Share Before Impairment Charge, a non-GAAP financial measure, is based on Net
Income Before Impairment Charge and diluted weighted average shares
outstanding; however, the reconciling items within the table above are based
on basic weighted average shares outstanding, as the inclusion of dilutive
securities such as stock options and stock awards would have an anti-dilutive
effect on loss per share.
                                                              
Adjusted Net Income and Earnings Per Share Before Impairment Charge
andAdjusted EBITDA are key measures used by management to evaluate its
operations and to provide useful information to investors. These measures
should not be considered in isolation or as an alternative to net income, cash
flows data or other financial statement information presented in the
consolidated financial statements as indicators of financial performance or
liquidity. These measurements are not determined in accordance with generally
accepted accounting principles and are thus susceptible to varying
calculations. The measures as presented may not be comparable to similarly
titled measures of other companies.

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

Kforce Inc. Logo
 
Press spacebar to pause and continue. Press esc to stop.