Kforce, Inc. · NYSE:KFRC
Kforce — Credit Suisse 18th Annual Global Services Conference 2016
22 slides from Kforce's conference presentation, Mar 9, 2016
Slide 1: Kforce
IKKFORCE KFORCE Great People = Great Results*
Slide 2: Forward Looking Statements
Forward Looking Statements All of the information presented that is not historical in nature should be considered to be forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors, including but not limited to the specific f
Slide 3: Kforce at a Glance
Kforce at a Glance Company overview Kforce is a professional staffing solutions firm providing Technology and Finance/Accounting flexible and direct hire staffing services to the commercial and government sectors 50+ years operating history – public since August 1995 Q4 ‘15 Revenue: $327.7 Milli
Slide 4: Key Investment Highlights
Key Investment Highlights Large, attractive end market with positive recent trends Tech staffing spend projected at $29 billion in 2016 Strong demand for higher skill sets in a temp led recovery Positive long-term secular trends as employers seek a flexible human capital solution against reg
Slide 5: The New Era
The New Era Focus. Simplicity. Accountability Simplified our service offerings to focus on our core business lines. Aggressive investment in revenue generating resources; particularly in Tech Flex Sales A focus on organic growth and execution Significant progress in optimizing our infrastruc
Slide 6: 2015 Highlights
2015 Highlights Achieved record annual revenues of $1.32 billion, which represents an 8.4% increase year-over year. Tech Flex revenue growth of 6.1% and FA Flex revenue growth of 18.0% Earnings per share from continuing operations of $1.52 in 2015 increased 63% year-over-year. Returned nearl
Slide 7: Current Revenue Stream: 2015 Revenue $1.32B
Current Revenue Stream 2015 Revenue – $1.32B Government 7% Finance & Accounting 25% Tech 68% 7
Slide 8: Secular Staffing Growth Drivers
Secular Staffing Growth Drivers As buyers/clients become more sophisticated in managing their workforce, companies are structurally utilizing temporary labor as a larger percentage of their workforce. Tepid recovery (low GDP) and regulatory (i.e. healthcare reform) uncertainties have incented co
Slide 9: Temporary Penetration Rate near Record Level 2.06%
Temporary Penetration Rate near Record Level 2.06% 9
Slide 10: Large End-markets with Significant Growth Opportunities
Large End-markets with Significant Growth Opportunities Technology Finance & Accounting IT staffing sector is expected to grow due to multiple demand drivers: F&A staffing sector is expected to grow due to multiple demand − Rapid pace of technological change drivers: − Growth in the volume of pr
Slide 11: Technology
Technology 67% of Q4 ‘15 revenue Key Trends: Obsolescence, deferred maintenance and upgrades are driving current spending coupled with systems of engagement where the customer directly interacts Government through mobile applications 7% Finance & Accounting $29 billion domestic market for Tech 2
Slide 12: Finance and Accounting
Finance and Accounting 26% of Q4 ‘15 revenue Key Trends: Skilled F&A professionals Projects related to general accounting, financial services transaction Finance & Government 7% processing and rev cycle Accounting 26% $8 billion domestic market for F&A staffing projected in 2016 Key Statistics
Slide 13: Government
Government 7% of Q4 ‘15 revenue Key Trends: Government provides clients with integrated solutions across the finance, accounting and technology disciplines Long-term contract profile Government 7% Low cost procurement environment Finance & Accounting Key Statistics: 26% Billable Headcount: ~
Slide 14: Financial Overview
Financial Overview KFORCE
Slide 15: Strong Financial Model
Strong Financial Model Revenue growth acceleration Improving margin profile Ongoing headcount additions to take advantage of market opportunity Improving gross margins High end domestic market exposure Increasing associate tenure expected to drive productivity improvements. Intensified inv
Slide 16: Annual Performance History
Annual Performance History $1,500 $2.00 $1,319 $1,217 $1,200 $1.60 $1,074 $1,005 $1.52 $900 $1.20 In Millions In Cents $600 $0.93 $0.80 $0.67 $300 $0.56 $0.40 $0 $0.00 2012 2013 2014 2015 Revenue EPS 16
Slide 17: Income Statement – Continuing Operations (2015 vs 2014)
Income Statement – Continuing Operations 2015 vs 2014 Twelve Months Ended (000's) Dec. 31, Dec. 31, Increase / 2015 2014 (Decrease) Revenue $ 1,319,238 $ 1,217,331 8.4% GP % 31.4% 30.8% 60 bps Flex GP% 28.5% 28.0% 50 bps SG&A % 25.0% 25.9% -90 bps Operating Income $ 73,867 $ 49,349 49.7% Operating I
Slide 18: Income Statement – Continuing Operations (Q4 2015)
Income Statement – Continuing Operations Q4 2015 Year-over-Year Three Months Ended (000's) Dec. 31, Dec. 31, Increase / 2015 2014 (Decrease) Revenue $ 327,699 $ 318,739 2.8% GP % 31.6% 30.9% 70 bps Flex GP% 28.7% 28.2% 50 bps SG&A % 24.6% 25.5% -90 bps Operating Income / (Loss) 20,384 14,755 38.1% O
Slide 19: Return on Staffing Revenue Generating Investment
Return on Staffing Revenue Generating Investment 30.0% 23.1% 24.7% 22.0% 20.0% 15.1% 15.7% 15.5% 18.4% 13.0% 12.2% 12.4% 12.3% 10.6% 9.8% 10.1% 9.5% 10.0% 10.7% 9.8% 3.8% 8.7% 7.7% 7.4% 2.3% 6.3% 0.8% 4.3% 2.6% 0.0% -10.0% YOY Staffing Revenue Growth % YOY Revenue Generator Headcount Growth % 19
Slide 20: Shares Repurchased & Adjusted EBITDA
Shares Repurchased & Adjusted EBITDA 2012 2013 2014 2015 2012-2015 Shares Purchased (000's) 3,376 1,812 4,883 1,487 11,558 Average Price $13.14 $15.07 $21.07 $24.69 $18.28 Amount Purchased (000's) $44,375 $27,313 $102,886 $36,712 $211,286 Prior Peak Actual Prior Peak Operating Q3'07 Q4' 15 Margins E
Slide 21: Balance Sheet / Cash Flow
Balance Sheet / Cash Flow (Millions) Qtr4 Qtr3 Qtr4 2015 2015 2014 Working Capital $126.8 $124.8 $130.2 AR Gross Balance $201.1 $218.9 $206.8 AR % Over 90 Days 3.6% 2.7% 3.0% Long Term Debt $83.8 $81.4 $93.9 Debt/Equity Ratio 61.0% 57.8% 68.1% Adjusted EBITDA $24.6 $27.0 $18.2 21
Slide 22: Summary
Summary Professional domestic staffing sector experiencing strong secular and cyclical growth drivers Domestic revenue stream with market share of 3% Tech and 4% FA Tech and FA flex well positioned to gain market share Improving operating margins Efficient use of cash to benefit shareholde
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