Kforce, Inc. · NYSE:KFRC
Kforce — Deutsche Bank 2018 Media, Telecom & Business Services Conference
25 slides from Kforce's conference presentation, Mar 5, 2018
Slide 1: Kforce, Inc.
KFORCE, INC. (KX)
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
Slide 3: Kforce Overview
Kforce Overview $1.4 Billion NASDAQ “KFRC” $1.4 billion in More than 60 offices Consistently ranked in the annual revenue throughout the U.S. and top 5 for IT and for Finance 20+ years publicly traded two National Recruiting & Accounting staffing firms Centers Top Industries Served Financial Service
Slide 4: Key Investment Highlights
Key Investment Highlights Large, attractive end market with positive secular trends • Tech staffing spend projected at $31 billion in 2018; roughly doubled over last 10 yrs. • Federal Government is largest buyer of technology services. KGS won nearly $100 million in prime contract awards in Q3 2017.
Slide 5: Current Revenue Stream
Current Revenue Stream Q4 ‘17 Revenue 2017 Revenue $342.6M $1.36B Government Government Finance & $29.4M $104.3M Finance & Accounting 9% 8% Accounting $346.1M $85.4M 25% 25% Tech Tech $227.8M $907.5M 66% 67% 5 5
Slide 6: Technology
Technology 66% of Q4 ‘17 revenue Key Trends: Cloud computing, cyber security, e- commerce, digital marketing, big data, and business intelligences are driving current spending coupled with systems of Gov engagement where the customer directly 9% interacts through mobile applications Finance & Acco
Slide 7: Finance & Accounting
Finance & Accounting 25% of Q4 ‘17 revenue Key Trends: Skilled F&A professionals Projects related to general accounting, financial services transaction processing Gov and rev cycle 9% Finance & $8.4 billion domestic market for F&A Accounting staffing projected in 2018 25% Key Statistics: Ave
Slide 8: Government
Government 9% of Q4 ‘17 revenue Key Trends: Government provides clients with integrated solutions across the finance, accounting and technology disciplines Gov 9% Long-term annuity contracts (4-5 years) Nearly $100m in recent Prime T4 Next Gen Finance & wins Accounting 25% Key Statistics: Bi
Slide 9: Significant Growth Opportunities In End Markets
Significant Growth Opportunities In End Markets Technology IT staffing sector is expected to grow due to multiple demand drivers: Technology Historical • Rapid pace of technological change and Projected Spending • Growth in the volume of project-based work ($ in billions) 27.5 28.6 29.7 30.9 • Oppor
Slide 10: 2017 Financial Overview
2017 FINANCIAL OVERVIEW (<)
Slide 11: Attributes of the Kforce Model
Attributes of the Kforce Model REVENUE GROWTH ACCELERATION IMPROVING OPERATING MARGIN PROFILE • Highly focused sales & delivery alignment • Fortune 1000 and similarly sized companies • Focus on the “sweet spot” of staffing; provides operating leverage opportunities domestic professional and technica
Slide 12: YoY Revenue Growth
YoY Revenue Growth Total Firm Tech Flex 6.0% 6.0% 4.5% 4.5% 3.0% 3.0% 1.5% 1.5% 0.0% 0.0% Govt. FA Flex 30.0% 8.0% 20.0% 6.0% 10.0% 4.0% 0.0% 2.0% -10.0% 0.0% Year over Year • Revenue changes are on a billing day basis. • Q3 ’17 reflects adjusted results. We have provided a schedule as Appendix A re
Slide 13: Financial Results Q4 2017
Financial Results Q4 2017 Three Months Ended (000's) Adjusted Adjusted GAAP Q4’ 17* Q3 ‘17* Q4 '16 Revenue $ 342,586 $ 342,053 $ 325,998 GP % 30.0% 30.7% 30.6% Flex GP% 27.8% 28.2% 28.1% SG&A % 24.0% 24.3% 25.2% Operating Income 18,518 19,901 15,591 Operating Income % 5.4% 5.8% 4.8% Net Income 11,50
Slide 14: Financial Results 2017 vs 2016
Financial Results 2017 vs 2016 Twelve Months Ended (000’s) Adjusted Adjusted Adjusted GAAP GAAP GAAP 2017* 2016* Variance 2017 2016 Variance Revenue $ 1,358,940 $ 1,319,706 $ 39,234 $1,357,940 $ 1,319,706 $ 38,234 GP % 30.1% 31.0% -0.9% 30.0% 31.0% -1.0% Flex GP% 27.5% 28.2% -0.7% 27.5% 28.2% -0.7%
Slide 15: Financial Results Continued
Financial Results Continued (Millions) Q4 ’17 Q3 ’17 Q4 ‘16 Working Capital $161.7 $171.1 $135.4 AR Gross Balance $228.2 $246.3 $208.4 AR % Over 90 Days 6.3% 6.0% 3.2% Long Term Debt $119.1 $128.9 $115.5 Debt/Equity Ratio 90.2% 91.9% 96.4% Adjusted EBITDA* $23.2 $24.2 $19.3 * Adjusted EBITDA is a No
Slide 16: Return of Capital
Return of Capital 2015 2016 2017 2015-2017 Shares Purchased (000's) 1,487 2,291 526 4,304 Amount Purchased (000's) $36,712 $44,032 $12,240 $92,984 Dividends (000's) $12,545 $12,447 $12,144 $37,136 Total Return to Shareholders (000's) $49,257 $56,479 $24,384 $130,120 Note: Return to shareholders has
Slide 17: Q1 2018 Financial Estimates
Q1 2018 Financial Estimates Financial Estimates Ranges of Estimates Revenues (in millions) $343 $347 Tech Flex YoY 5.0% 5.7% Total Firm YoY 2.7% 3.9% Gross Margin 29.0% 29.2% SG&A as a % of Revenue 24.4% 24.6% Operating Income as a % of Revenue 3.8% 4.2% EPS $0.35 $0.38 Effective Tax Rate 26.0% WASO
Slide 18: 2017 Highlights
2017 Highlights ▪ Optimized the alignment of our COO organization. ▪ Meaningfully accelerated YoY Tech Flex revenue growth in 2H 2017. ▪ Significantly improved the productivity of our revenue-generating talent; continued improvement expected to be realized in 2018. • Completed our sales transformati
Slide 19: Summary
Summary ▪ Professional domestic staffing sector experiencing solid secular demand ▪ 100% domestic revenue stream with market share of 3% in Tech and 4% in FA ▪ Tech Flex well positioned to gain market share ▪ Improving prospects in KGS ▪ Strong return of capital to shareholders ▪ Investing in long-t
Slide 20: Appendix A
Appendix A Adjusted Q4 ‘17 Financial Performance Measures 20 20
Slide 21: Appendix A
Appendix A Adjusted Q3 ‘17 Financial Performance Measures 21 See next slide for additional detail on adjustments 21
Slide 22: Appendix A
Appendix A Adjustment Details: Q3 ‘17 22 22
Slide 23: Appendix A
Appendix A Adjusted 2017 Financial Performance Measures 23 23
Slide 24: Appendix A
Appendix A Adjusted 2016 Financial Performance Measures 24 24
Slide 25: Appendix B
Appendix B Adjustment Details 25 25
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