Kforce, Inc. · NYSE:KFRC
Kforce — J.P. Morgan Ultimate Services Investor Conference 2017
24 slides from Kforce's conference presentation, Nov 14, 2017
Slide 1: Kforce Inc.
Kforce Inc. J.P. Morgan Ultimate Services Investor Conference November 14, 2017
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 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 100% domestic revenue footprint with approxi
Slide 4: Key Investment Highlights
Key Investment Highlights ▪ Large, attractive end market with positive recent trends ▪ Tech staffing spend projected at $30 billion in 2017 ▪ Federal Government is largest buyer of Tech services. KGS won nearly $100 million in recent prime contract awards. ▪ Strong demand for higher skill sets in a
Slide 5: Current Revenue Stream by Line of Business
Current Revenue Stream by Line of Business Q3 ‘17 Adjusted Revenue – $342.1M Government Finance & $26.5M Accounting 8% $85.6M 25% Tech $229.9M 67% 5 5
Slide 6: Current Revenue Stream by Product
Current Revenue Stream by Product Q3 ‘17 Adjusted Revenue – $342.1M Direct Hire $12.1M 4% Flex $329.9M 96% 6 6
Slide 7: 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. ▪ Regulatory (compliance) uncertainties have incented companies to pursue shifting more of their
Slide 8: Temp Penetration Rate at All Time High
Temp Penetration Rate at All Time High 8
Slide 9: Trend Is Our Friend
Trend Is Our Friend Professional Commerci 36% al 36% Commercial Profession 64% al 64% 1995 2015 Industry Revenue: $55 Billion Industry Revenue: $132 Billion 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 drivers: − Rapid pace of technological change − Lack of skilled finance an
Slide 11: Technology
Technology 67% of Q3 ‘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 engagement where the customer directly interacts through mobile Finance & Government applications 8
Slide 12: Finance and Accounting
Finance and Accounting 25% of Q3 ‘17 Revenue Key Trends: Skilled F&A professionals Projects related to general accounting, financial services transaction processing Finance & Government and rev cycle Accounting 8% 25% $8 billion domestic market for F&A staffing projected in 2017 Key Statistics
Slide 13: Government
Government 8% of Q3 ‘17 Revenue Key Trends: Government provides clients with integrated solutions across the finance, accounting and technology disciplines Long-term annuity contracts (4-5 years) Nearly $100m in recent Prime T4 Next Gen wins Government 8% Finance & Accounting 25% Key Statistic
Slide 14: Financial Overview
Financial Overview 14
Slide 15: Strong Financial Model
Strong Financial Model Revenue growth acceleration Improving operating margin profile Highly focused sales & delivery alignment Large client focus provides operating leverage opportunities Focus on the “sweet spot” of staffing; Improving associate productivity domestic professional and techn
Slide 16: Revenue Year-Over-Year Growth Rates
Revenue Year-Over-Year Growth Rates Three Months Ended (000's) Adjusted GAAP Q3 '17 YoY Q3 '17 * Q3 '16 Growth% Tech Flex $ 224,798 $ 220,376 3.6% Tech Direct Hire 5,133 5,148 1.3% Total Tech 229,931 225,524 3.6% FA Flex 78,559 76,290 4.6% FA Direct Hire 7,016 7,828 -9.0% Total FA 85,575 84,118 3.3%
Slide 17: Financial Results Q3 2017
Financial Results Q3 2017 Three Months Ended (000's) GAAP Adjustments Adjusted Q3 '17 Q3 '17 Revenue $ 341,053 $ 1,000 $ 342,053 GP % 30.6% 0.1% 30.7% Flex GP% 28.0% 0.2% 28.2% SG&A % 24.0% 0.3% 24.3% Operating Income 20,344 (443) 19,901 Operating Income % 6.0% -0.2% 5.8% Net Income 10,099 1,397 11,
Slide 18: Financial Results Q3 2017
Financial Results Q3 2017 Three Months Ended (000's) Adjusted GAAP GAAP Q3 '17 * Q2 '17 Q3 '16 Revenue $ 342,053 $ 340,309 $ 336,460 GP % 30.7% 30.5% 31.3% Flex GP% 28.2% 27.6% 28.6% SG&A % 24.3% 24.2% 26.1% Operating Income 19,901 19,360 15,502 Operating Income % 5.8% 5.7% 4.6% Net Income 11,496 11
Slide 19: Financial Results - Continued
Financial Results - Continued (Millions) Q3 ’17 Q2 ’17 Q3 ’16 Working Capital $171.1 $160.5 $136.3 AR Gross Balance $246.3 $227.6 $211.5 AR % Over 90 Days 6.0% 3.6% 2.8% Long Term Debt $128.9 $127.4 $105.0 Debt/Equity Ratio 91.9% 95.7% 82.6% Adjusted EBITDA * $24.2 $23.3 $18.9 * Adjusted EBITDA is a
Slide 20: Return of Capital
Return of Capital Q3 YTD 2015 2016 2017 2015-2017 Shares Purchased (000's) 1,487 2,291 74 3,852 Amount Purchased (000's) $36,712 $44,032 $1,428 $82,172 Dividends (000's) $12,545 $12,447 $9,125 $34,117 Total Return to Shareholders (000's) $49,257 $56,479 $10,553 $116,289 20 20
Slide 21: Summary
Summary ▪ Professional domestic staffing sector experiencing secular and cyclical growth drivers ▪ 100% domestic revenue stream with market share of 3% Tech and 4% FA ▪ Tech Flex well positioned to gain market share ▪ Improving prospects in KGS ▪ Efficient use of cash to benefit shareholders ▪ Inves
Slide 22: Appendix A
Appendix A Adjusted Financial Performance Measures 22 22 See next slide for additional detail on adjustments
Slide 23: Appendix A
Appendix A Adjustment Details 23 23
Slide 24: Appendix B
Appendix B Adjustment Details 24 24
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