Kforce, Inc. · NYSE:KFRC
Kforce — 5th Annual Credit Suisse Small & Mid Cap Conference (September 2014)
22 slides from Kforce's conference presentation, Sep 16, 2014
Slide 1: Kforce
KFORCE 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 sold its Health Information Management business unit on August 4, 2014
Kforce sold it’s Health Information Management business unit on August 4, 2014. The following exhibits exclude HIM unless otherwise noted. 3
Slide 4: Kforce at a Glance
Kforce at a Glance Company overview Kforce is a professional staffing solutions firm providing flexible and permanent staffing services to clients in an array of industries 50 year operating history – public since August 1995 Q2 ‘14 Revenue: $302.8 Million 2013 Revenue: $1.07 Billion Market
Slide 5: Diversified Revenue Stream
Diversified Revenue Stream Q2 2014 Revenue – $302.8M Government 8% Finance & Accounting 22% Tech 70% 5
Slide 6: Key Investment Highlights
Key Investment Highlights • Large, attractive end market with positive recent trends • Tech staffing spend projected at $26 billion in 2014 • 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 7: 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 F&A staffing sector is expected to grow due to multiple demand drivers: drivers: − Rapid pace of technological change − Lack of skilled finance an
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 Economic and regulatory uncertainty drives companies to use contract labor Economic and regula
Slide 9: The Flex Super-Cycle?
The Flex Super-Cycle? Easy Come, Easy Go The slump in temp jobs foreshadowed the recession. The boom in such positions since 2010, economists say, could mark a lasting shift in the job market. Percentage change in employment Temporary since the start of 2004 Total nonfarm employees M1 O coesseseeste
Slide 10: Technology
Technology 70% of Q2 ‘14 revenue Key Trends: Obsolescence, deferred maintenance and upgrades are driving current spending $26 billion domestic market for Tech staffing projected in 2014 Government 8% Finance & Key Statistics: Accounting 22% Average bill rate: ~$69.00 Assignment length: appro
Slide 11: Finance and Accounting
Finance and Accounting 22% of Q2 ‘14 revenue Key Trends: Skilled F&A professionals Projects related to M&A, tax, systems conversions, work-outs, transaction Finance & Government Accounting 8% processing 22% Key Statistics: Average bill rate: ~$32.50 Assignment length: approximately 3 months
Slide 12: Government
Government 8% of Q2 ‘14 revenue Key Trends: Government provides clients with integrated solutions across the finance, accounting and technology disciplines Government Long-term contract profile 8% Key Statistics: Finance & Accounting 22% FTE’s: 600 Defense / civilian split: 51/49 41% in He
Slide 13: Financial Overview
Financial Overview KFORCE
Slide 14: Strong Financial Model
Strong Financial Model Revenue growth acceleration Improving margin profile Ongoing headcount additions to take advantage of market opportunity Attractive gross margins Diversified high end market exposure Revenue growth surpassing core headcount growth on a percentage basis Intensified in
Slide 15: Five Quarter Revenue Growth
Five Quarter Revenue Growth 20.0% 16.0% 14.2% 14.4% 12.6% 12.0% 9.4% 8.0% 4.2% 4.0% 0.0% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 YOY Revenue changes are on a billing day basis 15
Slide 16: Return on Revenue Generating Investment
Return on Revenue Generating Investment 30.0% 24.7% 20.0% 18.4% 22.0% 15.1% 15.7% 15.5% 10.0% 11.6% 10.7% 12.4% 7.4% 3.8% 0.0% -0.8% -10.0% Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 YOY Staffing Revenue Growth % YOY Revenue Generator Headcount Growth % 16
Slide 17: Income Statement – Q2 2014
Income Statement – Q2 2014 Three Months Ended (000's) Jun. 30, Adjusted for 2014 HIM * Flex Revenue 314,807 Search Revenue 12,610 Total Revenue $ 327,417 $ 302,758 GP % 31.5% Flex GP% 28.8% SG&A % 25.2% Operating Income $ 18,170 Operating Income % 5.5% Net Income $ 10,703 EPS $ 0.33 $ 0.24 * Estimat
Slide 18: Adjusted EBITDA & Shares Repurchased
Adjusted EBITDA & Shares Repurchased Prior Peak Estimated * Prior Peak Operating Q3'07 Q2' 14 Margins Exceeded Operating Margins 7.4% 4.5% 7.5% EBITDA (000's) $ 24,033 $ 16,440 $29,000 - $33,000 Shares (000's) 42,544 32,710 32,710 EBITDA per Share $ 0.56 $ 0.50 $0.89 - $1.00 YTD Jun 2011-YTD 2011 20
Slide 19: Balance Sheet / Cash Flow
Balance Sheet / Cash Flow (Millions) Jun Mar Jun 2014 2014 2013 Working Capital $127.2 $118.1 $94.6 AR Gross Balance $203.2 $189.9 $167.0 AR Over 60% 6.6% 4.7% 3.8% Bank Debt $81.7 $61.2 $50.1 Debt/Equity Ratio 55.7% 39.3% 32.8% Adjusted EBITDA $21.1 $13.7 $14.8 The above financial information is in
Slide 20: Future State Operating Margin
Future State Operating Margin $1.2 billion $1.4 billion $1.6 billion Annualized Annualized Annualized Revenue Revenue Revenue 7.5% 0.85% 0.65% 6.0% 0.00% 0.95% 0.55% 4.5% 0.00% Q2-14 Est. Gross Margin Cost Associate Gross Margin Cost Associate Expansion Realignment, Productivity Expansion Realignmen
Slide 21: Sale of HIM
Sale of HIM Kforce sold its Kforce Healthcare, Inc. (HIM) business to further intensify focus on its core staffing services business. $25 billion domestic I.T. staffing market offers greatest long term growth opportunity Attractive nature of healthcare focused business in the market is current
Slide 22: Summary
Summary Professional domestic staffing sector experiencing strong secular and cyclical growth drivers Kforce well positioned in critical in demand skill sets, particularly Tech Flex Recent significant actions taken to streamline business Efficient use of cash to benefit shareholders 22
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