Slide 1: Kforce Inc. Q3 2016
Kforce Inc. Q3 2016
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 Q3 ‘16 Revenue: $336.5 Mill
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: Q3 2016 Highlights
Q3 2016 Highlights Revenues of $336.5 million, which is an increase of 0.4% quarter-over-quarter. Earnings per share of $0.34 in Q3 was impacted by $4.3 million in severance related costs which impacted GAAP earnings per share by 10 cents. Excluding the impact of the severance related costs, ear
Slide 6: Current Revenue Stream
Current Revenue Stream Q3 2016 Revenue – $336.5M Government Finance & $26.8M Accounting 8% $84.1M 25% Tech $225.5M 67% 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. Tepid recovery (low GDP) and regulatory (i.e. healthcare reform) uncertainties have incented co
Slide 8: Temporary Penetration Rate Near Record Level
Temporary Penetration Rate Near Record Level 8 8
Slide 9: 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 10: Technology
Technology $225.5M; 67% of Q3 ‘16 revenue Key Trends: Cloud computing, cyber security, e- commerce, digital marketing, big data, and business intelligences are driving current spending coupled with systems of Government Finance & engagement where the customer directly Accounting 8% 25% interacts t
Slide 11: Finance and Accounting
Finance and Accounting $84.1M; 25% of Q3 ‘16 revenue Key Trends: Skilled F&A professionals Projects related to general accounting, financial services transaction processing Finance & Government Accounting 8% and rev cycle 25% $8 billion domestic market for F&A staffing projected in 2016 Key St
Slide 12: Government
Government $26.8M; 8% of Q3 ‘16 revenue Key Trends: Government provides clients with integrated solutions across the finance, accounting and technology disciplines Long-term contract profile Government Finance & 8% Low cost procurement environment Accounting 25% 38% of business mix in the V.
Slide 13: KGS T4 Next Generation Update
KGS T4 Next Generation Update During the third quarter, task orders began to be awarded on this ten year, $22 billion contract vehicle As a result of Congressional mandatory set-aside provisions, the vast majority of initial awards went to small businesses. As a result, KGS was not eligible to s
Slide 14: Financial Overview
Financial Overview 14
Slide 15: Strong Financial Model
Strong Financial Model Revenue growth acceleration Improving margin profile Measured headcount additions to take Increase in large client volume is creating advantage of market opportunity operating leverage opportunities High end domestic market exposure Recent realignment to drive improved
Slide 16: Income Statement
Income Statement Q3 2016 Three Months Ended (000's) GAAP Adjusted * Q3 '16 Q3 '16 Q2 '16 Q3 '15 Revenue $ 336,460 $ 336,460 $ 335,047 $ 341,575 GP % 31.3% 31.3% 31.7% 32.2% Flex GP% 28.6% 28.6% 28.8% 29.2% SG&A % 26.1% 24.9% 25.5% 24.6% Operating Income 15,387 19,660 18,443 23,075 Operating Income %
Slide 17: Return of Capital
Return of Capital Q3 2016 2013 2014 2015 YTD 2013-2016 Shares Purchased (000's) 1,812 4,883 1,487 1,610 9,792 Average Price $15.07 $21.07 $24.69 $18.05 $20.01 Amount Purchased (000's) $27,313 $102,886 $36,712 $29,068 $ 195,979 Dividends (000's) $3,297 $12,776 $12,545 $9,397 $38,015 Total Return to S
Slide 18: Balance Sheet / Cash Flow
Balance Sheet / Cash Flow (Millions) Q3 ’16 * Q2 ‘16 Q3 ‘15 Working Capital $136.3 $137.2 $124.8 AR Gross Balance $211.5 $217.9 $218.9 AR % Over 90 Days 2.8% 3.0% 2.7% Long Term Debt $105.0 $99.7 $81.4 Debt/Equity Ratio 82.6% 77.1% 57.8% Adjusted EBITDA $18.8 $22.5 $27.0 * Q3 ‘16 adjusted EBITDA exc
Slide 19: 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 and FA flex well positioned to gain market share Efficient use of cash to benefit shareholders Investing in long-term sust