Kforce(KFRC)2024-10-30 20:09Revenue Performance - Revenue for the nine months ended September 30, 2024 decreased 9.1% to $1.06 billion from $1.17 billion in the comparable period in 2023[38] - Flex revenue for the nine months ended September 30, 2024 decreased 8.7% to $1.04 billion from $1.14 billion in the comparable period in 2023[38] - Direct Hire revenue for the nine months ended September 30, 2024 decreased 26.4% to $22.2 million from $30.1 million in the comparable period in 2023[38] - Year-to-date revenue growth rates for Technology Flex and FA Flex were (7.2)% and (23.9)%, respectively, indicating a decline in performance compared to the previous year[52] Profitability Metrics - Net income for the nine months ended September 30, 2024 decreased 13.2% to $39.4 million, or $2.08 per share, from $45.4 million, or $2.31 per share, for the nine months ended September 30, 2023[38] - Flex gross profit margin for the nine months ended September 30, 2024 decreased 10 basis points to 26.0% from 26.1% in the comparable period in 2023[38] - For the three months ended September 30, 2024, the total gross profit percentage increased by 20 basis points to 27.9% compared to the same period in 2023, driven by improved Technology Flex gross profit margins[46] - The Flex gross profit percentage for the three months ended September 30, 2024, increased by 40 basis points to 26.3% compared to the same period in 2023, while it decreased by 10 basis points for the nine months ended September 30, 2024[47] - Technology Flex gross profit margins increased by 60 basis points for the three months ended September 30, 2024, primarily due to improvements in the spread between bill and pay rates and lower healthcare costs[47] - FA Flex gross profit margins decreased by 110 basis points for the three months ended September 30, 2024, primarily due to a tighter pricing environment and a greater mix of lower margin projects[47] - Adjusted EBITDA for the nine months ended September 30, 2024, was $69.1 million, a decrease of 22.9% from $89.6 million in the same period of 2023[62] Cash Flow and Financing - Cash provided by operating activities was $65.1 million during the nine months ended September 30, 2024, compared to $69.1 million for the same period in 2023[38] - Operating cash flows for the nine months ended September 30, 2024, were $65.1 million, down from $69.1 million in the same period of 2023, reflecting lower profitability levels and collections on trade receivables[64] - Total cash used in financing activities was $57.2 million for the nine months ended September 30, 2024, compared to $66.5 million in the same period of 2023, primarily due to a decrease in stock repurchases[64] - The company repurchased approximately 324 thousand shares of common stock at a total cost of approximately $20.3 million during the nine months ended September 30, 2024[67] - The company declared and paid quarterly dividends totaling $21.3 million ($1.14 per share) for the nine months ended September 30, 2024, representing a 6% increase per share compared to $20.9 million ($1.08 per share) in 2023[65] Employment and Market Conditions - The national U.S. unemployment rate increased to 4.1% in September 2024 from 3.7% in December 2023[40] - The technology temporary staffing industry is estimated to decline 7% in 2024, while the finance and accounting temporary staffing industry is estimated to decline 9%[40] Investment and Capital Expenditures - Capitalized software amortization increased by 93.0% for the three months ended September 30, 2024, reflecting significant investment in technology[51] - Cash used in investing activities was $7.9 million for the nine months ended September 30, 2024, compared to $2.5 million in the same period of 2023[64] Tax and Compliance - The effective tax rate for the nine months ended September 30, 2024, was 25.1%, down from 28.9% in the same period in 2023, primarily due to a reduction in nondeductible executive compensation[53] - The company expects to maintain compliance with financial covenants under its credit facility[66] Shareholder Returns - The Firm returned $41.6 million of capital to shareholders in the form of open market repurchases totaling $20.3 million and quarterly dividends totaling $21.3 million during the nine months ended September 30, 2024[38] Working Capital - As of September 30, 2024, the company had $123.4 million in working capital, down from $141.5 million at December 31, 2023[63] - The outstanding balance under the Amended and Restated Credit Facility was $26.9 million as of September 30, 2024, with $172.1 million available for borrowing[66]