Kforce (KFRC) Tops Q2 EPS by 10c; Guides Above

Kforce (NASDAQ: KFRC) reported Q2 EPS of $1.00, $0.10 better than the analyst estimate of $0.90. Revenue for the quarter came in at $403.6 million versus the consensus estimate of $391.84 million.

David L. Dunkel, Chairman and Chief Executive Officer, said, “We believe the significant strength in our financial results leading into, during and now after the pandemic continues to reinforce the wisdom of our strategic decision to focus our business on domestic technology staffing and solutions. Our Technology business demonstrated remarkable resilience in 2020 when revenues were essentially flat, and we have built tremendous momentum since shortly after the pandemic began and into the early stages of the third quarter. The momentum is evident not only in our organic 21% year-over-year Technology flex revenue growth in the second quarter, a record for the Firm, but also the 17% revenue growth since the second quarter of 2019, pre-pandemic.

There is no other market we would want to be focused in other than the domestic technology staffing and solutions market as it has, in our view, the greatest prospects for strong, sustained, and profitable revenue growth. I am incredibly excited about our strategic position. We have the right team in place to capture additional market share within what we believe will be a continued strong demand environment for our services.”

Joseph J. Liberatore, President, said, “We continue to see momentum in our Technology business which should lead to third quarter year-over-year growth of approximately 25%, which would represent over 20% organic growth over the third quarter 2019, pre-pandemic. New assignment starts in Technology are not only reaching all-time highs, but they have been remarkably consistent and broad-based. We believe that this speaks volumes as to the primarily non-discretionary, mission critical work we are performing across our blue-chip client portfolio.

We are making nice progress transitioning our FA business to higher skilled positions, such as analytics and decision-support roles, which is evident in our key performance indicators. We have made tremendous progress advancing Kforce towards a fully integrated, technology enabled hybrid operating model. Our future work environment in this new age we are entering will be what we are referring to as “Office Occasional” whereby our people can have the flexibility driven through trust and technology with a remote-first approach along with the opportunity to leverage collaborative physical office space for activities that are best achieved through in-person, active collaboration. I greatly appreciate the trust our clients, consultants and candidates have placed in Kforce. Our teams continue to inspire me daily as we work together creating something beyond special for tomorrow and into the future to position Kforce as the most desirable destination for top professionals in our industry.”

David M. Kelly, Chief Financial Officer, said, “Our business continued to generate solid operating cash flows while revenues continued to expand. We continued to return capital to our shareholders through approximately $13 million in share repurchases and almost $5 million in dividends. We ended the quarter with net cash of approximately $17 million, which we believe gives us optimal financial flexibility to continue investing in our business and return capital to our shareholders. We are pleased to announce that our Board of Directors approved a third quarter cash dividend of $0.26 per share, which will be payable on September 24, 2021, to shareholders of record as of the close of business on September 10, 2021. This represents the second increase to our dividend approved by our Board of Directors in 2021 and collectively is up 30% from prior year levels, which we believe speaks to our belief in the continued strength of our business going forward and our continued commitment to returning cash to shareholders.”

GUIDANCE:

Kforce sees Q3 2021 EPS of $0.83-$0.91, versus the consensus of $0.82. Kforce sees Q3 2021 revenue of $385-396 million, versus the consensus of $381.91 million.

For earnings history and earnings-related data on Kforce (KFRC) click here.

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