kfrc-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________________________________________________________

FORM 10-Q

________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-26058

_________________________________________________________________

Kforce Inc.

Exact name of registrant as specified in its charter

_______________________________________________________________


Florida						59-3264661
State or other jurisdiction of incorporation or organization						IRS Employer Identification No.


1150 Assembly Drive, Suite 500, Tampa, Florida						33607
Address of principal executive offices						Zip Code

Registrant’s telephone number, including area code: (813) 552-5000

_______________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 per share	KFRC	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The number of shares outstanding (in thousands) of the registrant’s common stock as of April 24, 2024 was 19,491.


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	20
Item 4.	Controls and Procedures.	20
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings.	21
Item 1A.	Risk Factors.	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	21
Item 3.	Defaults Upon Senior Securities.	21
Item 4.	Mine Safety Disclosures.	21
Item 5.	Other Information.	21
Item 6.	Exhibits.	22
SIGNATURES		23


	Three Months Ended March 31,
	2024		2023
Revenue	$	351,889	$	405,997
Direct costs	256,639		292,021
Gross profit	95,250		113,976
Selling, general and administrative expenses	78,190		89,339
Depreciation and amortization	1,333		1,234
Income from operations	15,727		23,403
Other expense, net	656		1,045
Income from operations, before income taxes	15,071		22,358
Income tax expense	4,084		6,148
Net income	$	10,987	$	16,210




Earnings per share – basic	$	0.59	$	0.83
Earnings per share – diluted	$	0.58	$	0.82

Weighted average shares outstanding – basic	18,726		19,455
Weighted average shares outstanding – diluted	18,932		19,667


	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	106	$	119
Trade receivables, net of allowances of $1,670 and $1,643, respectively	236,923		233,428

Prepaid expenses and other current assets	9,146		10,912
Total current assets	246,175		244,459
Fixed assets, net	8,936		9,418
Other assets, net	82,800		75,924
Deferred tax assets, net	3,382		3,138
Goodwill	25,040		25,040
Total assets	$	366,333	$	357,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	59,415	$	64,795
Accrued payroll costs	39,746		33,968
Current portion of operating lease liabilities	3,423		3,589
Income taxes payable	3,520		623
Total current liabilities	106,104		102,975
Long-term debt – credit facility	40,800		41,600

Other long-term liabilities	54,924		54,324
Total liabilities	201,828		198,899
Commitments and contingencies (Note J)
Stockholders’ equity:
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value; 250,000 shares authorized, 73,455 and 73,462 issued, respectively	735		734
Additional paid-in capital	531,226		527,288
Retained earnings	528,795		525,222
Treasury stock, at cost; 53,968 and 53,941 shares, respectively	(896,251)		(894,164)
Total stockholders’ equity	164,505		159,080
Total liabilities and stockholders’ equity	$	366,333	$	357,979


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income				Treasury Stock			Total Stockholders’ Equity
	Shares	Amount						Retained Earnings		Shares	Amount
Balance, December 31, 2023	73,462	$	734	$	527,288	$	—	$	525,222	53,941	$	(894,164)	$	159,080
Net income	—	—		—		—		10,987		—	—		10,987
Issuance for stock-based compensation and dividends, net of forfeitures	(7)	1		285		—		(286)		—	—		—
Stock-based compensation expense	—	—		3,501		—		—		—	—		3,501
Employee stock purchase plan	—	—		152		—		—		(3)	52		204
Dividends ($0.38 per share)	—	—		—		—		(7,128)		—	—		(7,128)
Repurchases of common stock	—	—		—		—		—		30	(2,139)		(2,139)

Balance, March 31, 2024	73,455	$	735	$	531,226	$	—	$	528,795	53,968	$	(896,251)	$	164,505


	Three Months Ended March 31,
Supplemental Disclosure of Cash Flow Information	2024		2023
Cash Paid During the Period For:
Income taxes	$	300	$	5,108
Operating lease liabilities	1,297		1,303
Interest, net	614		248
Non-Cash Investing and Financing Transactions:
ROU assets obtained from operating leases	$	1,152	$	566
Employee stock purchase plan	204		245
Unsettled repurchases of common stock	200		—
Equipment and software additions included in accounts payable and other accrued liabilities	181		957


	Technology		FA		Total
Three Months Ended March 31,
2024
Revenue	$	322,084	$	29,805	$	351,889
Gross profit	$	84,037	$	11,213	$	95,250
Operating and other expenses					$	80,179
Income from operations, before income taxes					$	15,071
2023
Revenue	$	364,844	$	41,153	$	405,997
Gross profit	$	98,411	$	15,565	$	113,976
Operating and other expenses					$	91,618
Income from operations, before income taxes					$	22,358




Allowance for credit losses, January 1, 2024	$	1,106
Current period provision	(40)
Write-offs charged against the allowance, net of recoveries of amounts previously written off	(61)

Allowance for credit losses, March 31, 2024	$	1,005


	March 31, 2024		December 31, 2023
Assets held in Rabbi Trust	$	44,025	$	40,389
Capitalized software, net (1)	20,620		16,434
ROU assets for operating leases, net	14,504		14,368
Deferred loan costs, net	598		658

Other non-current assets	3,053		4,075
Total Other assets, net	$	82,800	$	75,924


	March 31, 2024		December 31, 2023
Deferred compensation payable	$	42,519	$	42,025
Operating lease liabilities	12,383		12,275
Other long-term liabilities	22		24
Total Other long-term liabilities	$	54,924	$	54,324


	Number of Restricted Stock	Weighted-Average Grant Date Fair Value		Total Intrinsic Value of Restricted Stock Vested
Outstanding at December 31, 2023	798	$	60.80
Granted	5	$	60.01
Forfeited	(12)	$	51.32
Vested	(6)	$	23.80	$	437
Outstanding at March 31, 2024	785	$	61.24


	Three Months Ended March 31,
	2024		Increase (Decrease)		2023
Technology
Flex revenue	$	318,514	(11.4)	%	$	359,524
Direct Hire revenue	3,570		(32.9)	%	5,320
Total Technology revenue	$	322,084	(11.7)	%	$	364,844
FA
Flex revenue	$	26,210	(27.2)	%	$	36,008
Direct Hire revenue	3,595		(30.1)	%	5,145
Total FA revenue	$	29,805	(27.6)	%	$	41,153

Total Flex revenue	$	344,724	(12.8)	%	$	395,532
Total Direct Hire revenue	7,165		(31.5)	%	10,465
Total Revenue	$	351,889	(13.3)	%	$	405,997


	Three Months Ended
	March 31, 2024 vs. March 31, 2023
Key Drivers - Increase (Decrease)	Technology		FA
Volume - hours billed	$	(42,423)	$	(11,341)
Bill rate	1,370		1,518
Billable expenses	43		25
Total change in Flex revenue	$	(41,010)	$	(9,798)


	Three Months Ended March 31,
	2024	Increase (Decrease)		2023
Technology	3,555	(11.8)	%	4,032
FA	512	(31.6)	%	748
Total Flex hours billed	4,067	(14.9)	%	4,780


	Three Months Ended March 31,
	2024		Increase (Decrease)		2023
Technology	26.1	%	(3.3)	%	27.0	%
FA	37.6	%	(0.5)	%	37.8	%
Total gross profit percentage	27.1	%	(3.6)	%	28.1	%


	2024		% of Revenue		2023		% of Revenue
Three Months Ended March 31,
Compensation, commissions, payroll taxes and benefits costs	$	65,609	18.6	%	$	75,615	18.6	%
Other (1)	12,581		3.6	%	13,724		3.4	%
Total SG&A	$	78,190	22.2	%	$	89,339	22.0	%



	Year-Over-Year Growth Rates (As Reported)
	2024	2023
	Q1	Q4	Q3	Q2	Q1

Technology Flex	(11.4)%	(11.1)%	(12.5)%	(7.8)%	2.2%
FA Flex	(27.2)%	(28.0)%	(26.9)%	(27.3)%	(28.2)%
Total Flex revenue	(12.8)%	(12.8)%	(13.9)%	(9.8)%	(1.6)%

	Year-Over-Year Growth Rates (As Adjusted)
	2024	2023
	Q1	Q4	Q3	Q2	Q1
Billing Days	64	61	63	64	64
Technology Flex	(11.4)%	(11.1)%	(11.1)%	(7.8)%	2.2%
FA Flex	(27.2)%	(28.0)%	(25.7)%	(27.3)%	(28.2)%
Total Flex revenue	(12.8)%	(12.8)%	(12.5)%	(9.8)%	(1.6)%


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2024 to January 31, 2024	—	$	—	—	$	41,731,977
February 1, 2024 to February 29, 2024	1,854	$	69.18	—	$	100,000,000
March 1, 2024 to March 31, 2024	28,640	$	69.84	28,640	$	97,999,764
Total	30,494	$	69.80	28,640	$	97,999,764


Exhibit Number			Description
3.1			Amended and Restated Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-91738) filed with the SEC on April 28, 1995.
3.1a			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1b			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1c			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1d			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 17, 2000.
3.1e			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 29, 2002.
3.2			Amended & Restated Bylaws, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on April 29, 2013.
31.1			Certification by the Chief Executive Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification by the Chief Financial Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification by the Chief Executive Officer of Kforce Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification by the Chief Financial Officer of Kforce Inc. pursuant to 18 U.S.C. Section 2350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1			The following material from this Quarterly Report on Form 10-Q of Kforce Inc. for the period ended March 31, 2024, formatted in XBRL Part I, Item 1 of this Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Operations; (ii) Unaudited Condensed Consolidated Balance Sheets; (iii) Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity; (iv) Unaudited Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.
104			Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

SEC Form 10-Q filed by Kforce Inc.