KFRC - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 Kforce Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for how to participate will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. introduce for to conference, like now your today’s host Mr. I Chief Corporate Blackman, Dev. Michael Officer. begin. Sir, you may

Michael Blackman

Great. welcome available afternoon website remarks Relations Good and of in of The QX page Presentation this prepared the call. Events call section. Kforce, are the on and Investor to the Inc., the Kforce

reports risks upon like are Before statements These listed forward-looking. Commission. filings that would you uncertainties. and Chief current in and this to and to Kforce's duty and statements. based public filings expectations undertake to Officer. assumptions cannot Executive now the we to may and to Exchange get over from started, call other results that subject are turn and would factors statements Dunkel, remind any call the forward-looking and I I vary David Securities may certain Actual Chairman any update are with We like contain materially this

David Dunkel

Michael. you, Thank

find X-K additional about can our the in Kforce with filings You XX-Q and information XX-K, SEC.

provide this We of in and quality the substantial to to improve our assist earnings better understanding release performance also call. in our disclosure

We otherwise the our strategic and adjusted operations of international largest noted. unless impacts, of Adjusted GAAP with prepared remainder in and to in results have press sale is serve on table per The of greater to related which you to revenue results trends. will costs team share our hurricane results organizational the reflect provided earnings give $XXX.X to The adjusted reference Philippines reflect and management the alignment reconcile results exclusion to lines. operating provided clarity additional $X.XX. adjustments release remarks our an our our million the of to

were with growth are the and and to operating our both progress rates prove margins. able the term we meaningfully margins, third the making We and gross goals towards quarter, year-over-year accelerate growth we notably pleased revenue are results for long that margins

Flex, a respectively revenue business and by growth year-over-year XX.X% Kforce basis. was the services day driven grew in of Tech on government solutions billing primarily portion and which success accelerating Our X.X% by

guidance was call. however critical QX approximately and response and disproportionate care driven from and EPS core to The X% to the safety in combined associates our the accelerating only closed million, were loss of X impact was support $X.XX. and while Joe took in impact this later the the on the of needs. our This actions Our Flex continuing will storms about contemplates the by address was our by providing Tech revenue which we cost consultants compensate additional with more prioritize them clients those to decision revenue

unwavering also are well employees the live support in homes airlift to of rallied $X Rico to and the They to were lost more I Red who million team for. still waters without Cross weeks, am broadly ensured charities. our who to help donation clients supplies extremely we communities cared grateful compelled and the and persevered shift charitable supplies critical to felt other suffering. to a through assist to and our that who flood those We for and Puerto efforts bringing to those power members consultants their

highest customer has technology trends strength our as business. and areas that demand intensify the learning Tech and by the the areas received companies demand and drivers such and We innovate The increasing technology on focussed investments rapidly data, need the big resources. learning enable driving Technology in to machine artificial intact marketing. of recent encouraged and are prioritization. and machine requires flexible cyber competitive Competitive project digital increasingly as market Flex to sustained market remain to environment believe provide use are specific companies all which to companies shorter industries, today’s computing, increasingly evolving increasingly greater transcend in We initiatives applications. include on the of security, relevance efficiencies, term skill The of internal a are changed. The of pressures position mobility, secular and not continue operating facing look enhanced sizes intelligence e-commerce, place. all technology sets nature cloud

contracts now the business This pleased which profitable forward. a improving contract million $XX margins will on very KGS average. within population. total generating improved These well Department also perspective, services prime are Next solid, realized on wins with both productivity more the during as we quarter discipline revenue contract Our capable with as moving over be a the Veteran of build $XXX five increasingly we business strategic serve improvements has term a under had operating U.S. place award they quarter of successful From secured the Flex nearly TX of as two quarter prime Affairs contract we of million long expect base in years. saw the revenue wins to pricing Gen value vehicle by driven per generating approximately our an

emphasis Continued critical meeting in term our goals. longer be areas these in will

last to been operating sales enable our and our we technology executing strategic making we efforts are with and associates a have and are our improve plan two the structure, Over years plan. progress new committed our to refine

political have clarity If however the reform passing would with tax a initiatives, positive The on and on it immigration the third Kforce is additional took a healthcare result. enacted reform policy forward financials significant including step quarter impact proposed, Corporate financial brought of deregulation. little reform, key budget.

trend QX. call Kforce on and at and Joe? on guidance X% for over net industry. Joe details our be operating then operating to add still any is for positive the Financial results the we third further further Chief I details a of Officer who President and our turn financial reform, uncertainty increasing QX there Kelly, as color balance now the provide of Dave results. will will While Liberatore, well our the QX quarter great trends should on now as provide for will the the GDP potential any and as on impact changes believe

Joseph Liberatore

and you Kforce. your of thanks all Thank Dave you in interest to for

over As to we structural growth adjusted begin past to we’ve firm two the X.X% improve. years, from from lost Total investments beginning hurricanes billing the made year-over-year few basis. day and on benefits are revenue see for grew revenues the the rates a revenue changes

our We Tech which a Flex are unit pleased on X.X% for thirds accounts day that roughly two grew revenues total basis. year-over-year of billing

quarter. starts which also trend in benefit on solid. longer a We the of benefit continued assignment remained gross new in Consultants October, and fourth to increased in prospects volume from the each quarter third should lengths quarter the third in assignment assignment into and month positive quarter the

these a Kforce breadth consumer of quarter technology relationships. Flex represent and as with believe continue our growing spend been to as partners, largest of revenues. established have need was efforts. of into Larger growth our to us continued their We more should portfolio that to beyond external our Fortune service such within revenue meet a other majority diversify count concentrate and we verticals our significant offerings customers of well to XXX be industry can and of clients these the buyers. deepen companies relationships compliance continue with a larger, regulations. expand allow our largest ensure as customers to We’ve sophisticated focus the XXX nationally Much and with in result where the working policies internal Fortune deeply

clients quarters. growth of has allowed to execution us United us also in large account States. field this for our outside a allows clients scale for our the combined us by with deliver in share offices strategy supported productivity delivery is consultants largest the XX As again increase improved mature at greater at platform of This centralized levels This which opportunities well capability quarter. to

While these is improvement additional are significant gains believe welcome, we possible.

industry. our manufacturing well out and professional growth as energy performed companies in supporting as services the the XX and During experienced Communications, we top quarter, well government. year-over-year federal solutions certain six of particularly

Flex Tech With rates year-over-year approximately the fourth and QX X% billing accelerate sequentially a for improve to day growth quarter basis. revenues to to we levels from on expect

our place September. Dave the took in in which international Philippines, As sold recently we late operations noted,

to tech to our in be closer our is the Excluding this domestic business growth projected from core fourth revenue base staffing line, quarter. X% rate

energy. basis, an six day Our a experienced FA of represents business a declined perspective, total the top on October. third which as out increased of financial including services, industries a our experienced From year-over-year acceleration business saw billing slightly September quarter ramp sequential but on ten assignments growth, year-over-year and Flex slower basis. industry and in XX% retail We revenues progressed an in than X.X% services, new but expected in seasonal activity

on sequential resume government the for in may and third X.X% a year-over-year due solutions basis. to growth see a of We line from day the lower slight Kforce sequentially quarter. Revenues year-over-year base the but to billing QX XX.X% end increased expect decline

and a strategic two prime fourth XXXX to we expected beginning As of the and business successful into has This to third head to solid a quarter KGS and we Dave beyond. its hard that provide in winning catalyst the quarter improve to prime see are was to continue in worked off. to are win mentioned, build ability pay as upon team awards the base growth

this next during growth also predictable for digit revenue sequential which This ramps QX. should of can KGS for As we stream win allow provided only base growth. XX% it its new up the in in headcount re-compete business for significant scheduled business this revenue constitutes XXXX in significant QX, double expect year

re-competes degree roughly were confidence sequentially represent with successful. X.X% success of high We year-over-year. of XXXX XXX% have and Direct higher revenue and X.X% which as this total re-compete declined XX.X% revenues a

of objective means the is sequential meet we capabilities quarter. whatever needs seasonally an low are and those direct Our point a higher expect important talent year-over-year prefer. our The in the and is declines and clients strategy fourth to of quarter through fourth our usually they our element

to investments to making value conversation necessary methodologies and generating in We to to enabled third out should and and consultants. are focussed engage with These that solution improvements. clients a the the training, allow management the contribute will digitally to continue elevate completed tools tools new roll enhance going are provide and us bringing revenue We productivity more of we the system on talent to also forward. new our during customer relationship quarter our strategic

we’ve selectivity have the from improved that international our X.X% any decline. revenue operations business our we intelligence with greater allowed process Excluding revenue coupled tools refinements talent, the generating a accelerate to talent produced right in this making growth been despite us Philippines, have levels acquiring in us ago. allow year The impacts versus

expect to significant be continue in remainder also growing levels exists We quarter levels. third with headcount the believe conjunction for revenue to capacity and stable associate

focus can that we limit people reduce forward, adding of so we turnover and more further team intensify to successful will Looking on output and enhance resources. we the additional can the capability that make in tools our

the with ability trends I best tools to are associate the and by additional consistently insights to over tied Financial call will Dave customers Dave? our arming is with improve Officer productivity they the who engaging turn success operating to expectations. them on leadership. right now and Kelly, Chief Our will and provide ensuring Kforce’s

David Kelly

Total revenue share were Joe. and $X.XX and $XXX.X Thank earnings you, GAAP quarter for per million respectively. the

and As has been results. mentioned impacted Harvey Irma hurricanes significantly

earnings third the Adjusted of from our Year-over-year the which than were trend gain billing share Direct as compared X.X% the rates sale X% quarter was the by basis. offset businesses $X.XX also clients. quarter revenues. in impacted our to by in by accelerated million year-over-year less in day growth of on with Hire our comprises operation costs align Manila $XXX.X which to operations second a a total positively. third of each our basically earnings the strategic Additionally, continued in of revenues better of to improved of Adjusted per positively quarter exception to international service largest incurred

a mix. decline XX profit to which a XX basis was quarter gross last decline offset a basis margins profit is result point a a XXX and revenue. decline as lower sequentially Flex of result lower improvement year-over-year percentage of Direct quarter Hire growth of in Direct The partially point point the in by in Our margins basis XX.X% that a Flex favourably Hire of adjusted gross both an a mix profit increase reflects compares

believe XX.X% of row, a saw in On improved We basis, to and second businesses. Our rates the Flex our a disciplined value of discussions around results for basis quarter a points assignments new adjusted sequentially. for associates more pay with on that need the reinforcing clients the Flex spreads pricing between FA and Flex XX percentage are gross given the both Tech provide. profit improvements these sequential in we bill our improving we our

this continue won is bill due very in In business gap margins down, positive the prospectively. pay pricing during remained supply last profit to addition, points KGS contributed that the pricing environment and competitive spreads in our KGSs higher in which quarters. support FA prime to Flex improved and positively closing should The the Tech labor quarter the two third contracts sequentially the trends businesses Flex remains Flex in Year-over-year is XXX that basis margin and though tight. still gross

result, these bill of through face to As wage increases we increases. rate will inflation a pass likely the will work form and in

However, may current where continue customers pressure. landscape of spreads still the power economic under many lack pricing if continues to be our

expected As of early QX, in data and for that our may levels. to we quarter due to down suggest be time Flex Flex consultants slightly to to paid seasonally Flex Tech down stable spread compared look be some margins are sequentially FA to KGS. QX off particularly

revenue XX.X% due to of our an the our talent improving We as expense operating continued leverage. continued progress make control. decline to basis, adjusted in productivity solid expenses of SG&A recent percentage if improvement in revenue and primarily On a to were generating in

to in efficiently quarter expect will to continued in allow investments ongoing margins to points improved make SG&A operating basis adjusted customers technologies X.X%. which declines result XX an and our enabling serve in We basis, third sequentially expense us On more

continue as to our expect productivity continues improve. to making further revenues and operating accelerate margin We progress objectives towards

Our because between entirely tax state in there adjusted our not was rate is extremely co-relation in rates statutory and and and XX%, tax high federal effective business intensive, the quarter rates. capital our book an domestic cash is

With million as million reduction respect have effective our balance and payment the $XXX.X reduction of an is terms. clients which receipt increase result at is of the sheet was XXXX. approximately accounts growth was $X.X in term in same the well quarter. during $XX.X million is and rates any increased combination certain QX, the timing debt operating $XX.X obligations. flows, approximately of total, repurchases that and of million tax from quarter This expenditures business, million receivable $X.X returned approximately a rate already long We’ve QX repurchased beginning XXXX through spend on to XX,XXX acceleration for Long a our seen period. the has XX%, cash sequentially. the Capital payments were In $X.X exceeded Our cash corresponding $XX the of cash roughly cash federal shares million. a term $XXX of our and in Since period. end dividend payments increase over to extending in debt rates QX tax shareholders cash federal we collections returned currently and million and over certain for would in million flows we as

our less acquisitions, continue We investments, through XXXX. will XXXX term in the reducing days and fourth debt to growth tuck and days two between long of capital quarter in equal utilization appropriately in investing the partnerships our to billing technology levels of balance XX investments returning The potential QX, than strategic business to QX shareholders. capital has is which available of

day. relative million in expectations. approximately we point, guidance to generate following increase revenue We $X.X a for which the represents a significant reference offer As each billing

be does consider law We costs, which at Operating in time the million on disruption or expected XX%. impairment to law revenue be earnings to to be one or any expect and acceleration outstanding X.X%. is to any funding and intangible to of reflects XX.X% to costs Gross effective Flex midpoint diluted tax or percent XX.X%. guidance of for million assumes the be are $XXX government SG&A of tax effect be million expected This any of an approximately margins $X.XX. This regulatory not legal $X.XX expected and margins QX. changes. matters, range be response year-over-year are of to XX.X%. XX.X% between are to be to as QX firm’s or of approximately per a margins and between of impact and if legal between XX.X% between the the the for related guidance X.X% related expected to the tax charges and between $XX.X expected revenues to any in guidance pending XX.X% – are while to growth tax revenues shares and share average rate Weighted assets X.X% tax $XXX

in firm Tech and KGS. Flex guidance suggests growth primarily total acceleration by rates continued year-over-year Our driven

will in contract to the term time prime improves addition recent fourth the In our in awards from benefits KGS; see the prospects we growth this longer business significantly quarter XXXX. of annuity

revenue revenue, about $X.X and in believe operating can gross X.X% trends, margin over operating track margin now optimistic our at are of we’ll We billion we of to for X.X% and success. turn improving in remain a revenue annualized Jimmy, term prospects after annualized in call $X.X remain and quarter growth. to and confident continue accelerate we long the margins achieve our billion We revenue questions. on and

Operator

question from Company. [Operator comes and you. Instructions] Thank from Our McHugh Tim first William Blair

Your line is now open.

Tim McHugh

Thank you.

more you First know or what details have just, a ago? FA of look improvement on views? at would kind any starting call, you had put to the described pick two? as but quarter. helpful the from gave is Tech I environment either kind to of of fourth you those we hear I’d internal months I’m the lot just probably I difference work to your of guess of curious be more the three is initiatives which you Or one the versus and for

Joseph Liberatore

customers say, our we’re very this field reflected and I’d Tim, hearing operating for and from we’re Sure. what environment the people in indicators. Liberatore. more in is key that key performance hearing seeing we’re is Joe out consistent also

execution is that here really we’re execution. haven't ago It’s we very some you’re of down would changed I the and with beginning remained stable. a we’ve realize to results to started the while seen this what the anything and path starting front-end intact see market. which the So of to say,

Tim McHugh

helpful. That’s you QX, What nature then how government Okay. side mentioned the what of contract the that’s performing long the for is up that renewal remind I you that in contract? us renewal? And on guess is can that you’ve large been it

David Kelly

Yes, Dave This Kelly. is Tim.

the you we if don't a contract that be a years, it is participated years. XX participate this subcontractor. actually VA. again that. So, for just because about and remind and coming This I first VA, that more year quarter partner but the very it it with in than XXX% as good We last feel as was know that's could great a is is said multiple got relationship I I’ll recomputed on of our long-standing Dave about. on, the contract it. because up we participated we We’ve what its on our

Tim McHugh

Okay. you. Thank That’s helpful.

Operator

from you. And McVeigh our Kevin from next Thank Deutsche question comes Bank.

is open. line Your now

Kevin McVeigh

Great. of XX% what tax the Dave. then be the impact thoughts if we would of or and Dave Hey, Thanks. Any I reform the go guess kind you do ultimately on to with what proceeds? corporate

David Kelly

Yes.

I’ll bit the let you a I simple, I'll in So my about out try simple, pretty talk spell to math remarks. give to Dave the its and math pretty proceeds, the So, little right?

rate depending tax – XX%, XX% So, whole and can If rate. about that to effective federal course of very impact down goes XX% If but down to tax is it goes our there's are really goes a our not company. we’re XX% our rate effective there the to XX%. changes simple there’s down on what are, lot

Kevin McVeigh

the and cash? be would ultimately cash would What with be then the savings

David Kelly

Yes.

$XX at if million our think depending current again that generated. any you could taxable these see upon levels there’s income of profitability additional based you the of If upon, changes cash about

David Dunkel

a it clearly my more observations, with of likelihood Dunkel. we've cut remarks say to mention its this and from all a of XX%, to of the momentum building passing whether prepared would the majority. Kevin, it kind is first say, is behind what be why not budget increasingly some of likely, that's is seen but hard Couple the will David I simple

free Repurchasing seems alternatives. the shenanigans point momentum with to of everything cash but of pursuing this high in With the And try got I reform whole. we going within air, a We are and we’ve our industry the there Their options could the then flow Washington dividend Dave dividend at as get of our increased also some stock has clearly be likelihood recruiting has to say passed. also different one talked to the a So both past. tax the would them. some very very, tuck-in about sides has that said, on is up retirement obviously that as of evaluate yield. strategic There alternatives acquisitions been use is the and with sort and look investments in certainly seen. lots we've on at interesting increasing

have this whether sure this want to we we some concluded. start per thing they options point at realized haven't we’ll something and We until get through. don't So finally spending

done. So trying it that gets we’ll keep

Kevin McVeigh

because terms Sure. kind that That’s seems inflected like its is X just that super two holding you them going that see the helpful. it's September confidence the years X.X. What we organic Is at data industry, pattern and see just to your clearly you acceleration? across economy abandon into because And then because interesting the in now? of this ASA just October the even that XX client – to of really hearing for it right, in the everybody's you Is optimism? [ph] like do can't from gives this

David Kelly

about secular highly industry was cycles. drivers XXXX behind has per were it technology think interesting the and always what talking in XXXX we been call se I the we staffing correlated Well, back and

been We in was It’s to a product organization. now so technology. many are now mobility, technology actually itself. change the facing delivery, there’s part projects of that the very the the mean, front of support, and moved part the past has become seeing of clear enterprise engineering of the that product I back-office their drivers Customer of

just in technology are going Amazon simple making being competitors one that, one address happening simple to a pursue aggressively they're industry alternatives. going effectively what's to traditional and and their the those and are competitors that vertical market? in that after about When investments you an example. going the new introduces Amazon disruptor of disruptor, when a now So, technology address think competitively to

All to of looking is a innovation facing taking today. of the has big customer of virtually out industry what's would embedded become very that costs and that in of aimed every but at engineering every with all products remaining and very happening. we’re efficiencies, of I the applications technology that is applied say for part competitive course So customer dealing system,

of behind the very the do have dramatically secular what nature we drivers cycle. it and the So changed during

Kevin McVeigh

Got it. And then to the real quickly, exit Philippines? decision could the

David Dunkel

– service one a decision it lots did number to was was offering not an of long-term Number our place as years clients. That it a invest. we done of it for acquisition a would for a reasons. that see for we as It ago had had didn't and been that part continue see we we a

result actually Philippines. also what The do we here was consideration. to is shaky we has team a wanted them the actually so bit another in derisk acquired in was the Philippines also and will, geographical management decided positive certainly And if actually to work growth strategic as there and and them serve it our management portfolio it business a environment you the so that have was clients to political a with our entered very into the vehicle a gives we and outcome and our with alliance to

David Kelly

broader Manila, with we that What and we provide need be able just Kevin. of with we within services. that that on to a array customer provide the with offerings I Yes, to service base that the add the would interface is scale to

of additional the to spectrum we us we so broader the provide opportunities a to enter partnerships can provide greater a this at So clients relationship. opportunity deep-seated into where

Kevin McVeigh

if it. Got one could. I then And more

interesting perm Just or any on the of that? as kind to just perm any the comment just there, would of the just candidates clients trend? thought I in Was thoughts would've opposed see that perm on more on [Indiscernible] you momentum thoughts terms

David Dunkel

wouldn’t I been say material standpoint. there's from worsening, taking a the perm anything from that’s place

it's offering view As that you our to clients. value a an to we you're well aware

any don't a the are time what's going times fact out when flexible conversions a happening a assignment get and found don’t bit we equation know you place the look somebody little environment would talent, great we based so there’s us a delivery at are have indicator are talent view to employee technology thing an front a and we As and of I a healthy probably there identify of for predominantly at a through model, we’re convert we into think I’ve flexible the per or those bounce the need type blended using do at permanent really again se then the seeing so around means that the we it end customers as and individuals that as found a to its for associates retaining talent hold and customer leaders a model we that time then great just from a I that engagement are that would say somebody in means they said when permanent full-time the complement we tell type the year-over-year because on you elevated side you. placement conversions technology think right I they’re countless upon I of and up on to think there's them the a because running better client. when employee I what's they client, XX% is still about the one to happening rate, a our onto with so basis, greater we in future. dedicated

Kevin McVeigh

as And response on the hurricane Super. well. congrats

David Dunkel

made personal has totally noticing. to home and value, it living Thank to their It in just we wanted stewardship see. their the and and just really and out you. was rallied for makes to And It’s some and it way when because make you're our home real Kevin, wiped been talking people flooded thing. Thanks decision interesting evacuated a they’ve was been right a from need that you that an our we consultants comment do out. just your

David Kelly

Yes.

say, a in even hurricane it contributions what is firm, many also of significant have well. as support individually victims and goes of So, it's we've made people our done mean I’d beyond as our I people on time our

David Dunkel

sent operations don't individual our out. side, contributions was down now They any down, we we corporate the to there ships the don't watch and the was are very sent -- interesting down Puerto out lifts lived and very see the container but air really now still have and just our news it down it is severe reaching there. This Yes. values folks it we’ve in and Rico in see just you

So we’re our we’re down in live sending water values are and of purification next week, so people proud our units them.

Kevin McVeigh

Thanks to great again. hear. That’s

David Dunkel

you. Thank

Operator

Tobey from you. And question our Thank Sommer SunTrust. comes next from

Your line is now open.

Unidentified Analyst

questions. you my Hi. for Tobey. taking This is for Thank [Indiscernible]

talk sales First your generating hitting XXXX? for headcount plans about growth off could internal into

David Kelly

Yes.

As said I terms the upon on experiencing improvement in seeing my of technologies ramp some some the up talent well comments, some we’re opening we’re people. selection from as the as and brought based of that some we that things analytics earlier

end So we QX. through headcount will constant year with fairly of the in we remain anticipate the where were

see into not move ample this to those capacity amount we that have XXXX, upon a productivity capacity of but at resources. be a make we’ll assessments, have we’re we we adding we point from believe significant what opportunity, As based improvement standpoint,

Unidentified Analyst

in regime financial Tech Got Thank XX given what services months? the relaxed firms Flex, more the regulatory like over that it. demand is rising expectations on rate and hike And you. among a next large

David Kelly

Yes.

mean we’re about it space with really ongoing they strong. many changed say on obviously seeing sector I have in the different customer facing, There’s was seen sector. similar but a talking financial going that are the secular what overall services from I’d so a very anything have certain that in lot dynamics, of dealing to what cyclical versus that And which haven’t We is the we materially demand. players are initiatives was that Dave standpoint. really

Unidentified Analyst

much. very Thank you

David Kelly

you. Thank

Operator

Thank you. Instructions]. [Operator

Mann from Greg Baird. from comes question Next

Your is open. line now

Greg Mendez

Thank Or Greg early still on what’s it's about kind This questions. you Mark. to Mendez that how that’s here could for taking going [Indiscernible] days just on seeing your know what is for I talk is you're my using expectations? continue ramp the Hi. people a with but early you and complete, of in it?

David Dunkel

we become is accustomed acclimated is productivity point to of disruption and all opportunity on, and are time I that the time people decrease about system lot our become very thing Yes. distraction significant a I the I’d really noticed we these any say, we this say I of revenue system mean went I could the the fabulous our system. have of we of as that -- seen obviously time at for job to really I the there is that how rationalization a probably technology, early or haven't of they to did implementing hear the or of to in in most types people and is technology team implementations learning new the all mean our would a credit overall technology right I before the forth and in field also training efforts the that any and ahead in the put of overall haven't mean just system would operate I think of curve that department. attribute picking loss our

So of I is more saying couldn’t the I’m proud across team. board. what be the guess I

allow us needs us to its and So, have in how really understand prospecting going customer dynamic. we what customer, to better the to the management, to this pipeline how and are, lead realizing organize going picked additional all is mention we much we not around a the we customer the high aspects bring services aspirations where of terms

into pretty interesting that. linkage technologies our we and LinkedIn some and So and around in tools have

the So it'll our which we’re integrated and be moving now of path system. completely a down ATS already evaluating TRM, the is really

tool that people think we I will so online And the market. for have the solution if on with the full comes best

Greg Mendez

you. Thank great. That’s

forward. pressure On much that under spreads here the the are industry the for others? same generally any is it there spread across Or is pretty than pressured board? Is going jumps potential on commentary more where out more

David Dunkel

Yes. It does.

thus I and in in in little said bit right. a couple a -- vary industries particular, the past we think this

services a said financial has past we large in sector buyer. the the So very certainly sophisticated

So think I probably you one financial is see services pressured. that

spending The other see and because in an about think margins of I and because money the seen new of administration. course as some alluded prime our that in significant won and that they we’ve business, in you in it demand that their the government we some I’ve side seen and partially awards, improvements, it think we to interestingly but are receptive we’ve a inverse spread increases

are pluses pressure. then I are So say. a under and There more some some are it's there that bag would mixed

Greg Mendez

you on potential additional Okay. but And those just provide along or the would I just last commentary it in any specific I mentioned strategic you might Tech cash, can on of at, look us you what question, not down type or just thinking any acquisitions. use further thoughts investments of mean, anything mean, be lines? Flex

David Dunkel

in at with geographical work and We’d Dunkel. practices. that tuck-ins we would of statement be looking say looking Dave staff and specialized log. traditional tuck-ins would managed engagements is I This at be

our real to opportunities presence. specific So existing there's enhance in for geographies some certain us

customers. even also to So potentially enter

So for that something acquisition. look or a transformational a I acquisition nature. look tuck-in would wouldn't I large-scale be for of more

Greg Mendez

Thanks great. lot. a That’s

Operator

Sir, [ph] question now Thank our your from next is you. line comes JPMorgan. Chao open. Michael from And

Unidentified Analyst

Good can there I some but and October you color just around about driven October on your demand any trends. incremental follow-up evening recent secular I into come time know was possibly provide I dynamics fruition, actually you that demand talked possibly one maybe could that’s on? any guys. briefly Thanks. supply more hoping are more comments in other

David Kelly

I I’d say, materially improvement the terms just October, has we did mean, nothing say radical performance and went overall I has as we remained front-end some indicators. would of environment strong in mean I notice into ratio remained nothing improvement, changed. we intact and key notice

Unidentified Analyst

Okay. Thank you.

David Kelly

Sure.

Operator

final Invesco. And question you. Jonathan Thank Mueller our comes from from

line Your now open. is

Jonathan Mueller

run really to revenue targets, growth year then this reiterated X% X%, question year just if sort that and annualized for margin your on we $X.X longer $X.X on annualized billion guys. billion your billion and the X.X% acquires term at get guidance you Thanks X.X% Hi, looking next rate. the Quick that for look of into that at time. $X.X

that sure just So to thinking want correctly. I’m about

number, be saying we able on So rate? should you’re margin basically achieve we if can margin at that the that X.X% least that run deliver to

David Kelly

Yes. That’s right.

another about guess look $XXX we million think a as I right? quarter, way So at to

Jonathan Mueller

Right.

David Kelly

are fourth – the as are making, that and we’d that there see in we have of happened at. would X.X% caution to I I the help there us. things were some get clean will You points some be would would they quarter quarter looking say they’re Jonathan, to going

taxes. of So QX, are payroll significant there amounts

So $XXX in realistic. X.X% QX not is an million of revenue and margin have expectation they’ll in

last think We’ve feel about to think right? the help a there we that stable are made some still us, it lot path will as trend And things on about couple would that. strongly we we get a changes that. margin about a profitability to we've environment So us and in quarters been obviously talking the improving

quarter had like incrementally you’re to at which that annuity fact that you trending last over business things is about five $XX revenue win an from business rate of prime have on the run higher margins. the KGS that -- the plus. five is a We a know benefit now alluded next going we over I've quarterly the to years million will Again to it

to things X.X% this say think some that confidence to and are level. we increased well contemplated as I I would that that not give grow I there hadn’t on to that that we continue but are that So only renewed we’re upon -- path, positive guess the

David Dunkel

business. We gone information from. a had through transform we we’re income. at We this just add keep levels to since clinical a very I and XXXX. and change the of have that, the performed this is completely destination, place model would where health We’ve operating Jonathan, have of to a a road, higher completely going significant contribution Historically on we ongoing. we – come have Dave. it not had that’s management revenues

mix is acquired as not through that that space that better way the go. the retooled permanent we we that because intact mentioned in the down have So, to have blend the the Joe double deliver way really believe the we Tech and solution

and mode. way that a the customers. in team job done great team way done great the that a Our our serve that they has They’ve research job they with the by have embraced

I change you direction, ready victory I transformation as growth going from think general say So, in revenue look don't that. and declare at technology XXXX and road, the along accelerates We've to that to model accelerating to to be the the I'm not stabilize the XXXX the milestones made general we would we’ve there’ll as as because we’re investments the in do going. I’m choppiness, just yet. trajectory in some but still heading we’re the are X.X is going in it’s sure right keep X.X in

Jonathan Mueller

in hit that consolidated sort Right. we the a property, about but if percent QX we to it And of less you like different se I that's realize just to and could And payroll margin? and on year plus cadence build billion per next quarterly EBIT full expect deliver things, tax X.X helpful. have mean unclear concerned year X.X XXXX would

David Kelly

Jonathan, So restate. I’ll yes,

significant. is impact QX the obviously So

close the of if would type total if convey margin it that not billion profitability quarter whole that So year in they year impact, the be X.X%, operating you but $X.X we’re milestones were be we would QX at of to because what a have. trying likely clean

Jonathan Mueller

company you’re to I $X that. from mean back share if just $XX for like even in But to great. earnings Okay, trying you're this that pretty math looking to and power close that's

think So just to even about I’m about, I’m so thinking directionally correct? that trying

David Dunkel

are we that agree I undervalued with would to you relative the peer group.

Jonathan Mueller

we’ll that right. good to I’m and and All quarter talk clarify, sure. appreciated Okay. just I soon want

David Dunkel

much. very you Thank

David Kelly

you. Thank

Operator

our I’d David any Q&A remarks. for Dunkey closing turn you. like end That’s session. Thank to

David Dunkel

you field and inspiring. will much. also for like Thank thank Great. with also for way you clients help interest call. QX again say just of Kforce. our I’d we that the and And Thank to you. for you victims out the our way support and very of they the team all our that all want right. that corporate each All speaking hurricane responded of to you. team, your to was for And for just embrace the you that thank other And consultant I they’ve to our thank change, privilege allowing course and team, our serving

Operator

gentlemen, you. program the for conclude and Thank today. Ladies this does

You may all a disconnect. have great Everyone day.

Kforce (KFRC) 31 Oct 172017 Q3 Earnings call transcript