KFRC - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 Kforce Incorporated 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 will be given at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to introduce your host for today's conference, Mr. Development Corporate Chief Blackman, Officer. Michael begin. Sir, you may

Michael Blackman

Good morning.

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

David Dunkel

Michael. you, Thank

release SEC and You our quarter's can find additional earnings about filings. information this our results in

remarks website. Investor our we portion Relations addition, our published have In within the prepared of

As results on am team strong in we quarter, particular, proud delivered has of I the I XXXX, fourth our what immensely the reflect and accomplished. in

made building of the During Flex progress our significant year the business. Tech course we in

deepened have a many meet cases, companies helping needs. and, client ever-growing in become technology in advisor their trusted we have relationships, We

we rollout We productivity our included strengthen platform. our generate year. continued and our These to should of Management additional technology initiative live our expect key which have A go be that our further initial capabilities Talent to will invest in investments CRM to the continued also Intelligence late enhancements associates. in and from tools Business system, XXXX the in Relationship

also which our capabilities. processes, could continued further technologies our have to into We enhance other incorporate

and technology and high we need model investment a virtually to of the continue maintain pace believe to foreseeable for every We of like expect the from standpoint organization, business change that levels future. we, technology

year-over-year. revenue generate points for shareholders. XX.X% X% share addition growth, earnings and in were of significant $X.XX, expand operating XX significantly revenue year-over-year. generated have a basis also and which cash by profitability margins XXXX to Total of our grew billion We is able we to also $X.XX improved accelerating In per improvement

in not positive the and and repurchases, flows dividend shareholders we All $X.XX shareholders through to dividends repurchases XXXX meaningfully Our increase to reducing through year year strong return million allowed returned $XX The is us also the $XX and outlook to share. revenues through exceeded earnings to our to for continue quarterly $XXX quite and our $X.XX. but cash by by continues while told, million per of our to our expectations per midway cash to also stock our only $X.XX outlook of Fourth million. demand debt share the environment very positive. constructive of mid-point guidance be exceeded quarter our

technology political late are macro entering transcend the market improve recent enable competitors machine market will scale, impacting limited $XX-plus rapidly It's cycle end with and provide to timely our infrastructure in These on a the be associates talent. that these technology environment, to technical believe and skilled continue and invest customer as in We need staffing cloud complex IT well selectively and to increased technology will requirements. both market new become where and learning the has the who support on providers in for talent. and gaining to productivity changing stringent demand, for but Trends data, invest as that the serving competitors that enter and mobility available persisted. for there space traditional advantages reports significant as for employment the we serving Contrary is concern $XXX-plus customers pressure cyber-security, tools with also in new as relationships volatility billion not meet and focus companies in competitive Big uncertainty companies solutions, the billion in economic Non-traditional At marketing. the professional and and foothold technologies cyclical innovation digital our in only intelligence industry. strength thus staffing. sophisticated models world are our In the secular business evolve. patterns artificial staffing that markets, to might transformed. well people embrace technologies others to increasingly Kforce, high appropriate, are putting compliance notion computing, as significant our non-traditional in are war are be technologies. talent business our These to of drivers quality represent service people. where increasingly trusted as strategy the to at and facilitate however, point As will and also increasing in staffing the enhanced today's

Liberatore, results to our then Joe? give clients trends. of President, QX. call and proud the talented and these with turn turn Before call now over, are humbled I'll dedicated needs greater side-by-side to And and provide and like guidance share for on work Dave work to hard the our I CFO fourth am Kelly, detail results by color I will associates to Joe add people deepest year. daily the who I done would for into the further my quarter the past of meeting will who appreciation consultants. over on our operating all

Joe Liberatore

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

exceeded year-over-year results which driven basis. sales grew quarter by and the Tech the Our Tech a on efforts end our fourth Flex, our optimize the client our continued in the portfolios. to quarter, delivery success X% guidance, talent our revenues strong top Flex, primarily environment of from reflect within in Overall alignment and fourth of demand a meaningfully particularly in

looking highly resources. more are the double fourth typically to is clients the first increase An we indicator of or rate maximize comps. anticipated Tech trends scarce were Flex XXXX good quarter of Tech in fewer quarter. industry a is average the expected assignment continues these later us assignment be for than rates hold in normal of may Flex, to worked, and exceed may year-over-year the that experienced than slow than and and growth In slightly skilled suggest Our accelerate the going and continue hours demand period ends levels accelerate and onto These of which the new higher despite of into to average first availability quarter, as difficult provide strength in new growth with momentum activity. starts experienced additional into the increasingly XX%, an

make and to productivity. associate talent continue our revenue growth align necessary portfolio to improved our both and client to delivery We contributing within which rates is adjustments sales

Technology largest consumers Flexible talent. Fortune XXXX companies continue to be the of

have over of and has solutions clients established broad largely beyond an This customers growth been of and substantial technology The sophisticated on Financial result top growth XX quarters in significant services. of consumers our understand our last flexible to and staffing other standpoint, these issues industry Services broader diversification based, relationships. revenue Services, the of we but experienced strongest was into industries. a several where for XXXX Technology, efforts enabled craft deeper growth and Fortune the From in X our Our Manufacturing. Business our us users focus services largest has we better

and revenues carry performed into XXXX. Our which fourth does of was The XX% of disaster government of sequentially first not recovery, quarter declined a to project federal with which consistent XX.X% Revenues business, improved the FA inclusive Flex roughly year-over-year. overall quarter related expectations. our represents

disrupted frankly being year business less early it sets struggled place to We higher rate by are skill greater and over in the have this reposition to susceptible on advancements. in the within bill to working emphasis past opportunities technology

performance rates market are roles of second FA we should within in continues projects X.X% using as same skilled the of Bill basis, on to Flex larger of which applied The mix balanced rate strong more for as methodology segment. reflects this a increased be bill have We the we to our staffing technology in believe we end. a enter our year-over-year the lead year. higher area our pursuit higher disciplined half FA and efforts FA improving to

of as period quarter due annually revenues XX% combination services volatile to improvement refinement delays product KGS on revenues contract basis be on expect protest reduce of days We award management to award a XX%-XX% be services which billable uncertain, business a year Last services recognized the revenue its number KGS over XX.X% a to the KGS’ $XX year-over-year buying hours with of basis. history, Federal the make our nice and a is we political increased fully a resolution strongest inherently reflected estimated it are a It and has instability the lost growth. year. its approximately bit pipeline contribute of Revenues million business of efforts Despite in of patterns down on a and ramp over beginning contract in quarter, its $XXX resolved under building to pursuits $XXX XX We we is align it environment, this to to on clear to team new year, the with the the with meaningful next disclosed X is a as we year-over-year approximately This the and, done KGS’ point lower be margin of half in the the is to expect largest Despite approximately declined annualized assignments year-over-year in while new consultants than basis. impact ramped. years. within first QX. shutdown job the business. more stable business, contribution awarded qualified XX-XX quarters typically of was shutdown. timing year services growth expect KGS once expected government KGS million sequential government to fiscal expect that delays, an be to on QX. a currently a and value, late the result for award strong, the KGS which have of second delayed have the business in been revenues, in favorably revenues significant timeline business to in pursuits the would over million of $XX of positioned

first will to product Overall year. we revenues, X.X% approximately decline KGS Hire The which X% Direct first expect year-over-year. first quarter revenues quarter, year revenues, of KGS increased typical to levels. quarter roughly revenues overall the over X% in decline represent seasonal

they an through business be ensuring to capability means talent prefer. Hire our meet of the needs clients whatever we important Direct in can continues Our that

selective been have in investments business meet this to model. of evolving line this in We our

mid and digits in growth than stronger be down single We expect quarter. sequential fourth high a expected after to in rates year-over-year the QX to

years. our as several talent, than the of our model our improved belief of after our productivity with team improved led combination of decline Over Direct that in term, our stabilization generating have XX% will and continue change, percentage The three significant a years greater entire long the technology each business. revenue we of Hire to built with has investments, have of past process which the

Our to associate design, sequentially near by flat term. levels population, the remain relatively was in headcount we expect and constant

appreciate look As our driving therefore, forward capacity exists continue continue expectations. I we turn those to as on forward our and to XXXX opportunities Dave? refine Kforce's our the Kelly, and to we significant areas in revenue made effort we and XXXX insight not model, team's warrant Financial trends beyond levels. have will provide material Dave I'll associate improving in productivity levels identify Officer, firm who believe additional call headcount, And Chief over and, operating beyond. additions for productivity at to targeted additions, where to grow our

Dave Kelly

$X.XX and Jobs QX of from Tax earnings the our deferred million quarter X.X% for XXXX year-over-year XX% Act. of Thank year-over-year, million of improved you, Revenues in as impact the Cuts $X.X Joe. of in in $XXX per adjusted revaluation stemming share the the taxes grew

declined the the margins of stable in XXXX, profit decline basis Tech and course Our and year second points profile. have products gross of margins experienced revenue of offset points by in in XX a half over year-over-year. XX.X% mix. Flex Flex result our year-over-year basis slight a XX Flex point we percentage Direct a relatively result business to of which growth XX.X% increased to year-over-year as Tech that our strong Flex the have is our Hire of of been Overall but in largest declined profit higher spreads percentage slightly lower clients gross XX FA of quarter two XX.X% basis XX%, points a as basis compression of the margin XX partially KGS in

the significant Tech clients we expect stable we into clients in lower strongest be have of Flex outside since As significant slightly very those margin XXXX, look should of in spreads, growth result have where than we rest This portfolio. a to profile those already relationships. the very reasonably

be of will points occur which of As basis payroll the case overall Flex the is first percentage margins SG&A resets, XX% year, as in impacted year-over-year quarter. a revenue declined negatively every to tax expenses sequentially the quarter XXX by annual XXXX. fourth in

in improving actions operating generating discretionary our allowed control leverage in investments improving continue our We solid significant increase to also exercising of by SG&A and progress make technology have the expenses. associates us over productivity These margins. to while

We expect reduce as revenue to as percentage SG&A to a grow. revenues continue expense of

trend levels. reflection these we and down operating expectations higher expect year-over-year XX consistent quarter SG&A looking were revenue points improved to revenue in dollars investments incremental and actually to despite of Fourth this As QX, a basis year-over-year levels X.X% at XXXX forward of and technology. margins of be with

basis XXX basis During Despite gross this actually economic cycle, by this XXX our points. operating percentage have margins by has compression improved points. declined profit

quarter was anticipated result stock quite and EBITDA. fourth vesting credits. of upon leverage X.X our sheet the XX-months in the With rate XXXX tax tax of trailing could and with flows to higher of based $XXX equates respect which Cash benefits lower income excess cash ended under effective $XX restricted flows Our XXXX cash of our outstanding than facility from which reach approximately tax approximately XX.X%, the quarter credit a was operating million as million, flows, of to strong. $XX.X We in fourth balance borrowings in times trends. current million were

partnerships flows, on repurchases. continue ventures and both credit and our a CapEx collectively tuck-in debt Our strategic healthy to million capital $XXX through or provide minimal or also low share healthy cash return to other requirements, to levels, execute dividend and acquisitions significant and flexibility quickly shareholders strategic facility

XX.X%. impact assumes should XX.X% be related tax shares of Weighted XX the X.X% costs, or be XX.X%, guidance which contract to of the expected we matters, the an government approximately of and This $X XXXX. Our This disruption government charges Revenues XX.X% and rest of range million revenues. and margins $X.XX. quarter per funding, does the be any are of expected XX.X% impairment average days impacted legal assets, sequential be to towards be one QX second to QX. million between first in tax the the changes. seasonal $XXX XX percent in not the quarter will shutdown a or share regulatory, intangible SG&A the created for rate or margins the to by quarter. XXXX impact related $XXX days million effect, third XX.X%. the of of to billing outstanding approximately XX charges in between to any, quarter, days margins be delays from the of first be less new to first per if in fourth are XX $X.X earnings $X.XX million X.X%. Flex taxes respect between while will revenue guidance, and one-time in government for legal, billing expect on firm’s the expected diluted days is be quarter, of days or payroll Billing Revenue are for quarter in consider than million. revenues year quarter, With basis of to expected in was in in and of XX.X% between revenues to expected costs fourth points. awards pending expected days in the QX Tech be day but Gross law future response XX.X to in any The the and the staff and primarily shutdown a total to integrators. in and operating includes business, be on as between Flex our to which hours, lost billable are effective Guidance tax impact and provides KGS, also basis the many any is an subcontract XX

are We our next quarterly margins milestone of revenues $XXX operating to track reach firmly on million. X.X% when reach

the absent the progression relatively seasonality linear impacts first expect quarters. in be fourth We and profitability to improvements in

combined For point of first and commitments payroll seasonality track. guidance thus, resets. range much very is $X.XX, from includes our to and cost in against taxes profitability operating impact a our our in contemplated impact basis the Payroll of on EPS first by X.X% X.X% margins operating the on the sales SG&A tax quarter, XXX of quarter

of performance associate especially a pleased level very and productivity our higher improving revenue fourth are the performance Flex are with our our flows. market profitability cash to continued the in with Tech In in accelerating Flex We XXXX, improve significantly continuing we quarter, and above growth in business. business generating successful Tech

that services confident solid sustained continued We up we'd market revenue questions. are in in like a profitability. and the foundation built Crystal, for quite remain now call XXXX prospects improvements we remains excited as growth our the open we've about and strong for for our to

Operator

from Thank you. Blair. question our Instructions] first Tim McHugh [Operator comes from And William

line Your is open.

Tim McHugh

Thanks.

on follow listened on thought to the – the Flex specially seems commentary, decline the would I decent-sized was margin. yet normalize margin like it guidance you QX revenue to gross comments wanted the that Tech seemed mix Just it a I guess, and but gross in about mostly Flex to imply the your

talk can So about you impacting what's that?

Dave Kelly

That's This got rates impact be we a bill Kelly. every we've what Tim. is actually going that year did increased sequential think Sure, significant of between in sales is stable. say Dave In and I of to what's cost pay QX, are Actually, payroll driving spreads taxes. decline.

Tim McHugh

seems decline. talking year-over-year it a to guess, down be on bit basis? I still quite I was that

Dave Kelly

so to from about did saw QX. we QX, look so in a as well QX you to spreads talking stable I decline From I Tim, mention sequentially in So spreads. – QX QX we're if as bill/pay mentioned

from stable levels. be to So we expect QX those spreads

because of those stay versus part they and XXXX lower levels. at of QX XXXX decline will QX So is of were year-over-year that

Tim McHugh

I were more seeing you feels that any than getting basically kind comment pronounced in you guess are bit a it end? the kind terms more there Okay. saw you broad give what And terms like was than people saw the I anymore, in what the about But engagements. specifics guess, year and behavior counseled areas saw or lose is afraid get that Can particular to there guess of that you I of you typically normal you can sectors more talk little that just if others? of feedback you're of in why commentary engagements I resources.

Joe Liberatore

the then in not to of Yeah. usually Tim well, certain we on people carrying us levels as the into ends back Where with through timeframe. Liberatore. have this requires move kind last experienced year that rebuild we the which March pre-holiday experienced Typically, is contract a Joe place quite of year-end individuals we every end getting on? assignment back typically extent it QX of forest it beginning of as many We those year. taking as ends the year to and to

that hearing them clients From end standpoint, months then thing on of this the more goes where Microsoft other the assignment organizations days. being for from back We're they in just you'll is of only a by roll large and that as have XX One can there to employment waived consultants keep and the to core have those off. well. we're were lot seeing put a limits more guidelines clients term

looking as as highest in to on demand all we've as balance directly So of of people hold skill our far Supply belief out front is individuals. ever is the seen to related sets are to war and for the this talent. demand is

David Dunkel

this is Dave. Tim

the prepared The historically saw the of November never that seen year. we December in had going really year that think and into backend the was we've other point that made the this I we acceleration remarks

is to happening of are talent, the we done. talent at attrition, really to that as unusual. lower war be increased which talent But saw backend move reflects it looking identify Joe there's of work think because saw hours that we increased kind quickly yet all for year, and a organizations I lot the said, of the So starts retain as to

Tim McHugh

major that when impact this on about Okay, do to watch focus thanks. you system. you the And management could is year, relationship just guess during that what talk then the the rollout? I talent last the the for question, as year And expect you Can business comment do we that?

Joe Liberatore

Yeah.

right intelligence move backend allow the then out tools -- year, to more no future, to the individual transformation through of things. and material that investments the other through a platforms so seeing targeting Again for be process, the of taking now the best lot go XXXX. of advanced the are we're it'll we're artificial various really the our bots the in these identify, and to As impact flying our technologies people marketplace, digital

things all that within integrating we're platform. So these

forward benefits I so So more we'll as we and we move on to probably backend that of through think as then see move the start the there. XXXX from

Tim McHugh

great. you. Okay, Thank

Operator

you. Thank

Our from next Sommer question comes from Tobey SunTrust.

Your is line open.

Unidentified Analyst

by line on [ph] question Was for about Thank much? occurring KGS. on you. is the and of This Toby at holidays, around is this shutdown the if government the effect morning. dampened so, first about the how KGS Joseph My all shutdown the

David Dunkel

were to so because was go would in billable a deterioration more for hour say award of impact don't the Yeah. available so not experienced the had don't drop you on. to people there, also of had by process, various any we I in able work. that new those engagements being the bidding things shutdown then approval officers there And we that real I we holidays contracting some really think have it's

David Dunkel

Yeah.

impact in the nominal. QX Joseph So was

actually think billable on. our I and in business hour Flex estimated. take, was going despite I is these think but QX, we is that to or lost business our in being which It's $XXX,XXX is of impacted. it in in not delays that even what XX% grow give north right Joe's only is point Tech KGS

Unidentified Analyst

versus being growth sales your how external productivity is staff an strong in increase Flex, being much -- how Thanks. looking of is Got growth you. by And driven environment? XQ's or at Tech of

Joe Liberatore

driving strong productivity a a really two. external I environment. economic of are mean, the so the growth robust are of it's two mean environment, hip, those strong individualists hiring of actually things combination and the very directly the connected backdrop It's I against our the Yeah. those at

Unidentified Analyst

in back the Thanks. jump I’ll queue.

Operator

you. Thank

question next from Our Mark W. Marcon from comes R. Baird.

line is open. Your

Mark Marcon

I everybody. Joe, the ask Dave clients the do are that? wanted morning you era How how waving some that? stipulations. Microsoft and And to Good they much of do seeing just you mentioned

Joe Liberatore

that have towards. put them based these legal programs internal place all organizations It's whatever guiding on in their is

in the into contracts embedded service them we it's that actual with master enter the So agreement.

Mark Marcon

that's benefits you? a contracts I was terms about mean up in the And particularly contract if specifically just with they're options In much related end could for being doing I how would those sign elaborate comp etcetera. as that I of -- little remember wondering it pretty you so and that's bit a great widespread? it.

David Dunkel

this is you term issue specifically Mark, The Dave. limits, the employment. relates more if call really to

there evolving management, is So seeing, the relationship, employment the of basically responsibility what the relationship the resources. supervision technology for we're the and view the about an

of of is So that bit than a shortages, past. they result the is environment. part evolving viewing a of the supply that result Part it you market, a is have will, if the differently little the of in regulatory

view administration's relationships. new I some at are regulations of XXXX of those view all the employment the the think affecting the the certainly look definition and things and employees, of of the

So benefits whole specifically of those, organizations per not have the a an conservative of we benefits It relaxed that view employment are the limits impact across more and the se to offering term past relates in really really term actually anyway. on because some core issue. took

Mark Marcon

that is now? widespread really that's encouraging. Yes How

Joe Liberatore

Com have when the than far year through even industry, that era. entering experienced more I'm went we never in -- my great XXst imbalances this it hearing during We're really Dot

you broad-based the It's that So they're are not is very skillsets. areas. expect There really real waving would And more would that those just see not that that. high say by are all I now broad-based. not organizations way coming just to it from in waving certain across it that demand

work some into within Dave the consumers. areas mentioned, seeing because Fortune Again the we're As larger of in number that we it realizing the of is majority the it's XXXX. do a playing of

Mark Marcon

the and then stats in to further? some came of success in year us could clients little to seeing this clients, color, was year. XX give of like, bit beyond that expanding top or it's expanding Got blank regards you top of blank you and with it. And last terms that the dimensionalize clients significant regards from top Like a clients percentage to revenue moving could XX with terms

to However could you put bones? it? do the some you But on choose meat

Joe Liberatore

I'll speak our Tech specifically. to Flex

XX was XX in Tech our concentration that, to top than basis, QX basically was about and basis points overall XXX were the the we in a QX, year-over-year So Flex of had top on XX. top it in XXXX new example, higher population XX% for with combination that

rotation. a kind you that So gives feel of really the for

David Dunkel

little So look to those largest a higher so let little point, in largest. Joe's revenues, soft. if less me add but the the a XX a you color bit more that, Mark, at although our in To it's concentration actually top five five is clients, concentration

is weighted through of XX, towards growth clients the XX. XX six that So top

is has of portfolio that Flex. Fortune don't service growing Tech Flex large have growth and and driving that XXXX we technology focus those as users been in the within significant a So of relationship double-digit clients, what the here on where is

Mark Marcon

still rate $XXX anticipating million? little expense about basically be then in SG&A in need putting you're solution, the you're bit new good Great. talk like that, order this investments leverage, able making to getting a achieve you behind SG&A place leverage. growth Because SG&A but that it talent level to sounds leverage? continue What That's you And or than management terrific. can other to would we're revenue just relationship revenue to what

Dave Kelly

Yes.

margin we've million we've as mentioned, X.X% revenue, expect profitability $X.X right? of I in we has as operating better. I or be been the linear, $XXX will and relatively at in at grow million said us said So for and will progression I've X.X% think $XXX Mark, be we So continue $XXX million million, to

have be a So linear that from technology investments. That we through lot a including gained of things, is it the will of there. result efficiencies

So ramped driving the mentioned on are efficiencies. and technology we've but of It's heels significantly. TRM, that heels investments CRM. the Joe BI a those spend is on of

of front in house to continue to back actually expect the to to to us the in to invest technology. and continue continue of improve those house the invest in things both We efficiency allow and

this be. on path we for are and we been thought is time on well So a would the we've road quite that some

David Dunkel

Mark, Dunkel. Yes. Dave is this

point Another more cloud is capitalized as of solutions, to today, software. that delivered the direct solutions that the are opposed the way being expense a it's

operating as are has new expenses coming older an an our fully so on expense. versus And our amortized, been technology amortized as expense

which of made, operating we've is So improvements expense. the all the seen technology direct to increase in of significant in our face other also spend, we've a a hit

and the manifests leverage to future. itself more even is that will starting So in

kind So together, of significantly technology leverage worked both those with together things we've of spend. increased operating

Dave Kelly

Yes.

operating what continue GP So before, to going economic basis was That's because we've going what said or despite Direct further compression. improve, Operating grow SG&A expense. a slightly We're to about state grow. gross just and cycle, trail said, up this talking is reductions revenues down actually to in the as of expect year-over-year reduced beginning are revenues. in as margins Hire we to be Joe stable margins of through X% Dave since is the XXX we points see up as expense to

Mark Marcon

questions. there's And two more Great.

is one. higher just think F&A little positions? Number a you two, about, reposition your would the added it to you to the how take on on long hire, just to of that current you can bit talk that? And the how like, given achievable be value number market And position? some Just direct expensive talk how will can do side, it stabilize

Dave Kelly

fairly eight the the you the at it over million back reality contribution Hire, is if $X.X $X look course Hire, million within the of So, Direct revenue last stable Direct quarterly the probably been quarterly. has quarters yes, on

an of in So, to continue are growth such. Does percentage of stabilization will I your dollar. terms outpace Flex answer and at That's stated question? absolute it shrink revenue; we Tech a as with we that why the think that I

Mark Marcon

Yes, but basis, will -- it here? will on an absolute be it hold

Dave Kelly

is And Mark, Dave. this

which we in Contract-to-Hire, are saying a has We significantly. making that we're but See changed business also that is that as offer area, investments selective that service well.

space. there's Hire different Direct things of happening that that are within So, lots

as decline our a are level But se. other investments. percentage, but We this rate will dollars businesses, it not selective making per the just growth at of with percentage

Mark Marcon

Okay. the And F&A? then on [ph]

Dave Kelly

wrap Yes, it just up. I'll

mean Hire From it FA Direct we've it's really any to in with absolute that. an started dissect around, so standpoint, given business. always flat bounce not will I quarter, As an

Our the it's a are -- We've activities. markets lot majority client-pursued our are now of of and aligned. repositioned is teams the

So, the we've down started path. already

of think into to that I the year-over-year improvements And last while my we in those up comments the themselves started of as in said on of mentioned we what back expect move I year. we business was basis, we reposition as I see starting business. to year bill to some as the realize work had some this a similar rate X.X% had end

David Dunkel

Mark this is Dave.

are look automated. If you and what's happening at the that more space areas more skill being lower of in

that's the BI a the so F&A. technology And and converge kind analysis of the tools -- FA a there's skillsets where so the technology being with done and forth blending is using FA and of

doesn't higher believe going customers. up mean So, growth plays skill to on skill the have portfolio business and focus but long-term position we where areas. are looked the we're the the It and skills, to is way the the by lower long-term, areas as in our migrating the and we're our is abandoning of be well we over this development real opportunities be with looking it that's going also because to the strategically

Joe Liberatore

we our that the skill that some business, hitting four years really -- are if are we've mainly through some our attributable of that ago which various areas performing from -- If three, other areas, centers you're years you to go way through ability seeing of areas space where the but we several benefited those RPA automations capture business well by were into also upper this growth those back when through bulks rather of in delivery those to deliver was to change our quickly. benefiting seen centralized double-digit to when mid and

Mark Marcon

get second back growth you second think So, to relatively At we comps we get half into actually the point do become in do we F&A? by or easy time the even the could think? the quarter what

Joe Liberatore

with our areas enter existing Yes, other penetration obviously were as if with leveraging we're mean capture targeting. to while I we're relationships repositioning we're move the everything we the into planned customer we're being when customers, the to business because having to we're having caveat at -- into look models that go within to

the as turn quarter year-over-year we'll that in half. be would second in hope of our the So, terms move we

Mark Marcon

Great. Thank you.

Operator

comes And next question our [Operator from you. Suisse. Instructions] from McVeigh Kevin Credit Thank

line Your open. is

Kevin McVeigh

it Could little Great. about what think business percentage in the client to F&A kind a is there? secular there of if any XXX% off, risk what of of way is to you about versus terms potential a way opportunity of that that versus stuff out to you terms then mix? frame the upsell there And have just in have different skill has real Like to to it? going is that's maybe sets run thinking opportunity and

Joe Liberatore

bulk in of runoff, first to filter Yeah, out move of out have the we filter half into our and started terms year. as this most projects of

been experienced -- business And of in at so we past. have bulk haven't we -- rates we're on-boarding the lower bill we not that had the volume

I would we there. say see that So wouldn't really much

mean, strong. the of strong the and I secular remains overall been terms very In has dynamics, F&A very space

right ZIP in as think Tech SIA X%. performing has the it have they I same where roughly code

This So I now model. by is a And is we market having there. pivot mean, the not problem. to our design. from our a benefited market this we're model is --

is the market So there.

David Dunkel

things, add a couple I'll Yes. And of Kevin.

more. market my you think at solutions. in Tech look I solution advantage flexibility. remarks billion offer that of up mentioned will, we're at I of into more greater cost if that and market $XXX addressable billion you the look We space there's pulled $XXX staffing, potential, addressable market billion $XX if being we being, and the

we're There's have the fully it. where early models, are an the if and believe stability look organizations the then a these we lot So address that business at you of in all plans. of others think yet on. of frankly to to models still we of -- And longer-term of element digitization have brings are that I transformation. that transformation there are that And

the there's that we that going that into I to see aggressively go Tech was mean of frankly tell haven't business soon, related investment one anytime in us And I would there that the anything is seen technology even strategically. the stop reasons to to even more made So cycles. we decision that a much play longer-term

that today and secular is technology. underpinning business of believe our we the driven predominantly So by

Kevin McVeigh

in terms you of And the we to or you F&A folks as do then them? margin within to the $X.X think that do able we just Understood. how need Tech, revisit context the about set towards see billion? the of still of achieve targets we mix have Are all those, the term out longer

Joe Liberatore

obviously, mentioned, had many, double lot and exerted Tech many decision made we've what to just we Yeah. We'll, mean, energy. where I a Dave a down in ago years our that's of

continue in to believe market we'll capturing Tech terms the So market that standpoint. from a outperform we of do

basis outgrow would business. anticipate percentage our that our on So a we would FA business Tech

So if will account, I into of take mean percentage that total you revenue. a FA math become smaller

Dave Kelly

Yes.

this Dave Kevin, is So, Kelly.

your would nicely we -- So about you into question margins, this said fits I would expected. I quite exactly have what tell

of client brings to on Tech per think Tech F&A consultants number which of people of reduces about a is higher higher. You are assignments placing higher. F&A consultants Length much rates The of the differences. about there and efficiencies assignment you much other to think are cost that. relative Bill are lot which much

the difference, F&A a relative though Tech assignment the on Flex slight So very there's incremental to consultants of profitability positive. margin is

we feel ability So meet can this goals. good about and very plan our think to these I

acceleration probably to a help F&A will relative As growth matter of further fact in us. Tech the

Kevin McVeigh

you. Thank Great.

Operator

Marcon R.W. do a we have from And you. Baird. Thank Mark from follow-up

open. line is Your

Mark Marcon

couple contracts said things perspective? staying you business think a that there you on that You interesting. of exactly you the there? Anything little wondering materials? and doing you're you expand could how can that? evolution you comment of kind deliverable doing bit solutions a into Dave project terms say about out solutions how about in last managers How was the Are I being time was terms the the the putting pulled a up light? the on Are of of part of Are are from in we you business? structuring of

David Dunkel

going more to because I'm question that answer Okay. Mark. he than answer to I that am. qualified let is Joe infinitely

Joe Liberatore

materials. would had time no where the we're Mark and so Yes. them is just I yes, consider pursuing mentioned off remains everything arrangement. of that more actually focused you about we're Albeit, pulled being majority bulk

on table to a to a engagement the be business basically a able aug allows have would us gives because relationship, higher-value staff to managers upstream. extremely yes, offering. which our the into a earn what really then well staff build customer. credibility to plays So site the more which But allows at bit we're overall this go consider It's I involvement putting us with aug us little seat

especially building customers those team. where very areas And these most identified well strategic out So bring can been we've services. our map we that the and we've into offerings

out in that I people team think But are the really job we board. front. has nice a the on our done on methodologies, right our on getting very building on our evolution processes early

David Dunkel

at a being of now methodologies is a for too agile the development. there's to Yes speed that that being projects Mark. couple of adopted on-shored with are done that the The being other pieces lot way stuff

somewhat that is And has and smaller The so the sprint that projects a have when back that moved. into into of that changed offshore in general teams moving you think that integrators and are about overall. large-scale sprint smaller it size the lot are as in stuff team context, organizations in onshore

we projects to ERP a those lot opposed the get So a the customer-focused to tend system. participate they're as that large-scale more nature the doing And result, be to in more. of as

separate unique technologies. these teams. are So There are

And with project local to skills so, with deliver very well our need it plays bringing resources that in. management ability the they

advantage. large-scale relationships significantly another a So There's it's are it the We integrators going. as big have to well. greater aspect result cost overhead. where customers and The those of a bring long-term

as and the flexibility them to loading And down. resources onto greater give we up hear don't flexibility slow well – ability these fast overhead because they have much projects. have customers. the the ramp we gives love this it unbilled We They or from us

so of echo $XX same market to billion. opposed address large-scale of solutions we the the just have who relationships as recruiting the of technology delivery at the of right in scale? play. has where the ability in staffing brand billion I said full things are the of course and talent that to the and staffing XX and providers final is market capabilities talent And $XXX to then would and have is come years I all to others into thing sweet want mean where as deliver field so And space their the in resources the we the centralized spot comments. be our we to And those

Mark Marcon

just the have One, how is would now I you a getting And but open a you and actually comment Great. ago? ends go-forward from we on – economic set other Obviously, all you think then to them now? while – you can wondering basis? hearing budget the how confidence you're the Hopefully, do an that perspective had we you're XX continue. does from questions. How hearing And basically But another commentary I'm we big two KGS. impacting shutdown wondering, could shift days that? perspective macro was And window wondering has was if then contrast the clients. if like, up what market contracts on impasse think be then that should have if on another could and how secondly, what in sentiment, business you're

Joe Liberatore

another if at least to concentrated. the guess, Related positive bulk where about is shutdown, we – this I shutdown the business of have heavily our it for wasn't Yeah. areas government in we're

our still work to paid. go get people of majority the able still were So to

things as we're bit I our such total the little So the in given VA impacted realizing believe over makes up heavily of we're not that a involved revenue. VA XX%

in of the we're award on Mark that is So it. that contracts really terms that Where positive award. delayed bidding we of it that's feel are get side awaiting the

everything it pushes gets because and the you gets pushes to award effect, project just the ability right. on start now the impacted staffing your it have – project the this start to then ripple So delayed

would this with an to that, on were there's you answer give another too So, if what were solid I because go you to happen on components it I give answer a way shutdown, if many into that. length can't mean unfortunately and we

out growth doing the would we're to year, to start of the the look stay of in starts of hurt back it stable terms the today. just up. because business contracts revenue the that as into those business It So we ramping half

David Dunkel

Yeah.

as of to related the night if any issues the certainly though State you Union last doesn't impasses immigration. you If the will movement watched budget resolve, ability to the it towards and appear there's the

is we're And this. is and picked about. the to in watch But so the anything it can't forth. all the gets getting offices we demand Maybe down are road little The news contracting things done going of the good a things those do further. is impact bit So clearances just there. that

that So this the which the Joe indicated awards But can RFPs have contract like to call already answer one would either. mean certainly out that some awaiting been because we've won you know I put resolved. if then what need know there's I to be don't is I

Joe Liberatore

people as the on been starting people whole which contracts through out pushed bill. to has point process us somebody from where have prevents go Dave's on to even they're to assignment thing that well and getting Yes, bringing that clearance again those

Mark Marcon

then And -- a you're of sort hearing can bit talk just about you commentary from little it. whatever macro clients? Got

Joe Liberatore

the with from strong. is, very engaged that well to our demand say as that clients Yes. remains as I people those would hearing the are we've been we're close

areas anybody the these to for be seen there's haven't have negative. high-demand -- that people work more I where do competing skill We talent. reacting mean anything to resources to especially is done in than same everybody

David Dunkel

Yes.

I Fed, the the zero concerns in slower little rates overhang year last the that the on period of of comments impact there were expectation zero we Fed's end and fourth moves back and quarter sales demand. Fed about might to saw entering here the at with look you demand. impact mean the we If with a saw of into the we the with and even bond all bit be the

and so things are you've just adage. these got it's the of forth. model transformation old digital do. Some The to things changes And

more money Let me a ask or simple spending on technology? less Baird question. you Is

Mark Marcon

Obviously more.

David Dunkel

be the in technology because year Unfortunately might this but... compensation of a analysts' increases less little Yes.

Joe Liberatore

optional. not It's

David Dunkel

it's Yes, not.

Mark Marcon

spend more. It's has not option. to an Everybody

Joe Liberatore

a you standpoint And to. from competitive have

having are traditional a then that coming against from it up that You competitors. up storm have ramp the with. competitors on competitors to leverage I planet have at sides mean both non-traditional the the you perfect And are non-traditional have every coming in You that space right? you go platform their keeping people the at and it's technology. people -- existing to for are

David Dunkel

things if at banks, And to FinTech on it's the mean the look And race it's I technology. it. and larger amazing all you the a see particularly to improve

belief. cyclical. one won't opposed to our that's that's is underpinning of Thank think hopefully the as anytime the you soon, we to So test have but Mark. reasons that still We big secular

Mark Marcon

Great, thank you.

Operator

I'd remarks. no Thank for to like phone to our the further you. over from back am Dunkel turn David showing any And I questions now conference lines. closing

David Dunkel

of and to I'd our more do. and And thank our forward Thank you you, Well, and the look decisions your is of serving Kforce. thank say, teams thank and a experiencing us lot we very interest The consultants to for like for we're tough of to and tenacity. results and to of you. with you hard much corporate soon. our you very by clients every privilege of grateful talking their each really and to our member much field allowing and for result you work I'm team support have the much. But that we

Operator

gentlemen day. wonderful Everyone you This thank today's participating the conclude Ladies may disconnect. program in and for you have conference. all does and a

Kforce (KFRC) 6 Feb 192018 Q4 Earnings call transcript