KFRC - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2020 Kforce Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, David Dunkel, Chairman and CEO. Please go ahead, sir.

David Dunkel

afternoon. Good taken to are this the forward-looking, and from like certain may impact, you COVID-XX benefits that the statements including actions remind would health call that contain opportunities economic I and to crisis. related statements regarding based are and assumptions risks current subject expectations uncertainties. upon are to statements These and and and Exchange may filings with and vary factors Commission. Actual reports from results listed in Securities and other the materially Kforce’s public filings the forward-looking We cannot statements. to any any undertake duty update

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

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

on the core sudden of to pandemic. of world-class our dramatic FA resulting to grow footprint focus in on critical companies ability to critical landscape from business the initiatives the large-scale, allowed year-over-year backdrop support us as Our global the technology X.X% basis against FA government-sponsored an of revenues providing our as a macroeconomic to talent unprecedented and COVID-XX-related well addition effects

Our quarter we strong is disruption. longer-term and have for the made Kforce consequences from performance decisions of significantly the to success the position in economic strategic the a firm to testament the insulate second

non-strategic market We ongoing industry very limited leading high-end and and strong XX% companies. exhibit stable many have over to technology which solutions world-class in decision was that need would due economic sensitivity very staffing would concentrated years This roughly to belief demand solutions. investment, and have the worked resulted the technology long-term critical particularly for has information our in, of shed that being diligently revenues staffing our businesses, in technology by supported

strengthened crisis an the as companies of proof thesis, long-standing nobody technology we in digital drivers investments believe and only could demand our of current event be their to the have the of positive While this accelerate efforts. foreseen secular transformation that has secular severe

a technology our to business. priority capital allocating continue will place We on to grow

term, we capital near proud difficult tenacious fortify our and this and our displayed the I to how extremely continue future. financial focus performance the the balance us While position sheet execution deploy time. in cautious to in and during have the and associates in allows leaders our strength we of remain am in flexible be

tackled children successfully many in and working likely the have to levels. the fully any productivity people remotely, sudden schooling a decline shift virtually Our in fall without their in spring

industry. been short have nothing have proven the tremendous, of people they one Our the to and of best teams be in

is seem that As we several future, there but uncertain, look to remains to clear much the us. things relatively

reoccupying future anytime be and assessing model soon needs what reduce our offices business structurally as may are we not will field our we modify corporate and instance, costs. and our For real operating estate be

leveraging and investments position investments environment, a working in in technology future in environment. in likely cloud-based, will that levels excel as will our our what platform model, assessing Microsoft to to technology-enabled Our put a has more much are and service we be people enhance in operating greater choice, flexible effectiveness work virtual this areas of primarily drive accelerate

great our that accelerate downturns rapidly economic been well growth as business situation important take always during to retain and to – investments people and the so share our in priority positioned Our market has are improves. maintain return strategic we

the We same have current in situation the much handled way.

operating restrict that and to we we will resilience We will drastic Through or Rather, take will these move as safety call our trends continue the difficult to now a through their will associates are President, to dividends operating manage second determination positioned increasing based over are recent Joe in drive who’ll performance, They operating business give key times, we environment. situation. having to have always on very guidance Joe? and we the well our to first. actions of success, greater insights I as into the well put CFO, sheet our as capital. to turn trends. our quarter insights raise well the know manner other Dave then balance greater and beyond through the future quarter. without Kelly, for navigate into financial our disciplined current success we period and and position third including continue or current to results, as give Liberatore, detail our cash flows eliminate costs, the reduce on

Joe Liberatore

in that by exposure businesses our significant interest limit secular Hire third is Thank non-strategic an demonstrated Direct you, early the Dave to quarter of is and to advantage in for by Dave quarter thanks results trends. journey as shedding mentioned revenues you overall of business cyclical shift resiliency and all to Kforce. and second to focus your demand The greater to our the providing highly technology of level our take

Street revenue overall year-over-year in internal on business expectations. performance the and our the each of Our of X.X% growth second Wall exceeded both quarter in a basis lines and of

each Let more our lines respect in declined to Flex little technology X% and bit With of me sequentially. business. a you color year-over-year our revenues give business, of X%

we March growth throughout remainder April. of on headcount. modest the the April impacts After trends last into seen billable the Since notable COVID-XX decline of our and pandemic, second the the quarter. our weekly quarter’s were directly we’ve call, largely impacts these by crisis mid-June, early didn’t from As affected from see in noted stable until businesses late

declines weeks. last month were prior comp. levels. over against Search lower difficult the than have slightly for and a approximately quarter more and remain basis, these though year-over-year full activity down revenues to Flex job flow pre-pandemic July year several They the increase of may the For X%, increase order on begun Technology

of are quality seek clients higher stop than roles. pre-pandemic, critical While job as the to job the orders orders lower is

many and point set Tech and as done pandemic the quarter metrics XXX% retained we trends virtually continue, now our clients at where the noted in were been presence remotely, revenue transformational If of in new largest declines found third of care trends growth. being our concentrated have being leisure, the is and previously, progressed. greatest as we see the Our quarter retail relationships, pandemic, onset travel added as higher roles an resources health which sectors. supplemented of improving principally actually mature internal additional to with The sequential clients, that and is in assignment skill work, most by the the throughout has and growth we We environment. will majority experienced

technology-driven, to continue of the We acceleration companies. experience initiatives within direct strategic world-class mission-critical, consumer

qualified to our talent needs matured source diverse for sets large We scale the large-scale have that at skill are U.S. of users across deliver these to town and capability priority

quality evolve that greater technology market solution this we to provided have expanding downturn. and the our increasing accelerating positioned reputation disruption in our staffing economic at and solution this extremely longevity significantly by as managed share We providers. solutions historically needs in offerings a our pace or for Revenues services, Due those business overall positioning capable than with are well companies managed services offering the are changing supporting and these large demand navigate meet to to seeing been for expand confident technology to financially teams, feel viable and in the business. ability competitive our inclusive in clients’ of areas. less of our further and are clients’ We demand to services market delivering needs, emerge

than is in significant sequentially. we that It have revenues more Tech during the in to is We up quarter business year stability remainder experienced third slightly our trends secular XXXX, expect further X%. decline a the the also Flex in seen which less much that XXXX current be the story. the technology year, to of continue supports notable full Tech recession, Should for experience Flex than of would the stable

our revenue the of revenues $XX the initiatives from of Moving our support result FA second government-sponsored pandemic. primarily tied were up to of to business, the nearly XX% as year-over-year Flex quarter, COVID-XX million a of approximately contribution in

center including as the For this provide provided and have business support Flex specialists. we as core agents we revenue to consultants level service processing by have roles loan navigate in companies the These reductions several as our opportunities partnered well crisis. brought to a of FA customer business, call with

FA quarter. disasters remain centralized critical quarter. Due our the economy Due expect by the to we of would clients range to third Our offerings. the million scale, initiatives a relationships, projects, source the to which to recovers, with with prior and on nature delivery engagements deliver and these ability increasing quickly expect of the in related correspond and natural the innovative large to million in continue primarily could the revenues due these quarter fourth support be and our growth the Tech and should declines us core COVID we as through $XX to we long-standing capability likely second quarter, these These fortified positioned our talent into opportunities personal least during these technology, experienced demand to the in at uniquely but $XX for fluid, third initiatives. would revenues experience in

declined Flex business core Our approximately FA XX%.

stated the last have we of signs of June. quarter we of since impacts deeply earlier during the the from business. the the current As quarter, and we end second initial billable negative saw majority After line were this experienced more headcount stabilization in crisis felt, in impacts the felt of modest and growth

up revenue in the Hire XX% decline levels Year-over-year mid-single revenues and When month of Direct the roughly and XX% sequentially year-over-year. approximately total those at have lower with decelerated the Flex year-over-year. generally month July, the significant we see and in second midpoint the XX% second impact declines of of sequential of levels could may core quarter XX%, held may for the are second revenues, inherently levels. quarter revenue third of approximately were third end and the see digits. we experienced through the revenue the our For Direct less at decreased be quarter predictable. business FA FA QX quarter in quarter. combined for We July, revenue revenues the approximately down for nearly range COVID Hire a at

Direct economic this tends the X% service most prior revenues constitute As of were reduced the by of be years. than over quarter. the revenues to of the At recessionary revenue the XX.X% direct second offering bust, peak uncertainty, of the our most cycles, the hire we dot-com and less and concentration revenues have now consistently to expansion Hire in economic impacted of

the significant of this clients in term, in of to have part stream due remains the offerings we continued to service Hire that to While an important disruptive the part technologies our sensitivity economic revenue allocated space. to here over Direct have and cycles the not investments evolve long

our to Hire are we technology provide our Technology sets service as Flex Additionally, in similar. skill channel we practice the able capability same the through Direct in business utilized are

of suite we critical most a in technology investments our offerings position invest initiatives. our for long This the decision our initiatives implemented in years XXXX, to relationship leverage have strategic stated, strategic Microsoft we includes management including Dave firm customer in continued we Several to system, product made our better to and the a Teams, As XXX especially in ago, significant Outlook integrated XXXX. for technologies. cloud-based our in term, other implementing efficiencies talent combined environments has of to as in integration Microsoft such with of and are the we these us shifted relationship seamless which management work remote system, This, Office technology, process our with mid-March. with as provided we platform products, fully associates which

not We best we crisis. the did levels due the natural the the are advantage decline we positioned in associates elevated to overall of not we pro forma of subsequent but an are large-scale productivity typically to do managed headcount retaining We do associates performance our our to on take most focus to undertake manage any as and productive with reduction. experienced to attrition, expect market continuing the so

to will and the monitor manage business trends or and operating We our environment perform accordingly. headcount our continue

advantage current that improving tools and remote existing believe for take to can of begin have so in with work. our exists enablement our productivity we gains our improve, capacity greater along technology successful the been As of the us conditions during through we to that the transition talent, investments communication

capacity believe accelerated cycles been believe take competitive conditions expansion. the will and has of remote clients, we placed recover market experience have be candidates in through are recessionary and Our in to consultants remarkable a led of ideally situated result I we and by our the the an what digitally environment, couldn’t we be and that team’s fully advantage Kforce, these greatly shift in as managing executing our efforts, I in trust times. prouder appreciate a

Kforce’s not limited to We model to pandemic, by investments, future turn underway adjustments talent real the acquisition brought are future assessing now any this the strategies, among Kelly, operating but our in Dave? Officer. technology others. footprint, over internal Dave forefront Chief Financial well I call including, will our to to, estate

Dave Kelly

of per to of gross share particularly related costs a $XXX decline resources. due SG&A declined Revenues critical Joe. and margin to million in $X.XX and earnings Thank the and you, year-over-year higher in X.X% quarter XX.X% grew infrastructure of retention

XX.X% points Our revenue Direct gross of percentage a quarter lower profit a as basis XXX in of decreased the year-over-year mix. result Hire primarily

approximately result during of was XXX in sequentially FA business working in our strategic new FA was scarcity the our lower which as consultant retaining the Our pandemic. We points slightly talent given sequentially of our of has pricing year-over-year, taxes this XX% in areas, the flat points at per COVID-XX remotely. from offset bill down by of remained highly XX are declined assignments XXX from impact Flex a negative more increased a were margins $XX business. business basis points business by of consultants margins lower XX year-over-year Spreads clients of which core business technology in were driven of were essentially. and skilled driven rates managed of margin X.X% to gross onset believe our profit capable business certain costs. the improved as revenues hour as the year-over-year. basis Spreads the overall COVID-XX despite percentage technology our business, basis year-over-year ended Flex higher lower-margin in basis and services concessions year-over-year travel and technology carries less in from that increase any points improved profile. X.X% and business though primarily Flex provided mix payroll spread increased the the this Average were lower business pandemic our this clients mix part skilled the

similar bill $XX bill the New average increasing where of higher services assignment of year-over-year. a rates in adds rate mix X.X% in bill of story We concentrated saw sets. higher in business, FA the skill sequentially core X.X% our inclusive rate were as managed quarter grew well and business,

quarter quarter, we continued be forward stability our FA look second in and we third and overall technology bill for levels to core in stable. to As pay spreads the would margins versus expect our business

as sustain made to results associate we’ve activities, and efforts strong are Our us revenue increase the basis resources through led in of percentage the and improvements acceleration costs pandemic business allowing such technology as as related in actions quarter well on to our XX as accelerate These points strategic retaining pandemic. SG&A reposition to other a productivity discrete or an of expenditures year-over-year. in the the investments, critical to FA of second

revenue, expense to significant impact to increased QX, addition have manage structure. in We XX% positive are expect nature, decline per SG&A significant which, expenses which in flexibility us our – in SG&A earnings variable significant to Roughly allows to our of to a will cost share. allows

us and our business the make operating actions. years. leverage well continue with last several to has the have subsides. stream investments We outperform as in position to gained significant revenue along without over also that the to put crisis will cost-containment This position recent actions, the We’ve us leverage, drastic market navigate in quality we crisis our to continued taking current a believe

second X.X%. Our quarter was margin operating

rate quarter Our in XX.X%, was anticipated result certain was effective true-ups. than second which a slightly tax we higher of as the

million year-over-year Next, of million, second continued our due spend few cash flows $XX flows an operating and were profitable I’ll $XX.X liquidity a position. the growth. quarter discussing in increase cash Operating to minutes

of CARES also approximately the from million benefited $XX taxes quarter. under deferral payroll We in second Act the the in

levels. from portfolio QX receivable perform as sales flat outstanding days accounts to well was Our continues XXXX

business a have to to provides conditions ample and even very extreme allocate flexibility strong which the in resources. sheet, liquidity opportunistically We balance operate

cash balance source as June was on of million, serves $XXX reliable approximately liquidity contract. XX, a which net hand, of were working to of revenues Our if as capital

We matures have May million a in that $XXX XXXX. revolving facility credit

hand EBITDA. million roughly XX EBITDA trailing cash Our of $XXX $XX.X provides was should $XX trailing debt which approximately end as XX-month quarter. the X.Xx on at million as $XX net currently or need XX approximately of And of XX-month we of was capacity, roughly million. had incremental million, borrowing We the it, June June roughly

generate we into further expect Looking plan continue net to to to cash levels. QX, debt which flow, forward reduce utilize to positive we

acquisitions, be debt by expectations enviable we debt-free to Our healthy in flow current cash flows, net due are deploying XXXX. resilient and could the suggest our making effectively levels, We end portfolio accounts financial as receivable position areas, capital cash believe an that be position such of in capital and we low high-quality us revenue stream. our returning The our in strength other to business, to in allows our shareholders. investments continued flexible in

unknowns ranges this and wider of the We stream. given revenue continued our with are resuming the guidance but quarter, unpredictability COVID-XX

are same quarter and the the in third as Our third XXXX. QX of days the days is XX quarter, billing which XXXX

We range QX and are million and legal XX.X% technology expected and changes. related on tax not the onetime XX.X%. outperformed effect, matters, disruption on future be approximately XX.X%, to be expect potential QX, or to charges of for earnings million any and costs, and $XX Flex negative expected SG&A be outperform be million if any versus expected in consider the revenues funding to $XXX any, law economic $XXX per margins been impact while should a or rate far pandemic and legal does between significant recession, related the X.X%. average and to and costs Weighted total comprised regulatory, as between of firm’s of XX% great government $X.XX of guidance thus to margins the increase have an At the to in is anticipated that we XX.X%. or current outstanding results XX% demand charges to revenues crisis. during are be the health XX.X%, share Kforce this of XX.X% in is and pending to be response between encouraging. This the the We revenues impact and percent or to XX.X% Gross in margins a effective as navigate between position time, operating COVID-XX approximately the during $X.XX. are tax even today. believe we diluted are environment for to expected X.X% from cases, be only shares market between towards better tax our the revenue any

our of our over to knowledge promise up Lastly, will to I’d efforts sincere providing for ensure the last like great a we extend call brand are to that to X strategic and all now living we results their questions. you thank teams of partnership over for months through turn sharing. the Operator,

Operator

Sidoti Thank with Our comes first question Instructions] you Josh Vogel & [Operator from Company.

proceed your may question. You with

Josh Vogel

guys. Thanks. even too? first do these decides Good programs the sustain any question results evening, sort that see keep a taking My can after longer unless you environment. of this term questions. Thanks this my you for scenario in intact Pretty level of the economy of impressive that government recovers some to is, work,

Joe Liberatore

percentage this it’s I what out. to comfortable trillion-dollar I are capture where is revenue. government question, hard the our the Obviously, are Josh, to of say a overall But ultimately what’s question. play mix what we say from would a will right? mean that’s to of I kind been support, we have that we going Joe. able of as take from

and footprint around type that our higher investments Tech towards areas. not intelligence business skill with as really Tech an quite FAs continuing for we services, on areas and we pursuing project work actively our So stated managed to – value-add, now, really are further synergistic opportunities. with evolve those data are time with solutions-oriented have along are and currently some going in in in our that additional Mainly, emphasis the

really give you more but a long this how can’t that will run answer give of is to we out you I bit a little question an wanted that to, So backdrop.

David Dunkel

better I of I am the that give question, Yes. clue. Joe, could Dave. would I you if ends me when all can you ask a probably tell this

bringing is and long. so continued been are seeing that we uncertainty for additional watching flexibility. knows. clear thing the nobody go this up down is what that’s have very The We is And one

story deliver because centralized of people innovative X X,XXX capability to out our our utilizing in also as was of his what some to mean at unique pointed and remarks, scale, be proprietary what Joe So prepared technology, our that is. approximately a I remarkable own delivery, weeks able in

And knowing long so the how balanced with last. it’s very everything overall, going not pleased we way are to is and

as very and do that we we I are in anyway. only Joe think if, well business recovery, see that’s said, feed to fact, an going core positioned, economic the technology

spot. you. in So are we a Thank good

Josh Vogel

Great. update the Shifting you June. business Flex, to in Tech had early

for you quarter. about but said X% was down I year-over-year it the X% think

am – June right in was to that what I and clip So so, declined to it a that? drove it X% think at if X%

David Dunkel

early a into and I say was that was time would Josh, that, we on point when in COVID. gave very that

we deterioration So the then and quarter. to really improve a the of we experienced more started moved of as kind to mid-quarter back little bit end

exited of the much we here, full code quarter same ZIP as So pretty and the was. enter as we QX we quarter where in are the

things So happened timing of where really I the quarter. think the just in it’s

Josh Vogel

Understood. you through in trending X%. July you early August, said about down earlier that were the or Is comments? And

David Dunkel

Correct.

Josh Vogel

give The what no will of how longer – up think this longer it’s think only and what hypothetically – more commentary if long-term QX, great. be back COVID-XX the maybe term at built you could contributing. a a are is you levels run of into when when we or we quarterly understanding any directional and your let’s expectations the you situation sort say guidance work but that could these trend or just Okay, of guidance, that a of about Do you G&A? sustain could fluid think giving you much and percentage and rate look to of revenue as like do historical cuts

Dave Kelly

Yes.

this Dave couple A Kelly. of Josh, is things. So

business. million that release and gross you to shows in business. business Tech data your point look as of And will our forward, margin look I think we million levels we composition at between operating this some note the for stated, and Joe and historical look put are out revenue levels actually you you the COVID FA in $XX provided $XX that at you COVID-related that revenue I about a that that margins and third expect quarter the be margins, to core at the we approaching of profile profitability third the operating fourth if quarter, in to the are if had expect, quarter, levels relative the fourth You but actually there the profitability that the would think our not you quarter, than revenue we the not But in had pre-pandemic. the earlier of we

So we are very which as changes bill and pleased speaking, us profitability. to with rate – even are at starts position continue profitable, this grow, higher composition very improve mix in and operating FA, and we for certainly Tech great are of to stream, business revenue to business, how obviously, we a relatively is a the more

I fourth important third at levels the we a quarter. quarter mentioned are in you the the take think, third and quarter, even to profitability in So look expecting the

Josh Vogel

talk debt repayment, just for talk where about Okay, did strategy properties? lastly, And can details. in it general, your capital but just today you of you you thank about in stands terms the allocation

Dave Kelly

Yes.

So I restate think said remarks prepared We the about to be certainly we near-term. as what the in I will cautious. want

a to debt. terms we right shareholders, right. opportunities returning allocation, as flexibility. about But had time is to always generate cash, the to think indicated have right those capital good very of now we prudent as things, debt We the think we in have are I But in thinking acquisitions, to down in pay to strong we low all cash look continue cautious now about on we We third levels. great cautious. cash with in got But the be expect we flows of be quarter, again, position it’s think terms table talked when to

Josh Vogel

questions, for taking you guys. my Thank

Dave Kelly

you, Thank Josh. Sure.

Operator

Thank you.

Our comes from Blair. next question with William Mulrooney Tim

your now with may You proceed question.

Tim Mulrooney

and you Good top afternoon. the Can one rather I on not wanted quarter previous pay bill that of questions trends asked, line the July? talk the second just but the sequentially bill on how to pay through moved but about spread was build into the spreads.

Dave Kelly

that, This do Happy to Sure. is Dave Kelly. Tim.

think positive you if on story. Again made I a in Tech, – commentary So very I look at particular. here a

As some business. seen we – a concentration some have rates impacts new But second talked we I with quarter, stable. from some had actually if sequentially, set we a We pandemic has offset flat have strategic started in sequentially, mentioned, haven’t spreads about higher-margin the we themselves, as in Joe clients had obviously, of because increasing look that spreads higher the lot but had seen last higher bill we look are and you call as the as that, skill had. of, we that I in business requests that spreads for more concessions. think near-term the that of been completely of

Flex sequentially. But into the well the So as Tech are where very in about suggests those spreads good business. by commentary the Flex. core to were for FA historical quarter Obviously, the COVID be good move are spreads the in we feel aggregate our for spreads as feel well the think about stable FA, third going as remain quarter impacted in for constant stability the quarter. move business – to second we And as we in third the

Tim Mulrooney

quarter And Flex FA you you encouraging. million that in government $XX COVID-related that’s work clients? third to $XX second these million and the of continuation that or a see in million you said Okay, to revenue, did I think projects completely of the quarter. the are that Is separate in the on $XX expect

Dave Kelly

those being the that on, selling of quarter. staffed full Yes. just No, the are you they same reflection projects the working that fully for are been have we projects

Tim Mulrooney

thank Okay, you.

broader concrete you any their and Lastly, clientele examples makes as that’s I which client being business lot were right done question, a try support so just provide support incremental of that sense. work was now, driving talked wondering now to about of a type you if the employees? to how digital right needs is transformation they their there could

Joe Liberatoreb

advent I And back so to that do the along have their wouldn’t question. to you that I to what back XXXX, near-term you in Because smartphones incremental, really say great they really a this as the as in is XXXX, cloud, a It’s turning with of is to Yes. areas want I XXXX XXXX. infancy think have such ramification, clear look security were there. point was coming with mobility, about, a be

the internal their businesses even So I they way just mean, are online, distributors, experiencing entire personally Internet I talking I world mean that but are their online, with are and we has customers, interfacing moved center. their with am this vendors, their and how front all the interfacing people. not

mobile and the base customer of acquisition how whether I client processing the think experience, or payments, I So have possible product are all a of journey support, think to enhance interfacing this really terms of in those service, and mean. that dynamics, wherever optimize to it’s there in you cloud opportunities almost or technology a is you leveraging billing,

So an experience. it’s really end-to-end

So get customer which data to is I enhance – whole how my then the really accelerated COVID on – already back I really is, only experience. it’s – do data underway of trying that enhance with get what in And was end decision-making, terms to my happened what’s the how of data you this, this aspect, the after everybody after to overall do digitization. is have these figure whole out

clients all and really accelerator of see roles mean the environment activities. mobility enabling accelerating So would direct-type it work the hiring, I I the we has level, would linked really digitization directly it’s and really I being been just transformational say these up, that are senior that percentage high with of more consider remote with to digitization really forefront. sum whole really continue more to are and then this relationship an experience they they these what and at to cloud consumer

broader than incremental. it’s So that’s much something

David Dunkel

add that, too. mean, industry various the factor in want is to Dave have verticals. this disruptors is that to come to another Dunkel. major the Tim, something I I

traditional to mobile retail – with So some arms use while. a of of an customers, to if those those on and obviously, upgrade the disruption ordering brought, race, Amazon you operators many platforms going their digital will, go their quite now verticals, are own you for so and on this and their interfaces an that within the and retailers can capabilities is in as example

And another to entities disruptor the traditional see triggered you where within the that for this example, operating a more for time. has is from some vertical. industry, one just response that’s quite continue some So going of

Joe Liberatore

that to. world, experience every be they the Yes. frictionless It’s those whether you of world, it overall a and really of do? disruptors, the is more after. efficient down When some it the online and is Lyfts is a what much the this frictionless Uber’s what boils was something look land whole business what at the They this in of it really And did operating experience creating took traditional, environment. a brought created

Tim Mulrooney

I Thank the Got appreciate color. you. it.

Joe Liberatore

Sure.

Operator

Thank you. question from Our with Instructions] comes [Operator Marcon Mark Baird. next

question. your with proceed may You

Mark Marcon

others client Hey, on the you Wondering right And you obviously, broad But good how base little and obviously, a that give Can a percentage clients versus that there the their IT pulling the us side? afternoon the congratulations on bit? seeing the verticals back referenced a was. are expansion with you of their usage is are the you little impacted. now being IT expanding side, resiliency. talk were are certain accelerate if work sense to for are bit that on those were continuing where strong can clients what

Joe Liberatore

Yes.

you sense will So will I in One, for I what give I two parts. answer would we I across a a industries. base, seeing that and customer broader will you are then – for give sense our kind of

our grew would year-over-year And I on or the we remained do of I So is, X say or comps. where basis. would year-over-year say had way top that them business, they because that stable difficult industries Mark, sequentially some XX either a very of

the there. in momentum were always I healthcare, transportation retail, really mean client Tech I within and course those a of and outside we in do seen industries by basis. a that were front, business, have crisis, challenged top three subset very we directly those of great industries, all industries on those normal when stability have the clients at and sequential mean were these that out business on there’s – XX impacted industries, The grew XX unique those leisure. more more that, of you seem clients current that outside look other of So the dynamics. with of But stable of our I XX

to impact. QX have did a and COVID full realized QX not QX from that’s So

some the market, gives overall just that for you So hopefully. feel

Mark Marcon

how do It does. the of those very That’s overall much they XX, Flex? XX of the helpful. And comprise IT

Joe Liberatore

number of XX revenue years around. tech typically of customers make Yes. almost for footprint. now will a it here our half up our I mean, bounce mean, top overall I

for be will it some Sometimes – but that bounce been XX%, a quite it mid-XX% might it’s much pretty in might or closer it time now. be ZIP little bit all code to

Mark Marcon

gave set. of skill side of higher basis, the on skill Tech you really did speaking? a on seeing rates up you then looking Flex On set – you Great. it terms color sets, regards the concentration sounds the at rate sort end good to of comparable level some And greater bill of if set its with what in were roughly skill for skill bill a apples-for-apples, just increase like,

Joe Liberatore

of say don’t there’s parse it’s an talent. I is to of marketplace. know a very that generally Yes. Mark. that easy would speaking, scarcity There acknowledgment that, I certainly in the

skill so set rates. skill increasing bias is bill And the certainly, to for set,

David Dunkel

right. That’s

Joe Liberatore

Yes. is but I up rates. would numbers. rates, as in lower the comes It say capable mean skills artificially portfolio shift our not on, business you involve of It the that when it takes those increasing bill being so bill remote because I increasing. is

things. so really combination of And it’s those two the

Mark Marcon

your Okay. Flex projects talk And you about And growth are of percentage mighty what there? to what you managed sort regards of there? that currently of of some then and can little are experiencing solutions, a comprising you bit the types its with doing

Joe Liberatore

out a out the are tech building I we offering. But really from in our revenue of teams really time. outpacing of at broke our this haven’t a on the would revenue I nice point revenue continuing it’s are Well, mean say standpoint capabilities, nominal model. operating percentage this traditional our overall strides to they efforts percent the make in our because growth

market our now we of existing hear as people upstream. we best are well, that number just to and is, think fully pulling really dedicated those we redirected are to dynamics are a of business leverage you us pursue mean some doing leveraging relationships, are of what clients of I this actually because I from because have are that others type going on. the as

put objective, the plus past the I there out Dave of for one comprise next this our X think calls years probably so in it our in XX% our within and footprint. earnings of was Flex or to So really overall Tech

similar people of ends It’s are customer. the So, same we significant very in just work same more having work, that are that It digitization. we and/or odd types a are of doing engagements. of those involved lot and this of of still engagements around are types type what we the in the it’s within, work that other versus to greater the playing staff with a types is on those role putting for responsibility just

So not just of that how within different it it is a like are business is the the It’s nature we we clients. are those work in. performing

David Dunkel

Mark, this is Dave.

level. out to We am and business a I And you to hurry will that to level. that when XX%-plus it break tell up get this on gets significant call going Joe to

great rates those is progress but making reason it business there. the which So on we at first, here up. taking by rates, heard also the you another bill are way, have going are that bill are higher we’re projects And

Mark Marcon

then then talk and obviously, can impacting But think to terms you digitization and regards we impact can can legislation with difficulties the of have how around potential putting you changes then bit work with the the you factors And little other the and of impacts that work HXBs in offshore the some going and them also restrictions, occurred and about talk current should some those pressure about of some also technical forward? in a environment? having about impact. towards IT of COVID about, obviously, So, talk an Great. administration is the are that

Joe Liberatore

would about, say very makeup the you have specifically, Tech why the the nationals, with of I is or Tech work four see the stem which there impacts the of percentage you of a terms mean, that I several the at and Yes. because what’s in the to big overall the is is, workforce look to driving the forefront and I high years, companies, last this they been better tech tech companies. comes you market to halt you’re over going bring to mean world, screeching of to the it’s whenever start part a come tech the impacting

So based in after out what we’ve track at the is unique risk it type the things I’d what’s visa of visa, closely terms those upon point little very say that there. from to upon others we of administration legislation in to of droves our people trying very not onshore bring organizations offshore in because people based situations see providers projects. time those very different seen terms a would basically this are an I specific of many because business Because on again, working in from we mean that standpoint, out outsourcing lot going of is apply there. these inside global replace or necessarily the remember, that this IT to people are

from So seen the tech, tremendous stability of from entire in we’ve customer And standpoint. our really that’s terms just that I overall mean base. across happening just what’s –

Mark Marcon

some create mean, opportunities as I it should And well, Great. no?

Joe Liberatore

Well, a with standpoint the India are inability things because... on from service you potentially talking an going India from what to of about was work-from-home and the opportunities offshore for the – because

Mark Marcon

Precisely.

Joe Liberatore

the of that of happened. That first on sure starting the out that’s think believed issue. global was versus Yes. all back to not the front and more the reported raise is out while have think same don’t more but don’t – to it when that I I mean, would I there and you heard is were of in mission-critical was when but don’t we’ve is reflected I’m offshore onshore. data that it date now extent breach to may their to reporting ramification. around reports we a in massive, to what this want end, there’s say, that’s the have being much we I be. they is used that potential been would going coming I what isolated place, identified, say clients specific, situation that to outsourcers and took had the – more be be actually, what I certain read saw one any that which situations call materialized might

Mark Marcon

in kind the existing have? What potentially lastly, you’ve you your you a margin that are bit more the Also, implications You’ve little out. a process the will management standard what just talked David, talk with office talent running efficiency currently the that you at work-from-home number going re-imagine relative traditional you then of recruiters improvements of do? to and way – the And from rolled be it’s changing got can worked? could that’s we’ve as What be about of you And to that Great. the about being account system what managers like longer-term currently of capacity are had? percentage footprint. still perspective that

David Dunkel

part, let the then answer comment Go first I’ll and end. ahead, Joe. the on Joe will I

Joe Liberatore

Yes.

And comments, technology standpoint, first decide who dynamics. I decision how could a of So with step seamless just want things from as be mentioned our in long Microsoft we made to integrated and term. just my that leveraging investment because was with was to did them, with partner

the end back TRM, platform down first. So candidate, value it day And we client, went will remember, fully platform. after but provide Because are a we we’re a that’s that after person and the these platforms, platform. somebody they one started of is now, us have one CRM get seamless going that on next the which dynamics out our you’re day to is We of you journey. when integrated still the inside of a a

on, of dynamics after I and one innovation. is we been because we what just would TRM focused within from have CRM, element technology what really have So been say a

past, As into where technology. we’ve joint another strategic relationship the party entered venture standpoint, mentioned very we we’re applying innovative some a a with in from

what is, period technology our X,XXX staff when picked to the key to in driver over X,XXX ability COVID up a less XX-day that fact, business. a In roles than we in was

things, equation, everything our technology in only can that people do side is relationship technology do be really we’re more in is people to can better, piece. the interacting honed can proficient recruitment can we because on that can people then a that can with technologies to do the do the those things and where huge So on identification out the what of so innovative much match apply they from and is people still so remove

we with I associate as are the market now would we front. where indicators handle the population to there, we’ll and we’re say in start hiring what when future technology that’s From capacity when from a warranted. have conditions existing very ample right that’s So comfortable our those that capacity standpoint, are are

the me been of teams. to expanding doing just of areas through we where continued group only quickly more productivity we’ve population, of there. people of where revenue because to levels solutions to continued well with COVID, a know us into certain for capacity the has address their we addition want performance how people been that investing that? you managed we’ve people lot the selectively all-time jump that standpoint to technology believe to do that So need productive that And adding We’ve X But amount of productivity hire the our able we one on level. to want and years warrants, it help everything overall population. us you be with terms been even I our real be next take has group and and to year services to provides that over in at strong that, most to our the as in high X-plus or percentage have remains us for of if as maintain that are within very Dave, don’t estate even from really, the those performance, a to

David Dunkel

that done. is questions. have the it’s want you large-scale to real the can that Joe, I’m smaller traditional be real will no is related to have to answer the in future office to don’t I to to estate just just much ideas what with lot And to are the one you for But going everybody, have know it’s certainly few can’t to real We know But still know going queue other There’s say was We going I that flexibility. have do editorialize that? And to a just for and a when just different is and we it’s interact. about we in thing setup. fellowship the footprint be different likelihood estate folks to is better a footprint yet. gather the respect, we Well, opened of different. going that think We to desire different. what be. test for the But necessary estate a people flexibility. going to a we to work-from-home I today longer up and models. greater say likely add be of Yes. want

Joe Liberatore

No.

office Dave. really not the the mean High replicated. not be replicated everything you of there, probability to I I captured think be will is that future. the in reality going – yesterday is you

or that of do to, going I don’t way, see going that doubling If these where is accommodate real integrate that read of acceleration distancing. the to of efficiencies you any also take those that’s repurpose, to you what are. XX% get remain footprint to those back my that by organizations be and all translate where any most one to did innovations everybody talk how office platforms, I real their population footprint. that through what you how They to does just you is remotely estate Teams, whether this are social believe operating that accommodate companies be coming people my step that in real social be are remnants model, left remnants to you’re look to using the at, be extent to behind, and really really estate of about can these this, how mean, advantage, about. Zoom of are if footprint after historic re-challenging, going only their into standard because distancing And adoption do tires of their most video it legacy I I and estate space

David Dunkel

And at children they’re you’ve got people I teaching income families, their home. families at home working. mean way have that changed the two now,

openings to as what change happens and on forth. with so depending well going that’s so And the school

enable Joe believe the people fun for going of do to that more do the continue of and real and to some operating do leverage it. mundane is a we part job technology, the to aspects the have now of think So as from there not greater I it’s footprint much said, us estate

Mark Marcon

Great. Thank you.

David Dunkel

Thank you.

Operator

you. Thank

next Our question Sommer from comes Tobey Truist. with

may with your question. You proceed

Tobey Sommer

and occupations describe the that the are well said of bill driving are you decline? as now occupations of greater rate and Thanks. some end demand the increases as sort high Could and of some in categories you that seeing

David Dunkel

would have in of, I do we ones help really day-to-day somebody certain anything help fall Obviously, would where off. into really there. heavily we the the the be where to logical to the operations things, be really are and physically things, which you desk physically the not new those be that doing. things set, would tech had that be it’s the would capable the they say, like so Tobey, I’d – our more of the saw whether more you the being on the really what That’s moved say some we’re what the to is think of end Yes. really where those when what in it’s remote. spectrum, to involved of But it’s call support-oriented roles, support terms decline of acceleration, which get is or type site lower been skill

from higher-end that and evolve bit can little areas. understanding area the the standpoint, that a an skill of laying that of doing help lot in in nature. some just really of just so with more architect really or heavy the versus mobility people in A things come something of code We’re UI/UX are

I’d areas area has project played, we’ve this take our some a And managers, a you of bit need mix so your just overall one of driven place. then it’s we’ve which, always program becoming your lot percentage percentage. of that’s And where managers, little makeup, seen say a but the are larger where shift as also again, – for

what’s that’s some of rates. up So driving the bill

Tobey Sommer

think to said you able your respect longer-term going you to sufficient grow business be Do the your services you’re goals? quantify With there you could to to accelerating managed meet that organically growth faster, that?

David Dunkel

obtain can this organically. And we’re we in think said is I totally past that the our Yes. goals confident I

mean a the area. that However, for opportunity some of to into our we’re could going move accelerate right that that doesn’t skill not given look

to have strategic and that – we still we opportunities found at right we We the just look fit. continue So front. on were haven’t

news that we’ve do hit acquisition So anything have that from don’t to the laid good to standpoint the out an is we targets there.

us are in a long-term that it’s opportunity already comes we’re good However, to going about, right designated cultural right pursue area areas the we’ve they’re within that we opportunities, to to accelerate an those. see fit, if then going allow the skill market that

Tobey Sommer

quantify rate you what the could here recently? acceleration sort in And the business was of faster growth

David Dunkel

grown. It’s significantly has more than core our Tech business

that broke to nor we reported – that broke have out rate haven’t base haven’t revenue kind what We the growth talk we of without meaningless. to rates segment is understanding growth about because is, a

Tobey Sommer

of about Curious, a got Okay. that of you’ve Flex a downturn? course Do place land shielded of F&A think we certainly time? you’ve you side, can great in the what the in the that kind business. something in a downside would contract? core just you be Or should think did shield How over kind structural otherwise

David Dunkel

from we as relationships by it that present various comments think were programs. had relief was my well. partners I it mentioned disaster business earlier, worked with I Yes, was opportunities opening and other that won past on in that in The recovery themselves

was of at So right deliver the and that our it to scale. Part place, the strategic was ability time. relationship right

one finance the Tech between earlier, to see come we’re get of areas time sits blending. footprint tech this prospects footprint, gray that those then and in just organization work amount structurally, into Tech was the Kforce, this wanted are of and going other CMO expertise that of had make that because with that our of try required as things data, and the much nature create the were a of was get to we trust get pace data can lot look mentioned a do So terms in because looking how organization, because, FA into there’s areas together. they that’s the partner looking to outside organization our of that because I as doing the long-term IT organization a people to is really how very expertise if this knew I CFO board. there’s in as of But at those upon delivered on the was nature to as again, of synergies after and of the lines we leverage to questions push whole crisis Tech the the at everybody the that’s as possible, into our footprint do technology well they of that organization how within compressed just required that that the zone transcend we’re it obviously, I because forward, an what as us, And they this asked and in this organization, for there lot finance of and

Tobey Sommer

been With If to I not back can respect buying and how last deployment, has stock? Thanks paying in. I’m you’re your debt just sneak down one curious top capital one given the why resilient the just line

Dave Kelly

Yes.

grow for the think whether as opportunity that So to or we’re part to simple I one, continuing I make think that, we investments right? the think, got technology – well is otherwise. we do our uncertain business, we’ve as where important, here that. better Tobey, times. think, to these are as I in And of being It’s today, a discretion caution us, in be

Joe Liberatore

some on be Yes. outbreak a question Tobey, at a as if outbreak. the I mean, I and accelerating well. as again, to would whether to there’s going there’s derivative just second still happened, that complement comment or with look fall recent you what’s

that something. conservative to need this need it compelling going going us the we because we’re something that play is do so all still to a unless we it’s on to would So power give to act at point,

be a or to give So these this get as we’ll watch clarity. is sense where for we’ll going, X over to next greater so able quarters

Tobey Sommer

Thank you.

David Dunkel

Thank you.

Operator

not I’m at you. questions would Dunkel I to any for turn any call showing Thank back David further the like time. remarks. over this now to further

David Dunkel

thank been our thank congratulate team want amazing you. opportunity our And again take It’s Well, to team. I an to and time. just this

unprecedented just at QX, of our to for justice ahead team in and happening. this just the good to You the And really resiliency amazing we are Yet look the the are talent all encouragement our to guys we of our Kforce same were what consultants, in through we time, And about an all do excited resiliency and went customers spectacular. quarter. really word doesn’t things the that are us. such just as

you. So thank

support Thank the and you And much. side, and and the for in so you very standing unprecedented investment diligent your we’re And for of excited with thank and you for future. certainly rest of support thank for you interest about what times all actually Kforce on Kforce be ahead, the will us. we stewards lies your and

Operator

concludes Ladies this for you. participating. Thank gentlemen, today’s Thank you and conference call.

disconnect. now may You

Kforce (KFRC) 11 Aug 202020 Q2 Earnings call transcript