KFRC - Earnings call transcript Q1 2021

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Operator

Good day and thank you for standing by. Welcome to the Kforce first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. to CEO. conference like Dunkel, to now and Chairman would hand call this David I

begin. may You

David Dunkel

statements. Good afternoon. forward-looking. like and contain based I would current are certain call that upon and statements We the may update Actual subject this to and Securities the that filings uncertainties. and from in cannot any public to factors Commission. are duty undertake assumptions results These risks forward-looking may are vary to filings Kforce's statements any with and listed expectations remind you materially and reports Exchange other

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

of quarter the backdrop performance, In where addition, quarter the of heels resources raised for against the momentum our unprecedented for environment. macro team at increasing moment. of remarkable improved an in Dave we cover second I Investor website. am end ongoing the we incredibly results demand our that as the the delivering proud high our extraordinary first technology, some follows The entire demonstrated will detail significantly within Kforce expectations quarter a the in technology largest built This of continued have and that by resilience our remarks of and were elevated portion business, execution our on prepared Relations and execution our of the progressed. expectations have published XXXX have outstanding which expectations great Kelly in a

prior technology staffing Great of and from the XXXX, market market The $XX spend our segment solutions, in size with staffing market recent important technology domestic became nearly noted Analysts clerical billion largest and $XX update staffing reflect As staffing. that largest the segment it's the industrial the third market the Staffing Industry most behind was billion. business to strategic Recession, that on remember in on I domestic technology roughly and focus our decision domestic to staffing to

the times grew business excess in two period, Over same rate. of market the our technology

Companies technology have and the Additionally, this billion. spend technology their the $XXX the market decade growth is increased over significantly of in rate exceeds professional services accelerating. market past

In the XXXX. our domestic to in the of market strategic X% confirms focus related fact, functional This anticipates and technology technology will grow wisdom in our skills decision by complimentary SIA currently skillsets. in FA and energy staffing

is virtually prospects. As strength there future no industry, client services expectations, level team allowed talented with segment our with than more X% coupled a a deliver excited corporate day X% in on demand, year-over-year in prospects sequentially basis. other incredibly to of and our improving market Kforce's we across focused growing billing every we first to would where to portfolio the blue-chip technology look the and The we the quarter drivers to single be want above our are future, about secular at

made end our in in we toward objective our decision quarter. of progress migrating business nice analytics and skillsets Additionally, for the support FA higher

services we shift, an believe, technology our which elaborate compliment Our our provide FA COVID on revenues, during This exceeded results, we to also will will his expectations. clients, Joe provide important remarks. strategic the excluding

employees many available We tools, environment technology work. in-office blend continue work Reimagine that of post-pandemic flexible will through and in make a have internal a positioning by more initiative and utilizing also our remote investments have firm great to to leveraging our our progress such of our ongoing

and both in the smaller offices revenue-generating This will expect that revenue-enabling vision includes footprint our a We physical this workforce. per of components shift office. fewer result and

in seeking HQ Tampa new As sell facility a and are per week, have release to our an last into Bay. we corporate agreement actively entered our

our in the balance to were sheet in million with strength in active we operating repurchasing be to facility to under in quarter. continues approximately opportunistic deploying Our $XX capital. availability generate allows respect flows and and our stock credit business The significant us cash first

potential acquisitions, our and continue apply to to While we stringent we will any evaluate transaction. potential cultural financial criteria

In generating the our second we of solid the expect building, flows addition to in continue cash to sale operating quarter. from the proceeds

quarter, sheet backgrounds Given belief in Kforce a to into growth the our strength in Board we years possessing the active levels. and in fourth two detail skillsets expect the repurchasing our Board to and on Derrick perspectives stock the of first individuals future of extraordinarily and remain governance of these Cloudman Catherine we joined perspective, diverse provided Board to accomplished our in at four individuals, current with Directors we refresh to mission future. Board. to balance ago, Each prospects, lead earnest, necessary Brooks personally, quarter our both in valuable the our and XXXX our and Mr. in Earlier a quarter Ms. in our of joined began, professionally additions bring our the From Board. XXXX.

to well environment. execute the companies our digitize are our position over to Joe? be believe exponentially elevated second for what we investment. and businesses, transform will our other then drive into operating CFO, to I financial ahead, environment has that ability give continued and Kelly, gains and financial technology pandemic models imperative our demand strategic detail about turn greater guidance recent excited As will their and very productivity Dave will Liberatore, as the services. now business the trends as give our performance, for It's and the through position belief quarter. greater within on expectations results strong President, Joe we insights a will operating our we rapidly into our look insights call for who

Joe Liberatore

I for business. experienced business. X.X% COVID quarter am and the have on X.X% the strategic And first the revenue we you first business the seeing sequential improvements at our growth technology for March across growth day The by is are to Total all day accelerating. on XX.X% in basis being are extremely More billing Thank our revenues interest areas typically, ever ends. momentum of assignment business in you a technology our the complemented seasonal best as year-end we quarter your and year-over-year in best is first with grew a pleased Dave. and thanks Kforce. FA quarter given perhaps a Kforce. a in in record have in on basis decline sequential sequential performance year-over-year we billing day This billing experience we the the

very and starts. However, with of new at we first had quarter a to end ends remarkably assignment the low assignment XXXX respect strong

to of to to the the consultants return end the assignment of In it levels. levels Typically, fact, we returned until end quarter on pre-holiday of takes by January. these

going the day billing declines about was technology our Recession, of range perspective, back For X% Great to the sequential X%. in additional to business nearly

as is to shortly. to vital, than three So and $XX is sequentially technology driver that on our that in significant have Billable to this Volume, XX% at Consultants hour. growth encouraging greater most non-discretionary in speaks to elaborate are the consultants inception shortly improving have this are will trend. growth. Enhancing year-over-year rate for now result Bill tremendously the we that bill further critical performing believe grown however, on work I consecutive our assignment assignment of quarters. pandemic our is an XXXX. after rate increasing on X.X% June levels We the the an relative across client which range. mission increased portfolio, volumes rates began

assignment assignment months order flow lower combination to We levels. sequential Job surpassed activity as a has growth quarter new volume the to second March are of of and far levels significantly of pre-pandemic has and in thus prior levels first the the quarter from Both in levels rates our continued activity strong meaningfully new well solid seen and benefiting pandemic. accelerate to increases returned recently a as into the April continued assignment and foundation provide ends. have us the from bill solid

We an as critical are due also fill see initiatives. quality overall of mix order executing job to clients technology improved continuing higher against are ratios to higher

also scarcity deferred believe transformative the growing we for projects delayed, We high restarting or resources the securing IT been resources the of initiatives. of are end confidence experiencing are reflective may trends new that have and in

our highly traditional with differentiated strong accelerant now significant at scale, talent, solutions managed in offering provides our provide to has in clients. boundary-less offering management, technology This within been investments our such of cloud, a and value, diverse growth US. provide technology the years we top made staffing last higher and process have front-end capabilities these towards see the improving efficiently our over clients acceleration to in the program The geared the to clients data we digital a complement order focus business. to several We mobile, teams to critical made and environment have in A capabilities a with technology consumer's continue as analytics, the experience. our project to investments overall have in across initiatives our areas strong matured

professional have our offering resilience been virtually sequentially ability the tremendous for on our growth We shown success contributors We other stability. expanding our market in throughout further We experienced key nearly retail and industries, modest to confident strong feel to business and in in broad the clients demand positioning across partnerships We share. capability this have industry. have industry insurance insurance due been significant the we services. extremely growth technology or Financial basis. throughout this professional every our the while growth sectors to and and investments delivering XXXX built strength making quality intend remains on experiencing have in relative and in foreseeable our reputation experienced year-over-year to a the There all pandemic future. services, bringing in long-standing services, services and the continue of

growth declining This have in our year-over-year in technology quarter, year. to significantly momentum second we increase technology business into expect market the Given in X% basis. quarter in the market the teens second revenues the as mid compounding last outperformed a high well-above on could depths the revenues only pandemic, carried the of success, our the is we

execution share to take the of against to overall would team's of We are clearly acceleration spend. which attribute an backdrop our technology we market continuing

on the the second remains $XX of up of a could expect The of that $XX the to million range the be COVID-XX the a government-sponsored revenue to and COVID were quarter, from primarily million a recovery economic first pandemic. initiatives revenues in revenues tied in stream efforts and contribution approximately quarter. of of million as basis fluid our year-over-year fallout flex FA Our $XX revenue day in support billing from XX.X% result we

flex sequentially XX% basis. billing Our year-over-year business on stable was and declined day a non-COVID FA

business mentioned less efforts FA to assignments, and As intensify and analytics footprint. began are decision-support more and skilled our our migrate we to change that susceptible previously, we the technological our with technology towards more automation roles, highly synergistic to as such

where skillsets ongoing clients We success are have continue long-standing to our important for will relationships Kforce's we to lower and certain technology in support end strategically business.

of lower relationships expect the first ends assignment where do continue exist XXXX natural not of skilled FA strategic seen client second to roles into have the We in quarter and quarter. that

revenues quarter significant of expected a single COVID the We sequentially slightly When in to revenue. sensitivity but revenues the first the traction. allocated to on important part the our day our be remains hire range have year-over-year X% basis as year-over-year increased total nearly revenue, X% decline clients mid FA and hire economic though FA not may service gains our to cycles. on year-over-year a sequentially basis repositioning here expect due the primarily to Direct of a mid-point offering basis. flex its up non-COVID of billing of combined be up billing with down COVID to digits, due Direct in day on an investment we the

the revenues a We the demonstrate clients expect through addition and growth slight of recovery high staff. the degree year-over-year approximately may increase quarter second direct of hire in in sequentially confidence as see full-time XX%

long We are to growth. in our strategic for profitable firm initiatives invest term, to sustainable continuing position better

in significant recent other product Both and efficiencies. thus Relationship cloud-based Management quarter. systems TRM Microsoft live which are most system, in went and investment seamlessly our providing Our CRM offerings, Talent first fully with our integrate significant the us

model. interaction the hybrid candidates efforts with headquarter flexibility a online hybrid high position aligned will metrics what Productivity evolution for across work integrated us operating to performed facility announced our of to our a team and of evolution tech, other last in of build team the operating of the in with also of that will corporate Our maximum many enhance fully us our significantly has smaller the continued with internal footprint model sale clients, consultants. operating lies to week our future model out a The positions and provides continue deploying building improve experienced an experience and advanced high be state-of-the-art real-estate how touch associate efforts, base. a These the ahead. regardless

sufficient and of our also to are last bullish due transition the invest investments remains to so improve for believe take us processes making above to work. market should in been what XXXX. support will tools market increase the late to years remote currently number advantage our term rates investments we able so are year technology successful of our staffing and and beyond to during in to greater resources address growth continue technology selective we growth the allows us and capacity We business growth in collaboration strong technology communication long sustained to that our very of have come. in this and associates prospects for enablement began Overall to that to This growing be opportunity in continued

we are costs our will a accelerates in as result more that future. best positive structurally leverage and model reduced we fixed the and our supported refining as leverageable have reimagine growth We expect people, retained

customer Our are an employee at satisfaction and levels high. all-time

placed and Kelly, under to operating Kforce the rating teams' per greatly to I the SIA. turn continue world I consultants net maintain the highest and candidates year. trust of the the circumstances be most while recognized promoter clients our appreciate attitude and over from our Officer. Dave are the technology carry past in couldn't Dave? and class a We and clients, now our call of remote Financial consultants Glassdoor peers consultants and executing Chief fully prouder by a in firm score among have will Kforce's our I capacity efforts

Dave Kelly

Joe. you Thank

XX.X% quarter First $X.XX significantly revenues first exceeds trends us lead our million Earnings of technology of especially second were the previous positive and $XXX.X near per high the in the we our business, our grew are our end seeing guidance of quarter share across guidance expectations. quarter in to that business, year-over-year. provide

to quarter our are EPS due second expectations increasing also strength our the significantly growth. We for of revenue the

gross I tech basis as points, note year-over-year our XXX XX a slightly was points scale XX.X%. a year-over-year. largest margin in basis gross decreased related percentage XXX to gross business experienced are margins, decrease of able basis Our clients with which driven clients, of more a to as partially to continue primarily growth than we operating the declined profit the margins. XX.X% a flex decline overall in lower by lower as these technology which of also This profile that average point in of business the some result expand margin year-over-year our margins, was grow spread than to lower whole. we quarter profit margins by our the should to flex decline a Specific as offset we gross of with benefits compression,

QX basis versus in slightly primary lower in points margin decline. COVID also this QX, rates we declined last taxes states XXX costs portfolio from margins to our as the Flex FA We continue higher also quarter began contributor and payroll with managed to raise year-over-year, to expanded Sequentially, being higher healthcare spreads offering. have technology project success business year. the solutions higher as experienced growing first in end our our

resources. valuable wages technology both We rates term for long As work a be our spreads is are our we consultant we we retain look seeing of so and wage for QX, are strengthening to FA expect begin ability businesses our sign demand can net technology believe relatively our stable. to forward we clients with they to Should inflation bill these positive business. and to in align confident a that within population, appropriately our rising in resources

than carries managed our solutions to which basis business, continue XXX staffing higher in technology growing experience business. point and also roughly our teams success margins We

travel expenses costs offsetting These in will term margins this associate basis lower to and due credit higher approximately areas spreads QX, our help payroll are by revenue improve that in due such stabilize levels first the percentage offering points to improved strong and due our to results. office in to leverage by from longer resets of growth, as as a on should revenue percentage productivity, operating over technology overall quarter margins costs overall expenses trends. second expenses year-over-year performance-based expect significantly leverage by primarily payroll QX alleviation and to in reductions We quarter the $X SG&A seasonal of improving pay of tax as to our create of decline revenue Flex tax the SG&A million relative gain due sale the increase a XXX decreased and principally of headquarters. provided profitability. to the alleviation and Overall occurred QX. points the basis XXX

operating quarter improvement revenue continued productivity structural profitability first stream, margin operating was improving lower and drive our the continued collectively ongoing believe levels. of improvements will Our We quality X.X%. costs in

EBITDA from through in million, last was QX in flows year. XX.X%. Our was effective tax the the the were a quarter quarter approximately represents which first to $XX first $XX.X quarter. in million with rate net $XX.X increase million capital the in XX.X% shareholders our Operating quarter cash first in share first first million $XX.X the quarter in $X.X in ended We returned dividends. and $X.X repurchases cash. in million million We

like the As we to quarter, some our assumed I in two in are look items detail guidance. forward to would are that discuss there second

period on This of the an that sheet. the agreement facility First, for million $X a entered in as last $XX into leaseback will mid-May asset quarter. for transaction is agreement to monetizes second includes we week, sell building to SG&A under-utilized be a balance roughly gain months. corporate of generate in announced our million. an transaction our pre-tax recorded headquarters The and a close in expected XX This

expected $XXX,XXX during costs thereafter, leaseback million $X increased identify in more a expect footprint period to occupancy as is to a negative of savings Tampa impact area. provide quarter $X.X as we annual per the roughly brief Bay tenant, in a million it due the technology-enabled smaller, to we While SG&A to

The approximately results resulting $X second which million charge supplemental is of expected second discrete our expense. is an to termination in the quarter be other recorded item executive retirement impacting from plan,

Directors reduce decision will Compensation of and expense, linked eliminate made The volatility to the component plan Our cost and compensation to Board given directly eliminate its Committee of unnecessary also this executive termination maintain. performance. not and terminate to P&L a

reflects charge, previously of to a to the $X our the second related of $XXX,XXX tax SERP. rate million the addition XX.X% tax loss expected In benefit for the effective quarter anticipated

and on each of largely sale Excluding building the the charge SERP gain impact, the tax offset other.

tax leads SERP QX the XX.X%. providing of expected a normalized revenue of our Our we our and COVID the excluding stream rate guidance. us to continue in range higher been revenue The would broader impact unpredictability have are levels generating in

Our the and first in the more of the billing quarter which day of than second one same is XXXX. XX days number as are days quarter the days quarter, second

approximately QX percent of and a revenue X.X%. be be between diluted anticipated shares the XX.X%. in are QX XX.X% XX.X% expected of are the average be should expected while and expect million noted, and between to is Gross to SG&A per as XX.X% between be and is and X.X% XX.X effective flex margins expected and XX.X%. We to range million expected XX.X% to between expected XX.X%, be outstanding million tax as be are be rate for margins share to $XXX and, $XXX revenues margins be and $X.XX to to cents. to between earnings $X.XX Weighted operating

strong we in at or exceptional which technology, focus QX or on expected in we legal on effect, negative QX from tax matters, related the one-time greater, consider towards any future potential The to Our of changes. growth impact to environment an decision pending charges charges any related in in future. funding, the the strategic Overall, the and or response variant regulatory, tax grow costs, overall guidance any business revenue our law foreseeable the firm's us a cases, positions place. are revenues or in any, believe demand for COVID-XX of domestic government is very increase organically or to does to XX% in costs the if significant legal impact disruption not

expect we year. by As our end QX and COVID-related revenue to mix to through levels decline and reach QX minimal of the revenues the evolves,

focused expect permeates efforts. We to focused revenues XXXX of technology, which is on society business aspect and our every enter with business directly that FA and of an technology complimenting in those XX%

capital continue capital excess performance invested allocation, benefit exhibited return on shareholders a Our to from by strong of as XX%. efficient in and

our stock the predictable our like proceeds active continue Our our significant current I business remain flexibility XXXX. management the by in supplemented thank levels. you cash to sincere the build building provide future a from to flows, call On team, to to our our success sale, efforts making entire expectations would their would of behalf at and extend investments questions. now continuing XXXX through teams like outperforming to that in on and of open in for we adversity for market up repurchasing Operator,

Operator

from our And Instructions]. from Baird. comes first [Operator Marcon question Mark

is open. line now Your

Mark Marcon

Mark It's Marcon. Hi.

share? am and with a made across economy is, growing the is trends of a the there seeing could little First wondering comments the terms both if It's and digital if where are are more talk of Dave, gain regards you I are all, that tech share to gains? elaborate side. can bit in gains what share of the wondering you Joe you Is we you should congratulations you How improving and on strong you gaining Is the am by apparent How progress are in you I technology is wondering am that about board market geographic? I who secular on it pronounced going think But little it to it? sustainable forward? exhibiting. do is continuing about are flex to the the they? think that How steam. vertical? bit terms and that Relative

Joe Liberatore

question. growth. the SIA high is Joe. a is place broad really gain say, what would from reference Mark, against a as ourselves staffing at level in saying standpoint, is of share is to Yes. benchmarking terms taking a in Very I this good just whole

eight and had involved consolidation vendor front specific opportunity to winner on more that. are I continuing wood, good down give a we have important this you point are nine of we kind the A is, think on client with They XXX it's had So staying that up time about into our knock can time, vendors in pick won with be that at one or outcomes assignment. when to of about we that vendor. roughly it engagement that. going and that large probably through in consolidation had What we working that have consolidate one actually see associated We now and are point to and to clients example. I that actually note fortunate we share consultants We had to very vendor share XX% XXX% on to of wanted the on that about engagement. share.

that So within we see on clients. broad-based going

I and the business specific overall say, it's So we doing then client it's where really are market. would

Mark Marcon

can in that mid Great. high we flex? mid from at about terms you as just teens, you mean high board? of specific of talking then tech And to regional drivers I are about Is look perspective there uniformity, to a the you that growth? are across teens the in terms talk are any that the seeing? QX growth Or

Joe Liberatore

for market I the ramping year saw market-based looking the will right critical hiring here more in have growth third more screaming our after, the project we I is, of initiatives would much come it's were beginning versus we blocks that terms clients our they in whole, saw clients what get call little in enterprise say of balanced. QX, the up part of out tell you, of our we QX. the a of in a we what it. that entered why We enterprise early to clients referenced part bit we saw as

broad-based. seeing We growth are

with of seen it it are four being in five geographies. the So And we across those our double all we five have industries, seeing really or top digits. across

online that the the impact, So online adjust impact those hit, companies, on weeks dotcom. prepared best companies, the of pretty retailing mean, companies. a about at example about share first the the eight I I we small retailing growing additional the much to the online days pandemic close and market medium-sized imperative for was technology, pandemic, that is from kind to spend. could standpoint look of it's for online weren't digital captured organizations the grabbing if In broad-based, early retailing when large retailing X%, X% since of to XX% give at

all that's example happening. just So happening that's and all But industry industries. that's one sectors within of one

ongoing we terms very what the are confident are. prospects of So in

it's vertical, not it's a a it's client, basically So single single region, not it's single not broad-based.

Mark Marcon

then You little you just the You can quarter doing? ahead to the How second And And assuming that had on regards do of spend? of you in Great. that's COVID going can revenue, for guidance was quarter of the here conservative been bit, previously second the what previously the projected of in the anticipating. staying fall spend off. to is your a terms about gave special we well the talk the and F&A what balance terms year you think go? are terms talk projects we with going to were caused change it in of for guidance anticipated

Dave Kelly

This right. Yes, Yes. Hi Dave you is Mark. are Kelly.

we I things talked think excited that especially business, thought because revenues. think still actually this to we going I the third million-ish in basically $XX to unpredictable opportunity and would am in strategic about to quarter, in second Pretty quarter result, the what that partners. We participate us partners going actually can business these anticipated asked which is, request, had continues in come another invest stronger with quarter for third we second But We we that the the And about we matter revenue be the about in second it Probably with them. think I drop so quarter that think one with investments give we off. little us are have look the been of now an that into last talking we the make bit a us have at had project, have of total fact, of business. a forward we about to tech to in help had year us we indicated XX% levels respect to quarter. happened had growth our is to long as than and exiting as those government quarter. term, a those

I quarter get of both still the revenue So off at quarter. our a be here tail in and that the say, would relatively we the still lift but third it will in second planning the little bit are assumptions of end minimal year, and will

it's thing. a for been us, So great

in As for of a technology. been further advantage opportunity great take I to invest our said, it's and core us in particular, business,

Mark Marcon

can to, But the should then margins from here we the about about by the the business we corporate long perspective you the the complemented think metrics coming implications the moving revenue more here what regards work, How how with the term COVID think divestiture know, some a to with that the that's in. a and of just EBIT us margin you online headquarters, you improvement historically margin with for targets? QX have of you to nice are with talk business, are given implications? should and that's and to And obviously guiding Great. government regards

Dave Kelly

Sure. good problem, question. A Mark. Yes. No

operating certain as provided So would margins updated thought we to at be some revenue had said last guidance what our levels. quarter, we we

to revenue, we doing lower when Certainly, do was rest expectation. right those which changed not bit the are thing the impact is COVID that some of not about, it it's talking of the because we would a business it with have We this expectation than frankly us. the little margin and are

incrementally back again, certainly It be The impact So obviously having about a are second into quarter, operating it we as tenant as slight a leasing is corporate flex $XXX,XXX that's look us had it versus impact. margin mentioned, margin headquarters that save $X.X but to to as for year owner an because, a there take being year-and-a-half. going cost I are that we also to been exciting to still going for million we give hybrid expect a focused very new are foreseeable we that costs, space advantage on. a have the really million model we And people the of $X future. our it the

is great opportunity there. us think it really So a for we

haven't say, would I changed expectations. So all-in-all, our

approaching FA levels technology Certainly, X%. more at get $XXX improve had in core As as operating pure we we grow past before, we we our the business. expect our it's mark, still margins, million said to the

posture. So haven't we our changed

are We of COVID manage of some prepare future. take to advantage better trying even ourselves through just for to environment this this to revenue frankly the

Mark Marcon

Perfect. Thank you.

Operator

from question comes Mulrooney Blair. from And William thank our you. And next Tim

now is open. line Your

Tim Mulrooney

Good afternoon.

Dave Kelly

Hi Tim.

Tim Mulrooney

Can for afternoon. relevant, remarks, that want hear guidance quarter. to mean Or last me range I you you given said no that update you you even is I expected? gave than second color still just that mean But gave gave coming think things appreciate all quarter. for on just Are your the that okay? Good stick in the guide longer I how, comfortable So with you annual in I you prepared you previously? full you are year didn't notice second. a I better

Dave Kelly

Dave of Kelly this Tim, things. a I is Yes. couple guess,

it's the growing, that had. So that second footprint,, thought we just is the technology to the share provided that primary with to process of some post-COVID quarter certainly our right, we the frankly in And or reason was pace to we we eclipse you make wanted with business more sure the perspective feel XX% to going quite going still change. some how was

had are are we things revenue But And bit that trends seeing topline bottomline say, so here, we bottomline look that. the and the we overall, quite are are clearly both from we thought. provide seeing perspective and that update to didn't to are expect we going better, a an would at a going that obviously positive. we and than But trends that

as is a giving Our make guidance really we you as rather had sure going much than growing change to provided certainly at said, and tech to how courtesy was that, understood full-year. for you business the clip expected the a business we than I frankly stronger

Tim Mulrooney

I the No, that. I appreciate was figured but that sure. not was clarify to that for case, Yes. just wanted anyone that

So I appreciate that.

Dave Kelly

Sure.

Tim Mulrooney

Should this your may bit quarters? we somewhat margins so strong some for a over competitors, else. for Yes, little and about next what on demand their while. expansion several of around of your dynamic the quarters a expectations with into see, recently similar business tech coming Let's having to the little side expect more IT costs back a their that talked staffing margin hiring the anticipation the company maybe of limit flex folks they over effectiveness of temper layer ahead one in

Joe Liberatore

Joe. is this Tim, Yes.

question tech right you to it then that And of to two really asked ripples in headcount, answer talking I about You with part you ways. it because were the and have flex want different make the sure margins. margin. layering operating

So are around more for the you looking operating margin?

Tim Mulrooney

I am looking specifically for operating margin.

confuse. to Thanks. Sorry

Joe Liberatore

I the just there, changes we margin are Dave your of appropriately. questions to committed that Yes. targets we wanted I what go had to and have we what irrespective this, mentioned and sure operating put about. out experience for I answer make starters guess,

as coming P&L. into know, of the all the to a have expenses come down of pandemic, P&L. Other have lot certain we gone expenses As everybody out the

of come As are have travel move come expense going those out in. you more of to expenses, Certain we to going around. this, that's

headcount. various with to going have offset headcount. you start You going estate in more productivity going is things other like obviously ramp improvements. And doing come to things what a are from and be footprint for to other expenses that's to areas as up Wage leveraging are technology in real we

the As Dynamics overall I of our we rollout just front completed for our mentioned, final office. platform

We have front. that on of expectations high productivity gains terms in

the is, I that move continue on intent and to so our we XXXX quarter, as last business that mentioned can we capacity levels as productivity here will So warrant beyond headcount to incrementally call we XXXX adding be future. the fuel where into to the

marketplace. we to overall even built and the the comments, of our going been that to teams outpacing those in of growth. and It's area, contributor are a hit obtain into which opening going to we continue we also As my our are operating into, I solutions things all are is add headcount mentioned that put margin managed But targets to technology into big growth.

Tim Mulrooney

that's services how disruption pandemic? since there as you. to acceleration work you emerge over it to the then expected, had if seeing managed we maybe pandemic? Was Maybe this you that than during driver you did sticking did think months, But from just and XX managed XX the know work? hold an perform that that on better type type Okay. of the And for last I back in step important mentioned evolved I of an about is are up Or services you this it. the how growth work?

Joe Liberatore

say, would it crisis, I into compare to the our pandemic. broader I if would a was is was back with and trough then to staffing answer going that technology start business I think sectors question, you that the business down Yes. other within which financial was down, our probably I X.X%. X% the of mean at

a that So is that technology no I ago. question, is got place. taking be back used probably is cyclical into business there to isn't years play There the secular shift this it when three

You going can't point at everything in without technology facing. this consumer do with more touching anything time

found environment. seamless. work we our that technology of the it a realizing say, So did as that business remote the performed pandemic. I one to really that the in be teams more experience able to of we manage complex solutions did little teams would work managed just and thought that it anticipate, be of most well, in things would is overall Actually, staff people. not during a We we be very bit to business did and

productivity and gain being physical. teams our fact, versus of even when saw teams we some on remote those that the in in were put fully installed are In had clients

downside that It during of So performed business well pandemic. outperformed the the business. the overall technology

continued the year-over-year actually basis pandemic sequential a and perform. was it it's to throughout up So on and

more for We little standpoint. work what responsibility. really are they type bit a take more on that lean are that can because from a right are looking They on seeing the staff of engage partners are clients

able from I their So take of the overall well the any the their year. as have as increase has have the offload on on what leverage engagements back-end additional to seen they are last quarter it in leadership care they the get way were we certain that here so be say, coming really we than that to can teams on bandwidth demonstrated, would coming of projects engagements in more seeing of to that

technology accelerating overall accelerate. as it's So spends

item. So solution looking how great best manage value overall line to everybody's SG&A and to at providers their relative

momentum right business to in that all places the So to is continue the for prosper.

Tim Mulrooney

Thank quarter. a I on Congrats Okay. all color there. great appreciate you. the

Joe Liberatore

Thank you Tim.

Operator

And our next And from thank comes Josh Vogel you. Sidoti. question from

Your line is now open.

Josh Vogel

everyone. afternoon Good Thanks.

disciplines? seeing the skillsets as continue with managed higher obviously reception offering clients, opportunity in closely perhaps to migrate end to there are tech an more especially FA was strong services, curious rollout question, in that First FA to been is practice. solutions they this I towards aligned marketplace your

Joe Liberatore

those a more drivers of the one much of of closely that that touched of standpoint. It's what little in skillsets on FA opening type from bit to market footprint, our into we migration fit with a bringing many upon really technology traditional really David his Yes. kind remarks. are

types the technology analyzing those solution at a component, decision component type look data. view both a support we So standpoint absolutely projects teams where two is where around momentum competencies opportunistic you those when have well especially are type great we engaged direction are, a core that headed the bring projects, on believe We a and from have which our FA leverage we managed as from the and technology and historic is a already what the blend certain all together have to that as of that together. and in data-driven standpoint, and they in space around

it So fits well. real

So spot yes, you on. are

Josh Vogel

And because forth Great. a I between calls. bouncing apologize back Okay. of Thanks. and couple

prepared So I the remarks. did miss some of

matures just this as margin flex business a there more, am I curious, the profitability is traditional difference or profile in So work? versus material

Dave Kelly

Yes.

go think, I Joe. ahead

Joe Liberatore

Yes.

to I had mentioned to say well, think was this and going as your we Josh, point.

basis business. gross are services, this in business are have say to our margins complement So this I But seeing should than and we is a what this margins basis now, technology the are business, we this managed technology rest seen teams right in about of about points XXX higher XXX in business. great managed points, our business

a even have the got our certainly of be as stable in that's clients. confidence fair some so reasons we the amount pretty to And we going why as that one of forward, grow look of we business larger are margins

So greater maintaining it's and both well a the of client wonderful opportunity business, as in needs meeting stability our terms profile. margin complement to and bringing

Josh Vogel

right. All Great.

remarks. the all in prepared details juicy missed your I like Sounds

you contribution I balance of it, kind question QX but actually COVID the which year? me that next for into leads is the my about and discuss did just Sorry of tell what because you can know the expected

Dave Kelly

problem, Yes. Sure. Josh. No

our certainly have good had QX been a we indicated, expectations result. as So a had QX as and actually pretty we raised

I $XX million. had and million think between indicated we $XX

in. second project $XX is at million-ish of in and partners new the So we quarter. that that to Part asked result of assist our roughly a us came that the of one

still we go the think the sustain as and forward will look we that will we business So year they quarter, that as from levels near into minimal of those XXXX. third be but the will revenues to think that revenue off end tail

Josh Vogel

kind it vaccination becomes long-term around Okay. Yes. curious, because to next COVID led of new was element does an do of potentially seem my is that think the [indiscernible]? these stay, And you schedules. like year-over-year see bi-annual there could I is and question into flu That it government-sponsored just whether we initiatives

Dave Kelly

surrounding driver, pretty are Yes. pretty driver fluid, volatile. I continue the that see the we big the certainly a circumstances to opportunity as Again, a And this think have. country new clearly we to

So predict. us for to hard

are expectation it we that going isn't an can plan to is we here. it advantage take here with think I and

Joe Liberatore

This would it's is on that crystal so The that come add And that Josh. clear. Yes. our way has long-standing just through here to businesses Joe. I is relationships.

impact us Two, the two for had because nature right people, economy was capability and we support had business of So the given who this we main the the have at which really in of the our through thing these overall what capability. upon few One, do supported staff U.S. reasons. going the to partners the it was to depended scale, to engagements have in past.

for business it So from standpoint. pursuing is those a long-term that to right It's really This we do. drivers. the not was thing are two morally

XX% are mentioned, had we Dave technology. As

It future not FA in sure the that. our As closely to we migrated Kforce. our this That want clear we just align footprint. is more to make on are footprint have exit, upstream we I is of space. on much technology with crystal

Josh Vogel

your and finding meet Yes. end lastly, resource as you take to scarcity IT seeing and current are supply improve flow level, such [indiscernible]? potential of constraints what lot done Higher on to today order Totally And of what's understood. being a share? engagement and/or Thanks. candidate

Joe Liberatore

would I figure question. really dove slowed thick the say, great because trying out. pandemic a it down. mean, little it's and reset everybody was never bit I during the of it to So

we initiative which better have the TRM for subcomponent an of overall that investments. we been great transformation part delivery now, a three years after our have of that strategy, is area which made Our been has

lot We have a of innovation on. going

platform are through is to relationship the investments to no candidates have measurement is on that coupled from our that stores while referral out think, access improve NPS what and as our our going with client a our to a we and quickly services, consultant them capability move So after their make have And world-class, to tools we continue other technology suite deploy we that well front, our to back as people's many telling the different than standpoint. efficiently. all to there of in from process are WorkLLama And what I continue we are they that's best with which us. technologies with, announced that KFORCEconnect are we starting

get war performance drive a to are on able ultimately for going to we technology anybody the is out and there marketplace. assess people competitive it more continue else edge to our in to being invest So in candidates rapidly But than talent.

Josh Vogel

taking And year. my this last impressive Of certainly start year Yes, Well, course. results and thanks questions. for

Dave Kelly

Josh. you Thank

Joe Liberatore

Thanks Josh.

Operator

thank Truist comes Sommer And next Securities. And from you. from Tobey our question

now Your open. line is

Jasper Bibb

How for given is to are capacity I remarks. you recruiter wanted seeing Hi. gains are on This productivity going Good Bibb, circle on growing headcount thinking there? revenue Jasper during about forward, prepared to versus the Toby. evening. you your back your comments

Joe Liberatore

Yes. do groups. say, of we have It's would a across for starters, capacity to all more god question. our I XX-year

trying country which of times, of these the I and a tell stronger think has terms culture of spent are really spoke enhancing in drastically that can't the We because looking processes of very in the terms has proud they am culture. in source driven across time changed great where investment. have have working because believe we teams I teamwork a one we you becomes by our things of We mainly end in in we I are. enablement strengthening capacity standpoint, identify candidates of the world of at also the ongoing technology also a just, of and overall all of demonstrated how our the our how we is So realize terms comfortable just we client. our from of you are spot to some terms for what through is lot things about

for longer that our market our go no the constrained by geographical work to That willing out opportunities boundaries. You leverage and of also teams country. are provides with to are across people candidates productivity

ticked play things were pre-pandemic, associates I XX% those right back technology all our productivity off. gain left driving up where mean, and successfully we has it So that productivity. with

to hiring not forward. a hiring from XXXX going that to impact in doing standpoint, really So XXXX. we is is fuel the are here XXXX That

we So on the are to feel business we are basis. an of then ongoing we very currently support the terms comfortable what with and to support where doing in business capacity, continually

Jasper Bibb

hoping I was could you -- Go ahead.

Dave Kelly

Joe's I comments. to Well, to just going was add

great talked be we the place So a investments. that, really we do right. able about And to to are in technology

and got thing sitting as firm, in the have So do of future quarter, to second a in right is we the invest cash, We we the business. right. generate think the as here lot we are of move cash. additional a we

a sell to building. going are We

to going are We generate proceeds.

cash We in capital, think that the deployment inclusively to to business shareholders best, are right invest in significant our stock. generate about ways of benefit thinking going and about

to camping ability think, the place So much in business. am I invest from I at the better a frankly,

Jasper Bibb

question guess, you fully Thanks hoping market, practice rebound towards years? and was I in we resources to, for company in that should recent strategically cyclical guess, for expect more business perm temp in you comment I given have, could that. And tech me. I last the that on shifted in the a flex

Joe Liberatore

upon again my in say a little this I would opening bit I and touched comments.

last we on very realizing up from in the technology clients, sequential It's our service revenue our basis, be exiting year. been this will a XX% blended hiring perform We to impact year offerings that substantially, service pretty stream expect the focused. that the was important business of given comparable a tech part obviously that to bring on of a drive full-time year-over-year QX in of business We standpoint, a model. big

that's tech within provide permanent so the as hire that opportunity well that need teams their as is service there. based can it's employment client placement upon direct dedicated offering. So not what our our for the right And people candidate

our of it our might view in some So unlike of we out the be we client. participate this, around that we that side, have as the but integrated that an technology bringing yes, dedicated the offerings specially to competitors overall, will component are on and we this, there very practices view

turns this day I times, I of at conversion with today's really age, stated multiple there which, don't opportunities and standpoint many client candidate on then our clients So contracting into in of somebody higher bringing that a a we doing they engagement for and and is on us I again acknowledgment put think full-time. look when job an a a the think resources good than from our have

converting a that really of associated full-time a convert are of is them. not reasonable do is So and hire full-time opportunity. up percentage that ultimately a many seen with they when population because have lot fees they But end not our those into

indirect So market. in are that overall we that's way participating permanent an that

business this and to up So business we grown search years of question model the two XX and when is types this of the then flex being you in route, candidate-centric no blended prefer on ago consultant a than starting offerings a as in much side go the and having marketplace. nature client-centric there operations, running then is of more that partition these this

Jasper Bibb

color. the guys. I taking appreciate questions, the for you Thank

Operator

Thank now like back turn to closing questions. for you. am the David CEO, further call And Chairman I remarks. Dunkel, and no to would I showing

David Dunkel

support you you Thank say, let me Justin. Well, Kforce. interest I for your of thank appreciate it. for and just all

allowing and continue these unprecedented of persevere you our quarter. quarter look field teams, you difficult just delivered talking our we to us your corporate results trust for in of end the allowing with forward We the also in efforts you we Thank you another to times, you. of the clients partner at and and consultants and thank As I want we each privilege much. are We member are of and serving us especially extraordinary circumstances in our again how Kforce beginning and thank and with exceptional very XXXX. about during second to excited very to to you say to every

Operator

conference you. today's for Thank participating. concludes This you call. Thank

disconnect. You may now

Kforce (KFRC) 4 May 212021 Q1 Earnings call transcript