KFRC - Earnings call 3 2023

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Operator

Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Kforce Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Joe Liberatore, Kforce President and CEO, you may begin your conference.

Joseph Liberatore

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

our find about our release results can You information and earnings in additional our filings. SEC

challenging our operate have within the portion a of remarks effectively published to Investor continues prepared website. environment. our we Firm addition, In The macro against Relations

Our highly laser our our growing companies business organically business model to with refined focus on talent worldclass a tailored skilled to critical consistent, to solutions been provide has success. technology

we point, retention in Third notable than our top third expected in third and consultant of results business we improvement performance. contributed group. in half at better back quarter quarter, stronger to our to Further saw which the results significantly peer than a this anticipated the of continue were the Technology to quarter be our

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David Kelly

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Jeffrey Hackman

years the Thank you, over your Joe support comments. and Dave, for your and

forward. legal we These in and blessed in our legal and some $X.X as align settlement accruals September. position of structural reduce related executive to with and are to the about comments for the million. costs, expectations. of financial costs related revenue appreciate announced unwavering we amounted team expenses expenses to to better them realignment the have our provide I our lower that outstanding the also well to Kforce levels, the opportunity We the certain Firm quarter, as support In the matters, third to incurred expected forward-looking to entire moving passion actions recognized

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Operator

Your Instructions] Mark first Marcon line from from question [Operator the of comes Baird.

Mark Marcon

end on contemplate regards promotions. may December that that some see does or very what you have bit pull seeing Flex. to you're guidance please of through and furloughs slight you year, to that? in demand David, what you end well-deserved And little How decide is How that intra-quarter were as seeing to and David, Jeff, continuing? homes. typically that do gone consultants the multiple was send confident can the do cycles, how Joe about a the congratulations up stabilization the pervasive broad-based that more talk you all companies are Tech with the the end extent we of back at potential upturn

that is what So a to pad extent occur? wondering for there to

David Kelly

Dave. this the Yes, kind Mark, you. I Thank appreciate is words.

a about at maybe start gave how we number I a guidance XX good thought there. is look of when asked about we days think place when questions you to it QX Difficulties] So [Technical we ago.

to first recall, the to first in declines if in couple last of of third approach really quarter. of some consistent, quarter had number you indicated, the and of months I the took the been seeing the quarter we quarter small the or mathematical consultants should of say this assignments we've months couple guidance month a albeit As we because than

our guidance that contemplated to so And continue.

So the number continue that in we of quarter began Obviously, also new number of the that assignments really into of had I activity we stable. we what being and have The experienced than quarter. during the pandemic. and the quarters rest was new during versus we that, saw midpoint the, was for third seen that midway the through pretty the the But of had in point say, was stabilization starts I'd here got through X very demand was the lower technology stable really is consultants which and we some prior it as think assignment so projects quarter the quarter, a decline. the the to

I on notable, from consultants is of this lot think a coming assignment. also stability maintaining clients,

kind very saw we think that as low that staffing quarter reaching I contracts are to a minimum made of Joe think comment that really are really levels levels the attrition indicative that So of during level we critical. on execute required clients a of

though, gotten improvements I October, addition consultants increasingly that assignment. into as is think seen encouraging to in we've we've for us, in on billable that,

uncertainty, would drivers spectrum and to generally managed well. in pretty we So an behaviors those projects is broadly really. is client of in the broadly speaking, think fourth coupled day as size based that client our in early specific the we're that are the growing I All sequential this. numerically, that, point a out, industry teams I It's I'm to billing quarter, a that's the say, not across and also mark. about signs if growth you industry equates positive manage believe, of in across seeing but all, lot space There's there that slight, should certainly opportunities with not suggesting pipeline of And quarter.

guidance the of part how about of quarter second et of to in question related the in fourth we're terms guidance thinking think your [Indiscernible], I cetera. terms

I do by know, that we we're think think what we're encouraging start than who And you fewer days fourth out the are -- saying or consistently and New surprisingly, seeing not seeing last shutdowns with a Christmas X quarter. the holidays, and even time off, the We Kforce. really some year, in year we're did billing not clients the soft close last as soft different but Year's. I'd third quarter, is are on between has very than enforcing I this closes

say the in quarter, impacts greater also, QX offer would I see always We consultants fourth that those things revenues. normal. time are pay

year together, and baked kind seeing ago, and from days, which typical all pretty into So is we're view going billing believe and pretty or technology, growth we flat all very again, guidance, of we together, we're that technology you some see patterns holiday-driven that of we what billing that are of slight bake all saw in clinical in you bake taking a we sequential to we're that a encouraging. still see days, those and

Mark Marcon

We but from about -- is then in they That's not to a I'm the terms obviously What to great, think just of David. investors and reset. think payroll that the bit when thinking broadly should ahead you QX. things are fourth building variations QX, the of And then go typically, start about quarter? it for beyond QX the and some people little just there how slower modeling pipeline as shooting a a have think bit when of speaking, little about in seems the of of out seasonal be terms ahead, asking kind normal guidance, about

David Kelly

Yes.

right, typically again. Joe I I'll at see comments. the But let Jeff the you rightly think, point project Dave as that is and ends out, Mark, year, any end this the of have other business. we impact

giving you view have of some based year, I what I'm "normal pandemic and we're this a, anything we're year" years increases. typically, relative hearing, I'll to think not upon exceptional QX don't say, where think saw we what seeing net really we I seen

based upon visibility have picture now. we're more year-end So the I think right typical a contemplating we ends

Jeffrey Hackman

resources consultants your into end in of at the typical look to going number XXXX, our that add back And thing years is in that ends our front periods. The at at end And of X appreciate the I than Jeff. pre-pandemic assignment is if go the the this. you business to the when were year that Mark, the were to they of they lower technology Mark. lost you comments year-end this over actually this to fair think ball We'll say criticality is some given to fourth of on how quarter here. that, it trying that projects I the X the we get not clarity and years through has the themselves, been just of of forecast goes visibility technology year. the a But the as and consultant and than seen the crystal we've last these end lower consultants we to last actually retained pre-pandemic only what the historically kind

Mark Marcon

is Great. Flex regards flexibility ratio? slightly going like Flex are How rates And think roughly with in you can margins How gross side you bill mentioned a regards the Do what talk the how then ratios? pay going you below on those? forward? year-over-year, more gross the consultants? for is margins pay pay What the of Because the are which the to the just growth, bit X% managing you and little competition inflation. about have discussions to seeing going? terms we with should about And are

David Kelly

Yes.

So again. Mark, Dave is this

clearly in and There specific last rates quarters. an I longer of comment think this bias well, a of couple over the is consistent $XX, course start many as a talent. story the for continues the north a high upward saying positive continue very talent, our highly still that skilled point be rate. in to relative made marketplace for out, right? a a think to has you which been pointed So the given the dynamics supply, this same day, term bill bill way, hold off you low increased and for percent. reflective up demand obviously different We in need the a by I I'd is comment of of out, rates up bill as

and rates relates in be to mentioned, related that's I've slight slower margins it environment. bill continues predominantly. and decline. between As actually very to spreads We a spread as But care consistent the see costs did health this pay

And not comment So and longer see would make the on typical in be the would I reiteration long sometimes rates kind the stable. remarks of very might bill although we things that environment, my continues in spread lags, in rates typically term. is pay you prepared last a see low improve, to the expansion some term, is between

dynamics playing have So out historically again, they as here. the are

Operator

from Blair. next the line Trevor from comes of Your question Romeo William

Trevor Romeo

also will the Jeff congratulate Dave and I on roles. new

conversations just any was kind the might year-end for year? how trending and I IT your of you from as for clients wondering on First, budget if mean IT we move spending that budgets client are have project next insights into what might cycle

Joseph Liberatore

Joe Yes, down locking Trevor, our this the is in XXXX are say most early still of clients terms I'd of budgets. Liberatore.

what would focused budget get out are gain hearing really whole, on to is up a be years. externally. discussions the news allocated good opening emphasis the bit diversity say, portfolio, prior dollar say overall -- more but seems as really I to seeing budgets of to on an However, There than that's to a which differently kind we're stretching to focus our like clients is cost as on at it. being and exclusively and us over engage internally industries versus no consulting about for efficiencies, Needless projects of there's a due firms between of differential are flat traditional little those with XXXX, opportunities KX. to Kforce increasing a the who slightly drivers, firms client-specific we looking that both to more the quality, the longer or with we're believe firms play our favor our with

solutions those clients. more So options give to what we that opportunity that feel and a with of efficient Does staffing a lot you provides with a that, you're us for for believe looking for?

Trevor Romeo

of better the think Kforce's up revenue this credit, see That to to wondering hold on just seeing competitive team's environment. than guess, I was peer I side any opportunity set. behavior further And then, the the continues in Yes. companies I'm to helpful. a are share tech take across type market? or the of in Do in market your you share perspective, changes you notable from lot

Joseph Liberatore

Yes.

we'd seen like say think are. as much the competitors as environment that's what this in an as I market. opportunities well not because would in but And competitors the our to probably us, I do well. just we've I would are of -- overall we them say performing indication of probably some challenging our well see is probably

experiences touches we our which from of through work focus existing more projects a standpoint, like. opportunities and of of platform. see our really strongest share QX up often pipeline data seeing and the within experimenting very is application QX, some customers that development, really realizing And moving the often those internal although that. a on we of digital coming the that as more things more transformation cloud into traditional, cloud happening they've regional exploring take AI been data I early think probably pipelines, existing initiatives, much requirements around other those practices, continue part operators and our aspects setting really have see to with to opportunity lot pipeline And are around also we we build and were and market which which projects to than localized are are from we're starting side also their and in expanded of themselves in the front-end and have customer our also because really and as a care

demand position well with that and be where term. think long digital, all focused areas us to application data development, areas is we're we term robust I near on and in really those continue believe there, said, and So all really cloud,

crushing then largest And year-over-year in been diversified part and aspect. over this new early more their in customers, And me up say, what time pandemic execution back say mission that done this. things clients. we've it what larger clients to become. focus the and you and here differentiator, I We've of get the that focused honed of with and a inside as don't taking say customers. persistency lot again. customers, about into they've some that's recover, to that and years, would And our that more just have customers attribute on seen team out get together, in those we're And footprint. start and gets if really an been the growth the I that I would excited had our a we those X of kind competitors. in a acceleration I the are place. is would know when our there's areas I there much when only things our of put to I going a our standpoint. coming once say out developed we're would our and I how exponential from would And things happening those is of of efforts But to penetrate where similar team's our what is really those I things were online, relationships. tightened be I'm they've not to recovery to our into X% out And excited I and diversify about. so our were tough simultaneously. team customers get of focused that's pandemic mean see driver, guess this critical as And part. was stuff And deterioration resiliency those much probably seen to things largest all in come those has about a same because I So stabilize has big so played both of new XX% I because playing of we've

Operator

from Research. comes Your of Coast line from next North question the Kartik Metra

Kartik Mehta

was just assignment. wondering, on Joe, I

wondering and seeing of I'm months money? if looked spending was existing little were that you're bit X Or that your better more are If a a feeling and think back you is it I at coming and which assignments customers have some delayed you canceled, were about on? others those not just And positive just being assignments talked ago, delayed sign.

Joseph Liberatore

probably would the it's latter. I say Yes,

that as I year conversions seen and what with We we've roughly we've that upon this, a is come changes any basis, Jeff on our difference in been we've earlier of mean, actually other the seeing are that terms we from haven't we're things your observing question. move our in really would retention year-over-year Dave in I have through noticeable say more the our so down. a consultant seen third seeing we major base, seen XX%. down been the have of What conversions the quarter. one touched

the workforce. exit the industry every stage with, to me in start economy those on they races. and the is to been full-time their to while first the third So really the to their they cycle tighten to up point start is align involved they're what off segment in consultant on FTEs certainty start And then bring that next flexible that And that waiting for or I've consultants. happens to is this recession is things thing is start clients

be And earlier so of we some last We this dynamics, year. experienced those right? seeing could

we put financial Tech had go we were in happen stabilization expansion guidance, then on the a Historically, the basically, if down after business. to of to sequential. positive flex our start more sequential back we as would think is back here Flex you as to Wall go sequential customers on basis. if our we and pandemic, And you start to in X and start to that consultants. would see our I within Street QX, the if had holds what bring our typically X in turn And quarters negative growth sequential more crisis you to

mean, I recurrent at economy have going. I'm I the mean just know I is versus I where history ball. ultimate don't crystal looking don't But are. So a

this we So to has cycles. started play of similar prior kind to see out cycle

Kartik Mehta

type what think the ago more feeling where don't positive? and are company, was these That's project? in talk changed the I you gave a months do helpful. based guidance of on your the from when others of comments uncertainty you've little for? happening think spending do from months you about X not [indiscernible] has About or bit you experience, in about that quarter ago, the gone do you a companies think last Is that change you curiosity, But away do weren't you sound old bit made. little that every just X has company it some better What a money uncertainty almost think and where what today

Joseph Liberatore

to us, I've can't again, every inside again, the And listening And -- just would done, you here, isn't which seeing is are listen to backlog the could go hearing that that the got get project. that unfolding too because be far that little those the be nice of in now must-do things people not why on of bit to Kforce. technology typically and some and to they they general things announced front, seen clients cycle, we it's projects, not has experiencing happens of are what you have projects, be competitors those to and you start projects and work cut to to the have just -- about and to when mission-critical client have you done too I far. say if stabilization on the amount forward. realize I it's impacted a And and this this Yes. when cut a our people the feedback. start mean our to and with that's their moved prior those been

I really that's that's what think stabilization going So creates this on.

moving of having were So and to get Goldline. some the would to points basically, if some organizations over to projects anything that say, on these them pain it's of change, feeling are I

Operator

of Your Marc next Riddick from from Sidoti. line comes question the

Marc Riddick

to seeing congratulations and wondering have kind leaders appreciate sense say the of earlier, are I you've forward the that Dave behavior your you're are making turn on congratulations, to comments it's the board? sort and there. given. across there one sort looking seeing? all of about further if that that from I was already follow really move a of said, and roles First, customer I are you're process the segment along that of that generally of industry that Or color you of that Joe, up, a I customer seeing wanted forward to continuing others certainly on just Jeff, piggyback had, you

David Kelly

we've that there a there industries you're So market are those what's speaking, that better utilities, bit a bit hearing environment. services, But Obviously, those in. activities know in have that do happening Obviously, right travel the that's one. more mentioned leaders don't I'd more relatively health need leading I difficult got got positive Yes, other of mentioned transportation, had, about performance in I is maintain Joe's Mark, any or As I care, on maybe thinking is a what different industry in financial we've industries said, market are to to industries, a number specific that necessary for the mission-critical right? just any are industry notably some top. headwinds, every other, about critically industries are the leaders are from to there right? in marketplace. to right, retail, play conducive example, are what a so stay for of

Marc Riddick

share what last if one where there to maybe are up looking bit I it's you're little starting on where others a some some versus around for and that's then actually, is candidate of And -- -- it's could up find that I candidates you Okay. me, thoughts the extraordinarily pockets seeing just the wonder loosen certain type more same about to guess you're or maybe for? maybe maybe difficult availability

David Kelly

been have hard been the the in, again, are segments by. to areas we candidates but this skill come changed, focused changed, to areas, the They've especially hard sets in I say demand. always areas of those I've that long always have industry, demand play come that which in as the for Yes, we've highest are technology highest as would by in

your think is again, if to market, and our in what engage available somebody this ability the So out me, the competency. asked them It timely and [Indiscernible] core to bring is them. clients a best the go I identify to ever in fashion mean, #X candidates

for really on course have of individuals is the that will one table. us offers, say their that Obviously. that's So doesn't the of year changed amount over those last I over of one the competing dynamics time. has change probably the

of client ability to that's If do of when that client we're So XXXX so robust bit want that customers that XXXX, helps that little just opportunity were another very a we elected have to a go not but individuals lot engage, to into pursue demand back with interested period, terms there dealing much our was our there you consultant offers, right? a engage with out time to because that there. in were in competing because they

less do that. see of You

the means clients, about those because uncertain kind of an of of also these a in when to that bit engage serious in deal We move. to of are a see they're it terms with dynamics and are risk take opportunities that versus look with candidates. make They're that which in not you more Those the at more types looking going much in more do it of people we little to we climate. marketplace consultants they're more probably want consider availability

Jeffrey Hackman

rates if would So to The and a accept. only being it I, continue see you bill are candidates Joe right? there former rise, right? to always was what thing other to an rates the So add, and availability right, are CFO, and I willing thing what pay pay talent, in it comes I in both clients numbers, would a out willing dislocation and of

Operator

next from Josh comes Your question from the Chan of line UBS.

Joshua Chan

a Congrats question. to question, and picture I bigger Dave maybe Jeff as my first guess well.

So it QX. improvement are economists you same sounds some into for recession and like that you time, expect At guiding year. better mentioned next sound the a

anyway bottom a on? perspective you recession would recession coming, So Kforce hypothetically, need from here we if that impact really and think you are is a do there therefore, at -- how a much perform a won't from

Joseph Liberatore

happen was a in hadn't is I time seen saying time that going the direction no am time. by in have industry Every every before been, unpredictable. by back be of been experiencing recessions one is differently. of these our business answer this actually, that moving that it been we right. Flex to like of one of in deterioration things it They By called short cycles. different. we've revenue react of recession, positive Yes, have which this type recession is this meaning called. what shallow we what's to called. would question, cycles and Again, to prior if that's and going Probably is where means And was is recessions been But a the

if could there's because that down. this I'd step So will and leg of team we sitting end that answer the question basis to we a might again, it's from we on [Indiscernible] to it give a a be recession and positioned Hopefully, seen have I are ball. going another an how react, dynamics. highest to us soft island the behind confidence to to economists do And that's on But somewhere. management equation pay what the the on respected those will of know depends and of soft really And the the really the long, attention landing, be we reacts clients it how of how this sitting you're that honestly worst have there to we information is, to shallow, at weekly nature here down deep, upon be just how question, get call, which the of a second some navigate Absolutely, how we don't played I day, answer this be If that comes probably economy not in the those us. how navigate out, our of which irrespective through economist scenarios one crystal landing, asking, wouldn't it's the a short, it.

Joshua Chan

a Okay. That Yes. lot of sense. color, makes appreciate I the Joe.

question, environment doesn't restructuring that impact, softened have but the like Was big looks driving sequentially. your a or second the normally, a my function hire tech actions? this macro What's it that? direct of For

Jeffrey Hackman

Yes.

Joe of solutions the XX% the it. most. in you Joe When suffer history typically is that's Just right? because typically is Direct stable Joe frankly, of now answer macroeconomic line business yes, That's actually Flex October. and mid-quarter on modestly, are seeing flexible hiring trends right? see and about what being think of only where were the simple environment, technology went of the but part from I cycles, seeing think very of would it It's that's just starting -- quarter to revenue I that volatility reason economic where quite our the trends improved we But couple as on Josh, Flex it that a go we to our of we and with absolutely is also the to albeit cycle, part of earlier, is what touched reason driving it why end part cycles. that part with Hire Joe the staffing start through there. permanent conversion is the in the And the went versus volatility but we going our macro the last the we we the saw the parcel improve through through a impact business not and within these were project that of and why base, directly in

Operator

comes Your Truist from line of next Tobey Securities. the from question Sommer

Jack Wilson

Wilson Jack is on for This Tobey.

a going data as that work? have demand mostly a long-term to direct demand? think when do cloud Or AI exposure up AI is show sort for you to and about Just we of in driver,

Joseph Liberatore

Yes, and is that attention it's question one paying to. great everybody a obviously,

related early data the came which In yet fact an much heard corporate. action way, infrastructure, interventions, any investments. predicting business way, as fact, clients and They and pricing, to privacy, right, make government the by Jen mean, substantial really billion services. the with data core data why that worldwide U.S. from It's I customers to hardware with I of of to is software, remains around security, at they first we're there is just aspects hot addressed in billion and as we was today, also, government's reach IT resolve AI are X the $XXX around the our think the you our and if has But we're day, in it of do AI seeing order. offerings. been executive very haven't center. the the in and AI and end XXXX, By yes, innings basically in out XXXX. expected solutions one cannot and you really What $XX where international much preparing experimenting is with that's

that's because old have if getting pristine play, our And where insure working data obviously, with they are out. is of service seeing cloud, AI X don't the moving with is on Everybody everything both garbage you things. which towards you're offerings. not we their one So cleaning up anywhere in, garbage the data, another

we'll them. submit how like we So

to are ramp AI positioned We to continue As well take up. investments very think that. advantage teams our of

Jack Wilson

from That's the looks XXXX? like in in Then more cost savings that very just perspective, what helpful. pick modeling is annual million achievable economic a regardless $XX

Jeffrey Hackman

Yes.

gave second our in quarter obviously point the we Jack, I call. think, us

in we fourth So reductions we third bit challenging. July when in The that that's benefit guidance. of started quarterly the issued that to benefit be back implemented realized. an the economic quarter anticipated we're structural quarter. sitting would quarter a cost amount The in environment third full here We the

So would is Jack, compared benefits. the environment, be irrespective would quarter the you But got that those to the effectively X/X answer, fourth economic realized we short of third. additional in the yes, annualized benefit expect

Operator

questions. We further have no

have this Joe further time. We at I turn over questions the no will for now call back Liberatore closing to remarks.

Joseph Liberatore

Thank say to and to support effort I'd your clients you every consultants with for Thank and thank and allowing forward evening. again everyone interest We your fourth to us privilege Have Kforce you for talking Kforce. quarter trust and our look your of Kforce in you. and XXXX. our and to for partnering great like the a after serve you you. to with

Operator

conference And for and participation, your now call. this you concludes disconnect. you today's Thank may

Kforce (KFRC) 30 Oct 232023 Q3 Earnings call transcript