Kforce Inc. (KFRC, Financial) filed Quarterly Report for the period ended 2012-06-30.
Kforce Inc. has a market cap of $406.4 million; its shares were traded at around $12.28 with a P/E ratio of 73.5 and P/S ratio of 0.4.
Flex gross profit margin increased 70 basis points to 29.3% for the three months ended June 30, 2012 as compared to 28.6% for the comparable period in 2011, and increased 30 basis points to 28.2% for the six months ended June 30, 2012 as compared to 27.9% for the comparable period in 2011. Flex gross profit margin increased sequentially 220 basis points for the three months ended June 30, 2012. This increase was primarily driven by the spread between bill rates and pay rates and lower statutory payroll taxes during the second quarter of 2012 primarily due, in part, to individuals reaching maximum withholding levels. The sequential improvement in Flex gross profit margin was also related to an accrual in the three months ended March 31, 2012 related to audits by state taxing authorities, which negatively impacted Flex gross profit margin by 50 basis points. SG&A expenses as a percentage of net service revenues were 26.1% and 33.1% for the three and six months ended June 30, 2012, respectively, as compared to 27.6% and 27.2% for the three and six months ended June 30, 2011, respectively. The increase in SG&A expenses as a percentage of net service revenues during the six months ended June 30, 2012 was primarily the result of the acceleration of substantially all of the outstanding and unvested PARS, RS and ALTI awards on March 31, 2012, which resulted in the recognition of incremental compensation expense of $31.3 million, including payroll taxes.
The increase in Search gross profit for the three months ended June 30, 2012, compared to the same period in 2011, was $1.2 million, composed of a $0.4 million increase in volume and a $0.8 million increase in rate. The increase in Search gross profit for the six months ended June 30, 2012, compared to the same period in 2011, was $2.5 million, composed of a $1.4 million increase in volume and a $1.1 million increase in rate. The sequential net increase in Search gross profit was $2.2 million, composed of a $2.2 million increase in volume.
The increase in Flex gross profit for the three months ended June 30, 2012, compared to the same period in 2011, was $9.0 million, composed of a $7.1 million increase in volume and a $1.9 million increase in rate. The net increase in Flex gross profit for the six months ended June 30, 2012, compared to the same period in 2011, was $17.1 million, composed of a $15.5 million increase in volume and a $1.6 million increase in rate. The sequential net increase in Flex gross profit was $6.7 million, composed of a $1.0 million increase in volume and a $5.7 million increase in rate.
Selling, General and Administrative Expenses (SG&A). For the three and six months ended June 30, 2012, total commissions, compensation, payroll taxes, and benefit costs as a percentage of SG&A represented 84.4% and 87.4%, respectively, as compared to 87.1% and 87.4% for the three and six months ended June 30, 2011, respectively. Commissions and related payroll taxes and benefit costs are variable costs driven primarily by revenue and gross profit levels, and associated performance. Therefore, as gross profit levels change, these expenses would also generally be anticipated to change but remain relatively consistent as a percentage of revenues.
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Kforce Inc. has a market cap of $406.4 million; its shares were traded at around $12.28 with a P/E ratio of 73.5 and P/S ratio of 0.4.
Highlight of Business Operations:
Net service revenues for the three and six months ended June 30, 2012 were $274.1 million and $542.5 million, respectively, which represents an increase of 10.5% and 12.0%, respectively, over the comparable periods in 2011. These increases were primarily due to our Tech (which represents approximately 62% of our total net service revenues) and FA segments (which represents approximately 23% of our net service revenues), which had year-over-year increases in net service revenues for the three months ended June 30, 2012 of 11.1% and 11.1%, respectively, and 13.3% and 11.5% for the six months ended June 30, 2012, respectively. For the three and six months ended June 30, 2012, net service revenues for HIM increased 19.1% and 20.3%, respectively, while our GS segment declined 1.8% and 1.7%, respectively, in net service revenues over the comparable periods in 2011. For the three and six months ended June 30, 2012, Search revenues increased 10.4% and 11.3%, respectively, over the comparable periods in 2011.Flex gross profit margin increased 70 basis points to 29.3% for the three months ended June 30, 2012 as compared to 28.6% for the comparable period in 2011, and increased 30 basis points to 28.2% for the six months ended June 30, 2012 as compared to 27.9% for the comparable period in 2011. Flex gross profit margin increased sequentially 220 basis points for the three months ended June 30, 2012. This increase was primarily driven by the spread between bill rates and pay rates and lower statutory payroll taxes during the second quarter of 2012 primarily due, in part, to individuals reaching maximum withholding levels. The sequential improvement in Flex gross profit margin was also related to an accrual in the three months ended March 31, 2012 related to audits by state taxing authorities, which negatively impacted Flex gross profit margin by 50 basis points. SG&A expenses as a percentage of net service revenues were 26.1% and 33.1% for the three and six months ended June 30, 2012, respectively, as compared to 27.6% and 27.2% for the three and six months ended June 30, 2011, respectively. The increase in SG&A expenses as a percentage of net service revenues during the six months ended June 30, 2012 was primarily the result of the acceleration of substantially all of the outstanding and unvested PARS, RS and ALTI awards on March 31, 2012, which resulted in the recognition of incremental compensation expense of $31.3 million, including payroll taxes.
The increase in Search gross profit for the three months ended June 30, 2012, compared to the same period in 2011, was $1.2 million, composed of a $0.4 million increase in volume and a $0.8 million increase in rate. The increase in Search gross profit for the six months ended June 30, 2012, compared to the same period in 2011, was $2.5 million, composed of a $1.4 million increase in volume and a $1.1 million increase in rate. The sequential net increase in Search gross profit was $2.2 million, composed of a $2.2 million increase in volume.
The increase in Flex gross profit for the three months ended June 30, 2012, compared to the same period in 2011, was $9.0 million, composed of a $7.1 million increase in volume and a $1.9 million increase in rate. The net increase in Flex gross profit for the six months ended June 30, 2012, compared to the same period in 2011, was $17.1 million, composed of a $15.5 million increase in volume and a $1.6 million increase in rate. The sequential net increase in Flex gross profit was $6.7 million, composed of a $1.0 million increase in volume and a $5.7 million increase in rate.
Selling, General and Administrative Expenses (SG&A). For the three and six months ended June 30, 2012, total commissions, compensation, payroll taxes, and benefit costs as a percentage of SG&A represented 84.4% and 87.4%, respectively, as compared to 87.1% and 87.4% for the three and six months ended June 30, 2011, respectively. Commissions and related payroll taxes and benefit costs are variable costs driven primarily by revenue and gross profit levels, and associated performance. Therefore, as gross profit levels change, these expenses would also generally be anticipated to change but remain relatively consistent as a percentage of revenues.
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