T O G E T H E R T O W A R D T O M O R R O W
A N N U A L R E P O R T 2 0 2 3
TO OUR FELLOW
SHAREHOLDERS, CLIENTS,
CONSULTANTS AND EMPLOYEES:
I AM TREMENDOUSLY GRATEFUL for the extraordinary
efforts of the Kforce team who executed well in 2023 in an
environment that proved to be more challenging than originally
expected. Our message to our people in 2023 was simple, and
frankly, it is no different as we begin 2024. There are many things
that are uncontrollable. We must control what we can control,
stay close to our internal associates, support our consultants,
and continue listening to our clients while maintaining a long-term
view in our decision making. Our results, driven by solid execution
and a focused business model, allowed us to continue allocating
significant capital towards our strategic priorities and in our
people and tools.
As to our strategic priorities, we meaningfully advanced our
integrated strategy, which capitalizes on the strong relationships
we have with world-class companies by utilizing our existing
sales, recruiters, and consultants to provide higher value teams
and project solutions that effectively and cost efficiently address
our clients’ challenges. We also made significant progress in our
multi-year back-office transformation efforts with the selection
of Workday as our future state enterprise cloud application
for HCM and financials and the selection of our implementation
partner. Workday will complement our Microsoft front-end
applications to create a unified and streamlined technology suite
for the Firm once fully implemented over the next few years.
We are incredibly fortunate to be partnering with these two
market-leading companies who are at the forefront of investing
in artificial intelligence. As we look ahead to 2024, we expect to
continue to make the necessary investments in our strategic
priorities to sustain our long-term growth ambitions and achieve
our financial objective of attaining double-digit operating margins
at slightly greater than $2 billion in annual revenues.
FULL YEAR 2023 FINANCIAL HIGHLIGHTS
• Revenue for the year ended December 31, 2023, of $1.53 billion
decreased 10.5% year-over-year (10.1% on a billing day basis).
• Technology revenue of $1.38 billion decreased 8.2% year-over-
year (7.8% on a billing day basis).
• As reported, operating margins were 5.7% for the year ended
December 31, 2023, which decreased 110 basis points year-
over-year. As adjusted, operating margins of 6.2% for the year
ended December 31, 2023, decreased 70 basis points from 6.9%
for the year ended December 31, 2022.
• As reported, diluted earnings per share for the year ended
December 31, 2023, were $3.13 per share, a decrease of 14.9%
year-over-year. As adjusted, diluted earnings per share were
$3.49 and $4.25 for the years ended December 31, 2023 and
2022, respectively, a decrease of 17.9%.
As we look ahead to 2024, we expect to
continue to make the necessary investments
in our strategic priorities to sustain our
long-term growth ambitions and achieve our
financial objective of attaining double-digit
operating margins at slightly greater than
$2 billion in annual revenues.
• We returned $94.7 million of capital to our shareholders through
$67.1 million of share repurchases and $27.6 million in dividends
during the year ended December 31, 2023, which exceeded
100% of operating cash flows.
We took action in July 2023 to reduce our structural costs to
the lower revenues that we were experiencing and announced
certain executive organizational changes in September 2023
consistent with our One Kforce organizational design and
operating principles. While actions that affect our Kforce
team are tremendously difficult to make and are never taken
lightly, these changes allow us to navigate through the ongoing
macroeconomic uncertainties and situate us well strategically
for the future.
In February 2024, our Board of Directors (the “Board”) approved
an increase of 5.5% in our annual dividend from $1.44 per
share to $1.52 per share, our fifth consecutive annual increase.
Additionally, the Board approved an increase in our stock
repurchase authorization, bringing the total to $100 million.
OUR SERVICE LINES
TECHNOLOGY
Our decision to grow our business organically with a consistent,
refined business model tailored to provide highly skilled
technology talent solutions to world-class companies in the
domestic market has been critical to our success over many years,
and we remain confident that our Firm is positioned well for
improving market conditions. In 2023, we experienced a decline
in flex revenues in our Technology business of approximately
7%, which closely resembled what we experienced in the Great
Recession in 2008. As a reminder, our Technology business
significantly outperformed the market in 2022 and 2021,
growing 40% over that two-year period. After experiencing
sequential billing day declines in the first three quarters of 2023,
KFORCE INC. AND SUBSIDIARIES | 1
importantly, our Technology business grew sequentially in the
fourth quarter of 2023, which was reflective of the stability in the
number of consultants on assignment we began to see beginning
in mid-Q3 and the modest increase throughout the fourth
quarter. Overall average bill rates in our technology business were
stable in 2023, remaining near record levels at approximately
$90 per hour, which was encouraging given the macro backdrop.
In addition, we continued to benefit from an increased mix of
managed teams and project engagements, which carries a higher
average bill rate (and greater flex margin %). Our clients remain
focused on critical technology initiatives in the areas of digital, UI/
UX, cloud, data governance, data analytics, business intelligence,
project and program management, and modernization efforts.
We believe the decline that we experienced in 2023 was due
to an acceleration of strategic technology investments made
during 2021 and 2022 to address the implications of remote
work and other digital transformation efforts, combined with the
caution exercised by companies in a very uncertain environment.
Companies remain cautious due to continued economic and
geopolitical uncertainty. While clients have been acting with
restraint over the last 12 plus months, the backlog of desired
investments continues to grow. We expect these important
technology investments to be high priorities once the macro
uncertainties begin to clear. Technology investments are simply
not optional in today’s competitive and disruptive business climate.
There is simply no other market we would want to be focused in
other than the domestic technology talent solutions space.
We have continued to broaden our technology service offerings
beyond traditional professional staffing to include managed
teams and project solutions. Clients consider access to the right
talent, at the right time, essential to their success and see our
services as a cost-effective solution for their project requirements
as demonstrated by more than 90% of our managed teams
and project solutions being executed with existing clients. Our
integrated strategy capitalizes on the strong relationships
built over the past 60 plus years within world-class companies
by utilizing our existing sales, recruiters, and consultants to
provide higher value teams and project solutions that effectively
and cost efficiently address our clients’ challenges.
Our client portfolio is diverse and includes market-leading
customers, which are the largest consumers for the services we
provide. Market leaders across all industries typically prioritize
technology investments to maintain their competitive advantage.
Our focus on addressing their strategic needs continues to be
critical in our ability to drive sustainable, long-term above-market
performance. While short-term disruption may occur with
certain clients or industries, our diverse client base provides
an outstanding platform for consistent, long-term growth.
FINANCE AND ACCOUNTING
Our FA business declined approximately 28% year-over-year
as a result of the impact of business we strategically are
no longer supporting due to our repositioning efforts and a
2 | KFORCE INC. AND SUBSIDIARIES
more challenging macro-environment. Our average bill rate
has continued to exceed $50 per hour, which has improved 37%
from $37 per hour pre-pandemic and our Flex margins have
improved 140 basis points over that same time period, which is
reflective of our success in repositioning this business towards
higher-skilled roles.
Our core competency is rooted in the
ability to identify and provide
critical resources, real-time and at scale,
to help world-class companies solve
complex problems and competitively
transform their businesses.
ALIGNING FOR THE FUTURE
Our strategic position is solid, and our prospects are excellent.
With that said, tremendous uncertainties still exist in the macro
landscape and there are conflicting views of economists on
whether we avert a recession, see a soft landing, or slip into a
recession in the U.S. economy in 2024, following the aggressive
monetary tightening by the Federal Reserve. The challenges in
the geopolitical landscape continue to grow with the ongoing
war in Ukraine, the affects across the region of the war in Israel
along with 2024 U.S. election uncertainties, and many others.
We will continue to closely monitor our performance indicators
and trends and are prepared to make the necessary adjustments
to our business without jeopardizing investments in our long-
term strategic priorities.
AS WE LOOK AHEAD TO 2024
The strength of the secular drivers of demand in technology
accelerated significantly coming out of both the 2008 Great
Recession, with advancements in mobility, cloud computing,
among many others, and the 2020 Pandemic, with further
digitalization of businesses and the continued headlines around
GenAI technologies. I have seen a lot of economic cycles in
my 35 plus years in this business and each one behaves a bit
differently. What remains clear to us though is that the broad
and strategic uses of technology, including AI technologies,
will continue to evolve and play an increasingly instrumental role
in powering businesses. Over the long term, we believe that AI
and other technologies will continue to drive demand for, rather
than replace technology resources, and that the pace of change
will accelerate. We are ideally positioned to meet that demand.
Our core competency is rooted in the ability to identify and
provide critical resources, real-time and at scale, to help world-
class companies solve complex problems and competitively
transform their businesses. Our operating model also allows us
to be flexible in partnering with our clients to meet their needs
across a broad spectrum of engagement forms, from direct hire,
traditional professional staffing assignments to managed teams’
participate in causes and organizations they are passionate
about. For example, this year we donated about 400 laptops to
organizations in need. Below are a few examples of the many
other initiatives we host and charities we partner with.
• Season of Impact: What began as an annual day of giving
evolved into a Season of Impact—where Kforce employees
are encouraged to give their time, talent and treasure to
organizations of their choice throughout the holiday season.
• Junior Achievement: Kforce is sponsoring a new 3DE program
at a local educational institution, which is a program that
reimagines education by linking school districts with the
business community so students can problem-solve real-world
challenges. 3DE schools provide access to in-demand careers,
fostering stability and building a culture of inclusionary
instruction and individual value. In 2023, Kforce sponsored
and participated in the inaugural program.
• Best Buddies: Kforce participated in the 2023 Best Buddies
Champion of the Year Gala and Friendship Walk. Kforce is also
a proud participant of the Best Buddies’ Jobs Program, which
gives individuals with intellectual and developmental disabilities
opportunities for meaningful and fulfilling work.
IN SUMMARY
We have built a solid foundation at Kforce to advance our
Mission Uniting professionals to achieve success through lasting
personal relationships® and Vision To have a meaningful impact
on all the lives we serve®. Our balance sheet is clean, which allowed
us to deliver predictable dividends for our shareholders and to
be opportunistic in repurchasing our stock in 2023, and we expect
to continue to generate strong cash flows in 2024.
I want to reiterate how proud I am of the performance and
resiliency of our collective Kforce team through their daily actions
living out our tagline We Love What We Do. We Love Who We Serve®.
Together, we fought through a challenging operating environment,
made some difficult decisions and met each challenge. We are
blessed to have a tenured Executive Leadership team who has
been through multiple economic cycles together and can quickly
adjust to changing market conditions. We will continue to invest in
our strategic priorities that will help drive long-term growth and
achieve our longer-term financial objective of attaining double-
digit operating margins. We believe the key contributors achieving
double-digit operating margins are increased scale, productivity
improvements—including through our back-office transformation
program and advancements in AI technologies, driving a greater
mix of managed teams and solutions business and further reducing
our fixed costs such as real estate. We enter 2024 well positioned
to take additional market share and continue creating significant
long-term returns for our shareholders.
Joseph J. Liberatore
President and Chief Executive Officer
Director
engagements and managed projects. We are fortunate to have
one of the most recognized brands in the market for providing
technology talent solutions. Our reputation has been established
over our 60 plus year operating history, and we continue to carry
the highest overall Glassdoor rating within our peer group.
We have taken necessary and thoughtful measures to strike
a balance between associate productivity and our revenue
expectations. As we have done in prior economic downturns,
we are focused on retaining our most productive associates and
making targeted investments in the business to ensure that
we are well prepared to capitalize on the market demand when
it accelerates. We continue to invest in our managed teams
and project solutions capabilities and the integration of those
offerings within the Firm, which is progressing well.
ESG AND STEWARDSHIP
Our 2023 Sustainability Report, which was published in February
2024, outlines the considerable progress we made in our overall ESG
efforts in 2023. We continued to prioritize investing in our people
as our number one priority and strengthened our governance and
environmental processes—starting with the formal inclusion of ESG
oversight and governance in the board committee charters. We also
calculated our value chain emissions for 2023, which have declined
55% over our 2019 baseline, primarily as a result of our intentional
focus on reducing our real estate footprint to align with our Office
Occasional® work environment. There is always more to be done,
and our desire to learn and evolve has us eager to discover the next
best steps in our ESG journey. Our goals for 2024 have us pushing
for even greater equity and inclusion throughout the Firm.
STEWARDSHIP AND COMMUNITY ENGAGEMENT
Our goal is to leave a lasting, positive impact on the world.
Our hope is that by partnering with charitable organizations,
connecting with diverse associations and engaging in projects
that have meaningful impacts, we will empower our employees
to empower others each and every day.
Under our guiding principle, Empowering People Through
Knowledge SharingSM, we focus on programs that help people
develop skills, gain knowledge and pursue meaningful careers.
Our employees lead the way in our community engagement
efforts. Their passion for education, community development
and human services guides our community engagement strategy.
We bring a unified approach to philanthropy with special
emphasis on our Firm’s four corporate-sponsored charities:
Best Buddies, Feeding America, Junior Achievement and Special
Operations Warrior Foundation. In addition to supporting
our Firm-sponsored charities, we encourage our people to
2 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 3
TECHNOLOGY
Kforce is a leading technology staffing and solutions firm
in the U.S. with a proven history of evolving to meet
our customers’ needs. We provide the right professionals,
teams and methodologies to deliver great results. Our
experts help our clients seize opportunities and solve their
greatest challenges.
Our four areas of focus are:
• APPLICATION ENGINEERING
We create and deploy comprehensive full-stack solutions
across the entire digital ecosystem, including software,
web and mobile development, to enhance user experience
and deliver impactful outcomes.
• CLOUD
We empower our clients with cloud-native solutions
customized to the right platform for their journey and
fast-track their use of cloud computing.
• DATA AND ANALYTICS
We serve our clients throughout the full data lifecycle:
from describing past performance and understanding
current progress to predicting future outcomes
and prescribing next steps to improve efficiency and
grow revenue.
• DIGITAL EXPERIENCE
We take a human-centered, design-inspired approach
to craft simple, personalized and differentiating digital
solutions that drive revenue growth, brand loyalty and
customer satisfaction.
Our CONSULTING SOLUTIONS team helps companies
achieve their vision through digital transformation and
modernization. We do so by combining our deep technical
expertise in core practice areas with a multi-industry
focus, including technology, financial services, insurance,
telecommunications, healthcare, retail and energy.
From strategy through implementation, we provide the
knowledge and leadership our clients rely on to accelerate
their business.
FINANCE AND ACCOUNTING
As a top provider of finance and accounting services in the
U.S., we provide highly skilled analytics and decision support
in the following areas:
STRATEGIC
We support senior-level decision making, ranging from
financial, risk, and mergers and acquisitions to business
intelligence and data science.
OPERATIONAL AND TECHNICAL
We execute day-to-day accounting and staffing analysis,
such as directing, controlling and planning.
TRANSACTIONAL
We perform essential functions, including accounts
receivable, accounts payable and payroll.
Our total shareholder return (TSR) since going public
in August 1995 has been approximately 2,300%,
roughly 4 times greater than the Russell 2000 over
the same period.
KFRC
2,400%
1,800%
1,200%
600%
0
RUSSELL
2000
Kforce TSR vs. Russell 2000 Index stock performance from 8/15/95
(IPO) to 12/31/23
4 | KFORCE INC. AND SUBSIDIARIES
4 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 5
SELECTED FINANCIAL DATA
The information set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with Kforce’s
Consolidated Financial Statements and the related notes thereto (”Consolidated Financial Statements”) incorporated into this Annual Report.
Years Ended December 31,
(In thousands, except per share amounts)
Revenue
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Other expense, net
Income from continuing operations,
before income taxes
Income tax expense
Income from continuing operations
Income from discontinued operations,
net of tax
Net income
Earnings per share — basic, continuing operations
Earnings per share — diluted, continuing operations
Weighted average shares outstanding — basic
Weighted average shares outstanding — diluted
Dividends declared per share
As of December 31,
(In thousands)
2023
2022
2021
2020
2019
$ 1,531,756
$1,710,765
$1,579,922
$1,397,700
$1,347,387
427,066
334,933
5,012
1,871
85,250
24,175
61,075
501,107
379,815
4,427
14,423
102,442
27,011
75,431
456,864
345,721
4,500
7,376
99,267
24,090
75,177
396,224
310,713
5,255
5,044
75,212
19,173
56,039
395,038
314,167
6,050
3,425
71,396
16,830
54,566
—
—
—
—
76,296
$
61,075
$ 75,431
$ 75,177
$ 56,039
$ 130,862
$3.18
$3.13
19,188
19,507
$1.44
$3.76
$3.68
20,054
20,503
$1.20
$3.65
$3.54
20,579
21,212
$0.98
$2.67
$2.62
20,983
21,395
$0.80
$2.35
$2.29
23,186
23,772
$0.72
2023
2022
2021
2020
2019
Cash and cash equivalents
$
119
$ 121
$ 96,989
$ 103,486
$ 19,831
Working capital
Total assets
Total outstanding borrowings on credit facility
Total long-term liabilities
Stockholders’ equity
$ 141,484
$ 146,327
$ 211,680
$ 230,726
$ 160,271
$ 357,979
$ 392,004
$ 503,401
$ 479,049
$ 381,125
$
$
41,600
95,924
$ 25,600
$ 100,000
$ 100,000
$ 65,000
$ 78,373
$ 154,564
$ 190,948
$ 128,898
$ 159,080
$ 182,198
$ 188,406
$ 179,935
$ 167,263
4 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 5
STOCK PRICE PERFORMANCE
The following graph compares the cumulative five-year total return on our common stock, the NASDAQ Stock Market (U.S.) Index and
our Peer Group using the value of an investment of $100 on December 31, 2018 with dividends fully reinvested. All returns are weighted
based on market capitalization at the end of each discrete measurement period. Historical stock prices of our common stock are not
necessarily indicative of future stock price performance.
Index
Kforce Inc.
NASDAQ Stock Market (Composite)
2023 Peer Group (1)
2022 Peer Group (2)
2018
100.0
100.0
100.0
100.0
2019
2020
2021
2022
2023
131
135
128
123
142
194
126
123
258
236
192
187
192
158
148
149
236
226
170
162
The Compensation Committee (“Committee”) reviews the composition of the peer group on an annual basis with the assistance of
Pay Governance. Consistent with the recommendation of Pay Governance, the Committee approved the removal of AMN Healthcare
Services Inc. and Cross Country Health Inc. from our peer group in 2023 due to their predominant focus in healthcare staffing, which is
not a focus for Kforce. The Committee also approved the addition of ICF International, Inc. and Perficient Inc. who are more focused on
providing technology services and solutions. The changes to our 2023 peer group further align our peer group with our business mix,
which is 90% concentrated in providing technology talent and solutions to world-class clients.
(1) 2023 Peer Group:
ASGN Incorporated
Barrett Business Services, Inc.
CBIZ, Inc.
The Hackett Group, Inc.
Heidrick & Struggles International Inc.
Huron Consulting Group Inc.
ICF International, Inc.
Kelly Services, Inc.
Korn Ferry
ManpowerGroup, Inc.
Perficient Inc.
Resources Connection, Inc.
Robert Half International Inc.
True Blue, Inc.
(2) 2022 Peer Group:
AMN Healthcare Services, Inc.
ASGN Incorporated
Barrett Business Services, Inc.
CBIZ, Inc.
Cross Country Healthcare Inc.
6 | KFORCE INC. AND SUBSIDIARIES
The Hackett Group, Inc.
Heidrick & Struggles International Inc.
Huron Consulting Group Inc.
Kelly Services, Inc.
Korn Ferry
ManpowerGroup, Inc.
Resources Connection, Inc.
Robert Half International Inc.
True Blue, Inc.
KFORCE INC. AND SUBSIDIARIES | 7
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Committee uses a peer group of companies as a source for executive compensation benchmarking data and comparisons to Kforce’s
executive compensation levels; insight into external compensation practices; and assistance with determining specific financial objectives
for our performance-based compensation. Additionally, our peer group is used to determine annual equity LTI compensation levels based
on our relative TSR performance.
The Committee focuses on selecting peers that are publicly-traded professional staffing, technology solutions providers and human
capital centric companies, including certain companies we consider to be our direct business competitors. The Committee also selects
peers that are similar in terms of size (as measured by revenue and market capitalization) that are in adjacent staffing markets but may not
be considered a competitor. The Committee matches the median size of the peer group to Kforce by balancing a selection of both larger
and smaller companies. The primary criteria for selection include customers, revenue footprint, geographical/domestic presence, talent,
complexity of operating model and direct competitors.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Holders of Common Stock
Our common stock trades on the NASDAQ using the ticker symbol “KFRC.” As of February 20, 2024, there were 138 holders of record.
Purchases of Equity Securities by the Issuer
In February 2024, the Board approved an increase in our stock repurchase authorization, bringing the total authorization from $41.7
million to $100.0 million. Purchases of common stock under the Plan are subject to certain price, market, volume and timing constraints,
which are specified in the plan.
The following table presents information with respect to our repurchases of Kforce common stock during the three months ended
December 31, 2023:
Period
October 1, 2023 to October 31, 2023
November 1, 2023 to November 30, 2023
December 1, 2023 to December 31, 2023
Total
Total Number of
Shares Purchased
(1)(2)(3)
Average Price
Paid Per Share
5,124
221,392
253,855
480,371
$59.23
$65.38
$68.56
$66.99
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plans or Programs
Approximate Dollar
Value of Shares
That May Yet Be
Purchased Under the
Plans or Programs
—
219,473
155,722
375,195
$66,822,516
$52,472,901
$41,731,977
$41,731,977
(1) Includes 5,124 shares of stock received upon vesting of restricted stock to satisfy tax withholding requirements for the period October 1, 2023 to October 31, 2023.
(2) Includes 1,919 shares of stock received upon vesting of restricted stock to satisfy tax withholding requirements for the period November 1, 2023 to November 30, 2023.
(3) Includes 98,133 shares of stock received upon vesting of restricted stock to satisfy tax withholding requirements for the period December 1, 2023 to December 31, 2023.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the inherent operational risks, Kforce is exposed to certain market risks, primarily related to changes in interest rates.
As of December 31, 2023, we had $41.6 million outstanding under the Amended and Restated Credit Facility. A hypothetical 10%
increase in interest rates in effect at December 31, 2023 would increase Kforce’s annual interest expense by less than $0.4 million. Refer
to Note 13 — “Credit Facility” in the Notes to Consolidated Financial Statements, included in this Annual Report, for further details on
the Amended and Restated Credit Facility.
6 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 7
BUSINESS OVERVIEW
COMPANY OVERVIEW
Our Technology Business
Kforce Inc., along with its subsidiaries (collectively, “Kforce”), is a
solutions firm specializing in technology and finance and accounting
professional staffing services. Our KNOWLEDGEforce® empowers
industry-leading companies to achieve their digital transformation
goals. We curate teams of technical experts who build solutions
custom-tailored to each client’s needs. These scalable, flexible
outcomes are shaped by deep market knowledge, thought leadership
and our multi-industry expertise. Our integrated approach is rooted in
60 years of proven success deploying highly skilled professionals on a
temporary (“Flex”) and permanent (“Direct Hire”) basis.
Kforce serves clients across a diverse set of industries and
organizations of all sizes, but we place a particular focus on serving
Fortune 500 and other large companies. Each year, over 20,000
talented consultants provide services to a significant majority of the
Fortune 500. Together, we deliver Great Results Through Strategic
Partnership and Knowledge Sharing®.
Over the last decade, we have driven significant, strategic change
at Kforce, including but not limited to, streamlining the focus of our
business on providing technology talent solutions. In alignment with
this goal, since 2008, we have completed various divestitures of
businesses that did not relate to our core business.
Our Technology and Finance and Accounting (“FA”) businesses
represent our two operating segments. Our Technology business
comprises 90% of our overall revenues, and the remainder is generated
by our FA business. For our Flex services, we provide our clients with
qualified individuals (“consultants”), or teams of consultants, on a
finite basis when the consultant’s set of skills and experience is the
right match for our clients. For our Direct Hire services, we identify
qualified individuals (“candidates”) for permanent placement with our
clients. We further describe our two operating segments below.
Our operating results can be affected by:
• the number of billing days;
• the seasonality of our clients’ businesses;
• changes in holidays and vacation days taken, which is usually
highest in the fourth quarter of each calendar year; and
• increased costs as a result of certain annual U.S. state and federal
employment tax resets that occur at the beginning of each
calendar year, which negatively impact our gross profit and overall
profitability in the first fiscal quarter of each calendar year.
We provide talent solutions to our clients in highly skilled areas
including, but not limited to, systems/applications architecture and
development (mobility and/or web); data management and analytics;
cloud architects and engineers; business and artificial intelligence
(“AI”); machine learning; project and program management; and
network architecture and security.
We provide services to clients across virtually every industry with a
diversified footprint in, among others, financial and business services,
communications, insurance, retail and technology.
We have continued to broaden our service offerings beyond
traditional staffing to include managed teams and project solutions.
We believe our clients consider access to the right talent to be essential
to their success and see our services as a cost-effective solution
for their project requirements as demonstrated by more than
90% of our managed teams and project solutions being executed
within existing clients. Kforce has been successfully winning more
complex engagements due to the strong, long-standing partnerships
we have built with our clients, our capability in identifying quality
technology talent, and our reputation for delivering quality services.
We are continuing to further integrate this capability into our
Technology business.
The September 2023 report published by Staffing Industry Analysts
(“SIA”) stated that temporary technology staffing was forecasted to
decline by 3% in 2023 and grow by 5% in 2024. Technology, as a discipline,
continues to be project driven, even amidst generational changes like AI.
There are a multitude of technology projects that need to be addressed
to remain competitive, irrespective of economic performance.
Our Technology revenues declined 8.2% year-over-year (7.8% per
billing day), to $1.4 billion in 2023. Although we experienced a decline
in 2023, our Technology business grew 18% in 2022 on a year-over-
year billing day basis after growing more than 22% in 2021 on a year-
over-year billing day basis. The average bill rate in the fourth quarter
of 2023 was approximately $90 per hour, which remained stable as
compared to the fourth quarter of 2022. Our average assignment
duration has been steadily increasing over the last several years and
is currently 10 months.
The strength of the secular drivers of demand in technology
accelerated significantly coming out of both the Great Recession,
with advancements in mobility and cloud computing, among many
others, and the 2020 COVID-19 Pandemic, with further digitalization
of businesses and the continued headlines around Generative AI
technologies. What remains clear to us is that the broad and strategic
uses of technology, including AI technologies, will continue to evolve
and play an increasingly instrumental role in powering businesses.
Over the long term, we believe that AI and other technologies will
continue to drive demand for, rather than replace technology
resources, and that the pace of change will accelerate.
While our Technology business is not immune to economic
turbulence, we believe there is a critical need for innovation to
support business strategies and sustain relevancy in today’s rapidly
changing marketplace.
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Our FA Business
Over the last several years, we have been strategically repositioning
our FA business to focus on more highly skilled assignments that
are less susceptible to technological change and automation and
that more closely aligned with our Technology business. The talent
solutions we offer our clients in our FA business include traditional
finance and accounting roles, such as: finance, planning and analysis;
business intelligence analysis; general accounting; transactional
accounting (e.g., payables, billing, cash applications, receivables,
etc.); business and cost analysis; and taxation and treasury. We
will continue to support certain clients with whom we have long-
standing relationships and that are strategically important to our
overall success by providing consultants in lower skill roles (i.e. loan
servicing; customer and call center support; data entry; and other
administrative roles).
We believe we have made solid progress in this repositioning effort
as evidenced by our overall average bill rate in our FA business of $51
per hour in the fourth quarter of 2023, which improved from $46 per
hour, or 9.8%, as compared to the fourth quarter of 2022 and from
$37 per hour, or 37.8%, as compared to the fourth quarter of 2019.
We provide services to clients in a variety of industries with a
diversified footprint in, among others, the financial services, business
services, healthcare and manufacturing sectors.
Revenue for our FA business decreased 27.5% to $147.2 million
in 2023 compared to 2022, which was primarily driven by the
repositioning efforts of our business towards higher skill roles and
the continued uncertainty in the macroeconomic environment.
Our Consultants
The majority of our consultants are directly employed by Kforce,
including domestic workers and foreign workers whose visas are
sponsored by Kforce. As the employer of the vast majority of our
consultants, Kforce is responsible for the employer’s share of
applicable payroll taxes (“FICA”), federal and state unemployment
taxes, workers’ compensation insurance and other direct labor costs.
The more significant health, welfare and retirement benefits include
comprehensive health insurance, workers’ compensation benefits,
and retirement plan options.
A key ingredient to our overall success in attracting and retaining
our consultants is fostering a positive experience for our consultants
and offering rewarding assignments with world-class companies.
We measure the quality of our service to and support of our
consultants using staffing industry benchmarks and net promoter
score (“NPS”) surveys conducted by a specialized, independent
third-party provider. Additionally, we continually seek direct feedback
from our consultants to help us identify opportunities to refine our
services. Our 2023 consultant NPS are well above current industry
averages and near the world class designation.
INDUSTRY OVERVIEW AND ADDRESSABLE MARKET OPPORTUNITY
We assist our clients, which are principally market-leading
companies in their respective industries, in solving their complex
business challenges and digitally transform their businesses. We
continue to believe that technology is at the epicenter of how business
is conducted and investments in technology are simply not optional
in today’s competitive and disruptive business climate. Our core
competency is rooted in the ability to identify and provide qualified
and highly-skilled consultants to our clients under a spectrum of
engagement structures from traditional staff augmentation to
delivering technology solutions.
From a traditional staff augmentation standpoint, the staffing
industry is made up of thousands of companies, most of which are
small local firms providing limited service offerings to relatively small
local client bases. A report based on revenues published by SIA in
2023 indicated that, in the United States, Kforce is one of the largest
publicly-traded specialty staffing firms, the sixth largest technology
temporary staffing firm and the eleventh largest finance and
accounting temporary staffing firm.
According to the September 2023 SIA report, the technology
temporary staffing industry and finance and accounting temporary
staffing industry are expected to generate projected revenues
of $43 billion and $9 billion, respectively, in 2024. Based on these
projected revenues, our current market share is nearly 3%. Our
business strategies are focused on continuing to penetrate our share
of the U.S. temporary staffing industry and continue investing in our
capability to provide higher level technology services and solutions
while also integrating that capability within our overall Technology
business. We believe that the organic investments that we have
made in our managed teams and project solutions capabilities over
the last several years continues to expand Kforce’s total addressable
market into the information technology solutions space. While reports
differ in the size of the information technology solutions addressable
market, IBIS World has indicated it is greater than $500 billion. While
the portion that is addressable by Kforce is debatable, what is clear to
us is that our addressable market is significantly greater than the $43
billion and $9 billion for the technology and finance and accounting
temporary staffing industries, respectively.
Based on data published by the U.S. Bureau of Labor Statistics and
SIA, temporary employment figures and trends are important indicators
of staffing demand from an economic standpoint. The penetration rate
(the percentage of temporary staffing to total employment) decreased
to 1.8% in December 2023, from 2.0% in December 2022, while the
unemployment rate, increased to 3.7% in December 2023 from 3.5%
in December 2022. In addition, the college-level unemployment rate,
which we believe serves as a better proxy for professional employment,
and therefore aligns well with the consultant and candidate population
that Kforce most typically serves, increased to 2.1% in December 2023,
from 1.9% in December 2022.
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Business Strategies
Our primary business strategies are driving long-term shareholder
value by achieving above-market revenue growth within the domestic
technology solutions space, making prudent investments to enhance
our efficiency and effectiveness within our consistent operating
model, and significantly improving our profitability as we progress
towards double-digit operating margins. We believe the following
strategic priorities will help us achieve our objectives.
Back-Office Transformation. Over the last five to ten years, we have
been investing in high-quality technologies that have significantly
bolstered our associates’ productivity and enhanced our ability
to effectively and efficiently support our clients, consultants and
candidates. Our customer relationship management (“CRM”) and
talent relationship management (“TRM”) capabilities are now on the
Microsoft Dynamics platform, which went live in March 2017 and June
2020, respectively. We are continuing to make investments in these
technologies, and others, to enhance our capabilities and processes
in ways we believe will allow us to better evaluate and shape business
opportunities with our clients and more seamlessly match candidates
to assignments and projects.
We have not made meaningful investments in our back-office
technologies in more than 15 years while the complexities of our
business and client requirements have increased significantly. We
have been meeting these complexities and requirements by adding
dedicated Firm resources, which is not a scalable solution as we
continue to grow. Our multi-year transformation program for our
back-office technology will enhance the support to our Firm, including
our clients, candidates and consultants. Overall, the benefits of
streamlining our processes will create a positive impact resulting in
increased client satisfaction and improved consultant productivity.
This multi-year effort was initiated following a comprehensive
assessment of our current state, and this assessment confirmed
our belief that we have a tremendous opportunity to fundamentally
transform and create advancements in our back-office functions. In
2023, we made tremendous progress advancing this program by
selecting Workday as our future state enterprise cloud application for
human capital management and financial reporting, and also selected
our systems integrator to support us in the design, configuration and
implementation of these solutions. In 2024, we expect to continue
allocating significant investments towards this initiative as we initiate
detailed design and implementation steps.
We are incredibly fortunate to be partnering with Workday and
Microsoft, two companies at the forefront of investing in AI, which
puts us in an ideal position to take advantage of these technologies
as they become available.
Integrated Strategy. Our clients are increasingly looking to us to
deliver services across a spectrum from traditional staff augmentation
to managed project solutions. We have been organically investing
in our managed teams and project solutions capabilities over the
last five years, and this offering has been positively contributing to
our financial results. We expect to continue to make investments
in advancing our capabilities in this service offering and further
integrating this capability within our overall Technology business.
Our integration strategy is intended to harness the longevity of our
relationships, primarily with Fortune 500 companies, and execute a
unified account pursuit and delivery approach that broadly leverages
our capabilities across the Firm.
Evolving our Nearshore and Offshore Delivery Strategy. Virtually
all of our revenues are generated by helping our clients solve their
most complex technology challenges through our onshore delivery
model. Thus, the predominant worksite for our consultants is within
the U.S. We have experienced an increasing desire by our clients
in certain engagements for a blended delivery model leveraging
onshore, nearshore and offshore resources to gain cost efficiencies
and increase the speed of technological change. In these cases, we
leverage our qualified partner network where we have long-standing
relationships and proven track records. In the longer term, we believe
there is a tremendous opportunity for us to develop a more scalable
nearshore and offshore delivery capability.
COMPETITION
We operate in a highly competitive and fragmented staffing
industry comprised of large national and local staffing and solutions
firms. The local firms are typically operator-owned, and generally
each geographic market has at least one significant competitor.
Within our managed teams and project solutions offerings, we also
face competition from global, national and regional accounting,
consulting and advisory firms, as well as national and regional
strategic consulting and systems implementation firms. We believe
that our physical presence in larger markets, concentration of service
offerings in areas of greatest demand (especially technology),
national delivery teams, centralized delivery channels for foreign
consultants (including those obtained via visa programs that optimize
distribution and strengthen compliance), longevity of our brand and
reputation in the market, along with our dedicated compliance and
regulatory infrastructure, all provide a competitive advantage.
Managed Service Providers (“MSP”) or Vendor Management
Organizations (“VMO”) are utilized by certain of our clients for the
management and procurement of our services. We do not consider
these organizations as a competitive threat. Generally, MSPs and
VMOs standardize processes through the use of Vendor Management
Systems (“VMS”), which are tools used to aggregate spend and
measure supplier performance. VMS’ are also offered through
independent providers. Typically, MSPs, VMOs and/or VMS providers
charge staffing firms administrative fees ranging from 1% to 4% of
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Because we operate in a complex regulatory environment, one of
our top priorities is compliance. For more discussion of the potential
impact that the regulatory environment could have on Kforce’s
financial results, refer to Item 1A. Risk Factors of the Kforce 10-K.
INSURANCE
Kforce maintains a number of insurance policies, including general
liability, automobile liability, workers’ compensation and employers’
liability, liability for certain foreign exposure, umbrella and excess
liability, property, crime, fiduciary, directors and officers, employment
practices liability, cybersecurity, professional liability and excess
health insurance coverage. These policies provide coverage, subject
to certain terms, conditions, and limits of liability and deductibles,
for certain liabilities that may arise from Kforce’s operations. There
can be no assurance that any of the above policies will be adequate
for our needs, or that we will maintain all such policies in the future.
HUMAN CAPITAL MANAGEMENT AND ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (“ESG”) MATTERS
For over 60 years, Kforce has been rooted in stewardship, integrity
and compassion. As a human capital solutions business, we are
driven by the desire to serve others, provide meaningful work and
opportunities to a diverse workforce, strengthen our communities
and shape a more sustainable world.
Our 2023 Sustainability Report recognizes achievements in
our ESG-related initiatives, and also outlines opportunities for
continued growth and evolution. For a detailed discussion of our
ESG initiatives, achievements and commitments, please refer to our
2023 Sustainability Report and 2023 Supplemental Greenhouse Gas
(“GHG”) Report, publicly available on our website: https://www.kforce.
com/about/kforce-corporate-social-responsibility/.
We are grounded by our people-first approach with a set of
Core Values that serves as a solid foundation. Our Core Values, as
described below, are the foundation for how we positively impact our
communities, the environment and the governance of our Firm.
revenue. In addition, the aggregation of services by MSPs for their
clients into a single program can result in significant buying power
and, thus, pricing power. Therefore, the use of MSPs by our clients
has, in certain instances, resulted in gross margin compression, but
has also led to incremental client share through our clients vendor
consolidation efforts. Kforce does not currently provide MSP or VMO
services directly to our clients; rather, our strategy has been to work
with MSPs, VMOs and VMS providers that enable us to better extend
our services to current and prospective clients.
We believe that the principal elements of competition in our industry
are differentiated offerings; reputation; the ability of consultants to
work on assignments with innovative and leading companies; the
availability and quality of associates, consultants and candidates; the
level of service provided; effective monitoring of job performance;
scope of geographic service; the types of service offerings;
and compliance orientation. To attract consultants and candidates,
we emphasize our ability to provide competitive compensation
and benefits; quality and varied assignments; scheduling flexibility
and permanent placement opportunities, all of which are important
to Kforce being the employer of choice. Because individuals pursue
other employment opportunities on a regular basis, it is important
that we respond to market conditions affecting these individuals
and focus on our consultant relationship objectives. Additionally, in
certain markets, from time to time we have experienced significant
pricing pressure as a result of our competitors’ pricing strategies,
which may result in us not being able to effectively compete or
choosing to not participate in certain business that does not meet
our profitability standard.
REGULATORY ENVIRONMENT
Staffing and solutions firms are generally subject to one or more of
the following types of government regulations: (1) regulation of the
employer/employee relationship, such as wage and hour regulations,
payroll tax withholding and reporting, immigration/visa regulations,
as well as social security and other retirement, anti-discrimination,
employee benefits and workers’ compensation regulations; (2)
registration, licensing, recordkeeping and reporting requirements;
and (3) worker classification regulations.
As the employer, Kforce is responsible for the employer’s share of
FICA, federal and state unemployment taxes, workers’ compensation
insurance and other direct labor costs relating to our employees.
The more pertinent health, welfare and retirement benefits provided
to employees and consultants employed directly by us include:
comprehensive health insurance, workers’ compensation benefits and
retirement plan options. We also provide paid leave for our associates
and certain consultants. We have no collective bargaining agreements
covering any of our employees, have never experienced any material
labor disruption and are unaware of any current efforts or plans of
our employees to organize.
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The following sections provide a high-level overview of our strategic
initiatives related to each of the ESG pillars.
Governance
We believe that our governance principles add value to our
shareholders, associates, consultants, clients and communities.
These principles provide a framework for our culture, strategy, people
and policy. This section includes an overview of our commitment to
oversight, ethics and integrity, and risk management.
Oversight — Our Board of Directors (“Board”) meets regularly
to assess strategic plans and manage risks to our business and
people, as well as to promote sound corporate governance
practices and policies. These practices and policies include
firm-wide compliance with our Commitment to Integrity —
Kforce’s Code of Business Conduct — that intends to set the
highest ethical standards for how we conduct business (“Code
of Conduct”). The Board is responsible for the oversight of
our ESG policies and strategy. The Board delegates certain
aspects to Board committees who inherently play an active role
and are jointly responsible for ESG compliance and oversight.
The Board’s Audit Committee (the “Audit Committee”) oversees
the Firm’s cybersecurity and data privacy strategies and
practices, regularly reviews the Firm’s cybersecurity roadmaps
and framework progress and receives updates on relevant
activities and measures. Refer to Item 1C. Cybersecurity for
additional details regarding the oversight of cybersecurity in the
Kforce 10-K.
Code of Conduct — Our Code of Conduct reflects our commitment
to operate in a fair, honest, responsible and ethical manner, and it
covers various topics, including, but not limited to, cybersecurity,
insider trading, data privacy, equal opportunity employment and
acceptable pay practices. Our associates receive annual training
on our Code of Conduct and are required to certify compliance.
Everyone who works with us—from our directors and executives
to our associates, consultants, suppliers and business partners—
is trained on and expected to abide by our Code of Conduct.
People
As of December 31, 2023, Kforce employed approximately 1,800
associates and had 8,600 consultants on assignment with our clients,
of which a significant majority of these consultants are employed
directly by Kforce.
Our work environment is shaped by our people. We maintain
a commitment to well-being, flexibility and balance; learning
and development; and diversity, equity and inclusion. We believe
these initiatives are a testament to how much we value and invest
in our people.
Well-Being, Flexibility and Balance — The success of our business
is fundamentally connected to the well-being of our people.
We provide our associates and consultants, and their families,
with access to a variety of flexible and convenient health and
wellness programs. These programs are part of our thoughtful
and comprehensive response to support the physical and mental
health of our employees by providing tools and resources that each
employee can use to improve or maintain their health.
Shaped by the feedback of our associates, our Office Occasional®
remote-first, hybrid work model is supported by flexibility and
choice, and empowered by trust and technology. We have
successfully transitioned many of our offices to align with our
Office Occasional® strategy and will continue to transition our
remaining offices as they come up for renewal. The shift in strategy
to Office Occasional® has allowed us to introduce a new design and
streamline our overall physical footprint, which has led to a decline
in overall square footage compared to pre-pandemic periods. We
believe that our Office Occasional® model allows our associates
to design their workdays; thus, additionally contributing to their
health and well-being.
Learning and Development — To turn a job into a career, we believe
people need clear and attainable paths to grow. We are committed
to investing in the tools, resources and trainings necessary for
our people to excel in all stages of their career. We believe our
leadership development programs help people grow their skills
from the moment they join our Firm through the most senior level
of their careers.
Diversity, Equity and Inclusion (“DE&I”) — Our DE&I mission is to
advocate for and support the inclusion, growth and success
of all people connected to Kforce. The ultimate goal is to weave
DE&I seamlessly into our overall firm strategy using a variety of
approaches including creating an inclusive culture, ensuring an
equitable talent journey for all, establishing policies that support
our people, building an increasingly robust pipeline of diverse
candidates, enhancing our supplier diversity practices, and
instituting training programs to meet our DE&I objectives.
Refer to our 2023 Sustainability Report, which includes trends
related to employee turnover rates and workforce demographics.
Environmental
As a people-focused solutions business, our impact on the
environment is relatively low. With that said, we regularly look for
opportunities to reduce our impact on the environment. We saw
some of the greatest environmental benefits to date as a result of
the continued rollout of our Office Occasional® work model, which
resulted in a significant reduction in office space, business travel,
in-office electricity usage and employee commutes.
During 2023, we engaged a third-party specialist to calculate our
greenhouse gas emissions (“GHG”) for Scopes 1, 2 and 3 for 2023,
which indicated a decline of approximately 55% compared to our
2019 baseline. This information is more fully detailed in our 2023
Sustainability Report.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This MD&A should be read in conjunction with our Consolidated
Financial Statements and the accompanying notes thereto and the
Business Overview included in this Annual Report, for an overview of
our operations and business environment.
EXECUTIVE SUMMARY
The following is an executive summary of what Kforce believes are
highlights for 2023, which should be considered in the context of the
additional discussions herein and in conjunction with the consolidated
financial statements and notes thereto.
• Cash provided by operating activities was $91.5 million during
the year ended December 31, 2023, as compared to $90.8 million
for 2022. In 2022, there were higher cash outlays related to
the payment of deferred payroll taxes under the Coronavirus
Aid, Relief and Economic Securities Act (the “CARES Act”)
and settlement of the Supplemental Executive Retirement
Plan (“SERP”) obligation, totaling approximately $39 million.
Operating cash flows in 2023 were negatively impacted by lower
profitability levels due to the decline in revenues stemming from
the uncertainty in the macro environment.
• Revenue for the year ended December 31, 2023, decreased
10.5% to $1.53 billion in 2023 from $1.71 billion in 2022. Revenue
decreased 8.2% and 27.5% for Technology and FA, respectively,
in 2023, primarily driven by the uncertainty in the macro
environment and our repositioning efforts in our FA business.
• Flex revenue decreased 9.6% (9.2% on a billing day basis), to $1.49
billion in 2023 from $1.65 billion in 2022. In 2023, Flex revenue
decreased 7.4% (7.1% on a billing day basis) for Technology and
decreased 27.6% (27.3% on a billing day basis) for FA.
• Direct Hire revenue decreased 34.9% to $38.0 million in 2023
from $58.3 million in 2022.
• Gross profit margin decreased 140 basis points to 27.9% in 2023
from 29.3% in 2022, primarily as a result of a decline in the mix
of Direct Hire revenue and Technology Flex gross profit margins.
• Flex gross profit margin decreased 80 basis points to 26.0% for
2023 from 26.8% in 2022. Flex gross profit margin decreased 70
basis points for Technology and increased 20 basis points for FA
in 2023 as compared to 2022.
• Selling, General and Administrative (“SG&A”) expenses as a
percentage of revenue for the year ended December 31, 2023,
decreased to 21.9% from 22.2% in 2022. SG&A expenses for
the year ended December 31, 2023, include costs of $8.4 million
related to (i) organizational realignment activities and actions taken
to reduce our costs to better align with the lower revenue levels
and (ii) legal costs for settlements. These costs, net of related tax
benefits, impacted our earnings per share by $0.36 per share.
• Net income for the year ended December 31, 2023, decreased
19.0% to $61.1 million, or $3.13 per share, from $75.4 million, or
$3.68 per share, in 2022.
• The Firm returned $94.7 million of capital to our shareholders in
the form of open market repurchases totaling $67.1 million, or
1.1 million shares, and quarterly dividends totaling $27.6 million
during the year ended December 31, 2023. The total capital
returned to shareholders in 2023 represented over 100% of
operating cash flows.
RESULTS OF OPERATIONS
Certain discussions of the changes in our results of operations
from the year ended December 31, 2022, as compared to the year
ended December 31, 2021, have been omitted from this Annual
Report, and may be found in “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of our Form
10-K for the fiscal year ended December 31, 2022, filed with the SEC
on February 24, 2023.
There has been heightened uncertainty in the macroeconomic
environment, and concerns that the U.S. economy may fall into a
recession, since the Federal Reserve began aggressively raising
interest rates in March 2022 to address persistently high inflation.
The U.S. Treasury’s yield curve has also been significantly inverted,
which, for more than 50 years, has been a very strong indicator of
a likely recession. There are also significant geopolitical concerns
including, but not limited to, the Ukraine-Russia War, ongoing supply
chain issues, U.S. political uncertainties and the Israel-Hamas War.
With that said, growth in the U.S. economy was reasonably strong
in 2023 as real gross domestic product (“GDP”) grew at a pace of
roughly 3% led by robust consumer spending. In addition, the labor
markets remained quite strong in 2023 as the overall unemployment
rate of 3.7% in December 2023 remained near historically low levels.
Despite the expansion in the U.S. economy, the uncertainties in the
macro environment caused companies, broadly speaking, to exercise
restraint in the number of new technology investments they initiated
and to selectively scale back on existing projects in 2023. This restraint,
which we began to see in the second half of 2022, had a negative
impact on our results of operations in 2023. Kforce took certain actions
to realign our organization and reduce costs to better align with lower
revenue levels during the third quarter of 2023. We anticipate that these
actions will reduce annual operating costs by at least $14.0 million, and
began to realize this reduction in the fourth quarter of 2023.
Midway through the third quarter of 2023, we began to see a notable
improvement in consultant retention, which led to stabilization of
our consultants on assignment in our Technology business. We also
experienced an improving trend in new consultant assignments in
October, which largely continued throughout the fourth quarter of 2023.
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The following table presents certain items in our Consolidated Statements of Operations and Comprehensive Income as a percentage of
revenue for the years ended:
December 31,
Revenue by segment:
Technology
FA
Total Revenue
Revenue by type:
Flex
Direct Hire
Total Revenue
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Income from operations
Income from operations, before income taxes
Net income
2023
2022
2021
90.4%
9.6
88.1%
11.9
80.6%
19.4
100.0%
100.0%
100.0%
97.5%
2.5
100.0%
27.9%
21.9%
0.3%
5.7%
5.6%
4.0%
96.6%
3.4
96.9%
3.1
100.0%
100.0%
29.3%
22.2%
0.3%
6.8%
6.0%
4.4%
28.9%
21.9%
0.3%
6.7%
6.3%
4.8%
Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period for the years
ended December 31 (in thousands):
Technology
Flex revenue
Direct Hire revenue
Total Technology revenue
FA
Flex revenue
Direct Hire revenue
Total FA revenue
Total Flex revenue
Total Direct Hire revenue
Total Revenue
Increase
(Decrease)
2023
Increase
(Decrease)
2022
2021
$1,366,095
18,458
$1,384,553
$ 127,679
19,524
$ 147,203
$ 1,493,774
37,982
$1,531,756
(7.4)%
(41.5)%
(8.2)%
(27.6)%
(27.0)%
(27.5)%
(9.6)%
(34.9)%
(10.5)%
$1,476,055
31,572
$1,507,627
18.3%
19.7%
18.3%
$1,247,560
26,381
$1,273,941
$ 176,395
26,743
$ 203,138
$1,652,450
58,315
$1,710,765
(37.6)%
14.4%
(33.6)%
8.0%
17.2%
8.3%
$ 282,597
23,384
$ 305,981
$1,530,157
49,765
$1,579,922
Flex Revenue. The key drivers of Flex revenue are the number of
consultants on assignment, billable hours, the bill rate per hour and,
to a limited extent, the amount of billable expenses incurred by Kforce.
Flex revenue for our Technology business decreased 7.4% (7.1%
on a billing day basis), during the year ended December 31, 2023, as
compared to the same period in 2022, primarily due to a decrease
in consultants on assignment, which was partially offset by higher
average bill rates. We began to experience a softening in the demand
environment beginning in the second half of 2022, which continued
throughout 2023, as our clients began to exercise restraint in
initiating new technology initiatives against the backdrop of the
uncertainty in the macroeconomic environment. Our Technology
business declined on a sequential billing day basis in the first, second
and third quarters of 2023 and grew almost 1% on a sequential billing
day basis in the fourth quarter of 2023. We experienced a notable
improvement in consultant retention rates during the third quarter
of 2023 and also began to see improving trends in new assignments
in October 2023, which contributed to the sequential growth in the
fourth quarter of 2023.
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Our average bill rates remained strong and increased 2.5% for the
year ended December 31, 2023, as compared to the same period in
2022. Our average bill rate of approximately $90 per hour was largely
stable throughout 2023, which was encouraging given the significant
uncertainty in the macro environment. In the first quarter of 2024,
we expect Technology Flex revenue to decline in the low double digits
year-over-year.
Our FA business experienced a decrease in Flex revenue of 27.6%
(27.3% on a billing day basis), during the year ended December 31,
2023, as compared to the same period in 2022, primarily driven by
the repositioning of this business towards more highly-skilled roles
and the continued uncertainty in the macro environment. We have
seen indicators of success in our repositioning efforts as our average
bill rate of approximately $50 per hour for the year ended December
31, 2023 has improved from an average bill rate of $37 per hour for
the year ended December 31, 2019, an increase of 35%. In the first
quarter of 2024, we expect FA Flex revenue to decrease in the mid
20% range on a year-over-year basis.
The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):
Year Ended December 31,
2023 vs. 2022
2022 vs. 2021
Key Drivers—Increase (Decrease)
Volume—hours billed
Bill rate
Billable expenses
Total change in Flex revenue
Technology
FA
Technology
FA
$(141,498)
33,320
(1,782)
$(109,960)
$(57,647)
8,949
(18)
$(48,716)
$118,757
109,357
381
$228,495
$(144,684)
38,456
26
$(106,202)
The following table presents total Flex hours billed by segment and the percentage change over the prior period for the years ended
December 31 (in thousands):
Technology
FA
Total Flex hours billed
2023
15,178
2,550
17,728
Increase
(Decrease)
(9.6)%
(32.7)%
(13.9)%
2022
16,794
3,789
20,583
Increase
(Decrease)
9.6%
(51.2)%
(10.9)%
2021
15,329
7,768
23,097
Direct Hire Revenue. The key drivers of Direct Hire revenue are the
number of placements and the associated placement fee. Direct Hire
revenue also includes conversion revenue, which may occur when a
consultant initially assigned to a client on a temporary basis is later
converted to a permanent placement for a fee.
Direct Hire revenue decreased 34.9% during the year ended
December 31, 2023, as compared to the same period in 2022,
primarily driven by a decrease in placements stemming from
uncertainties in the macroeconomic environment. We expect Direct
Hire revenue to be down in the 30% range in the first quarter of
2024 on a year-over-year basis.
Gross Profit. Gross profit is determined by deducting direct
costs (primarily consultant compensation, payroll taxes and certain
fringe benefits, as well as independent contractor costs) from
total revenue. In addition, there are no consultant payroll costs
associated with Direct Hire placements; thus, all Direct Hire revenue
increases gross profit by the full amount of the placement fee.
The following table presents the gross profit as a percentage of total revenue (“gross profit percentage”) for each segment and the
percentage change over the prior period for the years ended December 31:
Technology
FA
Total gross profit percentage
2023
26.7%
39.2%
27.9%
Increase
(Decrease)
(4.6)%
0.5%
(4.8)%
2022
28.0%
39.0%
29.3%
Increase
(Decrease)
0.4%
18.2%
1.4%
2021
27.9%
33.0%
28.9%
Total gross profit percentage decreased 140 basis points for the year ended December 31, 2023, as compared to the same period in 2022,
primarily as a result of a decline in the mix of Direct Hire revenue and lower Technology Flex gross profit margins.
Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insight into the other
drivers of total gross profit percentage driven by our Flex business such as changes in the spread between the consultants’ bill rate and pay
rate, changes in payroll tax rates or benefits costs, as well as the impact of billable expenses, which provide no profit margin.
14 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 15
The following table presents the Flex gross profit percentage for each segment and the percentage change over the prior period for the
years ended December 31:
Technology
FA
Total Flex gross profit percentage
2023
25.7%
29.9%
26.0%
Increase
(Decrease)
(2.7)%
0.7%
(3.0)%
2022
26.4%
29.7%
26.8%
Increase
(Decrease)
—%
8.4%
0.8%
2021
26.4%
27.4%
26.6%
Our Flex gross profit percentage decreased 80 basis points for the year ended December 31, 2023, as compared to the same period in 2022.
• Technology Flex gross profit margins decreased 70 basis points for the year ended December 31, 2023, as compared to the same period in
2022, primarily due to a tighter pricing environment.
• FA Flex gross profit margins increased 20 basis points for the year ended December 31, 2023, as compared to the same period in
2022, primarily a result of favorable benefits and payroll taxes due to a change in our client portfolio mix, partially offset by a tighter
pricing environment.
The following table presents the key drivers for the change in Flex gross profit by segment over the prior period (in thousands):
Year Ended December 31,
2023 vs. 2022
2022 vs. 2021
Key Drivers—Increase (Decrease)
Revenue impact (volume)
Profitability impact (rate)
Total change in Flex gross profit
Technology
FA
Technology
FA
$(29,079)
(10,333)
$(39,412)
$(14,483)
187
$(14,296)
$60,365
395
$60,760
$(29,128)
4,061
$(25,067)
SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.3%, 84.1%
and 85.4% of SG&A for the years ended December 31, 2023, 2022 and 2021, respectively. Commissions and other bonus incentives for our
revenue-generating talent are variable costs driven primarily by revenue and gross profit levels, and associate performance.
The following table presents certain components of SG&A as a percentage of total revenue for the years ended December 31 (in thousands):
2023 % of Revenue
2022 % of Revenue
2021 % of Revenue
Compensation, commissions,
payroll taxes and benefits costs
Other(1)
Total SG&A
$282,439
52,494
$334,933
18.4%
3.5%
21.9%
$319,501
60,314
$379,815
18.7%
3.5%
22.2%
$295,187
50,534
$345,721
18.7%
3.2%
21.9%
(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office related expense, and certain other expenses.
SG&A as a percentage of revenue decreased 30 basis points for the year ended December 31, 2023, as compared to the same period in
2022, primarily driven by a decrease in performance-based compensation and tighter expense management given the lower revenue levels,
partially offset by costs associated with organizational realignment activities and actions taken to reduce our structural costs along with legal
settlement costs.
Despite the uncertainties in the macroeconomic environment, we continue to prioritize investments in our strategic initiatives, including our
integrated strategy and multi-year efforts to transform our back office, and are continuing to exercise tight discretionary spend control, taking
certain actions to align our costs with the lower revenue levels and generating other cost efficiencies, where appropriate.
Depreciation and Amortization. The following table presents depreciation and amortization expense and percentage change over the prior
period by major category for the years ended December 31 (in thousands):
2023
$3,142
1,870
$5,012
Increase
(Decrease)
18.3%
5.5%
13.2%
2022
$2,655
1,772
$4,427
Increase
(Decrease)
(5.9)%
5.6%
(1.6)%
2021
$2,822
1,678
$4,500
Fixed asset depreciation
Capitalized software amortization
Total Depreciation and amortization
16 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 17
Other Expense, Net. Other expense, net was $1.9 million, $14.4 million
and $7.4 million for the years ended December 31, 2023, 2022 and
2021, respectively. Other expense, net consists of our proportionate
share of losses for our joint venture and interest expense related to
outstanding borrowings under our credit facility.
During the years ended December 31, 2023, 2022 and 2021, we
recognized $0.8 million, $3.8 million, and $2.5 million, respectively,
related to our share of losses associated with our equity method
investment. On February 23, 2023, Kforce sold its 50% noncontrolling
interest in our equity method investment to an unaffiliated third party,
which fully settled the outstanding note receivable. Other expense,
net also includes an impairment charge of $13.7 million for our equity
method investment for the year ended December 31, 2022. Refer to
Note 1 — “Summary of Significant Accounting Policies” in the Notes to
Consolidated Financial Statements, included in this Annual Report, for a
more detailed discussion on the sale of our equity method investment.
During the year ended December 31, 2022, Other expense, net also
included a $4.1 million gain recognized as a result of the termination
of an interest rate swap agreement in May 2022. Refer to Note 14 —
“Derivative Instrument and Hedging Activity” in the Notes to
Consolidated Financial Statements, included in this Annual Report, for
a complete discussion of the interest rate swap derivative instruments.
During the year ended December 31, 2021, Other expense, net
included expense of $1.8 million related to the termination of our
SERP. Refer to Note 12 — “Employee Benefit Plans” in the Notes to
Consolidated Financial Statements, included in this Annual Report, for a
complete discussion of the termination of our SERP.
Income Tax Expense. Income tax expense as a percentage of
income from operations, before income taxes (our “effective tax rate”)
were 28.4%, 26.4% and 24.3% for the years ended December 31,
2023, 2022 and 2021, respectively. The 2023 effective tax rate was
unfavorably impacted by a lower work opportunity tax credit, a lower
tax benefit from the vesting of restricted stock, and higher non-
deductible expenses, as compared to 2022.
NON-GAAP FINANCIAL MEASURES
Revenue Growth Rates. “Revenue growth rates,” a non-GAAP
financial measure, is defined by Kforce as year-over-year revenue
growth after removing the impacts on reported revenues from the
changes in the number of billing days. Management believes this data
is particularly useful because it aids in evaluating revenue trends over
time. Billing days impact is calculated by dividing each comparative
period’s reported revenues by the number of billing days for that period
to arrive at a per billing day amount. Same billing day growth rates are
then calculated based on the per billing day amounts. Management
calculates the number of billing days for each reporting period based
on the number of holidays and business days in the quarter.
Technology Flex
FA Flex
Total Flex revenue
Billing Days
Technology Flex
FA Flex
Total Flex revenue
Year-Over-Year Growth Rates (As Reported)
2023
YTD
Q4
Q3
Q2
Q1
(7.4)%
(27.6)%
(9.6)%
2.2%
(11.1)% (12.5)%
(28.0)% (26.9)% (27.3)% (28.2)%
(1.6)%
(12.8)% (13.9)%
(7.8)%
(9.8)%
Year-Over-Year Growth Rates (As Adjusted)
2023
YTD
Q4
Q3
Q2
Q1
252
(7.1)%
(27.3)%
(9.2)%
63
61
64
2.2%
(11.1)% (11.1)%
(28.0)% (25.7)% (27.3)% (28.2)%
(1.6)%
(12.8)% (12.5)%
64
(7.8)%
(9.8)%
2022
Q4
8.5%
(28.8)%
3.1%
2022
Q4
61
8.5%
(28.8)%
3.1%
Free Cash Flow. “Free Cash Flow”, a non-GAAP financial measure,
is defined by Kforce as net cash provided by operating activities
determined in accordance with GAAP, less capital expenditures.
Management believes this provides an additional way of viewing our
liquidity that, when viewed with our GAAP results, provides a more
complete understanding of factors and trends affecting our cash flows
and is useful information to investors as it provides a measure of the
amount of cash generated from the business that can be used for
strategic opportunities, including investing in our business, repurchasing
common stock, paying dividends or making acquisitions. Free Cash Flow
has limitations due to the fact that it does not represent the residual
cash flow available for discretionary expenditures. Therefore, we believe
it is important to view Free Cash Flow as a complement to, but not as a
replacement for, our Consolidated Statements of Cash Flows.
16 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 17
The following table presents Free Cash Flow (in thousands):
Years Ended December 31,
Net income
Non-cash provisions and other
Changes in operating assets/liabilities
Net cash provided by operating activities
Capital expenditures
Free cash flow
Change in debt
Repurchases of common stock
Cash dividends
Proceeds from the sale of our joint venture interest
(Premiums paid for) cash proceeds received from company-owned life insurance
Note receivable issued to our joint venture
Equity method investment
Net proceeds from the sale of assets held for sale
Other
2023
$ 61,075
30,713
(323)
91,465
(7,763)
83,702
16,000
(75,024)
(27,562)
5,059
(1,408)
(750)
—
—
(19)
2022
2021
$ 75,431
50,294
(34,920)
90,805
(8,109)
82,696
(74,400)
(74,913)
(24,027)
—
1,077
(6,750)
(500)
—
(51)
$ 75,177
30,188
(32,467)
72,898
(6,441)
66,457
—
(66,210)
(20,120)
—
—
—
(9,000)
23,742
(1,366)
Change in cash and cash equivalents
$ (2)
$(96,868)
$ (6,497)
Adjusted EBITDA. “Adjusted EBITDA”, a non-GAAP financial
measure, is defined by Kforce as net income before depreciation and
amortization, stock-based compensation expense, interest expense,
net, income tax expense, organizational realignment activities, legal
settlement expense, loss from equity method investment, reserve
associated with the note receivable issued to our joint venture,
impairment of equity method investment, gain from termination of
interest rate swap, gain on the sale of the corporate headquarters,
and SERP termination expense. Adjusted EBITDA should not be
considered a measure of financial performance under GAAP.
Items excluded from Adjusted EBITDA are significant components
in understanding and assessing our past and future financial
performance, and this presentation should not be construed as an
inference by us that our future results will be unaffected by those
items excluded from Adjusted EBITDA. Adjusted EBITDA is a key
measure used by management to assess our operations including
our ability to generate cash flows and our ability to repay our debt
obligations, and management believes it provides a good metric of our
core profitability in comparing our performance to our competitors,
as well as our performance over different time periods. Consequently,
management believes it is useful information to investors. The
measure should not be considered in isolation or as an alternative
to net income, cash flows or other financial statement information
presented in the consolidated financial statements as indicators of
financial performance or liquidity. The measure is not determined in
accordance with GAAP and is thus susceptible to varying calculations.
Also, Adjusted EBITDA, as presented, may not be comparable to
similarly titled measures of other companies.
In addition, although we excluded amortization of stock-based
compensation expense because it is a non-cash expense, we expect
to continue to incur stock-based compensation in the future and
the associated stock issued may result in an increase in our
outstanding shares of stock, which may result in the dilution of our
shareholder ownership interest. We suggest that you evaluate these
items and the potential risks of excluding such items when analyzing
our financial position.
The following table presents Adjusted EBITDA and includes a reconciliation of net income to Adjusted EBITDA (in thousands):
Years Ended December 31,
Net income
Depreciation and amortization
Stock-based compensation expense
Interest expense, net
Income tax expense
Organizational realignment activities
Legal settlement expense
Loss from equity method investment
Reserve associated with note receivable issued to our joint venture
Impairment of equity method investment
Gain from termination of interest rate swap
Gain on sale of corporate headquarters
SERP termination expense
Adjusted EBITDA
18 | KFORCE INC. AND SUBSIDIARIES
2023
$ 61,075
5,012
17,747
1,122
24,175
3,662
2,175
750
—
—
—
—
—
$115,718
2022
2021
$ 75,431
4,427
17,655
973
27,011
—
—
3,824
1,925
13,684
(4,059)
—
—
$ 75,177
4,500
13,999
3,073
24,090
—
3,350
2,480
—
—
—
(2,051)
1,821
$140,871
$126,439
KFORCE INC. AND SUBSIDIARIES | 19
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
To meet our capital and liquidity requirements, we primarily rely on
operating cash flow, as well as borrowings under our credit facility.
At December 31, 2023 and 2022, we had $0.1 million in cash and
cash equivalents. At December 31, 2023, Kforce had $141.5 million
in working capital compared to $146.3 million at December 31, 2022.
Cash Flows
Our business has historically generated a significant amount of
operating cash flows, which allows us to balance deploying available
capital towards: (i) investing in our infrastructure to allow sustainable
growth; (ii) our dividend and share repurchase programs; and (iii)
maintaining sufficient liquidity for potential acquisitions or other
strategic investments.
The following table presents a summary of our net cash flows from
operating, investing and financing activities (in thousands):
Years Ended December 31,
2023
2022
2021
Cash Provided by (Used in)
Operating activities
Investing activities
Financing activities
Change in cash and
cash equivalents
$ 91,465 $ 90,805
(14,282)
(173,391)
(4,862)
(86,605)
$ 72,898
8,301
(87,696)
$ (2) $ (96,868)
$ (6,497)
Cash provided by operating activities was $91.5 million during the
year ended December 31, 2023, as compared to $90.8 million during
the year ended December 31, 2022. Our largest source of operating
cash flows is the collection of trade receivables, and our largest use of
operating cash flows is the payment of our associate and consultant
compensation. In 2022, there were higher cash outlays related to
the payment of deferred payroll taxes under the CARES Act and the
settlement of the SERP, totaling approximately $39 million. Operating
cash flows in 2023 were negatively impacted by lower profitability
levels due to the decline in revenues stemming from the uncertainty
in the macro environment.
Investing Activities
Cash used in investing activities was $4.9 million during the year
ended December 31, 2023, and primarily consisted of cash used for
capital expenditures of $7.8 million, partially offset by the proceeds
from the sale of our joint venture interest of $5.1 million. Cash used in
investing activities of $14.3 million during the year ended December 31,
2022 primarily consisted of cash used for capital expenditures of
$8.1 million and the issuance of secured promissory notes to our joint
venture totaling $6.8 million.
Financing Activities
Cash used in financing activities was $86.6 million during the year
ended December 31, 2023, as compared to $173.4 million during the
year ended December 31, 2022. This change was primarily driven by
$16.0 million of net borrowings on our credit facility in 2023 and $74.4
million of net payments in 2022.
The following table presents the cash flow impact of the common stock repurchase activity for the years ended December 31 (in thousands):
Open market repurchases
Repurchase of shares related to tax withholding requirements for restricted stock vesting
Total cash flow impact of common stock repurchases
Cash paid in current year for settlement of prior year repurchases
2023
$67,178
7,846
$75,024
$ 974
2022
$66,806
8,107
$74,913
$ 181
2021
$54,265
11,945
$66,210
$ —
Kforce’s Board declared and paid dividends of $27.6 million
($1.44 per share), $24.0 million ($1.20 per share) and $20.1 million
($0.98 per share) for the years ended December 31, 2023, 2022 and
2021, respectively.
In February 2024, Kforce’s Board approved a 5.5% annual increase
to the Company’s dividend from $1.44 per share to $1.52 per share.
The declaration, payment and amount of future dividends are
discretionary and will be subject to determination by Kforce’s Board
each quarter following its review of, among other things, the Firm’s
current and expected financial performance as well as the ability to
pay dividends under applicable law.
We believe that existing cash and cash equivalents, cash flow
from operations and available borrowings under our credit facility
will be adequate to meet the capital expenditure and working capital
requirements of our operations for at least the next 12 months.
However, a material deterioration in the economic environment or
market conditions, among other things, could negatively impact
operating results and liquidity, as well as the ability of our lenders
to fund borrowings. Actual results could also differ materially from
those indicated as a result of a number of factors, including the use of
currently available resources for potential acquisitions and additional
stock repurchases.
Credit Facility
On October 20, 2021, the Firm entered into an Amended and
Restated Credit Facility, which has a maximum borrowing capacity of
$200.0 million, and subject to certain conditions and the participation
of the lenders, may be increased up to an aggregate additional
amount of $150.0 million. As of December 31, 2023, $41.6 million
was outstanding and $157.2 million, net of $1.2 million in letters of
credit outstanding, was available under the Amended and Restated
Credit Facility. As of December 31, 2023, we were in compliance with
all of our financial covenants.
In June 2023, Kforce entered into the First Amendment to the
Amended and Restated Credit Facility, by and among Wells Fargo, as
administrative agent, and the lenders and financial institutions from
time to time party thereto (the “First Amendment”), to replace the
interest rates based on the London Inter-Bank Offered Rate (“LIBOR”)
18 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 19
with benchmark interest rates based on the Secured Overnight
Financing Rate (“SOFR”). Refer to Note 13 — “Credit Facility” in
the Notes to Consolidated Financial Statements, included in this
Annual Report for a complete discussion of the Amended and Restated
Credit Facility.
In April 2017 and March 2020, Kforce entered into two forward-
starting interest rate swap agreements to mitigate the risk of rising
interest rates. As of December 31, 2023, the Firm did not have
any outstanding interest rate swap derivative instruments. Refer to
Note 14 — “Derivative Instrument and Hedging Activity” in the Notes
to Consolidated Financial Statements, included in this Annual Report
for a complete discussion of our interest rate swaps.
Stock Repurchases
The following table presents the open market repurchase activity
under the Board-authorized common stock repurchase program for
the years ended December 31 (in thousands):
2023
2022
Shares $ Shares $
Open market
repurchases
1,097
$67,124 1,124 $67,599
In February 2024, the Board approved an increase in our stock
repurchase authorization, bringing the total authorization to $100.0
million. As of December 31, 2023, $41.7 million remained available
for further repurchases under the Board-authorized common stock
repurchase program.
Contractual Obligations
In addition to our discussion and analysis surrounding our
liquidity and capital resources, consideration should also be given to
significant contractual obligations:
• The Amended and Restated Credit Facility matures on October 20,
2026, and as of December 31, 2023, our outstanding debt balance
under the credit facility was $41.6 million. Total payments,
however, are inherently uncertain as the interest rates related
to this outstanding balance are variable and the outstanding
borrowings that will occur over the remaining term of the Credit
Facility are unknown. Refer to Note 13 — “Credit Facility” in the
Notes to Consolidated Financial Statements, included in this
Annual Report for further details on the Amended and Restated
Credit Facility.
• We maintain various non-qualified deferred compensation
plans pursuant to which eligible management and highly-
compensated key employees may elect to defer all or part of their
compensation to later years. As of December 31, 2023, the total
amount of our obligations under these plans was $48.0 million.
These amounts are included in the accompanying Consolidated
Balance Sheets and classified as Accounts payable and other
accrued liabilities and Other long-term liabilities, as appropriate,
and are payable based upon the elections of the plan participants
(e.g., retirement, termination of employment, change-in-control,
etc.). Amounts payable upon the retirement or termination of
employment may become payable during the next five years if a
covered employee retires, terminates, or schedules a distribution.
• Our purchase commitments consist of agreements to purchase
goods and services entered into in the ordinary course
of business. As of December 31, 2023, the value of our
non-cancellable unconditional purchase commitments was
$38.0 million.
• We have employment agreements with certain executives that
provide for minimum compensation, salary and continuation
of certain benefits for a six-month to a three-year period
after their employment ends under certain circumstances. At
December 31, 2023, our liability would be approximately $30.3
million for terminations related to a change in control and $11.4
million related to terminations in the absence of cause. Refer to
Note 17 — “Commitments and Contingencies” in the Notes to
Consolidated Financial Statements, included in this Annual Report
for additional information regarding our commitments related to
employment agreements.
• We lease certain facilities and other properties under non-
cancellable operating lease arrangements that expire at various
dates through 2033. As of December 31, 2023, the total amount
of our obligations under operating leases was $18.2 million. Refer
to Note 11 — “Operating Leases” in the Notes to Consolidated
Financial Statements, included in this Annual Report. Financial
Statements and Supplementary Data for additional information
regarding our lease obligations and the timing of expected future
payments, including a five-year maturity schedule.
Off-Balance Sheet Arrangements
Kforce provides letters of credit to certain vendors in lieu of
cash deposits. At December 31, 2023, Kforce had letters of credit
outstanding for operating lease and insurance coverage deposits
totaling $1.2 million.
These off-balance sheet arrangements do not have a material
impact on our liquidity or capital resources. These off-balance sheet
arrangements do not provide financing, liquidity, market or credit
risk support.
CRITICAL ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared
in
accordance with GAAP, and our significant accounting policies
are discussed in Note 1 — “Summary of Significant Accounting
Policies” in the Notes to Consolidated Financial Statements,
included in this Annual Report. In connection with the preparation
of our consolidated financial statements, we are required to
make assumptions and estimates about future events, and apply
judgments that affect the reported amount of assets, liabilities,
revenues, expenses and the related disclosures. Our assumptions,
estimates and judgments are based on our historical experience,
20 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 21
current trends and other factors that management believes to
be relevant at the time our consolidated financial statements are
prepared. Management regularly reviews the accounting policies,
estimates, assumptions and judgments to ensure that our consolidated
financial statements are presented fairly and in accordance with
GAAP. However, because future events and their effects cannot
be determined with certainty, actual results could differ from our
assumptions and estimates, and such differences could be material.
Management believes that the following accounting estimates are
the most critical to aid in fully understanding and evaluating our
reported financial results, and they require management’s most
difficult, subjective or complex judgments, resulting from the need
to make estimates about the effect of matters that are inherently
uncertain. We have not made any material changes in our accounting
methodologies used in prior years.
Allowance for Credit Losses
We estimate and recognize lifetime expected losses, rather than
incurred losses, which results in the earlier recognition of credit
losses even if the expected risk of credit loss is remote. As part of
our analysis, we apply credit loss rates to outstanding receivables
by aging category. For certain clients, we perform a quarterly
credit review, which considers the client’s credit rating and financial
position as well as our total credit loss exposure. A 10% change in
accounts reserved at December 31, 2023 would have impacted our
net income by approximately $0.1 million in 2023.
Refer to Note 4 — “Allowance for Credit Losses” in the Notes to
Consolidated Financial Statements, included in this Annual Report,
for more details on our allowance for credit losses.
Accounting for Income Taxes
Our effective income tax rate is influenced by tax planning
opportunities available to us in the various jurisdictions in which we
conduct business. Significant judgment is required in determining our
effective tax rate and in evaluating our tax positions, including those
that may be uncertain.
We are also required to exercise judgment with respect to the
realization of our net deferred tax assets. Management evaluates
positive and negative evidence and exercises judgment regarding
past and future events to determine if it is more likely than not that
all or some portion of the deferred tax assets may not be realized. If
appropriate, a valuation allowance is recorded against deferred tax
assets to offset future tax benefits that may not be realized. A 0.5%
change in our effective tax rate would have impacted our net income
by approximately $0.4 million in 2023.
Refer to Note 6 — “Income Taxes” in the Notes to Consolidated
Financial Statements, included in this Annual Report, for a complete
discussion of the components of our income tax expense, as well as
the temporary differences that exist as of December 31, 2023.
Goodwill Impairment
Goodwill is tested at the reporting unit level, which is generally
an operating segment or one level below the operating segment
level, where a business operates and for which discrete financial
information is available and reviewed by segment management.
We evaluate goodwill for impairment annually or more frequently
whenever events or circumstances indicate that the fair value of a
reporting unit is below its carrying value. We monitor the existence
of potential impairment indicators throughout the year. It is our
policy to conduct impairment testing based on our current business
strategy in light of present industry and economic conditions, as well
as future expectations.
When performing a quantitative assessment, we determine the
fair value of our reporting units using widely accepted valuation
techniques, including the discounted cash flow, guideline transaction
and guideline company methods. These types of analyses contain
uncertainties because they require management to make significant
assumptions and judgments including: (1) an appropriate rate to
discount the expected future cash flows; (2) the inherent risk in
achieving forecasted operating results; (3) long-term growth rates;
(4) expectations for future economic cycles; (5) market comparable
companies and appropriate adjustments thereto; and (6) market
multiples. When performing a qualitative assessment, we assess
qualitative factors to determine whether the existence of events or
circumstances indicated that it was more likely than not that the fair
value of the reporting unit was less than its carrying amount.
Refer to Note 8 — “Goodwill” in the Notes to Consolidated Financial
Statements, included in this Annual Report, for a complete discussion
of the valuation methodologies employed.
Self-Insured Liabilities
We are self-insured for certain losses related to health insurance
claims that are below insurable limits. However, we obtain third-
party insurance coverage to limit our exposure to claims in excess
of insurable limits. When estimating our self-insured liabilities, we
consider a number of factors, including historical claims experience,
plan structure, internal claims management activities, demographic
factors and severity factors. Periodically, management reviews its
assumptions to determine the adequacy of our self-insured liabilities.
Our self-insured liabilities contain uncertainties because
management is required to make assumptions and to apply judgment
to estimate the ultimate total cost to settle reported claims and
claims incurred but not reported (“IBNR”) as of the balance sheet
date. A 10% change in our self-insured liabilities related to health
insurance, as of December 31, 2023, would have impacted our net
income by approximately $0.4 million in 2023.
NEW ACCOUNTING STANDARDS
Refer to Note 1 — “Summary of Significant Accounting Policies”
in the Notes to Consolidated Financial Statements, included in this
Annual Report, for a discussion of new accounting standards.
20 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 21
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Kforce is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) of the Exchange Act. Kforce’s internal control system was designed to provide reasonable assurance to Kforce’s management
and the Board regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of the CEO and the CFO, Kforce’s management assessed the effectiveness of Kforce’s
internal control over financial reporting as of December 31, 2023. In making this assessment, it used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013). Based on our assessment
we believe that, as of December 31, 2023, Kforce’s internal control over financial reporting is effective based on those criteria.
Kforce’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on our internal control over financial
reporting, which is presented herein.
22 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Kforce Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Kforce Inc. and subsidiaries (the “Company”) as of December 31, 2023 and
2022, the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows, for each
of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively
referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31,
2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the
Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to
be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
Tampa, Florida
February 23, 2024
We have served as the Company’s auditor since 2000.
22 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 23
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
Years Ended December 31,
Revenue
Direct costs
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Income from operations
Other expense, net
Income from operations, before income taxes
Income tax expense
Net income
Other comprehensive (loss) income:
Defined benefit pension plans, net of tax
Change in fair value of interest rate swaps, net of tax
Comprehensive income
Earnings per share — basic
Earnings per share — diluted
Weighted average shares outstanding — basic
Weighted average shares outstanding — diluted
The accompanying notes are an integral part of these consolidated financial statements.
2023
2022
2021
$1,531,756
1,104,690
$1,710,765
1,209,658
$1,579,922
1,123,058
427,066
334,933
5,012
87,121
1,871
85,250
24,175
61,075
—
—
501,107
379,815
4,427
116,865
14,423
102,442
27,011
75,431
—
(615)
456,864
345,721
4,500
106,643
7,376
99,267
24,090
75,177
3,103
1,941
$ 61,075
$ 74,816
$ 80,221
$3.18
$3.13
19,188
19,507
$3.76
$3.68
20,054
20,503
$3.65
$3.54
20,579
21,212
24 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 25
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
ASSETS
Current assets:
Cash and cash equivalents
Trade receivables, net of allowances of $1,643 and $1,575, respectively
Prepaid expenses and other current assets
Total current assets
Fixed assets, net
Other assets, net
Deferred tax assets, net
Goodwill
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities
Accrued payroll costs
Current portion of operating lease liabilities
Income taxes payable
Total current liabilities
Long-term debt — credit facility
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value; 250,000 shares authorized, 73,462 and 73,242 issued, respectively
Additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Treasury stock, at cost; 53,941 and 52,744 shares, respectively
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
2023
2022
$ 119
233,428
10,912
244,459
9,418
75,924
3,138
25,040
$ 121
269,496
8,143
277,760
8,647
75,771
4,786
25,040
$ 357,979
$ 392,004
$ 64,795
33,968
3,589
623
102,975
41,600
54,324
198,899
$ 72,792
48,369
4,576
5,696
131,433
25,600
52,773
209,806
—
734
527,288
—
525,222
(894,164)
159,080
—
732
507,734
6
492,764
(819,038)
182,198
$ 357,979
$ 392,004
24 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 25
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
Balance, December 31, 2020
Net income
Issuance for stock-based compensation and dividend equivalents, net of forfeitures
Stock-based compensation expense
Employee stock purchase plan
Dividends ($0.98 per share)
Defined benefit pension plan, no tax benefit
Change in fair value of interest rate swap, net of tax of $657
Repurchases of common stock
Balance, December 31, 2021
Net income
Issuance for stock-based compensation and dividend equivalents, net of forfeitures
Stock-based compensation expense
Employee stock purchase plan
Dividends ($1.20 per share)
Change in fair value of interest rate swap, net of tax of $209
Repurchases of common stock
Balance, December 31, 2022
Net income
Issuance for stock-based compensation and dividend equivalents, net of forfeitures
Stock-based compensation expense
Employee stock purchase plan
Dividends ($1.44 per share)
Repurchases of common stock
Other
Balance, December 31, 2023
The accompanying notes are an integral part of these consolidated financial statements.
Common Stock
Shares Amount
72,600
—
397
—
—
—
—
—
—
72,997
—
245
—
—
—
—
—
73,242
—
220
—
—
—
—
—
73,462
$726
—
4
—
—
—
—
—
—
730
—
2
—
—
—
—
—
732
—
2
—
—
—
—
—
$734
26 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 27
Additional
Paid-In
Capital
$472,378
—
1,102
13,999
557
—
—
—
—
488,036
—
1,234
17,655
809
—
—
—
507,734
—
1,053
17,747
754
—
—
—
Accumulated Other
Comprehensive
(Loss) Income
$(4,423)
—
—
—
—
—
3,103
1,941
—
621
—
—
—
—
—
(615)
—
6
—
—
—
—
—
—
(6)
Retained
Earnings
$388,645
75,177
(1,106)
—
—
(20,120)
—
—
—
442,596
75,431
(1,236)
—
—
(24,027)
—
—
492,764
61,075
(1,055)
—
—
(27,562)
—
—
$527,288
$ —
$525,222
Treasury Stock
Shares Amount
Total
Stockholders’
Equity
50,427
—
—
—
(15)
—
—
—
1,080
51,492
—
—
—
(17)
—
—
1,269
52,744
—
—
—
(18)
—
1,215
—
53,941
$ (677,391)
—
—
—
205
—
—
—
(66,391)
(743,577)
—
—
—
245
—
—
(75,706)
(819,038)
—
—
—
288
—
(75,414)
—
$ 179,935
75,177
—
13,999
762
(20,120)
3,103
1,941
(66,391)
188,406
75,431
—
17,655
1,054
(24,027)
(615)
(75,706)
182,198
61,075
—
17,747
1,042
(27,562)
(75,414)
(6)
$(894,164)
$159,080
26 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 27
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to cash provided by operating activities:
2023
2022
2021
$ 61,075
$ 75,431
$ 75,177
Deferred income tax provision, net
Provision for credit losses
Depreciation and amortization
Stock-based compensation expense
Noncash lease expense
Loss on equity method investment
Defined benefit pension plans expense
Reserve related to note receivable
Impairment of equity method investment
Other
(Increase) decrease in operating assets
Trade receivables, net
Other assets
Increase (decrease) in operating liabilities
Accrued payroll costs
Other liabilities
Payment of benefit under terminated pension plan
Cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from the sale of our joint venture interest
(Premiums paid for) cash proceeds received from company-owned life insurance
Note receivable issued to our joint venture
Equity method investment
Net proceeds from the sale of assets held for sale
Cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from credit facility
Payments on credit facility
Repurchases of common stock
Cash dividends
Other
Cash used in financing activities
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Income taxes
Operating lease liabilities
Interest, net
Non-Cash Financing and Investing Transactions:
ROU assets obtained from operating leases
Unsettled repurchases of common stock
Employee stock purchase plan
The accompanying notes are an integral part of these consolidated financial statements.
1,647
768
5,012
17,747
4,065
750
—
—
—
724
35,301
(1,304)
(13,358)
(20,962)
—
91,465
(7,763)
5,059
(1,408)
(750)
—
—
(4,862)
594,400
(578,400)
(75,024)
(27,562)
(19)
(86,605)
(2)
121
3,081
(126)
4,427
17,655
5,683
3,824
—
1,925
13,684
141
(4,049)
(9,199)
(22,003)
20,296
(19,965)
90,805
(8,109)
—
1,077
(6,750)
(500)
—
(14,282)
38,200
(112,600)
(74,913)
(24,027)
(51)
(173,391)
(96,868)
96,989
2,425
11
4,500
13,999
5,509
2,480
2,157
—
—
(893)
(36,960)
(9,779)
6,337
7,935
—
72,898
(6,441)
—
—
—
(9,000)
23,742
8,301
—
—
(66,210)
(20,120)
(1,366)
(87,696)
(6,497)
103,486
$ 119
$ 121
$ 96,989
$ 28,616
5,232
897
$ 4,378
920
1,042
$ 16,579
6,992
885
$ 9,997
974
1,054
$ 24,277
7,468
2,453
$ 5,098
181
762
28 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements have been prepared in
conformity with Generally Accepted Accounting Principles (“GAAP”)
and the rules of the Securities and Exchange Commission (the “SEC”).
Certain prior year amounts have been reclassified to conform with
the current period presentation.
Principles of Consolidation
The consolidated financial statements include the accounts
of Kforce Inc. and its subsidiaries. All intercompany transactions
and balances have been eliminated in consolidation. References
in this document to “Kforce,” the “Company,” “we,” the “Firm,”
“management,” “our” or “us” refer to Kforce Inc. and its subsidiaries,
except where the context indicates otherwise.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. The most critical of these estimates
and assumptions relate to the following: allowance for credit losses;
income taxes; self-insured liabilities for health insurance; and the
impairment of goodwill, other long-lived assets and the equity method
investment. Although these and other estimates and assumptions
are based on the best available information, actual results could be
materially different from these estimates.
Revenue Recognition
All of our revenue and trade receivables are generated from
contracts with customers and our revenues are derived from U.S.
domestic operations.
Revenue is recognized when the control of the promised services
is transferred to our customers at an amount that reflects the
consideration to which we expect to be entitled to in exchange for
those services. Revenue is recorded net of sales or other transaction
taxes collected from clients and remitted to taxing authorities.
For substantially all of our revenue transactions, we have determined
that the gross reporting of revenues as a principal, versus net as an
agent, is the appropriate accounting treatment because Kforce: (i) is
primarily responsible for fulfilling the promise to provide the specified
service to the customer; (ii) has discretion in selecting and assigning
the temporary workers to particular jobs and establishing the bill rate;
and (iii) bears the risk and rewards of the transaction, including credit
risk if the customer fails to pay for services performed.
Flex Revenue
Substantially all of our Flex revenue is recognized over time as
temporary staffing services and managed solutions are provided
by our consultants at the contractually established bill rates, net
of applicable variable consideration, such as customer rebates and
discounts. Reimbursements of travel and out-of-pocket expenses
(“billable expenses”) are also recorded within Flex revenue when
incurred and the equivalent amount of expense is recorded in
Direct costs in the Consolidated Statements of Operations and
Comprehensive Income. We recognize revenue in the amount
of consideration to which we have the right to invoice when it
corresponds directly to the services transferred to the customer and
satisfied over time.
Direct Hire Revenue
Direct Hire revenue is recognized at the agreed upon rate at the
point in time when the performance obligation is considered complete.
Our policy requires the following criteria to be met in order for the
performance obligation to be considered complete: (i) the candidate
accepted the position; (ii) the candidate resigned from their current
employer; and (iii) the agreed upon start date falls within the following
month. Because the client has accepted the candidate and can direct
the use of and obtains the significant risk and rewards of the placement,
we consider this point as the transfer of control to our client.
Variable Consideration
Transaction prices for Flex revenue include variable consideration,
such as customer rebates and discounts. Management evaluates the
facts and circumstances of each contract to estimate the variable
consideration using the most likely amount method which utilizes
management’s expectation of the volume of services to be provided
over the applicable period.
Direct Hire revenue is recorded net of a fallout reserve. Direct Hire
fallouts occur when a candidate does not remain employed with the
client through the respective contingency period (typically 90 days
or less). Management uses the expected value method to estimate
the fallout reserve based on a combination of past experience and
current trends.
Payment Terms
Our payment terms and conditions vary by arrangement. The vast
majority of our terms are typically less than 90 days, however, we
have extended our payment terms beyond 90 days for certain of
our customers. Generally, the timing between the satisfaction of the
performance obligation and the payment is not significant and we do
not currently have any significant financing components.
Unsatisfied Performance Obligations
We do not disclose the value of unsatisfied performance obligations
for contracts if either the original expected length is one year or less
or if revenue is recognized at the amount to which we have the right
to invoice for services performed.
Contract Balances
We record accounts receivable when our right to consideration
becomes unconditional and services have been performed. Other than
our trade receivable balance, we do not have any material contract
assets as of December 31, 2023 and 2022.
We record a contract liability when we receive consideration from a
customer prior to transferring services to the customer. We recognize
the contract liability as revenue after we have transferred control of
the goods or services to the customer. Contract liabilities are recorded
within Accounts payable and other accrued liabilities if expected to be
recognized in less than one year and Other long-term liabilities, if over
one year, in the Consolidated Balance Sheets. We do not have any
material contract liabilities as of December 31, 2023 and 2022.
28 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 29
Cost of Services
Direct costs are composed of all related costs of employment for
consultants, including compensation, payroll taxes, certain fringe
benefits and subcontractor costs. Direct costs exclude depreciation
and amortization expense, which is presented on a separate line
in the accompanying Consolidated Statements of Operations and
Comprehensive Income.
Associate and field management compensation, payroll taxes and
fringe benefits are included in SG&A along with other customary costs
such as administrative and corporate costs.
Commissions
Our associates make placements and earn commissions as a
percentage of revenue or gross profit pursuant to a commission
plan. The amount of associate commissions paid increases as
volume increases. Commissions are accrued at an amount equal to
the percent of total expected commissions payable to total revenue
or gross profit for the commission-plan period, as applicable. We
generally expense sales commissions and any other incremental
costs of obtaining a contract as incurred because the amortization
period is typically less than one year.
Stock-Based Compensation
Stock-based compensation is measured using the grant-date fair
value of the award of equity instruments. The expense is recognized
over the requisite service period and forfeitures are recognized as
incurred. Excess tax benefits or deficiencies of deductions attributable
to employees’ vesting of restricted stock are reflected in Income tax
expense in the accompanying Consolidated Statements of Operations
and Comprehensive Income.
Income Taxes
Income taxes are recorded using the asset and liability approach
for deferred tax assets and liabilities and the expected future tax
consequences of differences between carrying amounts and the tax
basis of assets and liabilities. A valuation allowance is recorded unless
it is more likely than not that the deferred tax asset can be utilized
to offset future taxes.
Management evaluates tax positions taken or expected to be
taken in our tax returns and records a liability (including interest
and penalties) for uncertain tax positions. We recognize tax benefits
from uncertain tax positions when it is more likely than not that the
position will be sustained upon examination, including resolutions of
any related appeals or litigation processes. The Company recognizes
interest and penalties related to uncertain tax positions in Income tax
expense in the accompanying Consolidated Statements of Operations
and Comprehensive Income. There were no significant uncertain
income tax positions for the year ended December 31, 2023.
Cash and Cash Equivalents
All highly liquid investments with original maturity dates of
three months or less at the time of purchase are classified as cash
equivalents. Cash and cash equivalents are stated at cost, which
approximates fair value because of the short-term nature of these
instruments. Our cash equivalents are held in government money
market funds and at times may exceed federally insured limits.
Trade Receivables and Related Reserves
Trade receivables are recorded net of allowance for credit losses.
The allowance for credit losses is determined using the application of
a current expected credit loss model, which measures expected credit
losses based on relevant information, including historical experience,
current conditions and reasonable and supportable forecasts.
We estimate and recognize lifetime expected losses, rather than
incurred losses, which results in the earlier recognition of credit
losses even if the expected risk of credit loss is remote. As part of
our analysis, we apply credit loss rates to outstanding receivables
by aging category. For certain clients, we perform a quarterly credit
review, which considers the client’s credit rating and financial position
as well as our total credit loss exposure. Trade receivables are written
off after all reasonable collection efforts have been exhausted.
Trade accounts receivable reserves as a percentage of gross trade
receivables was less than 1% at both December 31, 2023 and 2022.
Recoveries of trade receivables previously written off are recorded when
received and are immaterial for the year ended December 31, 2023.
Fixed Assets
Fixed assets are carried at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over
the estimated useful lives of the assets. The cost of leasehold
improvements is amortized using the straight-line method over the
lesser of the estimated useful lives of the assets or the expected
terms of the related leases. Upon sale or disposition of our fixed
assets, the cost and accumulated depreciation are removed and any
resulting gain or loss, net of proceeds, is reflected within SG&A in the
Consolidated Statements of Operations and Comprehensive Income.
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. Recoverability of long-lived assets is
measured by a comparison of the carrying amount of the asset group
to the future undiscounted net cash flows expected to be generated
by those assets. If an analysis indicates the carrying amount of
these long-lived assets exceeds the fair value, an impairment loss is
recognized to reduce the carrying amount to its fair market value, as
determined based on the present value of projected future cash flows.
Goodwill
Management has determined that the reporting units for the
goodwill analysis is consistent with our reporting segments. We
evaluate goodwill for impairment either through a qualitative or
quantitative approach annually, or more frequently if an event occurs
or circumstances change that indicate the carrying value of a reporting
unit may not be recoverable. If we perform a quantitative assessment
that indicates the carrying amount of a reporting unit exceeds its fair
market value, an impairment loss is recognized to reduce the carrying
amount to its fair market value. Kforce determines the fair market
value of each reporting unit based on a weighting of the present
value of projected future cash flows (the “income approach”) and
the use of comparative market approaches (the “market approach”).
Factors requiring significant judgment include, among others, the
assumptions related to discount rates, forecasted operating results,
long-term growth rates, the determination of comparable companies
and market multiples. Changes in economic and operating conditions
or changes in Kforce’s business strategies that occur after the annual
30 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 31
impairment analysis may impact these assumptions and result in a
future goodwill impairment charge, which could be material to our
consolidated financial statements.
We elected the short-term practical expedient for leases with an
initial term of 12 months or less and do not recognize ROU assets or
lease liabilities for these short-term leases.
Equity Method Investment and Note Receivable
In June 2019, we entered into a joint venture whereby Kforce had
a 50% noncontrolling interest in WorkLLama, which was accounted
for as an equity method investment. Under the equity method, our
carrying value included equity capital contributions, adjusted for our
proportionate share of earnings or losses. We recorded a loss related
to our equity method investment of $0.8 million and $3.8 million
during the years ended December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022, we recognized an
impairment loss of the full balance of the equity method investment
of $13.7 million, which was recorded in Other Expense, net in the
Consolidated Statements of Operations and Comprehensive Income.
Refer to Note 15 — “Fair Value Measurements” for more details on
the impairment analysis of our equity method investment.
During the year ended December 31, 2022, Kforce executed
a series of promissory notes (the “Note Receivable”) to our joint
venture for a total of $6.8 million and recorded a credit loss of $1.9
million, resulting in a balance of $4.8 million at December 31, 2022.
There were no payments received on the Note Receivable during the
year ended December 31, 2022.
On February 23, 2023, Kforce received $6.0 million in exchange
for the sale of our 50% noncontrolling interest in WorkLLama to
an unaffiliated third party and in full settlement of the outstanding
balance of the Note Receivable. These proceeds, net of customary
transaction costs, amounted to $5.1 million and is presented in the
investing section of the Consolidated Statements of Cash Flows.
Operating Leases
Kforce leases property for our field offices and corporate headquarters
as well as certain office equipment, which limits our exposure to risks
related to ownership. We determine if a contract or arrangement meets
the definition of a lease at inception. We elected not to separate lease
and non-lease components when determining the consideration in the
contract. Right-of-use (“ROU”) assets and lease liabilities are recognized
based on the present value of the lease payments over the lease term at
the commencement date. If there is no rate implicit in the lease, we use
our incremental borrowing rate in the present value calculation, which
is based on our collateralized borrowing rate and determined based on
the terms of our leases and the economic environment in which they
exist. Our lease agreements do not contain any material residual value
guarantees or restrictive covenants.
ROU assets for operating leases, net of amortization, are recorded
within Other assets, net and operating lease liabilities are recorded
within current liabilities if expected to be recognized in less than
one year and in Other long-term liabilities, if over one year, in the
Consolidated Balance Sheets. Operating lease additions are non-cash
transactions and the amortization of the ROU assets is reflected as
Noncash lease expense within operating activities in the Consolidated
Statement of Cash Flows.
Our lease terms range from two to eleven years with a limited
number of leases containing short-term renewal provisions that
range from month-to-month to one year and some containing
options to renew or terminate.
In addition to base rent, certain of our operating leases require
variable payments of property taxes, insurance and common area
maintenance. These variable lease costs, other than those dependent
upon an index or rate, are expensed when the obligation for those
payments is incurred.
Capitalized Software
Kforce purchases, develops and implements software to enhance
the performance of our technology infrastructure. Direct internal
costs, such as payroll and payroll-related costs, and external costs
incurred during the development stage are capitalized and classified
as capitalized software. Capitalized software development costs
and the associated accumulated amortization are included in Other
assets, net in the accompanying Consolidated Balance Sheets.
Amortization expense is computed using the straight-line method
over the estimated useful lives of the software, which range from
one to fifteen years. Amortization expense of capitalized software
during the years ended December 31, 2023, 2022 and 2021 was $1.9
million, $1.8 million and $1.7 million, respectively.
Health Insurance
Except for certain fully insured health insurance lines of coverage,
Kforce retains the risk of loss for each health insurance plan
participant up to $600 thousand in claims annually. Additionally, for
all claim amounts exceeding $600 thousand, Kforce retains the risk of
loss up to an annual aggregate loss of those claims of $280 thousand.
For its partially self-insured lines of coverage, health insurance costs
are accrued using estimates to approximate the liability for reported
claims and incurred but not reported claims, which are primarily
based upon an evaluation of historical claims experience, actuarially-
determined completion factors and a qualitative review of our health
insurance exposure, including the extent of outstanding claims and
expected changes in health insurance costs.
Legal Costs
Legal costs incurred in connection with loss contingencies are
expensed as incurred.
Earnings per Share
Basic earnings per share is computed as net income divided by the
weighted-average number of common shares outstanding (“WASO”)
during the period. WASO excludes unvested shares of restricted
stock. Diluted earnings per share is computed by dividing net income
by diluted WASO. Diluted WASO includes the dilutive effect of
unvested shares of restricted stock using the treasury stock method,
except where the effect of including potential common shares would
be anti-dilutive.
For the years ended December 31, 2023, 2022 and 2021, there
were 319 thousand, 449 thousand and 633 thousand common stock
equivalents, respectively, included in the diluted WASO. For the years
ended December 31, 2023, 2022 and 2021, there were 157 thousand,
292 thousand and 9 thousand, respectively, of anti-dilutive common
stock equivalents.
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Treasury Stock
The Board may authorize share repurchases of our common stock.
Shares repurchased under Board authorizations are held in treasury
for general corporate purposes. Treasury shares are accounted for
under the cost method and reported as a reduction of stockholders’
equity in the accompanying consolidated financial statements.
On August 16, 2022, the Inflation Reduction Act of 2022 (the
“IRA”) was signed into Federal law. The IRA provides for, among other
things, a new U.S. Federal 1% nondeductible excise tax on certain
repurchases of stock by publicly-traded U.S. domestic corporations
occurring after December 31, 2022. The excise tax is imposed on
the repurchasing corporation itself, not its shareholders from which
shares are repurchased. The amount of the excise tax is generally 1%
of the fair market value of the shares repurchased. For purposes of
calculating the excise tax, repurchasing corporations are permitted
to net the fair market value of certain stock issuances against the
fair market value of stock repurchases during the same taxable year,
with certain exceptions. For the year ended December 31, 2023,
we recorded $0.4 million in excise tax related to the IRA, which was
included in Treasury stock in the consolidated financial statements.
Derivative Instrument
Our interest rate swap derivative instruments were designated
as cash flow hedges and recorded at fair value on the Consolidated
Balance Sheets. The effective portion of the gain or loss on the
derivative instruments are recorded as a component of Accumulated
other comprehensive income, net of tax, and reclassified into
earnings when the hedged items affect earnings and into the line
item of the hedged item. Any ineffective portion of the gain or loss is
recognized immediately into Other expense, net on the Consolidated
Statements of Operations and Comprehensive Income. Cash flows
from the derivative instrument are classified in the Consolidated
Statements of Cash Flows in the same category as the hedged
item. As of December 31, 2023 and 2022, the Firm did not have any
outstanding interest rate swap derivative instruments.
Reportable Segments
Our segments are based on the organizational structure for which
financial results are regularly reviewed by our chief operating decision-
maker, our President and Chief Executive Officer, to determine resource
allocation and assess performance. Based on services provided,
Kforce’s reportable segments are Technology and FA.
We report our performance based on segment revenue and
segment profit. Segment profit includes revenue, related cost
of services and other direct operating expenses directly attributable
to the reportable segment. We do not report total assets, or
income from operations, separately by segment as our operations
are largely combined.
Fair Value Measurements
Fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly
transaction between market participants at the measurement date.
The fair value hierarchy uses a framework which requires
categorizing assets and liabilities into one of three levels based on
the inputs used in valuing the asset or liability.
• Level 1 inputs are unadjusted, quoted market prices in active
markets for identical assets or liabilities.
• Level 2 inputs are observable inputs other than quoted prices
included in Level 1, such as quoted prices for similar assets or
liabilities in active markets or quoted prices for identical assets or
liabilities in inactive markets.
• Level 3 inputs include unobservable inputs that are supported by
little, infrequent or no market activity and reflect management’s
own assumptions about inputs used in pricing the asset or liability.
Level 1 provides the most reliable measure of fair value, while Level 3
generally requires significant management judgment. Assets and
liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measurement.
The carrying values of cash and cash equivalents, trade receivables,
other current assets and accounts payable and other accrued
liabilities approximate fair value because of the short-term nature of
these instruments.
Rabbi trust assets are primarily comprised of marketable equity
securities and the fair values are based on unadjusted, quoted prices
in active markets, which are considered Level 1.
Certain assets, in specific circumstances, are measured at fair value
on a non-recurring basis utilizing Level 3 inputs such as goodwill and
the equity method investment. For these assets, measurement at
fair value in periods subsequent to their initial recognition would be
applicable if one or more of these assets were determined to be impaired.
New Accounting Standards
Recently Adopted Accounting Standards
In March 2020, the FASB issued guidance for reference rate reform,
which provided temporary optional guidance to ease the potential
burden in accounting for reference rate reform in contracts and other
transactions that reference LIBOR, or another reference rate expected
to be discontinued because of reference rate reform, if certain criteria
are met. The FASB has since issued subsequent updates to the initial
guidance in December 2022, which extends the final sunset date for
reference rate reform from December 31, 2022 to December 31, 2024.
We adopted this standard as of January 1, 2023, and it did not have a
material impact on our consolidated financial statements.
Accounting Standards Not Yet Adopted
In October 2023, the FASB issued guidance for disclosure
improvements in accordance with the SEC’s simplification initiative.
These amendments are intended to align FASB’s accounting standards
and eliminate disclosures that are “redundant, duplicative, overlapping,
outdated, or superseded.” The effective date for each amendment
will be the date on which the SEC’s removal of that related disclosure
requirement from Regulation S-X or Regulation S-K becomes effective,
with early adoption prohibited. We are evaluating this new guidance,
which may modify our disclosures, but we do not expect this standard
to have a material effect on our consolidated financial statements.
In December 2023, the FASB issued guidance intended to improve
reportable segment disclosure requirements through enhancements
for significant segment expenses. These amendments clarify
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KFORCE INC. AND SUBSIDIARIES | 33
circumstances in which an entity can disclose multiple segment
measures of profit or loss, provide new segment disclosure
requirements for entities with a single reportable segment, and
contain other disclosure requirements. This guidance is effective for
annual periods beginning after December 15, 2023, including interim
periods within those annual periods. Early adoption of this guidance is
permitted and retrospective application is required. We are evaluating
this new guidance, which may modify our disclosures, but we do not
expect this standard to have a material effect on our consolidated
financial statements.
In December 2023, the FASB issued guidance for disclosure
improvements for income taxes. These amendments require the
disclosure of specific categories in the rate reconciliation and provide
additional information for reconciling items that meet a quantitative
threshold. This guidance is effective for annual periods beginning
after December 15, 2024. Early adoption of this guidance is permitted
for annual financial statements that have not yet been issued, with
prospective application required. We are evaluating this new guidance,
which may modify our disclosures, but we do not expect this standard
to have a material effect on our consolidated financial statements.
2. REPORTABLE SEGMENTS
The following table provides information concerning the operations of our segments for the years ended December 31 (in thousands):
2023
Revenue
Gross profit
Operating and other expenses
Income from operations, before income taxes
2022
Revenue
Gross profit
Operating and other expenses
Income from operations, before income taxes
2021
Revenue
Gross profit
Operating and other expenses
Income from operations, before income taxes
Technology
FA
Total
$1,384,553
$ 369,396
$147,203
$ 57,670
$1,507,627
$ 421,922
$203,138
$ 79,185
$1,273,941
$ 355,971
$305,981
$100,893
$1,531,756
$ 427,066
341,816
$ 85,250
$1,710,765
$ 501,107
398,665
$ 102,442
$1,579,922
$ 456,864
357,597
$ 99,267
3. DISAGGREGATION OF REVENUE
The following table provides information about disaggregated revenue by segment and revenue type for the years ended December 31
(in thousands):
2023
Flex revenue
Direct Hire revenue
Total Revenue
2022
Flex revenue
Direct Hire revenue
Total Revenue
2021
Flex revenue
Direct Hire revenue
Total Revenue
Technology
FA
Total
$1,366,095
18,458
$127,679
19,524
$1,493,774
37,982
$1,384,553
$147,203
$1,531,756
$1,476,055
31,572
$176,395
26,743
$1,652,450
58,315
$1,507,627
$203,138
$1,710,765
$1,247,560
26,381
$282,597
23,384
$1,530,157
49,765
$1,273,941
$305,981
$1,579,922
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4. ALLOWANCE FOR CREDIT LOSSES
The following table presents the activity within the allowance for
credit losses on trade receivables for the years ended December 31,
2023 and 2022 (in thousands):
Allowance for credit losses, January 1, 2022
Current period provision
Write-offs charged against the allowance, net of
recoveries of amounts previously written off
Allowance for credit losses, December 31, 2022
Current period provision
Write-offs charged against the allowance, net of
recoveries of amounts previously written off
Allowance for credit losses, December 31, 2023
$ 1,729
(126)
(597)
1,006
768
(668)
$ 1,106
The provision for income taxes shown above varied from the
statutory federal income tax rate for those periods as follows:
Years Ended December 31,
2023
2022
2021
Federal income tax rate
State income taxes,
net of Federal tax effect
Non-deductible compensation
and meals and entertainment
Tax credits
Tax benefit from restricted
stock vesting
Other
21.0%
21.0%
21.0%
6.0
5.4
5.0
2.3
(0.8)
(0.8)
0.7
2.5
(1.2)
(1.0)
0.3
2.2
(2.2)
(2.6)
0.9
Effective tax rate
28.4%
26.4%
24.3%
The allowances on trade receivables presented in the
Consolidated Balance Sheets include $0.5 million and $0.6 million
for reserves unrelated to credit losses at December 31, 2023
and 2022, respectively.
5. FIXED ASSETS, NET
The following table presents major classifications of fixed assets
and related useful lives (in thousands, except useful lives):
December 31,
USEFUL LIFE
2023
2022
Furniture and equipment
Computer equipment
Leasehold improvements
2-10 years $ 4,971
6,216
1-10 years
7,672
1-10 years
Total fixed assets
Less accumulated depreciation
18,859
(9,441)
$ 5,553
5,168
9,624
20,345
(11,698)
Total Fixed assets, net
$ 9,418
$ 8,647
Depreciation expense was $3.1 million, $2.7 million and $2.8 million
during the years ended December 31, 2023, 2022 and 2021, respectively.
6. INCOME TAXES
The provision for income taxes consists of the following (in
thousands):
Years Ended December 31,
2023
2022
2021
Current tax expense:
Federal
State
Deferred tax expense
$16,530
5,998
1,647
$17,535
6,400
3,076
$15,617
5,765
2,708
Total Income tax expense
$24,175
$27,011
$24,090
The 2023 effective tax rate was unfavorably impacted by a
lower Work Opportunity Tax Credit (“WOTC”), a lower tax benefit
from the vesting of restricted stock and higher non-deductible
expenses, as compared to 2022. The 2022 effective rate was
unfavorably impacted by a lower WOTC and a lower tax benefit
from the vesting of restricted stock as compared with 2021, which
were partially offset by greater non-deductible compensation to
certain executive officers pursuant to IRS Code Section 162(m).
Deferred tax assets and liabilities are composed of the following
(in thousands):
December 31,
Deferred tax assets:
Accounts receivable reserves
Accrued liabilities
Deferred compensation obligation
Stock-based compensation
Operating lease liabilities
Other
Deferred tax assets
Deferred tax liabilities:
Prepaid expenses
Fixed assets
Goodwill
ROU assets for operating leases
Partnership basis difference
Deferred tax liabilities
Valuation allowance
2023
2022
$ 382 $ 901
2,855
6,521
902
5,411
8
1,345
6,616
1,475
4,071
8
13,897
16,598
(367)
(4,307)
(2,401)
(3,684)
—
(359)
(4,694)
(2,408)
(4,397)
46
(10,759)
—
(11,812)
—
Total Deferred tax assets, net
$ 3,138 $ 4,786
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In evaluating the realizability of Kforce’s deferred tax assets,
management assesses whether it is more likely than not that some
portion, or all, of the deferred tax assets will be realized. Management
considers, among other things, the ability to generate future taxable
income (including reversals of temporary differences and projections
of future taxable income) during the periods in which the related
temporary differences will become deductible.
Kforce is periodically subject to IRS audits, as well as state and
other local income tax audits for various tax years. Although Kforce
has not experienced any material liabilities in the past due to income
tax audits, Kforce can make no assurances concerning any future
income tax audits.
Kforce and its subsidiaries file income tax returns in the U.S.
federal jurisdiction and various states. With a few exceptions, Kforce
is no longer subject to federal, state, local, or non-U.S. income tax
examinations by tax authorities for years before 2020.
7. OTHER ASSETS, NET
Other assets, net consisted of the following (in thousands):
December 31,
Assets held in Rabbi Trust
ROU assets for operating leases, net
Capitalized software, net(1)
Deferred loan costs, net
Note receivable, net(2)
Other non-current assets
Total Other assets, net
2023
2022
$40,389 $31,976
17,102
16,149
881
4,825
4,838
14,368
16,434
658
—
4,075
$75,924 $75,771
(1) Accumulated amortization of capitalized software was $37.6
million and $36.6 million as of December 31, 2023 and 2022,
respectively.
(2) During the year ended December 31, 2022, Kforce executed
the Note Receivable with our joint venture that amounted to
$6.75 million and recorded a reserve of $1.9 million on the Note
Receivable. In February 2023, Kforce sold our 50% noncontrolling
interest in our joint venture and settled the outstanding balance
of the Note Receivable. Refer to Note 1 — “Summary of Significant
Accounting Policies” for more details on the Note Receivable
issued to our joint venture.
8. GOODWILL
The following table presents the gross amount and accumulated
impairment losses for each of our reporting units as of December 31,
2023, 2022 and 2021 (in thousands):
Goodwill, gross amount
Accumulated impairment
Technology
FA
Total
$ 156,391
$ 19,766 $176,157
losses
(139,357)
(11,760)
(151,117)
Goodwill, carrying value
$ 17,034
$ 8,006 $ 25,040
There was no impairment expense related to goodwill for each of
the years ended December 31, 2023, 2022 and 2021.
Management performed its annual impairment assessment of
the carrying value of goodwill as of December 31, 2023 and 2022.
For each of our reporting units, we assessed qualitative factors
to determine whether the existence of events or circumstances
indicated that it was more likely than not that the fair value of
the reporting units was less than its carrying amount. Based on
the qualitative assessments, management determined that it was
more likely than not that the fair values of the reporting units were
more than the carrying values at December 31, 2023 and 2022.
A deterioration in any of the assumptions could result in an
impairment charge in the future.
9. CURRENT LIABILITIES
The following table provides information on certain current
liabilities (in thousands):
December 31,
Accounts payable
Accrued liabilities
Customer rebates payable
Deferred compensation payable
Total Accounts payable and
other accrued liabilities
Payroll and benefits
Health insurance liabilities
Payroll taxes
Workers’ compensation liabilities
Total Accrued payroll costs
2023
2022
$42,842
8,699
7,327
5,927
$49,600
11,552
7,522
4,118
$64,795
$72,792
$28,110
3,727
1,705
426
$ 41,506
3,481
2,633
749
$33,968
$48,369
Our accounts payable balance includes vendor and third party
payables.
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10. OTHER LONG-TERM LIABILITIES
12. EMPLOYEE BENEFIT PLANS
Other long-term liabilities consisted of the following (in thousands):
December 31,
Deferred compensation plan
Operating lease liabilities
Other long-term liabilities
2023
2022
$42,025
12,275
24
$36,390
16,380
3
Total Other long-term liabilities
$54,324
$52,773
11. OPERATING LEASES
The following table presents weighted-average terms for our
operating leases:
December 31,
Weighted-average discount rate
Weighted-average remaining
lease term
2023
4.0%
2022
2.6%
401(k) Savings Plans
The Firm maintains a qualified defined contribution 401(k)
retirement savings plans for eligible employees. Assets of these
plans are held in trust for the sole benefit of employees and/or their
beneficiaries. Employer matching contributions are discretionary
and are funded annually as approved by the Board. Kforce accrued
matching 401(k) contributions of $1.9 million and $2.1 million as of
December 31, 2023 and 2022, respectively.
Employee Stock Purchase Plan
Kforce’s employee stock purchase plan allows all eligible employees
to enroll each quarter to purchase Kforce’s common stock at a
5% discount from its market price on the last day of the quarter.
Kforce issued 18 thousand, 17 thousand, and 15 thousand shares of
common stock at an average purchase price of $57.13, $63.37 and
$51.10 per share during the years ended December 31, 2023, 2022
and 2021, respectively. All shares purchased under the employee
stock purchase plan were settled using Kforce’s treasury stock.
6.5 years
6.8 years
Deferred Compensation Plans
The following table presents operating lease expense included in
SG&A (in thousands):
December 31,
Lease Cost
Operating lease expense
Variable lease costs
Short-term lease expense
Sublease income
Total operating lease expense
2023
2022
$4,673
1,093
1,396
(189)
$6,279
965
1,615
(205)
$6,973
$8,654
The following table presents the maturities of operating lease
liabilities as of December 31, 2023 (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total maturities of operating lease liabilities
Less: imputed interest
Total operating lease liabilities
$ 4,161
3,198
1,991
1,766
1,724
5,360
18,200
2,336
$15,864
The Firm maintains various non-qualified deferred compensation
plans, pursuant to which eligible management and highly compensated
key employees, as defined by IRS regulations, may elect to defer all
or part of their compensation to later years. These amounts are
classified upon retirement or termination of employment in Accounts
payable and other accrued liabilities if payable within the next year,
or in Other long-term liabilities if payable after the next year, in the
accompanying Consolidated Balance Sheets. At December 31, 2023
and 2022, amounts related to the deferred compensation plans
included in Accounts payable and other accrued liabilities were $5.9
million and $4.1 million, respectively, and $42.0 million and $36.4
million was included in Other long-term liabilities at December 31,
2023 and 2022, respectively, in the Consolidated Balance Sheets. For
the years ended December 31, 2023, 2022 and 2021, we recognized
compensation expense for the plans of $1.3 million, $0.5 million and
$1.1 million, respectively.
Kforce maintains a Rabbi Trust and holds life insurance policies
on certain individuals to assist in the funding of the deferred
compensation liability. If necessary, employee distributions are funded
through proceeds from the sale of assets held within the Rabbi Trust.
The balance of the assets held within the Rabbi Trust, including the
cash surrender value of the Company-owned life insurance policies,
was $40.4 million and $32.0 million as of December 31, 2023 and 2022,
respectively, and is recorded in Other assets, net in the accompanying
Consolidated Balance Sheets. As of December 31, 2023, the life
insurance policies had a net death benefit of $168.8 million.
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Supplemental Executive Retirement Plan
Effective April 30, 2021, Kforce’s Board of Directors irrevocably
terminated the SERP. As a result of the termination of the SERP,
Kforce recognized a net loss of $1.8 million for the year ended
December 31, 2021, which was recorded in Other expense, net in
the accompanying Consolidated Statements of Operations and
Comprehensive Income.
The SERP benefits owed to the two participants at December 31,
2021 was approximately $20.0 million in the aggregate, which
represented the fair value at the date of termination, and was
recorded in Accounts payable and accrued liabilities in the
Consolidated Balance Sheet. During the year ended December 31,
2022, the Company paid the SERP benefit obligation in full.
13. CREDIT FACILITY
On October 20, 2021, the Firm entered into an amended and
restated credit agreement with Wells Fargo Bank, National Association,
as administrative agent, Wells Fargo Securities, LLC, as lead arranger
and bookrunner, Bank of America, N.A., as syndication agent, BMO
Harris Bank, N.A., as documentation agent, and the lenders referred
to therein (the “Amended and Restated Credit Facility”). Under the
Amended and Restated Credit Facility, the Firm has a maximum
borrowing capacity of $200.0 million, which may, subject to certain
conditions and the participation of the lenders, be increased up to an
aggregate additional amount of $150.0 million (the “Commitment”).
The maturity date of the Amended and Restated Credit Facility is
October 20, 2026.
Revolving credit loans under the Amended and Restated Credit
Facility bears interest at a rate equal to (a) the Base Rate (as
described below) plus the Applicable Margin (as described below) or
(b) the LIBOR Rate plus the Applicable Margin. Swingline loans under
the Amended and Restated Credit Facility bears interest at a rate
equal to the Base Rate plus the Applicable Margin. The Base Rate is
the highest of: (i) the Wells Fargo Bank, National Association prime
rate, (ii) the federal funds rate plus 0.50% or (iii) one-month LIBOR
plus 1.00%, and the LIBOR Rate is reserve-adjusted LIBOR for the
applicable interest period, but not less than zero. The Applicable
Margin is based on the Firm’s total leverage ratio. The Applicable
Margin for Base Rate loans ranges from 0.125% to 0.500% and
the Applicable Margin for LIBOR Rate loans ranges from 1.125% to
1.50%. The Firm pays a quarterly non-refundable commitment fee
equal to the Applicable Margin on the average daily unused portion
of the Commitment (swingline loans do not constitute usage for this
purpose). The Applicable Margin for the commitment fee is based on
the Firm’s total leverage ratio and ranges between 0.20% and 0.30%.
The Firm is subject to certain affirmative and negative financial
covenants including (but not limited to) the maintenance of a fixed
charge coverage ratio of no less than 1.25 to 1.00 and the maintenance
of a total leverage ratio of no greater than 3.50 to 1.00. The
numerator in the fixed charge coverage ratio is defined pursuant to
the Amended and Restated Credit Facility as earnings before interest
expense, income taxes, depreciation and amortization, stock-based
compensation expense and other permitted items pursuant to our
Credit Facility (defined as “Consolidated EBITDA”), less cash paid for
capital expenditures, income taxes and dividends. The denominator
is defined as Kforce’s fixed charges such as interest expense and
principal payments paid or payable on outstanding debt other than
borrowings under the Amended and Restated Credit Facility. The
total leverage ratio is defined pursuant to the Amended and Restated
Credit Facility as total indebtedness divided by Consolidated EBITDA.
Our ability to make distributions or repurchases of equity securities
could be limited if an event of default has occurred. Furthermore, our
ability to repurchase equity securities in excess of $25.0 million over
the last four quarters could be limited if (a) the total leverage ratio is
greater than 3.00 to 1.00 and (b) the Firm’s availability, inclusive of
unrestricted cash, is less than $25.0 million. As of December 31, 2023,
we are in compliance with all of our financial covenants contained in
the Amended and Restated Credit Facility.
In June 2023, Kforce entered into the First Amendment to the
Amended and Restated Credit Facility, by and among Wells Fargo, as
administrative agent, and the lenders and financial institutions from
time to time party thereto, to replace the LIBOR-based benchmark
interest rates with SOFR-based benchmark interest rates.
As of December 31, 2023 and 2022, $41.6 million and $25.6
million was outstanding on the Amended and Restated Credit Facility,
respectively. Kforce had $1.2 million and $1.3 million of outstanding
letters of credit at December 31, 2023 and 2022, respectively, which
pursuant to the Amended and Restated Credit Facility, reduces the
availability of the borrowing capacity.
14. DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY
As of December 31, 2023 and 2022, the Firm did not have any
outstanding interest rate swap derivative instruments.
On April 21, 2017, Kforce entered into a forward-starting interest
rate swap agreement with Wells Fargo Bank, N.A (“Swap A”). Swap A
was effective on May 31, 2017 and matured on April 29, 2022. Other
information related to Swap A is as follows: Notional amount — $25.0
million; and Fixed interest rate — 1.81%.
On March 12, 2020, Kforce entered into a forward-starting interest
rate swap agreement with Wells Fargo Bank, N.A (“Swap B”, together
with Swap A, the “Swaps”). Swap B was effective on March 17, 2020.
Other information related to Swap B is as follows: Scheduled maturity
date — May 30, 2025; Fixed interest rate — 0.61%; and Notional
amount — $100.0 million.
The Firm used the Swaps as an interest rate risk management tool
to mitigate the potential impact of rising interest rates on variable
rate debt. The fixed interest rate for each Swap, plus the applicable
interest margin under our Amended and Restated Credit Facility, was
recorded in Other expense, net in the accompanying Consolidated
Statements of Operations and Comprehensive Income.
36 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 37
In May 2022, the Firm terminated Swap B in anticipation of paying
the outstanding amount on the Amended and Restated Credit
Facility, which was $100.0 million. At the termination of Swap B, the
amount recorded in Accumulated other comprehensive income was
recognized. We received proceeds of $4.1 million, which represented
the gain and fair value of Swap B at the time of termination, and
is included in Other expense, net in the accompanying Consolidated
Statements of Operations and Comprehensive Income for the year
ended December 31, 2022.
Both Swaps A and B were designated as cash flow hedges. The
change in the fair value of the Swaps was previously recorded as
a component of Accumulated other comprehensive income in the
consolidated financial statements.
The following table sets forth the activity in the accumulated
derivative instrument activity (in thousands):
December 31,
2023
2022
Accumulated derivative instrument
gain, beginning of year
Net change associated with current
period hedging transactions
Accumulated derivative instrument
gain, end of year
$—
$ 823
—
(823)
$—
$ —
15. FAIR VALUE MEASUREMENTS
Nonrecurring Fair Values — Equity Method Investment
We review the equity method investment for impairment whenever
events or changes in circumstances indicate that the carrying amount
of the investment may not be recoverable. An impairment loss is
recognized in the event that an other-than-temporary decline in the
fair value of the investment occurs.
Events such as the impact of the COVID-19 pandemic (in 2020),
a strategic repositioning of the joint venture to focus on providing
its clients with an ability to directly source and engage talent on its
platform (in 2021) and delays in WorkLLama’s ability to achieve its
financial projections, despite continued demand for its technology
platform, have resulted in the indicators of other-than-temporary
impairments. When these events have occurred, we performed an
impairment test utilizing the market and income approaches. For
the income approach, we utilized estimated discounted future cash
flows expected to be generated by WorkLLama. For the market
approach, we utilized market multiples of revenue and earnings
derived from comparable publicly-traded companies. These types
of analyses contain uncertainties because they require management
to make significant assumptions and judgments, including: (1) an
appropriate rate to discount the expected future cash flows; (2) the
inherent risk in achieving forecasted operating results; (3) long-term
growth rates; (4) expectations for future economic cycles; (5) market
comparable companies and appropriate adjustments thereto; and
(6) market multiples. The fair value determination in our impairment
tests is considered Level 3, due to the high sensitivity to changes
in key assumptions, including, but not limited to, the discount rate
that is applied to the financial projections. The fair value of the
equity investment, determined by our previous impairment analysis,
concluded that the fair value exceeded the carrying value.
During 2022, with the assistance of an independent financial
advisor, WorkLLama and Kforce were pursuing the identification of a
strategic partner to support WorkLLama’s future growth expectations
and further invest in their technology platform. In the fourth quarter
of 2022, Kforce made a strategic decision to focus on investing in
the growth of its business and to pursue an exit of its equity stake
in WorkLLama, which was an indicator of other-than-temporary
impairment. In December 2022, WorkLLama executed a LOI with an
independent third party whereby they would acquire WorkLLama
and settle the outstanding debt, or a portion thereof, owed by
WorkLLama to Kforce. This transaction closed on February 23,
2023. As a result of this transaction, Kforce no longer has any equity
interest in WorkLLama. Management used this, combined with other
facts and circumstances, to determine the fair value of the equity
method investment and recognized an impairment loss of the full
balance of the equity method investment as of December 31, 2022. The
fair value of the equity method investment was measured using the
best information available, including the economics of the transaction
and management’s judgment, which are considered Level 3 inputs.
The valuation technique utilized at December 31, 2022 changed
based on the circumstances discussed above. During the year ended
December 31, 2021, the Company did not record any impairments
related to the equity method investment. Refer to Note 1 —
“Summary of Significant Accounting Policies” for more details.
There were no transfers into or out of Level 1, 2 or 3 assets or
liabilities during the years ended December 31, 2023 and 2022.
16. STOCK-BASED COMPENSATION
On April 20, 2023, the Kforce shareholders approved the 2023
Stock Incentive Plan (the “2023 Plan”). The 2023 Plan allows for
the issuance of stock options, stock appreciation rights (“SARs”),
stock awards (including restricted stock awards (“RSAs”) and
restricted stock units (“RSUs”)) and other stock-based awards.
The aggregate number of shares reserved under the 2023 Plan is
approximately $3.2 million. Grants of an option or SARs reduce the
reserve by one share, while a restricted stock award reduces the
reserve by 2.72 shares. The 2023 Plan terminates on April 20, 2033.
During the years ended December 31, 2023, 2022 and 2021, stock-
based compensation expense was $17.7 million, $17.7 million and
$14.0 million, respectively, and is included in Selling, general and
administrative expenses (“SG&A”) in the Consolidated Statements
of Operations and Comprehensive Income. The related tax benefit
for the years ended December 31, 2023, 2022 and 2021 was $4.8
million, $3.7 million and $4.1 million, respectively.
38 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 39
Restricted Stock
Restricted stock (including RSAs and RSUs) are granted to
executives and management either: for awards related to Kforce’s
annual long-term incentive (“LTI”) compensation program, or as part
of a compensation package in order to retain directors, executives and
management. The LTI award amounts are primarily based on Kforce’s
total shareholder return as compared to a predefined peer group.
Restricted stock granted during the year ended December 31, 2023
will vest ratably over a period of one to ten years.
RSAs contain the same voting rights as other common stock as well
as the right to forfeitable dividends in the form of additional RSAs at
the same rate as the cash dividend on common stock and containing
the same vesting provisions as the underlying award. RSUs contain no
voting rights, but have the right to forfeitable dividend equivalents
in the form of additional RSUs at the same rate as the cash dividend
on common stock and containing the same vesting provisions as the
underlying award. The distribution of shares of common stock for each
RSU, pursuant to the terms of the Kforce Inc. Director’s Restricted
Stock Unit Deferral Plan, can be deferred to a date later than the
vesting date if an appropriate election was made. In the event of such
deferral, vested RSUs have the right to dividend equivalents.
The following table presents the restricted stock activity for the years ended December 31, 2023 (in thousands, except per share amounts):
Outstanding at December 31, 2022
Granted
Forfeited/Canceled
Vested
Outstanding at December 31, 2023
Number of
Restricted Stock
Weighted-Average
Grant Date
Fair Value
Total Instrinsic
Value of Restricted
Stock Vested
911
309
(89)
(333)
798
$54.42
$64.97
$53.59
$49.18
$60.80
$22,469
The weighted-average grant date fair value of restricted stock
granted was $64.97, $55.85 and $47.58 during the years ended
December 31, 2023, 2022 and 2021, respectively. The total intrinsic
value of restricted stock vested was $22.5 million, $23.7 million and
$33.6 million during the years ended December 31, 2023, 2022 and
2021, respectively.
The fair market value of restricted stock is determined based on
the closing stock price of Kforce’s common stock at the date of grant
and is amortized on a straight-line basis over the requisite service
period. As of December 31, 2023, total unrecognized stock-based
compensation expense related to restricted stock was $42.2 million,
which will be recognized over a weighted-average remaining period
of 4.3 years.
17. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
Kforce has various commitments to purchase goods and services in the
ordinary course of business. These commitments are primarily related to
software and online application licenses and hosting. As of December 31,
2023, these purchase commitments amounted to approximately $38.0
million and are expected to be paid as follows: $14.8 million in 2024, $7.8
million in 2025, $2.4 million in 2026, $2.4 million in 2027, $2.2 million in
2028, and $8.4 million in 2029 and beyond.
Letters of Credit
Kforce provides letters of credit to certain vendors in lieu of
cash deposits. At December 31, 2023, Kforce had letters of credit
outstanding for operating lease and insurance coverage deposits
totaling $1.2 million.
Employment Agreements
Kforce has employment agreements with certain executives that
provide for minimum compensation, salary and continuation of
certain benefits for a six-month to a three-year period after their
employment ends under certain circumstances. Certain of the
agreements also provide for a severance payment ranging from one
to three times annual salary and one-half to three times average
annual bonus if such an agreement is terminated without good cause
by Kforce or for good reason by the executive subject to certain
post-employment restrictive covenants. At December 31, 2023, our
liability would be approximately $30.3 million if, following a change in
control, all of the executives under contract were terminated without
good cause by the employer or if the executives resigned for good
reason and $11.4 million if, in the absence of a change in control, all
of the executives under contract were terminated by Kforce without
good cause or if the executives resigned for good reason.
38 | KFORCE INC. AND SUBSIDIARIES
KFORCE INC. AND SUBSIDIARIES | 39
Litigation
We are involved in legal proceedings, claims and administrative
matters that arise in the ordinary course of business. We have made
accruals with respect to certain of these matters, where appropriate,
that are reflected in our consolidated financial statements but are
not, individually or in the aggregate, considered material. For other
matters for which an accrual has not been made, we have not yet
determined that a loss is probable, or the amount of loss cannot be
reasonably estimated. While the ultimate outcome of the matters
cannot be determined, we currently do not expect that these
proceedings and claims, individually or in the aggregate, will have a
material effect on our financial position, results of operations or cash
flows. The outcome of any litigation is inherently uncertain, however,
and if decided adversely to us, or if we determine that settlement of
particular litigation is appropriate, we may be subject to liability that
could have a material adverse effect on our financial position, results
of operations or cash flows. Kforce maintains liability insurance in
amounts and with such coverage and deductibles as management
believes is reasonable. The principal liability risks that Kforce
insures against are workers’ compensation, personal injury, bodily
injury, property damage, directors’ and officers’ liability, errors and
omissions, cyber liability, employment practices liability and fidelity
losses. There can be no assurance that Kforce’s liability insurance will
cover all events or that the limits of coverage will be sufficient to fully
cover all liabilities.
As previously reported, on December 17, 2019, Kforce Inc., et al.,
was served with a complaint brought in Superior Court of the State of
California, Alameda County. Kathleen Wahrer, et al. v. Kforce Inc., et
al., Case Number: RG19047269. Subsequent to December 31, 2023,
the Court granted final approval of the parties’ settlement agreement.
This matter is resolved and did not have a material adverse effect on
our business, consolidated financial position, results of operations,
or cash flows.
As previously reported, on November 18, 2020, Kforce Inc., et
al. was served with a complaint brought in the Superior Court of
the State of California, San Diego County, which was subsequently
amended on January 21, 2021, to add Kforce Flexible Solutions as a
party. Bernardo Buchsbaum, et al. v. Kforce Inc., et al., Case Number:
37-2020-00030994-CU-OE-CTL. The Court entered a written order
granting final approval of the parties’ settlement agreement in March
2023, and the case has been dismissed. This matter is resolved and
did not have a material adverse effect on our business, consolidated
financial position, results of operations, or cash flows.
As previously reported, on December 24, 2020, a complaint
was filed against Kforce Inc., et al. in Superior Court of the State
of California, Los Angeles County. Sydney Elliott-Brand, et al. v.
Kforce Inc., et al., Case Number: 20STCV49193. On January 7, 2022,
the lawsuit was amended to add Bernardo Buchsbaum and Josie
Meister as plaintiffs and to add claims under PAGA and the Fair Labor
Standards Act, 29 U.S.C. §§ 201, et seq. The Court entered a written
order granting final approval of the parties’ settlement agreement
in March 2023. This matter is resolved and did not have a material
adverse effect on our business, consolidated financial position,
results of operations, or cash flows.
As previously reported, on December 11, 2020, a complaint
was filed against Kforce and its client, Verity Health System of
California (“Verity”) in the Superior Court of California, Los Angeles
County, which was subsequently amended on February 19, 2021.
Ramona Webb v. Kforce Flexible Solutions, LLC, et al., Case Number:
20STCV47529. The Court dismissed the representative PAGA action
in May 2023, and the American Arbitration Association closed its file
on Webb’s individual claims in June 2023. This matter is resolved and
did not have a material adverse effect on our business, consolidated
financial position, results of operations, or cash flows.
As previously reported, on January 6, 2022, a complaint was filed
against Kforce Inc. in the Superior Court of the State of California,
Los Angeles County. Jessica Cook and Brianna Pratt, et al. v. Kforce
Inc., Case Number: 22STCV00602. The Court entered a written order
granting final approval of the parties’ settlement agreement in March
2023, and the case has been dismissed. This matter is resolved and
did not have a material adverse effect on our business, consolidated
financial position, results of operations, or cash flows.
As previously reported, on January 6, 2022, a complaint was
filed against Kforce Inc. in the United States District Court for the
Middle District of Florida and was served on February 4, 2022. Sam
Whiteman, et al. v. Kforce Inc., Case Number: 8:22-cv-00056. The
Court granted final approval of the parties’ settlement agreement and
the case was dismissed in February 2023. This matter is resolved and
did not have a material adverse effect on our business, consolidated
financial position, results of operations, or cash flows.
40 | KFORCE INC. AND SUBSIDIARIES
Kforce is a solutions firm specializing
in technology, finance and accounting,
and professional staffing services.
Our KNOWLEDGEforce® empowers
industry-leading companies to achieve
their digital transformation goals.
We curate teams of technical experts
who build solutions custom-tailored
to each client’s needs. These scalable,
flexible outcomes are shaped by deep
market knowledge, thought leadership
and our multi-industry expertise.
Our integrated approach is rooted in
60 years of proven success deploying
highly skilled professionals on a
temporary and direct-hire basis.
Each year, more than 20,000 talented
experts work with a majority of the
Fortune 500. Together, we deliver
Great Results Through Strategic
Partnership and Knowledge Sharing®.
CORPORATE INFORMATION
BOARD OF DIRECTORS
EXECUTIVE OFFICERS
FORM 10-K AVAILABLE
David L. Dunkel
Chairman of the Board
Derrick D. Brooks
Executive Vice President,
Corporate & Community
Business Development,
Vinik Sports Group
Catherine H. Cloudman
President and
Chief Executive Officer,
CHC Advisors, LLC
Ann E. Dunwoody
General (Retired),
U.S. Army
President,
First 2 Four, LLC
Mark F. Furlong
President and
Chief Executive Officer (Retired),
BMO Harris Bank N.A.
Joseph J. Liberatore
President and
Chief Executive Officer,
Kforce Inc.
Randall A. Mehl
President and
Chief Investment Officer,
Stewardship Capital Advisors, LLC
Elaine D. Rosen
Nonexecutive Chair of the Board,
Assurant, Inc.
Lead Independent Director,
Kforce Inc.
N. John Simmons
Chief Executive Officer,
Growth Advisors, LLC
A copy of the Kforce Inc.’s Annual
Report on Form 10-K (excluding
exhibits thereto) is available
to any investor without charge
upon written request to:
Michael R. Blackman
Chief Corporate
Development Officer
Kforce Inc.
1150 Assembly Drive
Suite 500
Tampa, Florida 33607
Or call Investor Relations:
1 (813) 552-2927
ANNUAL MEETING
The annual meeting of
shareholders will be held on
April 24, 2024 at 8:00 a.m. ET
at Kforce Inc.headquarters
in Tampa, Florida.
WEBSITE INFORMATION
For a comprehensive profile
of Kforce Inc., visit the Firm’s
website at: www.kforce.com.
Joseph J. Liberatore
President and
Chief Executive Officer
David M. Kelly
Chief Operating Officer and
Corporate Secretary
Jeffrey B. Hackman
Chief Financial Officer and
Assistant Corporate Secretary
Andrew G. Thomas
Chief Experience Officer
CORPORATE COUNSEL
Holland & Knight LLP
Tampa, Florida
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Tampa, Florida
TRANSFER AGENT
Computershare Investor Services
P.O. Box 505000
Louisville, KY 40233-5000
www.computershare.com/investor
Shareholder services:
1 (877) 373-6374
This Annual Report contains forward-looking statements
(within the meaning of the federal securities laws). Please see
the “Cautionary Note Regarding Forward-Looking Statements”
contained in the introductory portion of our Annual Report on
Form 10-K for the year ended December 31, 2023 for additional
information regarding forward-looking statements.
Corporate Headquarters:
1150 Assembly Drive
Suite 500
Tampa, Florida 33607
(813) 552-5000
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