TOGETHER
TOWARD
TOMORROW
ANNUAL REPORT 2024
Kforce is a solutions firm specializing in technology, finance and accounting, and professional staffing
services. Our KNOWLEDGEforce® empowers top companies to achieve their digital transformation
goals. We curate teams of technical experts who deliver 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, approximately 18,000 talented experts work with
the Fortune 500 and other leading companies. Together, we deliver Great Results Through Strategic
Partnership and Knowledge Sharing®.
To our fellow shareholders, clients,
consultants and employees:
We have been operating in an uncertain macro environment since
the Federal Reserve began rapidly raising interest rates to address persistent
inflationary pressures in March 2022. Since then, the U.S. economy has continued
to defy broad-based recession expectations due to a strong labor market primarily
in government, healthcare and construction, as well as continued strong consumer
spending. The prolonged period of uncertainty has resulted in our clients continuing
to exercise a degree of restraint in the level of their technology investments.
Operating trends in our Technology business stabilized early in 2024 and have
remained stable throughout the year. We are extremely proud of how our
teams have operated in this relatively subdued environment as evidenced by our
industry-leading performance in our Technology business yet again in 2024.
Our teams have continued to persevere and make the necessary adjustments
within our business to maintain high levels of performance and significantly
advance our strategic priorities, which we believe will provide a great foundation
moving forward to return higher levels of profitability as revenues inflect.
We believe that a meaningful by-product of the restraint that our clients have
been exercising in anticipation of a recession, which hasn’t materialized, is an
increasingly strong backlog of strategically imperative technology investments.
Conversations with our clients post-election and the preponderance of economic
views suggest to us that the operating environment, as we move through 2025,
may improve as clients generally gain increased confidence in the U.S. economy.
We believe we are ideally positioned to capture this demand, should it improve,
and continue capturing additional market share.
Full Year 2024 Financial Highlights
• Revenue for the year ended December 31, 2024, was $1.41 billion compared to
$1.53 billion for the year ended December 31, 2023.
• Technology revenue of $1.29 billion decreased 6.6% year over year (7.4% on a
billing day basis) and now represents 92% of total Firm revenues.
• Operating margins were 5.0% for the year ended December 31, 2024, which
decreased 70 basis points year over year.
• Diluted earnings per share for the year ended December 31, 2024, were $2.68 per
share, a decrease of 14.4% year over year.
• We returned nearly $65 million of capital to our shareholders through share
repurchases and dividends during the year ended December 31, 2024, which
represented approximately 75% of operating cash flows.
Our Board of Directors (the “Board”) approved an increase in our dividend,
representing the sixth consecutive annual increase, beginning with our first
quarter 2025 dividend.
KFORCE INC. AND SUBSIDIARIES | 1
OUR SERVICE LINES
Technology (92% of Revenue)
Our decision to grow our business organically with a consistent,
refined business model tailored to providing highly skilled
technology talent solutions to world-class companies in the
domestic market has been critical to our success over many years.
From a performance standpoint, our overall Technology business
declined by approximately 7% in 2024 on a year-over-year basis,
due to the impact of the persistent macro uncertainties on the
level of technology investments being made by our clients.
Following unprecedented levels of growth that exceeded 40%
across the two-year period from 2021 and 2022, Technology
revenues have declined in 2023 and 2024. Demand within our
Technology business stabilized in early 2024 and remained stable
throughout the year. Our current KPIs and conversations with
our clients suggest a slightly more optimistic, but still relatively
stable, demand environment as we move into 2025.
Our technology service offering has evolved over the years
beyond traditional staffing assignments to include more
consulting-oriented engagements based on the demand we
are experiencing from our clients. Clients continue to prioritize
efficient access to highly skilled talent and see our services
as a cost-effective solution to meet their technology project
requirements leveraging our superior delivery capability.
The demand for this consulting-oriented offering continued to
contribute positively to the results of our Technology business
inclusive of the stability we have seen for more than two years
in our $90 average bill rate and our Flex margin spreads.
Our clients remain focused on critical technology initiatives
across our digital, cloud, data and AI, application engineering
practices. Our core competency is sourcing quality talent, at
scale, for our clients as demand for various skillsets change and
evolve. We expect this to continue as clients increasingly look
to us to provide data and digital resources to support their data
requirements, integration work and cloud migration activities
that are at the front end of their AI investments. As technology
has evolved over the decades, we have efficiently evolved with
the changing skillset demands of our clients.
Our client portfolio is diverse and is mostly comprised of large,
market-leading companies across virtually every industry. This
portfolio focus continues to be critical in our ability to drive
sustainable, long-term above-market performance.
While the political uncertainty has been resolved with President
Trump and his administration taking office in January 2025, the
impacts from potential policy changes is unclear. In addition, the
prospects for further Fed rate cuts in 2025 appear less certain
with inflation indicators proving a bit stickier and continued
strength in the labor markets. We believe that clients will begin
to incrementally invest in technology initiatives as they gain
additional confidence in the U.S. economy.
Our teams made significant progress in our integrated strategy
efforts to capitalize on the strong relationships we have with
world-class companies by utilizing our existing sales team
members, recruiters, and consultants to deliver on higher value
engagements that effectively and cost efficiently address our
clients’ challenges. In addition, our teams were hard at work in
2024 establishing a development center in Pune, India, which was
fully operational in January 2025. We believe this facility puts
Kforce in a strong position to compete on client opportunities
that we were precluded from bidding on in the past.
We head into 2025 ideally positioned to capture additional
market share should demand improve and continue delivering
above-market performance as we have for well over a decade.
Finance and Accounting
Our FA business, which represents 8% of total revenues,
declined approximately 24% year over year driven by the impact
of business we are strategically no longer supporting due to
our repositioning efforts combined with a more challenging
macro-environment. Our average bill rate of approximately
$51 per hour has been relatively stable over the past year and
is reflective of the higher skilled areas we are pursuing that are
more synergistic with our Technology service offering.
We took additional steps in 2024 to provide our teams increased
focus over both our Technology and FA business and are well
positioned heading into 2025.
POSITIONING KFORCE FOR THE FUTURE
We continue to make the necessary adjustments within the
business to maintain high levels of performance, while also
maintaining elevated investments on critical initiatives. This
provides a great foundation moving forward to return higher levels
of profitability as revenues inflect. We have made tremendous
progress related to the implementation of Workday as our
future state enterprise cloud application for HCM and financials,
along with the evolution of our nearshore and offshore delivery
capabilities with the opening of our India Development Center
in January 2025. These developments represent the ongoing
integration of all of the Firm’s capabilities across the full spectrum
of our service offerings as One Kforce. Each of these strategic
initiatives are transformational in nature and will be a meaningful
contributor to us meeting our longer-term financial objective
of generating greater operating margins when we return to $1.7
billion in annual revenue along with our standing goal of at least
10% operating margins at $2.1 billion in annual revenue.
AS WE LOOK AHEAD TO 2025
As has been the case for the last several years, AI continues to
dominate the headlines, including DeepSeek’s AI advancements
and the announcement of the Stargate venture to build new
data centers in the U.S. to provide more computing power to
OpenAI to develop and train their models. As we have previously
articulated, over the long term, we believe that AI and other
innovative technologies will continue to play an increasing role
in powering businesses. We expect their impact will follow the
historic Jevons Paradox pattern, where improved efficiency
ultimately drives greater demand for, rather than replacement
of, technology resources, and that the pace of change will
continue to accelerate.
The strength of the secular drivers of demand in technology
accelerated significantly coming out of the Dot Com Recession
with the foundational internet work by all companies and
the 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
2 | KFORCE INC. AND SUBSIDIARIES
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, and that access to highly skilled and scarce
technology talent to drive this evolution will remain critical.
We continue to make adjustments to associate levels based
upon productivity expectations. We will remain 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 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. Regardless of the
ultimate environment, we
enter 2025 well positioned
to take additional market
share and continue laying
the foundation to generate
significant long-term returns
for our shareholders.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
Our 2024 Sustainability Report,
published in February 2025,
outlines the progress we made
in our ESG efforts last year. We
continue to make progress in
reducing our environmental
footprint, fostering a diverse
and inclusive workplace
and upholding the highest
standards of governance.
We continuously refine these
initiatives to ensure they
remain effective and impactful.
Investing in our people
remains a top priority. We
created a more holistic view
of employee sentiment by
increasing ongoing feedback
opportunities and expanded
our leadership development
program to include a
series featuring our board
members. We furthered our
strong corporate governance
practices by establishing an
ESG Committee to oversee
our collective efforts and
engaged a third party to
review and validate the
progress of our cybersecurity
and data privacy program.
We stayed focused on making
sound decisions for the Firm
that contributed to our goal of lowering our greenhouse gas
(GHG) emissions. We further reduced our GHG emissions in 2024
by 11% versus 2023 levels and, in total, have reduced our GHG
emissions by approximately 60% compared to our 2019 baseline.
The path to sustainability is a continuous one. We will continue
to listen, learn and adapt as we navigate the complexities of the
ESG landscape.
STEWARDSHIP
Our core values of compassion, unity and fun support
our culture of stewardship. We are passionate about leaving
a lasting, positive impact on the world. Under our guiding
principle, Empowering People Through Knowledge Sharing®,
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 by partnering with
four corporate-sponsored charities: Best Buddies Tampa Bay,
Feeding Tampa Bay, Junior Achievement Tampa Bay and Special
Operations Warrior Foundation, but also encourage our people to
support causes and organizations they are passionate about.
Our most significant 2024 activity was the support of disaster
relief efforts after Hurricanes Helene and Milton devastated
Tampa Bay (where our headquarters is located) and surrounding
areas, western North Carolina and other parts of the coast.
We placed special emphasis on aiding those impacted by,
among other support, donating 1.6 million meals and hosting
a “warehouse takeover” at Feeding Tampa Bay. Additional
donations were made to MANNA Food Bank in North Carolina,
Hope Children’s Home and other charities.
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®.
I want to reiterate how proud I am of the performance and
resiliency of our collective Kforce team through their daily
actions while 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 that 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 enter 2025 well positioned to capture additional
market share and continue creating significant long-term
returns for our shareholders.
Joseph J. Liberatore
President and Chief Executive Officer
OUR CLIENT
PORTFOLIO
IS DIVERSE AND
IS MOSTLY
COMPRISED
OF LARGE,
MARKET-
LEADING
COMPANIES
ACROSS
VIRTUALLY
EVERY
INDUSTRY.
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 AI
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
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
2,000%, roughly
3.1 times greater than
the Russell 2000 over
the same period.
2,000%
1,500%
1,000%
500%
Kforce TSR vs. Russell 2000 Index stock performance from 8/15/95
(IPO) to 12/31/24
RUSSELL 2000
KFRC
FROM STRATEGY
THROUGH
IMPLEMENTATION,
WE PROVIDE
THE KNOWLEDGE
AND LEADERSHIP
OUR CLIENTS
RELY ON TO
ACCELERATE
THEIR BUSINESS.
4 | KFORCE INC. AND SUBSIDIARIES
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,
2024
2023
2022
2021
2020
(In thousands, except per share amounts)
Revenue
$ 1,405,308
$1,531,756
$1,710,765
$1,579,922
$1,397,700
Gross profit
385,445
427,066
501,107
456,864
396,224
Selling, general and administrative expenses
309,802
334,933
379,815
345,721
310,713
Depreciation and amortization
5,922
5,012
4,427
4,500
5,255
Other expense, net
2,097
1,871
14,423
7,376
5,044
Income from continuing operations,
before income taxes
67,624
85,250
102,442
99,267
75,212
Income tax expense
17,210
24,175
27,011
24,090
19,173
Income from continuing operations
50,414
61,075
75,431
75,177
56,039
Income from discontinued operations,
net of tax
—
—
—
—
—
Net income
$
50,414
$ 61,075
$ 75,431
$ 75,177
$ 56,039
Earnings per share — basic, continuing operations
$2.71
$3.18
$3.76
$3.65
$2.67
Earnings per share — diluted, continuing operations
$2.68
$3.13
$3.68
$3.54
$2.62
Weighted average shares outstanding — basic
18,574
19,188
20,054
20,579
20,983
Weighted average shares outstanding — diluted
18,811
19,507
20,503
21,212
21,395
Dividends declared per share
$1.52
$1.44
$1.20
$0.98
$0.80
As of December 31,
2024
2023
2022
2021
2020
(In thousands)
Cash and cash equivalents
$
349
$ 119
$ 121
$ 96,989
$ 103,486
Working capital
$
112,949
$ 141,484
$ 146,327
$ 211,680
$ 230,726
Total assets
$
357,834
$ 357,979
$ 392,004
$ 503,401
$ 479,049
Total outstanding borrowings on credit facility
$
32,700
$ 41,600
$ 25,600
$ 100,000
$ 100,000
Total long-term liabilities
$
90,759
$ 95,924
$ 78,373
$ 154,564
$ 190,948
Stockholders’ equity
$
154,618
$ 159,080
$ 182,198
$ 188,406
$ 179,935
KFORCE INC. AND SUBSIDIARIES | 5
SELECTED FINANCIAL DATA
The following graph compares the cumulative five-year total return on our common stock, the New York Stock Exchange and our Peer
Group using the value of an investment of $100 on December 31, 2019 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
2019
2020
2021
2022
2023
2024
Kforce Inc.
100.0
108.5
197.0
146.4
184.7
158.7
New York Stock Exchange
100.0
104.4
123.4
109.1
121.1
137.3
2024 Peer Group
100.0
98.4
143.9
113.7
135.1
128.6
2023 Peer Group
100.0
98.7
151.6
115.6
134.9
119.7
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 Perficient Inc. from
our peer group going forward following its acquisition in October 2024.
Our 2024 Peer Group consisted of the following companies:
ASGN Incorporated
Huron Consulting Group Inc.
Perficient, Inc.
Barrett Business Services, Inc.
ICF International, Inc.
Resources Connection, Inc.
CBIZ, Inc.
Kelly Services, Inc.
Robert Half International Inc.
The Hackett Group, Inc.
Korn Ferry
True Blue, Inc.
Heidrick & Struggles International Inc.
ManpowerGroup, Inc.
6 | KFORCE INC. AND SUBSIDIARIES
STOCK PRICE PERFORMANCE
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, in 2024, our peer group was used to assess performance in determining annual
equity LTI compensation levels based on our 3-year TSR performance in comparison to peers.
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 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
direct business competitor. The Committee reviews the median size of peer companies relative to Kforce’s size by balancing the inclusion
of both larger and smaller companies. The primary criteria for selection include customers, revenue footprint, geographical and 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 New York Stock Exchange (“NYSE”) using the ticker symbol “KFRC.” As of February 13, 2025, there
were 270 holders of record.
Purchases of Equity Securities by the Issuer
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, 2024:
Total Number of
Approximate Dollar
Shares Purchased
Value of Shares
Total Number of
as Part of
That May Yet Be
Shares Purchased
Average Price
Publicly Announced
Purchased Under the
Period
(1)(2)
Paid Per Share
Plans or Programs (3)
Plans or Programs (3)
October 1, 2024 to October 31, 2024
167,508
$54.87
167,508
$70,498,722
November 1, 2024 to November 30, 2024
1,633
$59.24
—
$70,498,722
December 1, 2024 to December 31, 2024
192,306
$58.35
118,045
$63,497,672
Total
361,447
$56.74
285,553
$63,497,672
(1) Includes 1,633 repurchased shares withheld for tax withholding upon vesting of restricted stock for the period November 1, 2024 to November 30, 2024.
(2) Includes 74,261 repurchased shares withheld for tax withholding upon vesting of restricted stock for the period December 1, 2024 to December 31, 2024.
(3) In February 2024, the Board approved a change in our stock repurchase authorization increasing the available authorization to $100 million.
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, 2024, we had $32.7 million outstanding under the Amended and Restated Credit Facility. A hypothetical 10%
increase in interest rates in effect at December 31, 2024 would increase Kforce’s annual interest expense by less than $0.2 million.
Refer to Note 12 — “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.
KFORCE INC. AND SUBSIDIARIES | 7
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
COMPANY OVERVIEW
Kforce Inc., along with its subsidiaries (collectively, “Kforce”), is a
solutions firm specializing in technology, finance and accounting,
and other professional staffing services. Our KNOWLEDGEforce®
empowers industry-leading companies to achieve their digital
transformation goals. We curate teams of technical experts who
deliver solutions custom-tailored to each of our 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 more than 60 years of proven
success deploying highly skilled professionals on traditional staffing
assignments or as part of a team of professionals who are responsible
for delivering solutions to our clients, both of which are considered
temporary (“Flex”) in nature. We also place highly skilled professionals
in a permanent (“Direct Hire”) role with our clients. Each year,
approximately 18,000 talented experts work with Fortune 500 and
other leading companies. Together, we deliver Great Results Through
Strategic Partnership and Knowledge Sharing®.
Over the last decade, we have driven significant, strategic change at
Kforce, including 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.
During 2024, we established a development center in Pune,
India, one of the leading technology cities in India. Following its
formation, our India development center began supporting project
engagements with our U.S.-based clients in January 2025. We believe
this development center, when combined with a strong U.S. sales
and delivery capability and a high-quality vendor network, will help
us to more fully address the evolving needs of our clients, whether
onshore, nearshore or offshore.
Our Technology and Finance and Accounting (“FA”) businesses
represent our two reportable segments. Our Technology business
comprises 92% 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 skills and experience of the consultants are 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 reportable 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.
Our Technology Business
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 architecture and engineering; business and artificial intelligence
(“AI”); machine learning; project and program management; and
network architecture and security.
Our service offerings have evolved over the years beyond traditional
staffing assignments to include solutions-oriented engagements; this
evolution was based on the demand we were seeing from our clients.
Clients continue to prioritize efficient access to highly skilled talent
and view our solutions offering as a cost-effective solution to meet
their technology project requirements. This offering has continued
to be a positive contributor and catalyst to our Technology business
over the last several years and we expect this offering to continue to
represent a growing mix of our overall Technology revenue footprint.
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.
The demand for our solutions engagements contributed positively
to the results of our Technology business in 2024, while our traditional
staff augmentation offering has been the driver of our overall
Technology revenue declines year over year. Our integrated strategy
efforts capitalize on the strong relationships we have with world-class
companies by utilizing our existing sales teams, recruiters, consulting
solutions professionals, technology practice experts, among other
teams within the Firm, to provide higher value engagements that
effectively and cost efficiently address our clients’ challenges. We are
continuing to further integrate and prioritize this capability into our
Technology business.
The September 2024 report published by Staffing Industry Analysts
(“SIA”) stated that temporary technology staffing was forecasted to
decline by 7% in 2024 and grow by 5% in 2025. In the next update
from SIA, which would typically be released in April 2025, we would
expect growth expectations to come down. Technology, as a discipline,
continues to be project driven, even amidst generational changes like
AI. We believe there are a multitude of technology projects that need
to be addressed by our clients in order for them to remain competitive
and to effectively change how they operate and deliver value to their
customers, irrespective of economic performance.
$1 BILLION
Total Capital Returned to
Shareholders
Since 2007
92%
Revenue Concentrated
in Technology Staffing
and Solutions
1962
Year Founded
#1
Recognized Brand by
Technology Consultants per
Staffing Industry Analysts
KFRC
Listed on
New York Stock Exchange
18,000
Consultants Placed Annually
8 | KFORCE INC. AND SUBSIDIARIES
BUSINESS
Our Technology revenues declined 6.6% year over year to $1.3 billion
in 2024 (7.4% on a billing day basis), which was primarily driven by
the ongoing uncertainty in the macroeconomic environment that
has largely persisted since the second half of 2022. Although we
experienced declines in 2024 and 2023, our Technology business
grew 18% in 2022 and more than 22% in 2021, on a year-over-year
billing day basis. The average bill rate in the fourth quarter of 2024
was approximately $90 per hour, which remained flat as compared to
the fourth quarter of 2023. Our average assignment duration was 10
months in 2024, which is consistent with the prior period.
The strength of the secular drivers of demand for technology
accelerated significantly exiting both the Great Recession, with
among many others, advancements in mobility and cloud computing,
and the 2020 COVID-19 Pandemic, with further digitalization of
businesses and the continued focus on Generative AI technologies.
While all economic cycles behave a bit differently, we believe that
the broad and strategic uses of technology, including the early-
stage technology evolution associated with AI, will continue to play
an increasingly instrumental role in powering businesses. As we
have previously articulated, over the long term, we believe that AI
and other innovative technologies will follow historic patterns where
improved efficiency ultimately drives greater demand for, rather
than replace technology resources, and that the pace of change will
continue to accelerate. We believe we are ideally positioned to meet
that demand.
While our Technology business is not immune to economic
turbulence, we continue to believe there is a critical need for
innovation to support business strategies and sustain relevancy in
today’s rapidly changing marketplace.
Our FA Business
Over the last several years, we have repositioned our FA business
to focus on more highly skilled assignments that are less susceptible
to technological change and automation and more closely aligned
with our Technology business. The talent solutions we offer our
clients in our FA business generally include traditional finance and
accounting roles, such as: financial 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 selectively
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. mortgage
servicing; customer and call center support; data entry; and other
lower skilled administrative roles).
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.
Our overall average bill rate in the fourth quarter of 2024 was
approximately $51 per hour, which remained flat as compared to the
fourth quarter of 2023. Notably, our average bill rate in the fourth
quarter of 2019, which prior to the repositioning, was approximately
$37 per hour.
Revenue for our FA business decreased 23.5% to $112.6 million in
2024 compared to 2023, which was primarily driven by the ongoing
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; health, welfare and
retirement benefits and other direct labor costs.
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 2024 consultant NPS are well above current industry
averages and near the world-class designation.
OUR 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 transforming their businesses.
We continue to believe that technology is at the epicenter of how
business is conducted and investments in technology are necessary
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
2024 indicated that, in the United States, Kforce is among the largest
publicly-traded specialty staffing firms, the sixth largest technology
temporary staffing firm and the tenth largest finance and accounting
temporary staffing firm.
According to the September 2024 SIA report, the technology
temporary staffing industry and finance and accounting temporary
staffing industry are expected to generate projected revenues
of $40 billion and $9 billion, respectively, in 2025. Based on these
projected revenues, our current market share is approximately 3%.
We are intensely focused on continuing to expand our market share
of the U.S. technology temporary staffing industry and to further
invest 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 solutions capabilities over the last several years
has meaningfully expanded Kforce’s total addressable market into the
KFORCE INC. AND SUBSIDIARIES | 9
technology solutions space. As we continue to deliver on our solutions
engagements with clients and further mature our capabilities in
our digital, cloud, data and application engineering practice areas,
we would expect our ability to capture an increasing portion of the
overall technology solutions market to improve. While reports differ
in the size of the technology solutions addressable market, IBIS World
has indicated it is greater than $700 billion. While the portion that is
addressable by Kforce is debatable, we believe that our addressable
market is many times greater than the $40 billion for the technology
temporary staffing industry.
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 1.7% in December 2024, from 1.8% in December 2023, while the
unemployment rate, increased to 4.1% in December 2024 from 3.7%
in December 2023. 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 2.4% in December 2024,
from 2.1% in December 2023.
Our Strategic Priorities
Our strategic priorities are centered around driving greater
long-term shareholder value by achieving above-market revenue
growth, making prudent investments to enhance our efficiency and
effectiveness, 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 meaningfully 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. We continue to make investments in our technologies
and enhance our sales and delivery 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.
Our last significant investment in back-office technologies was more
than 15 years ago, despite the complexities of our business and client
requirements having increased significantly. We have been primarily
meeting these complexities and requirements by incrementally adding
internal resources, which is not a scalable solution as we continue
to grow and have a greater mix of solutions-oriented engagements.
We believe our multi-year transformation program for our back-
office technology will enhance the support to our Firm, including our
clients, candidates and consultants. Overall, we believe the benefits
of streamlining our processes will create a positive impact resulting in
increased client satisfaction and improved associate productivity. This
multi-year effort was initiated following a comprehensive assessment
of our current technological position, which confirmed our belief that
we have a tremendous opportunity to fundamentally transform and
create advancements in our back-office functions.
We made significant progress related to the implementation of
Workday, our future enterprise cloud application, over the last few
years. In 2025, we expect to continue making significant investments
towards this initiative as we finalize the design, continue the build and
configuration of the technology, conduct extensive testing, and plan
for the initial deployment.
Integrated Strategy. Our technology service offering has evolved
over the years beyond traditional staffing assignments to include
more consulting and solutions-oriented engagements based on
the demand we were seeing from our clients. Our clients continue
to prioritize efficient access to highly skilled talent and see our
services as a cost-effective solution to meet their technology project
requirements. Our integrated strategy efforts capitalize on the strong
relationships we have with world-class companies by utilizing our
existing sales teams, recruiters, consulting solutions professionals
and technology practice experts, among other teams within the
Firm, to accelerate revenue growth and improve profitability levels
as we make progress towards our longer-term financial objectives of
attaining double-digit operating margins at slightly greater than $2
billion in annual revenues.
Evolving our Nearshore and Offshore Delivery Strategy. Historically,
the overwhelming majority of our revenues were generated by
helping our clients solve their most complex technology challenges
through our onshore delivery model. This onshore delivery capability
was complemented by a high-quality vendor network where our
clients required a multi-shore delivery model (onshore, nearshore
and offshore). An increasingly important vehicle to providing cost-
effective solutions is the ability to source highly skilled talent
outside of the United States. Following a period of comprehensive
due diligence, including an executive trip in August 2024 to India,
management made the strategic decision to establish a development
center in Pune, India. Pune is one of the leading technology cities in
India, and we are optimistic about leveraging this capability to further
enhance our service offerings to our clients. This India development
center began supporting project engagements with our U.S.-based
clients in January 2025. We believe this development center, when
combined with a strong U.S. sales and delivery capability and a high-
quality vendor network, will help us to more fully address the evolving
needs of our clients, whether onshore, nearshore or offshore.
We expect 2025 to be the final year of allocating significant
investments in these three strategic priorities and for each of the
initiatives to begin providing a meaningful and growing return as we
move into 2026 and beyond.
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
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 competitive advantage lies in a combination of
key factors: long-standing client relationships with primarily Fortune
500 and other leading companies; greater focus with more than 90%
of our business concentrated in technology staffing and solutions;
breadth of service offerings from traditional staffing assignments
10 | KFORCE INC. AND SUBSIDIARIES
to solutions engagements; access to qualified and available talent,
which allows us to deliver our solutions at scale; and dedicated,
tenured and passionate Kforce associates. We believe our long-
established brand reputation reinforces our position as a trusted
partner while upholding a strong compliance framework to ensure
regulatory adherence. Together, these strengths enable us to provide
high-quality solutions in an increasingly competitive market.
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 providers are also offered
through independent providers. MSPs, VMOs and/or VMS providers
charge staffing firms administrative fees typically ranging from 1%
to 4% of 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 client’s
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.
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 the following
types of government regulations and enforcement: (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, providing healthcare and retirement plan options, and
other direct labor costs relating to our employees. We also provide
paid leave for our associates and certain consultants. We have no
collective bargaining agreements covering any of our employees. We
have not experienced any material labor disruption and are unaware
of any current efforts or plans of our employees to organize.
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 directors
and officers, cybersecurity, professional liability, employment
practices liability, general liability, umbrella and excess liability, excess
health insurance coverage, workers’ compensation and employers’
liability, crime, property, fiduciary, automobile liability, and liability
for certain foreign exposure. 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
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 work environment is shaped by our people. We maintain a
commitment to our employees’ 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.
Our Office Occasional® work environment (remote-first, office
occasionally) is supported by flexibility and choice and empowered
by trust and technology. The shift in strategy following the pandemic
has allowed us to introduce a new design and streamline our overall
physical real estate footprint. 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.
As of December 31, 2024, Kforce employed approximately 1,700
associates and had 8,000 consultants on assignment with our clients,
of which a significant majority of these consultants are employed
directly by Kforce.
KFORCE INC. AND SUBSIDIARIES | 11
This MD&A should be read in conjunction with our Consolidated
Financial Statements and the accompanying notes thereto and the
Business Overview of 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 2024, which should be considered in the context of the
additional discussions herein and in conjunction with the consolidated
financial statements and notes thereto.
• Revenue for the year ended December 31, 2024 decreased
8.3% to $1.41 billion in 2024 from $1.53 billion in 2023.
Revenue decreased 6.6% and 23.5% for Technology and
FA, respectively, in 2024, primarily driven by the ongoing
macroeconomic uncertainty.
• Flex revenue decreased 7.9% to $1.38 billion (8.6% on a billing day
basis) in 2024 from $1.49 billion in 2023. In 2024, Flex revenue
decreased 6.4% for Technology (7.1% on a billing day basis) and
decreased 23.5% for FA (24.1% on a billing day basis). These
decreases were driven by a decline in the number of consultants
on assignment.
• Direct Hire revenue decreased 24.0% to $28.9 million in 2024
from $38.0 million in 2023.
• Gross profit margin decreased 50 basis points to 27.4% in 2024
from 27.9% in 2023, primarily as a result of a decline in the mix
of Direct Hire revenue.
• Flex gross profit margin decreased 10 basis points to 25.9% for
2024 from 26.0% in 2023. Flex gross profit margin remained flat
for Technology and decreased 80 basis points for FA in 2024 as
compared to 2023. The decrease in FA was primarily driven by a
greater mix of lower margin projects.
• Selling, General and Administrative (“SG&A”) expenses as a
percentage of revenue for the year ended December 31, 2024,
increased slightly to 22.0% from 21.9% in 2023.
• Net income for the year ended December 31, 2024, decreased
17.5% to $50.4 million, or $2.68 per share, from $61.1 million, or
$3.13 per share, in 2023.
• The Firm returned $64.7 million of capital to our shareholders in
the form of open market repurchases totaling $36.5 million, or
0.6 million shares, and quarterly dividends totaling $28.2 million
during the year ended December 31, 2024. The total capital
returned to shareholders in 2024 represented approximately 75%
of operating cash flows.
• Cash provided by operating activities was $86.9 million during
the year ended December 31, 2024, as compared to $91.5 million
for 2023.
RESULTS OF OPERATIONS
Certain discussions of the changes in our results of operations from
the year ended December 31, 2023, as compared to the year ended
December 31, 2022, 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, 2023, filed with the SEC on
February 23, 2024.
Our performance continued to be adversely affected by the
ongoing macroeconomic uncertainty, which resulted in our clients
being more cautious with the level of investment in their digital
transformation efforts. With that said, our Technology business was
largely stable throughout 2024 as indicated by our sequential billing
day growth in both the second and fourth quarters of 2024 with a
slight sequential decline in the third quarter. Against the backdrop
of revenue declines, we continued to manage down our overall
headcount levels, especially in our delivery roles, and tightly control
spend levels in order to mitigate the pressure on profitability from
the lower revenue and gross margin levels.
The political landscape in the U.S. remains unclear, particularly
in relation to the impacts of the potential policy changes from the
new administration. Geopolitical risks persist, including uncertainty
in the Middle East and global supply chain disruptions. Despite these
challenges, the U.S. economy demonstrated consistent growth in
2024, with real GDP expanding at 2.8%, largely driven by increased
government spending and a healthy consumer. Although the
unemployment rate rose to 4.1% in December 2024 from 3.7% in
December 2023, employment grew across most sectors in the final
quarter of 2024. Additionally, the Federal Reserve cut interest rates
by a total of 100 basis points in late 2024, but the prospects for
further interest rate cuts in 2025 appear less certain with inflation
being a bit stickier and the labor markets continuing to show signs
of strength.
12 | KFORCE INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
December 31,
2024
2023
2022
Revenue by segment:
Technology
92.0%
90.4%
88.1%
FA
8.0
9.6
11.9
Total Revenue
100.0%
100.0%
100.0%
Revenue by type:
Flex
97.9%
97.5%
96.6%
Direct Hire
2.1
2.5
3.4
Total Revenue
100.0%
100.0%
100.0%
Gross profit
27.4%
27.9%
29.3%
Selling, general and administrative expenses
22.0%
21.9%
22.2%
Depreciation and amortization
0.4%
0.3%
0.3%
Income from operations
5.0%
5.7%
6.8%
Income from operations, before income taxes
4.8%
5.6%
6.0%
Net income
3.6%
4.0%
4.4%
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):
Increase
Increase
2024
(Decrease)
2023
(Decrease)
2022
Technology
Flex revenue
$1,278,715
(6.4)%
$1,366,095
(7.4)%
$1,476,055
Direct Hire revenue
14,028
(24.0)%
18,458
(41.5)%
31,572
Total Technology revenue
$1,292,743
(6.6)%
$1,384,553
(8.2)%
$1,507,627
FA
Flex revenue
$ 97,729
(23.5)%
$ 127,679
(27.6)%
$ 176,395
Direct Hire revenue
14,836
(24.0)%
19,524
(27.0)%
26,743
Total FA revenue
$ 112,565
(23.5)%
$ 147,203
(27.5)%
$ 203,138
Total Flex revenue
$1,376,444
(7.9)%
$1,493,774
(9.6)%
$1,652,450
Total Direct Hire revenue
28,864
(24.0)%
37,982
(34.9)%
58,315
Total Revenue
$1,405,308
(8.3)%
$1,531,756
(10.5)%
$1,710,765
The following table presents certain items in our Consolidated Statements of Operations and Comprehensive Income as a percentage of
revenue for the years ended:
KFORCE INC. AND SUBSIDIARIES | 13
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,
2024 vs. 2023
2023 vs. 2022
Technology
FA
Technology
FA
Key Drivers—Increase (Decrease)
Volume—hours billed
$(90,372)
$(32,440)
$(141,498)
$(57,647)
Bill rate
3,092
2,469
33,320
8,949
Billable expenses
(100)
21
(1,782)
(18)
Total change in Flex revenue
$(87,380)
$(29,950)
$(109,960)
$(48,716)
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):
Increase
Increase
2024
(Decrease)
2023
(Decrease)
2022
Technology
14,171
(6.6)%
15,178
(9.6)%
16,794
FA
1,902
(25.4)%
2,550
(32.7)%
3,789
Total Flex hours billed
16,073
(9.3)%
17,728
(13.9)%
20,583
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 24.0% during the year ended
December 31, 2024, as compared to the same period in 2023,
primarily driven by a decrease in placements. We expect Direct Hire
revenue to be stable in the first quarter of 2025 year over year.
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 (gross profit as a percentage of total revenue) by segment and percentage change over the
prior period:
Increase
Increase
2024
(Decrease)
2023
(Decrease)
2022
Technology
26.5%
(0.7)%
26.7%
(4.6)%
28.0%
FA
38.5%
(1.8)%
39.2%
0.5%
39.0%
Total gross profit percentage
27.4%
(1.8)%
27.9%
(4.8)%
29.3%
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 6.4% (7.1% per
billing day) during the year ended December 31, 2024, as compared
to the same period in 2023, primarily due to a decrease in the number
of consultants on assignment. The average bill rate was approximately
$90 per hour for 2024, which remained flat as compared to 2023. In
the first quarter of 2025, we expect Technology Flex revenue to decline
sequentially on a billing day basis in the low to mid-single digits, at a
level that is largely consistent with pre-pandemic levels and in the low
single digits year over year.
Our FA business experienced a decrease in Flex revenue of 23.5%
(24.1% per billing day) during the year ended December 31, 2024, as
compared to the same period in 2023, primarily driven by a decrease
in the number of consultants on assignment. Our average bill rate of
$51 per hour for the year ended December 31, 2024 was up slightly on
a year-over-year basis. In the first quarter of 2025, we expect FA Flex
revenue to decline sequentially on a billing day basis in the low double
digits following greater than expected year-end assignment ends.
14 | KFORCE INC. AND SUBSIDIARIES
Total gross profit percentage decreased 50 basis points for the year ended December 31, 2024, as compared to the same period in 2023,
primarily as a result of a decline in the mix of Direct Hire revenue.
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.
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:
Increase
Increase
2024
(Decrease)
2023
(Decrease)
2021
Technology
25.7%
—
25.7%
(2.7)%
26.4%
FA
29.1%
(2.7)%
29.9%
0.7%
29.7%
Total Flex gross profit percentage
25.9%
(0.4)%
26.0%
(3.0)%
26.8%
Our Flex gross profit percentage decreased 10 basis points for the year ended December 31, 2024, as compared to the same period in 2023.
• Technology Flex gross profit margins remained stable at 25.7% for the year ended December 31, 2024, as compared to the same period in
2023. The impact from a tighter pricing environment in 2023 that carried over into 2024 was offset by lower healthcare costs. Overall bill
and pay spreads in our Technology business were largely stable throughout 2024 with a slight improvement in the second half of 2024. We
expect Technology Flex gross profit margins for the first quarter of 2025 to remain stable year over year.
• FA Flex gross profit margins decreased 80 basis points for the year ended December 31, 2024, as compared to the same period in 2023,
primarily driven by a greater mix of lower margin projects, which was partially offset by lower healthcare costs. As a result of this mix, we
expect FA Flex gross profit margins for the first quarter of 2025 to be down on a year-over-year basis.
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,
2024 vs. 2023
2023 vs. 2022
Technology
FA
Technology
FA
Key Drivers—Increase (Decrease)
Revenue impact (volume)
$(22,448)
$(8,948)
$(29,079)
$(14,483)
Profitability impact (rate)
(364)
(743)
(10,333)
187
Total change in Flex gross profit
$(22,812)
$(9,691)
$(39,412)
$ (14,296)
SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A represented 84.2%, 84.3% and
84.1% of SG&A for the years ended December 31, 2024, 2023 and 2022, respectively. Commissions and other bonus incentives are variable
costs driven primarily by revenue and gross profit levels. Therefore, as those levels change, these expenses would also generally be anticipated
to change.
The following table presents certain components of SG&A as a percentage of total revenue for the years ended December 31 (in thousands):
2024
% of Revenue
2023
% of Revenue
2022
% of Revenue
Compensation, commissions,
payroll taxes and benefits costs
$260,839
18.6%
$282,439
18.4%
$319,501
18.7%
Other(1)
48,963
3.4%
52,494
3.5%
60,314
3.5%
Total SG&A
$309,802
22.0%
$334,933
21.9%
$379,815
22.2%
(1) Includes items such as credit loss expense, lease expense, professional fees, travel, communication and office-related expense, and certain other expenses.
KFORCE INC. AND SUBSIDIARIES | 15
Other Expense, Net. Other expense, net was $2.1 million, $1.9 million
and $14.4 million for the years ended December 31, 2024, 2023 and
2022, 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, 2024, 2023 and 2022, we
recognized nil, $0.8 million, and $3.8 million, respectively, related to
our share of losses associated with our equity method investment.
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 in February 2023.
Income Tax Expense. Income tax expense as a percentage of income
from operations, before income taxes (our “effective tax rate”) were
25.4%, 28.4% and 26.4% for the years ended December 31, 2024,
2023 and 2022, respectively. The primary driver for the decrease relates
to a reduction in nondeductible executive compensation, non-taxable
proceeds from company-owned life insurance, and the recognition of
research and development tax credits.
NON-GAAP FINANCIAL MEASURES
Revenue Growth Rates. “Revenue growth rates,” a non-GAAP
financial measure, is defined by Kforce as 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. The
impact of billing days is calculated by dividing each comparative
period’s reported revenues by the number of billing days for the
respective period to arrive at a per billing day amount for each quarter.
Growth rates are then calculated using the per billing day amounts as
a percentage change compared to the respective period. Management
calculates the number of billing days for each reporting period based
on the number of holidays and business days in the quarter.
SG&A as a percentage of revenue increased 10 basis points for
the year ended December 31, 2024, as compared to the same period
in 2023.
For compensation and related expenses, we have experienced a
degree of SG&A deleverage as compared to 2023, as we continued
to make investments in our strategic priorities and to retain our most
productive associates to strategically position the Firm to capture an
increased market share when the demand environment eventually
improves. To mitigate the pressure on our profitability levels from
the revenue and gross profit declines, we have taken certain actions
to align our costs such as tight discretionary spend control and
decreases in personnel, specifically within our delivery capabilities.
The decrease in Other SG&A expenses was primarily attributable to
lower professional fees pertaining to the settlement of legal claims in
2023.
We continue to prioritize investments in our strategic initiatives,
including the implementation of Workday as part of our back-office
transformation program, integrated strategy efforts, and the
evolution of our nearshore and offshore delivery capabilities. We
expect to continue exercising tight discretionary spend control and
balance productivity levels.
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):
Increase
Increase
2024
(Decrease)
2023
(Decrease)
2022
Fixed asset depreciation
$3,178
1.1%
$3,142
18.3%
$2,655
Capitalized software amortization
2,744
46.7%
1,870
5.5%
1,772
Total Depreciation and amortization
$5,922
18.2%
$5,012
13.2%
$4,427
16 | KFORCE INC. AND SUBSIDIARIES
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.
Sequential Growth Rates (GAAP)
2024
2023
Q4
Q3
Q2
Q1
Q4
Technology Flex
(2.5)%
(0.6)%
1.7%
(2.3)%
(2.5)%
FA Flex
(2.7)%
(4.1)%
(5.7)% (11.5)%
(1.0)%
Total Flex revenue
(2.5)%
(0.8)%
1.2%
(3.1)%
(2.3)%
Sequential Growth Rates (Non-GAAP)
2024
2023
Q4
Q3
Q2
Q1
Q4
Billing Days
62
64
64
64
61
Technology Flex
0.6%
(0.6)%
1.7%
(6.9)%
0.7%
FA Flex
0.5%
(4.1)%
(5.7)% (15.7)%
2.3%
Total Flex revenue
0.6%
(0.8)%
1.2%
(7.6)%
0.9%
Year-Over-Year Growth Rates (GAAP)
2024
2023
YTD
Q4
Q3
Q2
Q1
YTD
Q4
Technology Flex
(6.4)%
(3.7)%
(3.6)%
(6.4)%
(11.4)%
(7.4)%
(11.1)%
FA Flex
(23.5)% (22.1)% (20.7)% (23.1)%
(27.2)%
(27.6)%
(28.0)%
Total Flex revenue
(7.9)%
(5.2)%
(5.0)%
(7.8)%
(12.8)%
(9.6)%
(12.8)%
Year-Over-Year Growth Rates (Non-GAAP)
2024
2023
YTD
Q4
Q3
Q2
Q1
YTD
Q4
Billing Days
254
62
64
64
64
252
61
Technology Flex
(7.1)%
(5.2)%
(5.1)%
(6.4)%
(11.4)%
(7.1)%
(11.1)%
FA Flex
(24.1)% (23.3)% (21.9)% (23.1)%
(27.2)%
(27.3)%
(28.0)%
Total Flex revenue
(8.6)%
(6.7)%
(6.5)%
(7.8)%
(12.8)%
(9.2)%
(12.8)%
KFORCE INC. AND SUBSIDIARIES | 17
The following table presents Free Cash Flow (in thousands):
Years Ended December 31,
2024
2023
2022
Net cash provided by operating activities
$ 86,874
$ 91,465
$ 90,805
Capital expenditures
(7,573)
(7,763)
(8,109)
Free cash flow
79,301
83,702
82,696
Change in debt
(8,900)
16,000
(74,400)
Repurchases of common stock
(41,938)
(75,024)
(74,913)
Cash dividends
(28,236)
(27,562)
(24,027)
Proceeds from company-owned life insurance
2,377
—
1,077
Premiums paid for company-owned life insurance
(2,368)
(1,408)
—
Note receivable issued to our joint venture
—
(750)
(6,750)
Proceeds from the sale of our joint venture interest
—
(5,059)
—
Equity method investment
—
—
(500)
Other
(6)
(19)
(51)
Change in cash and cash equivalents
$ 230
$ (2)
$(96,868)
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; and gain from termination
of interest rate swap. 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 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,
2024
2023
2022
Net income
$50,414
$ 61,075
$ 75,431
Depreciation and amortization
5,922
5,012
4,427
Stock-based compensation expense
14,044
17,747
17,655
Interest expense, net
2,097
1,122
973
Income tax expense
17,210
24,175
27,011
Organizational realignment activities
—
3,662
—
Legal settlement expense
—
2,175
—
Loss from equity method investment
—
750
3,824
Reserve associated with note receivable issued to our joint venture
—
—
1,925
Impairment of equity method investment
—
—
13,684
Gain from termination of interest rate swap
—
—
(4,059)
Adjusted EBITDA
$89,687
$115,718
$140,871
18 | KFORCE INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
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, 2024 and 2023, we had $32.7 million and $41.6
million outstanding under our Amended and Restated Credit Facility,
respectively, and the borrowing availability was $166.3 million
and $157.2 million, respectively, subject to certain covenants. At
December 31, 2024, Kforce had $112.9 million in working capital
compared to $141.5 million at December 31, 2023.
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 strategic priorities that we expect
will accelerate future revenue growth and profitability levels; (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,
2024
2023
2022
Cash Provided by (Used in)
Operating activities
$ 86,874
$ 91,465 $ 90,805
Investing activities
(7,564)
(4,862)
(14,282)
Financing activities
(79,080)
(86,605)
(173,391)
Change in cash and
cash equivalents
$ 230
(2) $ (96,868)
Operating Activities
Cash provided by operating activities was $86.9 million during the
year ended December 31, 2024, as compared to $91.5 million during
the year ended December 31, 2023. 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. The year-over-year decrease was primarily driven
by lower profitability levels, lower collections of trade receivables,
and continued management of working capital partially offset by the
timing of payments.
Investing Activities
Cash used in investing activities was $7.6 million during the year
ended December 31, 2024, and primarily consisted of cash used for
capital expenditures. Cash used in investing activities was $4.9 million
during the year ended December 31, 2023, which 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.
Financing Activities
Cash used in financing activities was $79.1 million during the year
ended December 31, 2024, as compared to $86.6 million during the
year ended December 31, 2023. This change was primarily driven by
a decrease in repurchases of common stock driven by lower operating
cash flows, partially offset by the net payments made on our Amended
and Restated Credit Facility.
The following table presents the cash flow impact of the common
stock repurchase activity for the years ended December 31
(in thousands):
Years Ended December 31,
2024
2023
2022
Open market repurchases
$37,162
$67,178
$66,806
Repurchased shares withheld
for tax withholding upon
vesting of restricted stock
4,776
7,846
8,107
Total cash flow impact
from Repurchases of
common stock
$41,938
$75,024
$74,913
Cash paid in current year
for settlement of prior
year repurchases
$ 920
$ 974
$ 181
Kforce’s Board declared and paid dividends of $28.2 million
($1.52 per share), $27.6 million ($1.44 per share) and $24.0 million
($1.20 per share) for the years ended December 31, 2024, 2023 and
2022, respectively.
In January 2025, Kforce’s Board approved an increase to the
Company’s dividend from $1.52 per share to $1.56 per share, which
is the sixth consecutive annual increase. 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, operating cash
flows and available borrowings under our Amended and Restated
Credit Facility will be adequate to meet the capital expenditure
and working capital requirements of our operations for at least
the next 12 months, and the foreseeable future, which we believe
will provide us the flexibility to continue returning significant
capital to our shareholders. However, a material deterioration in
the macroeconomic environment or market conditions, among
other things, could adversely affect 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 capital expenditures, investments, additional common stock
repurchases or dividends.
$
KFORCE INC. AND SUBSIDIARIES | 19
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, 2024, $32.7 million
was outstanding and $166.3 million, net of $1.0 million in letters of
credit outstanding, was available under the Amended and Restated
Credit Facility. As of December 31, 2024, 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”)
with benchmark interest rates based on the Secured Overnight
Financing Rate (“SOFR”). Refer to Note 12 — “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.
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):
2024
2023
Shares $ Shares $
Open market
repurchases
609
$36,502
1,097
$67,124
As of December 31, 2024, $63.5 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, 2024, our outstanding debt balance
under the credit facility was $32.7 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
Amended and Restated Credit Facility are unknown. Refer to
Note 12 — “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, 2024, the total amount of our
obligations under these plans was $54.8 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, 2024, the value of our unconditional
purchase obligations with a remaining term in excess of one year
was $30.7 million.
• We have employment agreements with certain executives that
provide for minimum compensation, salary and continuation
of certain benefits for a one-year to a three-year period
after their employment ends under certain circumstances. At
December 31, 2024, our liability would be approximately $27.7
million for terminations related to a change in control and $8.8
million related to terminations in the absence of cause. Refer to
Note 15 — “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, 2024, the total amount
of our obligations under operating leases was $17.0 million.
Refer to Note 10 — “Operating Leases” in the Notes to
Consolidated Financial Statements, included in this Annual Report
for additional information regarding our lease obligations and
the timing of expected future payments, including a five-year
maturity schedule.
20 | KFORCE INC. AND SUBSIDIARIES
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements that have or
are reasonably likely to have a material impact on our liquidity or
capital resources.
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, 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 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.
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 $0.3 million in 2024.
Refer to Note 7 — “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, 2024.
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 the inputs 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.
KFORCE INC. AND SUBSIDIARIES | 21
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, 2024. 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, 2024, 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.
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
22 | KFORCE INC. AND SUBSIDIARIES
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, 2024 and
2023, 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, 2024, 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,
2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2024, 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, 2024, 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 21, 2025
We have served as the Company’s auditor since 2000.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KFORCE INC. AND SUBSIDIARIES | 23
(In thousands, except per share amounts)
Years Ended December 31,
2024
2023
2022
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:
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.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
$1,405,308
1,019,863
385,445
309,802
5,922
69,721
2,097
67,624
17,210
50,414
—
$ 50,414
$2.71
$2.68
18,574
18,811
$1,531,756
1,104,690
427,066
334,933
5,012
87,121
1,871
85,250
24,175
61,075
—
$ 61,075
$3.18
$3.13
19,188
19,507
$1,710,765
1,209,658
501,107
379,815
4,427
116,865
14,423
102,442
27,011
75,431
(615)
$ 74,816
$3.76
$3.68
20,054
20,503
24 | KFORCE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$ 349
$ 119
Trade receivables, net of allowances of $1,560 and $1,643, respectively
215,690
233,428
Prepaid expenses and other current assets
9,367
10,912
Total current assets
225,406
244,459
Fixed assets, net
7,723
9,418
Other assets, net
94,656
75,924
Deferred tax assets, net
5,009
3,138
Goodwill
25,040
25,040
Total assets
$ 357,834
$ 357,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities
$ 61,753
$ 64,795
Accrued payroll costs
38,823
33,968
Current portion of operating lease liabilities
3,038
3,589
Income taxes payable
8,843
623
Total current liabilities
112,457
102,975
Long-term debt — credit facility
32,700
41,600
Other long-term liabilities
58,059
54,324
Total liabilities
203,216
198,899
Commitments and Contingencies (Note 15)
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, 73,835 and 73,462 issued, respectively
738
734
Additional paid-in capital
543,109
527,288
Retained earnings
546,202
525,222
Treasury stock, at cost; 54,619 and 53,941 shares, respectively
(935,431)
(894,164)
Total stockholders’ equity
154,618
159,080
Total liabilities and stockholders’ equity
$ 357,834
$ 357,979
The accompanying notes are an integral part of these consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES | 25
Common Stock
Shares Amount
72,997
—
245
—
—
—
—
—
73,242
—
220
—
—
—
—
—
73,462
—
373
—
—
—
—
73,835
$730
—
2
—
—
—
—
—
732
—
2
—
—
—
—
—
734
—
4
—
—
—
—
$738
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
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
Net income
Issuance for stock-based compensation and dividend equivalents, net of forfeitures
Stock-based compensation expense
Employee stock purchase plan
Dividends ($1.52 per share)
Repurchases of common stock
Balance, December 31, 2024
The accompanying notes are an integral part of these consolidated financial statements.
26 | KFORCE INC. AND SUBSIDIARIES
Additional
Paid-In
Capital
Accumulated Other
Comprehensive
Income (Loss)
Retained
Earnings
Treasury Stock
Shares Amount
Total
Stockholders’
Equity
$ 621
—
—
—
—
—
(615)
—
6
—
—
—
—
—
—
(6)
—
—
—
—
—
—
—
$ —
$488,036
—
1,234
17,655
809
—
—
—
507,734
—
1,053
17,747
754
—
—
—
527,288
—
1,194
14,044
583
—
—
$543,109
$442,596
75,431
(1,236)
—
—
(24,027)
—
—
492,764
61,075
(1,055)
—
—
(27,562)
—
—
525,222
50,414
(1,198)
—
—
(28,236)
—
$546,202
51,492
—
—
—
(17)
—
—
1,269
52,744
—
—
—
(18)
—
1,215
—
53,941
—
—
—
(13)
—
691
54,619
$(743,577)
—
—
—
245
—
—
(75,706)
(819,038)
—
—
—
288
—
(75,414)
—
(894,164)
—
—
—
215
—
(41,482)
$(935,431)
$ 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)
159,080
50,414
—
14,044
798
(28,236)
(41,482)
$154,618
KFORCE INC. AND SUBSIDIARIES | 27
(In thousands)
Years Ended December 31,
2024
2023
2022
Cash flows from operating activities:
Net income
$ 61,075
$ 75,431
Adjustments to reconcile net income to cash provided by operating activities:
Deferred income tax provision, net
1,647
3,081
Provision for credit losses
768
(126)
Depreciation and amortization
5,012
4,427
Stock-based compensation expense
17,747
17,655
Noncash lease expense
4,065
5,683
Loss on equity method investment
750
3,824
Reserve related to note receivable
—
1,925
Impairment of equity method investment
—
13,684
Other
724
141
(Increase) decrease in operating assets
Trade receivables, net
35,301
(4,049)
Other assets
(1,304)
(9,199)
Increase (decrease) in operating liabilities
Accrued payroll costs
(13,358)
(22,003)
Other liabilities
(20,962)
20,296
Payment of benefit under terminated pension plan
—
(19,965)
Cash provided by operating activities
91,465
90,805
Cash flows from investing activities:
Capital expenditures
(7,763)
(8,109)
Proceeds received from company-owned life insurance
—
1,077
Premiums paid for company-owned life insurance
(1,408)
—
Proceeds from the sale of our joint venture interest
5,059
—
Note receivable issued to our joint venture
(750)
(6,750)
Equity method investment
—
(500)
Cash used in investing activities
(4,862)
(14,282)
Cash flows from financing activities:
Proceeds from credit facility
594,400
38,200
Payments on credit facility
(578,400)
(112,600)
Repurchases of common stock
(75,024)
(74,913)
Cash dividends
(27,562)
(24,027)
Other
(19)
(51)
Cash used in financing activities
(86,605)
(173,391)
Change in cash and cash equivalents
(2)
(96,868)
Cash and cash equivalents at beginning of year
121
96,989
Cash and cash equivalents at end of year
$ 119
$ 121
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Income taxes, net
$ 28,616
$ 16,579
Operating lease liabilities
5,232
6,992
Interest, net
897
885
Non-Cash Financing and Investing Transactions:
ROU assets obtained from operating leases
$ 4,378
$ 9,997
Unsettled repurchases of common stock
920
974
Employee stock purchase plan
1,042
1,054
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
$ 50,414
(1,871)
100
5,922
14,044
3,683
—
—
—
(395)
17,638
(8,789)
5,653
475
—
86,874
(7,573)
2,377
(2,368)
—
—
—
(7,564)
301,000
(309,900)
(41,938)
(28,236)
(6)
(79,080)
230
119
$ 349
$ 9,777
4,733
1,989
$ 3,078
260
798
28 | KFORCE INC. AND SUBSIDIARIES
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,” the “Firm,” “management,”
“we,” “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: income taxes and the impairment
of goodwill. 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 assignments and
engagements and establishing the bill and pay rates; and (iii) bears
the risk and rewards of the transaction, including credit risk if the
customer fails to pay for services performed.
Our integrated approach deploys highly skilled professionals on a
temporary (“Flex”) and permanent (“Direct Hire”) basis.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KFORCE INC. AND SUBSIDIARIES | 29
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, 2024 and 2023.
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, 2024 and 2023.
Direct Costs
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 place consultants on assignments 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 Expense
Stock-based compensation expense 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, 2024 and 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.
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, 2024 and 2023.
Recoveries of trade receivables previously written off are recorded
when received and are immaterial for the year ended December 31,
2024 and 2023.
30 | KFORCE INC. AND SUBSIDIARIES
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 reportable segments. We
evaluate goodwill for impairment either through a qualitative or
quantitative approach annually on October 1, 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 impairment analysis
may impact these assumptions and result in a future goodwill
impairment charge, which could be material to our consolidated
financial statements.
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.
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.
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 promissory notes (the “Note Receivable”) that were executed
to our joint venture for a total of $4.8 million at December 31, 2022.
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
operating 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 estimated
using 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.
KFORCE INC. AND SUBSIDIARIES | 31
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.
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.
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 sixteen years. Amortization expense of capitalized
software during the years ended December 31, 2024, 2023 and 2022
was $2.7 million, $1.9 million and $1.8 million, respectively.
Kforce also enters into certain cloud-based software hosting
arrangements that are accounted for as service contracts. Certain
implementation costs of cloud computing arrangements during the
development stage are capitalized, which is consistent with the
capitalization criteria used for internal use software. Capitalized costs
are included in Other assets, net in the accompanying Consolidated
Balance Sheets and within operating activities on the Consolidated
Statement of Cash Flows. Capitalized cloud computing arrangement
implementation costs are amortized using the straight-line method
over the remaining term of the contract.
Health Insurance
Except for certain fully insured health insurance lines of coverage,
Kforce retains the risk of loss for each health insurance plan both on
a participant and aggregate basis. 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 effect of potentially
dilutive securities, such as unvested shares of restricted stock using
the treasury stock method, except where the effect of including
potential common shares would be anti-dilutive.
The following table provides information on potentially dilutive
securities for the years ended December 31 (shares in thousands):
2024
2023
2022
Common stock equivalents
237
319
449
Anti-dilutive shares
209
157
292
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.
Derivative Instrument
The Firm, from time to time, enters into forward starting interest
rate swaps. The Firm evaluates the designation of the derivative
instrument. Cash flow hedges would be recorded at fair value on the
Consolidated Balance Sheets, and the changes in the fair value would
be recorded as a component of Accumulated other comprehensive
income/loss in the consolidated financial statements. Cash flows
from these derivative instruments were classified in the Consolidated
Statements of Cash Flows in the same category as the hedged item.
The Firm did not have any outstanding interest rate swap derivative
instruments as of December 31, 2024 and 2023.
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.
32 | KFORCE INC. AND SUBSIDIARIES
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. 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 November 2023, the FASB issued guidance intended to improve
reportable segment disclosure requirements through enhancements
for significant segment expenses. These amendments clarify
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 was effective
for Kforce on January 1, 2024, and the presentation and disclosure
requirements were applied retrospectively to our annual disclosures
for the year ended December 31, 2024 and will apply to the interim
disclosures beginning January 1, 2025. This new guidance will enhance
our disclosures, but did not have a material effect 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 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 adopting this
standard effective January 1, 2025. This new guidance will enhance
our disclosures, but we do not expect this standard to have a material
effect on our consolidated financial statements.
In November 2024, the FASB issued guidance for disclosure
improvements related to the disaggregation of income statement
expenses. These amendments require the disaggregation of certain
income statement expense captions in a tabular format within the
footnotes of the financial statements. This guidance is effective for
annual periods beginning after December 15, 2026, including interim
periods within those annual periods. Early adoption of this guidance
is permitted and can be applied prospectively or retrospectively. 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
Kforce’s two reportable segments are Technology and FA. Within
each segment, we provide highly skilled professionals on a Flex and
Direct Hire basis to our customers on traditional staffing engagements
and increasingly, within our Technology segment, as a part of an
overall solutions engagement. The chief operating decision-maker
(“CODM”), our President and Chief Executive Officer, establishes the
strategic direction of the Firm, its priorities and longer-term financial
objectives. Our CODM is ultimately responsible for evaluating segment
performance and making decisions regarding resource allocation.
Our CODM evaluates performance based on, among others, revenue
trends (relative to peers and market benchmarks) and segment
gross profit, and other key leading indicators such as client visits,
job order trends for traditional staffing assignments, opportunity
pipeline reviews for solutions-oriented engagements, and trends in
consultants on assignment. The CODM uses these financial metrics
and productivity measures when making decisions about allocating
capital and resources to the segments.
Segment gross profit is defined as segment revenue, less direct
costs attributable to the reportable segment. The CODM is not
provided income from operations or asset information by reportable
segment as operations are largely combined.
KFORCE INC. AND SUBSIDIARIES | 33
The following table provides information on the operations of our segments (in thousands):
Technology
FA
Total
2024
Revenue
$1,292,743
$112,565
$1,405,308
Direct costs
950,589
69,274
1,019,863
Gross profit
$ 342,154
$ 43,291
$ 385,445
Less:
Selling, general and administrative expenses
309,802
Depreciation and amortization
5,922
Other expense, net
2,097
Income from operations, before income taxes
$ 67,624
2023
Revenue
$1,384,553
$147,203
$1,531,756
Direct costs
1,015,157
89,533
1,104,690
Gross profit
$ 369,396
$ 57,670
$ 427,066
Less:
Selling, general and administrative expenses
334,933
Depreciation and amortization
5,012
Other expense, net
1,871
Income from operations, before income taxes
$ 85,250
2022
Revenue
$1,507,627
$203,138
$1,710,765
Direct costs
1,085,705
123,953
1,209,658
Gross profit
$ 421,922
$ 79,185
$ 501,107
Less:
Selling, general and administrative expenses
379,815
Depreciation and amortization
4,427
Other expense, net
14,423
Income from operations, before income taxes
$ 102,442
34 | KFORCE INC. AND SUBSIDIARIES
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):
Technology
FA
Total
2024
Flex revenue
$1,278,715
$ 97,729
$1,376,444
Direct Hire revenue
14,028
14,836
28,864
Total Revenue
$1,292,743
$112,565
$1,405,308
2023
Flex revenue
$1,366,095
$127,679
$1,493,774
Direct Hire revenue
18,458
19,524
37,982
Total Revenue
$1,384,553
$147,203
$1,531,756
2022
Flex revenue
$1,476,055
$176,395
$1,652,450
Direct Hire revenue
31,572
26,743
58,315
Total Revenue
$1,507,627
$203,138
$1,710,765
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, 2024
and 2023 (in thousands):
Allowance for credit losses, January 1, 2023
$1,006
Current period provision
768
Write-offs charged against the allowance, net of recoveries of amounts previously written off
(668)
Allowance for credit losses, December 31, 2023
1,106
Current period provision
100
Write-offs charged against the allowance, net of recoveries of amounts previously written off
(290)
Allowance for credit losses, December 31, 2024
$ 916
The allowances on trade receivables presented in the Consolidated Balance Sheets include $0.6 million and $0.5 million for reserves
unrelated to credit losses at December 31, 2024 and 2023, 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
2024
2023
Furniture and equipment
2-10 years
$ 5,166
$ 4,971
Computer equipment
1-10 years
6,082
6,216
Leasehold improvements
1-10 years
7,395
7,672
Total fixed assets
18,643
18,859
Less accumulated depreciation
(10,920)
(9,441)
Total Fixed assets, net
$ 7,723
$ 9,418
Depreciation expense was $3.2 million, $3.1 million and $2.7 million during the years ended December 31, 2024, 2023 and 2022, respectively.
KFORCE INC. AND SUBSIDIARIES | 35
6. OTHER ASSETS, NET
Other assets, net consisted of the following (in thousands):
December 31,
2024
2023
Assets held in Rabbi Trust
$49,356
$40,389
Capitalized software, net (1)
29,090
16,434
ROU assets for operating leases, net
13,764
14,368
Other non-current assets
2,446
4,733
Total Other assets, net
$94,656
$75,924
(1) The increase in Capitalized software, net for the year ended
December 31, 2024 relates to our back-office transformation
program to enhance our technology capabilities to better
support our clients, consultants and candidates. This balance
includes $6.3 million related to capitalized implementation
costs from cloud computing arrangements as of December 31,
2024. Accumulated amortization of capitalized software was
$40.1 million and $37.6 million as of December 31, 2024 and
2023, respectively.
7. INCOME TAXES
The provision for income taxes consists of the following:
(in thousands):
Years Ended December 31,
2024
2023
2022
Current tax expense:
Federal
$14,067
$16,530
$17,535
State
5,014
5,998
6,400
Deferred tax expense
(1,871)
1,647
3,076
Total Income tax expense
$17,210
$24,175
$27,011
The provision for income taxes shown above varied from the
statutory federal income tax rate as follows:
Years Ended December 31,
2024
2023
2022
Federal income tax rate
21.0%
21.0%
21.0%
State income taxes,
net of Federal tax effect
5.6
6.0
5.4
Non-deductible compensation
and meals and entertainment
1.8
2.3
2.5
Tax credits
(1.5)
(0.8)
(1.2)
Tax benefit from restricted
stock vesting
(0.3)
(0.8)
(1.0)
Other
(1.2)
0.7
(0.3)
Effective tax rate
25.4%
28.4%
26.4%
The 2024 effective tax rate was favorably impacted by a reduction
in nondeductible executive compensation, non-taxable proceeds
from company-owned life insurance, and the recognition of research
and development tax credits, as compared to 2023. The 2023
effective 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.
Deferred tax assets and liabilities are composed of the following
(in thousands):
December 31,
2024
2023
Deferred tax assets:
Deferred compensation obligation
$ 6,549
$ 6,616
Operating lease liabilities
3,923
4,071
Research and development
2,027
—
Stock-based compensation
1,561
1,475
Accrued liabilities
995
1,345
Accounts receivable reserves
399
382
Other
8
8
Deferred tax assets
15,462
13,897
Deferred tax liabilities:
Fixed assets
(3,700)
(4,307)
ROU assets for operating leases
(3,512)
(3,684)
Goodwill
(2,291)
(2,401)
Prepaid expenses
(513)
(367)
Other
(437)
—
Deferred tax liabilities
(10,453)
(10,759)
Valuation allowance
—
—
Total Deferred tax assets, net
$ 5,009
$ 3,138
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 2021.
36 | KFORCE INC. AND SUBSIDIARIES
8. GOODWILL
The following table presents the gross amount and accumulated
impairment losses for each of our reporting units as of December 31,
2024, 2023 and 2022 (in thousands):
Technology
FA
Total
Goodwill, gross amount
$ 156,391
$ 19,766
$176,157
Accumulated impairment
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, 2024, 2023 and 2022.
Management performed its annual impairment assessment of
the carrying value of goodwill as of December 31, 2024 and 2023.
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, 2024 and 2023. 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,
2024
2023
Accounts payable
$38,315
$42,842
Deferred compensation payable
8,602
5,927
Customer rebates payable
6,556
7,327
Accrued liabilities
4,259
8,489
Accrued professional fees
4,021
210
Total Accounts payable and
other accrued liabilities
$61,753
$64,795
Payroll and benefits
$32,990
$28,110
Health insurance liabilities
3,593
3,727
Payroll taxes
1,698
1,705
Workers’ compensation liabilities
542
426
Total Accrued payroll costs
$38,823
$33,968
10. OPERATING LEASES
The following table presents weighted-average terms for our
operating leases:
December 31,
2024
2023
Weighted-average discount rate
4.3%
4.0%
Weighted-average remaining
lease term
6.0 years
6.5 years
The following table presents operating lease expense included in
SG&A (in thousands):
December 31,
2024
2023
Lease Cost
Operating lease expense
$4,344
$4,673
Short-term lease expense
1,265
1,396
Variable lease costs
934
1,093
Sublease income
(28)
(189)
Total operating lease expense
$6,515
$6,973
The following table presents the maturities of operating lease
liabilities as of December 31, 2024 (in thousands):
2025
$ 3,617
2026
3,049
2027
2,662
2028
1,989
2029
1,384
Thereafter
4,257
Total maturities of operating lease liabilities
16,958
Less: imputed interest
2,062
Total operating lease liabilities
$14,896
KFORCE INC. AND SUBSIDIARIES | 37
11. EMPLOYEE BENEFIT PLANS
401(k) Savings Plans
The Firm maintains a qualified defined contribution 401(k)
retirement savings plan 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 $2.1 million and $1.9 million as of
December 31, 2024 and 2023, 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 13 thousand, 18 thousand, and 17 thousand shares of
common stock at an average purchase price of $62.00, $57.13 and
$63.37 per share during the years ended December 31, 2024, 2023
and 2022, respectively. All shares purchased under the employee
stock purchase plan were settled using Kforce’s treasury stock.
Deferred Compensation Plans
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, 2024
and 2023, amounts related to the deferred compensation plans
included in Accounts payable and other accrued liabilities were $8.6
million and $5.9 million, respectively, and $46.2 million and $42.0
million was included in Other long-term liabilities at December 31,
2024 and 2023, respectively, in the Consolidated Balance Sheets. For
the years ended December 31, 2024, 2023 and 2022, we recognized
compensation expense for the plans of $1.3 million, $1.3 million and
$0.5 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 $49.4 million and $40.4 million as of December 31, 2024 and 2023,
respectively, and is recorded in Other assets, net in the accompanying
Consolidated Balance Sheets. As of December 31, 2024, the life
insurance policies had a net death benefit of $168.0 million.
12. 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”). Borrowings under the credit facility are secured
by substantially all of the tangible and intangible assets of the Firm.
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, 2024,
we are in compliance with all of our financial covenants contained in
the Amended and Restated Credit Facility.
38 | KFORCE INC. AND SUBSIDIARIES
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, 2024 and 2023, $32.7 million and $41.6
million was outstanding on the Amended and Restated Credit Facility,
respectively. Kforce had $1.0 million and $1.2 million of outstanding
letters of credit at December 31, 2024 and 2023, respectively, which
pursuant to the Amended and Restated Credit Facility, reduces the
availability of the borrowing capacity.
13. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the following (in thousands):
December 31,
2024
2023
Deferred compensation payable—long term
$46,183
$42,025
Operating lease liabilities
11,858
12,275
Other long-term liabilities
18
24
Total Other long-term liabilities
$58,059
$54,324
14. 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, such as
Performance-Based Awards (collectively referred to as “Restricted
Stock”). 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, 2024, 2023 and 2022, stock-
based compensation expense was $14.0 million, $17.7 million and
$17.7 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, 2024, 2023 and 2022 was $3.8
million, $4.8 million and $3.7 million, respectively.
Restricted Stock
Restricted Stock is granted to directors, executives and management
either: for awards related to Kforce’s annual long-term incentive
(“LTI”) compensation program, or as part of a compensation package
for retention. The LTI award amounts are primarily based on Kforce’s
total shareholder return as compared to a predefined peer group. RSAs
and RSUs granted during the year ended December 31, 2024 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.
During the year ended December 31, 2024, management issued
87 thousand shares of performance-based restricted stock awards
(“Performance-Based Awards”) to certain leaders within the Firm.
These Performance-Based Awards are subject to the achievement of
certain financial goals as a condition of vesting (“performance goals”)
and will be measured over a 10-year period. The Performance-Based
Awards become eligible to vest only if these performance goals are
achieved and if the grantee remains continuously employed by us
through the vesting date. We assess the probability of achieving
the performance goals for each reporting period. Determining
whether the performance goals will be achieved involves judgment,
and the estimate of compensation cost may be revised periodically
based on changes in the probability of achieving the performance
goals. Revisions are reflected in the period in which the estimate is
changed. If the performance goals are deemed unlikely to be met,
no compensation cost is recognized and, to the extent previously
recognized, compensation cost is reversed. Performance-Based
Awards contain the same voting rights as other common stock as
well as the right to forfeitable dividends in the form of additional
restricted stock at the same rate as the cash dividend on common
stock and containing the same vesting provisions as the underlying
award. No stock-based compensation expense related to these
Performance-Based Awards was recognized during the year ended
December 31, 2024.
KFORCE INC. AND SUBSIDIARIES | 39
The following table presents the Restricted Stock activity for the years ended December 31, 2024 (in thousands, except per share amounts):
Weighted-Average
Total Instrinsic
Number of
Grant Date
Value of Restricted
Restricted Stock
Fair Value
Stock Vested
Outstanding at December 31, 2023
798
$60.80
Granted
396
$57.83
Forfeited
(24)
$54.08
Vested
(260)
$55.24
$15,106
Outstanding at December 31, 2024
910
$61.28
The weighted-average grant date fair value of restricted stock
granted was $57.83, $64.97 and $55.85 during the years ended
December 31, 2024, 2023 and 2022, respectively. The total intrinsic
value of restricted stock vested was $15.1 million, $22.5 million and
$23.7 million during the years ended December 31, 2024, 2023 and
2022, 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. RSAs and RSUs are amortized on a straight-line basis over the
requisite service period. As of December 31, 2024, total unrecognized
stock-based compensation expense related to restricted stock was
$43.5 million, which is expected to be recognized over a weighted-
average remaining period of 4.5 years.
15. 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, 2024, these unconditional purchase obligations with an
initial or remaining term in excess of one year were approximately $30.7
million and are expected to be paid as follows: $5.6 million in 2025; $8.9
million in 2026, $5.4 million in 2027, $2.3 million in 2028, $2.2 million in
2029, and $6.3 million in 2030 and beyond.
Employment Agreements
Kforce has employment agreements with certain executives that
provide for minimum compensation, salary and continuation of certain
benefits for a one-year 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, 2024, our liability would be
approximately $27.7 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 $8.8
million if, in the absence of a change in control, all of the executives
under contract were terminated by Kforce without cause or if the
executives resigned for good reason.
Litigation
We are involved in legal proceedings, claims and administrative
matters that arise in the ordinary course of business, and 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. The outcome of any litigation
is inherently uncertain, but we do not expect that these proceedings
and claims, individually or in the aggregate, will have a material
adverse effect on our consolidated financial statements; however,
if decided adversely to us, or if we determine that settlement of
particular litigation is appropriate, we may be subject to additional
liabilities that could have a material adverse effect on our financial
position, results of operations or cash flows. Kforce maintains liability
insurance that insures us against workers’ compensation, personal
and 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.
40 | KFORCE INC. AND SUBSIDIARIES
CORPORATE INFORMATION
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, 2024 for
additional information regarding forward-looking statements.
BOARD OF DIRECTORS
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
EXECUTIVE OFFICERS
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
FORM 10-K AVAILABLE
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 23, 2025 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.
ARIZONA
Phoenix
CALIFORNIA
Costa Mesa
Culver City
San Diego
San Ramon
COLORADO
Centennial (Denver)
CONNECTICUT
Rocky Hill
FLORIDA
Doral (Miami)
Jacksonville
Orlando
Plantation (Ft. Lauderdale)
Tampa
GEORGIA
Atlanta
ILLINOIS
Chicago
MARYLAND
Linthicum (Baltimore)
MASSACHUSETTS
Boston
MICHIGAN
Grand Rapids
MISSOURI
St. Louis
NEW YORK
New York
OHIO
Dublin (Columbus)
OREGON
Lake Oswego (Portland)
PENNSYLVANIA
King of Prussia
TEXAS
Austin
Dallas
Houston
San Antonio
UTAH
Sandy (Salt Lake City)
VIRGINIA
Reston
WISCONSIN
Madison
Milwaukee
INDIA
Pune
Corporate Headquarters:
1150 Assembly Drive
Suite 500
Tampa, Florida 33607
(813) 552-5000
OFFICE LOCATIONS