Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 per share	KFRC	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

References in this document to the “Registrant,” “Kforce,” the “Company,” “we,” the “Firm,” “management,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context otherwise requires or indicates.

This report, particularly Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), and Part II, Item 1A. Risk Factors, and the documents we incorporate into this report contain certain statements that are, or may be deemed to be, forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements may include, but may not be limited to: expectations of financial or operational performance, including the possibility and potential effects of an economic recession on the Firm’s business; the impacts of SG&A deleveraging in connection with expected demand for the Firm’s services; our expectations regarding the future changes in revenue of each segment of our business; the impact of the economic environment on our business; our ability to control discretionary spending and decrease operating costs; the Firm’s commitment and ability to return significant capital to its shareholders; our ability to meet capital expenditure and working capital requirements of our operations; the intent and ability to declare and pay quarterly dividends; growth rates in temporary staffing; a constraint in the supply of consultants and candidates, or the Firm’s ability to attract such individuals; changes in client demand for our services and our ability to adapt to such changes; the ability of the Firm to maintain and attract clients in the face of changing economic or competitive conditions; expected incurrence of stock-based compensation; the impact of the Inflation Reduction Act of 2022 on our stock repurchases and financial condition; our beliefs regarding the expected future benefits of our flexible working environment; our ability to maintain compliance with our credit facility's covenants; potential government actions or changes in laws and regulations; anticipated costs and benefits of acquisitions, divestitures, joint ventures and other investments; effects of interest rate ~~variations;~~variations and inflation, including related changes in government policies; financing needs or plans; estimates concerning the effects of litigation or other disputes; the occurrence of unanticipated expenses; as well as assumptions as to any of the foregoing and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, refer to the MD&A and Risk Factors sections. In addition, when used in this discussion, the terms “anticipate,” “assume,” “estimate,” “expect,” “intend,” “plan,” “believe,” “will,” “may,” “likely,” “could,” “should,” “future” and variations thereof and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the date of this report. Kforce undertakes no obligation to update any forward-looking statements.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

KFORCE INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income				Treasury Stock			Total Stockholders’ Equity
	Shares	Amount						Retained Earnings		Shares	Amount
Balance, December 31, 2022	73,242	$	732	$	507,734	$	6	$	492,764	52,744	$	(819,038)	$	182,198
Net income	—	—		—		—		16,210		—	—		16,210
Issuance for stock-based compensation and dividends, net of forfeitures	5	—		340		—		(341)		—	—		(1)
Stock-based compensation expense	—	—		4,326		—		—		—	—		4,326
Employee stock purchase plan	—	—		172		—		—		(5)	73		245
Dividends ($0.36 per share)	—	—		—		—		(7,003)		—	—		(7,003)
Repurchases of common stock	—	—		—		—		—		181	(10,244)		(10,244)
Other	—	—		—		(6)		—		—	—		(6)
Balance, March 31, 2023	73,247	$	732	$	512,572	$	—	$	501,630	52,920	$	(829,209)	$	185,725

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

KFORCE INC. AND SUBSIDIARIES

Common Stock Additional Paid-In Capital Accumulated Other
Comprehensive Income Treasury Stock Total Stockholders’ Equity
Shares Amount Retained Earnings Shares Amount
Balance, December 31, 2021 72,997 $ 730 $ 488,036 $ 621 $ 442,596 51,492 $ (743,577) $ 188,406
Net income — — — — 19,181 — — 19,181
Issuance for stock-based compensation and dividends, net of forfeitures (1) — 319 — (318) — — 1
Stock-based compensation expense — — 4,437 — — — — 4,437
Employee stock purchase plan — — 193 — — (3) 49 242
Dividends ($0.30 per share) — — — — (6,094) — — (6,094)
Change in fair value of interest rate swap, net of tax benefit of $780 — — — 2,302 — — — 2,302
Repurchases of common stock — — — — — 147 (10,270) (10,270)
Balance, March 31, 2022 72,996 730 492,985 2,923 455,365 51,636 (753,798) 198,205
Net income — — — — 26,916 — — 26,916
Issuance for stock-based compensation and dividends, net of forfeitures 11 — 298 — (298) — — —
Stock-based compensation expense — — 4,410 — — — — 4,410
Employee stock purchase plan — — 234 — — (4) 61 295
Dividends ($0.30 per share) — — — — (6,093) — — (6,093)
Change in fair value of interest rate swaps, net of tax expense of $989 — — — (2,917) — — — (2,917)
Repurchases of common stock — — — — — 162 (10,283) (10,283)
Balance, June 30, 2022 73,007 730 497,927 6 475,890 51,794 (764,020) 210,533
Net income — — — — 22,262 — — 22,262
Issuance for stock-based compensation and dividends, net of forfeitures (1) — 318 — (319) — — (1)
Stock-based compensation expense — — 4,445 — — — — 4,445
Employee stock purchase plan — — 219 — — (5) 75 294
Dividends ($0.30 per share) — — — — (5,977) — — (5,977)
Repurchases of common stock — — — — — 383 (22,580) (22,580)
Balance, September 30, 2022 73,006 $ 730 $ 502,909 $ 6 $ 491,856 52,172 $ (786,525) $ 208,976
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~KFORCE INC. AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(IN THOUSANDS)~~
Nine Months Ended September 30,
2023 2022
Cash flows from operating activities:
Net income $ 45,359 $ 68,359
Adjustments to reconcile net income to cash provided by operating activities:
Deferred income tax provision, net (757) 4,386
Provision for credit losses 325 (231)
Depreciation and amortization 3,776 3,214
Stock-based compensation expense 14,602 13,293
Noncash lease expense 3,111 4,313
Loss on equity method investment 750 2,737
Other 675 (167)
(Increase) decrease in operating assets
Trade receivables, net 20,880 (15,571)
Other assets (289) (1,989)
Increase (decrease) in operating liabilities
Accrued payroll costs (4,812) 11,025
Payment of benefit under terminated pension plan — (19,965)
Other liabilities (14,564) 8,659
Cash provided by operating activities 69,056 78,063
Cash flows from investing activities:
Capital expenditures (6,076) (4,656)
Proceeds from the sale of our joint venture interest 5,059 —
Premiums paid for company-owned life insurance policies (765) —
Equity method investment (750) (500)
Note receivable issued to our joint venture — (4,500)
Cash used in investing activities (2,532) (9,656)
Cash flows from financing activities:
Proceeds from credit facility 426,400 —
Payments on credit facility (430,600) (100,000)
Repurchases of common stock (41,470) (42,103)
Cash dividends (20,842) (18,164)
Other (11) (40)
Cash used in financing activities (66,523) (160,307)
Change in cash and cash equivalents 1 (91,900)
Cash and cash equivalents, beginning of period 121 96,989
Cash and cash equivalents, end of period $ 122 $ 5,089


	Three Months Ended March 31,
Supplemental Disclosure of Cash Flow Information	2024		2023
Cash Paid During the Period For:
Income taxes	$	300	$	5,108
Operating lease liabilities	1,297		1,303
Interest, net	614		248
Non-Cash Investing and Financing Transactions:
ROU assets obtained from operating leases	$	1,152	$	566
Employee stock purchase plan	204		245
Unsettled repurchases of common stock	200		—
Equipment and software additions included in accounts payable and other accrued liabilities	181		957

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Nine Months Ended September 30,
Supplemental Disclosure of Cash Flow Information 2023 2022
Cash Paid During the Period For:
Income taxes $ 19,323 $ 14,348
Operating lease liabilities 3,937 5,413
Interest, net 623 918
Non-Cash Investing and Financing Transactions:
ROU assets obtained from operating leases $ 3,692 $ 274
Employee stock purchase plan 817 831
Unsettled repurchases of common stock 2,292 1,030

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

KFORCE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A - Summary of Significant Accounting Policies

Unless otherwise noted below, there have been no material changes to the accounting policies presented in Note 1 - “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of ~~the 2022~~our 2023 Annual Report on Form 10-K.

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and footnotes normally required by GAAP for complete financial statements have been condensed or omitted pursuant to those rules and regulations, although management believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our ~~2022~~2023 Annual Report on Form 10-K. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation. The Unaudited Condensed Consolidated Balance Sheet as of December 31, ~~2022,~~2023, was derived from our audited Consolidated Balance Sheet as of December 31, ~~2022,~~2023, as presented in our ~~2022~~2023 Annual Report on Form 10-K.

Our quarterly operating results are affected by the number of billing days in a particular quarter, the seasonality of our clients’ businesses and changes in holiday and vacation days taken. In addition, we typically experience higher costs in the first quarter of each fiscal year as a result of certain U.S. state and federal employment tax resets, which adversely affects our gross profit and overall profitability relative to the remainder of the fiscal year. As such, the results of operations for any interim period may be impacted by these factors, among others, and are not necessarily indicative of, nor comparable to, the results of operations for a full year.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Kforce Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. References in this document to “Kforce,” the “Company,” ~~“we,”~~ the “Firm,” “management,” “we,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context indicates otherwise.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most critical of these estimates and assumptions relate to the following: allowance for credit losses; income taxes; self-insured liabilities for health insurance; and the impairment of ~~goodwill and other long-lived assets.~~goodwill. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. Therefore, our accounting estimates and assumptions might change materially in future periods.

~~Health Insurance~~

Except for certain fully insured health insurance lines of coverage, Kforce retains the risk of loss per participant for each health insurance claim up to $600 thousand in claims annually. Additionally, for all claim amounts exceeding $600 thousand, Kforce retains the risk of loss up to an aggregate annual loss of those claims of $280 thousand. For its partially self-insured lines of coverage, health insurance costs are accrued using estimates to approximate the liability for reported claims, and incurred but not reported claims, which are primarily based upon an evaluation of historical claims experience, completion factors determined by an actuary, and a qualitative review of our health insurance exposure, including the extent of outstanding claims and expected changes in health insurance costs.

Basic earnings per share is computed as net income divided by the weighted average number of common shares outstanding (“WASO”) during the period. WASO excludes unvested shares of restricted stock. Diluted earnings per share is computed by dividing net income by diluted WASO. Diluted WASO includes the dilutive effect of 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.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~360~~206 thousand and ~~304~~212 thousand common stock equivalents were included in the diluted WASO, respectively. For ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2022, 428 thousand common stock equivalents were included in the diluted WASO. For the three~~March 31, 2024 and ~~nine months ended September 30,~~ 2023, there were 951 thousand and ~~186 thousand anti-dilutive common stock equivalents, respectively. For the three and nine months ended September 30, 2022, there were 304 thousand and 301~~264 thousand anti-dilutive common stock equivalents, respectively.

In June 2019, we entered into a joint venture whereby Kforce obtained a 50% noncontrolling interest in WorkLLama, LLC (“WorkLlama”), which was accounted for as an equity method investment. As of December 31, 2022, the equity method investment was fully impaired. During the three months ended September 30, 2023 and 2022, we recorded a loss related to our equity method investment of nil and $0.9 million, respectively. We recorded a loss related to our equity method investment of $0.8 million and $2.7 million during the nine months ended September 30, 2023 and 2022, respectively.

During the year ended December 31, 2022, Kforce executed a series of promissory notes (the “Note Receivable”) to our joint venture for a total of $6.8 million and recorded a credit loss of $1.9 million, resulting in a balance of $4.8 million at December 31, 2022. There were no payments received on the Note Receivable during the year ended December 31, 2022.

On February 23, 2023, Kforce received $6.0 million in exchange for the sale of our 50% noncontrolling interest in WorkLLama to an unaffiliated third party and in full settlement of the outstanding balance of the Note Receivable. These proceeds, net of customary transaction costs, amounted to $5.1 million and is presented in the investing section of the Unaudited Condensed Consolidated Statements of Cash Flows.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into Federal law. The IRA provides for, among other things, a new U.S. Federal 1% nondeductible excise tax on certain repurchases of stock by publicly-traded U.S. domestic corporations occurring after December 31, 2022. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased. For purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain stock issuances against the fair market value of stock repurchases during the same taxable year, with certain exceptions. For the three and nine months ended September 30, 2023, we recorded $0.2 million and $0.4 million, respectively, in excise tax related to the IRA, which was included in Treasury stock in the unaudited condensed consolidated financial statements.

~~New Accounting Standards~~

~~Recently Adopted Accounting Standards~~

In March 2020, the FASB issued guidance for reference rate reform, which provided temporary optional guidance to ease the potential burden in accounting for reference rate reform in contracts and other transactions that reference LIBOR, or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The FASB has since issued subsequent updates to the initial guidance in December 2022, which extends the final sunset date for reference rate reform from December 31, 2022 to December 31, 2024. We adopted this standard as of January 1, 2023, and it did not have a material impact on our consolidated financial statements.

~~Accounting Standards Not Yet Adopted~~

In October 2023, the FASB issued guidance for disclosure improvements in accordance with the SEC’s simplification initiative. These amendments are intended to align FASB’s accounting standards and eliminate disclosures that are “redundant, duplicative, overlapping, outdated, or superseded.”. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. We are evaluating this new guidance, which may modify our disclosures, but we do not expect this standard to have a material effect on our consolidated financial statements.

Note B - Reportable Segments

Kforce provides services through our Technology and Finance and Accounting (“FA”) segments. Historically, and for the three and nine months ended September 30, 2023, we have reported sales and gross profit information on a segment basis. Total assets, liabilities and operating expenses are not reported separately by segment as our operations are largely combined.

Note C - Disaggregation of Revenue

Note D - Allowance for Credit Losses

The allowance for credit losses on trade receivables is determined by estimating and recognizing 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. Recoveries of trade receivables previously written off are recorded when received and are immaterial for the three and nine months ended September 30, 2023.

The following table presents the activity within the allowance for credit losses on trade receivables for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 (in thousands):

The allowances on trade receivables presented in the Unaudited Condensed Consolidated Balance Sheets include ~~$0.6~~$0.7 million and $0.5 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, for reserves unrelated to credit losses.

Note E - Other Assets, Net

~~(2) Refer to Note A - “Summary of Significant Accounting Policies” for more details on the sale of our joint venture and the settlement of the Note Receivable.~~

Our accounts payable balance includes vendor and third-party payables. Our accrued liabilities balance includes the current portion of our deferred compensation plans liability, contract liabilities from contracts with customers (such as customer rebates) and other accrued liabilities.


	March 31, 2024		December 31, 2023
Accounts payable and other accrued liabilities:
Accounts payable	$	43,202	$	42,842
Deferred compensation payable	6,746		5,927
Accrued liabilities	5,691		8,699
Customer rebates payable	3,776		7,327
Total Accounts payable and other accrued liabilities	$	59,415	$	64,795
Accrued payroll costs:
Payroll and benefits	$	31,075	$	28,110
Payroll taxes	4,329		1,705
Health insurance liabilities	3,809		3,727
Workers’ compensation liabilities	533		426
Total Accrued payroll costs	$	39,746	$	33,968

Note G - Credit Facility

On October 20, 2021, the Firm entered into an amended and restated credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), 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 maturity date of the Amended and Restated Credit Facility is October 20, 2026.

In June 2023, Kforce entered into the First Amendment to the Amended and Restated Credit Facility (the “First Amendment”), 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 Secured Overnight Financing Rate benchmark interest rates (“SOFR Rate”).

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $21.4~~2023, $40.8 million and ~~$25.6~~$41.6 million was outstanding under the Amended and Restated Credit Facility, respectively. As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all of our financial covenants contained in the Amended and Restated Credit Facility.

Note H - Other Long-Term Liabilities

Table of Contents

Note I - Stock-based Compensation

On April 20, 2023, Kforce’s shareholders approved the 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan allows for the issuance of stock options, stock appreciation rights (“SAR”), stock awards (including restricted stock awards (“RSAs”) and restricted stock units (“RSUs”)) and other stock-based awards. The aggregate number of shares reserved under the 2023 Plan is approximately 3.2 million. Grants of an option or SAR 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.

Restricted stock (including RSAs and RSUs) is granted to directors, executives and management either for awards related to Kforce’s annual long-term incentive program or as part of a compensation package for attraction and retention purposes.

The following table presents the restricted stock activity for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 (in thousands, except per share amounts):


		Number of Restricted Stock	Weighted-Average Grant Date Fair Value		Total Intrinsic Value of Restricted Stock Vested
Outstanding at December 31, 2022		911	$	54.42
	Number of Restricted Stock						Number of Restricted Stock	Weighted-Average Grant Date Fair Value	Total Intrinsic Value of Restricted Stock Vested
Outstanding at December 31, 2023
Granted
Granted
Granted	Granted	70	$	57.40
Forfeited	Forfeited	(89)	$	53.59
Forfeited
Forfeited
Vested	Vested	(49)	$	48.41	$	2,952
Outstanding at September 30, 2023		843	$	55.11
Vested
Vested
Outstanding at March 31, 2024

As of ~~September 30, 2023,~~March 31, 2024, total unrecognized stock-based compensation expense related to restricted stock was ~~$29.5~~$38.1 million, which is expected to be recognized over a weighted-average remaining period of ~~4.5~~4.1 years.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, stock-based compensation expense was ~~$6.0~~$3.5 million and ~~$14.6~~$4.3 million, ~~respectively. During the three~~respectively, and ~~nine months ended September 30, 2022, stock-based compensation expense was $4.5 million and $13.3 million, respectively. Stock-based compensation expense~~ is included in Selling, general and administrative expenses (“SG&A”) in the Unaudited Condensed Consolidated Statements of ~~Operations and Comprehensive Income.~~Operations.

Note J ~~- Derivative Instrument and Hedging Activity~~

The Firm maintained two swap instruments, Swap A and Swap B, which were designated as cash flow hedges and were used as interest rate risk management tools to mitigate the potential impact of rising interest rates on variable rate debt. The fixed interest rate for each Swap, plus the applicable interest margin under our Amended and Restated Credit Facility, was recorded in Other expense (income), net in the accompanying Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Swap A matured on April 29, 2022 and Swap B was terminated in May 2022. As of September 30, 2023 and 2022, the Firm did not have any outstanding derivative instruments.

~~Table of Contents~~

~~The following table sets forth the activity in the accumulated derivative instrument activity (in thousands):~~
Nine Months Ended September 30,
2023 2022
Accumulated derivative instrument gain, beginning of period $ — $ 823
Net change associated with current period hedging transactions — (823)
Accumulated derivative instrument gain, end of period $ — $ —

~~Note K - Fair Value Measurements~~

Our interest rate swaps were previously measured at fair value using readily observable inputs, which are considered to be Level 2 inputs. In April 2022, Swap A matured and in May 2022, we terminated Swap B. Refer to Note J - “Derivative Instrument and Hedging Activity” for a complete discussion of the interest rate swap derivative instruments.

~~There were no transfers into or out of Level 1, 2 or 3 assets or liabilities during the nine months ended September 30, 2023.~~

~~Note L~~ - Commitments and Contingencies

Employment Agreements

Kforce has employment agreements with certain executives that provide for certain post-employment benefits under certain circumstances. At ~~September 30, 2023,~~March 31, 2024, our liability would be approximately ~~$35.0~~$30.4 million if, following a change in control, all of the executives under contract were terminated without cause by the employer or if the executives resigned for good reason, and ~~$15.7~~$11.5 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 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.

As previously reported, on December 17, 2019, Kforce Inc., et al., was served with a complaint brought in Superior Court of the State of California, Alameda County. Kathleen Wahrer, et al. v. Kforce Inc., et al., Case Number: RG19047269. The former employee purports to bring a representative action on her own behalf and on behalf of other allegedly aggrieved employees pursuant to the California Private Attorneys General Act of 2004, California Labor Code Section 2968, et seq. (“PAGA”) alleging violations of the California Labor Code, §201, et seq. (“Labor Code”). The plaintiff seeks civil penalties, interest, attorneys’ fees, and costs under the Labor Code for alleged failure to: provide and pay for work performed during meal and rest periods; properly calculate and pay all earned minimum and overtime wages; provide compliant wage statements; timely pay wages during employment and upon termination; and reimburse business expenses. On September 18, 2023, the parties reached a preliminary agreement to resolve this matter, which is subject to final approval by the Court, and we have set reserves accordingly. We do not believe that this matter has had or will have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

~~Table of Contents~~

As previously reported, on November 18, 2020, Kforce Inc., et al. was served with a complaint brought in the Superior Court of the State of California, San Diego County, which was subsequently amended on January 21, 2021, to add Kforce Flexible Solutions as a party. Bernardo Buchsbaum, et al. v. Kforce Inc., et al., Case Number: 37-2020-00030994-CU-OE-CTL. The Court entered a written order granting final approval of the parties’ settlement agreement in March 2023, and the case has been dismissed. This matter did not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

As previously reported, on December 24, 2020, a complaint was filed against Kforce Inc., et al. in Superior Court of the State of California, Los Angeles County. Sydney Elliott-Brand, et al. v. Kforce Inc., et al., Case Number: 20STCV49193. On January 7, 2022, the lawsuit was amended to add Bernardo Buchsbaum and Josie Meister as plaintiffs and to add claims under PAGA and the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. The Court entered a written order granting final approval of the parties’ settlement agreement in March 2023, and the matter is considered closed. This matter did not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

EXECUTIVE SUMMARY

The following is an executive summary of what Kforce believes are highlights as of and for the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, which should be considered in the context of the additional discussions herein and in conjunction with the unaudited condensed consolidated financial statements and notes thereto.

•Revenue for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased ~~9.5%~~13.3% to ~~$1.17 billion~~$351.9 million from ~~$1.29 billion~~$406.0 million in the comparable period in ~~2022.~~2023. Revenue decreased ~~7.0%~~11.7% and ~~27.5%~~27.6% for Technology and FA, respectively, primarily driven by the ~~impact of the macro environment on our business and the result of our repositioning efforts for FA.~~ongoing macroeconomic uncertainty.

•Flex revenue for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased ~~8.5% (8.1% on a billing day basis)~~12.8% to ~~$1.14 billion~~$344.7 million from ~~$1.24 billion~~$395.5 million in the comparable period in ~~2022.~~2023. Flex revenue decreased ~~6.2% (5.7% on a billing day basis)~~11.4% for Technology and ~~27.5% (27.1% on a billing day basis)~~27.2% for FA.

•Direct Hire revenue for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased ~~35.3%~~31.5% to ~~$30.1~~$7.2 million from ~~$46.6~~$10.5 million in the comparable period in ~~2022.~~2023.

•Gross profit margin for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased ~~160~~100 basis points to ~~28.0%, compared~~27.1% from 28.1% in the comparable period in 2023, primarily due to ~~September 30, 2022, as a result of~~ a decline in the mix of Direct Hire revenue and Technology Flex gross profit margins.

•Flex gross profit margin for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased 8060 basis points to ~~26.1%, compared to September 30, 2022,~~25.6% from 26.2% in the comparable period in 2023, primarily due to a ~~continued~~ tighter pricing ~~environment and changes in the mix of business.~~environment.

•SG&A expenses as a percentage of revenue for the ~~nine~~three months ended ~~September 30, 2023 remained flat at 22.1%, compared~~March 31, 2024, increased to ~~September 30, 2022.~~22.2% from 22.0% in the comparable period in 2023.

•Net income for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 decreased ~~33.6%~~32.2% to ~~$45.4~~$11.0 million, or ~~$2.31~~$0.58 per share, from ~~$68.4~~$16.2 million, or ~~$3.31~~$0.82 per share, ~~for the nine months ended September 30, 2022.~~

•~~SG&A expenses~~ for the three months ended September 30, 2023 include costs of $8.4 million related to (i) organizational realignment activities and actions taken to reduce our costs to better align with the lower revenue levels and (ii) legal costs for settlements. These costs, net of related tax benefits, impacted our earnings per share in the third quarter by $0.36 per share.March 31, 2023.

•The Firm returned ~~$62.9~~$9.1 million of capital to our shareholders in the form of open market repurchases totaling ~~$42.0~~$2.0 million and quarterly dividends totaling ~~$20.9~~$7.1 million during the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024.

•Cash provided by operating activities was ~~$69.1~~$13.2 million during the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, as compared to ~~$78.1~~$19.1 million for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

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RESULTS OF OPERATIONS

Business Overview

Kforce is a leading domestic provider of technology and finance and accounting talent solutions to innovative and industry-leading companies. ~~Our corporate headquarters is in Tampa, Florida.~~ As of ~~September 30, 2023,~~March 31, 2024, Kforce employed approximately 1,800 associates and had approximately ~~8,600~~8,100 consultants on ~~assignment providing flexible staffing services and solutions to our clients.~~assignment. Kforce serves clients across a diverse set of industries and organizations of all sizes, but we place a particular focus on serving Fortune 500 ~~companies~~ and other large ~~consumers~~companies.

Our results continue to be negatively impacted by the ongoing macroeconomic uncertainty, including inflation and interest rate levels. There are also significant geopolitical concerns including, but not limited to, U.S. political uncertainties (including the upcoming presidential election), ongoing supply chain issues, and the conflicts between Ukraine-Russia and Israel-Hamas (and more recently Israel-Iran), and any escalations thereof. While it has largely been anticipated that the U.S. economy would fall into a recession given the aggressive rate increases by the Federal Reserve (beginning in March 2022) to combat significant inflation, among other indicators, U.S. real gross domestic product (“GDP”) growth continues to be positive.

Based on data published by the U.S. Bureau of ~~our services.~~

~~From an economic standpoint, total~~Labor Statistics and Staffing Industry Analysts (“SIA”), temporary employment figures and trends ~~have historically been~~are important indicators of staffing ~~demand.~~demand from an economic standpoint. The national U.S. unemployment rate ~~was~~increased slightly to 3.8% in ~~September 2023~~March 2024 compared to ~~3.5%~~3.7% in December ~~2022.~~2023. In the latest U.S. staffing industry forecast published by ~~Staffing Industry Analysts (“SIA”)~~SIA in ~~September 2023,~~April 2024, the technology temporary staffing industry and finance and accounting temporary staffing industry are both estimated to decline 3% ~~and 6%~~ in ~~2023, respectively, and~~2024. For 2025, technology temporary staffing is estimated to grow 5% and ~~4% in 2024, respectively.~~

~~There has been heightened uncertainty in the macroeconomic environment,~~finance and ~~concerns that the U.S. economy may fall into a recession, since the Federal Reserve began aggressively raising interest rates in March 2022~~accounting temporary staffing is expected to address persistently high inflation. The U.S. Treasury’s yield curve has also recently been significantly inverted, which, for more than 50 years, has been a very strong indicator of a likely recession. There are also significant geopolitical concerns including, but not limited to, the Ukraine-Russia War, ongoing supply chain issues, U.S. political uncertainties and the Israel-Hamas War.

The uncertainty in the economy has had a negative impact on our results of operations since the second half of 2022. During the third quarter of 2023, Kforce took certain actions to realign our organization and reduce costs to better align with lower revenue levels. We anticipate that these actions will reduce annual operating costs by at least $14.0 million.remain flat year over year.

Operating Results - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

The following table presents certain items in our Unaudited Condensed Consolidated Statements of Operations ~~and Comprehensive Income~~ as a percentage of revenue:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Revenue by segment:
Revenue by segment:
Revenue by segment:	Revenue by segment:
Technology	Technology	90.7	%	89.2	%	90.3	%	87.9	%
Technology
Technology
FA
FA
FA	FA	9.3		10.8		9.7		12.1
Total Revenue	Total Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Total Revenue
Total Revenue
Revenue by type:
Revenue by type:
Revenue by type:	Revenue by type:
Flex	Flex	97.6	%	96.7	%	97.4	%	96.4	%
Flex
Flex
Direct Hire
Direct Hire
Direct Hire	Direct Hire	2.4		3.3		2.6		3.6
Total Revenue	Total Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Total Revenue
Total Revenue
Gross profit
Gross profit
Gross profit	Gross profit	27.7	%	29.0	%	28.0	%	29.6	%
Selling, general and administrative expenses	Selling, general and administrative expenses	23.1	%	21.6	%	22.1	%	22.1	%
Selling, general and administrative expenses
Selling, general and administrative expenses
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	0.3	%	0.2	%	0.3	%	0.2	%
Income from operations	Income from operations	4.3	%	7.2	%	5.6	%	7.2	%
Income from operations
Income from operations
Income from operations, before income taxes
Income from operations, before income taxes
Income from operations, before income taxes	Income from operations, before income taxes	4.2	%	6.9	%	5.5	%	7.2	%

Net income	Net income	2.8	%	5.1	%	3.9	%	5.3	%

Net income

Net income

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Revenue. The following table presents revenue by type for each segment and the percentage change from the prior period (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2023 Increase
(Decrease) 2022 2023 Increase
(Decrease) 2022
Technology
Flex revenue $ 334,253 (12.5) % $ 382,072 $ 1,040,103 (6.2) % $ 1,109,294
Direct Hire revenue 4,036 (52.1) % 8,424 15,055 (41.4) % 25,702
Total Technology revenue $ 338,289 (13.4) % $ 390,496 $ 1,055,158 (7.0) % $ 1,134,996
FA
Flex revenue $ 29,908 (26.9) % $ 40,896 $ 98,060 (27.5) % $ 135,239
Direct Hire revenue 4,925 (20.9) % 6,228 15,091 (27.7) % 20,868
Total FA revenue $ 34,833 (26.1) % $ 47,124 $ 113,151 (27.5) % $ 156,107
Total Flex revenue $ 364,161 (13.9) % $ 422,968 $ 1,138,163 (8.5) % $ 1,244,533
Total Direct Hire revenue 8,961 (38.8) % 14,652 30,146 (35.3) % 46,570
Total Revenue $ 373,122 (14.7) % $ 437,620 $ 1,168,309 (9.5) % $ 1,291,103

Our quarterly operating results are affected by the number of billing days in a quarter. The following table presents the year-over-year changes in Flex revenue, on a billing day basis, for the last five quarters:


	Three Months Ended March 31,
	Three Months Ended March 31,
	Three Months Ended March 31,
	2024
	2024
	2024
Technology
Technology
Technology
Flex revenue
Flex revenue
Flex revenue
Direct Hire revenue
Direct Hire revenue
Direct Hire revenue
Total Technology revenue
Total Technology revenue
Total Technology revenue
FA
FA
FA
Flex revenue
Flex revenue
Flex revenue
Direct Hire revenue
Direct Hire revenue
Direct Hire revenue
Total FA revenue
Total FA revenue
Total FA revenue
		Changes in Year-Over-Year Flex Revenue
Total Flex revenue
		(Per Billing Day)
Total Flex revenue
		Q3 2023		Q2 2023		Q1 2023		Q4 2022		Q3 2022
Billing Days		63		64		64		61		64
Technology		(11.1)	%	(7.8)	%	2.2	%	8.5	%	15.7	%
FA		(25.7)	%	(27.3)	%	(28.2)	%	(28.8)	%	(30.7)	%
Total Flex Revenue		(12.5)	%	(9.8)	%	(1.6)	%	3.1	%	8.7	%
Total Flex revenue
Total Direct Hire revenue
Total Direct Hire revenue
Total Direct Hire revenue
Total Revenue
Total Revenue
Total Revenue

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 and billable to our clients.

Technology Flex revenue ~~in our Technology business~~ decreased during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 by ~~12.5% (11.1% on a billing day basis) and 6.2% (5.7% on a billing day basis)~~11.4%, ~~respectively,~~ as compared to the same ~~periods~~period in ~~2022,~~2023, primarily ~~due to~~driven by a decrease in consultants on ~~assignment, which was partially offset by higher average bill rates. We~~assignment. Following a slower than expected start to the first quarter of 2024, our leading indicators began to ~~experience a softening~~improve in late January 2024, which led to consistent growth in the ~~demand environment beginning in the second half~~number of 2022 as our clients began to exercise restraint in initiating new technology initiatives against the backdrop of the current macroeconomic environment. Our average bill rates remained strong and increased 2.3% and 3.4% for the three and nine months ended September 30, 2023, respectively, as compared to the same periods in 2022. In the fourth quarter,consultants on assignment throughout March 2024. As a result, we expect revenue in our Technology Flex business to ~~remain stable sequentially and to decline~~increase in the low ~~double~~single digits ~~given~~sequentially and decrease in the ~~trends that we have experienced in 2023 on a year-to-date basis as well as difficult comparisons on a year-over-year basis.~~mid single digits year-over-year.

Our FA segment experienced a decrease in Flex revenue of ~~26.9% (25.7% on a billing day basis) and 27.5% (27.1% on a billing day basis)~~27.2% during the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, primarily driven by ~~the repositioning efforts of our business towards more high-skilled roles and the continued uncertainty~~a decrease in ~~the macroeconomic environment. We have seen solid indicators of success in our repositioning efforts as our~~consultants on assignment. Our average bill rates ~~continued to improve~~improved by ~~1.4% and 6.9%~~6.2% for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022 and our Flex margins have improved significantly as well.~~2023. In the ~~fourth~~second quarter, we expect ~~a sequential decline in~~ FA Flex ~~revenue~~revenues to decrease in the ~~mid-single digits.~~

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high single digits sequentially and in the mid 20% range year-over-year.

The following table presents the key drivers for the change in Flex revenue by segment over the prior period (in thousands):


		Three Months Ended				Nine Months Ended
		September 30, 2023 vs. September 30, 2022				September 30, 2023 vs. September 30, 2022
		Technology		FA		Technology		FA
		Three Months Ended
		Three Months Ended
		Three Months Ended
		March 31, 2024 vs. March 31, 2023
		March 31, 2024 vs. March 31, 2023
		March 31, 2024 vs. March 31, 2023
Key Drivers - Increase (Decrease)
Key Drivers - Increase (Decrease)
Key Drivers - Increase (Decrease)	Key Drivers - Increase (Decrease)
Volume - hours billed	Volume - hours billed	$	(54,566)	$	(11,385)	$	(101,682)	$	(43,474)
Volume - hours billed
Volume - hours billed
Bill rate
Bill rate
Bill rate	Bill rate	7,385		407		34,176		6,311
Billable expenses	Billable expenses	(638)		(10)		(1,685)		(16)
Billable expenses
Billable expenses
Total change in Flex revenue	Total change in Flex revenue	$	(47,819)	$	(10,988)	$	(69,191)	$	(37,179)
Total change in Flex revenue
Total change in Flex revenue

The following table presents total Flex hours billed by segment and percentage change over the prior period (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023	Increase (Decrease)		2022	2023	Increase (Decrease)		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Technology
Technology
Technology	Technology	3,690	(14.3)	%	4,308	11,550	(9.2)	%	12,722
FA	FA	589	(27.8)	%	816	1,970	(32.2)	%	2,904
FA
FA
Total Flex hours billed	Total Flex hours billed	4,279	(16.5)	%	5,124	13,520	(13.5)	%	15,626
Total Flex hours billed
Total Flex hours billed

Direct Hire revenue decreased ~~38.8% and 35.3%~~31.5% during the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, which was primarily driven by a decrease in ~~placements stemming from the uncertainties in the macroeconomic environment.~~placements.

The total gross profit percentage for ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 decreased ~~130 and 160~~100 basis points, ~~respectively,~~ as compared to the same ~~periods~~period in ~~2022,~~2023, primarily due to a decline in the mix of Direct Hire revenue and Technology Flex gross profit margins.

Flex gross profit percentage (Flex gross profit as a percentage of Flex revenue) provides management with helpful insights 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 by segment and percentage change over the prior period:


		Three Months Ended September 30,						Nine Months Ended September 30,
		2023		Increase (Decrease)		2022		2023		Increase (Decrease)		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Technology
Technology
Technology	Technology	25.5	%	(1.9)	%	26.0	%	25.8	%	(2.6)	%	26.5	%
FA	FA	30.5	%	(1.3)	%	30.9	%	29.9	%	(0.3)	%	30.0	%
FA
FA
Total Flex gross profit percentage	Total Flex gross profit percentage	25.9	%	(2.3)	%	26.5	%	26.1	%	(3.0)	%	26.9	%
Total Flex gross profit percentage
Total Flex gross profit percentage

Our Flex gross profit percentage decreased 60 ~~and 80~~ basis points for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022.~~2023.

•Technology Flex gross profit ~~margin~~margins decreased ~~50 and 70~~60 basis points for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, primarily due to a tighter pricing environment. On a sequential basis, Technology Flex gross profit margins declined 10 basis points as a result of seasonal payroll tax increases, which was partially offset by lower healthcare costs. We expect Technology Flex gross profit margins for the ~~fourth~~second quarter of 2024 to ~~be relatively stable~~increase sequentially ordue to ~~be slightly down as a result of typical~~lower seasonal ~~impacts.~~payroll taxes.

•FA Flex gross profit margins ~~decreased~~increased ~~40 and 10~~20 basis points for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022.~~2023. The ~~decrease~~increase for the three months ended March 31, 2024 is primarily due to lower healthcare costs, which were partially offset by a ~~change in our client portfolio mix.~~tighter pricing environment. We expect FA Flex gross profit margins for the second quarter of 2024 to remain stable sequentially.

SG&A Expenses. Total compensation, commissions, payroll taxes and benefit costs as a percentage of SG&A expenses represented ~~83.8% and~~83.9% for the three months ended March 31, 2024, as compared to 84.6% for the ~~three and nine months ended September 30, 2023, respectively, as compared to 85.3% and 85.1% for the~~ comparable ~~periods~~period in ~~2022, respectively.~~2023. Commissions and 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.

SG&A expenses as a percentage of revenue increased ~~150~~20 basis points for the three months ended ~~September 30, 2023,~~March 31, 2024, as compared to the same period in ~~2022, which was primarily related~~2023. While we have gained leverage in areas of variable compensation due to ~~$8.4 million of costs associated with~~the lower revenue and gross profit levels and through our organizational realignment activities in 2023, as well as other actions taken to ~~reduce~~align our ~~structural~~ costs ~~and legal costs for settlements.~~to the lower revenue levels, we are experiencing a degree of SG&A deleverage as ~~a percentage of revenue remained flat~~we look to retain our most productive and tenured associates to best position the Firm for an improved demand environment in the ~~nine~~future. We also experienced an increase in technology-related expenditures during the three months ended ~~September 30, 2023, as compared to the same period in 2022, primarily as a result of a decrease in performance-based compensation given lower revenues, offset by the aforementioned items.~~March 31, 2024.

~~Despite the uncertainties in the macroeconomic environment, we are continuing~~We continue to prioritize investments in our strategic initiatives, including our integrated strategy, nearshore and ~~multi-year efforts~~offshore delivery capabilities and our back-office transformation program. We are continuing to ~~transform our back office, but are exercising tighter~~exercise tight discretionary spend control ~~taking certain~~and take appropriate actions to ~~align our costs with the lower revenue levels and generating other~~generate cost ~~efficiencies, where appropriate.~~

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efficiencies.

~~During the three and nine months ended September 30, 2023, our proportionate share of losses related to our equity method investment was nil and~~ $0.8 million, respectively. During the three and nine months ended September 30, 2022, our proportionate share of losses related to our equity method investment was $0.9 million and $2.7 million, respectively.million. On February 23, 2023, Kforce sold its 50% noncontrolling interest in ~~WorkLLama~~our joint venture to an unaffiliated third party. ~~Refer to Note A - “Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements, included in Item 1 of this report, for more details.~~

During the nine months ended September 30, 2022, Other expense (income), net also includes a $4.1 million gain recognized as a result of the termination of an interest rate swap agreement in May 2022. Refer to Note J - “Derivative Instrument and Hedging Activity” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data, for a complete discussion of the interest rate swap derivative instruments.

Non-GAAP Financial Measures

Revenue Growth Rates. “Revenue growth rates,” a non-GAAP financial measure, is defined by Kforce as year-over-year revenue growth after removing the impacts on reported revenues from the changes in the number of billing days. Management believes this data is particularly useful because it aids in evaluating revenue trends over time. Billing days impact is calculated by dividing each comparative period’s reported revenues by the number of billing days for that period to arrive at a per billing day amount. Same billing day growth rates are then calculated based on the per billing day amounts. Management calculates the number of billing days for each reporting period based on the number of holidays and business days in the quarter.



	Year-Over-Year Growth Rates (As Reported)
	2024	2023
	Q1	Q4	Q3	Q2	Q1

Technology Flex	(11.4)%	(11.1)%	(12.5)%	(7.8)%	2.2%
FA Flex	(27.2)%	(28.0)%	(26.9)%	(27.3)%	(28.2)%
Total Flex revenue	(12.8)%	(12.8)%	(13.9)%	(9.8)%	(1.6)%

	Year-Over-Year Growth Rates (As Adjusted)
	2024	2023
	Q1	Q4	Q3	Q2	Q1
Billing Days	64	61	63	64	64
Technology Flex	(11.4)%	(11.1)%	(11.1)%	(7.8)%	2.2%
FA Flex	(27.2)%	(28.0)%	(25.7)%	(27.3)%	(28.2)%
Total Flex revenue	(12.8)%	(12.8)%	(12.5)%	(9.8)%	(1.6)%


	Three Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	13,169	$	19,056
Capital expenditures	(1,875)		(1,872)
Free cash flow	11,294		17,184
Change in debt	(800)		(3,300)
Repurchases of common stock	(2,848)		(11,126)
Cash dividends	(7,128)		(7,003)

Premiums paid for company-owned life insurance	(529)		—
Proceeds from the sale of our joint venture interest	—		5,059

Note receivable issued to our joint venture	—		(750)
Other	(2)		(14)
Change in cash and cash equivalents	$	(13)	$	50

In addition, although we excluded ~~amortization of~~ stock-based compensation expense because it is a non-cash expense, we expect to continue to incur stock-based compensation expense 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.

LIQUIDITY AND CAPITAL RESOURCES

To meet our capital and liquidity requirements, we primarily rely on our operating cash flows and borrowings under our credit facility. At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we had ~~$21.4~~$40.8 million and ~~$25.6~~$41.6 million outstanding under our Amended and Restated Credit Facility, respectively, and the borrowing availability was ~~$177.4~~$158.2 million and ~~$173.1~~$157.2 million, respectively, subject to certain covenants. At March 31, 2024, Kforce had $140.1 million in working capital compared to $141.5 million at December 31, 2023.

We are principally focused on generating positive cash flows from operating activities, investing in our business to sustain our long-term growth and profitability objectives, and returning capital to our shareholders through our quarterly dividends and common stock repurchase program.

Cash provided by operating activities was ~~$69.1~~$13.2 million during the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, as compared to ~~$78.1~~$19.1 million during the ~~nine~~three months ended ~~September 30, 2022.~~March 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 in cash provided by operating activities was primarily driven by lower profitability levels and collections on trade receivables, partially offset by the timing of payments.

Cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 was ~~$2.5~~$2.4 million and primarily consisted of cash used for capital expenditures of ~~$6.1~~$1.9 million. Cash provided by investing activities was $2.4 million ~~partially offset by~~during the three months ended March 31, 2023, and primarily consisted of the proceeds from the sale of our joint venture interest of $5.1 ~~million. Cash used in investing activities was $9.7~~ million, ~~during the nine months ended September 30, 2022, and primarily consisted of~~partially offset by cash used for capital expenditures ~~and contributions to our joint venture.~~of $1.9 million.

Cash used in financing activities was ~~$66.5~~$10.8 million during the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, compared to ~~$160.3~~$21.4 million during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. The change was primarily driven by ~~the repayment~~a decrease in repurchases of ~~$100.0 million outstanding on our Amended and Restated Credit Facility in the prior period.~~common stock.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ Kforce declared and paid quarterly dividends of ~~$20.9~~$7.1 million ($~~1.08~~0.38 per share) and ~~$18.2~~$7.0 million ($~~0.90~~0.36 per share), respectively, which represents a ~~20%~~6% increase on a per share basis. While the Firm’s Board of Directors (the “Board”) has declared and paid quarterly dividends since the fourth quarter of 2014, and intends to in the foreseeable future, dividends will be subject to determination by our 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, and give us the flexibility to continue returning significant capital to our shareholders. However, a material deterioration in the economic 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 these 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.

On October 20, 2021, the Firm entered into the 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 ~~September 30, 2023, $21.4~~March 31, 2024, $40.8 million was outstanding and ~~$177.4~~$158.2 million was available on our Amended and Restated Credit Facility, and as of December 31, ~~2022, $25.6~~2023, $41.6 million was outstanding. As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all of our financial covenants contained in the Amended and Restated Credit Facility as described in ~~the 2022~~our 2023 Annual Report on Form 10-K, and currently expect that we will be able to maintain compliance with these covenants.

In June 2023, Kforce entered into the First Amendment, 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 the SOFR Rate. Refer to Note G - “Credit Facility” in the Notes to Unaudited Condensed Consolidated Financial Statements, included in this report, for a complete discussion of our Amended and Restated Credit Facility.

In April 2017 and March 2020, Kforce entered into two forward-starting interest rate swap agreements to mitigate the risk of rising interest rates. As of September 30, 2023 and 2022, the Firm did not have any outstanding interest rate swap derivative instruments. Refer to Note J - “Derivative Instrument and Hedging Activity” in the Notes to Unaudited Condensed Consolidated Financial Statements, included in this report, for a complete discussion of our interest rate swaps.

In February ~~2023,~~2024, the Board approved an increase in our stock repurchase authorization, bringing the total authorization to $100.0 million. During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, Kforce repurchased approximately ~~722~~29 thousand shares of common stock on the open market at a total cost of approximately ~~$42.0~~$2.0 million, and ~~$66.8~~$98.0 million remained available for further repurchases under the Board-authorized common stock repurchase program at ~~September 30, 2023.~~March 31, 2024.

Contractual Obligations and Commitments

Other than the changes described below and elsewhere in this Quarterly Report, there have been no material changes during the period covered by this report on Form 10-Q to our contractual obligations previously disclosed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2022~~2023 Annual Report on Form 10-K.

Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of September 30, 2023, the value of our non-cancellable unconditional purchase obligations was $33.1 million.

CRITICAL ACCOUNTING ESTIMATES

Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our unaudited condensed 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. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, estimates, assumptions and judgments to ensure that our unaudited condensed 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.

Refer to Note A1 - “Summary of Significant Accounting Policies” in the Notes to ~~Unaudited Condensed~~the Consolidated Financial Statements, included in Item 1.8. Financial Statements ~~of this report~~and Supplementary Data in our 2023 Annual Report on Form 10-K, for a discussion of new accounting standards.

With respect to our quantitative and qualitative disclosures about market risk, there have been no material changes to the information included in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our ~~2022~~2023 Annual Report on Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2023,~~March 31, 2024, we carried out an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act (the “Evaluation”), under the supervision and with the participation of our CEO and CFO, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”). Based on the Evaluation, our CEO and CFO concluded that the design and operation of our Disclosure Controls were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

Management has evaluated, with the participation of our CEO and CFO, whether any changes in our internal control over financial reporting that occurred during our last fiscal quarter have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, management has concluded that no such changes have occurred.

Inherent Limitations of Internal Control Over Financial Reporting

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

CEO and CFO Certifications

Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section contains the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are involved in legal proceedings, claims, and administrative matters that arise in the ordinary course of ~~business.~~ ~~For further information regarding legal proceedings, refer~~business, and we have made accruals with respect to ~~Note L - "Commitments and Contingencies"~~certain of these matters, where appropriate, that are reflected in our consolidated financial statements but are not, individually or in the ~~Notes to Unaudited Condensed Consolidated Financial Statements in~~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 ~~section entitled "Litigation," included in Item 1. Financial Statements~~amount of ~~this report. While the ultimate~~loss cannot be reasonably estimated. The outcome of ~~these legal proceedings cannot be determined,~~any litigation is inherently uncertain, but we ~~currently~~ do not expect that these ~~matters,~~proceedings and claims, individually or in the aggregate, will have a material effect on our consolidated financial ~~position.~~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.

ITEM 1A. RISK FACTORS.

There have been no material changes in the risk factors previously disclosed in our ~~2022~~2023 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Purchases of Equity Securities by the Issuer

Purchases of common stock under the Board authorized stock repurchase plan (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 ~~September 30, 2023:~~March 31, 2024:
Period Total Number of
Shares Purchased
(1) (2) Average Price Paid
per Share
(3) Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the
Plans or Programs (3)(4)
July 1, 2023 to July 31, 2023 4,806 $ 63.45 — $ 84,852,288
August 1, 2023 to August 31, 2023 82,250 $ 61.86 80,807 $ 79,851,735
September 1, 2023 to September 30, 2023 218,945 $ 59.51 218,945 $ 66,822,516
Total 306,001 $ 60.20 299,752 $ 66,822,516


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1, 2024 to January 31, 2024	—	$	—	—	$	41,731,977
February 1, 2024 to February 29, 2024	1,854	$	69.18	—	$	100,000,000
March 1, 2024 to March 31, 2024	28,640	$	69.84	28,640	$	97,999,764
Total	30,494	$	69.80	28,640	$	97,999,764

(1) Includes ~~4,806~~1,854 shares received upon vesting of restricted stock to satisfy tax withholding requirements for the period ~~July~~February 1, ~~2023~~2024 to ~~July 31, 2023.~~February 29, 2024.

(2) ~~Includes 1,443 shares received upon vesting of restricted stock to satisfy tax withholding requirements for the period August 1, 2023 to August 31, 2023.~~

(3) The IRA imposed a 1% nondeductible excise tax on the net value of certain open market stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise tax, as applicable. Refer to Note A - “Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements, included in this report, for a complete discussion of the new excise tax related to the IRA.

~~(4)~~ In February ~~2023,~~2024, the Board approved a change in our stock repurchase authorization increasing the available authorization to $100.0 million.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

ITEM 4. MINE SAFETY DISCLOSURES.

ITEM 5. OTHER INFORMATION.

Insider Trading Arrangements

During the three months ended ~~September 30, 2023,~~March 31, 2024, none of the Company’s officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

ITEM 6. EXHIBITS.


Exhibit Number			Description
3.1			Amended and Restated Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-91738) filed with the SEC on April 28, 1995.
3.1a			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1b			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1c			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended.
3.1d			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 17, 2000.
3.1e			Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 29, 2002.
3.2			Amended & Restated Bylaws, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on April 29, 2013.

~~10.1~~			~~Form of Employee Restricted Stock Award Agreement under the 2023 Stock Incentive Plan filed herewith.~~
31.1			Certification by the Chief Executive Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification by the Chief Financial Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification by the Chief Executive Officer of Kforce Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification by the Chief Financial Officer of Kforce Inc. pursuant to 18 U.S.C. Section 2350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1			The following material from this Quarterly Report on Form 10-Q of Kforce Inc. for the period ended ~~September 30, 2023,~~March 31, 2024, formatted in XBRL Part I, Item 1 of this Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of ~~Operations and Comprehensive Income;~~Operations; (ii) Unaudited Condensed Consolidated Balance Sheets; (iii) Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity; (iv) Unaudited Condensed Consolidated Statements of Cash Flows; and (v) related notes to these financial statements.
104			Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KFORCE INC.

Date:

~~November~~May 1, ~~2023~~2024

By:

/s/ JEFFREY B. HACKMAN

Jeffrey B. Hackman

Chief Financial Officer

(Principal Financial and ~~Chief~~ Accounting Officer)


Florida						59-3264661
State or other jurisdiction of incorporation or organization						IRS Employer Identification No.


1150 Assembly Drive, Suite 500, Tampa, Florida						33607
Address of principal executive offices						Zip Code


PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1712
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2520
Item 4.	Controls and Procedures.	2520
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings.	2621
Item 1A.	Risk Factors.	2621
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2621
Item 3.	Defaults Upon Senior Securities.	2621
Item 4.	Mine Safety Disclosures.	2621
Item 5.	Other Information.	2621
Item 6.	Exhibits.	2722
SIGNATURES		2823


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Revenue
Revenue
Revenue
Direct costs
Direct costs
Direct costs
Gross profit
Gross profit
Gross profit
Selling, general and administrative expenses
Selling, general and administrative expenses
Selling, general and administrative expenses
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
Income from operations
Income from operations
Income from operations
Other expense, net
Other expense, net
Other expense, net
Income from operations, before income taxes
Income from operations, before income taxes
Income from operations, before income taxes
Income tax expense
Income tax expense
Income tax expense
Net income
Net income
Net income

		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Revenue		$	373,122	$	437,620	$	1,168,309	$	1,291,103
Direct costs		269,661		310,950		840,606		909,475
Gross profit		103,461		126,670		327,703		381,628
Selling, general and administrative expenses		86,226		94,306		258,558		285,502
Depreciation and amortization		1,202		1,045		3,776		3,214
Income from operations		16,033		31,319		65,369		92,912
Other expense (income), net		181		906		1,539		(333)
Income from operations, before income taxes		15,852		30,413		63,830		93,245
Income tax expense		5,277		8,151		18,471		24,886
Net income		10,575		22,262		45,359		68,359
Other comprehensive loss, net of tax:
Change in fair value of interest rate swaps		—		—		—		(615)
Comprehensive income		$	10,575	$	22,262	$	45,359	$	67,744

Earnings per share – basic

Earnings per share – basic

Earnings per share – basic	Earnings per share – basic	$	0.55	$	1.11	$	2.35	$	3.38
Earnings per share – diluted	Earnings per share – diluted	$	0.54	$	1.09	$	2.31	$	3.31
Earnings per share – diluted
Earnings per share – diluted

Weighted average shares outstanding – basic

Weighted average shares outstanding – basic

Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	19,158		20,022		19,317		20,206
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	19,518		20,450		19,621		20,634
Weighted average shares outstanding – diluted
Weighted average shares outstanding – diluted


		September 30, 2023		December 31, 2022
	March 31, 2024						March 31, 2024	December 31, 2023
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	122	$	121
Trade receivables, net of allowances of $1,454 and $1,575, respectively		248,291		269,496
Cash and cash equivalents
Cash and cash equivalents
Trade receivables, net of allowances of $1,670 and $1,643, respectively

Prepaid expenses and other current assets
Prepaid expenses and other current assets
Prepaid expenses and other current assets	Prepaid expenses and other current assets	9,498		8,143
Total current assets	Total current assets	257,911		277,760
Fixed assets, net	Fixed assets, net	9,489		8,647
Other assets, net	Other assets, net	71,779		75,771
Deferred tax assets, net	Deferred tax assets, net	5,543		4,786
Goodwill	Goodwill	25,040		25,040
Total assets	Total assets	$	369,762	$	392,004
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable and other accrued liabilities
Accounts payable and other accrued liabilities
Accounts payable and other accrued liabilities	Accounts payable and other accrued liabilities	$	67,253	$	72,792
Accrued payroll costs	Accrued payroll costs	42,740		48,369
Current portion of operating lease liabilities	Current portion of operating lease liabilities	3,850		4,576
Income taxes payable	Income taxes payable	5,429		5,696
Total current liabilities	Total current liabilities	119,272		131,433
Long-term debt – credit facility	Long-term debt – credit facility	21,400		25,600

Other long-term liabilities	Other long-term liabilities	50,138		52,773
Other long-term liabilities
Other long-term liabilities
Total liabilities	Total liabilities	190,810		209,806
Commitments and contingencies (Note L)
Commitments and contingencies (Note J)						Commitments and contingencies (Note J)
Stockholders’ equity:	Stockholders’ equity:
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding	Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding	—		—
Common stock, $0.01 par value; 250,000 shares authorized, 73,224 and 73,242 issued, respectively		732		732
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding
Preferred stock, $0.01 par value; 15,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value; 250,000 shares authorized, 73,455 and 73,462 issued, respectively
Additional paid-in capital	Additional paid-in capital	523,669		507,734
Accumulated other comprehensive income		—		6
Retained earnings	Retained earnings	516,540		492,764
Treasury stock, at cost; 53,464 and 52,744 shares, respectively		(861,989)		(819,038)
Treasury stock, at cost; 53,968 and 53,941 shares, respectively
Total stockholders’ equity	Total stockholders’ equity	178,952		182,198
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	369,762	$	392,004


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




Allowance for credit losses, January 1, ~~2023~~2024	$	~~1,006~~1,106
Current period provision	~~560~~ (40)
Write-offs charged against the allowance, net of recoveries of amounts previously written off	~~(708)~~(61)

Allowance for credit losses, ~~September 30, 2023~~March 31, 2024	$	~~858~~1,005


		September 30, 2023		December 31, 2022
Deferred compensation plan		$	37,550	$	36,390
	March 31, 2024					March 31, 2024	December 31, 2023
Deferred compensation payable
Operating lease liabilities	Operating lease liabilities	12,560		16,380
Other long-term liabilities	Other long-term liabilities	28		3
Total Other long-term liabilities	Total Other long-term liabilities	$	50,138	$	52,773


		2023		% of Revenue		2022		% of Revenue
Three Months Ended September 30,
	2024															2024				% of Revenue						2023				% of Revenue
Three Months Ended March 31,
Compensation, commissions, payroll taxes and benefits costs
Compensation, commissions, payroll taxes and benefits costs
Compensation, commissions, payroll taxes and benefits costs	Compensation, commissions, payroll taxes and benefits costs	$	72,232	19.4	%	$	80,425	18.4	%	$	65,609			18.6			18.6	%			$	75,615			18.6		18.6	%
Other (1)	Other (1)	13,994		3.7	%	13,881		3.2	%	Other (1)		12,581			3.6			3.6	%				13,724			3.4		3.4	%
Total SG&A	Total SG&A	$	86,226	23.1	%	$	94,306	21.6	%	Total SG&A		$	78,190		22.2			22.2	%				$	89,339		22.0		22.0	%
Nine Months Ended September 30,
Compensation, commissions, payroll taxes and benefits costs		$	218,850	18.7	%	$	243,017	18.8	%
Other (1)		39,708		3.4	%	42,485		3.3	%
Total SG&A		$	258,558	22.1	%	$	285,502	22.1	%


Period	Total Number of Shares Purchased (1) (2)	Average Price Paid per Share (3)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3)(4)
July 1, 2023 to July 31, 2023	4,806	$	63.45	—	$	84,852,288
August 1, 2023 to August 31, 2023	82,250	$	61.86	80,807	$	79,851,735
September 1, 2023 to September 30, 2023	218,945	$	59.51	218,945	$	66,822,516
Total	306,001	$	60.20	299,752	$	66,822,516