Kforce, Inc.

good day and thank you for standing by welcome to the k4s q3 2021 earnings conference call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you will need to press star 1 on your telephone if you require any further assistance please press star 0 i would now like to hand the conference over to Mr. David Dunkel, Chairman and Chief Executive Officer. Please go ahead.

Good afternoon. I would like to remind you that this call may contain certain statements that are forward looking. These statements are based upon current assumptions and expectations and are subject to risks and uncertainties. Actual results may vary materially from the factors listed in K-Force's public filings in other reports and filings with the Securities and Exchange Commission. We cannot undertake any duty to update any forward-looking statements. You can find additional information about this quarter's results in our earnings release and our SEC filings. In addition, we have published our prepared remarks within the investor relations portion of our website. We are very pleased that revenue and earnings per share both meaningfully exceeded our range of guidance for the third quarter, driven again by the strong performance of our technology business. The nearly 30% year-over-year growth rate in our technology business continues to be among the best in class in our industry. The exceptional growth rate in Q3 of this year follows on market-leading performance in 2020, where we saw only minimal revenue declines in technology during the height of the pandemic. Strikingly, technology revenues are up nearly 24% from the Q3 2019 levels. It is clear to us that we have been successful at continuing to capture meaningful market share. The foundation for our current performance was built during the multi-year strategic journey that began more than 10 years ago to focus our business on providing high-end domestic technology services to innovative and industry-leading companies. While this journey has neither been easy nor perfect, we believe our strategic actions are the foundation of our success. The driver to our strategy was the recognition of the strategic role of technology we play in all functional areas within an enterprise, which has played out to an even greater degree than we had expected. There is simply no other market we would want to be focused in other than the domestic technology market, as it has, in our view, the greatest prospects for sustained profitable revenue growth. Concurrently, we continue to make progress in our objective of migrating our FA business towards higher-end skill sets that are more synergistic with our technology offerings. With our revenues now concentrated approximately 85% in technology, coupled with a complementary finance and accounting footprint, we are ideally positioned. During the lowest point of the COVID-19 crisis, we identified several opportunities to assist our clients in providing resources to help key areas of relief efforts associated with the pandemic. The revenue streams from these projects provided us an important bridge to navigate through the pandemic. Not only did they allow us to retain the existing infrastructure in our business, but they provided an opportunity to increase investments that we believe will further enable sustained above-market growth in the future. Our objective was to replace these non-strategic revenue streams as they declined with a much higher-quality technology revenue stream. Evident in our results is that we have executed consistent with our expectations, and I am grateful for our team's efforts in supporting these critical COVID initiatives while also driving considerable success in our technology business. As we stated on the second quarter earnings call, we have not further pursued these opportunities. We continue to make progress in positioning our firm to have a more flexible hybrid work environment through our K-Force reimagined initiative. Joe Liberatore, President, will elaborate further in his remarks. Our business continues to generate significant operating cash flows, and we were again active in repurchasing stock during the third quarter. The strength in our balance sheet and availability under our new 200 million credit facility allows us to be opportunistic with respect to returning additional capital to our shareholders while continuing to evaluate potential acquisitions. However, our belief is that a focus on organic growth provides us the best opportunity for long-term success. Accordingly, we will continue to apply very stringent cultural and financial criteria to any potential transaction as we are sensitive to the distraction an acquisition could create. Given our confidence in our future growth prospects, we expect to remain active in repurchasing our shares at current stock price levels. As we look ahead, we are incredibly excited about our strategic position. I am so proud in particular of our highly tenured, strong management team and dedicated associates. We have the right team in place to capture additional market share within what we believe will be a continued strong demand environment for our services. It's our belief that the pandemic has exponentially elevated the imperative for companies to rapidly digitize their businesses, transform business models, and drive productivity gains through technology investments. I will now turn the call over to Joe Ligatore, who will give greater insights into our performance, recent operating trends, and other insights into our operating environment. Dave Kelly, CFO, will then give greater detail on our financial results and position, as well as our financial expectations and guidance for the fourth quarter. Joe?

Thank you, Dave, and thanks to all of you for your interest in K-Force. We continue to see unprecedented demand across our business and accordingly are experiencing record levels of revenue growth. Our exceptional overall performance continues to be propelled by the strength of our $1.3 billion high-end technology business, which grew in excess of 8% sequentially and nearly 30% organically year-over-year in the third quarter. The operating trends we are experiencing in our technology business have been impressive. Its front-end KPIs and new assignment starts have been extremely strong, and the duration of our assignments continue to increase as well. Encouragingly, our new assignment starts were stronger in September versus the full quarter and have strengthened further thus far into October. Consultants on assignment increased 7% from the end of the second quarter to the end of the third quarter and has grown nearly 28% over the third quarter of 2020. We are seeing strength across virtually every industry we serve. We believe these trends are great indicators of our ability to continue delivering sequential billing day growth and sustaining our elevated year-over-year growth rates in the fourth quarter on an increasingly difficult comp. While the clear driving factor to our technology growth is the number of consultants on assignment, we continue to see increases in our average bill rate, which grew 1.2% sequentially and 2.4% off of already elevated prior year levels to approximately $82 per hour. There has been much discussion and headlines surrounding the recent talent shortage in other staffing and markets, principally in lower-skill areas that K-Force does not support, as well as wage pressure at a more macro level. The reality for us is that we've been navigating supply-constrained environments for over a decade in our technology business. So this is not new to us, and we believe that we are well-equipped to address these challenges and to believe, over time, wage pressures serve as a tailwind to our business through future bill rate increases. We continue to see the acceleration of critical technology initiatives within our clients in areas such as cloud, mobile, data analytics, project and program management, with a strong focus geared towards improving the consumer's digital experience. The investments that we've made in front-end technology and process over the last several years have matured our capability to efficiently provide clients with highly diverse top talent at scale in a now boundaryless environment across the U.S. A significant accelerant to our overall technology growth has been the investments we've made and will continue to make in our managed team and solutions capabilities to meet the evolving needs of our clients. We have continued to add highly talented, experienced resources to our team and are investing to arm them with state-of-the-art tools and technology. Data points that support the success we are experiencing in this higher value capability are an increase in average bill rates of 11% from 2018 levels and a 25% increase in average assignment length from approximately 8 to 10 months over the same period. We feel extremely confident in the positioning of our technology business and the ability to continue expanding our market share beyond traditional areas of technology staffing. Given the momentum that we've carried into the fourth quarter, we expect revenues in our technology business may grow approximately 29% on a year-over-year basis, which would represent an excess of 30% growth over fourth quarter of 2019. We are clearly continuing to take market share. Our FASlex revenues were down 41.3% year-over-year in the third quarter, which included an expected 44 million year-over-year decline from our supportive initiatives tied to the economic fallout and the recovery efforts from the COVID-19 pandemic. These revenue streams were approximately $8 million in the third quarter, and we expect them to further decline to approximately $4 million in the fourth quarter. We made a conscious decision to not pursue business beyond our existing commitments once it became clear the recovery was well underway, and this has allowed us to focus our efforts on our forward-looking FA strategy. Our non-COVID FAA Flex business declined 1% sequentially, but grew 4% year over year. As we mentioned previously, we are transitioning our FAA business towards a more highly skilled assignment, such as analytics and decision support that are less susceptible to technological change and automation and more synergistic with our technology footprint. We will continue to support lower-end skill sets for certain clients where we have longstanding relationships that are strategically important to K-Force's overall ongoing success. We have seen natural assignment ends of lower-skilled FAA roles in 2021, where strategic client relationships do not exist, and expect that to continue into the fourth quarter. We expect our non-COVID FAA revenues to be down in the mid-single digits on a year-over-year basis, and when combined with the expected COVID revenue decline, total FAA selects may be down over 30% year-over-year in the fourth quarter. Direct higher revenues in the third quarter increased nearly 11% sequentially and approximately 55% year-over-year as the macroeconomic environment has continued to improve. While this is not an area of heavy investment for us, it remains an important part of our portfolio to meet our client needs. We expect that direct higher revenues may see a typical seasonal sequential decline, but they increase over 30% year-over-year in the fourth quarter as clients continue to demonstrate a high degree of confidence in the recovery through the addition of full-time staff. We are continuing to invest in strategic initiative and technologies that best position our firm for long-term, sustainable, profitable growth. From a technology perspective, our fully integrated CRM and TRM systems are cloud-based, and seamlessly integrate with other Microsoft offerings. Investments to further develop these tools along with enhancing capabilities in other areas are continuing. We believe great opportunities still exist to further enhance productivity, which will drive future profitable growth. With great anticipation from our people, we announced in September that we signed a lease for our future corporate headquarters, which we anticipate occupying in the fourth quarter of 2022. This new space will be modern, open, and technology-enabled to provide a flexible environment for our people to work effectively. Our approach to the design of our corporate headquarters is consistent with the approach we are taking in each of our field offices across the U.S. We are referring to this new era of KFORCE work environment as office occasional, whereby our people will have maximum flexibility and choice in designing their workdays, that is rooted in trust and supported by the integrated technology aligned with our evolved operating model. We will have a remote-first approach, but encourage our people to leverage physical office space when desirable for activities best done through in-person active collaboration, such as training, team building, client and candidate interactions. We expect our work environment to further improve the retention of our most talented associates, as well as attract highly talented new associates. Productivity metrics continue to improve across our tenured associates. We have continued to make measured investments in internal talent to take advantage of the heightened market demand while also investing in technology to further drive productivity improvements. Overall capacity remains sufficient to support our growth and should improve due to our continued investments in technology and greater enablement of our communication and collaboration tools and processes that have been so successful for us since we transitioned to remote work last March. We have supported and retained our best people, structurally reduced our fixed costs, and are refining a more scalable operating model that we expect will result in positive operating leverage as our solid growth continues to compound and we reimagine the future of how we work. Our customer and employee satisfaction levels continue to be at an all-time high. We continue to carry the highest Glassdoor rating among our peers and maintain a world-class net promoter score from our clients, consultants, and are the most recognized firm by technology consultants per SIA. I greatly appreciate the trust our clients, consultants, and candidates have placed in K-Force. Our teams continue to inspire me daily as we work together, creating something beyond special for tomorrow and into the future to position K-Force as the most desirable destination for top professionals in our industry. I will now turn the call over to Dave Kelly, K-Force's Chief Financial Officer. Dave.