Kforce : Q2 2021 Kforce Prepared Remarks

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SECOND QUARTER 2021 FINANCIAL RESULTS

CONFERENCE CALL, AUGUST 3, 2021

PREPARED REMARKS

Disclaimer

All statements in these prepared remaks, other than those of a historical nature, are forward-looking statements including, but not limited to, statements regarding the performance of technology-focused businesses, the secular drivers of technology, the pace of digital transformation, the Firm's opportunity to continue investing in its future growth, returning capital to its shareholders including the intent and ability to declare and pay quarterly dividends, and the Firm's guidance for the third quarter of 2021. Such forward-looking statements are 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. Factors that could cause actual results to differ materially include the following: business conditions, growth rate in temporary staffing and the general economy; competitive factors; risks due to shifts in the market demand; a reduction in the supply of consultants and candidates or the Firm's ability to attract and retain such individuals; the success of the Firm in attracting and retaining its management team and key operating employees; the impacts (direct and indirect) of COVID-19 on our business, our consultants and employees, and the overall economy; changes in the service mix; ability of the Firm to repurchase shares; the occurrence of unanticipated expenses; the effect of adverse weather conditions; changes in our effective tax rate; changes in government regulations, laws and policies that impact our business and our ability to comply with the same; risk of contract performance, delays or termination or the failure to obtain new assignments or contracts, or funding under contracts; changes in client demand and our ability to adapt to such changes; our ability to continue to perform under the government-sponsoredCOVID-19 related initiatives; continued performance of and improvements to our enterprise information systems; impacts of outstanding litigation or other legal matters, including the risk factors and matters listed from time to time in the Firm's reports filed with the Securities and Exchange Commission, including, but not limited to, the Firm's Form 10- K for the fiscal year ending December 31, 2020, as well as assumptions regarding the foregoing. The terms "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof contained in this press release identify certain of such forward-looking statements, which speak only as of the date of this press release. As a result, such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Future events and actual results may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and the Firm undertakes no obligation to update any forward-looking statements.

SECOND QUARTER 2021 FINANCIAL RESULTS

CONFERENCE CALL, AUGUST 3, 2021

PREPARED REMARKS

DAVID L. DUNKEL, CHAIRMAN AND CEO

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 Kforce's public filings and 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.

The significant strength in our financial results leading into, during and now after the pandemic continues to affirm our strategic decision to focus our business on domestic technology staffing and solutions. Prior to the Great Recession, 50% of our business was providing technology solutions to commercial clients. Our executive and leadership teams and dedicated associates have all participated in completely reshaping the composition of our business, using as a foundation our 50 plus years of experience in delivering quality solutions to our clients. This reshaping involved numerous divestitures, evolving our client portfolio to be more significantly focused in industry-leading companies, and disproportionately investing in growing our technology business organically. Staffing Industry Analysts noted that the domestic technology staffing market was the largest staffing market segment in 2020, with spend of nearly $31 billion, which represents growth of nearly 100% since the Great Recession. The technology solutions market is estimated at greater than $100 billion which represents new growth opportunities for our managed teams and solutions efforts. As we look to the future, this market is expected to continue its rapid growth rate. With our revenues concentrated approximately 85% in technology, coupled with a complementary finance and accounting footprint, we are ideally positioned. There is 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 strong sustained profitable revenue growth.

Further to this point, our Technology business has demonstrated remarkable resilience. Our full year technology revenues in 2020 were essentially flat from 2019 levels, despite an unprecedented macro environment. Revenues began to grow shortly after businesses began to shut down and have continued to build tremendous momentum over the course of the first half of 2021 and early stages of the third quarter. This is evident not only in our completely organic 21% year-over-year Technology revenue growth in the second quarter, but this is significant growth off a relatively strong comp in the second quarter of 2020, where we declined only 3%. Our Technology business has now grown approximately 17% since the second quarter of 2019, pre-pandemic.

The secular demand drivers, coupled with improving corporate prospects across virtually every industry, resulted in overall revenues for the second quarter exceeding the high end of our expectations. Our sequential and year-over-year growth rates of 9% and 21%, respectively represent the highest organic growth rates we have on record. We continue to make progress in

SECOND QUARTER 2021 FINANCIAL RESULTS

CONFERENCE CALL, AUGUST 3, 2021

PREPARED REMARKS

our objective of migrating our FA business toward higher-end skillsets for decision support and analytics. We believe this strategic shift, will provide an important compliment to the technology services we provide our clients.

During the lowest points of the COVID-19 crisis, we found 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. As the economy is now recovering, we have not pursued these opportunities further. Therefore, COVID-19 related revenues will significantly diminish in Q3, as Dave Kelly will elaborate. We will be left with the high-quality revenue stream we anticipated prior to the pandemic, growing at a rate over two times SIA market estimates.

We also continue to make great progress in positioning our Firm to have a more flexible hybrid work environment through our Kforce Reimagined initiative. The sale of our corporate headquarters facility in the second quarter, which generated nearly $24 million net proceeds, is aligned to this initiative. We are actively seeking a location for our future corporate headquarters in the Tampa Bay area, which will be a more modern, open, technology-enabled office, very similar to how we will be transitioning our field offices.

Our business continues to generate significant operating cash flows and we were again active in repurchasing our stock during the second quarter. The strength in our balance sheet and availability under our Credit Facility allows us to be opportunistic with respect to returning additional capital to our shareholders while continuing to evaluate potential tuck-in acquisitions. We will continue to apply very stringent cultural and financial criteria to any potential transaction as we are sensitive to the distraction this creates to our strong performing Technology business. Given our confidence in our future growth prospects, we expect to remain active in repurchasing our shares at current stock price levels. In addition, our Board of Directors recently approved a 13% increase to our quarterly dividend, which is the second increase in 2021. Our dividend is up 30% from prior year levels and we believe a strong signal of our belief in the strength in our business.

As we look ahead, we are incredibly excited about our strategic position. 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 investment.

I will now turn the call over to Joe Liberatore, President, 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 third quarter.

SECOND QUARTER 2021 FINANCIAL RESULTS

CONFERENCE CALL, AUGUST 3, 2021

PREPARED REMARKS

JOSEPH LIBERATORE, PRESIDENT

Thanks to all of you for your interest in Kforce.

The momentum across our business is continuing to accelerate. Total revenues for the second quarter exceeded the high end of our guidance and grew 17.7% on a year-over-year basis and has improved 19.1% compared to Q2 2019. Total Firm year- over-year growth in the second quarter is the highest organic growth rate we have on record.

The operating trends we continue to experience in our Technology business have been impressive. New assignment starts are not only reaching all-time highs, but they have been remarkably consistent and broad-based throughout the second quarter and thus far in the third quarter. We believe that this speaks volumes as to the vital, non-discretionary mission critical work that we are performing across our blue-chip client portfolio.

While the clear driving factor to our record levels of Technology growth is demand for additional resources, we continue to see increases in bill rates. Our average bill rate is now approximately $81 per hour, which is indicative of the demand for higher-end Technology talent for project and solutions work. Billable consultants on assignment began increasing shortly after the inception of the pandemic and have grown sequentially for four consecutive quarters. Consultants on assignment are now at levels 28% greater than in June 2020 and increased 6% from the beginning of the second quarter to the end of the quarter, which is a great indication for accelerated growth year-over-year in the third quarter.

Job order flow has largely returned to pre-pandemic levels, and we are also continuing to see higher fill ratios due to improved job order quality as clients are executing against an overall higher mix of critical technology initiatives. We also believe the trends we are experiencing are reflective of the growing confidence in restarting projects that may have been deferred or delayed, the scarcity of higher-end IT resources, and securing resources for new transformative initiatives.

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 we have made in front-end technology and process over the last several years have matured our capabilities to efficiently provide clients with highly diverse top talent, at scale, in a now boundaryless environment across the US.

A significant accelerant to our overall Technology growth has been the investments we've made over the last three years in our managed teams and solutions capabilities to provide a higher value, differentiated offering to our clients. We have