Q2 2021 Kforce Inc Earnings Call
To the Kate Force second quarter 2021 earnings conference call at this on all participants are in 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 keypad. If you require any producers since please press star zero.
I would now like to turn the call over to David Dunkel, Chairman and Chief Executive Officer. Please go ahead.
Good afternoon.
To remind you that this call may contain certain statements that are forward looking.
Statements are based upon current assumptions and expectations and are subject to risks and uncertainties.
Actual results may vary materially from the factors listed and K force as public filings and all.
And the reports and filings with the Securities and Exchange Commission.
And we cannot undertake any duty to update any forward looking statements.
And 5 additional information about this quarter's results and our earnings release, and our SEC filings and and.
Additionally, we have published our prepared remarks within the Investor relations portion of our website.
The significant strides on our financial results leading into the range 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 and completely reshaping the composition of our business using as a foundation our 15th.
Last years of experience and deliver on quality solutions to our clients.
This reshaping involve numerous divestitures.
Evolving our client portfolio to be more significantly focused and industry leading companies and.
And disproportionately investing and growing our technology business organically.
Staffing industry analysts noted that the domestic technology staffing market was the largest staffing market segment and 2020.
And with spend of nearly 31 billion, which represents growth of nearly 100% since the great recession.
With technology solutions market is estimated at greater than 100 billion, which represents new growth opportunities for our managed teams and solutions efforts as.
As we look to the future. This market is expected to continue its rapid growth rate.
With our revenues concentrated approximately 85% and technology, coupled with a complementary finance and accounting footprint. We are ideally positioned there is no other market, we would want to be focused and other than the domestic technology market as it has and our view of the greatest prospects for strong sustained profitable revenue.
<unk> 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.
And as evident not only and are completely organic 21% year over year technology revenue growth and the second quarter, but this is significant growth pretty relatively strong comp and the second quarter of 2020.
Where we declined only 3%.
And 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, resulting in overall revenues from 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 and our objective of migrating our FAA business towards higher and skill sets.
And the decision support and analytics.
We believe this strategic shift will provide an important complement to the technology services and will provide our clients.
During the lowest points and the COVID-19 crisis, we found several opportunities to assist our clients and providing resources to help key areas of relief efforts associated with the pandemic.
Revenue streams from these projects provided us and important bridge to navigate through the pandemic.
Not only did they allow us to retain the existing infrastructure and our business, but they provided an opportunity to increase investments that we believe will further enable sustained above market growth and the future.
As the economy is now recovering we have not pursued these opportunities further.
And therefore, COVID-19 related revenues will significantly diminished in Q3 and as Dave Kelly will elaborate.
We will be left with a high quality revenue stream, we anticipated prior to the pandemic growing at a rate of over 2 times, sorry, a market estimates.
We also continue to make great progress and positioning our flow them through having more flexible hybrid work environment through our K force re imagined initiative.
The sale of our corporate headquarters facility and the second quarter, which generated nearly $24 million net proceeds there's a line for this initiative.
We are actively seeking a location for our future corporate headquarters and 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 and repurchasing our stock during the second quarter.
The strength and 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 2 our strong performing technology business.
And our confidence and our future growth prospects and we expect to remain active and purchasing 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 and 2021.
Our dividend is up 30% from prior year levels, and we believe a strong signal of our belief and the strength of 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 is 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 Laboratory, 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 Joe.
Thank you David and thanks to all you for your interest and keyboards momentum across our businesses continuing to accelerate.
Total revenues for the second quarter, we 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 and the second quarter is the highest organic growth rate we have on record.
The operating trends and we continue to experience and on technology.
And Preston.
And you assignment starts on not only reaching all time highs and remarkably consistent and broad based throughout the second quarter and thus far on the third quarter we.
We believe that this speaks volume.
Idle non discretionary mission critical work and we are performing and constantly blue chip client portfolio.
While the clear driving backwards from a record levels and the technology growth as demand for additional resources, we continue to see increases and building. Our average bill rate is now approximately $81 per hour, which.
Which is indicative on the demand for iron ore and technology talent for project and solutions work.
Billable consultants on assignment and began increasing shortly after the inception of the pandemic.
Grown sequentially for 4 consecutive quarters.
And so on.
On.
We're 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 and the third quarter.
Job order flow and has largely returned to pre pandemic levels and we are also continuing to see higher fill ratio due to the improved job order quality as clients are executing against and overall higher mix of critical technology initiatives.
We also believe the trends we are experiencing on a reflective of the growing confidence and returning project and named and deferred or delayed.
Scarcity of high and resources and security resources for new transformative initiatives.
We continue to see the acceleration of critical technology initiatives within our client and areas like cloud mobile and data analytics project and program management with a strong focus geared towards improving the consumers' digital experience.
The investments that we've made and front end technology and processes over the last several years and matured our capability to efficiently provide clients with highly diverse top talent at scale and and now boundary with environment across the U S.
A significant accelerant to our overall technology growth has been the investments we've made over the last 3 years and our managed teams and solutions capability to provide higher value differentiated offerings to our clients.
We have continued to add highly talented experienced and resources coming out of the most respected solution providers and as dedicated team and are investing further to arm them with day to day, our tools and technology.
Growth and this offering is outpacing that of ruble technology staffing business due to the success, we've had and breeding is offering to our clients will be on <unk>.
Strong longstanding partnerships.
We intend on making further investments and this capability throughout 2021 and for the foreseeable future given the long term demand environment, we see for these services.
We feel extremely confident and the positioning of our technology business and the ability to continue expanding our market share.
And it remains broad strength and demand across virtually every industry.
As was true in particular and business services financial services and wholesale retail during the second quarter.
And the same highlighted industry has shown resilience throughout the pandemic and have been significant contributors through on growth on a year over year basis.
Given the momentum we've carried into the third quarter, we expect revenues and our technology business and they grow approximately 25% on a year over year basis.
Which would represent over 20% organic growth from the third quarter 2019 pre pandemic.
We are clearly continuing to take market share, which we would attribute to the lack of distraction.
And operating model keenly focused on providing domestic technology solutions for world class clients and an outstanding team of Cape worthy and executing at levels, we have not experienced and our history.
I cannot be prouder of how our teams and responded and.
And their innovation combined with a lean forward and not look back attitude start and the pandemic escalated a major on the snack cake mix Darren King.
Alright, and they flex revenues were up 2.7% year over year on the second quarter.
Which included the contribution of approximately $35 million and revenue from our support of government sponsored initiatives tied to the economic fallout and recovery efforts from the COVID-19 pandemic.
The results of our FAA business were consistent with our expectations.
The vast majority of these projects included at the end of the second quarter and into the first part of July.
Thus, we expect COVID-19 revenues could approximate $5 million to $7 million and the third quarter.
We made a conscious decision not to pursue business beyond our existing commitment and support of our long standing client relationship. Once it became clear that the recovery is well underway.
This will allow us to focus our efforts on forward looking M&A strategy.
Our non Covid FAA flex business declined 7.1% sequentially per billing day, but grew 5.3% year over year.
And we mentioned previously we are transitioning our MSA business towards more highly skilled assignment such as analytics and decision support roles and are less susceptible to technological change and automation and more synergistic with our technology footprint.
We will continue to support lower and skillset for certain clients, where we have long standing relationships and are strategically important to <unk> ongoing success and our technology business.
We have seen natural assignment ends of our lower skilled ethane roles and the first half of 2021 were strategic client relationships do not ignite and expect that to continue in the third quarter and be completed by the end of the year.
We expect our non Covid FAA revenues to be down and the mid single digits on a year over year basis in the third quarter due to the repositioning activity.
When combined with the expected Covid revenue decline total FAA blocks may be down nearly 15% on a year over year in the third quarter.
Direct higher revenues and the second quarter increased almost 30% sequentially per billing day, and approximately 85% year over year.
Direct hire remains an important part of our service offering. So we have non allocated significant investments here and and now represents approximately 3% and total revenues.
And as backdrop on our second quarter results demonstrate the depth of high quality long standing relationship with credible and capable team did that.
We expect direct hire revenues.
<unk> sequential decline, which is typical during the summer months and increased nearly 30% year over year, and the third quarter and clients demonstrating a high degree of confidence and the recovery through the additional full time staff.
We are continuing to invest and strategic initiatives to better position on our from for long term sustainable profitable growth.
Our most recent significant investment is on our talent relationship management system, which went live and the first quarter.
Our fully integrated CRM CRM systems are cloud based continuously integrate with other Microsoft product offerings.
As Dave highlighted investments to further develop these tools along with enhancing capabilities and other areas such as our managed teams and solutions offerings are continuing.
We believe great opportunities still exist to further enhance productivity, which will drive future profitable growth.
We've made tremendous progress advancing <unk> towards a fully integrated technology enabled hybrid operating model to enhance the experience and life work balance from our internal team and the interaction with our clients candidates and consoles.
We refer to this initiative launched in May 2020, and Skateboards re imagine.
Early into the pandemic. It was cleared on work, it's something we do not a place we go.
Our future work environment and this new age we're entering will be what we are referring to is office occasional.
Whereby our people can have maximum flexibility during 2 trust and technology.
With a remote first approach along with the opportunity to leverage our collaborative physical office design when desirable for activities such as training and team building and for activities that are best done through in person active collaboration inclusive of client and candidate database interactions.
Productivity metrics continue to improve across our tenured associate base.
Given the tremendous growth trends, we are experiencing most notably and our technology business, we have begun making selective investments to increase the number of associates and our technology business, especially in our managed team and solutions capability.
Overall capacity remains sufficient to support our well above market growth rates and should improve due to our continued investments and technology and greater enabled and 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 refine a more scalable model that we expect will result in positive leverage and accelerated growth continues to compound and we re imagine the future how we work, resulting in further improving retention and on those talented associates.
Our customer and employee satisfaction loans continue to be and an all time high we.
We continue to carry the highest glassdoor rating among our peers and maintain a world class net promoter score from our clients and consultants and.
And are the most recognized firm by technology consultants per day.
I greatly appreciate the trust and our clients consultants and candidates have placed and Cape worse.
Our teams continue to inspire me daily and we worked together, creating something beyond special for tomorrow and into the future to position <unk> as the most desirable destination for top professionals and our industry I will now turn the call over to Dave Kelly K Force as Chief Financial Officer, David.
Thank you Joe.
We are very pleased with second quarter revenues of $403.6 million exceeded the high end of our guidance as we experienced record organic sequential and year over year growth and our technology business.
Profitability levels also exceeded the high end of our guidance with record earnings per share of $1 in the second quarter, which represents an increase of nearly 113% year over year.
Our gross profit percentage and the quarter of 29, 5% increased 110 basis points year over year as a result of a greater mix of direct higher revenues and an increase and overall flex gross profit margins, which improved 30 basis points year over year to 27, 3%.
Flex margins and our technology business were essentially flat as growth and our higher margin and managed teams and solutions business has largely offset the slight spread compression, we experienced and our traditional technology staffing business due to the strong relative growth, we are seeing and our largest clients, which carry a slightly lower margin.
Overall average bill rates and pay rates continue to modestly increase sequentially.
Sequentially spreads and our technology business expanded slightly from Q1, while overall margins improved due to seasonal taxes and lower health care accounts compared to Q1.
Flex margins and FAA expanded.
<unk> expanded 180 basis points year over year, primarily as a result of our higher margin short term Covid project that ended in June.
When looking at the underlying business that we are migrating towards we're seeing early indications of improvements and flex margins and overall average bill rates.
As we look forward to Q3, we expect spreads and our technology business to be stable with second quarter levels, while <unk> will improve sequentially from our repositioning efforts and the decline of lower margin Covid projects.
Should we begin seeing wage inflation within our consultant population, which we have not yet experienced and any meaningful way, we are confident and our ability to work with our clients to appropriately align bill rates.
They could and retained the valuable technology resources needed to complete their critical projects.
We believe the continued rising wages is a sign of strengthening demand for technology resources and it's a long term net positive for our business.
We also continue to experience success and growing our managed teams and solutions business and a growth rate that significantly exceeds our overall technology business.
This offering Carrington and approximately 400 basis point higher margin profile and the rest of our technology staffing business, which helps stabilize overall technology spreads and over the longer term creates an opportunity to increase margins and overall profitability.
Overall, SG&A expenses decreased as a percentage of revenue by 250 basis points year over year due to operating leverage provided by our revenue growth significantly improved associate productivity the gain on the sale of our corporate headquarters facility and lower costs in areas, such as lease and office expenses.
Due to our strong growth increases and performance based pay have partially offset these reductions and are expected to continue to do so for the rest of the year.
Our second quarter operating margin was 8.2%, which is an increase of 370 basis points from 4.5% and the second quarter of 2020.
The sale on our corporate headquarters and the second quarter of 2021 benefited our operating margin by 50 basis points.
We believe the improving quality of our revenue stream continued productivity improvements and ongoing lower structural operating costs will collectively allow us to continue to invest aggressively and our business to drive sustained above market growth rates, while continuing to drive improvements and profitability levels.
As previously noted the Covid project revenue streams will significantly decline and the second half of the year.
And the revenue and profitability that resulted from the Covid projects allowed us to not only sustain critical infrastructure and talent needed to maintain the growth of our business during the pandemic, but to also accelerate certain other investments, which we believe will enhance future growth.
These investments have been primarily focused and our technology business and specifically and supported further improving overall productivity and building our managed teams and solutions capabilities.
The falloff of these COVID-19 revenues, we plan to sustain and potentially accelerate this investment and talent and tools, which we believe is critical to both take advantage of the existing market conditions and to enhance our longer term growth prospects.
Third quarter operating margins of between 6.6% and 7% reflect the decline from Q2 levels due to the nonrecurring gain from the sale of our headquarters, which benefited Q2 by 50 basis points.
A 10 basis point impact from the leaseback of our headquarters and 40% to 50 basis points from the accelerated investments in tools and talent.
These investments are primarily targeted for our technology and managed service offerings and the impact from the incremental investment is expected to last for the first quarter of 2022, well additional leaseback costs and in January 2023.
And we previously stated and as revenues reached $400 million quarterly net operating margin would be at least 7.8%.
We expect to return to this margin trajectory by Q2, 2022, and also to derive annual savings of $1 million to $1.5 million as we.
<unk> to our new Tampa headquarters with the exploration and the leaseback.
We will also continue to investigate additional opportunities to improve our operating model to drive additional future profitability improvements.
And had great success, and rebuilding our front office technology processes and tools over the past 5 years, and we believe equal opportunity exists to drive efficiencies and the back office.
And we've recently begun assessing the opportunities in this area, which we believe could benefit operating margins by 60 basis points or more and dramatically improve our back office support firm. Once this multi year program is complete.
This transformation will be planned and phases and could pick up from 5 years to complete it may involve some upfront costs and each phase.
Once complete this investment along with the accelerated investments and our managed services capabilities will enhance our ability to generate double digit operating margins as we grow we look forward to sharing further details in future calls.
Our effective tax rate and the second quarter was 29, 4%, which was consistent with our expectations.
This included a negative impact of 280 basis points as a result of the previously announced termination on our supplemental executive retirement plan.
EBITDA in Q2 was $35.8 million, which represents an 81, 5% increase from the second quarter last year.
Operating cash flows were $14.1 million and the second quarter, and we returned $18.1 billion and capital to our shareholders via a $13.4 million and share repurchases and $4.7 million and dividends.
We ended the second quarter was $17.3 million and net cash.
The number of billing days are 64, and the third quarter of 2021, which is the same number of days of the second quarter and the same number of days and the third quarter of 2020.
We expect Q3 revenues to be and the range of $385 million to $393 million and earnings per share to be between 83 and 91.
Gross margins are expected to be between 29% and 29, 2% while flex margins are expected to be between 26, 8% and 27 per cent.
SG&A as a percentage of revenue is expected to be between 21, 9% and 22, 1% and operating margin as I mentioned should be between 6.6% and 7%.
Weighted average diluted shares outstanding are expected to be approximately 21 million per Q3, and the anticipated effective tax rate is expected to be 27, 5%.
Our guidance does not consider the potential negative impact on the demand environment from a significant increase and COVID-19, Varian and cases the effect if any of charges related to any onetime costs costs or charges related to any pending tax or legal matters. The impact on revenues of any disruption and government funding or the firms.
<unk> towards regulatory legal or future tax law changes.
Overall, we believe we're in and exceptional place.
We believe the strategic decision to focus the vast majority of our business and providing domestic technology solution and this is paying dividends.
The range of guidance at the midpoint implies organic growth and our technology business and the 25% range, we couldnt be more excited about our future growth prospects with 85% of our revenues focused and technology, which permeates every aspect of business and society and an <unk> business. That's directly focused on couple that day.
Technology efforts.
Our shareholders continue to benefit from strong performance and efficient capital allocation as exhibited by our return on invested capital of approximately 40% and.
And our predictable cash flows provide significant future flexibility to make investments and continue returning capital to our shareholders.
And on behalf of our entire management team I'd like to extend a sincere. Thank you to our teams for their efforts and outperforming market expectations through the adversity and uncertainty of the past year and a half and continuing to build on that success for the remainder of 2021 and beyond.
Operator, we'd now like to open up the call for questions.
Sure thing.
And that reminder, if you had a question at this time. Please press Star then the number 1 key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue press the pound key.
Possibly this moment compile the Q&A roster.
Your first question comes from the line, Josh Vogel Youre line channel.
Thank you good afternoon, everyone.
After and juice.
Thank you.
So first question I had.
I know theres, a lot of moving parts, but when we look at this 85% to 15.
Target revenue split, especially entering 2020, and we think about the nature of the work being done and increase in bill rates consultants on assignment and mixed direct hire.
But you already have.
Gross margin profile and this back to 2019 levels, even with mix working against and then so.
And what sort of margin profile should we think that the business and get to later this year and into 2022.
Yes, Josh Hi, this is David Kelley, so when we think about margins prospectively, we think about them at least in and therefore, a term to be stable price had been relatively stable as you pointed out.
For the last couple of years returned to the 2019 levels.
<unk> sequentially they were looking at stability and our tech margin does 85% of our revenue stream and I think we're doing a really nice job.
Balancing.
The growth and the portfolio with.
Appropriately priced and so we look at this as a pretty stable environment for the foreseeable future.
Alright, great and.
Obviously very impressive results with.
The tech staffing business.
Who do you think is taking share from that and when we look at the 9% sequential and year over year growth parse out maybe from what's coming from share gains versus.
And they know that may not be but.
Okay.
Thoughts there.
So John this is Joe laboratory.
I think it's really when we look at the competitive landscape.
I think flow.
Flow awareness.
Publicly comps that are out there and so I think and you can we can say part of it is coming from there part of it is coming from the local operators regional operators.
What we're saying is <unk>.
Demand is broad based across all geographies and industry and its also very balanced on our portfolio. So we compete with different type of companies on site different organizations and other large organizations typically national scale players when we get into local.
More local based company and a regional based company and Thats, when we run into the regional and local provider and I think it's really indicative and when you look at where our growth is coming from.
Our top 25 accounts grew at.
Rate of about 22% and our non top 25 accounts grew at 21, 6% so borrowing balance across the portfolio regardless of size of about this type of company that we're working with.
And we're also capturing some solution business.
Embedded in our overall mix and we have.
And the competitors that we're up against and the solution space and all of them, all and what I would consider local and regional on each players and there.
And also we are capturing some business from the larger more global providers, but.
But thats really typically carve out pipe projects, where we have unique expertise and relationship within the organization.
I appreciate all of his insights and then 1 more on and I'll hop back in the queue, but on.
Knowing that we should expect COVID-19 related business and significantly decline and now for the strategic move.
And that you are doing on year and but as the.
The pandemic lingers and the Delta variant spreads.
Is there a potential that there could be significant upside for that business and I guess I wanted to get an idea on how easy how easily you can scale that back up if need be.
Yes, I would say could.
Could we scale back up the answer is yes because.
The teams did a tremendous job and surfacing.
Tens of thousands of candidates.
And so very short period of time, so we still have the connectivity with the candidate pool the service name Com, but also.
On the flip side of that is as we've been very clear on these were a byproduct of long standing relationships and we add.
With certain organization and so and less.
It's kind of the same specific types of engagements re engaged.
I'd say more than likely they won't see us.
Turning out Covid, Robyn Covid related revenue irrespective of what might happen with the Delta there and.
And when you look at where our concentration of business I think its even a lower probability that those engagements with would reengage based upon conversations that we've had with with our partners, but we helped out there at that time period.
Understood well from the impressive results and thanks for taking my questions.
Thank you thanks, Josh.
Great.
Your next question comes from the line of Mark Martin Your line Kansas.
And good afternoon, everybody and I was wondering can you talk a little bit about.
The strong growth that you saw on Perm and just how youre thinking about that long term strategically considering.
The continued labor shortages that are out there that don't seem to be abating anytime soon.
Well Mark on <unk>.
Group scope out the power and while we have a lot of people that are highly competent and capable which is why really referenced them on my opening comments and they have a lot of.
Deep long standing relationships.
Pardon me and very important to the offerings that we bring to our clients as we've articulated.
Countless times the way we service that on the technology side, which is the bulk of the revenue that we derive is really more on a blended model. So the client is of harmony will serves that farm Nate if it's strategic and make sense and it's a value add to the client.
Our dedicated and farm teams on the based on your house.
We haven't.
Industrial and extensively to build those teams. So however, we are selectively adding flow team, where we have a really good footprint, we have capacity and we can use additional resources on those tiers, but that's kind of all fits within our strategy and we made the strategic move many years ago.
And you remember the days during dot Com, we saw our quarterly total revenues go from about $42 million per quarter down to $6 million a quarter over a course of 6 quarters highly cyclical and sensitive to the economic drivers that are out there. So we really we like how we're positioned from a price stands.
Point.
And that's kind of strategically we've been very consistent on how we've been approaching this.
Okay.
And you've been very consistent and the reasons for that.
It's been consistent over the years I was just wondering if there is perhaps any sort of downturn just given.
On how strong the level of demand has been but you answered that and then with regards to the additional investments that youre, making.
Across the board.
How soon do you think you can ramp up your new people.
In order to get them up to productivity levels, particularly with the new systems that you've been laying and.
So I would say everything everything we're doing is really to drive 2 things.
Such as the increased productivity capability of our proven sales and people and we've really starting to see some of the fruits of the investments we've been making I mean all productivity.
And from a technology standpoint up over 25% year over year and.
And there is actually a little bit north of that and our core business.
Business and I think this also dovetails back into our ability to ramp up on new hires a lot of what we've been doing here over the course of the pandemic and looking at different ways that we can create more leverage on both training and development platforms and our team has done a fabulous job and we're just getting to the point now where we are.
Starting to deploy some of the work that we've built per selling for the better part of the last 16 months.
Part of our K force, we imagine strategies. So I think all of those things will play into our ability to more quickly ramp new hires as well as continued to provide tools technology and processes to further drive productivity gains of our existing people.
Great.
And then.
And to that Brian.
And the idea of investment, especially in technology for Us isn't.
And particularly new rates and we've been investing and Joe mentioned and the productivity enhancements that we've seen over the years.
And as.
Opportunity as we said to accelerate this investment it is as much long term.
And because it is on.
Opportunity to take advantage of a great operating environment, obviously, and the productivity enhancements driving that.
And 12% growth. So this is technology as well as the talent as well as I think specifically as we have mentioned.
The investments in the capabilities and highly skilled people and we've managed to teens and managed services offerings. So so it's a it's a holistic holistic look at that and continuing to evolve our model.
Just sort of requirement that's great and then just on.
On the managed team and solution capabilities within technology.
And tapping into an even bigger market who who.
Where are you running into the most what's the most.
Common.
Scenario that you are being brought in and what's gone better and then you.
<unk>, where are you seeing the best opportunities.
Yes.
And I touched upon this a little bit earlier.
We mainly run into a regional and local on niche solution provider. We also.
Our capturing a number on what I would call internal projects, where the clients looking to handle the office on 1 with expertise.
And areas, where we have a capability and.
And we also are getting some carve out type projects, where large integrators and might be on there.
And dominant provider on a large scope and scale project that there is a niche opportunity and so.
We will also continue to hire a lot of Smes from large solution providers that are highly capable and competent and been playing in this space for quite some time and we've been very fortunate with.
And the individuals that we've been able to bring on hurricane and just continue to further build out on our capabilities on that front.
That's terrific. Thank you.
Sure.
Once again, if you would like to ask a question. Please press star 1 on your telephone and wait for your name to be announced and then Thats Star 1 to ask a question and your next question comes from the lineup Sam Fisch from your line's now open.
Hey, guys. Thanks for taking the questions here.
Relating to remote work do you have a sense for what percent of your client base was offering and network conditions prior to the pandemic and how does that compare and the situation today I guess I'm, just trying to get a sense and how fast and market is shifting towards this new way of working and also this has any implications on your margin structure.
So I would say.
Pre pandemic and we saw some we saw some more remote work going on it was usually on much more specific.
And the unique needs whether it be the whether it be the candidates need and based upon what their unique skills or or a certain client opportunities where maybe they didn't have adequate space. So they were resolved and people and having them work remotely on that all got turned on and pad.
And when the pandemic hit virtually all of the peso and of our technology resources were working remote outside of those that were physically working and labs on.
Actual physical technology, where they ought to be there from a hardware standpoint.
What we've seen at this point and time.
And so we've seen the majority of our customer base.
So predominantly the functioning of a remote capacity, we do have a number of customers and you can read about those and and the media.
The large customers that are trying to bring people back on premise.
I will tell you what we are seeing are probably on the last 3 weeks as we've seen people backtracking on their back office programs, mainly associated because of the things that are happening with delta.
So.
The majority of our clients are very flexible and <unk>.
Hiring remote talent.
And some prefer that balance to actually day closer and market, but work from or are those that are really truly after getting the best talent are completely flexible on having that talent.
Located anywhere in fact, I would say from what we're doing on the managed came solutions from us.
Really I guess showing a flat because those customers are looking for the best talent and the marketplace and when we are engaging and those type of projects, we're seeing a much higher percentage of flexibility for those people and the data anywhere.
And they are really after the best talent.
Great I appreciate the color there.
Maybe switching gears, a little bit here, but.
Labor availability and it's been a huge issue that many companies have been struggling and lift.
Imagine them anyways and benefited your business as these companies partner with you to help address their their labor shortage, but I also wonder if there are some physicians and light have build that you can't because the right labor and scarce can you share.
Share of documentation and its impacts on the business right now.
Now, let's say from a labor shortage standpoint, the areas, where we typically play have been labor short categories long before the pandemic hit.
Hi, and technology individuals', even on what unemployment.
Running.
Mid to upper single digits.
So running negative in terms of the amounts and other things there are for the amount the people capable of performing loans, so and all what it really boils down to what is our recruiting capability to go out and identify that top talent and then secure that talent for our clients and thats really the core.
Competency at K Force.
That's what we do for a living if there is 1 thing that I would say is our core competency and it's on the recruitment side to be able to go out identify and attract and then retain that talent for our clients.
So we're not really seeing any particular openings were.
And we can't fill the position and some are obviously more difficult and they are but that's all supply demand driven and then it's we're really working with the client.
And the client flexible on up to open up their requirements. So that we can identify the talent based upon within the marketplace.
Sure.
Great I appreciate the answers thanks.
Sure.
We have no further question at this time I will now turn the call and went back to David Dunkel for it.
<unk> remarks.
That's great well. Thank you again for your interest and support of K Force.
Once again I'd like to say, thank you to each and every member of our field and corporate teams. Once again, just incredible efforts on incredible results.
And so our consultants and our clients for your trust and care for Us and partnering with you and.
Again, allowing us the privilege of serving them with.
And we've delivered another quarter of exceptional results and we look forward and speaking with you again after our third quarter. Thank you very much and good evening.
Ladies and gentlemen, this concludes today's conference call and thank you for participating you may now disconnect.
Okay.
Okay.
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Okay.