Q4 2023 Kforce Inc Earnings Call

Thank you for standing by and welcome to the key for Us.

Operator: Thank you for standing by, and welcome to the Kforce Q4 2023 Earnings Compensation call. I would now like to welcome Gerald Liberatore, President, and Joe to begin the call. Joe, over to you. Good afternoon.

For 2023 earnings Conference call I would now like to welcome Joe Laboratory, President and CEO to begin the call Joe over to you.

Good afternoon. This call contains certain statements that are forward looking that are based upon certain assumptions and expectations and are subject to risks and uncertainties.

Unnamed Speaker: This call contains certain statements that are forward-looking, that are based upon certain assumptions and expectations and are subject to risk and uncertainty. Actual results may vary materially from the factors listed in Kforce's public filings and other reports and filings with the FCC. We cannot undertake any duty to update any forward-looking statement.

Actual results may vary materially from the factors listed in K forces public filings and other reports and filings with the SEC, we cannot undertake any duty to update any forward looking statements you can find additional information about our results in our earnings release and our SEC filings. In addition, we have published our prepared remarks within our investor really.

Unnamed Speaker: You can find additional information about our results in our earnings release and our SEC filings. In addition, we have published our prepared remarks in the investor relations portion of our website. I am tremendously grateful for the extraordinary efforts of the K-Force team who executed well in 2023 in an environment that proved to be more challenging than originally expected. Our results, driven by solid execution and a focused business model, also allowed us to continue allocating significant capital towards strategic investments in our people and tools. As a result, we at 2024 are well-positioned to take additional market share and create significant long-term returns for our shareholders. The investments we are making include a continuation of our efforts to transform the back office, implementing AI in certain areas to drive efficiency and productivity, while further institutionalizing our 1Kforce organizational design and operating principles. During 2023, we selected Workday as our future state enterprise cloud application for our HCM and financials, which will complement our Microsoft front end application and create a unified and streamlined technology suite for the firm once fully implemented over the next few years.

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I am tremendously grateful for the extraordinary efforts of the K force team, who executed well in 2023 and an environment that proved to be more challenging than originally expected our results driven by solid execution and a focus business model also allowed us to continue allocating significant capital towards strategic investments in our people and tools.

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As a result, we entered 2024 well positioned to take additional market share and create significant long term returns for our shareholders. The investments. We're making include a continuation of our efforts to transform the back office implementing AI in certain areas to drive efficiency and productivity, while further institutionalizing, our one K force.

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During 2023, we selected workday as our future state enterprise cloud application for HCM and financials, which will complement our Microsoft front end application and create a unified and streamlined technology suite for the farm once fully implemented over the next few years, we are incredibly fortunate to be partnering with workday.

Joseph J. Liberatore: We are incredibly fortunate to be partnering with Workday and Microsoft, two companies at the forefront of investing in AI, which puts us in an ideal position to take advantage of these technologies as they become available. This foundational transformation will be a meaningful contributor to us meeting one of our long-term financial objectives of generating at least 10% operating margin. Our decision to grow our business organically, with a consistent, refined business model tailored to provide highly skilled technology and talent solutions to world-class companies in the domestic market, has been critical to our success over many years, and we remain confident that our firm is positioned well for improving market conditions. We experienced a decline in technology revenues in 2023 that closely resembled what we experienced during the Great Recession in 2009.

And Microsoft two companies at the forefront of investing in AI, which puts us in an ideal position to take advantage of these technologies as they become available the foundational transformation will be a meaningful contributor to US meeting one of our long term financial objectives of generating at least 10% operating margins.

Our decision to grow our business organically with a consistent refined business model tailored to provide highly skilled technology talent solutions to world class companies in the domestic market has been critical to our success over many years and we remain confident that our firm is positioned well for improving market conditions, we experienced in <unk>.

Decline in technology revenues in 2023 that closely resembled what we experienced in the great recession in 2009.

We believe the decline that we experienced in 2023 was due to an acceleration of strategic technology investments made during 2021 and 'twenty two to address the implications of remote work and other digital transformation efforts combined with the caution exercised by companies in a very uncertain environment.

Joseph J. Liberatore: We believe the decline that we experienced in 2023 was due to an acceleration of strategic technology investments made during 2021 and 22 to address the implications of remote work and other digital transformation efforts combined with the caution exercised by companies in a very uncertain environment. Companies remain cautious due to the continued economic and geopolitical uncertainties, and we are encouraged to have grown our technology revenues sequentially in the fourth quarter of 2023 on a billing day basis in this difficult environment. We are blessed to have a tenured executive leadership team who have been through multiple economic cycles together and can quickly adjust to changing market conditions. Our message to our people in 2023 was simple, and frankly, it is no different as we begin 2024. There are many things that are uncontrollable.

Companies remain cautious due to the continued economic and geopolitical uncertainties and we are encouraged to have grown our technology revenues sequentially in the fourth quarter of 2023 on a billing day basis in this difficult environment.

We are blessed to have a tenured executive leadership team who's been through multiple economic cycles, together and can quickly adjust to the changing market conditions.

Our message to our people in 2023 was simple and frankly it is no different as we began 2024. There are many things that are uncontrollable, we must control what we can control stay close to our internal associates support our consultants and continue listening to our clients, while maintaining a long term view in our decision making.

Joseph J. Liberatore: We must control what we can control, stay close to our internal associates, support our consultants, and continue listening to our clients while maintaining a long-term view in our decision-making. We made some difficult adjustments in July 2023 to reduce our structural costs, which mitigated the impact of lower revenues on the profitability level. Our strategic position is solid, and our prospects are excellent. However, tremendous uncertainty still exists in the macro landscape, and there are conflicting views of economists on whether we will avert a recession, see a soft landing, or slip into a recession in the U.S. economy in 2024 following the aggressive monetary tightening by the Federal Reserve. The challenges in the geopolitical landscape continue to grow with the ongoing war in Ukraine, the effects across the region of the war in Israel, including the loss of American service members and dozens injured in the drone attack on their base in Jordan, along with the 2024 U.S. election uncertainties and many others.

We made some difficult adjustments in July 2023 to reduce our structural cost, which mitigated the impact of lower revenues on the profitability levels. Our strategic position is solid and our prospects are excellent with that said tremendous uncertainty still exists in the macro landscape and there are conflicting.

Views of economists on whether we will avert a recession see a soft landing or slip into a recession in the U S economy in 2024, following the aggressive monetary tightening by the Federal reserve.

The challenges in the geopolitical landscape continue to grow with the ongoing war in Ukraine, the effects across the region of the war in Israel, including a loss of American service members with dozens injured in the drone attack on their base and Jordan along with the 2024 U S election, uncertainties in many others we will.

Joseph J. Liberatore: We will continue to closely monitor our performance indicators and trends and are prepared to make the necessary adjustments to our business without jeopardizing investments in our long-term strategic priorities. The strength of the secular drivers of demand in technology accelerated significantly coming out of both the Great Recession, with the advancement of mobility, cloud computing, among others, and with the 2020 pandemic, with further digitization of businesses, and the continued headlines around Gen AI technology. I have seen a lot of economic cycles in my 35-plus years in business, and each one behaves a bit differently. What remains clear to us, though, is that the broad and strategic use of technology, including AI technologies, will continue to evolve and play an increasingly instrumental role in powering businesses.

To closely monitor our performance indicators and trends and are prepared to make the necessary adjustments to our business without jeopardizing investments in our long term strategic priorities.

The strength of the secular drivers of demand in technology accelerated significantly coming out of both the great recession with the advancement of mobility cloud computing among others.

And with the 2020 pandemic with further digitization of businesses.

And the continued headlines around Gen AI technologies I.

I've seen a lot of economic cycles in my 35, plus years in the business and each one behaves a bit differently what remains clear to us, though is that the broad and strategic use of technology, including AI technologies will continue to evolve and play an increasingly instrumental role empowering businesses.

Joseph J. Liberatore: Over the long term, we believe that AI and other technologies will continue to drive demand for, rather than replace, technology resources, and that the pace of change will accelerate. We are ideally positioned to meet that demand. Our core competency is rooted in the ability to identify and provide critical resources in real-time, at scale, to help world-class companies solve complex business problems and help them competitively transform their businesses. Our operating model also allows us the flexibility of partnering with our clients to meet their needs across a broad spectrum of engagement forms, from direct hire, traditional staffing assignments, to managed team engagements and managed projects. While clients have been acting with restraint over the last 12-plus months, the backlog of desired investments continues to grow. We expect these important technology investments to be high priorities once the macro uncertainties begin to clear. Technology investments are simply not optional in today's competitive and disruptive business climate. There is simply no other market we would want to be focused on other than the domestic technology talent solution space.

Over the long term, we believe that AI and other technologies will continue to drive demand for rather than replace technology resources and that the pace of change will accelerate.

We are ideally positioned to meet that demand.

Our core competency is rooted in the ability to identify and provide critical resources real time at scale to help world class companies solve complex business problems and help them competitor leave transform their businesses are operating model also allows us the flexibility and partnering with our clients to meet their needs across a broad spec.

Among engagement forms from direct hire traditional staffing assignments to manage team engagement and manage projects.

While clients had been acting with words the restraint over the last 12 plus months the backlog of desired investments continues to grow we expect these important technology investments to be high priorities. Once the macro uncertainties begin to clear technology investments are simply not optional in today's competitive and disruptive business climate.

There is simply no other market, we would want to be focused on other than the domestic technology talent solution space. We have built a solid foundation of K force, our balance sheet is clean which allowed us to be opportunistic in repurchasing over $67 million of our stock in 2023, and we expect to continue to generate.

Joseph J. Liberatore: We have built a solid foundation at Kforce, our balance sheet is clean, which allowed us to be opportunistic in repurchasing over 67 million shares of our stock in 2023, and we expect to continue to generate strong cash flows in 2024. Our board of directors recently approved an increase in our quarterly dividend and share repurchase authorization to support our ongoing objective of returning capital to our shareholders. Before transitioning the call to Dave, I wanted to reiterate how proud I am of the performance and resiliency of our corrective K-Force team. Together, we fought through a challenging operating environment, made some difficult decisions, and met each and every challenge. We are blessed to have a high-performing team that is tenured, dedicated, and passionate at K-Force.

Strong cash flows in 2020 for.

Our board of Directors recently approved an increase in our quarterly dividend and share repurchase authorization to support our ongoing objective and returning capital to our shareholders.

Before transitioning the call to Dave I wanted to reiterate how proud I am of the performance and resiliency of our collective K force team together, we fought through a challenging operating environment made some difficult decisions and that each and every challenge. We are blessed to have a high performing team that is tenured dedicated.

It and passionate a K force I'm excited about the future of K Bourse as our team continues to advance our office occasional model in combination with our integrated strategy, resulting in an overall team's ability to operate even more consistently as one firm.

David Kelly: I am excited about the future of K-Force as our team continues to advance our office-occasional model in combination with our integrated strategy, resulting in an overall team's ability to operate even more consistently as one firm. Dave Kelly, our Chief Operating Officer, will now give greater insight into our performance and recent operating trends. Jeff Hackman, Kforce's Chief Financial Officer, will then provide additional detail on our financial results as well as our future financial expectations. Dave. Thank you, Joe.

Dave Kelly, our Chief operating Officer will now give greater insight into our performance and recent operating trends Jeff Hackman.

Hey forces Chief Financial Officer will then provide additional detail on our financial results as well as our future financial expectations Dave.

Thank you Joe Rep.

David Kelly: Revenue for the fourth quarter came in just above the midpoint of our guidance. We were encouraged to see overall revenues increase sequentially by.6%, led by sequential growth in our technology business. For fiscal 2023, overall revenues were down 10%, while flex revenues in our technology business were down approximately 7%.

Revenue for the fourth quarter came in just above the midpoint of our guidance. We were encouraged to see overall revenues increased sequentially by 0.6% led by sequential growth in our technology business.

For fiscal 2023 overall revenues were down 10%, while flex revenues in our technology business were down approximately 7%.

David Kelly: As a reminder, our technology business significantly outperformed the market in 2022 and 2021, growing 43.5% over that two-year period. The queue for sequential growth in our technology business is reflective of the stability in the number of consultants on assignment we began to see beginning in mid-Q3, which was followed by a modest increase through the fourth quarter. As we look into early Q1 trends, year-end assignments in our technology business were slightly greater than prior year levels as clients were generally slower than usual to approve 2024 IT budgets, which resulted in fewer redeployments of our consultants as projects were completed at year-end within existing clients. This also contributed to a slightly later start in the typical acceleration of new orders from our clients at the beginning of the year.

As a reminder, our technology business significantly outperformed the market in 2022, and 2021 growing 43, 5% over that two year period.

Q4 sequential growth in our technology business is reflective of the stability in the number of consultants on assignment we began to see beginning in mid Q3, which was followed by a modest increase through the fourth quarter.

As we look into early Q1 trends year end assignment ends in our technology business were slightly greater than prior year levels as clients were generally slower than usual to approved 2024, I T budgets, which resulted in fewer redeployments of our consultants as projects were completed at year end within existing existing clients.

This also contributed to a slightly later start in the typical acceleration of new orders from our clients at the beginning of the year.

David Kelly: With that said, over the last two weeks, we've seen an improvement in our leading indicators, and as a result, we believe that the level of new assignment starts could improve from current levels as we get later in the quarter. This suggests we may see a more traditional pattern of growth in the number of technology consultants on assignments, albeit beginning slightly later in the quarter than usual. Our clients have recognized the need to retain the highly skilled talent that we provide while they await a point of increased confidence to address their increasing backlog of critical technology initiatives more aggressively. Overall average bill rates in our technology business remain at near-record levels at approximately $90 per hour.

That said over the last two weeks, we've seen an improvement in our leading indicators and as a result, we believe that the level of new assignment starts could improve from current levels as we get later in the quarter. This suggests we may see a more traditional pattern of growth and in the number of technology consultants on assignment, albeit beginning slightly later.

In the quarter than usual.

Our clients recognize the need to retain the highly skilled talent that we provide while they await a point of increased confidence to address their increasing backlog of critical technology initiatives more aggressively.

Overall average bill rates in our technology business remained at near record levels at approximately $90 per hour, while bill rates have been stable over the past few quarters, we expect them to increase over the longer term is highly skilled talent will remain in short supply as demand improves. In addition, we're continuing to benefit from.

David Kelly: While bill rates have been stable over the past few quarters, we expect them to increase over the longer term as highly skilled talent will remain in short supply as demand improves. In addition, we're continuing to benefit from an increased mix of managed teams and project engagements within our overall technology business, which carries a higher bill rate. Our clients remain focused on critical technology initiatives in the areas of digital, UI, UX, cloud, data governance, data analytics, business intelligence, project and program management, and modernization efforts.

Of an increased mix of managed teams and project engagements within our overall technology business, which carries an average higher bill rate.

Our clients remain focused on critical technology initiatives in the areas of digital you our UX cloud data governance data analytics business Intelligence project and program management and modernization efforts. This represents a continuation of recent trends and reflects some of the front end work needed by <unk>.

David Kelly: This represents a continuation of recent trends and reflects some of the front-end work needed by companies to take advantage of the pandemic. A Planned AI-Related Industry, Flex margins of 25.4% in our technology business saw a seasonal decline of 10 basis points sequentially and 70 basis points year over year. As we've mentioned on prior calls, the year-over-year declines in technology flex margins that we've seen recently are typical of what we've seen in prior slowdowns, and we normally see margins recover as the macroeconomic environment stabilizes. As we look forward to Q1, we expect bill pay spreads in our technology business to continue to be stable, though overall flex margins will be lower due to seasonal payroll tax recessions. We've continued to broaden our service offerings beyond traditional staffing to include managed teams and projects. Clients consider access to the right talent essential to their success and see our services as a cost-effective solution for their project requirements, as demonstrated by more than 90% of managed teams and project solutions being executed within existing clients.

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A planned AI related investments.

Flex margins of 25, 4% and our technology business saw a seasonal decline of 10 basis points sequentially and 70 basis points year over year.

As we've mentioned on prior calls the year over year declines in technology Flex margins that we've seen recently are typical of what we see have seen in prior slowdowns and we normally see margins recover as the macroeconomic environment stabilizes.

As we look forward to Q1, we expect bill pay spreads in our technology business to continue to be stable, though overall flex margins will be lower due to seasonal payroll tax resets we've.

We've continued to broaden our service offerings beyond traditional staffing to include managed teams and project solutions.

Clients consider access to the right talent essential to their success and see our services as a cost effective solution for their project requirements as demonstrated by more than the 90% of managed teams and project solutions being executed within existing clients.

David Kelly: Our integrated strategy capitalizes on the strong relationships we have with world-class companies by utilizing our existing sales, recruiters, and consultants to provide higher-value teams and project solutions that effectively and cost-efficiently address our clients' challenges. Our client portfolio is diverse and includes large market leaders. Market leaders typically prioritize technology investments to maintain their competitive advantage.

Our integrated strategy capitalizes on the strong relationships, we have with world class companies by utilizing our existing sales recruiters and consultants to provide higher value teams and project solutions that effectively and cost efficiently address our clients' challenges.

Our client portfolio is diverse and includes large market leading customers market leaders typically prioritize technology investments to maintain their competitive advantage our focus on addressing their needs continues to be critical in our ability to drive sustainable long term above market performance.

David Kelly: Our focus on addressing their needs continues to be critical in our ability to drive sustainable long-term above-market performance. While short-term disruption may occur within certain clients or industries, our diverse client base provides an outstanding platform for consistent, long-term growth. We experienced stabilization in some of our larger industry verticals in Q4, including financial services and technology. Elsewhere, we saw quarter-over-quarter improvement in transportation and retail trade, and some headwinds in manufacturing. Looking forward to Q1, we expect technology revenue to decline between 10 and 12% year-over-year, which is consistent with Q4 2019. RFA business grew approximately 2% sequentially but declined 28% year-over-year, as the prior year period included a project to support hurricane relief. The year-over-year decline also reflects the impact of business we are no longer supporting due to our repositioning efforts in a more challenging macro environment. We expect revenues to be down approximately 25% year-over-year.

While short term disruption may occur within certain clients or industries. Our diverse client base provides an outstanding platform for consistent long term growth.

We experienced stabilization in some of our larger industry verticals in Q4, including financial services and technology services elsewhere, we saw quarter over quarter improvement in transportation and retail trade and some headwinds in manufacturing.

Looking forward to Q1, we expect technology revenue to decline between 10, and 12% year over year, which is consistent with Q4 2023.

Our FAA business grew approximately 2% sequentially, but declined 28% year over year as the prior year period included a project to support Hurricane relief efforts.

Year over year decline also reflects the impact of business, we are no longer supporting due to our repositioning efforts and a more challenging macro environment, we expect revenues to be down approximately 25% year over year. Our average bill rate has continued to exceed $50 per hour, reflecting our success in repositioning this business.

David Kelly: Our average bill rate has continued to exceed $50 per hour, reflecting our success in repositioning this business towards a higher skill set for the business, which is more synergistic with our technology service offering. Select margins in our FAA business decreased 70 basis points sequentially due to a lower margin project with a strategic client, but they have improved 330 basis points since the first half of 2020 as our mix of business has significantly improved. We expect bill pay spreads to remain fairly stable at these levels now that the significant majority of business that we are no longer pursuing has run off. However, overall FAA margins will decrease sequentially due to seasonal payroll tax relief.

This towards a higher skill set set of business, which is more synergistic with our technology service offering.

Flex margins at our FAA business decreased 70 basis points sequentially due to a lower margin project with a strategic client, but if improved 330 basis points since the first half of 2020 as our mix of business has significantly improved.

We expect bill pay spreads to remain fairly stable at these levels now that the significant majority of business that we are no longer pursuing as run off however, overall F. A margins will decrease sequentially due to seasonal payroll tax resets.

David Kelly: We've taken the necessary and thoughtful measures to strike a balance between associate productivity and our revenue expectations. As we have done in prior economic downturns, we are focused on retaining our most productive associates and making targeted investments in the business to ensure that we are well prepared to capitalize on market demand when it accelerates. We continue to invest in our managed teams and project solutions capabilities and the integration of those offerings within the firm, which is progressing well. We are fortunate to have one of the most recognized brands in the market for providing technology talent solutions. Our reputation has been established over our 60-plus year operating history, and we continue to carry the highest overall Glassdoor rating within our peer review.

We've taken the necessary and thoughtful measures to strike a balance between associate productivity and our revenue expectations as we've done in prior economic downturns, we are focused on retaining our most productive associates and making targeted investments in the business to ensure that we are well prepared to capitalize on the market demand.

Got it accelerates we continue to invest in our managed teams and project solutions capabilities and the integration of those offerings within the firm which is progressing well.

We are fortunate to have one of the most recognized brands in the market for providing technology talent solutions. Our reputation has been established over our 60 plus year operating history, and we continue to carry the highest overall glassdoor rating within our peer group I'm tremendously excited about our strategic position and the ability to continue delivering.

Jeff Hackman: I'm tremendously excited about our strategic position and the ability to continue delivering above-market performance. The success that we have as an organization wouldn't happen without the unwavering trust that our clients, candidates, and consultants place in us, and I appreciate the dedication, creativity, and resilience displayed by our incredible team. I'll now turn the call over to Jeff Hackman, Kforce's Chief Financial Officer. Thank you, Dave.

Spring above market performance. The success that we have as an organization that doesn't happen without the unwavering trust that our clients candidates and consultants place in us and I appreciate the dedication creativity and resilience displayed by our incredible team.

I'll now turn the call over to Jeff Hackman, K forces Chief Financial Officer.

Thank you, Dave and my commentary I will discuss certain non-GAAP items. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.

Jeff Hackman: In my commentary, I will discuss certain non-GAAP items. However, the non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the impact of these costs on our financial results. Our press release provides the reconciliation of differences between GAAP and non-GAAP financial networks. Overall revenues in 2023 of $1.53 billion decreased approximately 10% year-over-year. Gap earnings per share in 2023 were $3.13, which declined 15% year-over-year, as adjusted for the third quarter charges associated with actions to reduce our structural costs and the settlement of outstanding legal matters.

They are included as additional clarifying items to aid investors in further understanding the impact of these costs on our financial results.

Our press release provides the reconciliation of differences between GAAP and non-GAAP financial measures.

Overall revenues in 2023 of 1.53 billion decreased approximately 10% year over year.

GAAP earnings per share in 2023.

Was $3.13, which declined 15% year over year.

As adjusted for the third quarter charges associated with actions to reduce our structural costs and the settlement of outstanding legal matters.

Jeff Hackman: EPS was $3.49 in 2020. This represents a decrease of 18% over the prior year period, as adjusted for a fourth quarter 2022 impairment charge related to a previous joint failure. Fourth quarter revenues of $363.4 million declined 13.4% year-over-year, while earnings per share of $0.82 was at the top end of guidance due to lows in expected SG&A costs. Overall gross margins declined 40 basis points sequentially and declined 120 basis points year-over-year to 27.3% in the fourth quarter due to a combination of a lower mix of direct title revenue and a decline in flex margins.

E. P. S was $3.49 in 2023. This represents a decrease of 18% over the prior year period as adjusted for our fourth quarter of 2022 impairment charge related to a previous joint venture.

Fourth quarter revenues of 363.4 million declined 13.4% year over year, while earnings per share of 82 cents was at the top end of guidance due to lower than expected SG&A costs.

Overall gross margins declined 40 basis points sequentially and declined 120 basis points year over year to 27, 3% in the fourth quarter due to a combination of a lower mix of direct hire revenue and a decline in flex margins.

Overall SG&A expenses as a percentage of revenue was 21%, which was a decrease of 150 basis points year over year or a decrease of 100 basis points. After normalizing for the joint venture impairment charge.

Jeff Hackman: Overall, FTA expenses as a percentage of revenue were 21%, which is a decrease of 150 basis points year-over-year or a decrease of 100 basis points after normalizing for the joint venture retirement charge. SG&A costs were lower than anticipated in the fourth quarter of 2023 due to lower performance-based compensation, lower health care costs, and lower professional fees stemming from the settlement of outstanding litigation. We also continue to exercise greater discretionary spend control in this macro environment and generate leverage from our real estate portfolio given our office occasional work environment. Our operating margin of 6% exceeded the high end of our expectations of 5.8%. Our effective tax rate in the fourth quarter was 26.6%, which was 160 basis points higher than we anticipated due to adjustments to certain tax credits.

SG&A costs were lower than anticipated in the fourth quarter of 2023 due to lower performance based compensation lower health care costs and lower professional fees stemming from the settlement of outstanding litigation.

We also continued to exercise greater discretionary spend control in this macro environment and generate leverage from our real estate portfolio, given where office occasional work environment.

Our operating margin of 6% exceeded the high end of our expectations of five 8%.

Our effective tax rate in the fourth quarter was 26.6%.

Which was a 160 basis points higher than we anticipated due to adjustments to certain tax credits.

Jeff Hackman: Operating cash flows were $22 million, and our return on invested capital was approximately 40% in the fourth quarter. We generated $116 million in EBITDA in 2023. Operating cash flows were $91.5 million for 2023, and we've returned nearly $95 million in capital, in excess of 100% of operating cash flows, to our shareholders via dividends and open market re-purchase. We have prudently managed our business by driving solid organic growth over many years that has resulted in consistently strong results and a pristine balance sheet with minimal debt. As Joe indicated in his opening remarks, our Board of Directors approved an increase in our dividend, the 5th consecutive annual increase in revenue, and an increase in our share repurchase authorization to $100 million. These actions again demonstrate our financial strength and continued confidence in our business. Our pattern of returning significant capital to our shareholders has been consistent over many years, not just in this operating environment. In fact, since we initiated our dividend in 2014, we have increased it by nearly 400%. And, since 2007, we have reduced our weighted average number of shares outstanding from $42.3 million to $19.5 million.

Operating cash flows were $22 million and our return on invested capital was approximately 40% in the fourth quarter.

We generated $116 million in EBITDA in 2023 opt.

Operating cash flows were 91.5 million for 2023, and we returned nearly 95 million in capital in excess of 100% of operating cash flows to our shareholders via dividends and open market repurchases.

We have prudently managed our business by driving solid organic growth over many years that has resulted in consistently strong results and a pristine balance sheet with minimal debt.

As Joe indicated in his opening remarks, our board of directors approved an increase to our dividend the fifth consecutive annual increase and an increase in our share repurchase authorization to $100 million.

These actions again demonstrate our financial strength and continued confidence in our business.

Our pattern of returning significant capital to our shareholders has been consistent over many years not just in this operating environment and.

In fact, since we initiated our dividend in 2014, we have increased it nearly 400%.

And since 2007, we have reduced our weighted average shares outstanding from 42.3 million to 19, and a half million. All in we have returned slightly more than $900 million in capital to our shareholders. Since 2007, which has represented approximately 75% of the cash generated.

Jeff Hackman: All in, we have returned slightly more than $900 million in capital to our shareholders since 2007, which represents approximately 75% of the cash generated. Plus, significantly growing our business and improving profitability levels. We remain committed to returning capital, regardless of the economic climate, and our threshold for any prospective acquisition remains high. Our strong balance sheet and the flexibility we have under our credit facility provide us with the opportunity to get more addresses in repurchasing our stock if there is a dislocation between expected future financial performance and the valuation of our shares. The first quarter had 64 billing days, which is three more than the fourth quarter of 2023 and the same as the first quarter of 2023. We expect Q1 revenues to be in the range of $351 million to $359 million and earnings per share to be between $54 and $62 cents.

Whilst significantly growing our business and improving profitability levels.

We remain committed to returning capital regardless of the economic climate and our threshold for any prospective acquisition remains high.

Our strong balance sheet and the flexibility we have under our credit facility provides us with the opportunity to get more aggressive in repurchasing our stock. If there is a dislocation between expected future financial performance and the valuation of our shares.

The first quarter has 64 billing days, which is three more than the fourth quarter of 2023 and the same as the first quarter of 2023.

We expect Q1 revenues to be in the range of 351 million to 359 million and earnings per share to be between 54, and <unk> 62 cents.

Operator: Our guidance does not consider the potential impact of any other unusual or nonrecurring items that may occur, looking beyond what we expect may be short-term macroeconomic uncertainty. We remain extremely excited about our strategic position and prospects for continuing to deliver above-market growth while continuing to make the necessary investments in our integrated strategy and the ongoing transformation of our back office that will help drive long-term growth and profitability improvement. Joe mentioned our longer-term financial objective of obtaining double-digit operating margins. We believe the key contributors are increased scale, productivity improvements, including a back office transformation program and advancements in AI technology, driving a greater mix of managed teams and solutions businesses and further reducing our fixed costs, such as real... As a point of reference, in 2022, our operating margin was approximately 7% at $1.7 billion in revenue.

Our guidance does not consider the potential impact of any other unusual or nonrecurring items that may occur.

Looking beyond what we would expect may be short term macroeconomic uncertainties.

We remain extremely excited about our strategic position and prospects for continuing to deliver above market growth, while continuing to make the necessary investments in our integrated strategy and the ongoing transformation of our back office that will help drive long term growth and profitability improvements.

Joe mentioned, our longer term financial objective of obtaining double digit operating margins. We believe the key contributors are increased scale productivity improvements, including through our back office transformation program and advancements in AI technologies, driving a greater mix of managed.

Teams and solutions business and further reducing our fixed costs such as real estate.

As a point of reference in 2022, our operating margin was approximately 7% at 1.7 billion in revenue.

Operator: As we look forward, the anticipated benefits associated with our back-office transformation program are about 100 basis points compared to the current level of investment. When you combine this benefit with the benefit of scale, we believe a reasonable revenue level for us to attain double-digit operating margins is slightly more than $2 billion in annual revenue. We offer this data point as our confidence in achieving these profitability levels has further increased due to the returns we have seen in our front office technology investments and our progress with our transformation efforts. On behalf of our entire management team, I'd like to extend a sincere thank you to our team for the record. We would now like to turn the call over to questions. The floor is now open to your questions. To ask a question at this time, please press star followed by the number 1 on your telephone. Again, to ask a question at the... Simply press the star followed by the number one on your telephone.

As we look forward the anticipated benefits associated with our back office transformation program are about 100 basis points compared to the current level of investment.

When you combine this benefit with the benefit of scale, we believe a reasonable revenue level for us to attain double digit operating margins is slightly more than $2 billion in annual revenues.

We offer this data point is our confidence in achieving these profitability levels has further increased due to the returns we have seen in our front office technology investments and our progress with our transformation efforts.

On behalf of our entire management team I'd like to extend a sincere. Thank you to our teams for their efforts.

We would now like to turn the call over for questions.

The floor is now open for your questions to ask a question at this time.

<unk> followed by the number one on your telephone keypad.

Again to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Mark S. Marcon: We'll now take a moment to compile our first question comes from the line of Mark. Marcon, with theirs. Hey, good afternoon. Thanks for taking my question. I'm wondering, with regard to the tech flex, you did note that there was, you know, a little bit of a slower start, but in the last couple of weeks, things have picked up. And if I take a look at just the year-over-year trends, it looks like they've actually improved in the fourth quarter. So I'm wondering, can you talk a little bit about your level of confidence, and is there any particular vertical or area where you're starting to see a rebound with regard to the assignments picking up? Yeah, Mark. This is Dave Kelly.

Now take a moment to compile our roster.

Our first question comes from the line of Mark.

Marchionne with Baird. Please go ahead.

Hey, good afternoon.

Thanks for taking my questions.

I'm wondering with regards to the.

So tech flex.

You did note that there was you know.

A little bit of a slower start but in the last couple of weeks things have picked up and if I take a look at just the year over year trends it looks like they've actually improved in the fourth quarter. So wondering can you talk a little bit about your level of confidence and what is there any particular vertical or.

Area, where youre starting to see a rebound with regards to the the assignments picking up.

Yeah, Mark this is Dave Kelly.

David Kelly: I think I start by saying, obviously, there's a lot going on. And I mean, obviously, always a bit of uncertainty, but just kind of, give a little clarity on some of the comments that I made. So you're right, there was a little greater number of ends that we had seen at the end of the year. There seems to be some delay in some budgetary approvals.

I think I'd start by saying, obviously theres a lot happening in I mean, obviously always a bit of uncertainty, but just kind of.

Put a little clarity on some of the comments that I've made so youre right.

It was a little bit.

Greater amount of ends that we had seen at the end of the year.

There seem to be some delay in.

Some budgetary approvals.

David Kelly: And so that led to maybe a bit greater fall off. But in the last two weeks, really, we've seen a lot of our key performance indicators, our job orders, our interview sendouts, really return to late Q3 levels. If you remember, and obviously, we made it a point in the remarks, we saw sequential growth from Q3 to Q4 in our technology business as a result of increased activity. So we think that the levels that we've seen in the last couple of weeks and what we continue to hear anecdotally from our clients about the backlog of technology investments are positive indicators. So I think as we, and I wouldn't say, by the way, you asked about industry, that there's a particular industry that's driving it. It is pretty broadly based, broadly based, as we always say, there are certain clients and projects that we might win and or new activities, but it's not industry specific.

That led to maybe a bit greater falloff, but in the last two weeks really we've seen a lot of our key performance indicators of job orders. Our interview send outs really returned to late Q3 levels.

If you remember and obviously, we've made it out as a point on the in the remarks, we saw a sequential growth through Q3 Q4 in our technology business. As a result of increased activity. So we think that the levels that we've seen in the last couple of weeks and what we continue to hear anecdotally from our clients about the backlog of technology investments are positive.

Caters.

So I think as we and I Wouldnt say by the way you asked about industry that there's a particular industry. That's driving it it is pretty broadly based broadly based as we always say there are certain clients and projects that we might win <unk> new activities, but it's not industry specific so if I were to characterize it I think overall.

David Kelly: So if I were to characterize it, I think overall, I'd say that the environment is really, as we sit here today, pretty similar to what we saw in early Q4, stable, with some positive signs of potential improvement. So I feel pretty good about what we've seen. Okay. And then, can you talk just a little bit about the bill rates?

I'd say that we characterize the environment really as we sit here today are pretty similar to we saw in early Q4 stable with some positive signs for potential improvement so feel pretty good about where we sit.

Great and then can you talk just a little bit about.

The bill rates so.

Mark S. Marcon: So, in Q4, on the tech side, they were down a little bit, both sequentially and year over year. And that coincided with, you know, the flex gross margin declining a little bit sequentially and year over year. I'm wondering, was that specific to any one particular client, or was that broad-based as well?

In Q4.

The tech side, they were they were down a little bit.

Both sequentially and year over year and that coincided with the flex gross margin.

Declining a little bit sequentially and year over year I'm wondering is that was that specific to any one particular.

Client or was that broad based as well and how should we think about the margin profile for tech flex for the coming year do you feel confident that we can stabilize those gross margins.

David Kelly: And how should we think about, you know, the margin profile for tech flex for the coming year? Do you feel confident that we can, you know, stabilize those gross margins? Yeah, Mark. This is Dave again.

Yeah, Mark this is Dave again, maybe I'll put a little bit finer point and obviously, we all know 2023 was a tough year in the technology space right. So clients are obviously, putting pressure on bill rates as well, but.

David Kelly: Maybe I'll put a little bit of a finer point on that. And obviously, we all know 2023 was a tough year in the technology space, right? So clients are obviously putting pressure on bill rates as well, but you mentioned the decline. To be precise, I think the bill rates declined in technology by 0.2%, so less than a half a percent. So when we talk about relatively stable at $90, it is essentially stable. So there is no specific driver of that 0.2%, right?

You mentioned the decline to be precise I think the bill rate declined in technology to.

2%, so less than a half a percent. So when we talk about relatively stable at $90. It is essentially stable. So there is no specific driver to that 0.2% right. It could be a project. It could be you know a mix item, but it is really a nominal change anyway. So I don't think we think about it.

David Kelly: It could be a project, it could be, you know, a mixed item, but it is really a nominal change anyway. So I don't think we should think about it as a difference year over year in bill rates. In terms of the margin expectations that we've got going forward, you know, we really have seen, and we've mentioned, we don't expect any spread changes other than payroll tax receivables in Q1. We said that we've seen that in the last couple quarters. So we look to margins in technology, inflexible, and technology flex to be stable at these levels. In the near term, I would say. In the longer term, obviously, when some of this uncertainty clears up, and maybe we see some positive inflection in the revenue trend, we would also typically see expansion in margin. So this is pretty historical.

As a difference year over year in bill rates and in terms of the margin expectations that we've got going forward.

We really have seen and we had mentioned we don't expect any spread changes other than payroll tax resets in Q1, we said that we have seen that the last couple of quarters. So we look to margins in technology and flexible.

Technology flex to be stable at these levels in the near term I would say is in the longer term obviously.

When some of this uncertainty clears up and maybe we see some positive inflection in the revenue trends. We would also typically see expansion and margin. So this is pretty historic goal I mean, this looks pretty much like we've seen historically, so we feel like we're kind of following just as we have from a revenue perspective from a margin perspective, a pretty traditional pattern here.

David Kelly: This looks pretty much like we've seen historically. So we feel like we're kind of following just as we have from a revenue perspective, from a margin perspective, a pretty traditional pattern. Kevin Marcon, this is Greg.

Mark This is Jack.

Greg Mendez: To add on one comment to Dave's point, and Dave touched on this, but I think we've seen after the earlier decline that we saw in our flex margin profile and our technology business in the first half of 2023, we've seen really good stability in Q3 and Q4. The tick down that you mentioned in the fourth quarter has more to do with some of the seasonal impacts that we traditionally see from Q3 to Q4. And Dave's right.

Add on one comment to where Dave went and Dave touched on this but I think we've seen after the earlier declines that we saw in our flex margin profile in our technology business in the first half of 2023, we've seen really good stability and in Q3 and Q4 the.

The tick down that you've mentioned in the fourth quarter has more to do with some of the seasonal impacts that we traditionally see Q3 to Q4.

And Dave's right I think as we sit here today and certainly the economics skies clear up a bit I would expect to recapture some of that lost margin earlier in the year, but in the near term and unexpected stability in our technology business.

Greg Mendez: I think as we sit here today, certainly as the economic skies clear up a bit, I would expect to recapture some of that lost margin earlier in the year, but in the near term, I would expect stability in our technology business. That's great. And then you did a really nice job in terms of managing the discretionary SG&A and showing more efficiency. You also mentioned that you've got the Workday implementation that you're putting in place. The guidance for Q1 is relatively clear.

That's great and then you did a really nice job in terms of managing the discretionary SG&A and.

And showing more efficiency you also mentioned.

You know that you've got the work day implementation that youre putting in place.

The guidance for Q1 is relatively clear how should we think about that unfolding as the year goes through are there are you anticipating any big jumps in terms of.

Mark S. Marcon: How should we think about that unfolding as the year goes by? Are you anticipating any big jumps in terms of your internal SG&A just due to project starts or your internal initiatives or anything that we should be aware of from that perspective? No, I think Mark, and thank you for your comments on the SG&A control going into the year. You know, Joe said it, controlling what we can control.

Of your internal SG&A just due to.

Project starts for your internal.

Initiatives or anything that we should be aware of from that perspective.

Martin and thank you for your comments on the on the SG&A control going into the year, Joe said it.

Troll and what we can control.

Mark S. Marcon: I think as it relates to our back office transformation program. We mentioned in our prepared remarks the selection of Workday. Mark, that's been a program, you've made comments on our earnings calls broadly, we've been after this for probably the last, you know, two, two and a half years, and selecting Workday in the second half of 2023, I think, is meant to convey some increased confidence in the roadmap that we're going under. And in 2024, Mark, I mean, we're, you know, continuing to invest at about the pace that we have been in 23, heading into 24. So I think from an SG&A standpoint, I wouldn't expect anything significant in 24 related to our Gemini program.

As it relates to our back office transformation program, we mentioned in our prepared remarks, the selection of workday.

That's been a program we've made comments on our earnings call. Historically, we've been after this for probably the last.

Two two and a half years.

And the selection of workday in the second half of 2023 I think is is meant to convey some some increased confidence in the roadmap that we are going under.

And then in 2024, Mark I mean, we're continuing to invest at about the pace that we have been in 23 heading into 2004. So.

I think from an SG&A standpoint, I wouldn't expect anything significant in 'twenty four related to our Gemini program.

Mark S. Marcon: So I think that's the short of it, Mark, from that standpoint. Right, and then last one for me. I'm encouraged to hear you talk about, you know, when we get to 2 billion, getting to double-digit operating margin. How are you thinking about... Just in broad strokes, the gross margin for the company and the SG&A is a percentage of revenue.

So I think that's that's the short of it Mark I think from that standpoint.

Great and then last one for me encouraged to hear you talk about you know.

When we get to 2 billion getting to double digit operating margins.

How are you thinking about.

Just in broad strokes, the gross margin for the company and in the SG&A as a percentage of revenue.

Jeff Hackman: I'm assuming we're going to get more efficiency with regard to SG&A, and you mentioned 100 bits. But I'm wondering if you can put in just a finer point as we think about that $2 billion double-digit mark. Yeah, and I think, Mark, there's a number of components to getting from where we were at the end of 2022, which was about 7% to double-digit operating margin. I covered those in the prepared remarks.

I'm, assuming we're going to get more efficiency with regards to the SG&A and you mentioned 100 bps, but wondering if you can put a finer point as we think about that $2 billion double digit mark.

Yes, and I think Mark there is a number of components to getting from where we were at the end of 2022, which was about 7%.

Double digit operating margin I'll cover those in the prepared remarks, certainly Mark you would expect the benefits we've talked about.

Jeff Hackman: You know, certainly, Mark, you would expect the benefits that we talked about, to what degree is this linear versus a bit of a step function, but I think, certainly, you would expect the benefits of scale as we continue to grow. I think it's also fair to assume that some of the linear progression that we've been after for quite a number of years as we invest in technology to drive both front office and back office improvements will largely be linear. You know, I mentioned in my prepared remarks that a significant contributing factor to our financial objectives is our back office transformation program. We compared it more or less to what our current investment run rate is to the benefits. We anticipate that being about 100 basis points, as you call out. We've got, you know, several years left in that program.

To what degree is this linear versus a bit of a step function, but I think certainly you would expect the benefits of scale as we continue to grow revenue would be more linear I think it's also fair to assume that some of the linear progression that we've been after for quite a number of years as we invest in technology to drive both front office and back off.

This.

Improvements for that to largely be linear.

I did I did mentioned in my prepared remarks that a significant contributing factor to our financial objectives as our back office transformation program, certainly compare more to what our current investment run rate as to the benefits, we anticipate that being about 100 basis points.

As you called out we've got several years left in that program I would expect us to step into some of those savings versus a pure linear progression from a math standpoint, so we feel pretty confident there.

Jeff Hackman: I would expect us to step into some of those savings versus a kind of pure linear progression from a math standpoint, so, you know, we feel pretty confident there. The last component, I would say, we've been after for a number of years, which is, you know, constantly getting after a structural fixed cost and things like real estate, et cetera. We've been driving that for a number of years, and in 24 and 5, we've got a bit of work left to do there, Mark, but hopefully, that helps a bit.

Last component I would say we've been after for a number of years, which is constantly getting after our structural fixed costs and things like real estate et cetera.

Driving that for a number of years.

And in 'twenty, four and five we've got a bit of work left to do there mark but.

That helped a bit yeah, just maybe just add mark right. So this is a path that we've been on for a long time right simplifying our business. If this is an increasing view of the confidence in being able to get there right.

David Kelly: Yeah, just maybe just to add, Mark, right, so this is a path that we've been on for a long time, right? Simplifying our business. This is an increasing view of confidence and being able to get there, right?

We have built a relatively speaking a very focused model with a focus on improving productivity. We've done that over the last number of years and significant improvements in operating margin. So this is really just a continuation of a plan we put in place years ago that we've been executing on and expect to continue to execute our.

David Kelly: We have built, relatively speaking, a very focused model with a focus on improving productivity. We've done that over the last number of years and have had significant improvements in operating margins, so this is really just a continuation of a plan we put in place years ago that we've been executing on and we expect to continue to execute on. Yeah, Mark, this is Joe.

Mark This is Joe I would say as the most tenured person in the room. This has been a 20 year journey.

Joseph J. Liberatore: I would say, as the most tenured person in the room, this has been a 20-year journey. I mean, you can go all the way back to the dot-com, and coming out of the dot-com, you made strategic decisions about taking down our percentage of focus within direct hire for a variety of reasons, which we were never going to get back to operating margin when that happened. We've proven the firm's capable of doing that with that shift, and then even as we moved past the dot-com and we made strategic decisions to divest those units that weren't going to be able to compete for dollars, investment dollars, because of our focus on IT and shedding that revenue and replacing it with healthy tech revenue, so long, long strategic plan to get us where we are today. We are highly confident, as Jeff spoke about, that That's great. Thank you very much.

You can go all the way back to the dotcom and coming out of the dotcom, we made strategic decisions in and around <unk>.

Taking down our percentage of focus within direct hire a variety of reasons, which we were never going to get back to operating margin when that happens we've proven the firms capable of doing that with that shift and then even as we move past the dotcom and we made strategic decisions to divest of those units there.

We're going to be able to compete for dollars investment dollars because of our focus on it.

And shedding those that revenue and replacing it with a with healthy Tac revenue. So long long strategic plan to get US where we are today, we are highly confident in what Jeff spoke about.

As we get into that $2 billion range, we'll be able to achieve those double digit operating margins.

That's great. Thank you very much.

Operator: Sure. Our next question comes from Trevor Romeo with William Blair. Please go ahead.

Sure.

Our next question comes from Trevor.

Romeo with William Blair. Please go ahead.

Trevor Romeo: Hi, good afternoon. Thanks for taking the questions. First one, yeah, I know you talked about clients being slower to approve their budget this year. But I kind of had a question about the size of the IT budget you're seeing relative to last year. I think maybe last quarter, you talked about potentially slashing it slightly up versus 2023. Is that kind of still your expectation?

Hi, good afternoon, thanks for taking the questions first one.

Yeah, I know you talked about clients being slower to approve their budgets. This year, but I kind of had a question about the size of the it budgets youre seeing relative to last year.

Maybe last quarter, you talked about potentially flat to slightly up versus 2023 is that still your expectation and then if we do happen to see.

Joseph J. Liberatore: And then if we do happen to see an increase in macrocompetence later this year, how quickly do you think those clients can adjust and potentially increase product spending? Yeah, I was saying, nothing's really changed at this point in time. I mean, in general, we are hearing flags of slightly increasing budgets over 2023, again with that emphasis on projects focused on gaining efficiencies both internally and externally. But I think, as I might have even mentioned last quarter, news to say, there are industry and specific client drivers which we believe play to our favor in terms of the quality and diversity of our overall portfolio. I mean, we are also seeing that the budgets, as they're being discussed, are being allocated a little bit differently than in prior years.

An increase in macro continents. Later this year how quickly do you think those clients can adjust and potentially increase project spending.

Yes, I would say nothing has really changed at this point in time I mean in general we are hearing flat to slightly increasing budgets over 2023.

Again with that emphasis on projects focus to gain efficiencies, both internally and externally, but I think I might have even mentioned last quarter Needless to say I mean, there are industry and specific client drivers, which we believe play to our favor in terms of the quality and diversity of our overall portfolio.

I mean, we are seeing also the budgets as they are being discussed I mean, they are being allocated a little bit differently than in prior years Theres really a focus on stretching the dollar to get more out of it I think the good news for US is that's opening up more opportunities as clients are no longer exclusively looking at just traditional <unk>.

Joseph J. Liberatore: There's really a focus on stretching the dollar to get more out of it. I think the good news for us is that it's opening up more opportunities, as clients are no longer exclusively looking at just traditional consulting firms to do their very high-cost type work, which provides an opening for firms such as us to really go after this hybrid type work in a more efficient way, you know, with staffing and solutions and servicing through multiple means there. So nothing's really changed from that standpoint. I do believe, you know, if we do see the interest rates start to step down and we see a positive reaction, I think clients could move very quickly because their backlog is just incredible. I mean, they're not able to get done what they need to get done in terms of staying competitive and with disruptive factors that are out there. And then with Genix, throw Gen AI on top of that, and everybody's desires there, you know, because we are seeing the majority of the clients that we work with, I would say that are not technology specific from an industry standpoint. They're still very much in the early innings.

Consulting firms to do their very high cost type work, which provides us an opening for firms such as us to really go. After this hybrid type work in a more efficient.

With staffing and solutions and servicing it through multiple means there. So nothing nothing has really changed from that standpoint, I do believe.

If we do see that the interest rates start to step down and we see a positive reaction I think clients could move very quickly because their backlog is just incredible I mean, they're not able to get done what they needed to get done.

In terms of staying competitive and with disruptive factors that are out there and then with Janet throw Jan AI on top of that in everybody's desires. There because we are seeing the majority of the clients that we work with I would say that our non.

Technology specific from an industry standpoint, they are very much in the early innings, I mean, theyre getting after rationalizing their data organizing their data to position. There there are opportunities so while they're making investments there I'm sure no different than here at K for us I wish we had more SG&A dollars to accelerate certain things so theres a balance there.

Joseph J. Liberatore: I mean, they're getting after rationalizing their data, organizing their data to position their opportunities. So while they're making investments there, I'm sure it's no different than here at K-Force. I wish we had more SDNA dollars to accelerate certain things. So there's a balance there.

Joseph J. Liberatore: And I think that's just a microcosm of what we're experiencing with our clients. But as things start to get, become, greater visibility, more predictable, I think we'll see things loosen up. Okay, great.

And I think Thats, where just a microcosm of what we're experiencing with our clients, but as things start to get become greater visibility more predictable I think we will see things loosen up.

Okay, great. Thanks, Joe.

David Kelly: Thanks, Joe. That's very helpful. And then, I guess, just following up on some of the improvement you've seen in the leading project indicators lately, does the Q1 guidance assume that, I guess, assignments start to improve a little bit throughout the quarter, as you described? Or would that be, you know, kind of more upside to the guidance that they're having? Yeah, I think Trevor, you know, there's obviously a lag as these indicators start to become more robust. So, the improvement that we might see in the first quarter is pretty mild.

And then I guess just following up on some of the improvement you've seen in the leading project indicators lately.

The Q1 guidance assume that I guess assignment starts improve a little bit throughout the quarter. As he described could happen or would that be kind of more upside to the guidance if it happens.

Yes, I think Trevor.

There's obviously a lag as these indicators start to become more robust. So the improvement that we might see in the first quarter was pretty mild but the trajectory as we look into the second quarter and beyond for the year.

David Kelly: But the trajectory as we look into the second quarter and beyond for the year will improve. So, you know, as we sit here on the 5th of February, we've seen improvement, and it takes a few weeks, right? So, you only have a few weeks left in the quarter to see revenue improvement in the quarter. So, we're not expecting a great lift in the first quarter. It's really the momentum as we move forward. Okay, got it Dave, thank you. Our next question comes from the line of Karthik Mehta, who is from North Coast- Just go ahead.

We will improve so as we sit here on the fifth of February we've seen improvements and it takes a few weeks right. So you only have a few weeks left in the quarter to see revenue improvement in the quarter. So we're not expecting great lift in the first quarter, it's really the momentum as we move forward.

Okay got it Dave Thank you.

Our next question comes from the line of Kartik Mehta with Northcoast Research. Please go ahead.

Karthik Mehta: Yeah, you talked about leading indicators, and I just wanted to understand, are these resulting in conversion? Has there been a change in the sales cycle? And just ultimately getting from, you know, some inquiries to final sales, you know, how's that progressing? Or what changes have you seen?

Yeah.

You talked about the leading indicators and I just wanted to understand.

Are these resulting in conversion.

There been a change in the sales cycle.

It gets ultimately getting from.

Some inquiries to final sales how is that progressing or what changes have you seen.

Yes, I would say.

David Kelly: I would say, in terms of those indicators, now, we haven't really seen anything change with the sale cycle. The sale cycle has been elongated, you know, for really since the back half of 2022, when uncertainty started to creep in. So, no material changes there. I would say, you should ask about conversions.

Some of those indicators now we haven't we haven't really seen anything change with the sales cycle. The sales cycle has been elongated.

For really since the back half of 2022, when uncertainty started to creep and so no material changes there I would say you'd asked about conversions, we've actually over the course of the last four or five quarters, we've seen our conversions come down rather significantly.

David Kelly: We've actually, over the course of the last four or five quarters, seen our conversions come down rather significantly in comparison to where we were. And again, I think, back to the clients, they're looking for a little bit more flexibility. So, they're holding on to the consultants longer versus converting them. In-depth keys, which, again, this goes back to what I've discussed on prior calls.

As in comparison to where we were and again I think the.

That's where the clients are looking for a little bit more flexibility, so theyre holding on to the consultants longer versus converting them into ftes, which again. This goes back to what I've discussed on prior calls it's the normal cycle.

Joseph J. Liberatore: It's the normal cycle that I've seen for 35 years in multiple recessionary periods and tough periods of time, you know, where the first thing they do is get rid of consultants. The second thing, they right-size their internal resources. And then, the third thing they do is start bringing consultants back on. And then, the fourth phase is when they start to really start to bring back FTEs.

That I've seen for 35 years in multiple recessionary periods and tough periods of time.

The first thing they do is exit consultants the second thing they right size their internal.

Resources and then the third thing they do is they start bringing consultants back on and then the fourth phase is when they start to really start to bring on back FTE. So I think that's all we're seeing is that traditional cycle playing out.

Joseph J. Liberatore: So, I think that's all we're seeing is that traditional cycle playing out. And then you obviously talked about companies wanting to stretch their dollars, which makes a lot of sense. I'm wondering if this is resulting in any changes from your competition or maybe more competition than you've seen in the past 6 to 12 months? I would actually say, from a competitive standpoint, all the traditional competitors we deal with are still viable competitors. One of the things that typically happens as we go through these cycles is you do see those organizations that were not well prepared, didn't have good balance sheets, maybe had a high customer concentration, and they see a receivable go bad.

And then you obviously talked about companies wanting to stretch their dollars, which makes a lot of sense. I'm wondering is this a resulting in any changes from your competition or may be more competition than you've seen in the past six months to 12 months.

Yes, I would actually say from a competitive standpoint.

The traditional competitors that we deal with are still viable competitors one of the things that typically happens as we go through these cycles as you do see those organizations that were not well prepared didn't have good balance sheets, maybe had a high customer concentration and they see our receivable go bad so.

Joseph J. Liberatore: So I don't think we're seeing anything different this cycle than we've historically seen in tougher times. If anything, we see the overall competitive landscape shrinking, but it's really more the smaller players that are exiting the marketplace, and we don't see as many new competitors coming in. But in terms of those that we typically see day in and day out, the larger or mid-tier providers, whether they're professional staffing or they're on the solution side, nothing really changed materially in that landscape, right?

I don't think we're seeing anything different this cycle than we've historically seen in tougher times, if anything we see the overall competitive landscape shrinking, but it's really more of the smaller players that are there.

We're exiting the marketplace and we don't see as many new competitors coming in but in terms of those that we typically see day in and day out.

The larger or mid tier providers, whether they are professional staffing or they're on the solution side.

Nothing's really changed materially what that landscape the thing I would add and Joe touched on it in the last sentence right. So the larger players the suite of services that they can offer from traditional staff augmentation to manage teams is really an important differentiator. So part of the reason why we can do what we can do is because we've got longstanding relationships with them.

Greg Mendez: So the larger players, the suite of services that they can offer, from traditional staff augmentation to managed teams, is really an important differentiator. So part of the reason why we can do what we can do is because we've got long-standing relationships with a lot of significant clients who have faith in our ability to deliver across a spectrum of services. And that's what, frankly, they're looking for in the competitive landscape, and the winners are going to be those companies that can do that across the spectrum. Yeah, and that's why we're seeing the larger players making those investments because they can afford to. The smaller entities can't afford to bring in the resources to bring those credentials to the table to get them in front of the organization because it's an expensive proposition.

A lot of significant clients, we have trust in our ability to deliver across the spectrum of services and that's what frankly, they're looking for in the competitive landscape and the winners are going to be those companies that can do that across the spectrum and that's why we're seeing the larger players are making those investments because they can afford to the smaller entities. They can't afford to bring on the resources that <unk>.

Those credentials to the table to get them in front of the organization because it's an expensive proposition. So I would say that's another strategic dynamic that is evolving in the marketplace versus if you're just in a traditional staff of which has a much lower expense type model to get involved with.

Joseph J. Liberatore: So I would say that's another strategic dynamic that is evolving in the marketplace versus if you're just in a traditional staff Aug, which is a much lower expense type model to get involved in. Thank you very much. I really appreciate it. Thank you. Our next question comes from the line of Josh Chan with UBS. Please go ahead.

Perfect. Thank you very much I really appreciate it.

Thank you.

Our next question comes from the line of Josh Chan with UBS. Please go ahead.

Joshua K. Chan: Hi, good afternoon. Thanks for taking my questions. You mentioned the slower ramp up this year. So I was wondering, in past years that have been slower to ramp up, do you see or expect kind of a catch up, where you get back on to the pace, or do slower start years usually suggest kind of a slower year overall? Yeah, I mean, I think every year is a little bit different, right?

Hi, good afternoon, and thanks for taking my question.

You mentioned the slower ramp up this year. So I was wondering in in the past years that have been slower to ramp up do you see or expect kind of a catch up where you get back onto the pace is slower start years, usually suggests kind of a slower year overall.

Yes, I mean, I think every year is a little bit different right. So Josh So I think the way that we characterize this year is obviously 2020 threes and uncertain year companies looking at their it budgets are being very thoughtful about it and they took longer right.

Unnamed Speaker: So Josh, I think the way that we should characterize this year is obviously 2023 is an uncertain year. Companies looking at their IT budgets are being very thoughtful about it. They took it longer, right?

Unnamed Speaker: So this is a phenomenon that we've seen in 2023. You haven't heard us say this in years past. What we've seen is, as they sorted through that, it took them a little bit longer, and now they've finally said, "Okay, I've got these things in front of me. I know what I'm going to do. Now I need to go find the people to do the work that I need to do."

So this is a phenomenon that we've seen in 2023, you haven't heard us say this in years past.

What we've seen is as weak as they have sorted through that it's taken them a little bit longer and now. They finally said, okay. I've got these things, even though no one I'm going to do that we need to go find the people to do the work that I need to do so we've seen literally over the course of the last couple of weeks, what we probably would have seen a weaker true earlier in a given.

Unnamed Speaker: So we've seen, literally, over the course of the last couple weeks, what we probably would have seen a week or two earlier in a given year. So it's more than, it's not a different model, it's just probably, from our perspective at least, from what we've seen so far, a bit of a lag in getting things started. And what I would add to that is, if we were to compare the beginning of 2023 to the beginning of 2024, probably the most material difference is that we're hearing more optimism from our clients here in 2024, at the beginning of the year, even if the years have started out very similar. Whereas, in 2023, there was a lot of concern with the customers. There are a lot of internal things going on within organizations about holding back, about getting prepared to cut back. We are not necessarily hearing those types of things, so I think this is more of just a delay and pause. So it's kind of the equation of looking through that windshield. It was really cloudy in 2023.

A year, so it's more than more and just had a different models just probably from our perspective at least from what we seen so far.

A bit of a lag in getting things started.

I would add to that if we were to compare the beginning of 2023 to the beginning of 2020 for probably the most material difference is we're hearing more optimism from our clients here in 2024 at the beginning of the year, even albeit that the year has started out very similar whereas in 2023.

There was a lot of concern with the customers there were a lot of internal things going on within organizations about holding back about getting prepared to cut back we are not necessarily hearing those types of things. So I think this is more of a just a delay and pause so it's kind of the equation.

Looking through that windshield. It was it was really cloudy.

In 2023, the windshield looks pretty pretty clear at this point in time and I think everybody is just a matter of when.

Joseph J. Liberatore: The windshield looks pretty clear at this point in time, and I think everybody, it's just a matter of where perception is of the overall economy, what's going to be happening with the Fed and rate cuts and all those dynamics. So I think everybody's still in a little bit of a wait and see. But overall, I'd say a lot more optimism than what we were experiencing at the beginning of 2023. That's a really helpful color.

Fair perception is of the overall economy, what's going to be happening with the fed and rate cuts and all of those dynamics. So I think everybody is still in a little bit wait and see but overall I'd say a lot more optimism and what we were experiencing in the beginning of 2023.

Okay. That's really helpful color. Thanks, so that characterization Joe sure.

Operator: Thanks for that characterization, Joe. Sure. I guess if we look at the long-term goal, thanks for the goalpost that you kind of put up today. Am I reading it right that to get to the 10% margin from the current profile, it sounds like most of the drivers are SG&A related, meaning that growth margins could be slavish at the current levels, and then you're looking to take SG&A down to get to 10%. Is that the right way? Yeah, I think Josh, it was good to speak with you.

I guess so.

We look at the long term goals. Thanks for the the goalposts that you've kind of put up today.

Am I reading it right that to get to that 10% margin from from the current profile. It sounds like most of the drivers are SG&A related meaning that gross margins could be flattish at the current levels. And then you are looking to take SG&A down to get to 10% is that is that the right read.

Yeah, I think Josh this is Jeff good to speak with you.

Jeff Hackman: I think for the most part, Josh, when you look at the components of the benefit of scale, you know, certainly that is going to be, you know, leveraging our existing infrastructure at a lesser, you know, pace. When you think about the, you know, back office transformation program, which we've been driving for a number of years now, yes, that gives us the benefit of scale. Yes, that gives us, you know, better predictability of SG&A. And the gross margin tie-in to that, when you think about Joe and Dave's comments earlier, gross margins are down, you know, every year by about 120 basis points. You know, as the economic skies start to clear to a degree, we would expect to recapture some of that gross margin. Obviously, you know, in times where you've got a little bit more certainty in US GDP, certainly positive, our direct hire mix would improve. Obviously, you know, right now, it's a little bit depressed, about two and a half percent, but historically, we've been roughly three and a half percent.

For the most for Josh when you look at the components of the benefit of scale.

Certainly that is going to be leveraging our existing infrastructure.

At a lesser pace.

When you think about the back office transformation program, which we've been driving for a number of years now, yes that gives us the benefit of scale, yes that gives us better predictability of SG&A.

The.

The gross margin tie into that when you think about Joe and Dave's comments earlier gross margins are down call it year over year about 120 basis points.

As the economic Sky is start to clear to a degree we would expect to recapture some of that gross margin, obviously in times, where you've got a little bit more certainty.

U S. GDP certainly positive our direct hire mix would improve obviously right now it's a little bit depressed at about two and a half percentage historically have been roughly three 5%. So I think as the economy starts to become more clear for our clients. We would expect to recapture some of the gross margin that we've.

Jeff Hackman: So, I think as the economy starts to, you know, become more clear for our clients, we would expect to recapture some of the gross margin that we've lost. But to your point, Josh, SG&A is a primary driver for, Yeah, I would add, so as a planning mechanism, right, stable margins are how we're thinking about it. And that's the plan we've been executing on. Opportunities, Jeff mentioned direct hire. Obviously, we continue to have success in the managed teams and project solutions space, which typically carries a higher gross margin, so there's opportunity there. But that is not part of our path to improve profitability when we're talking about today. That is, we look at that as a potential opportunity; that's not part of the, what we're counting. Yeah, I think that's really helpful. Thank you for the color and pictures.

We've lost but to your point Josh.

SG&A as a primary driver for.

For us I would add so so as a planning mechanism right stable margins are thin.

About it and.

And that's the plan we've been executing on opportunities Jeff mentioned direct hire obviously.

We continue to have success in the managed teams and project solutions space that typically carries a higher gross margin. So there's opportunity there, but that is not part of it or when we're talking about today.

The path to improve profitability that as we look at that as potential opportunity thats not part of the.

What we're counting on.

Alright. Thanks.

That's really helpful. Thank you for the color and thanks for your time.

Jeff Hackman: Thank you. Our next question. Muck, with Fridodi and Company, please.

Thank you.

Our next question comes from the line of Marc Riddick with Sidoti and company. Please go ahead.

Mark: Hi, good evening. Good evening. Hi Mark. Hey Mark.

Hi, good evening.

Good evening Mark.

Jeff Hackman: So a lot of my questions have already been answered. I was wondering if you could just touch a little bit on the cash usage, the announcement of the dividend boost, and the share repurchase authorization. Maybe touch on that, and maybe share your thoughts on CapEx for the year. Thank you.

So a lot of my questions have already been answered I was wondering if you could just touch a little bit on the gas.

Cash usage, the announcement of the dividend boost and the the the share repurchase authorization, maybe touch a little bit on that and maybe share your thoughts on capex for the year. Thank you.

Jeff Hackman: Yeah, and Mark, it's good to chat with you. I know we put this in some of the prepared remarks, but I think it's worth reiterating. I think the short answer on the capital side, as you would expect in 2024, will be very similar to what we have been doing. We've been repurchasing shares for a long time. Before it was in vogue to be repurchasing shares in the face of a more difficult macro environment, we believe in our ability to generate significant long-term shareholder appreciation, and believe that organic revenue growth is naturally for us where to go. You avoid the disruptions that tend to come from acquisitions in a human capital-centric business.

Yes.

Mark good to chat with you.

I know we put this in some of the prepared remarks, but I think it's worth reiterating.

I think the short answer on the capital side as you should expect in 2024.

Similar to what we have been doing.

We have been repurchasing shares for a long time.

<unk> was in Vogue to be repurchasing shares in the face of a more difficult macro environment.

We believe in our ability to generate significant long term shareholder appreciation.

Believe that organic revenue growth is naturally for us where to go you avoid the disruptions.

And to come from acquisitions, and a human capital centric business. So I think we've been at this for quite a while more.

Jeff Hackman: So, I think we've been at this for quite a while, Mark. We gave the quote earlier on, having 42 million shares in 2007 and about 19.5 million shares as we sit here today. When you take all of that together since 2007, we've returned slightly more than $900 million in capital through our dividend program and our share repurchases. That's significant.

We gave the quote earlier on do you have a 42 million shares in 2007, and $19 5 million shares that we sit here today.

When you take all in since 2007, we've returned slightly more than $900 million in capital through our dividend program and our share repurchases that's significant.

Jeff Hackman: And yet again, our board of directors continues to support that deployment of capital by raising our dividend five and a half percent, which was our fifth consecutive year, and also, at the same time, increasing that share repurchase authorization to 100 million, which I'll remind you we also did last time. So, if you look at that, Mark, and you look over the long term at what we've bought back, and we're probably in the high teens to low $20 range. So, I think from a shareholder perspective, it's been very friendly and has generated a significant return for us. Excellent, and any thoughts on maybe the ballpark range as far as CapEx for the year? Yeah, I think CapEx, Mark, I would imagine somewhere between six and eight million in total for CapEx at the balance that we've been running at.

Yet again.

Board of directors continues to support that deployment of capital by raising our dividend five 5%, which was our fifth consecutive year and also at the same time increase that share repurchase authorization to 100 million, which I'll remind you. We also did last Q1 this time so.

If you look at that market and look over the long term of what we bought back and we're probably in the high teens to low $20 range. So I think from a shareholder.

Perspective.

Been very friendly and for US has been generating significant returns.

Excellent and then.

Any thoughts on maybe ballpark range as far as Capex for the year.

Yes, I think Capex Mark.

I would imagine somewhere between six and $8 million in total for Capex, that's about what we've been running at.

Jeff Hackman: We've obviously got our backs on the transformation program, which we talked about here, that consent to lift CapEx to a degree. But the other thing is we've been rationalizing our real estate footprint over time. Leasehold improvements is another area of our CapEx that historically is a part of that, less so as we sit here moving into 2024. So, I think it's got a netting effect as we move into 2024. So, I'd look at it as relatively flat in 2023. Great, thank you very much.

We've obviously got our back office transformation program, which we've talked about here.

That can tend to lift capex to a degree.

But the other thing is we've been rationalizing our real estate footprint over time leasehold improvements is another area of our Capex that historically has been part of that less so as we sit here moving into 2024. So I think it's got a netting effect as we move into 'twenty four so I'd look at it as relatively flat with 23.

Great. Thank you very much.

Operator: Thank you. Again, as a reminder, the floor is now open for your questions. I ask you a question at this time, and Tester Starr, followed by the number one on your, Our next question comes from the line of Tobey Sommer, from Kforce Inc. Go ahead. Thanks.

Thank you.

Again as a reminder, the floor is now open for your questions should you ask a question at this time simply press the star followed by the number one on your telephone keypad.

Our next question comes from the line of Tobey Sommer with tourists Securities. Please go ahead.

Thanks.

Tobey Sommer: I was wondering if you could give us some color about how you're managing. Your salespeople, sort of account manager headcount here after a couple of slow years, and what your recruiter headcount looks like, you know, out of sequence for your year over year so that we can get a sense for what kind of capacity you would have to absorb and deal with an increase in demand should it occur. Yeah, hi Tobey, this is Dave.

I'm wondering if you could give us some color about how you're managing.

Your salespeople sort of account manager head count here after a.

Couple of slow years, and what your recruiter head count looks like either sequentially or year over year. So that we can get a sense for what kind of capacity you would have to.

Absorb and deal with an increase in demand should it occur.

Yes, Tobey this is Dave so.

David Kelly: So, um... I'll start off by saying we've got more than enough capacity to meet current needs, and as things accelerate to meet those needs, as you, I think, obviously, know, our intention with a lot of the investments that we've made over the years and continue to make is to improve the capabilities of our sales and delivery capabilities and allow them to generate more activity, and that is continuing to add to our capacity. And that is continuing as part of the investment cycle as we look forward. So in terms of our thought process, as Joe mentioned earlier, obviously, there's been a bit of an elongation; there's more activity in the sales cycle. While we've seen, I think, year over year, a relatively stable, slight decline in overall sales and recruiting, obviously, we always look at where the right allocation is, and net-net, we've added to the number of salespeople that we have relative to the recruiters because a lot of our technology investments have been focused on making sure our recruiters can become increasingly productive in sourcing candidates. So we're always looking at that, we're always making sure that we're thinking about not just the short term as well, right; we're not focused on ensuring we maintain maximum profitability levels in slower periods.

I'll start out by saying, we've got more than enough capacity to meet current needs and as things accelerate to meet those needs. As you I think know obviously, our intention with a lot of the investments that we've made over the years and continue to make are to improve the capabilities of our sales and delivery.

Our capabilities are.

Allow them to generate more activity.

And that is continuing to add to our capacity.

And that is continuing as part of the investment cycle as well as we look forward. So in terms of our thought process as Joe mentioned earlier.

Obviously, theres been a bit of an elongation there's more.

Activity in the sales cycle.

While we've seen.

I think year over year relatively stable slight decline in the entire <unk>.

Sales and recruiting of course, obviously, we always look at where the right allocation isn't net.

Net net we've added to the number of salespeople that we have relative to the recruiters because a lot of our technology investments have been focused on making sure our recruiters can become increasingly productive in sourcing candidates. So.

So we're always looking at that we're always making sure that we're thinking about not just the short term as well right. We're not focused on ensuring we maintain maximum profitability levels in slower periods. We are always playing for the long term and continue to do so and feel like we're in a very good place as we move forward, yes Tobey.

David Kelly: We are always playing for the long term and continue to do so, and feel like we're in a very good place as we move forward. Yeah, Toby, you know, we're playing for the other side to Dave's point, which is why we've actually netted up people on the sales side, because, as you well know, relationships take time to build, so we're in that build process, playing for the other side. Because of what David mentioned, all the investments we've made on the delivery side, the recruitment side with technologies, and we're also exploring other technologies, we have a pretty good model that we can ramp up recruiters very quickly. So we have great capacity right now. We also have to balance those things to make sure that we have enough requirements so that our people can survive, and we can feed them, you know, so that they can make the appropriate levels of income.

We're playing for the other side today's point, which is why we've actually netted up people on the sales side, because as you well know relationships take time to build so we're in that build process playing for the other side because of what David mentioned all the investments we've made on the on the delivery side the recruitment side.

With technology and we're also exploring other technologies, we have a pretty good model that we can ramp up recruiters very quickly. So we have great capacity right. Now we also have to balance those things to make sure that we have enough requirements that our people can survive in and we can feed them.

They can make the appropriate levels of income. So it's typically how we handle this point in the cycle start ramping up on the sales side to prepare for the other side balanced that recruitment side and then as we start to see job orders start to spike up in those types of things. We can quickly ramp up we have a great internal recruitment. Following then.

Joseph J. Liberatore: So it's typically how we handle this point in the cycle, you know, start ramping up on the sales side to prepare for the other side, balance the recruitment side, and then as we start to see job orders start to spike up and those types of things, we can quickly ramp up. We have a great internal recruitment function. Our leaders are locked and loaded, so we know we can turn that dial very quickly. Thanks. I was wondering if you could give some color from an industry vertical standpoint for your customers. Which ones are sort of relatively strong or relatively weak?

<unk> are locked and loaded so we know we can turn that down very quickly.

Thanks. So I was wondering if you could give some color from an industry vertical standpoint for your customers.

Which ones are sort of relatively strong or relatively weak and include in there. If you could financial services, which I know it tends to.

David Kelly: and include in there, if you could, financial services, which I know tends to kind of be or maybe a little bit more volatile than some other industry vertices. Yeah, I guess, Toby, I'd start off by saying that as a barometer to strengthen any particular industry, it's tough to gauge, obviously, from our sequential success, quarter to quarter, you know, because a lot of the drivers are specific to things that we do at a client level. But having said that, I made some commentary, you know, we actually have had success sequentially in financial services, I've had a couple of nice projects there, you know, in technology services as well, energy, you know, manufacturing, was, alternatively, a little weaker for us. You know, retail was also a good industry vertical for us in the fourth quarter. So, you know, I think if I go back and look quarter to quarter, it seems to me that there are different industries each quarter that are better or worse.

B or maybe a little bit more volatile than some other industry verticals.

Yeah, I guess, Toby I'd start out by saying as a barometer to strength in any particular industry, it's tough to gauge obviously from our sequential success quarter.

Quarter to quarter.

Because a lot of the drivers are specific to things that we do at a client level, but having said that I made commentary.

We actually have had success sequentially in financial services I've had a couple of nice projects there.

In technology services as well energy.

Manufacturing Alternatively was a little weaker for us.

Retail was also a good industry vertical for us in the fourth quarter. So.

I think if I go back and look quarter to quarter. It seems to me that there are different industries each quarter that are better or worse. So I guess my start of the comment with caution has widened.

Okay.

Last one from me.

David Kelly: So I guess my start of the comment with caution is right at, Okay, and the last one for me: any discernible difference in the cadence of demand exiting the fourth quarter and then here in the early part of the first quarter between kind of the staffing business and managed services, anything you'd call out as better or worse in one of those areas? Yeah, obviously, just to reiterate, obviously, we've seen a nice uptick in the last couple of weeks. Generally, you know, when I look at the contributors to our business, we've continued to have, relatively speaking, more success in this period of the cycle in our managed services business. So that is a relatively bright spot that we've talked about in an integrated fashion, making sure that we can meet the needs of our clients across the spectrum. They're increasingly looking to us for that. I mean, I don't know that I would say that it's a calendar thing.

Any discernible difference in the cadence of.

Of demand exiting the fourth quarter and then here in <unk>.

The early part of the first quarter between kind of the.

Staffing business and managed services any anything you'd call out as a better or worse in <unk>.

And one of those areas.

Yes.

Obviously, just to reiterate obviously, we've seen a nice uptick in the last couple of weeks generally when I look at the contributors to our business. We've continued to have relatively speaking.

More success in this period in the cycle and our managed services business. So that is a bright as a relatively speaking bright spot we've talked about in an integrated fashion, making sure that we can meet the needs of our clients across the spectrum. They are increasingly looking to us for that I mean, I don't know that I would say that as a calendar thing that is a <unk>.

David Kelly: There's a general trend that we're seeing now. So not much has changed, obviously, since we last talked. Thank you very much. Thank you, everybody. I would now like to turn the call over to Joe Liberatore for closing remarks. Well, thank you for your interest in and support of K-Force. I'd like to say thank you to every K-Forcer for your efforts, to our consultants, and our clients for your trust in K-Force and partnering with us and allowing us the privilege of serving you. We look forward to talking with you again after the first quarter of 2024. Have a great evening. This concludes today's call. You may now...

General trends that we're seeing now so not much has changed obviously since Vince.

Last last time.

Okay.

Thank you very much.

Thank you.

I would now like to turn the call over to Joe <unk> for closing remarks.

Well. Thank you for your interest in and support of K for US I would like to say thank you to every Cape Orsa for your efforts to our consultants and our clients for your trust and K force in partnering with you and allowing US the privilege of serving you. We look forward to talking with you again after the first quarter 2024 have a great evening.

This concludes today's call you may now disconnect.

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Yes.

Yeah.

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