TAMPA — Kforce is tightening its focus on its core business — providing clients with staffers in information technology, finance and accounting.
And that is leading the Tampa-based staffing company to sell a less-profitable line of business, Kforce Government Solutions, to ManTech International for $115 million in cash. The sale is expected to close by March 31.
With clients that include the U.S. Department of Veterans Affairs, a dozen Pentagon agencies and the city of Miami, the government solutions business provides services that range from audit preparation and managing grants to cybersecurity and data analytics. But it is not Kforce's most lucrative operation, and executives say ManTech, based in Fairfax, Va., has the resources and scale to grow the business. ManTech said 500 Kforce employees will join its workforce with the sale.
Headquartered on the edge of Ybor City, Kforce has more than 50 offices and two national recruiting centers that match 36,000 skilled professionals with jobs at more than 4,000 clients nationwide.
Kforce estimates it will net $90 million to $95 million from the sale after taxes and transaction costs. It plans to use that money mostly to repurchase shares of its stock, a move that the company says should simplify its business model and make it more profitable without adverse impact on its earnings per share.
Kforce further projects that that the net proceeds from the sale, plus the strong cash flow the company expects to generate this year and its $300 million in available credit, will allow "us to move quickly should we identify other strategic investments," Kforce chief financial officer David M. Kelly told analysts on a conference call.
"As we think about the prospects of our business going forward, we expect to generate higher levels of profitability as we accelerate revenues in our core businesses and replace the revenues lost from the sale of (Kforce Government Solutions)," Kelly said.
This is not the first time Kforce has divested itself of one of its operations The company sold its clinical research business in 2012 and its medical coding business in 2014, but it has grown its revenues and become more profitable since.
PREVIOUS COVERAGE: Kforce sells health care staffing unit for $119 million
"Coming out of the Great Recession, we made a strategic decision to focus our offerings in the technical and professional staffing space, with a particular focus on technology," Kforce president Joseph Liberatore said.
In 2018, 70 percent of its $1.4 billion in revenues came from its technology business, and 22 percent came from its finance and accounting business.
The domestic market for information technology staffing has doubled since the crash to a projected $32 billion this year, and Kforce says it currently has 3 percent of that market. The company says it has 4 percent of the $8.5 billion domestic market for finance and accounting.
Follow trends affecting the local economy
Subscribe to our free Business by the Bay newsletter
You’re all signed up!
Want more of our free, weekly newsletters in your inbox? Let’s get started.Explore all your options
And this may not be the last change coming for Kforce. The sale does not include a products-based business called TraumaFX, but Kforce executives said they are looking into "strategic alternatives for this business."
Early Monday afternoon, Kforce stock was trading at $36.56, down about 1 percent.
Contact Richard Danielson at firstname.lastname@example.org or (813) 226-3403. Follow @Danielson_Times