TAMPA, Fla., Feb. 06, 2019 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq: KFRC), a provider of professional staffing services and solutions, today announced results for its fourth quarter and full year 2018.
Fourth Quarter 2018 Financial Highlights
- Revenue for the quarter ended December 31, 2018 was $358.0 million compared to $342.6 million for the quarter ended December 31, 2017, an increase of 2.8% on a billing day basis.
- Flex revenue of $341.6 million in the quarter ended December 31, 2018 increased 2.3%, on a billing day basis, from $328.5 million in the quarter ended December 31, 2017.
- Year-over-year growth in Flex revenue for Tech was 9.0% on a billing day basis, while FA and GS experienced a decrease of 11.7% and 13.3% on a billing day basis, respectively.
- Gross profit margin decreased 20 basis points in the quarter ended December 31, 2018 as compared to 2017.
- Selling, general and administrative expense as a percentage of revenue in the quarter ended December 31, 2018 was 23.0%, which decreased 100 basis points from the quarter ended December 31, 2017.
- Net income for the quarter ended December 31, 2018 was $16.4 million, or $0.65 per share, as compared to $6.1 million, or $0.24 per share, for the quarter ended December 31, 2017. Adjusted earnings per share for the quarter ended December 31, 2017 was $0.45 per share1.
- Operating cash flows in the quarter ended December 31, 2018 were $23.0 million compared to $23.7 million in the quarter ended December 31, 2017.
- We repurchased approximately 236 thousand shares of common stock on the open market at a total cost of approximately $7.1 million during the quarter ended December 31, 2018.
Year End 2018 Financial Highlights
- Revenue for the year ended December 31, 2018 of $1.42 billion increased 4.0% on a billing day basis from $1.36 billion for the year ended December 31, 2017.
- Net income for the year ended December 31, 2018 was $58.0 million, or $2.30 per share, which represent increases of 74.2% and 76.9%, respectively, compared to 2017 and increases of 44.8% and 46.5%, respectively, as adjusted1, for 2017.
- Operating cash flows for the year ended December 31, 2018 were $87.7 million, which was an increase from $29.3 million for the year ended December 31, 2017.
End Note:
1 A non-GAAP financial measure, refer to reconciliation in the Adjusted Financial Performance Measures section.
Management Commentary
David L. Dunkel, Chairman and Chief Executive Officer commented, “We are very pleased with our fourth quarter performance as our largest business, Tech Flex, grew 9.0% year-over-year on a billing day basis. Tech Flex revenue accelerated meaningfully towards the end of the quarter due to fewer assignment ends and stronger new assignment starts than anticipated. We believe this is related to the acute labor shortage, especially with highly-skilled resources. The pace of digital transformation continues at a rapid pace, forcing organizations across all industries to increase their technology investments. We believe the secular drivers of technology will transcend traditional cyclical patterns as business models are transformed."
Joseph J. Liberatore, President, said, “We believe that the broad-based growth we are experiencing in Tech Flex is a result of the actions taken and investments made over the last several years to better segment our client portfolio and optimize the alignment of our associates within the portfolio. We are encouraged with the strong finish to 2018 within our Tech Flex business and are pleased with the progress in improving associate productivity.”
David M. Kelly, Chief Financial Officer, said, “We continue to make solid progress improving our profitability as operating margin in the fourth quarter of 6.2% increased 80 basis points year-over-year. In addition, we are converting our revenue growth and improved profitability into higher levels of operating cash flow, which was $23.0 million in the fourth quarter and $87.7 million for the full year. This allowed us to not only decrease outstanding borrowings under our Credit Facility by nearly $45 million, but also return more than $30 million of our free cash flow to our shareholders. We are also pleased to announce that our Board of Directors approved a first quarter cash dividend of $0.18 per share, which will be payable on March 22, 2019 to shareholders of record as of the close of business on March 8, 2019."
Guidance and Outlook
Looking forward to the first quarter of 2019, there will be 63 billing days, as compared to 62 billing days in the fourth quarter of 2018, and 64 billing days in the first quarter of 2018. Current estimates for the first quarter of 2019 are:
- Revenue of $351 million to $356 million
- Earnings per share of $0.40 to $0.42
- Gross profit margin of 28.2% to 28.4%
- Flex gross profit margin of 25.7% to 25.9%
- SG&A expense as a percent of revenue of 23.4% to 23.6%
- Operating margin of 4.1% to 4.3%
- Effective tax rate of 25.5%
Conference Call and Annual Meeting
On Wednesday, February 6, 2019, Kforce will host a conference call at 8:30 a.m. E.T. to discuss these results. The dial-in number is (877) 344-3890 and the conference passcode is Kforce. The prepared remarks for this call and webcast are available on the Investor Relations page of the Kforce Inc. website (http://investor.kforce.com/) in the Events & Presentations section.
The replay of the call will be available from 11:30 a.m. E.T., Wednesday, February 6, 2019 until February 13, 2019 by dialing (855) 859-2056, passcode 5779898.
Our 2019 Annual Meeting of Kforce Inc. Shareholders will be held on Tuesday, April 23, 2019 at 1001 East Palm Avenue, Tampa, Florida 33605, commencing at 8:00 a.m. EST.
About Kforce
Kforce Inc. is a professional staffing services and solutions firm that specializes in the areas of Technology and Finance and Accounting. Each year, our network of over 50 offices and two national recruiting centers provides opportunities for 36,000 highly skilled professionals who work with over 4,000 clients, including 70% of the Fortune 100. At Kforce, our promise is to deliver great results through strategic partnership and knowledge sharing. For more information, please visit our Web site at http://www.kforce.com.
Michael R. Blackman, Chief Corporate Development Officer (813) 552-2927
Cautionary Note Regarding Forward-Looking Statements
Certain of the above statements contained in this press release, including earnings projections, are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions, growth in temporary staffing and the general economy; competitive factors, risks due to shifts in the market demand; a reduction in the supply of candidates or the Firm's ability to attract such candidates; the success of the Firm in attracting and retaining revenue-generating talent; changes in the service mix; ability of the Firm to repurchase shares; the occurrence of unanticipated expenses; the effect of adverse weather conditions; changes in our effective tax rate; changes in government regulations, laws and policies that are adverse to our businesses; risk of contract performance, delays or termination or the failure to obtain awards, task orders or funding under contracts; changes in client demand and our ability to adapt to such changes; continued performance of and improvements to our enterprise information systems, and the risk factors listed from time to time in the Firm’s reports filed with the Securities and Exchange Commission, including the Firm’s Form 10-K for the fiscal year ending December 31, 2017, as well as assumptions regarding the foregoing. In particular, the Firm makes no assurances that the estimates of continuing operations will be achieved or that we will continue to increase our market share, successfully manage risks to our revenue stream, successfully put into place the people and processes that will create future success or further accelerate our revenue. The terms “should,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “foresee,” “plan” and similar expressions and variations thereof contained in this press release identify certain of such forward-looking statements, which speak only as of the date of this press release. As a result, such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Future events and actual results may differ materially from those indicated in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and the Firm undertakes no obligation to update any forward-looking statements.
| Kforce Inc. Summary of Operations (In Thousands, Except Per Share Amounts) (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | ||||||||||
| Revenue by segment: | ||||||||||||
| Technology | $ | 252,750 | $ | 251,079 | $ | 227,816 | ||||||
| Finance and accounting | 77,627 | 75,505 | 85,349 | |||||||||
| Government solutions | 27,607 | 28,868 | 29,421 | |||||||||
| Total Revenue | 357,984 | 355,452 | 342,586 | |||||||||
| Direct costs | 251,428 | 251,071 | 239,959 | |||||||||
| Gross profit | 106,556 | 104,381 | 102,627 | |||||||||
| GP % | 29.8 | % | 29.4 | % | 30.0 | % | ||||||
| Flex GP % (1) | 27.0 | % | 26.7 | % | 27.3 | % | ||||||
| Selling, general and administrative expenses | 82,315 | 79,771 | 82,067 | |||||||||
| Depreciation and amortization | 1,939 | 1,947 | 2,042 | |||||||||
| Income from operations | 22,302 | 22,663 | 18,518 | |||||||||
| Other expense, net | 859 | 1,044 | 629 | |||||||||
| Income before income taxes | 21,443 | 21,619 | 17,889 | |||||||||
| Income tax expense | 5,087 | 5,442 | 11,749 | |||||||||
| Net income | $ | 16,356 | $ | 16,177 | $ | 6,140 | ||||||
| Earnings per share - diluted | $ | 0.65 | $ | 0.64 | $ | 0.24 | ||||||
| Weighted average shares outstanding - diluted | 25,257 | 25,366 | 25,462 | |||||||||
| Adjusted EBITDA | $ | 26,588 | $ | 26,733 | $ | 23,183 | ||||||
| Billing days | 62 | 63 | 61 | |||||||||
(1) Beginning in Q1 2018, Flex GP% excludes GS Product; prior quarters have been adjusted to align with this presentation.
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Year Ended | ||||||||
| Dec. 31, 2018 | Dec. 31, 2017 | |||||||
| Revenue by segment: | ||||||||
| Technology | $ | 990,089 | $ | 907,511 | ||||
| Finance and accounting | 313,848 | 346,135 | ||||||
| Government solutions | 114,416 | 104,294 | ||||||
| Total Revenue | 1,418,353 | 1,357,940 | ||||||
| Direct costs | 999,745 | 949,884 | ||||||
| Gross profit | 418,608 | 408,056 | ||||||
| GP % | 29.5 | % | 30.0 | % | ||||
| Flex GP % (1) | 26.8 | % | 27.2 | % | ||||
| Selling, general and administrative expenses | 329,126 | 331,172 | ||||||
| Depreciation and amortization | 7,831 | 8,255 | ||||||
| Income from operations | 81,651 | 68,629 | ||||||
| Other expense, net | 4,498 | 4,535 | ||||||
| Income before income taxes | 77,153 | 64,094 | ||||||
| Income tax expense | 19,173 | 30,809 | ||||||
| Net income | $ | 57,980 | $ | 33,285 | ||||
| Earnings per share - diluted | $ | 2.30 | $ | 1.30 | ||||
| Weighted average shares outstanding - diluted | 25,251 | 25,586 | ||||||
| Adjusted EBITDA | $ | 98,670 | $ | 85,241 | ||||
| Billing days | 253 | 252 | ||||||
(1) Beginning in Q1 2018, Flex GP% excludes GS Product; prior quarters have been adjusted to align with this presentation.
Kforce Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
| December 31, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 112 | $ | 379 | ||||
| Trade receivables, net of allowances | 234,895 | 225,865 | ||||||
| Income tax refund receivable | 319 | 7,116 | ||||||
| Prepaid expenses and other current assets | 13,136 | 12,085 | ||||||
| Total current assets | 248,462 | 245,445 | ||||||
| Fixed assets, net | 35,818 | 39,680 | ||||||
| Other assets, net | 36,957 | 38,598 | ||||||
| Deferred tax asset, net | 9,751 | 11,316 | ||||||
| Intangible assets, net | 2,952 | 3,297 | ||||||
| Goodwill | 45,968 | 45,968 | ||||||
| Total assets | $ | 379,908 | $ | 384,304 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | 38,606 | $ | 34,873 | ||||
| Accrued payroll costs | 45,262 | 46,886 | ||||||
| Other current liabilities | 1,632 | 1,960 | ||||||
| Income taxes payable | 4,858 | — | ||||||
| Total current liabilities | 90,358 | 83,719 | ||||||
| Long-term debt - credit facility | 71,800 | 116,523 | ||||||
| Long-term debt - other | 1,359 | 2,597 | ||||||
| Other long-term liabilities | 48,060 | 47,188 | ||||||
| Total liabilities | 211,577 | 250,027 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 719 | 715 | ||||||
| Additional paid-in capital | 447,337 | 437,394 | ||||||
| Accumulated other comprehensive income | 1,296 | 100 | ||||||
| Retained earnings | 237,308 | 195,143 | ||||||
| Treasury stock, at cost | (518,329 | ) | (499,075 | ) | ||||
| Total stockholders’ equity | 168,331 | 134,277 | ||||||
| Total liabilities and stockholders’ equity | $ | 379,908 | $ | 384,304 | ||||
Kforce Inc.
Key Statistics
(Unaudited)
| Q4 2018 | Q3 2018 | Q4 2017 | ||||||||||
| Total Firm | ||||||||||||
| Total Revenue | $ | 357,984 | $ | 355,452 | $ | 342,586 | ||||||
| GP % | 29.8 | % | 29.4 | % | 30.0 | % | ||||||
| Flex revenue (000’s) (1) | $ | 341,604 | $ | 339,937 | $ | 328,526 | ||||||
| Flex GP % (1) | 27.0 | % | 26.7 | % | 27.3 | % | ||||||
| Direct Hire revenue (000’s) | $ | 11,275 | $ | 10,482 | $ | 10,170 | ||||||
| Placements | 695 | 721 | 816 | |||||||||
| Average fee | $ | 16,227 | $ | 14,525 | $ | 12,469 | ||||||
| Product revenue | $ | 5,105 | $ | 5,033 | $ | 3,890 | ||||||
| Billing days | 62 | 63 | 61 | |||||||||
| Technology | ||||||||||||
| Total Revenue (000's) | $ | 252,750 | $ | 251,079 | $ | 227,816 | ||||||
| GP % | 28.0 | % | 27.7 | % | 28.5 | % | ||||||
| Flex revenue (000’s) | $ | 248,151 | $ | 247,154 | $ | 223,897 | ||||||
| Hours (000’s) | 3,354 | 3,319 | 3,101 | |||||||||
| Flex GP % | 26.6 | % | 26.5 | % | 27.2 | % | ||||||
| Direct Hire revenue (000’s) | $ | 4,599 | $ | 3,925 | $ | 3,919 | ||||||
| Placements | 245 | 234 | 225 | |||||||||
| Average fee | $ | 18,744 | $ | 16,742 | $ | 17,423 | ||||||
| Finance and Accounting | ||||||||||||
| Total Revenue (000's) | $ | 77,627 | $ | 75,505 | $ | 85,349 | ||||||
| GP % | 34.8 | % | 35.1 | % | 33.8 | % | ||||||
| Flex revenue (000’s) | $ | 70,951 | $ | 68,948 | $ | 79,098 | ||||||
| Hours (000’s) | 2,026 | 1,942 | 2,382 | |||||||||
| Flex GP % | 28.7 | % | 29.0 | % | 28.5 | % | ||||||
| Direct Hire revenue (000’s) | $ | 6,676 | $ | 6,557 | $ | 6,251 | ||||||
| Placements | 450 | 487 | 591 | |||||||||
| Average fee | $ | 14,854 | $ | 13,458 | $ | 10,583 | ||||||
| Government Solutions | ||||||||||||
| Total Revenue (000's) | $ | 27,607 | $ | 28,868 | $ | 29,421 | ||||||
| GP% | 32.0 | % | 28.9 | % | 30.3 | % | ||||||
| Flex revenue (000’s) (1) | $ | 22,502 | $ | 23,835 | $ | 25,531 | ||||||
| Flex GP % (1) | 25.2 | % | 21.6 | % | 24.7 | % | ||||||
| Product revenue | $ | 5,105 | $ | 5,033 | $ | 3,890 | ||||||
| Product GP% | 62.2 | % | 63.5 | % | 67.2 | % | ||||||
(1) Beginning in Q1 2018, Flex Revenue and GP% excludes GS Product; prior quarters have been adjusted to align with this presentation.
Kforce Inc.
Revenue Growth Rates
(Unaudited)
| Year-Over-Year Revenue Growth Rates | |||||||||||||||
| (Per Billing Day) | |||||||||||||||
| Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | |||||||||||
| Billing days | 62 | 63 | 64 | 64 | 61 | ||||||||||
| Tech Flex | 9.0 | % | 10.3 | % | 9.8 | % | 6.7 | % | 5.4 | % | |||||
| FA Flex | (11.7 | )% | (11.8 | )% | (9.4 | )% | (7.9 | )% | 0.3 | % | |||||
| Total Tech and FA Flex | 3.6 | % | 4.5 | % | 4.7 | % | 2.8 | % | 4.0 | % | |||||
| GS Flex (1) | (13.3 | )% | (0.6 | )% | 18.2 | % | 24.5 | % | 27.9 | % | |||||
| Total Flex (1) | 2.3 | % | 4.2 | % | 5.6 | % | 4.2 | % | 5.5 | % | |||||
| Total Firm | 2.8 | % | 4.2 | % | 5.4 | % | 3.7 | % | 5.1 | % | |||||
(1) Beginning in Q1 2018, Flex revenue excludes GS Product; prior quarters have been adjusted to align with this presentation.
Kforce Inc.
Non-GAAP Financial Measures
(In Thousands, Except Per Share Amounts)
(Unaudited)
The following non-GAAP financial measures presented may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently. The Company’s non-GAAP financial measures are not measurements of financial performance under GAAP and should not be considered as alternatives to amounts presented in accordance with GAAP. The Company views these non-GAAP financial measures as supplemental and they are not intended to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below.
Free Cash Flow
“Free Cash Flow”, a non-GAAP financial measure, is defined by Kforce as net cash provided by operating activities determined in accordance with GAAP, less capital expenditures. Management believes this provides an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and is useful information to investors as it provides a measure of the amount of cash generated from the business that can be used for strategic opportunities including investing in our business, making acquisitions, repurchasing common stock or paying dividends. Free Cash Flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view Free Cash Flow as a complement to our financial statements.
| (In Thousands) | Year Ended | |||||||
| Dec. 31, 2018 | Dec. 31, 2017 | |||||||
| Net income | $ | 57,980 | $ | 33,285 | ||||
| Non-cash provisions and other | 22,643 | 29,134 | ||||||
| Changes in operating assets/liabilities | 7,100 | (33,080 | ) | |||||
| Net cash provided by operating activities | 87,723 | 29,339 | ||||||
| Capital expenditures | (5,170 | ) | (5,846 | ) | ||||
| Free cash flow | 82,553 | 23,493 | ||||||
| Proceeds from sale of Global's assets | 1,000 | 1,000 | ||||||
| Change in debt | (44,723 | ) | 4,976 | |||||
| Repurchases of common stock | (22,187 | ) | (14,622 | ) | ||||
| Cash dividends | (14,871 | ) | (12,144 | ) | ||||
| Other | (2,039 | ) | (3,806 | ) | ||||
| Change in cash and cash equivalents | $ | (267 | ) | $ | (1,103 | ) | ||
Adjusted EBITDA
“Adjusted EBITDA”, a non-GAAP financial measure, is defined by Kforce as net income before depreciation and amortization, stock-based compensation expense, interest expense, net and income tax expense. Adjusted EBITDA should not be considered a measure of financial performance under GAAP. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our past and future financial performance, and this presentation should not be construed as an inference by us that our future results will be unaffected by those items excluded from Adjusted EBITDA. Adjusted EBITDA is a key measure used by management to assess our operations including our ability to generate cash flows and our ability to repay our debt obligations. Management believes it is useful information to investors as it provides a good metric of our core profitability in comparing our performance to our competitors, as well as our performance over different time periods. The measure should not be considered in isolation or as an alternative to net income, cash flows or other financial statement information presented in the consolidated financial statements as indicators of financial performance or liquidity. The measure is not determined in accordance with GAAP and is susceptible to varying calculations, and as presented, may not be comparable to similarly titled measures of other companies.
| (In Thousands) | Three Months Ended | |||||||||||
| Dec. 31, 2018 | Sept. 30, 2018 | Dec. 31, 2017 | ||||||||||
| Net income | $ | 16,356 | $ | 16,177 | $ | 6,140 | ||||||
| Depreciation and amortization | 2,019 | 2,074 | 2,135 | |||||||||
| Stock-based compensation expense | 2,239 | 2,006 | 1,933 | |||||||||
| Interest expense, net | 887 | 1,034 | 1,226 | |||||||||
| Income tax expense | 5,087 | 5,442 | 11,749 | |||||||||
| Adjusted EBITDA | $ | 26,588 | $ | 26,733 | $ | 23,183 | ||||||
| (In Thousands) | Year Ended | |||||||
| Dec. 31, 2018 | Dec. 31, 2017 | |||||||
| Net income | $ | 57,980 | $ | 33,285 | ||||
| Depreciation and amortization | 8,265 | 8,508 | ||||||
| Stock-based compensation expense | 8,797 | 7,600 | ||||||
| Interest expense, net | 4,455 | 5,039 | ||||||
| Income tax expense | 19,173 | 30,809 | ||||||
| Adjusted EBITDA | $ | 98,670 | $ | 85,241 | ||||
Adjusted Financial Performance Measures
The "Adjusted Financial Performance Measures" present non-GAAP financial information and should not be considered a measure of financial performance under generally accepted accounting principles. These measures are presented as an alternative method for assessing the Company’s operating results by adjusting for the impact of certain non-recurring, infrequent or unusual items in a manner that is focused on the performance of our underlying operations. Each of these measures are intended to provide greater consistency, comparability and clarity of our results. Management uses this non-GAAP financial information to assess the Company's core operating results and consequently, management believes it is similarly useful information to investors. During the three months and year ended December 31, 2018, the Firm did not have any non-GAAP adjustments.
| (In Thousands, Except Per Share Amounts) | Three Months Ended December 31, | |||||||||||||||
| 2017 | 2018 | |||||||||||||||
| Reported (GAAP) | Adjustments (1) | Adjusted (Non-GAAP) | Reported (GAAP) (2) | |||||||||||||
| Reconciliation of Tax Impact and Profitability: | ||||||||||||||||
| Income before income taxes | $ | 17,889 | $ | — | $ | 17,889 | $ | 21,443 | ||||||||
| Income tax expense | $ | 11,749 | $ | (5,360 | ) | $ | 6,389 | $ | 5,087 | |||||||
| Effective tax rate | 65.7 | % | (30.0 | )% | 35.7 | % | 23.7 | % | ||||||||
| Net income | $ | 6,140 | $ | 5,360 | $ | 11,500 | $ | 16,356 | ||||||||
| Earnings per share - diluted | $ | 0.24 | $ | 0.21 | $ | 0.45 | $ | 0.65 | ||||||||
(1) The $5.4 million income tax expense adjustment is related to the remeasurement of our net deferred tax assets as a result of the Tax Cuts and Jobs Act.
(2) For the three months ended December 31, 2018, there were no charges or similar items requiring an adjustment.
| (In Thousands, Except Per Share Amounts) | Year Ended December 31, | |||||||||||||||
| 2017 | 2018 | |||||||||||||||
| Reported (GAAP) | Adjustments | Adjusted (Non-GAAP) | Reported (GAAP) (7) | |||||||||||||
| Reconciliation of Revenue and Gross Profit: | ||||||||||||||||
| Revenue (3) | $ | 1,357,940 | $ | 1,000 | $ | 1,358,940 | $ | 1,418,353 | ||||||||
| Gross profit (3) | $ | 408,056 | $ | 713 | $ | 408,769 | $ | 418,608 | ||||||||
| GP % | 30.0 | % | 0.1 | % | 30.1 | % | 29.5 | % | ||||||||
| Flex GP % (4) | 27.2 | % | — | % | 27.2 | % | 26.8 | % | ||||||||
| Reconciliation of SG&A and Operating Margin: | ||||||||||||||||
| Selling, general & administrative expenses (5) | $ | 331,172 | $ | 1,156 | $ | 332,328 | $ | 329,126 | ||||||||
| SG&A as a percentage of revenue | 24.4 | % | 0.1 | % | 24.5 | % | 23.2 | % | ||||||||
| Income from operations | $ | 68,629 | $ | (443 | ) | $ | 68,186 | $ | 81,651 | |||||||
| Operating margin | 5.1 | % | (0.1 | )% | 5.0 | % | 5.8 | % | ||||||||
| Reconciliation of Tax Impact and Profitability: | ||||||||||||||||
| Income before income taxes | $ | 64,094 | $ | (443 | ) | $ | 63,651 | $ | 77,153 | |||||||
| Income tax expense (6) | $ | 30,809 | $ | (7,200 | ) | $ | 23,609 | $ | 19,173 | |||||||
| Effective tax rate | 48.1 | % | (11.0 | )% | 37.1 | % | 24.9 | % | ||||||||
| Net income | $ | 33,285 | $ | 6,757 | $ | 40,042 | $ | 57,980 | ||||||||
| Earnings per share - diluted | $ | 1.30 | $ | 0.27 | $ | 1.57 | $ | 2.30 | ||||||||
(3) For the year ended December 31, 2017, the $1.0 million revenue adjustment and the related $0.7 million gross profit adjustment was related to the impact from Hurricanes Harvey and Irma.
(4) Beginning in Q1 2018, Flex GP% excludes GS Product; prior quarters have been adjusted to align with this presentation.
(5) For the year ended December 31, 2017, the $1.2 million adjustment was related to a $1.0 million disaster relief contribution and $1.1 million in charges for role eliminations related to refining how we support and service our largest strategic clients, offset by a $3.3 million gain on sale of Global's assets.
(6) For the year ended December 31, 2017, adjustments to income tax expense include (i) tax expense of $5.4 million related to the remeasurement of our net deferred tax assets as a result of the Tax Cuts and Jobs Act, (ii) a $1.6 million valuation allowance placed on our foreign tax credit deferred tax asset that we expect may not be realizable as a result of the sale of Global's assets and (iii) a net income tax benefit of $0.2 million related to the income before income taxes adjustments described within this table, which was calculated using the Q3 2017 effective tax rate, of 38.0%.
(7) For the year ended December 31, 2018, there were no charges or similar items requiring an adjustment.