Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Kforce Q1 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] It is now my pleasure to turn today’s call over to Mr. Joe Liberatore, President and CEO. Sir, please go ahead.

Good afternoon. This call may contain certain statements that are forward-looking. These statements are based upon current assumptions and expectations and are subject to risks and uncertainties. Actual results may vary materially from the factors listed in Kforce’s public filings and other reports and filings with the Securities and Exchange Commission. We cannot undertake any duty to update any forward-looking statements. You can find additional information about our results in our earnings release and our SEC filings. In addition, we have published our prepared remarks within the Investor Relations portion of our website. We delivered another quarter of exceptional performance in the first quarter as both revenue and earnings per share meaningfully exceeded the top end of our guidance. It has been widely publicized that the COVID pandemic accelerated many years of technology adoption and advancements. This has resulted in a corresponding acceleration in demand for highly skilled talent to assist companies across every industry to rapidly digitize business models. The strength in our financial performance continues to be led by strong growth in our Technology business. As our business continues to become more highly concentrated in technology, it is also driving significant increases in profitability levels, which meaningfully accelerated and were at Firm record levels in the first quarter. Kye Mitchell and Dave Kelly will speak to our results in greater detail. Since growth resumed shortly after the onset of the pandemic, we have quarter-after-quarter, improved our performance and raised our own internal expectations of what is possible. The improvement in our performance starts with our strategic positioning over the past 10 years. My thanks go out to our leadership team and associates for continuing to stay true to our strategic vision and for their relentless execution. Strategy without execution matters very little and I’m proud of our team’s…

Thank you, Joe. I am incredibly proud of our team’s hard work and dedication, which led to our exceptional results. Total revenues grew 13% year-over-year with all lines of business showing stronger than expected results. This overall growth rate was negatively impacted by the planned runoff of COVID-related project work we accepted during the pandemic. Excluding the impact of that COVID business, our ongoing business grew more than 21% year over year. We continue to deliver exceptional organic growth fueled by our Technology business and complemented by our FA business. In Technology, we delivered another excellent quarter of organic year-over-year revenue growth of nearly 27% off a more difficult prior-year comp. We have been successful at driving high levels of compounded growth in our Technology business as indicated by our organic growth of 35% over the first quarter of 2020, which was the last quarter not materially impacted by the pandemic. Our business performed exceptionally well leading up to and throughout the challenging macro-economic environment caused by the pandemic. We believe this is unmistakable evidence that our secular demand drivers in the technology talent solutions space are more important to our long-term success than any of the changes to the economic environment. Our growth has meaningfully exceeded the industry growth benchmarks over the last 15 years. Furthermore, we believe our growth rates have been consistently near or at the top of the industry since the pandemic began. Understandably, our clients are reluctant to lose key resources even during challenging macro-economic environments because our highly skilled consultants work on mission critical projects. The operating trends we are seeing in our Technology business have remained strong. Our front-end KPIs and new assignment starts are at historically high levels. The average assignment duration continues to expand, and consistent with what we saw in…

Thank you, Kye. I’m pleased to provide some additional color on our excellent results and prospects. First quarter revenues of $417 million, a Kforce record, grew 13% year-over-year and were 24% higher than the pre-pandemic levels of Q1 2020. Earnings per share of $0.93 in the first quarter improved 50% year-over-year and reflect the improving quality of our revenue stream and concentration of technology revenues. We saw sequential improvements in both flex margins and overall gross margins in the first quarter as a result of both stronger than anticipated direct-hire revenues and higher flex margins in both our Technology and FA businesses. Gross margins increased 250 basis points year-over-year to 29.7% in the first quarter. While we don’t expect continued growth, at this pace, in direct-hire revenues, which constitute less than 4% of total revenues, the benefit in a greater percentage of Technology revenues is notable and provides significant margin stability given both our ability to manage bill/pay spreads and the increasing desire by our clients to engage our firm for project-based work. Flex margins in our Technology business improved 150 basis points year-over-year and bill/pay spreads have been stable, while wages have accelerated. We are also benefiting from a lower percentage of overall payroll taxes and health insurance costs than we have seen historically due to Technology being a higher percentage of overall revenues. Our ability to drive more revenue on average from each billable consultant through higher bill rates and longer assignment duration contributes to the reduced percentage of these costs and results in a structurally higher-quality revenue stream that we expect to continue going forward. Flex margins in our FA business expanded 400 basis points year-over-year due primarily to a decline in the lower margin COVID project work and improved bill rates and spreads resulting from the…

[Operator Instructions] Your first question comes from the line of Mark Marcon with Baird. Your line is open.

Hey good afternoon, everybody and congratulations on the strong results. I'm wondering Kye, you mentioned, the strengthened in IT Flex that you're seeing. And I was wondering if you could give a little bit more detail with regards to the verticals in terms of like how broad based the strength was. I imagine it was broad based, but love to get some confirmation there. If you saw any sort of particular client activity that really stood out, and then one thing that you mentioned in your prepared remarks was, companies not only putting in place digital transformation efforts for the benefit of the, for their clients to involve their consumers, but also to better engage with their own employees. And I was wondering if you could give a little bit more color there.

Sure. Thank you for the question. We are seeing broad based growth across all of the industries. It's interesting; we've really focused in, on industry diversification. What industries do we want to play in over the last several years? And no single industry is more than 20% of our business. And we saw every industry we support up and double digits. So great growth across the board. We're seeing a lot of growth in continuing, as you've said and digital. And in regards to the comments I made clients are spending a lot of money on digital transformation. A lot on everybody knows, everything today is being done digitally. I think 80% of transactions are now going through digital platforms, but they're also investing in that employee experience with the great resignation that's been going on. It's more important than ever that, that employees are supported, that they can communicate with employees quickly, that the on-boarding experience is good, that they have different tools necessary to do their job. And they're all taking a digital approach to that too, to make it a better experience for those employees to be able to retain long term. So we're seeing a lot of growth in that area as well. So I expect that to continue as we move forward. We're also seeing a lot in cloud and cloud is another area where clients are definitely continuing to make those investments. It's not an optional thing for most of them with today in cybersecurity and everything else, cloud is the way our clients are going and we're continuing to benefit from network.

That's terrific. And then can you talk a little bit about on the F&A side, do you expect the second quarter to kind of assuming that the economic environment stays steady? Would you expect, the second quarter to kind of be the low watermark for F&A or would there still be some runoff in terms of some of the areas that you're supporting to a lesser degree as we start going, beyond the second quarter?

The biggest impact for us as we go into Q2, as I mentioned in my comments is that we do have $35 million of COVID business that was in Q2 of 2021 coming off. That will be, we've now have hit for the most part. All of our COVID business has run out. So it's very minimal, but we did have it last year in each of our quarters. And we're not going to be able to outrun that year-over-year impact for the rest of the year. However, it will be to a much less degree from a sequential basis. We're seeing a lot of pickup right now from our bill rates. As I mentioned, our bill rates have gone up over 20% in FA. So we're continuing to see benefit from that move and transition into the higher level jobs that won't be on automated as easily. And it fits much better into what we're seeing on the technology side too. So we're really excited about where we're going in this transformation with our FA business. However, it will continue as technology is continuing to grow at the pace it's at. That's going to be really where our big story is.

I was just wondering whether or not on a sequential basis, we would see an improvement in FA.

I think it'll, I think FAs going to continue to trend down just slightly because we have moved a lot of those FA associates over to our technology teams and so the levels we're at right now. I think you'll see it start to level off. But I would anticipate a little bit of sequential decline next quarter.

Mark. This is Joe. I was going to give you a little bit more flavor there, because I think the way that you should look at our FA business, our FA business is about the quality of the FA business and how it aligns with our technology footprint. So I wouldn't get as hung up on the, what's happening with it. Sequentially I mean, look at what's happening with bill rates, as Kye mentioned in her comments. I mean, we're really going upstream here and those roles that are much more synergistic with tech, because again I would take you back to, especially with the COVID that we're going to be dealing with here. Through Q2, when we went – into the recession and we gave the market the indication we were going to go after that business, it was by design when no one knew where the world was going so that we could support our business. Back in the early part of 2020 when that started to become a big revenue stream, we basically said that we're going to run that business out and then basically transcend from that business into tech. And I think we've accomplished that if you look at our tech business up 35% over that two year period, we pretty much have more than outrun what we brought on from that business.

Great. And then can you talk a little bit more about on the tech side, what percentage of the placements are now for virtual positions, in other words, not necessarily working in the office and how far along do you think we are in terms of that progression in terms of the acceptance, of work from home, being completely adapted, even in a post-COVID environment and to what extent does that give you competitive advantages, to be able to continue to grow above market, particularly relative to regional players that just don't have the same level of capabilities that you do.

Yes, well I'll give you the backdrop and then if Kye has anything she wants to tag on, but I would say, yes, I think we're really in the early innings believe it or not of remote work. And the reason that I say that is clearly there's those companies that have adopted and accepted remote work, which really provides us a great opportunity to expand not only the candidates that we can bring to those clients, but also from a candidate perspective, we get, we're able to provide them to more job opportunities, which only increases that probability of fill as well as getting to the right match. And the reason that I say it's the early innings, some of the things that we're seeing from clients that have been more aggressive about trying to drive technologists, and I'm just going to talk about technologists and not the market as a whole given that's 85% of our footprint and growing, but those that are trying to drive the technologists back into the office and basically said, you got to be back in five days, we've seen them now migrating to, okay you only have to be in three days, you only have to be in two days. So that's why I say, I still believe we're in the early innings from that standpoint, overall it provides a tremendous opportunity for us, especially with our national footprint and being able to be on ground with candidates and meet them likewise for our clients just with our footprint across the domestic U.S. So very positive from – opportunity from our standpoint, I mean every day, more and more companies are embracing remote work. And I would say, part of that is out of necessity. It's widely publicized this great resignation and just how mobile the world is at this point in time. And those organizations aren't reacting, they're having trouble attracting and retaining talent. So, it's clear. If you look out there, especially from a technologist, the surveys that are being done out there, seven out of 10 technologists said, if I'm forced to go in the office more than I want to go in the office, I'll find another job. And when you look at where the current unemployment rates are at a macro level, and we all know it's much more severe within the technology skill set, I mean, they're in control. So the opportunities are out there. And customers are going to be adapting and adjusting.

That's great. And then, given the strong trends that you're seeing in technology, borrowing a severe recession, we would anticipate that that would – you'd continue to see growth. How should we think about like the operating margins, as we start approaching closer to $500 million in quarterly revenue? How should we think about that?

Hey, Mark. It’s Dave Kelly, how are you? So, clearly as obviously first quarter results suggest and as revenues accelerating to the second quarter, we're having some nice success driving that improvement to the bottom line. So the expectation is we grow the business is that, clearly as we grow, we're going to generate additional operating margin, just because of the scale, the quality of the revenue stream, right. Technology for us, we talked a little bit in some of the prepared remarks about the health of the gross margin profile, technology helps us there. We've said in the past, as we grow that we think we're on a path as we continue to grow to double-digit operating margins. We haven't put a number out there and said, what should it be at $500 million precisely, but I can tell you, although obviously we continue to invest on our business as we continue to grow, we think it'll expand into double-digits at some point.

Great. I'll follow up with additional questions at the end of the queue.

Your next question comes from the line of Marc Riddick with Sidoti. Your line is open.

Hey, good evening, everyone.

Good evening.

So I was wondering, certainly a lot of detail in prepared remarks. And thank you for that. I was wondering if you could spend a little bit of time bringing us up to date on, I know you had the bill rate commentary. I was wondering if you could talk a little bit about what you were seeing as far as pay rates go and then I have a couple follow-ups there.

Yes. This is Dave Kelly, again. Marc, nice to meet you. So what we've seen is quite frankly, what we've continued to see over the course of the last couple years, right. So we're sitting here in an environment where both bill rates and pay rates are increasing. Joe mentioned the shortage of the supply constraints in the market and our ability to find those, obviously our clients understand that they have to pay more. And we've been doing this for years, right. So this is not an environment that's changed. So certainly bill rates are going up in tandem with pay rates. So spreads of themselves have been basically stable over the course of the last couple years. Even in a very supply constraint market, our expectation as we move forward is that we continue to expect that to be the case. So I think the trajectory here for our business is improving bill rates, right. Bill rates, we think and pay rates are going to continue to go up, the percentage of that which is generating gross margin is going to be about the same as what it has been historically. So more gross profit dollars, obviously as well. So really pretty much what we've been experiencing, we expect to continue to experience.

Yes, Marc. This is Joe, I'd also just add to that, just kind of lifting things up a little bit. I mean, we all know one of the biggest macro trends out there is inflation and certain aspects of inflation are more directly related to our business such as wage inflation, which I believe the last numbers put out there is surged about 11.7% year-over-year in March. So one of the things that, and Kye had mentioned some of this in her comments that our team has done is a nice job on increasing the bill rates and that associated wage increase that kind of flows through to our consultants. I mean, one of the interesting dynamics is our clients understand wage inflation better in this cycle than what I've seen in any other cycle in my 34 year career here at Kforce. I mean, no doubt, the broad based understanding and awareness have to do with all the news and companies are feeling this firsthand with their core populations during this great resignation, point being clients are more informed and probably more receptive than ever and working with us to make sure that we're doing everything necessary to adjust so that they can attract top technology talent. I just want to make sure we lift this up from a bigger perspective on what's taking place.

Excellent. And then that actually leads me to the next part of the question. And I was sort of thinking about when you think through the digital transformation that you're seeing your customers sort of embark upon and sort of what stage they're in and that process. I was wondering, you could talk a little bit about maybe what that does for you on two fronts. One, how that's sort of adjusted or changed if at all, the level of visibility that you have in working with your customers and sort of the projects that they have in mind, how has that maybe changed your level of visibility for your own results? And then maybe could touch a little bit about the – on the competitive advantages and how those have either expanded with your clients sitting in that direction. Thank you.

I think from a visibility perspective, it hasn't changed that much. Although, we do see long range on this, this is not just coming in and doing one project. This is long range, full enterprise transformation. When you think about our customer base, 70% of our clients are in the Fortune 500 and they don't have an option on sending this money. So we do see this as continuing long-term and great partnerships with our companies. I mean, it ranges from everything from in the retail space, you're seeing clients, who are really trying to have digital platforms now to handle shipping and returns to in insurance tech, you're seeing everything's done now over the mobile apps and those types of things. So you just see it throughout every industry that we're touching, but I do think it's continuing to improve the longevity of our clients and those assignments too. We have seen our average assignment length continue to grow, we're at roughly 10 months now, and it's very sustainable. Clients don't have an option, they have to do this. So I think this is a trend we're going to continue to see for a very long time.

Okay, great. And then the competitive advantage of where you stand currently and how that’s expanded over time. Thank you.

I think the competitive advantage that we have, and I’ll let Joe add to that, but we’ve been after this, we were very early in looking and partnering with various CDOs, Chief Digital Officers across our client base. We have built out a lot of capability in this. We’ve hired some outstanding subject matter experts in this field. And then obviously our national footprint is a big advantage for us. And in this space, clients are doing most of the work can be done remote. So we’re able to have access across the country to identify that top talent we’ve invested in great tools that help us recognize who the best and brightest are. And our people have really become experts in recruiting this type of individual. So really proud of the progress the team has made in this space. Focus wins and this is a big for focus for us.

Hey Mark, thank you very much. I was just going to put just add quickly and Kye’s talking about the competitive advantage, just kind of numerically here. Focus absolutely wins. You look at our $85 an hour bill rate business even during the pandemic, right, that business didn’t go away. So one of the advantages that we have is being focused here, make us a necessity in the eyes of our customers and it’s – and it led to basically even in the worst of times, relative to the market as a whole our revenue held up probably better than anybody’s in the space, so.

Excellent. Thank you.

Thank you, Mark.

Your next question comes from the line of Tobey Sommer with Truist Securities. Your line is open.

Thank you. I kind of wanted to expand on that last question. Can you give us context for the assignment link in recent history and maybe describe – just describe the changes over time and bring it home if you could with what those changes mean and now 10 months on average to your ability and how you manage your business as you have what seems like more visibility?

Yes. Hi Tobey, Dave Kelly. So to put it in historical context, so 10 months is compared to I would say if you look at maybe right after the great recession, it was probably five or six months, so it’s – so it is really doubled since that time. So what you’re seeing is clients holding on to our consultants more, one of the things that we’ve touched on and Kye had mentioned in her remarks, obviously our clients are looking for companies such as Kforce to do more project based work. Those are obviously longer in duration. So for us, it’s a combination of the need to hold onto talent and the type of work that we’re doing. And really, that helps us obviously deepen our relationship as Kye said with our clients as well. So on an ongoing basis, as we look to the future as the shape of the business that we’re doing continues to move down this path. It just gives us a much more sustainable revenue stream, generally speaking.

And do you think we’re topping out at 10 months? Is there room after a doubling to keep going a little bit?

Well, I mean I would say…

I’d say there is definitely room to go.

Yes. Yes. I would agree with Kye, right. So as we see that project based work increase, those are typically longer lengths of assignments. So on average it’s going to increase, right. So that’s just kind of the nature of how technology talent is procured these days.

Yes. And Tobey, we were in the – as you’re well aware, we’re in the most imbalanced supply demand in terms of resources in these key technology roles. I mean this is more severe than it was during the peak of the dot-com. And by default, we are seeing clients hold onto people longer, even when it’s not in and around the managed team and solution space because they realize how difficult it’s going to be to find somebody else. We also are seeing clients redeploy our consultants inside their organization, meaning when one assignment’s wrapping up, they’re actually helping that, that consultant find another initiative inside that organization when they have somebody that has some of that domain knowledge now. So that’s also playing into this as well.

You kind of prompted a follow-up there. Does that change the way you can utilize your recruiting force to kind of be more productive hunting? If to some degree, you’re getting renewals or longer assignments as a result of your clients actually redeploying talents on your behalf?

Absolutely. That really gives us some good opportunities to continue to expand the business. We are really rethinking about how we think about redeployment. We’re looking at how do we continue to infiltrate within client. How do we redeploy with other clients? We recently had, for example, a project that ended it had about 30 people on it, we redeployed 28 of them. So it’s definitely something that’s working for us. And with this type of demand, we’ll continue to obviously the people that have worked for us and proven themselves are the ones that we want to continue to place time and time again.

And if I could just ask that you to touch on sort of a consulting value-added side of the services in contrast to staff are, what does the assignment link look there? And are you comfortable that you can still build that at scale on a pure organic basis?

Yes. Tobey, I…

So can you clarify that? Yes, go ahead. Joe, go ahead.

Yes, Tobey, I would say from a standpoint of the progress we’ve made with our manage teams and solutions efforts, we are very comfortable that we can go this organically if need be, we’re staying remaining active in the market and looking for that potential right fit that would bring value added services to our team that we could take across our broad base of customers. We just have – we haven’t found that right fit. And so to what Kye had mentioned, we’re bringing on a lot of skilled individuals that are coming out of solutions organizations that have really allowed us to build a strong team, and we continue to outpace our growth within this area versus our overall tech growth, roughly 27%. So we’re growing at a faster rate in these areas.

Yes. And I even would add to that, it’s nice not to have the distraction too. I think that again is why we’re accelerating so quickly.

Thank you for that. How would – do you think that the Tech Flex business would perform in a longer recession in 2020, because in fact that was severe and swift, but quite brief. I’ll sort of the great recession and I can’t recall if you had any unique factors, either beneficial or that worked against the business at that time to consider in sort of evaluating what it would look like this go around should there be one.

I would say, probably the best parallel even versus the financial crisis is when you go back to the dot-com, because I believe that cycle was very tech centric, this cycle is very tech centric. However, they’re tech centric in very different areas. Dot-com as we all know, as the internet came about – everybody was scrambling to get websites up. Everybody was worried about disruptive business models that were out there. It was very hypothetical. So that’s what drove a lot of the bubbles during the dot-com. This cycle is structurally sound. Everything that’s happening is, as we’ve said to digitize individual’s business, whether it be on the consumer front, whether it be on the employee front, I mean, these are non-optional for organizations to not move forward their digital efforts. So I think that plays a lot into how the business would perform in a longer recessionary period. Again, let’s go back to even the great recession, I mean, the financial crisis. At that – that was a much longer and the business performed extremely well in that cycle. So when we look at the dynamics that are gone, we’re no longer in the 80s or 90s, where technology was the first place where people went to cut expenses. I mean, everything has to do with that experience and now with data on top of that. So, I mean, we’re in the right areas on everything that we’re focused on with the end clients in terms of the competitive opportunity and the strategic approach that we’ve taken through the overall business.

Thank you. Last question for me. Some investors have been focused on customer concentration for another company had a large project. And could you remind us what does the largest customer represent or maybe the top 10 customers, if that’s – how you’d like to slice it and give us a comparison for how that’s changed in recent history maybe pre-pandemic. Thank you.

Yes. Hey, Tobey, Dave Kelly. So I can tell you that pre-pandemic, post pandemic, we’ve always been extremely well diversified. From an industry standpoint, Kye touchd on it that industry as a whole is I mean, everything is great less than 20%. From an individual customer, we don’t have any customer concentration of any note, right, probably less than 5%. So we’re not reliant upon any one industry nor are we any one customer. And that is – and that, I would say, by the way, Tobey, that has been the case for a long time. So that dynamic has not really changed over time.

Thank you.

And Tobey, we’re a little bit different type business, meaning to Dave’s point, even when we talk customer concentration realize we have many different initiatives going on within customers. So, I mean, any one given project is a percentage of whatever revenue we’re deriving from a specific client. I mean, I think it’s also important to put a footnote on that.

Right. Good point. Thank you very much.

Sure.

Your next question comes from the line of Kartik Mehta with Northcoast Research. Your line is open.

Hi, good afternoon. I think you’ve talked about obviously what wage inflation has been so far. I’m wondering, as you look forward to the rest of 2022, what your expectations are for wage inflation. Are we kind of at the peak or do you think there’s still greater pressure on that occur on wages?

Yes, I think – please go ahead, Joe. Yes, I think the simple answer is in the technology space, we’ve been seeing wage pressure for the last number of years. And I don’t think we have any expectation that is going to change. What I can tell you is, we’ve been dealing with this for a long time and we are very confident that and I think Joe touched on it. Our customers really understand it as well. So our ability to pass that through to our customers we feel very strongly about as well, frankly, rising wage really is a tailwind into our business. So I don’t know that changes and I quite frankly think it’s a good thing for us.

And then believe – go ahead. I apologize.

No, go ahead.

Well, I was going to say, I think you talked a little bit about remote work and we’re kind of in the early inning. I’m wondering if that opens up your ability to recruit people maybe internationally and the ability to do that or maybe if there are hurdles in doing that, especially with your customers.

Yeah, probably the biggest hurdles that you run from an international work standpoint has to come in and around some of the cyber aspects. So it’s very client specific in terms of where their appetite is there. We believe, and again, this could goes back to domestically, we’re one of the top five providers here domestically at 4% market share. So there’s just a tremendous talent pool here in the U.S. And it’s a talent pool that we’ve been involved with and developing relationships with since the day we moved into technology, which I believe was back in about mid 1980s slightly before I joined Kforce. So, our focus is on the domestic talent pool. And also those foreign workers that are on ground in the U.S. that have experiences working within the organizations. So that that’s really where Kforce focus is.

And then if you could just go back to wage inflation, I think, you said that, that obviously is a tailwind. I’m wondering, have you seen any times where maybe your clients might be pushing back because the costs are getting prohibitive or the costs are much more than they anticipated? I realize this is kind of mission critical stuff, so maybe that doesn’t apply. But I’m just wondering if there’s the other part of wage inflation that could potentially have a negative impact?

I mean, we could potentially see at some point, right, because organizations can only assume the inflation for such a period of time until it starts to come back and impact their P&L. But again, going back to, when you look at how technology is, is centric to every bit of this strategy today, this is probably one of the last places that organizations go to in terms of trying to reduce expense. And so we do see wages continuing to probably increase throughout the remainder of the year, there’s been more economist reports coming out that that it could be – we could be more at the top point. So maybe we start to see that subside to some extent. But again the projects that we’re focused on are mission critical projects to the business, these aren’t elective. So, I believe the organizations are going to have to go to other areas to look at reduction of expenses, or they’re going to have to cut back on the amount of things they’re doing and focus on the highest priority initiatives in the firm. I mean, if you really want to play that forward.

Thank you very much, Joe. I appreciate it.

Sure.

Your next question comes from the line of Mark Marcon with Baird. Your line is open.

I just wanted to ask a follow up question. Clearly IT Flex is mission critical. And if we go back even during 2020, when the impact of COVID was significant, you saw dis minimal declines in terms of IT Flex revenue. On the other hand, there was a decline in terms of perm and despite that you were, and certainly in F&A to a certain degree, but you were able to preserve the margins at a very strong level, I’m just wondering what were some of the lessons that you’ve learned that if we go into another recession, there’s parts of the business that aren’t going to be impacted, there’s going to be other parts that are going to be impacted, to what extent do you think you’re going to be able to maintain profitability as well as you did back in the 2020 time period?

Yes, Mark, we wore game scenarios all the time, especially, as different things are evolving, and we have a very seasoned management team. I mean, most of us have been together for over 20 years. So, we’ve seen different cycles. We know they all come with a little bit different flavor. And I think if you go back and you look at our history, if you look at how we navigate it through the financial crisis, and now how we’ve navigated through this most recent pandemic crisis. We’re going to make the right calls and we’re going to always preserve profitability of the firm to keep the business. But we also are going to do and make the right calls to hold onto the talent, because we also realize always another side to these. Again, I’ll go back to today, unlike either one of those even with the pandemic even more recent here, 85% of our business is wrapped up in technology. And that’s not on the – what less than 4% of our total revenue stream in the permanent non-cyclical. We – to answer your question, we learned from every one of these cycles and they’ve driven our strategic decisions going back to, as far as I can remember coming out of dot-com, when we came out dot-com, what we experienced, if we weren’t significant inside customers, we were being exited that changed our account portfolio strategy to become significant within organizations. And we’re seeing the byproduct through these last two downturns of that. We also saw a permanent revenue stream go from – was it $40 million a quarter down to $6 million a quarter, and all the real estate overhang, everything else. And that’s when we consciously made the decision to not see exposed on the permanent side. So through this last cycle, what we learned is we learned with our people speaking in truth and transparency that that improves the trust. And that’s no small part of why Kforce is performing the way it is, because we work through this as a team, through a lot of surveys, gathering their feedback, doing what they were asking and telling us their needs were, which is really driven where we are with our office occasional, which is choice and flexibility that are really empowered by trust and technology. So these things don’t just come out of these. I mean, we have a really solid team with a lot of 10 year, and we’re going to make the right calls.

Terrific. Thank you.

Sure.

There are no further questions at this time. I will now turn the call back over to Mr. Liberatore for closing remarks.

Well, thank you for your interest in support of Kforce. I’d like to say thank you to every Kforce for your extraordinary effort and to our consultants and clients for your trust in Kforce and partnering with you and allowing us the privilege to serve you. We look forward to talking with you again after second quarter of 2022. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today’s conference call. You may now disconnect.