Revenue during the quarter went down marginally by 1.50 percent to $336.46 million from $341.58 million in the previous year period. Gross margin for the quarter contracted 83 basis points over the previous year period to 31.32 percent. Total expenses were 95.43 percent of quarterly revenues, up from 93.24 percent for the same period last year. That has resulted in a contraction of 218 basis points in operating margin to 4.57 percent.

Operating income for the quarter was $15.39 million, compared with $23.08 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $18.81 million compared with $27 million in the prior year period. At the same time, adjusted EBITDA margin contracted 231 basis points in the quarter to 5.59 percent from 7.90 percent in the last year period.

David L. Dunkel, chairman and chief executive officer, said, "Revenues in the third quarter of $336.5 million were largely as anticipated across all business lines as we continued to make progress in diversifying our client portfolio. We are encouraged by the late-quarter and early October trends in our Tech and FA businesses that are providing momentum heading into the fourth quarter and should allow us to return to positive year-over-year growth overall and in our Tech Flex business. While we continue to believe that the T4 Next Gen contract vehicle could be an important growth vehicle for KGS, the initial group of awards were more concentrated than we anticipated with small businesses as a result of Congressional mandatory set-aside provisions requiring competition in certain instances to be restricted to service-disabled veteran-owned small businesses. As a result, KGS was not eligible to submit responses as a prime contractor on some task orders for which we believed it was well qualified."

Days sales outstanding were almost stable at 58 days for the quarter, when compared with the last year period.

Debt increases substantially
Kforce Inc. has witnessed an increase in total debt over the last one year. It stood at $104.99 million as on Sep. 30, 2016, up 29 percent or $23.60 million from $81.39 million on Sep. 30, 2015. Kforce has witnessed an increase in long-term debt over the last one year. It stood at $104.99 million as on Sep. 30, 2016, up 29 percent or $23.60 million from $81.39 million on Sep. 30, 2015. Total debt was 28.49 percent of total assets as on Sep. 30, 2016, compared with 21.85 percent on Sep. 30, 2015. Debt to equity ratio was at 0.81 as on Sep. 30, 2016, up from 0.57 as on Sep. 30, 2015.