Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kforce Q4 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question press star one again. I would now like to turn the conference over to Joe Liberatore, President and CEO. Please go ahead. Good afternoon. This call contains certain statements that are forward-looking. These statements are based upon current assumptions and expectations and are subject to risk and uncertainties. Actual results may vary materially from the factors listed in Kforce's public filing offerings 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. We have published our prepared remarks within our investor relation portion of our website. On this call, we 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. They are included as an additional clarifying items to aid investors in further understanding the impact of these items and events have on our financial results. Our earnings press release provides the reconciliation difference between GAAP and non-GAAP financial measures. Let me begin by offering some commentary about the current operating environment, which is informed by our internal metrics and discussions with our clients and our associates. As we've mentioned on prior earnings call, we experienced unprecedented demand in Technology Business beginning in 2021 and continuing largely for the H1 of 2022, driven by our clients' acceleration of their digital spend and transformation efforts geared towards employee engagement in a more remote-centric environment and their customer experiences. The unprecedented demand fueled the two-year growth rate in our technology business of approximately 44%, which yet again significantly exceeded market benchmarks. We had previously noted a slowdown in demand during the H2 of the year, and more recently have seen a higher level of project scrutiny being exercised by our clients given the macroeconomic uncertainty. However, technology spend on critical technology initiatives across industries is still proceeding and provides strong underpinning for our Technology Business. We continue to have an unwavering belief and expectation that the long-term secular drivers of demand in technology spend are more present than ever, irrespective of how the economic environment plays out. The strength of our secular drivers of demand in technology accelerated coming out of the Great Recession by advancements in mobility big data cloud and the rapid expansion of consumer-facing technology initiatives. The pandemic has only accelerated the strategic imperative for businesses to further digitize their business to enhance the consumer and employee experiences. Technology is not optional and is core to all business strategies regardless of industry. We don't see that changing. While our business is not immune from the impacts of economic turbulence, trends during periods of economic softness suggest that technology spend is increasingly resilient and less correlated than other areas where companies utilize flexible talent. This is informed by our performance in the Great Recession, where our Technology Business is down approximately 7% versus general staffing market declines of roughly 25%-30%. The 2020 pandemic, where our Technology Business was virtually flat in comparison to general staffing market, which experienced 10%-15% declines. We also believe that our focus on organic growth for the last 15 years and the divesture of non-core businesses has dramatically sharpened our focus and contributed to our sustained success. It has also resulted in a clean balance sheet with virtually no debt and allowed us to return a tremendous amount of capital to our shareholders. Today's announcement of a 20% increase in our dividend, the 5th increase in four years, and an increase in our share repurchase authorization is further evidence of our confidence in our business and our intention in prioritizing return of capital going forward. We have significantly improved our profitability levels, as evidenced by our nearly 300 basis point increase in operating margin since 2016. This has been accomplished while also reducing our concentration of cyclically sensitive direct hire revenues to less than 3% of revenues in the fourth quarter of 2022 versus 7.5% immediately preceding the Great Recession and 19.4 preceding the dot-com recession. The quality of our business and revenue stream continues to improve. To that point, 2022 was an extremely successful year for Kforce. We met the financial objectives we outlined at the beginning of the year, despite the softening in demand we began to experience in the H2 of 2022. We grew revenues in our Technology Business by 18% on top of more than 22% growth in 2021. In addition, we further improved our profitability by 20% in 2022 over 2021 levels. Strategically, we advanced our integrated sales strategy to further integrate our managed teams and project solutions capability within our Technology Business. We advanced the repositioning of our FA Business towards more highly skilled positions. Our team made significant progress on the multi-year effort to transform our back office, and we fully transitioned to a hybrid work environment across all markets and opened our new state-of-the-art headquarters in Tampa. Our office occasional work environment provides our people with maximum flexibility and choice in designing their work days that is grounded in our trust in them and supported by technology. This has resulted in improved retention of our associates and positioned Kforce as a destination for top talent. Kforce is proud to be certified as a great place to work, which distinguishes Kforce as one of the best companies to work for in the country. As we look ahead to 2023, we will continue to make necessary investments in our business to further advance our integrated sales strategy and the transformation of our back office to sustain our long-term growth ambitions and attain double-digit operating margins. We have built a solid foundation at Kforce and are partnering with world-class companies to solve complex problems and help them transform their businesses. There is simply no other market we want to be focused on other than domestic technology talent solution space. In a macro sense, the near term is uncertain, but our path forward couldn't be clearer, and we will remain consistent with the principles under which we've been operating so successfully. We have a solid, highly tenured team in place with the expectation of continuing to capture additional market share and are prepared for the long term and whatever the near-term environment may bring. We have a long track record of expanding our market share, particularly in times of market turbulence, and intend on continuing to deliver above-market performance. I am thankful for the tireless efforts of all Kforcers from our incredible leadership team, our sales and delivery associates, to our revenue enablement team and our executive leadership team, who have been together through multiple economic cycles. I cannot be prouder of what these teams have achieved in executing our strategy over so many years. Kye Mitchell, our Chief Operating Officer, will now give greater insight into our performance and recent operating trends. Dave Kelly, Kforce's Chief Financial Officer, will then provide additional detail on our financial results as well as our future financial expectations. Kye? Thank you, Joe. Overall revenues grew slightly more than 2% year-over-year in the fourth quarter. Our technology business, which continues to be the primary driver of our success, performed slightly ahead of our expectations with year-over-year growth of nearly 8% in the fourth quarter and 18% growth for the full year of 2022. Our technology business now has an annual run rate of $1.5 billion and represents approximately 90% of our total revenues. We believe our strong, consistent outperformance of the market over many years has resulted from our execution and dedicated focus in the domestic technology market. As Joe mentioned in his commentary, our recent operating trends and activity levels have experienced a degree of softening as clients appear to be more cautious given the uncertain macroeconomic environment. This trend began in the H2 of 2022 and has continued into the new year. Sales cycles are becoming longer due to extended interview processes and more scrutiny around budgets. Year-end assignment attrition was also slightly higher compared to the last few years. Our clients continue to pursue essential technology projects even as they become cautious due to the economic uncertainty. Overall average bill rates in technology continued to improve with 1.7% sequential growth to approximately $90 per hour. While the pace of bill rate growth may moderate in the near term, we expect that the continued scarcity of highly skilled technology talent will drive continued bill rate expansion over time. As our portfolio of managed teams and solution engagements continues to grow, we would expect average bill rates to expand along with improved revenue visibility and margins. Critical technology initiatives continue with our clients in areas of cloud, digital, UI/UX, data analytics, project and program management. Conversations with our clients suggest that they will continue to prioritize significant technology investments to remain competitive regardless of the economic environment. Many of our engagements are multi-year initiatives that we expect to continue despite any changes in the macroeconomic environment. Clients continue to look to us to provide managed teams and project solutions engagements. Our integrated sales strategy allows our people to leverage their long-term relationships in this space as we seek to solve our clients' challenges. Clients are looking for us to continue to move up the value chain, providing more complex solutions. We feel an integrated strategy allows us to leverage our existing sales, recruiters, and consultants to effectively deliver in the solutions space. Our year-over-year growth was driven by a diverse set of industries. Sequentially, we are still seeing broad-based demand with select softening. We have not yet seen any particular industry vertical as a whole experience acute reductions in demand. This remains true through the first month of 2023. We have a very diverse client portfolio of large market-leading customers that are prioritizing technology spend, which we believe will be a positive catalyst to our long-term, sustainable above-market growth. While we may be susceptible to short-term disruption with specific clients or industry-specific dynamics, we expect our diversification and concentration in world-class companies to serve our shareholders well over the long term. We expect first quarter revenues in our technology business to grow in the low to mid-single digits year over year and decline in the mid-single digits sequentially, which contemplates the softness we experienced at the beginning of the year. Our overall FA Business declined 26.4% year over year, which reflects the continued runoff of business we are no longer pursuing due to our repositioning efforts. Sequentially, our FA Business experienced 4.7% growth, primarily due to a short-term project in support of Hurricane lan Recovery efforts with a strategic client. This project essentially ended in late January. We expect revenues to decline in the low to mid-teens sequentially and year over year to be down in the mid-20% range. We continue to support our FA business and improve its alignment with our Technology Business. Evidence of this progress is that our average bill rate in FA, excluding the Hurricane Ian project in the fourth quarter of 2022, is $51 compared to $37 in the fourth quarter of 2019. As Joe mentioned, direct hire comprises less than 3% of total revenues. We made the intentional decision to curtail investment to grow our direct hire business due to the volatility we typically see in this revenue stream in uncertain economic times. Our expectations for direct hire are for continued declines in the first quarter. We are pleased that we are not reliant on this business to make significant contributions to our growth and profitability. We believe the scalability of a flexible model is the best foundation for predictable, sustainable and profitable growth. The investments we continue to make in our strategic priorities, along with process improvements to increase productivity levels in our associate population, provide capacity to grow. While capacity exists, we have continued to make targeted investments in associate headcount to drive sustainable growth. This investment is predominantly in our managed teams and project solutions capabilities within our technology business as we evolve to meet customer requests and grow share. We have supported and retained our best people and we have made significant changes to give our employees flexibility and choice in our office occasional work environment. As mentioned last quarter, Kforce has earned Glassdoor's Open Company designation, which recognizes employers that proactively promote and embrace workplace transparency through sharing workplace culture, being responsive to all reviews, and sharing our updates related to diversity, equity, and inclusion efforts along with our ESG priorities. I am grateful for the trust our clients, consultants, and candidates have in Kforce. I would like to thank our amazing people who helped our fourth quarter results and impressive 2022 performance. They are the backbone of our success. I will now turn the call over to Dave Kelly, Kforce's Chief Financial Officer. Dave? Thank you, Kye. We are pleased with our performance in 2022, as full year revenues of approximately $1.71 billion increased nearly 8% year-over-year, led again by market share gains in our technology business. GAAP earnings per share were $3.68. Normalized for impairment charges related to our joint venture, adjusted earnings per share of $4.25 improved approximately 20% year-over-year. Fourth quarter revenues of $419.7 million grew 2.3% year-over-year, and adjusted earnings per share were $0.93. Overall, gross margins decreased 70 basis points year-over-year and 50 basis points sequentially to 28.5% in the fourth quarter, principally due to a lower mix of direct hire revenue. Flex margins of 26.1% in our technology business, which met our expectations in the fourth quarter, increased 10 basis points sequentially and declined 30 basis points year-over-year. For the full year 2022, Flex margins in technology of 26.4% were unchanged from 2021 levels. Top technology talent remains scarce, we've seen consistent wage increases over many years. We've had good success passing through these increases to our clients due to the critical work our consultants perform. This has led to relative stability in the margin profile of our technology business throughout economic expansions and declines, which is our expectation as we move forward. Flex margins in our FA business declined 210 basis points sequentially as a result of a short-term, lower-margin project associated with Hurricane Ian Relief. As we look forward to Q1, we expect spreads in our technology business to be stable with fourth quarter levels, though overall technology flex margins will be lower due to seasonal payroll tax resets. Overall gross margins are also expected to decline due to the lower direct hire revenues. While we believe that clients may be slightly more price sensitive in the current macroeconomic environment, we believe our nearly 90% concentration in technology provides relative margin stability over the long term due to the desire by our clients to increasingly engage us for projects critical to their ongoing success. We also expect that business in the managed teams and project solution space should remain resilient in this environment. Those initiatives bring higher margins to the overall portfolio. Overall, SG&A expenses, as adjusted for the impairment charges as a% of revenue, decreased 90 basis points year-over-year, which is predominantly driven by lower performance-based compensation as it was elevated in 2021 due to extraordinary growth levels. We have a high degree of variable compensation within our plans, which creates operating leverage as growth slows. We've also been successful in driving greater cost efficiencies from our real estate portfolio, given our office occasional model, which has allowed us to reduce overall square footage by approximately 40%. As leases expire, we will continue to transition to the new office footprint, which will lead to further declines in real estate costs. We expect SG&A expenses as a% of revenue to increase sequentially due to the annual payroll tax reset in the first quarter. Our fourth quarter operating margin, as adjusted for the impairment charges, was 6.2% and improved 20 basis points over the fourth quarter of 2021 as a result of the reduction in SG&A expense. Our effective tax rate in the fourth quarter was 23.1%, which was higher than we anticipated because of a lower tax benefit on the vesting of restricted stock and other year-end tax adjustments. Operating cash flows were $12.7 million and as expected, were negatively impacted by the final settlement of $20 million related to payroll taxes previously deferred under the CARES Act. We generated $141 million in EBITDA in 2022, which represents an increase of 11.4% year-over-year. Operating cash flows were $90.8 million in 2022. When adjusted for cash outflows in 2022 related to the settlement of our terminated pension plan and the deferred payroll taxes, operating cash flows would have been approximately $130 million. We returned slightly in excess of 100% of operating cash flows in 2022 to our shareholders through $24 million in dividends and nearly $68 million in open market repurchases. Our return on invested capital was approximately 46% in the fourth quarter. As Joe mentioned, our board of directors approved a 20% increase to our dividend to $1.44 per share and increased our share repurchase authorization to $100 million. Since we initiated our dividend in 2014, we have now increased it 360%. The current dividend yield is 2.6%. In addition, since 2007, we've reduced our weighted average shares outstanding from 42.3 million to 20.5 million, or slightly more than 50%. All in, we've returned in excess of $830 million in capital to our shareholders since 2007, which has represented approximately 75% of the cash we generated while significantly expanding our business. The increase in our dividend and share repurchase authorization demonstrates both our financial flexibility due to the strength of our balance sheet and our confidence in our organic growth model. We remain committed to returning capital to our shareholders regardless of the economic climate. With respect to guidance, the first quarter had 64 billing days, which is three additional days than the fourth quarter of 2022 and the same as the first quarter of 2022. We expect Q1 revenues to be in the range of $406 million-$414 million and earnings per share to be between $0.78 and $0.86. First quarter earnings per share is impacted by approximately $0.15 due to seasonal impacts on annual payroll tax resets. Our guidance does not consider the potential impact of unusual or non-recurring items that may occur. Our performance has put us in an excellent position to continue to make incremental investments in our business, even in an uncertain environment. These include selective additions in our managed teams and project solutions capability and continued investments in our back office transformation efforts. We believe these ongoing investments will benefit our shareholders in the long term and are important drivers to our attainment of double-digit operating margins. Overall, we believe our strategy has put us in an exceptional place, and we are fully prepared for the various economic possibilities that may lie ahead. On behalf of our entire management team, I'd like to extend a sincere thank you to our teams for all their efforts. Operator, we would now like to return the call over for questions. At this time, if you'd like to ask a question, simply press star one on your telephone keypad. Again, that is star one for any questions. Our first question will come from the line of Mark Marcon with Baird. Please go ahead. Good afternoon, and thanks for taking my question. Wondering if you can provide a little bit more color in terms of what you're seeing with regards to the clients on the IT flex side? You mentioned, you know, that for the most part, you know, the impacts are relatively moderate, by vertical. Can you talk a little bit about which verticals? I know there's no drastic impacts, but any sort of, like, changes that you're seeing, you know, just on the margin of certain verticals, which ones are the strongest? Which ones are, you know, showing a little bit more of the macro uncertainty? You know, this is Kye Mitchell. We didn't see a lot of significant client-wide trends. Most of it has been very much pruning by select clients. There's nothing to indicate that any industry or any particular client is down significantly. It's just been pruning. We'll slug it out the gate. We've seen the last couple of weeks. Front end indicators pick back up. Job orders, for instance is one that we look at, but nothing that would indicate anything industry-wide or client-specific. It's just been more pruning after a busy couple of years. Got it. Then with regards to the pricing, you kinda gave us an indication, you know, with regards to how we should think about the bill rates. Do you think that continues over the course of the year in terms of just, you know, slightly more moderate increases in terms of the bill rates? Or are there any chances that, you know, we could end up seeing bill rates decline if the environment becomes a little bit more challenging? Marc, this is David Kelly. In terms of bill rates, I think, you know, obviously we've seen some pretty significant increases over the last couple of years, but very much stability in margins, Flex margins themselves. I would say generally speaking, we've been saying this for quite some time, we expect ongoing stability in margins. In terms of bill rates, you know, if you kinda look at times of, if there is a slowdown, you see pretty stable bill rates. If there is anything, it's been relatively minor. Again, I think as it relates to both margins and bill rates, you're gonna see a pretty stable picture based on what we're seeing today. Great. Question for Joe and Kye. I know it's only been less than a month since ChatGPT emerged, but there's clearly a lot of buzz around AI which there's been buzz around AI before but this is really making it even more obvious. I'm wondering if you can talk a little bit about your early impressions with regards to the opportunities for Kforce to leverage the opportunities that are gonna come there specifically with regards to either practices that you might unfold or what you may end up doing with regards to increasing the efficiencies on the SG&A side. Yeah, it's a great question, Mark. You know, it kind of takes me back, and obviously I'm sure you see what's going on with Google as well. We have the AI arms race going on, and takes me back to 2018 with a great book that one of our, probably most strategic clients recommended to me called AI Superpowers. If you haven't read that book, I'd strongly recommend it 'cause, I mean, you could see all these things coming and evolving. You know, we sit here, and we look at all of these technology innovations as opportunistic on both fronts. One, you know, we've applied a lot of different technologies internally that has allowed us to continue to drive productivity. From that standpoint, great opportunities to further drive greater efficiencies in a lot of what we do inside our firm, applying, you know, whether it's, whether it's chat technology and/or various other artificial intelligence-type technologies. From a opportunity standpoint as well on the client front, you know, one of the things I love about what we do for a living is we are not dependent on any particular technology, any particular industry any particular type of methodologies that are evolving. As time goes on, you know, it kind of takes me back to when I first got into this business, right? Everything was assembler and COBOL. As, as code generation came about, it was gonna impact our business, and it didn't. It actually enhanced the business. I mean, this is a constant evolution. Will it change how app dev happens over time as it continues to evolve? There's no question it will. That's gonna create needs in other areas in terms of the overall what it takes to really deploy as well as create technology and then drive change management with technology within organizations. Kye, I don't know if you have anything else that you wanted to add. No, I think, I think you hit it, Joe. In that market, it's really opportunity on both fronts, in terms of it will create new business opportunities. I think it's just too early to tell on that front. Obviously internal opportunities in terms of how we can deploy and apply things. Great. One last one. Just on the SG&A side, you've already, you know, rationalized your real estate footprint. How much more should we expect over the course of this year? Marc, as far as the real estate footprint, obviously we've been talking about offsite caseload and deploying that across the country. Actually, we've reduced our real estate footprint by about 40%, but we still probably got about three years to annualize the leases that currently exist. As we do that, we plan to deploy that same type of footprint across the country. We've got some time to go there. I think there's opportunity there for us. You know, we're always looking at opportunity as it relates to other areas, right? I'd mentioned in my remarks, and we've been pretty consistent in investing in our business over the years, right? We've talked at length about the improvements we've seen in productivity because of the front office tools, our CRM and TRM tools. We're currently in the process, we actually started it last year, of looking at the reengineering of all of our back office tools, which, although it's gonna take a little bit of time, will be another big leg up. As it relates to the business, as we grow, obviously, we get the benefits of scale. We expect continued productivity improvements that will help from an SG&A standpoint in the front of the house, and we expect to overlay that over time with back office improvements as well. We think there's a fair runway here. As we grow, to continue to increase operating margins, we've said in the past, double-digit operating margins are that which we should expect, still expect that to be the case. Joe. Thank you. Your next question comes from the line of Tim Mulrooney with William Blair. Please go ahead. Hey, this is Sam Kusswurm for Tim Mulrooney. Thanks for taking the questions here. I guess to start, you know, we've seen a lot of announcements about headcount reductions recently, particularly across the tech industry. Payrolls came out last week and were much stronger than expected. How would you characterize the tightness of the IT labor market right now relative to last quarter? Is it easing or pretty much steady state? Well, in regards to candidate supply, we've been in a very candidate-constrained environment for well over a decade. Frankly, that hasn't changed and likely won't change in the current environment. It does appear that some of the largest companies may have overhired and as I mentioned, are doing a little bit of pruning over the last few months. I think that you're seeing selective pruning in those investments. There might be a bit of incremental supply. The clients are still being really selective in their hiring process, and we don't see this impacting any future expectation for what that candidate supply looks like. I think it's gonna continue to be a tight one. I think also we're seeing, some folks looking to go into the office again, which is probably a little bit of, any pressure off of some of those candidates that are out there. Seeing overall, it's very similar to what it has been. I don't, I don't expect to see a lot of change there. Kye, let me add, Sam, just to kind of as a reminder, our technology footprint is pretty high up the value chain, right. We talk about things like cloud, application modernization, data analytics, digital transformation. You know, our average bill rate is $90 an hour, as you might expect. You think about what that means from a pay rate perspective. Kye mentioned scarce talent. For years, right, the world has not produced enough of those skill sets, and that is still the case. A big driver to the expectation of continued scarcity in the areas that we play. That's very helpful. I appreciate the color there. you know, you touched on this in your prepared remarks, but, can you maybe expand a little bit more about client behavior in this environment? What are you hearing from clients these days from both the demand side as well as client behavior on the process side? Have they given any indication on how they're thinking about their own staffing needs in the months ahead here? You know, as we mentioned, I think there's more scrutiny on budgets than what we've seen the last 2 years. It's not anything unusual to prior cycles, but there is more scrutiny around it. However, clients are very much committed to continuing in the areas of strategic investments. For example, cloud, you know, digital transformation. If they're doing a cloud project, they're not gonna stop migrating to the cloud. We believe we're very well-positioned strategically in the right areas where clients are continuing to invest. We've seen some good wins as we come into the 1st of the year. We had a recent win with a healthcare company to help them in their cloud migration. We had a recent win with a customer to help them create new tools to help improve employee productivity. I think the space we're playing in, we continue to see client investment there. Yeah. I would add, as Kye mentioned, clients still funding critical projects. That has been true historically, right? I'll just remind you, during the Great Recession, right, technology critical spend was far more robust than other industries, other disciplines within staffing. Just recently in the pandemic, our technology revenues actually were flat when we had obviously a significant decline. Kind of a reflection of what we're seeing. That is on top of obviously significant growth in technology prior to that and then subsequent to that. A lot of resilience in the technology revenue stream here, regardless of the climate. That's helpful. Appreciate that, both. I think we'll leave that there. Thank you. Your next question comes from the line of Tobey Sommer with Truist Securities. Please go ahead. Thank you. wanted to ask you about managed teams and project solutions. Can you give us some color there along basic dimensions of either size, kind of margin profile, if not specifics, maybe juxtapose it and compare it with existing businesses you talk about, project nature, maybe a description of what kind of things you take on versus things you won't? Any kind of things that'll help us get a better overall understanding of what you're doing, where you're going with that would be helpful. Thanks. Yeah, thanks, Tobey. relative to that solution set that we're bringing to market, right, we've taken a little alternative approach to maybe, what you hear from some of our direct competitors in the marketplace, because we view that this is integrated into who we are, with our technology-focused DNA and how we can leverage all of our capabilities within, Kforce through our integrated sales strategy, because that's really what unlocks, the value here. I think we've stated in the past, you know, our margin profile is roughly 400 basis points higher when we do this type of work because of the additional value that we're bringing and moving up that value chain. The further we go up that chain, the more that that margin expands, that on average, we've been roughly about 400 basis point. In terms of the footprint that we're after, I mean, Kye had articulated the key areas and part of the reason why we focus in the areas that we do, you know, cloud data and various other ones, because they play off of each other. 'Cause often when a client is working and has an initiative going on with cloud, well, that's gonna also drive their data needs. Based upon when we get engaged, it allows us to get honed in on these different areas and catch them at the different phases of an overall macro project. From a duration standpoint, our efforts in this area typically are of a longer duration than that average, roughly 10-month contract that we've spoke about. you know, we see some of these projects go multi-year, but on average, they're gonna be of a greater duration. Kye, I don't know if you wanna talk a little bit more of the, of the particulars. Yes. Tobey, as Joe said, we see longer durations. We do see clients in the areas we're spending continue to look for everything from solutions through managed teams. You know, managed teams is something we're seeing a lot of demand for. People don't wanna have to go to the various different staff aug providers. They want somebody with skin in the game to bring on a whole pod or bring on a whole team. It creates great opportunities for us, and we're continuing to see strong demand in that space. When you reference margins, is that at the GP level or is that, sort of more at the bottom line level? Yeah, Tobey, the answer here is really both, right. We're sitting here, it has at the higher gross margin profile you'd expect, right. As we deliver more at that line, it translates. It's an important business for us. Okay, perfect. Where do you see flex gross margins trending in the quarter? Because if we look at the model, the flex gross margins on a year-over-year basis, it did start to contract a little bit, and I'm just trying to reconcile that because I don't know whether managed teams and other things muddy the waters in the way that we can sort of extract it and draw conclusions from those kind of numbers. Thanks. Yeah. Yeah, Tobey. I think a couple things. If I look at full year margins, they're actually, in technologies where we're focused, they were flat. Yeah, they were down in a very minor way 'cause I think about the spreads to that business, that's unchanged, right? As I'd mentioned, as I look sequentially, obviously we get impacted by payroll taxes in the first quarter, but, I think the buzzword here is really stability. We're not looking for any significant change from where we're at, and we're not seeing anything that suggests that we should do otherwise. Okay. And then, I'm curious that you touched on this in another question, but I'm gonna ask you a different one. When you plan for recessions, and you think about how the business will perform, we have, I guess, 3 examples in the last 20-some years. You've got the tech bubble, the Great Recession, and 2020. They all have peculiarities, different depths. Which ones do you use to inform your planning for the business? And are there any adjustments you'd make? Because we often hear from investors that, you know, 2020 was unique and for IT maybe unique in that the pandemic encouraged some spending on IT that a normal recession absent a pandemic may not. Thanks. Yeah. It's a, it's a great question. As you well know, because you've been around the space for a while, no two are the same, and they all react differently. I think we're in probably one of the more unique environments. You know, this will be. Well, if recession truly ever gets coined, right? I think this has been the most telegraphed recessionary period in history. If it ultimately plays out that way, I would say what's really so significantly different this time around is just the overall labor market. You know, we've seen labor markets are impacted. By the way, they're never impacted as severely, especially in the high-skilled areas, as what one believes. Although the last two recessions have been impacted, or I should say, if I look at the financial crisis and we look at what happened during the pandemic, those probably had more labor impact than any of the other prior recessions if you go back over the course of the last 50 years. This one, when you just look at when you look at the amount of jobs and then you look at the available pool of talent, they say, you know, if this were to contract even rather extensively, I mean, you're still gonna have 1 plus job per person in the marketplace. As you well know, when we're sitting here focused on technology, which has always been an outlier in terms of supply-demand, we feel very good about those fronts. You know, we have a very flexible and elastic model that has natural throttles within it. You know, we have a variable cost structure. You know, as things, if things were to get tight and there were to be revenue impacts, even although we really didn't experience any of that during the pandemic, and it was phenomenal during the financial crisis, our business naturally readjusts because of, you know, we have a lot of leverage comp plans and those types of things. We feel great in the spot that we're sitting here with virtually, you know, no debt, a pristine balance sheet. We've been very prudent about how we've staffed coming out of the pandemic, so we haven't overhired. We've hired based upon need. I mean, we feel we're in a real place of strength right now, and we view no different than where we were blessed to be when we went through the pandemic. We operated from a position of strength throughout the pandemic, and if things were to get tighter, we're going to operate from a position of strength and play for the other side and really position ourselves. I guess those would be the key themes that we look at as we prepare for any difficult or trying time is how are we set up and how are we positioned to operate. I've been here for 35 years now and been through four different cycles, and we've never been stronger or better positioned than we are today, no matter what comes around the corner. Tobey, let me amplify a point that Joe made in terms of managing through various cycles, right? He had mentioned, we just increased our dividend, we just increased the authorization on our buyback. In good times and bad, we generate a significant amount of cash. I think in excess of $130 million, certainly in operating cash flows this coming year. We have been very consistent how we've thought about the use of that cash. I don't have any expectation that that's going to change either. This is the last piece kind of how we think about managing the business. Okay. If I kinda just double-click on my question, when you look back at 2020, do you think that there were unique features to the pandemic that contributed to IT's resilience? That if we have a sort of a similar contoured economic contraction without unique pandemic features, would the business and industry perform differently? Yeah. I think coming out, the pandemic was a big wake-up call for many organizations that were slow in getting after digitizing their business, looking at how they were leveraging data, moving their businesses to the cloud. I think that was a huge wake-up call for all businesses. There is no question that that created an acceleration of investment in technology. However, what it also did is it actually moved forward the adoption of technologies by years. I mean, I can't sit here and say exactly how many years, but I even look at us at Kforce and I look at how we're deploying and leveraging technologies that we already had that we were having trouble getting traction with that now is fully embraced, you know, whether it be Teams or various other tools that we've implemented. That acceleration, there's no question it created an excess of demand, right? You have to delink some of these tech reductions that you hear in the marketplace in comparison to what technology really has done. Everybody is having to do these things, digitize their business, move to the cloud, figure out how they monetize and leverage data to be more competitive. It is not an option to invest in these areas. We see the need continuing on in these areas irrespective of what economic backdrop. I mean, I think if it was a tougher economic climate, would you see some cutback in certain technology initiatives? Absolutely. These mission-critical, imperative, skill areas and projects that companies have to work on, they have to do this or they're putting their business at risk from a competitive long-term sustainability standpoint. I'd say that's what's really different. I mean, we are in more of a, what I would consider a normal operating environment versus, you know, those couple of years post-pandemic where everybody was scrambling. Normal is a pretty darn healthy environment to be as well, is the way that we look at it. Thank you very much. Your next question will come from the line of Kartik Mehta with Northcoast Research. Please go ahead. Thank you. Have you seen a change at all in the competitive landscape? Maybe since you're seeing a little bit of softening, has there been any change? There's been a slight softening. As we said in our opening comments, we did see a little bit higher than usual attrition numbers at the end of the year. I think the way the holidays fell too, it just pushed everything out a little bit. While it was sluggish coming out of it, we have seen, like I mentioned, Kartik, in the last couple of weeks, we've seen those front-end indicators pick back up. It'll be interesting too with clients seeing the latest BLS numbers and everything. I think a lot of it was clients just taking longer to scrutinize and wondering where the macroeconomic was going. I think there's some positive indicators now for them. Yeah. Kartik, I think you're also asking about, I'm assuming, the direct competitive landscape. Yes. Is that correct? Yes. Yeah. I think what we're seeing from a competitive landscape standpoint is, you know, with the larger players that we compete with, things have remained pretty constant. Probably the biggest place that we've seen some competitive dynamics is when we look at the local operators and the smaller players in the space. They are feeling a little bit of pressure. By the way, this is typically what we see as these cycles evolve and the environment becomes a little bit more difficult, right? They're typically more single-company dependent. As you look at, as you look at defaults going up on credit and those types of things, they don't have a lot of room to play with, nor do they have really strong balance sheets. I suspect if things were to be tougher throughout the course of 2023, what's gonna happen is our competitive landscape is gonna shrink from a local operator, regional operator standpoint, which just provides us more market share opportunity. That's why historically, if you go back and look at Kforce's performance, we always come out on the back end of these stronger than where we went in. I don't foresee this being any different irrespective of how the market plays out this year. you know, you've talked about obviously the sales cycle lengthening a little bit, and we're coming off some pretty tough comparisons where things were really good. If you compared that to pre-pandemic levels, you know, how would that compare? Rather than the last kinda 2 years that were really strong, just comparing it to previous to pan-pandemic, you know, before there was this big surge in demand. We're still very stable to what we saw during pre-pandemic. We haven't seen a real dip from those levels. Perfect. Thank you very much. Really appreciate it. Sure. Once again, for any questions, please press star one. Your next question comes from the line of Marc Riddick with Sidoti. Please go ahead. Oh, good evening. Good evening. I wanted to first, I really do appreciate the update as far as the return of capital to shareholders. Certainly, that is, it's substantial in times like this. It's certainly nice to see. I was wondering if, and this is sort of a, I guess, maybe just trying to sort of look at this as a slightly different vantage point. I was kinda curious as to whether or not the things that you're seeing with your bullishness on the company as well as what you're seeing with the clients. I was sorta curious as to how much that's actually changed from your last call in the third quarter. I mean, is there anything that you've seen in that timeframe that's necessarily sort of changed your outlook, you know, bullishness, bearishness, or any signposts that you think have necessarily been altered over the last few months? Yeah. I would say, we've been bullish, for quite some time now. I mean, I think the pandemic and, you know, while it was a horrific experience to go through, I think it forever changed Kforce, and I think it changed the trust within Kforce, and I think it also has changed our ability to move quickly, adjust rapidly because our teams had to learn, and how to deal with so much change management over those periods of time, that I think we're a very different organization than we were in the early part of 2020 prior to going into that. That really excites me because when I look at what our team has been able to accomplish over the course of the last three years in the face of some of the most emotionally and mentally challenging situations that probably anybody in the business world has ever faced, I'm just blown away what our teams have accomplished and where we are today, with, you know, our Office Occasional model with real technology applied, with real cultural shift taking place, and then just how we've also elevated our game with our end clients. No, I mean, nothing's changed since we spoke to you back in, you know, back end of October of last year. We've been of this attitude for quite some time. We are playing offense, and we are gonna continue to play offense. Why is that? Because we can, and we have the right team to do it. Excellent. I was wondering if you'd talk a little bit about, if, with some of your engagements with the clients, has there been much of an impact or benefit, from either increased or stalled, M&A activity or business transitions that you're seeing, or is that fairly similar to what we saw? We know that obviously, a lot of M&A sort of dried up last year. I was sort of curious as to whether or not any of that was driving changes or the way they were looking at things. Thank you. No, we haven't seen any significant impact from that. Clients are pretty much business as usual. As you know, we haven't done any M&A in many, many years. We have a couple of clients, but they're, you know. Our largest client makes up only 5% of revenues. We have a couple of clients right now that are we're benefiting from them going through some M&A activity, but it's really not an impact on what we're seeing. Okay, great. Thank you very much. Sure. Thank you. We have no further questions at this time. I'll hand the call back over to Joe Liberatore for any closing remarks. Well, thank you for your interest and support of Kforce. I'd like to say, thank you to every Kforcer, for your extraordinary efforts, and to our consultants and our clients for your trust in Kforce and partnering, with you and allowing us the privilege to serve you. We look forward to talking to you again, after our first quarter of 2023. Ladies and gentlemen, that concludes today's meeting. Thank you all for joining. You may now disconnect.