- Q1 revenue down 2.2%; down 1.4% in constant currency;
organic revenue nearly flat (down 0.5% in constant
currency)
- Q1 gross profit down 1.7%; down 0.8% in constant currency;
delivered continued improvement in GP rate, 20.0%, up 10 bps
year-over-year
- Q1 operating earnings of $10.7
million, including a $5.7
million restructuring charge, or $16.4 million on an adjusted basis
- Initiated a comprehensive business transformation program to
significantly improve EBITDA margin
TROY,
Mich., May 11, 2023 /PRNewswire/ -- Kelly
(Nasdaq: KELYA, KELYB), a leading specialty talent solutions
provider, today announced results for the first quarter of
2023.
Peter Quigley, president and
chief executive officer, announced revenue for the first quarter of
2023 totaled $1.3 billion, a 2.2%
decrease, or 1.4% decrease in constant currency, compared to the
corresponding quarter of 2022, with organic, constant currency
revenue down 0.5%. Year-over-year revenue trends were impacted by
foreign currency headwinds and the impact of the sale of Russian
operations in July 2022.
Year-over-year results in the quarter also reflect the impact of
the 2022 acquisitions of RocketPower, a recruitment process
outsourcing firm, and Pediatric Therapeutic Services, a specialty
firm providing in-school therapy services.
"Taking into account well recognized macroeconomic headwinds, we
delivered solid results as our specialty solutions proved more
resilient than others. Our Education segment and our more
profitable outcome-based solutions in both P&I and SET
continued to deliver solid growth, while, as expected, our staffing
businesses faced decreased demand in this environment," said
Quigley.
Kelly reported operating earnings in the first quarter of 2023
of $10.7 million, compared to
earnings of $23.4 million reported in
the first quarter of 2022. Earnings in the first quarter of 2023
included a $5.7 million restructuring
charge. The restructuring charge reflects cost management actions
in response to the current demand levels and to reposition the
Professional & Industrial staffing business to better
capitalize on opportunities in local markets. Excluding the
restructuring charge, adjusted earnings from operations were
$16.4 million. Earnings in the first
quarter of 2022 included a $0.9
million gain on sale of assets and adjusted earnings were
$22.5 million. Adjusted earnings
declined year-over-year primarily as a result of lower
revenues.
Earnings per share in the first quarter of 2023 were
$0.29 compared to a loss per share of
$1.23 in the first quarter of 2022.
Included in the earnings per share in the first quarter of 2023 is
an $0.11 per share restructuring
charge, net of tax. Included in the first quarter of 2022 is a
$1.69 loss per share, net of tax, on
the sale of Kelly's investment in Persol Holdings common shares and
related transactions, partially offset by a $0.02 per share gain on sale of real property,
net of tax. On an adjusted basis, earnings per share were
$0.40 in the first quarter of 2023, a
decline of 9% from $0.44 per share in
the corresponding quarter of 2022.
As Kelly approaches the three-year anniversary of its operating
model, Quigley went on to introduce a new phase in the company's
journey toward profitable growth. "We have made progress on our
growth journey. Now, with an eye to the future, we are taking a
bold approach to accelerate profitable growth. I've established a
Transformation Management Office reporting directly to me and
engaged an expert consulting firm to support our aggressive
ambitions to create structural improvements in our business
designed to convert our revenue and gross margin gains to
significantly improve our EBITDA." Quigley noted that regular
progress updates will be provided starting in August.
Kelly also reported that on May 9,
its board of directors declared a dividend of $0.075 per share. The dividend is payable on
June 6, 2023, to shareholders of
record as of the close of business on May
22, 2023.
In conjunction with its first-quarter earnings release, Kelly
has published a financial presentation on the Investor
Relations page of its public website and will host a
conference call at 9 a.m. ET
on May 11 to review the results and answer questions. The call
may be accessed in one of the following ways:
Via the Internet:
Kellyservices.com
Via the Telephone
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please
enter "#"
A recording of the conference call will be available after
2:30 p.m. ET on May 11, 2023, at (866) 207-1041 (toll-free) and
(402) 970-0847 (caller-paid). The access code is 4789007#. The
recording will also be available at kellyservices.com during this
period.
This release contains statements that are forward looking in
nature and, accordingly, are subject to risks and uncertainties.
These factors include, but are not limited to, changing market and
economic conditions, the impact of the novel coronavirus (COVID-19)
outbreak, competitive market pressures including pricing and
technology introductions and disruptions, disruption in the labor
market and weakened demand for human capital resulting from
technological advances, competition law risks, the impact of
changes in laws and regulations (including federal, state and
international tax laws), unexpected changes in claim trends on
workers' compensation, unemployment, disability and medical benefit
plans, or the risk of additional tax liabilities in excess of our
estimates, our ability to achieve our business strategy, our
ability to successfully develop new service offerings, material
changes in demand from or loss of large corporate customers as well
as changes in their buying practices, risks particular to doing
business with government or government contractors, the risk of
damage to our brands, our exposure to risks associated with
services outside traditional staffing, including business process
outsourcing, services of licensed professionals and services
connecting talent to independent work, our increasing dependency on
third parties for the execution of critical functions, our ability
to effectively implement and manage our information technology
strategy, the risks associated with past and future acquisitions,
including risk of related impairment of goodwill and intangible
assets, exposure to risks associated with certain equity
investments, including with strategic partners, risks associated
with conducting business in foreign countries, including foreign
currency fluctuations, risks associated with violations of
anti-corruption, trade protection and other laws and regulations,
availability of qualified full-time employees, availability of
temporary workers with appropriate skills required by customers,
liabilities for employment-related claims and losses, including
class action lawsuits and collective actions, our ability to
sustain critical business applications through our key data
centers, risks arising from failure to preserve the privacy of
information entrusted to us or to meet our obligations under global
privacy laws, the risk of cyberattacks or other breaches of network
or information technology security, our ability to realize value
from our tax credit and net operating loss carryforwards, our
ability to maintain specified financial covenants in our bank
facilities to continue to access credit markets, and other risks,
uncertainties and factors discussed in this release and in the
Company's filings with the Securities and Exchange Commission.
Actual results may differ materially from any forward-looking
statements contained herein, and we undertake no duty to update any
forward-looking statement to conform the statement to actual
results or changes in the Company's expectations.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies
recruit and manage skilled workers and helps job seekers
find great work. Since inventing the staffing industry in
1946, we have become experts in the many industries and local and
global markets we serve. With a network of suppliers
and partners around the world, we connect more than 450,000
people with work every year. Our suite of outsourcing and
consulting services ensures companies have the people they
need, when and where they are needed most. Headquartered in
Troy, Michigan, we empower
businesses and individuals to access limitless opportunities
in industries such as science, engineering, technology,
education, manufacturing, retail, finance, and energy. Revenue
in 2022 was $5.0 billion. Learn more
at kellyservices.com.
KLYA-FIN
MEDIA
CONTACT:
|
|
|
ANALYST
CONTACT:
|
Jane
Stehney
|
|
|
James
Polehna
|
(248)
765-6864
|
|
|
(248)
244-4586
|
stehnja@kellyservices.com
|
|
|
james.polehna@kellyservices.com
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF EARNINGS
|
FOR THE 13 WEEKS
ENDED APRIL 2, 2023 AND APRIL 3, 2022
|
(UNAUDITED)
|
(In millions of dollars
except per share data)
|
|
|
|
|
|
|
|
|
%
|
|
CC %
|
|
|
|
2023
|
|
2022
|
|
Change
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
1,268.3
|
$
|
1,296.4
|
$
|
(28.1)
|
|
(2.2)
|
%
|
(1.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services
|
|
1,014.2
|
|
1,037.8
|
|
(23.6)
|
|
(2.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
254.1
|
|
258.6
|
|
(4.5)
|
|
(1.7)
|
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
243.4
|
|
236.1
|
|
7.3
|
|
3.1
|
|
3.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
assets
|
|
—
|
|
(0.9)
|
|
0.9
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
operations
|
|
10.7
|
|
23.4
|
|
(12.7)
|
|
(54.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on investment in
Persol Holdings
|
|
—
|
|
(67.2)
|
|
67.2
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on currency
translation from liquidation of subsidiary(1)
|
|
—
|
|
(20.4)
|
|
20.4
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net
|
|
2.0
|
|
2.8
|
|
(0.8)
|
|
(27.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before taxes and equity in net earnings (loss) of
affiliate
|
|
12.7
|
|
(61.4)
|
|
74.1
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
1.8
|
|
(13.0)
|
|
14.8
|
|
113.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
before equity in net earnings (loss) of affiliate
|
|
10.9
|
|
(48.4)
|
|
59.3
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings
(loss) of affiliate
|
|
—
|
|
0.8
|
|
(0.8)
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
10.9
|
$
|
(47.6)
|
$
|
58.5
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share
|
$
|
0.29
|
$
|
(1.23)
|
$
|
1.52
|
|
NM
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.29
|
$
|
(1.23)
|
$
|
1.52
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent placement
revenue (included in revenue from services)
|
$
|
17.5
|
$
|
26.6
|
$
|
(9.1)
|
|
(34.2)
|
%
|
(33.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
20.0
|
%
|
19.9
|
%
|
0.1
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
rate
|
|
4.2
|
%
|
9.1
|
%
|
(4.9)
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
25.9
|
$
|
30.7
|
$
|
(4.8)
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
2.0
|
%
|
2.4
|
%
|
(0.4)
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate
|
|
13.9
|
%
|
21.2
|
%
|
(7.3)
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding (millions):
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
37.1
|
|
38.6
|
|
|
|
|
|
|
|
Diluted
|
|
37.4
|
|
38.6
|
|
|
|
|
|
|
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
RESULTS OF
OPERATIONS BY SEGMENT
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
|
|
CC %
|
|
|
|
2023
|
|
|
2022
|
|
Change
|
|
Change
|
|
Professional &
Industrial
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
389.8
|
|
$
|
444.3
|
|
(12.3)
|
%
|
(11.7)
|
%
|
Gross
profit
|
|
69.8
|
|
|
83.1
|
|
(15.9)
|
|
(15.3)
|
|
SG&A expenses
excluding restructuring charges
|
|
64.5
|
|
|
71.1
|
|
(9.2)
|
|
(8.8)
|
|
Restructuring
charges
|
|
3.0
|
|
|
0.3
|
|
NM
|
|
NM
|
|
Total SG&A
expenses
|
|
67.5
|
|
|
71.4
|
|
(5.4)
|
|
(5.0)
|
|
Earnings (loss) from
operations
|
|
2.3
|
|
|
11.7
|
|
(80.0)
|
|
|
|
Earnings (loss) from
operations excluding restructuring charges
|
|
5.3
|
|
|
12.0
|
|
(55.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
17.9
|
%
|
|
18.7
|
%
|
(0.8)
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Science, Engineering
& Technology
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
306.4
|
|
$
|
317.1
|
|
(3.4)
|
%
|
(3.2)
|
%
|
Gross
profit
|
|
71.3
|
|
|
73.8
|
|
(3.5)
|
|
(3.4)
|
|
Total SG&A
expenses
|
|
52.8
|
|
|
53.2
|
|
(0.9)
|
|
(0.8)
|
|
Earnings (loss) from
operations
|
|
18.5
|
|
|
20.6
|
|
(10.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
23.3
|
%
|
|
23.3
|
%
|
—
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Education
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
249.4
|
|
$
|
173.4
|
|
43.9
|
%
|
43.9
|
%
|
Gross
profit
|
|
39.3
|
|
|
26.6
|
|
47.8
|
|
47.8
|
|
Total SG&A
expenses
|
|
23.8
|
|
|
18.6
|
|
28.2
|
|
28.2
|
|
Earnings (loss) from
operations
|
|
15.5
|
|
|
8.0
|
|
93.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
15.8
|
%
|
|
15.3
|
%
|
0.5
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outsourcing &
Consulting
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
114.6
|
|
$
|
109.1
|
|
5.0
|
%
|
6.4
|
%
|
Gross
profit
|
|
41.6
|
|
|
37.3
|
|
11.4
|
|
13.7
|
|
Total SG&A
expenses
|
|
40.5
|
|
|
34.3
|
|
18.0
|
|
19.0
|
|
Earnings (loss) from
operations
|
|
1.1
|
|
|
3.0
|
|
(63.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
36.3
|
%
|
|
34.2
|
%
|
2.1
|
pts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services
|
$
|
211.8
|
|
$
|
252.8
|
|
(16.2)
|
%
|
(13.8)
|
%
|
Gross
profit
|
|
32.1
|
|
|
37.8
|
|
(14.9)
|
|
(12.2)
|
|
Total SG&A
expenses
|
|
32.4
|
|
|
33.2
|
|
(2.3)
|
|
0.5
|
|
Earnings (loss) from
operations
|
|
(0.3)
|
|
|
4.6
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
rate
|
|
15.2
|
%
|
|
15.0
|
%
|
0.2
|
pts.
|
|
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
April 2,
2023
|
|
January 1,
2023
|
|
April 3,
2022
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and
equivalents
|
$
|
111.7
|
$
|
153.7
|
$
|
230.3
|
|
Trade accounts
receivable, less allowances of
|
|
|
|
|
|
|
|
$11.0, $11.2, and $12.2, respectively
|
|
1,438.5
|
|
1,491.6
|
|
1,523.8
|
|
Prepaid expenses
and other current assets
|
|
82.3
|
|
69.9
|
|
72.2
|
|
Total current
assets
|
|
1,632.5
|
|
1,715.2
|
|
1,826.3
|
|
|
|
|
|
|
|
|
|
Noncurrent
Assets
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
28.6
|
|
27.8
|
|
32.0
|
|
Operating lease
right-of-use assets
|
|
65.0
|
|
66.8
|
|
71.8
|
|
Deferred
taxes
|
|
301.9
|
|
299.7
|
|
303.6
|
|
Goodwill,
net
|
|
151.1
|
|
151.1
|
|
155.8
|
|
Other
assets
|
|
409.5
|
|
403.2
|
|
396.1
|
|
Total noncurrent
assets
|
|
956.1
|
|
948.6
|
|
959.3
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
2,588.6
|
$
|
2,663.8
|
$
|
2,785.6
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
—
|
$
|
0.7
|
$
|
0.2
|
|
Accounts payable
and accrued liabilities
|
|
684.7
|
|
723.3
|
|
711.6
|
|
Operating lease
liabilities
|
|
14.3
|
|
14.7
|
|
16.1
|
|
Accrued payroll
and related taxes
|
|
275.9
|
|
315.8
|
|
338.9
|
|
Accrued workers'
compensation and other claims
|
|
23.1
|
|
22.9
|
|
20.4
|
|
Income and other
taxes
|
|
52.9
|
|
51.4
|
|
109.1
|
|
Total current
liabilities
|
|
1,050.9
|
|
1,128.8
|
|
1,196.3
|
|
|
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
53.4
|
|
55.0
|
|
58.7
|
|
Accrued workers'
compensation and other claims
|
|
41.0
|
|
40.7
|
|
36.4
|
|
Accrued
retirement benefits
|
|
184.6
|
|
174.1
|
|
205.1
|
|
Other long-term
liabilities
|
|
10.9
|
|
11.0
|
|
15.6
|
|
Total noncurrent
liabilities
|
|
289.9
|
|
280.8
|
|
315.8
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
Common
stock
|
|
38.5
|
|
38.5
|
|
38.5
|
|
Treasury
stock
|
|
(35.3)
|
|
(20.1)
|
|
(13.0)
|
|
Paid-in
capital
|
|
26.4
|
|
28.0
|
|
22.8
|
|
Earnings
invested in the business
|
|
1,224.4
|
|
1,216.3
|
|
1,239.9
|
|
Accumulated
other comprehensive income (loss)
|
|
(6.2)
|
|
(8.5)
|
|
(14.7)
|
|
Total stockholders'
equity
|
|
1,247.8
|
|
1,254.2
|
|
1,273.5
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
$
|
2,588.6
|
$
|
2,663.8
|
$
|
2,785.6
|
|
|
|
|
|
|
|
|
|
STATISTICS:
|
|
|
|
|
|
|
|
Working
Capital
|
$
|
581.6
|
$
|
586.4
|
$
|
630.0
|
|
Current
Ratio
|
|
1.6
|
|
1.5
|
|
1.5
|
|
Debt-to-capital
%
|
|
0.0
|
%
|
0.1
|
%
|
0.0
|
%
|
Global Days Sales
Outstanding
|
|
59
|
|
61
|
|
62
|
|
Year-to-Date Free
Cash Flow
|
$
|
(17.9)
|
$
|
(88.3)
|
$
|
(107.8)
|
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
REVENUE FROM
SERVICES BY GEOGRAPHY
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
|
|
CC %
|
|
|
|
2023
|
|
2022
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
959.2
|
$
|
956.6
|
|
0.3
|
%
|
0.3
|
%
|
Canada
|
|
44.9
|
|
39.1
|
|
14.6
|
|
22.4
|
|
Puerto Rico
|
|
26.9
|
|
27.6
|
|
(2.3)
|
|
(2.3)
|
|
Mexico
|
|
16.7
|
|
10.3
|
|
61.6
|
|
47.0
|
|
Total Americas
Region
|
|
1,047.7
|
|
1,033.6
|
|
1.4
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
|
|
Switzerland
|
|
52.9
|
|
55.0
|
|
(3.7)
|
|
(3.6)
|
|
France
|
|
47.8
|
|
54.6
|
|
(12.6)
|
|
(8.7)
|
|
Portugal
|
|
44.4
|
|
41.9
|
|
6.0
|
|
10.8
|
|
Italy
|
|
16.9
|
|
19.5
|
|
(13.3)
|
|
(9.6)
|
|
Russia
|
|
—
|
|
29.7
|
|
(100.0)
|
|
(100.0)
|
|
Other
|
|
47.7
|
|
51.3
|
|
(6.9)
|
|
(0.3)
|
|
Total Europe
Region
|
|
209.7
|
|
252.0
|
|
(16.8)
|
|
(13.4)
|
|
|
|
|
|
|
|
|
|
|
|
Total Asia-Pacific
Region
|
|
10.9
|
|
10.8
|
|
0.7
|
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly
Services, Inc.
|
$
|
1,268.3
|
$
|
1,296.4
|
|
(2.2)
|
%
|
(1.4)
|
%
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
FOR THE 13 WEEKS
ENDED APRIL 2, 2023 AND APRIL 3, 2022
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
Net earnings
(loss)
|
$
|
10.9
|
$
|
(47.6)
|
Adjustments to
reconcile net earnings (loss) to net cash from operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
8.4
|
|
7.5
|
Operating lease asset
amortization
|
|
4.3
|
|
5.0
|
Provision for credit
losses and sales allowances
|
|
0.4
|
|
0.8
|
Stock-based
compensation
|
|
3.1
|
|
2.1
|
Gain on sale of equity
securities
|
|
(2.0)
|
|
—
|
Loss on investment in
Persol Holdings
|
|
—
|
|
67.2
|
Loss on currency
translation from liquidation of subsidiary
|
|
—
|
|
20.4
|
Gain on foreign
currency remeasurement
|
|
—
|
|
(5.5)
|
Gain on sale of
assets
|
|
—
|
|
(0.9)
|
Equity in net
(earnings) loss of PersolKelly Pte. Ltd.
|
|
—
|
|
(0.8)
|
Other, net
|
|
(0.3)
|
|
1.7
|
Changes in operating
assets and liabilities, net of acquisitions
|
|
(38.3)
|
|
(156.0)
|
Net cash used in
operating activities
|
|
(13.5)
|
|
(106.1)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(4.4)
|
|
(1.7)
|
Proceeds from sale of
assets
|
|
—
|
|
0.9
|
Acquisition of
companies, net of cash received
|
|
—
|
|
(58.3)
|
Proceeds from sale of
Persol Holdings investment
|
|
—
|
|
196.9
|
Proceeds from sale of
equity method investment
|
|
—
|
|
119.5
|
Proceeds from equity
securities
|
|
2.0
|
|
—
|
Other investing
activities
|
|
0.2
|
|
(0.2)
|
Net cash (used in)
from investing activities
|
|
(2.2)
|
|
257.1
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Net change in
short-term borrowings
|
|
(0.7)
|
|
0.2
|
Financing lease
payments
|
|
(0.4)
|
|
(0.3)
|
Dividend
payments
|
|
(2.8)
|
|
(1.9)
|
Payments of tax
withholding for stock awards
|
|
(1.2)
|
|
(0.8)
|
Buyback of common
shares
|
|
(18.3)
|
|
(27.2)
|
Contingent
consideration payments
|
|
(1.4)
|
|
(0.7)
|
Net cash used in
financing activities
|
|
(24.8)
|
|
(30.7)
|
|
|
|
|
|
Effect of exchange
rates on cash, cash equivalents and restricted cash
|
|
(0.8)
|
|
(1.7)
|
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash
|
|
(41.3)
|
|
118.6
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
|
162.4
|
|
119.5
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
121.1
|
$
|
238.1
|
KELLY
SERVICES, INC. AND SUBSIDIARIES
|
RECONCILIATION
OF NON-GAAP MEASURES
|
FIRST
QUARTER
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
|
|
|
2023
|
|
2022
|
SG&A
Expenses:
|
As
Reported
|
|
Restructuring(4)
|
|
Adjusted
|
|
As
Reported
|
Professional &
Industrial
|
$
67.5
|
|
$
(3.0)
|
|
$
64.5
|
|
$
71.4
|
Science, Engineering
& Technology
|
52.8
|
|
(0.5)
|
|
52.3
|
|
53.2
|
Education
|
23.8
|
|
(0.1)
|
|
23.7
|
|
18.6
|
Outsourcing &
Consulting
|
40.5
|
|
(0.6)
|
|
39.9
|
|
34.3
|
International
|
32.4
|
|
(0.6)
|
|
31.8
|
|
33.2
|
Corporate
|
26.4
|
|
(0.9)
|
|
25.5
|
|
25.4
|
Total
Company
|
$
243.4
|
|
$
(5.7)
|
|
$
237.7
|
|
$
236.1
|
|
2023
|
|
2022
|
Earnings (loss) from
Operations:
|
As
Reported
|
|
Restructuring(4)
|
|
Adjusted
|
|
Adjusted
|
Professional &
Industrial
|
$
2.3
|
|
$
3.0
|
|
$
5.3
|
|
$
11.7
|
Science, Engineering
& Technology
|
18.5
|
|
0.5
|
|
19.0
|
|
20.6
|
Education
|
15.5
|
|
0.1
|
|
15.6
|
|
8.0
|
Outsourcing &
Consulting
|
1.1
|
|
0.6
|
|
1.7
|
|
3.0
|
International
|
(0.3)
|
|
0.6
|
|
0.3
|
|
4.6
|
Corporate
|
(26.4)
|
|
0.9
|
|
(25.5)
|
|
(25.4)
|
Total
Company
|
$
10.7
|
|
$
5.7
|
|
$
16.4
|
|
$
22.5
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
RECONCILIATION OF
NON-GAAP MEASURES
FIRST
QUARTER
(UNAUDITED)
(In millions of
dollars)
|
|
|
2022
|
Earnings (loss) from
Operations:
|
As
Reported
|
|
Gain on sale
of assets(3)
|
|
Adjusted
|
Professional &
Industrial
|
$
11.7
|
|
$
—
|
|
$
11.7
|
Science, Engineering
& Technology
|
20.6
|
|
—
|
|
20.6
|
Education
|
8.0
|
|
—
|
|
8.0
|
Outsourcing &
Consulting
|
3.0
|
|
—
|
|
3.0
|
International
|
4.6
|
|
—
|
|
4.6
|
Corporate
|
(25.4)
|
|
—
|
|
(25.4)
|
Gain on sale of
assets
|
0.9
|
|
(0.9)
|
|
—
|
Total
Company
|
$
23.4
|
|
$
(0.9)
|
|
$
22.5
|
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP MEASURES
|
(UNAUDITED)
|
(In millions of dollars
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
2023
|
|
2022
|
Income tax expense
(benefit)
|
|
$
1.8
|
|
$
(13.0)
|
Taxes on investment in
Persol Holdings(1)
|
|
—
|
|
18.4
|
Taxes on foreign
currency matters(2)
|
|
—
|
|
(1.5)
|
Taxes on gain on sale
of assets(3)
|
|
—
|
|
(0.2)
|
Taxes on restructuring
charges(4)
|
|
1.4
|
|
—
|
Adjusted income tax
expense (benefit)
|
|
$
3.2
|
|
$
3.7
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
2023
|
|
2022
|
Net earnings
(loss)
|
|
$
10.9
|
|
$
(47.6)
|
Loss on investment in
Persol Holdings, net of taxes(1)
|
|
—
|
|
48.8
|
Loss on foreign
currency matters, net of taxes(2)
|
|
—
|
|
16.4
|
Gain on sale of assets,
net of taxes(3)
|
|
—
|
|
(0.7)
|
Restructuring charges,
net of taxes(4)
|
|
4.3
|
|
—
|
Adjusted net
earnings
|
|
$
15.2
|
|
$
16.9
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
2023
|
|
2022
|
|
|
Per
Share
|
Net earnings
(loss)
|
|
$
0.29
|
|
$
(1.23)
|
Loss on investment in
Persol Holdings, net of taxes(1)
|
|
—
|
|
1.26
|
Loss on foreign
currency matters, net of taxes(2)
|
|
—
|
|
0.43
|
Gain on sale of assets,
net of taxes(3)
|
|
—
|
|
(0.02)
|
Restructuring charges,
net of taxes(4)
|
|
0.11
|
|
—
|
Adjusted net
earnings
|
|
$
0.40
|
|
$
0.44
|
Note: Earnings per share amounts for each quarter are required
to be computed independently and may not equal the amounts computed
for the total year.
KELLY SERVICES, INC.
AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP MEASURES
|
(UNAUDITED)
|
(In millions of
dollars)
|
|
|
|
|
|
First
Quarter
|
|
2023
|
|
2022
|
Net earnings
(loss)
|
$
10.9
|
|
$
(47.6)
|
Other (income) expense,
net(2)
|
(2.0)
|
|
(2.8)
|
Income tax expense
(benefit)
|
1.8
|
|
(13.0)
|
Depreciation and
amortization
|
8.4
|
|
7.5
|
EBITDA
|
19.1
|
|
(55.9)
|
Equity in net
(earnings) loss of affiliate
|
—
|
|
(0.8)
|
Loss on investment in
Persol Holdings(1)
|
—
|
|
67.2
|
Loss on foreign
currency matters(2)
|
—
|
|
20.4
|
Gain on sale of
assets(3)
|
—
|
|
(0.9)
|
Restructuring(4)
|
5.7
|
|
—
|
Other,
net(5)
|
1.1
|
|
0.7
|
Adjusted
EBITDA
|
$
25.9
|
|
$
30.7
|
Adjusted EBITDA
margin
|
2.0 %
|
|
2.4 %
|
KELLY SERVICES, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted
Accounting Principles) information excluding the 2023 restructuring
charges, the 2022 sale of the Persol Holdings investment, the 2022
losses on the fair value changes of the investment in Persol
Holdings, the 2022 losses on foreign currency matters, and the 2022
gain on sale of assets are useful to understand the Company's
fiscal 2023 financial performance and increases
comparability. Specifically, Management believes that
removing the impact of these items allows for a meaningful
comparison of current period operating performance with the
operating results of prior periods. Management also believes
that such measures are used by those analyzing performance of
companies in the staffing industry to compare current performance
to prior periods and to assess future performance.
Management uses Adjusted EBITDA (adjusted earnings before
interest, taxes, depreciation and amortization) and Adjusted EBITDA
Margin (percent of total GAAP revenue) which Management believes is
useful to compare operating performance compared to prior periods
and uses it in conjunction with GAAP measures to assess
performance. Our calculation of Adjusted EBITDA may not be
consistent with similarly titled measures of other companies and
should be used in conjunction with GAAP measurements.
Management also uses year-to-date free cash flow (operating cash
flows less capital expenditures) to indicate the change in cash
balances arising from operating activities, net of working capital
needs and expenditures on fixed assets.
These non-GAAP measures may have limitations as analytical tools
because they exclude items which can have a material impact on cash
flow and earnings per share. As a result, Management
considers these measures, along with reported results, when it
reviews and evaluates the Company's financial performance.
Management believes that these measures provide greater
transparency to investors and provide insight into how Management
is evaluating the Company's financial performance. Non-GAAP
measures should not be considered a substitute for, or superior to,
measures of financial performance prepared in accordance with
GAAP.
(1) In 2022, the loss on the investment in Persol Holdings
represents the change in fair value up until the date of the sale
of the investment on February 15,
2022 as well as the loss on the sale of the investment
during the period presented and the related tax benefit.
(2) In 2022, the loss on foreign currency matters includes
a $20.4 million loss on currency
translation resulting from the substantially complete liquidation
of the Company's Japan entity,
partially offset by a $5.5 million
foreign exchange gain on the Japan
entity's USD-denominated cash balance. The foreign exchange
gain is included in other (income) expense, net in the EBITDA
calculation.
(3) Gain on sale of assets in 2022 is related to the sale
of real property in the first quarter of 2022.
(4) Restructuring charges in the first quarter of 2023
represent severance costs and lease and other terminations as a
result of management undertaking actions to further our cost
management efforts in response to the current demand levels and
reflects a repositioning of our P&I staffing business to better
capitalize on opportunities in local markets.
(5) Other, net primarily represents amortization of
capitalized hosted software implementation costs.
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SOURCE Kelly Services, Inc.