- Q1 operating earnings of
$26.8 million , or up 34% on an adjusted basis - Q1 revenue down following sale of European staffing operations; down 2.6% on an organic basis
- Q1 adjusted EBITDA margin increased 110 basis points to 3.2% driven by meaningful reduction in operating expenses resulting from business transformation initiatives and sale of European staffing operations
- Company expects further expansion of EBITDA margin from the planned Q2 2024 acquisition of
Motion Recruitment Partners, LLC ("MRP") and ongoing transformation actions
Kelly reported operating earnings in the first quarter of 2024 of
Earnings per share in the first quarter of 2024 were
On
“In the first quarter, we continued making progress on our journey to accelerate profitable growth notwithstanding continued macroeconomic uncertainty and industry headwinds. Our ongoing growth and efficiency initiatives increased Kelly’s adjusted EBITDA margin to 3.2% – a significant improvement of 110 basis points over the prior year and well above the company’s recent average,” said Quigley. “Our more streamlined and profitable portfolio of businesses is poised to realize additional benefits from the transformational acquisition of MRP. When completed in the second quarter, this acquisition will strengthen Kelly’s scale and capabilities and meaningfully increase market share across several key areas, which in turn creates exciting opportunities for future revenue growth and additional EBITDA margin expansion.”
Kelly also reported that on
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
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
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the
About Kelly®
KLYA-FIN
ANALYST & MEDIA CONTACT: | |||
(248) 251-7264 | |||
scott.thomas@kellyservices.com | |||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 13 WEEKS ENDED | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2024 | 2023 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 1,045.1 | $ | 1,268.3 | $ | (223.2 | ) | (17.6 | ) | % | (17.7 | ) | % | |||
Cost of services | 839.4 | 1,014.2 | (174.8 | ) | (17.2 | ) | ||||||||||
Gross profit | 205.7 | 254.1 | (48.4 | ) | (19.1 | ) | (19.2 | ) | ||||||||
Selling, general and administrative expenses | 190.5 | 243.4 | (52.9 | ) | (21.7 | ) | (21.9 | ) | ||||||||
Gain on sale of EMEA staffing operations | (11.6 | ) | — | (11.6 | ) | NM | ||||||||||
Earnings from operations | 26.8 | 10.7 | 16.1 | 150.2 | ||||||||||||
Gain on forward contract | 1.2 | — | 1.2 | NM | ||||||||||||
Other income (expense), net | 1.8 | 2.0 | (0.2 | ) | (8.8 | ) | ||||||||||
Earnings before taxes | 29.8 | 12.7 | 17.1 | 134.6 | ||||||||||||
Income tax expense | 4.0 | 1.8 | 2.2 | 128.0 | ||||||||||||
Net earnings | $ | 25.8 | $ | 10.9 | $ | 14.9 | 135.7 | |||||||||
Basic earnings per share | $ | 0.71 | $ | 0.29 | $ | 0.42 | 144.8 | |||||||||
Diluted earnings per share | $ | 0.70 | $ | 0.29 | $ | 0.41 | 141.4 | |||||||||
STATISTICS: | ||||||||||||||||
Permanent placement revenue (included in revenue from services) | $ | 8.0 | $ | 17.5 | $ | (9.5 | ) | (54.2 | ) | % | (54.4 | ) | % | |||
Gross profit rate | 19.7 | % | 20.0 | % | (0.3 | ) | pts. | |||||||||
Adjusted EBITDA | $ | 33.3 | $ | 26.8 | $ | 6.5 | ||||||||||
Adjusted EBITDA margin | 3.2 | % | 2.1 | % | 1.1 | pts. | ||||||||||
Effective income tax rate | 13.5 | % | 13.9 | % | (0.4 | ) | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 35.4 | 37.1 | ||||||||||||||
Diluted | 35.8 | 37.4 | ||||||||||||||
SEGMENT INFORMATION | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
We utilize business unit profit (loss) to evaluate the performance of our segments. Business unit profit (loss) and SG&A expenses as presented in the segment information table below do not include depreciation and amortization expenses. | ||||||||||||||
First Quarter | ||||||||||||||
% | CC % | |||||||||||||
2024 | 2023 | Change | Change | |||||||||||
Professional & Industrial | ||||||||||||||
Revenue from services | $ | 358.4 | $ | 402.6 | (11.0 | ) | % | (11.4 | ) | % | ||||
Gross profit | 63.9 | 72.2 | (11.7 | ) | (12.1 | ) | ||||||||
SG&A expenses excluding restructuring charges | 57.9 | 70.4 | (17.7 | ) | (18.0 | ) | ||||||||
Restructuring charges | 0.1 | 3.0 | (96.6 | ) | (96.6 | ) | ||||||||
Total SG&A expenses | 58.0 | 73.4 | (20.9 | ) | (21.3 | ) | ||||||||
Business unit profit (loss) | 5.9 | (1.2 | ) | NM | ||||||||||
Business unit profit (loss) excluding restructuring charges | 6.0 | 1.8 | 210.5 | |||||||||||
Gross profit rate | 17.8 | % | 18.0 | % | (0.2 | ) | pts. | |||||||
Science, Engineering & Technology | ||||||||||||||
Revenue from services | $ | 289.3 | $ | 306.4 | (5.6 | ) | % | (5.6 | ) | % | ||||
Gross profit | 64.4 | 71.3 | (9.6 | ) | (9.6 | ) | ||||||||
Total SG&A expenses | 46.2 | 52.8 | (12.5 | ) | (12.6 | ) | ||||||||
Business unit profit (loss) | 18.2 | 18.5 | (1.3 | ) | ||||||||||
Gross profit rate | 22.3 | % | 23.3 | % | (1.0 | ) | pts. | |||||||
Education | ||||||||||||||
Revenue from services | $ | 289.9 | $ | 249.4 | 16.2 | % | 16.2 | % | ||||||
Gross profit | 42.1 | 39.3 | 7.1 | 7.1 | ||||||||||
Total SG&A expenses | 24.0 | 23.9 | 0.3 | 0.3 | ||||||||||
Business unit profit (loss) | 18.1 | 15.4 | 17.7 | |||||||||||
Gross profit rate | 14.5 | % | 15.8 | % | (1.3 | ) | pts. | |||||||
Outsourcing & Consulting | ||||||||||||||
Revenue from services | $ | 108.0 | $ | 114.6 | (5.7 | ) | % | (5.5 | ) | % | ||||
Gross profit | 35.3 | 41.6 | (15.0 | ) | (14.9 | ) | ||||||||
Total SG&A expenses | 37.1 | 41.7 | (11.1 | ) | (11.3 | ) | ||||||||
Business unit profit (loss) | (1.8 | ) | (0.1 | ) | NM | |||||||||
Gross profit rate | 32.7 | % | 36.3 | % | (3.6 | ) | pts. | |||||||
International | ||||||||||||||
Revenue from services | $ | — | $ | 195.8 | (100.0 | ) | % | (100.0 | ) | % | ||||
Gross profit | — | 29.7 | (100.0 | ) | (100.0 | ) | ||||||||
Total SG&A expenses | — | 30.4 | (100.0 | ) | (100.0 | ) | ||||||||
Business unit profit (loss) | — | (0.7 | ) | (100.0 | ) | |||||||||
Gross profit rate | — | % | 15.2 | % | (15.2 | ) | pts. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
2024 | 2023 | 2023 | |||||||||||
Current Assets | |||||||||||||
Cash and equivalents | $ | 200.7 | $ | 125.8 | $ | 111.7 | |||||||
Trade accounts receivable, less allowances of | 1,152.9 | 1,160.6 | 1,438.5 | ||||||||||
Prepaid expenses and other current assets | 83.2 | 48.9 | 82.3 | ||||||||||
Assets held for sale | — | 291.3 | — | ||||||||||
Total current assets | 1,436.8 | 1,626.6 | 1,632.5 | ||||||||||
Noncurrent Assets | |||||||||||||
Property and equipment, net | 25.5 | 24.6 | 28.6 | ||||||||||
Operating lease right-of-use assets | 46.3 | 47.1 | 65.0 | ||||||||||
Deferred taxes | 318.9 | 321.1 | 301.9 | ||||||||||
Retirement plan assets | 243.7 | 230.3 | 204.4 | ||||||||||
151.1 | 151.1 | 151.1 | |||||||||||
Intangibles, net | 132.5 | 137.7 | 153.4 | ||||||||||
Other assets | 40.6 | 43.1 | 51.7 | ||||||||||
Total noncurrent assets | 958.6 | 955.0 | 956.1 | ||||||||||
Total Assets | $ | 2,395.4 | $ | 2,581.6 | $ | 2,588.6 | |||||||
Current Liabilities | |||||||||||||
Accounts payable and accrued liabilities | $ | 581.2 | $ | 646.1 | $ | 684.7 | |||||||
Operating lease liabilities | 8.4 | 8.4 | 14.3 | ||||||||||
Accrued payroll and related taxes | 165.9 | 156.2 | 275.9 | ||||||||||
Accrued workers' compensation and other claims | 22.0 | 22.1 | 23.1 | ||||||||||
Income and other taxes | 20.0 | 17.2 | 52.9 | ||||||||||
Liabilities held for sale | — | 169.9 | — | ||||||||||
Total current liabilities | 797.5 | 1,019.9 | 1,050.9 | ||||||||||
Noncurrent Liabilities | |||||||||||||
Operating lease liabilities | 42.0 | 42.9 | 53.4 | ||||||||||
Accrued workers' compensation and other claims | 40.9 | 40.9 | 41.0 | ||||||||||
Accrued retirement benefits | 229.5 | 217.4 | 184.6 | ||||||||||
Other long-term liabilities | 8.7 | 6.8 | 10.9 | ||||||||||
Total noncurrent liabilities | 321.1 | 308.0 | 289.9 | ||||||||||
Stockholders' Equity | |||||||||||||
Common stock | 38.5 | 38.5 | 38.5 | ||||||||||
(53.1 | ) | (57.3 | ) | (35.3 | ) | ||||||||
Paid-in capital | 27.1 | 30.6 | 26.4 | ||||||||||
Earnings invested in the business | 1,264.8 | 1,241.7 | 1,224.4 | ||||||||||
Accumulated other comprehensive income (loss) | (0.5 | ) | 0.2 | (6.2 | ) | ||||||||
Total stockholders' equity | 1,276.8 | 1,253.7 | 1,247.8 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,395.4 | $ | 2,581.6 | $ | 2,588.6 | |||||||
STATISTICS: | |||||||||||||
Working Capital | $ | 639.3 | $ | 606.7 | $ | 581.6 | |||||||
Current Ratio | 1.8 | 1.6 | 1.6 | ||||||||||
Debt-to-capital % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||
Global Days Sales Outstanding | 58 | 59 | 59 | ||||||||||
Year-to-Date Free Cash Flow | $ | (29.2 | ) | $ | 61.4 | $ | (17.9 | ) | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 13 WEEKS ENDED | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2024 | 2023 | |||||
Cash flows from operating activities: | ||||||
Net earnings | $ | 25.8 | $ | 10.9 | ||
Adjustments to reconcile net earnings to net cash from operating activities: | ||||||
Gain on sale of EMEA staffing operations | (11.6 | ) | — | |||
Depreciation and amortization | 8.0 | 8.4 | ||||
Operating lease asset amortization | 2.2 | 4.3 | ||||
Provision for credit losses and sales allowances | 0.5 | 0.4 | ||||
Stock-based compensation | 2.8 | 3.1 | ||||
Gain on sale of equity securities | — | (2.0 | ) | |||
Gain on forward contract | (1.2 | ) | — | |||
Other, net | (0.2 | ) | (0.3 | ) | ||
Changes in operating assets and liabilities, net of acquisition | (51.8 | ) | (38.3 | ) | ||
Net cash used in operating activities | (25.5 | ) | (13.5 | ) | ||
Cash flows from investing activities: | ||||||
Capital expenditures | (3.7 | ) | (4.4 | ) | ||
Proceeds from sale of EMEA staffing operations, net of cash disposed | 77.1 | — | ||||
Payment for settlement of forward contract | (2.4 | ) | — | |||
Proceeds from equity securities | — | 2.0 | ||||
Other investing activities | 1.1 | 0.2 | ||||
Net cash from (used in) investing activities | 72.1 | (2.2 | ) | |||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | — | (0.7 | ) | |||
Financing lease payments | — | (0.4 | ) | |||
Dividend payments | (2.7 | ) | (2.8 | ) | ||
Payments of tax withholding for stock awards | (1.9 | ) | (1.2 | ) | ||
Buyback of common shares | — | (18.3 | ) | |||
Contingent consideration payments | — | (1.4 | ) | |||
Other financing activities | (0.1 | ) | — | |||
Net cash used in financing activities | (4.7 | ) | (24.8 | ) | ||
Effect of exchange rates on cash, cash equivalents and restricted cash | (0.6 | ) | (0.8 | ) | ||
Net change in cash, cash equivalents and restricted cash | 41.3 | (41.3 | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | 167.6 | 162.4 | ||||
Cash, cash equivalents and restricted cash at end of period | $ | 208.9 | $ | 121.1 |
REVENUE FROM SERVICES BY GEOGRAPHY | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
First Quarter | ||||||||||||||
% | CC % | |||||||||||||
2024 | 2023 | Change | Change | |||||||||||
$ | 933.6 | $ | 959.2 | (2.7 | ) | % | (2.7 | ) | % | |||||
45.4 | 44.9 | 1.3 | 1.0 | |||||||||||
24.9 | 26.9 | (7.4 | ) | (7.4 | ) | |||||||||
18.9 | 16.7 | 13.1 | 3.0 | |||||||||||
1,022.8 | 1,047.7 | (2.4 | ) | (2.6 | ) | |||||||||
1.1 | 52.9 | (97.9 | ) | (98.0 | ) | |||||||||
— | 47.8 | (100.0 | ) | (100.0 | ) | |||||||||
— | 44.4 | (100.0 | ) | (100.0 | ) | |||||||||
— | 16.9 | (100.0 | ) | (100.0 | ) | |||||||||
Other | 9.7 | 47.7 | (79.7 | ) | (80.1 | ) | ||||||||
10.8 | 209.7 | (94.9 | ) | (95.0 | ) | |||||||||
11.5 | 10.9 | 5.8 | 11.0 | |||||||||||
$ | 1,045.1 | $ | 1,268.3 | (17.6 | ) | % | (17.7 | ) | % |
RECONCILIATION OF NON-GAAP MEASURES | |||||||
FIRST QUARTER | |||||||
(UNAUDITED) | |||||||
(In millions of dollars) | |||||||
SG&A Expenses: | 2024 | 2023 | |||||
As reported | $ | 190.5 | $ | 243.4 | |||
Transaction costs(3) | (5.6 | ) | — | ||||
Restructuring(4) | (2.3 | ) | (6.6 | ) | |||
Adjusted SG&A expenses | $ | 182.6 | $ | 236.8 |
Earnings from Operations: | 2024 | 2023 | |||||
As reported | $ | 26.8 | $ | 10.7 | |||
Gain on sale of EMEA staffing operations(1) | (11.6 | ) | — | ||||
Transaction costs(3) | 5.6 | — | |||||
Restructuring(4) | 2.3 | 6.6 | |||||
Adjusted earnings from operations | $ | 23.1 | $ | 17.3 |
RECONCILIATION OF NON-GAAP MEASURES | ||||||||
(UNAUDITED) | ||||||||
(In millions of dollars except per share data) | ||||||||
First Quarter | ||||||||
2024 | 2023 | |||||||
Income tax expense | $ | 4.0 | $ | 1.8 | ||||
Taxes on gain on sale of EMEA staffing operations(1) | (1.2 | ) | — | |||||
Taxes on gain on forward contract(2) | — | — | ||||||
Taxes on transaction costs(3) | 1.2 | — | ||||||
Taxes on restructuring charges(4) | 0.6 | 1.6 | ||||||
Adjusted income tax expense | $ | 4.6 | $ | 3.4 | ||||
First Quarter | ||||||||
2024 | 2023 | |||||||
Net earnings | $ | 25.8 | $ | 10.9 | ||||
Gain on sale of EMEA staffing operations, net of taxes(1) | (10.4 | ) | — | |||||
Gain on forward contract, net of taxes(2) | (1.2 | ) | — | |||||
Transaction costs, net of taxes(3) | 4.4 | — | ||||||
Restructuring charges, net of taxes(4) | 1.7 | 5.0 | ||||||
Adjusted net earnings | $ | 20.3 | $ | 15.9 | ||||
First Quarter | ||||||||
2024 | 2023 | |||||||
Per Share | ||||||||
Net earnings | $ | 0.70 | $ | 0.29 | ||||
Gain on sale of EMEA staffing operations, net of taxes(1) | (0.28 | ) | — | |||||
Gain on forward contract, net of taxes(2) | (0.03 | ) | — | |||||
Transaction costs, net of taxes(3) | 0.12 | — | ||||||
Restructuring charges, net of taxes(4) | 0.05 | 0.13 | ||||||
Adjusted net earnings | $ | 0.56 | $ | 0.42 | ||||
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.
RECONCILIATION OF NON-GAAP MEASURES | |||||||
(UNAUDITED) | |||||||
(In millions of dollars) | |||||||
First Quarter | |||||||
2024 | 2023 | ||||||
Net earnings | $ | 25.8 | $ | 10.9 | |||
Other (income) expense, net | (1.8 | ) | (2.0 | ) | |||
Income tax expense | 4.0 | 1.8 | |||||
Depreciation and amortization | 10.2 | 9.5 | |||||
Gain on sale of EMEA staffing operations(1) | (11.6 | ) | — | ||||
Gain on forward contract(2) | (1.2 | ) | — | ||||
Transaction costs(3) | 5.6 | — | |||||
Restructuring(4) | 2.3 | 6.6 | |||||
Adjusted EBITDA | $ | 33.3 | $ | 26.8 | |||
Adjusted EBITDA margin | 3.2 | % | 2.1 | % |
First Quarter 2024 | |||||||||||||||||||
Professional & Industrial | Science, Engineering & Technology | Education | Outsourcing & Consulting | International | |||||||||||||||
Business unit profit (loss) | $ | 5.9 | $ | 18.2 | $ | 18.1 | $ | (1.8 | ) | $ | — | ||||||||
Restructuring(4) | 0.1 | — | — | 0.6 | — | ||||||||||||||
Adjusted EBITDA | $ | 6.0 | $ | 18.2 | $ | 18.1 | $ | (1.2 | ) | $ | — | ||||||||
Adjusted EBITDA margin | 1.7 | % | 6.3 | % | 6.2 | % | (1.1 | )% | — | % | |||||||||
First Quarter 2023 | |||||||||||||||||||
Professional & Industrial | Science, Engineering & Technology | Education | Outsourcing & Consulting | International | |||||||||||||||
Business unit profit (loss) | $ | (1.2 | ) | $ | 18.5 | $ | 15.4 | $ | (0.1 | ) | $ | (0.7 | ) | ||||||
Restructuring(4) | 3.0 | 0.5 | 0.1 | 0.6 | 0.6 | ||||||||||||||
Adjusted EBITDA | $ | 1.8 | $ | 19.0 | $ | 15.5 | $ | 0.5 | $ | (0.1 | ) | ||||||||
Adjusted EBITDA margin | 0.5 | % | 6.2 | % | 6.2 | % | 0.3 | % | — | % |
First Quarter | |||||||
Free Cash Flow: | 2024 | 2023 | |||||
Net cash used in operating activities | $ | (25.5 | ) | $ | (13.5 | ) | |
Capital expenditures | (3.7 | ) | (4.4 | ) | |||
Free Cash Flow | $ | (29.2 | ) | $ | (17.9 | ) |
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2024 gain on the sale of our EMEA staffing operations, the 2024 gain on forward contract, the 2024 restructuring charges, the 2024 transaction costs, and the 2023 restructuring charges are useful to understand the Company's fiscal 2024 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) Gain on sale of EMEA staffing operations represents the gain as of the first quarter-end 2024 as a result of the sale in
(2) Gain on forward contract represents the gain recognized in the first quarter of 2024 for the settlement of the foreign currency forward contract in
(3) Transaction costs, which includes employee termination costs and transition costs, incurred in the first quarter of 2024 directly related to the sale of the EMEA staffing operations.
(4) Restructuring charges in the first quarter of 2024 represent a continuation of the comprehensive transformation initiative that started in the second quarter of 2023 that will further streamline the Company's operating model to enhance organizational efficiency and effectiveness. These restructuring charges include
Source:
2024 GlobeNewswire, Inc., source