Kelly (Nasdaq: KELYA) (Nasdaq: KELYB), a leading specialty talent
solutions provider, today announced results for the first quarter
of 2020.
Peter Quigley, president and chief executive officer, announced
revenue for the first quarter of 2020 totaled $1.3 billion, an 8.8%
decrease, or 8.3% in constant currency, compared to the
corresponding quarter of 2019. Included in the revenue decline is
an estimated year-over-year decrease of 2.7% as a result of lower
demand during the second half of March as customers reacted to the
COVID-19 crisis.
Loss from operations for the first quarter of 2020 totaled
$111.8 million, compared to the $16.8 million of earnings from
operations reported for the first quarter of 2019. The 2020 first
quarter results include a $147.7 million non-cash goodwill
impairment charge, an $8.7 million restructuring charge and a gain
on the sale of headquarters buildings of $32.1 million. The
first quarter of 2019 included a restructuring charge of $6.3
million. On an adjusted basis, earnings from operations were $12.5
million for the first quarter of 2020 compared to $23.1 million for
the first quarter of 2019.
Diluted loss per share in the first quarter of 2020 is $3.91
compared to earnings per share of $0.56 in the first quarter of
2019. Included in the loss per share in the first quarter of 2020
is a non-cash goodwill impairment charge of $3.18 per share, net of
tax, a $1.38 per share non-cash loss, net of tax, on Persol
Holdings common stock, a $0.17 per share restructuring charge, net
of tax, and a gain on the sale of headquarters buildings of $0.61,
per share net of tax. Included in the earnings per share in the
first quarter of 2019 is a $0.23 from a non-cash gain per share on
Kelly’s investment in Persol Holdings common stock, net of tax and
a $0.12 per share restructuring charge, net of tax. On an adjusted
basis, earnings per share were $0.20 for the first quarter of 2020
compared to $0.45 for the corresponding quarter of 2019.
“Kelly began the year with signs of stabilization in our U.S.
staffing business, and continued growth in our outcome and
consulting businesses,” stated Quigley. “However, the sudden and
dramatic disruption sparked by COVID-19 in mid-March was unlike
anything we’ve seen in our nearly 75 years. Negative market
reaction to the crisis, including declines in our share price,
triggered a goodwill impairment charge in the quarter that had a
significant impact on our reported results. While we continue
to closely manage the financial impact of the pandemic, the
non-cash impairment charge does not change our views, or
confidence, in our ability to weather the COVID-19 crisis or to
capitalize on opportunities when the crisis ends. We’re moving
forward with our transformation into a specialty talent solutions
provider by taking prudent, near-term measures to protect our
financial flexibility, while preserving our ability to capture
growth coming out of this crisis. And, of course, our top
priority has been, and continues to be, the health and safety of
our people.”
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 9:00 a.m. (ET) on May 4 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
5728672After the prompt, please enter
“#”
A recording of the conference call will be available after 2:30
p.m. ET on May 4, 2020 at (866) 207-1041 (toll-free) and (402)
970-0847 (caller-paid). The access code is 5222215#. 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, the recent novel
coronavirus (COVID-19) outbreak, competitive market pressures
including pricing and technology introductions and disruptions,
changing market and economic conditions, our ability to achieve our
business strategy, the risk of damage to our brand, the risk our
intellectual property assets could be infringed upon or
compromised, our ability to successfully develop new service
offerings, our exposure to risks associated with services outside
traditional staffing, including business process outsourcing and
services connecting talent to independent work, our increasing
dependency on third parties for the execution of critical
functions, the risks associated with past and future acquisitions,
exposure to risks associated with investments in equity affiliates
including PersolKelly Pte. Ltd., 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, risks associated with
conducting business in foreign countries, including foreign
currency fluctuations, the exposure to potential market and
currency exchange risks relating to our investment in Persol
Holdings, 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, 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 sustain critical business applications through our key
data centers, our ability to effectively implement and manage our
information technology projects, our ability to maintain adequate
financial and management processes and controls, risk of potential
impairment charges triggered by adverse industry developments or
operational circumstances, unexpected changes in claim trends on
workers’ compensation, unemployment, disability and medical benefit
plans, the impact of changes in laws and regulations (including
federal, state and international tax laws), competition law risks,
the risk of additional tax or unclaimed property liabilities in
excess of our estimates, 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 have no intention to update these statements.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) connects talented
people to companies in need of their skills in areas including
Science, Engineering, Education, Office, Contact Center, Light
Industrial, and more. We’re always thinking about what’s next in
the evolving world of work, and we help people ditch the script on
old ways of thinking and embrace the value of all workstyles in the
workplace. We directly employ nearly 440,000 people around the
world, and we connect thousands more with work through our global
network of talent suppliers and partners in our outsourcing and
consulting practice. Revenue in 2019 was $5.4 billion.
Visit kellyservices.com and let us help with what’s next for
you.
KLYA-FIN
MEDIA
CONTACT: |
|
|
ANALYST
CONTACT: |
Jane
Stehney |
|
|
James
Polehna |
(248)
574-9800 |
|
|
(248)
244-4586 |
stehnja@kellyservices.com |
|
|
james.polehna@kellyservices.com |
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF EARNINGS |
FOR THE 13 WEEKS ENDED MARCH 29, 2020 AND MARCH 31,
2019 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
1,261.1 |
|
|
$ |
1,382.6 |
|
|
$ |
(121.5 |
) |
|
|
(8.8 |
) |
|
% |
(8.3 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
1,037.8 |
|
|
|
1,131.0 |
|
|
|
(93.2 |
) |
|
|
(8.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
223.3 |
|
|
|
251.6 |
|
|
|
(28.3 |
) |
|
|
(11.3 |
) |
|
|
(10.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
219.5 |
|
|
|
234.8 |
|
|
|
(15.3 |
) |
|
|
(6.5 |
) |
|
|
(6.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge |
|
147.7 |
|
|
|
— |
|
|
|
147.7 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of assets |
|
(32.1 |
) |
|
|
— |
|
|
|
(32.1 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(111.8 |
) |
|
|
16.8 |
|
|
|
(128.6 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on investment in Persol Holdings |
|
(77.8 |
) |
|
|
13.2 |
|
|
|
(91.0 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
1.7 |
|
|
|
(1.1 |
) |
|
|
2.8 |
|
|
|
234.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before
taxes and equity in net earnings (loss) of affiliate |
|
(187.9 |
) |
|
|
28.9 |
|
|
|
(216.8 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(36.2 |
) |
|
|
6.4 |
|
|
|
(42.6 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
before equity in net earnings (loss) of affiliate |
|
(151.7 |
) |
|
|
22.5 |
|
|
|
(174.2 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings (loss) of affiliate |
|
(1.5 |
) |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(312.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(153.2 |
) |
|
$ |
22.1 |
|
|
$ |
(175.3 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
$ |
(3.91 |
) |
|
$ |
0.56 |
|
|
$ |
(4.47 |
) |
|
|
NM |
|
|
|
Diluted earnings (loss) per share |
$ |
(3.91 |
) |
|
$ |
0.56 |
|
|
$ |
(4.47 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing fee-based income
(included in revenue from services) |
$ |
12.3 |
|
|
$ |
15.9 |
|
|
$ |
(3.6 |
) |
|
|
(22.9 |
) |
|
% |
(22.1 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
17.7 |
|
|
% |
18.2 |
|
|
% |
(0.5 |
) |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion rate |
|
(50.1 |
) |
|
|
6.7 |
|
|
|
(56.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Return: |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(8.9 |
) |
|
|
1.2 |
|
|
|
(10.1 |
) |
|
|
|
|
|
|
Net earnings (loss) |
|
(12.1 |
) |
|
|
1.6 |
|
|
|
(13.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
19.3 |
|
|
% |
22.2 |
|
|
% |
(2.9 |
) |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares
outstanding (millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
39.2 |
|
|
|
39.0 |
|
|
|
|
|
|
|
|
|
Diluted |
|
39.2 |
|
|
|
39.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RESULTS OF OPERATIONS BY SEGMENT |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC
% |
|
|
|
2020 |
|
|
2019 |
|
Change |
|
Change |
|
Americas Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
533.4 |
|
|
$ |
626.5 |
|
|
(14.9 |
) |
|
% |
(14.6 |
) |
|
% |
Gross profit |
|
93.6 |
|
|
|
117.2 |
|
|
(20.2 |
) |
|
|
(20.0 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
87.9 |
|
|
|
94.9 |
|
|
(7.4 |
) |
|
|
(7.4 |
) |
|
|
Restructuring charges |
|
5.6 |
|
|
|
6.3 |
|
|
(10.6 |
) |
|
|
(10.6 |
) |
|
|
Total SG&A expenses |
|
93.5 |
|
|
|
101.2 |
|
|
(7.6 |
) |
|
|
(7.6 |
) |
|
|
Earnings from operations |
|
0.1 |
|
|
|
16.0 |
|
|
(99.5 |
) |
|
|
|
|
Earnings from operations excluding restructuring charges |
|
5.7 |
|
|
|
22.3 |
|
|
(74.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
17.5 |
|
% |
|
18.7 |
|
% |
(1.2 |
) |
|
pts. |
|
|
Conversion rate |
|
0.1 |
|
|
|
13.7 |
|
|
(13.6 |
) |
|
|
|
|
Conversion rate excluding restructuring charges |
|
6.1 |
|
|
|
19.1 |
|
|
(13.0 |
) |
|
|
|
|
Return on sales |
|
— |
|
|
|
2.6 |
|
|
(2.6 |
) |
|
|
|
|
Return on sales excluding restructuring charges |
|
1.1 |
|
|
|
3.6 |
|
|
(2.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Talent Solutions |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
503.2 |
|
|
$ |
501.0 |
|
|
0.4 |
|
|
% |
0.6 |
|
|
% |
Gross profit |
|
100.2 |
|
|
|
100.4 |
|
|
(0.2 |
) |
|
|
0.1 |
|
|
|
SG&A expenses excluding restructuring charges |
|
72.8 |
|
|
|
74.7 |
|
|
(2.5 |
) |
|
|
(2.2 |
) |
|
|
Restructuring charges |
|
0.9 |
|
|
|
— |
|
|
NM |
|
NM |
|
Total SG&A expenses |
|
73.7 |
|
|
|
74.7 |
|
|
(1.3 |
) |
|
|
(1.0 |
) |
|
|
Earnings from operations |
|
26.5 |
|
|
|
25.7 |
|
|
2.9 |
|
|
|
|
|
Earnings from operations excluding restructuring charges |
|
27.4 |
|
|
|
25.7 |
|
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
19.9 |
|
% |
|
20.0 |
|
% |
(0.1 |
) |
|
pts. |
|
|
Conversion rate |
|
26.5 |
|
|
|
25.7 |
|
|
0.8 |
|
|
|
|
|
Conversion rate excluding restructuring charges |
|
27.4 |
|
|
|
25.7 |
|
|
1.7 |
|
|
|
|
|
Return on sales |
|
5.3 |
|
|
|
5.1 |
|
|
0.2 |
|
|
|
|
|
Return on sales excluding restructuring charges |
|
5.5 |
|
|
|
5.1 |
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
227.6 |
|
|
$ |
258.9 |
|
|
(12.1 |
) |
|
% |
(10.7 |
) |
|
% |
Gross profit |
|
29.9 |
|
|
|
34.6 |
|
|
(13.4 |
) |
|
|
(11.8 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
28.2 |
|
|
|
31.3 |
|
|
(9.7 |
) |
|
|
(8.5 |
) |
|
|
Restructuring charges |
|
1.1 |
|
|
|
— |
|
|
NM |
|
NM |
|
Total SG&A expenses |
|
29.3 |
|
|
|
31.3 |
|
|
(6.2 |
) |
|
|
(5.0 |
) |
|
|
Earnings from operations |
|
0.6 |
|
|
|
3.3 |
|
|
(81.7 |
) |
|
|
|
|
Earnings from operations excluding restructuring charges |
|
1.7 |
|
|
|
3.3 |
|
|
(48.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
13.2 |
|
% |
|
13.3 |
|
% |
(0.1 |
) |
|
pts. |
|
|
Conversion rate |
|
2.0 |
|
|
|
9.5 |
|
|
(7.5 |
) |
|
|
|
|
Conversion rate excluding restructuring charges |
|
5.6 |
|
|
|
9.5 |
|
|
(3.9 |
) |
|
|
|
|
Return on sales |
|
0.3 |
|
|
|
1.3 |
|
|
(1.0 |
) |
|
|
|
|
Return on sales excluding restructuring charges |
|
0.7 |
|
|
|
1.3 |
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
March 29, 2020 |
|
Dec. 29, 2019 |
|
March 31, 2019 |
|
Current Assets |
|
|
|
|
|
|
|
Cash and
equivalents |
$ |
48.3 |
|
|
$ |
25.8 |
|
|
$ |
30.9 |
|
|
|
Trade accounts
receivable, less allowances of $11.1, $12.9, and $12.0,
respectively |
|
1,236.1 |
|
|
|
1,282.2 |
|
|
|
1,283.1 |
|
|
|
Prepaid expenses and
other current assets |
|
81.4 |
|
|
|
76.5 |
|
|
|
86.2 |
|
|
|
Properties held for
sale |
|
— |
|
|
|
21.2 |
|
|
|
— |
|
|
|
Total current assets |
|
1,365.8 |
|
|
|
1,405.7 |
|
|
|
1,400.2 |
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
Property and equipment,
net |
|
38.1 |
|
|
|
43.1 |
|
|
|
86.0 |
|
|
|
Operating lease
right-of-use assets |
|
89.2 |
|
|
|
60.4 |
|
|
|
69.5 |
|
|
|
Deferred taxes |
|
249.5 |
|
|
|
229.1 |
|
|
|
204.6 |
|
|
|
Goodwill, net |
|
— |
|
|
|
127.8 |
|
|
|
127.8 |
|
|
|
Investment in Persol
Holdings |
|
96.8 |
|
|
|
173.2 |
|
|
|
147.2 |
|
|
|
Investment in equity
affiliate |
|
116.3 |
|
|
|
117.2 |
|
|
|
121.2 |
|
|
|
Other assets |
|
306.1 |
|
|
|
324.1 |
|
|
|
315.7 |
|
|
|
Total noncurrent assets |
|
896.0 |
|
|
|
1,074.9 |
|
|
|
1,072.0 |
|
|
|
|
|
|
|
|
|
|
|
Total
Assets |
$ |
2,261.8 |
|
|
$ |
2,480.6 |
|
|
$ |
2,472.2 |
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Short-term
borrowings |
$ |
1.7 |
|
|
$ |
1.9 |
|
|
$ |
74.2 |
|
|
|
Accounts payable and
accrued liabilities |
|
475.5 |
|
|
|
503.6 |
|
|
|
496.6 |
|
|
|
Operating lease
liabilities |
|
19.2 |
|
|
|
20.1 |
|
|
|
21.2 |
|
|
|
Accrued payroll and
related taxes |
|
259.7 |
|
|
|
267.6 |
|
|
|
292.1 |
|
|
|
Accrued workers'
compensation and other claims |
|
26.1 |
|
|
|
25.7 |
|
|
|
24.4 |
|
|
|
Income and other
taxes |
|
60.6 |
|
|
|
65.2 |
|
|
|
64.9 |
|
|
|
Total current liabilities |
|
842.8 |
|
|
|
884.1 |
|
|
|
973.4 |
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
Operating lease
liabilities |
|
72.7 |
|
|
|
43.3 |
|
|
|
50.6 |
|
|
|
Accrued workers'
compensation and other claims |
|
46.4 |
|
|
|
45.8 |
|
|
|
47.9 |
|
|
|
Accrued retirement
benefits |
|
164.5 |
|
|
|
187.4 |
|
|
|
176.0 |
|
|
|
Other long-term
liabilities |
|
35.3 |
|
|
|
55.5 |
|
|
|
46.5 |
|
|
|
Total noncurrent liabilities |
|
318.9 |
|
|
|
332.0 |
|
|
|
321.0 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
Common stock |
|
40.1 |
|
|
|
40.1 |
|
|
|
40.1 |
|
|
|
Treasury stock |
|
(18.0 |
) |
|
|
(20.9 |
) |
|
|
(21.9 |
) |
|
|
Paid-in capital |
|
19.5 |
|
|
|
22.5 |
|
|
|
21.0 |
|
|
|
Earnings invested in
the business |
|
1,081.7 |
|
|
|
1,238.6 |
|
|
|
1,157.2 |
|
|
|
Accumulated other
comprehensive income (loss) |
|
(23.2 |
) |
|
|
(15.8 |
) |
|
|
(18.6 |
) |
|
|
Total stockholders' equity |
|
1,100.1 |
|
|
|
1,264.5 |
|
|
|
1,177.8 |
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders'
Equity |
$ |
2,261.8 |
|
|
$ |
2,480.6 |
|
|
$ |
2,472.2 |
|
|
|
|
|
|
|
|
|
|
|
STATISTICS: |
|
|
|
|
|
|
|
Working Capital |
$ |
523.0 |
|
|
$ |
521.6 |
|
|
$ |
426.8 |
|
|
|
Current Ratio |
|
1.6 |
|
|
|
1.6 |
|
|
|
1.4 |
|
|
|
Debt-to-capital % |
|
0.2 |
|
|
% |
0.1 |
|
|
% |
5.9 |
|
|
% |
Global Days Sales
Outstanding |
|
59 |
|
|
|
58 |
|
|
|
58 |
|
|
|
Year-to-Date Free Cash
Flow |
$ |
5.4 |
|
|
$ |
82.2 |
|
|
$ |
17.0 |
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE 13 WEEKS ENDED MARCH 29, 2020 AND MARCH 31,
2019 |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
2020 |
|
2019 |
Cash flows from
operating activities: |
|
|
|
|
Net earnings (loss) |
$ |
(153.2 |
) |
|
$ |
22.1 |
|
|
Adjustments to reconcile net earnings (loss) to net cash from
operating activities: |
|
|
|
|
Goodwill impairment charge |
|
147.7 |
|
|
|
— |
|
|
Deferred income taxes on goodwill impairment charge |
|
(23.0 |
) |
|
|
— |
|
|
Depreciation and amortization |
|
6.0 |
|
|
|
7.6 |
|
|
Operating lease asset amortization |
|
5.3 |
|
|
|
5.8 |
|
|
Provision for bad debts |
|
(0.4 |
) |
|
|
0.3 |
|
|
Stock-based compensation |
|
1.2 |
|
|
|
3.2 |
|
|
(Gain) loss on investment in Persol Holdings |
|
77.8 |
|
|
|
(13.2 |
) |
|
(Gain) loss on sale of assets |
|
(32.1 |
) |
|
|
— |
|
|
Equity in net (earnings) loss of PersolKelly Pte. Ltd. |
|
1.5 |
|
|
|
0.4 |
|
|
Other, net |
|
0.7 |
|
|
|
(0.4 |
) |
|
Changes in operating assets and liabilities, net of
acquisitions |
|
(23.1 |
) |
|
|
(4.6 |
) |
|
|
|
|
|
|
Net cash from operating activities |
|
8.4 |
|
|
|
21.2 |
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Capital expenditures |
|
(3.0 |
) |
|
|
(4.2 |
) |
|
Acquisition of companies, net of cash received |
|
(36.3 |
) |
|
|
(86.4 |
) |
|
Investment in equity securities |
|
(0.3 |
) |
|
|
— |
|
|
Proceeds from sale of assets |
|
55.5 |
|
|
|
— |
|
|
Other investing activities |
|
— |
|
|
|
0.3 |
|
|
|
|
|
|
|
Net cash from (used in) investing activities |
|
15.9 |
|
|
|
(90.3 |
) |
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Net change in short-term borrowings |
|
(0.1 |
) |
|
|
72.0 |
|
|
Financing lease payments |
|
(0.3 |
) |
|
|
— |
|
|
Dividend payments |
|
(3.0 |
) |
|
|
(3.0 |
) |
|
Payments of tax withholding for stock awards |
|
(1.1 |
) |
|
|
(2.3 |
) |
|
Other financing
activities |
|
(0.1 |
) |
|
|
— |
|
|
|
|
|
|
|
Net cash (used in) from financing activities |
|
(4.6 |
) |
|
|
66.7 |
|
|
|
|
|
|
|
Effect of exchange
rates on cash, cash equivalents and restricted cash |
|
2.8 |
|
|
|
(1.9 |
) |
|
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash |
|
22.5 |
|
|
|
(4.3 |
) |
|
Cash, cash equivalents
and restricted cash at beginning of period |
|
31.0 |
|
|
|
40.1 |
|
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
53.5 |
|
|
$ |
35.8 |
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
REVENUE FROM SERVICES |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter (Americas, International and
GTS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
United States |
$ |
928.5 |
|
$ |
1,018.9 |
|
|
(8.9 |
) |
|
% |
(8.9 |
) |
|
% |
Canada |
|
32.8 |
|
|
33.0 |
|
|
(0.7 |
) |
|
|
— |
|
|
|
Mexico |
|
28.7 |
|
|
27.5 |
|
|
4.4 |
|
|
|
7.3 |
|
|
|
Puerto Rico |
|
17.7 |
|
|
19.2 |
|
|
(7.6 |
) |
|
|
(7.6 |
) |
|
|
Brazil |
|
9.1 |
|
|
8.5 |
|
|
7.5 |
|
|
|
18.8 |
|
|
|
Total
Americas |
|
1,016.8 |
|
|
1,107.1 |
|
|
(8.2 |
) |
|
|
(8.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
EMEA |
|
|
|
|
|
|
|
|
|
France |
|
52.5 |
|
|
64.3 |
|
|
(18.3 |
) |
|
|
(15.8 |
) |
|
|
Switzerland |
|
44.2 |
|
|
49.5 |
|
|
(10.8 |
) |
|
|
(13.3 |
) |
|
|
Portugal |
|
43.6 |
|
|
44.8 |
|
|
(2.5 |
) |
|
|
0.3 |
|
|
|
Russia |
|
32.1 |
|
|
25.4 |
|
|
26.4 |
|
|
|
26.7 |
|
|
|
United Kingdom |
|
22.3 |
|
|
26.2 |
|
|
(14.9 |
) |
|
|
(13.6 |
) |
|
|
Italy |
|
14.7 |
|
|
20.6 |
|
|
(28.6 |
) |
|
|
(26.4 |
) |
|
|
Germany |
|
8.0 |
|
|
11.1 |
|
|
(27.9 |
) |
|
|
(25.8 |
) |
|
|
Ireland |
|
5.0 |
|
|
10.1 |
|
|
(50.9 |
) |
|
|
(49.4 |
) |
|
|
Other |
|
15.2 |
|
|
18.0 |
|
|
(15.6 |
) |
|
|
(10.6 |
) |
|
|
Total
EMEA |
|
237.6 |
|
|
270.0 |
|
|
(12.0 |
) |
|
|
(10.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
APAC |
|
6.7 |
|
|
5.5 |
|
|
20.5 |
|
|
|
27.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly Services,
Inc. |
$ |
1,261.1 |
|
$ |
1,382.6 |
|
|
(8.8 |
) |
|
% |
(8.3 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES |
FIRST QUARTER |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
2020 |
|
2019 |
SG&A
Expenses: |
As Reported |
|
Goodwill Impairment(1) |
|
Gain on sale of assets(3) |
|
Restructuring(4) |
|
Adjusted |
|
Adjusted |
Americas Staffing |
$ |
93.5 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(5.6 |
) |
|
|
$ |
87.9 |
|
|
|
$ |
94.9 |
|
|
Global Talent Solutions |
73.7 |
|
|
|
— |
|
|
— |
|
|
(0.9 |
) |
|
|
72.8 |
|
|
|
74.7 |
|
|
International Staffing |
29.3 |
|
|
|
— |
|
|
— |
|
|
(1.1 |
) |
|
|
28.2 |
|
|
|
31.3 |
|
|
Corporate |
23.4 |
|
|
|
— |
|
|
— |
|
|
(1.1 |
) |
|
|
22.3 |
|
|
|
28.2 |
|
|
Intersegment |
(0.4 |
) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(0.4 |
) |
|
|
(0.6 |
) |
|
Total Company |
$ |
219.5 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(8.7 |
) |
|
|
$ |
210.8 |
|
|
|
$ |
228.5 |
|
|
|
2020 |
|
2019 |
Earnings (loss) from
Operations: |
As Reported |
|
Goodwill Impairment(1) |
|
Gain on sale of assets(3) |
|
Restructuring(4) |
|
Adjusted |
|
Adjusted |
Americas Staffing |
$ |
0.1 |
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
$ |
5.6 |
|
|
$ |
5.7 |
|
|
|
$ |
22.3 |
|
|
Global Talent Solutions |
26.5 |
|
|
|
— |
|
|
— |
|
|
|
0.9 |
|
|
27.4 |
|
|
|
25.7 |
|
|
International Staffing |
0.6 |
|
|
|
— |
|
|
— |
|
|
|
1.1 |
|
|
1.7 |
|
|
|
3.3 |
|
|
Corporate |
(139.0 |
) |
|
|
147.7 |
|
|
(32.1 |
) |
|
|
1.1 |
|
|
(22.3 |
) |
|
|
(28.2 |
) |
|
Total Company |
$ |
(111.8 |
) |
|
|
$ |
147.7 |
|
|
$ |
(32.1 |
) |
|
|
$ |
8.7 |
|
|
$ |
12.5 |
|
|
|
$ |
23.1 |
|
|
|
2019 |
SG&A
Expenses: |
As Reported |
|
Restructuring(4) |
|
Adjusted |
Americas Staffing |
$ |
101.2 |
|
|
|
$ |
(6.3 |
) |
|
|
$ |
94.9 |
|
|
Global Talent Solutions |
74.7 |
|
|
|
— |
|
|
|
74.7 |
|
|
International Staffing |
31.3 |
|
|
|
— |
|
|
|
31.3 |
|
|
Corporate |
28.2 |
|
|
|
— |
|
|
|
28.2 |
|
|
Intersegment |
(0.6 |
) |
|
|
— |
|
|
|
(0.6 |
) |
|
Total Company |
$ |
234.8 |
|
|
|
$ |
(6.3 |
) |
|
|
$ |
228.5 |
|
|
|
|
|
|
|
|
|
2019 |
Earnings from
Operations: |
As Reported |
|
Restructuring(4) |
|
Adjusted |
Americas Staffing |
$ |
16.0 |
|
|
|
$ |
6.3 |
|
|
|
$ |
22.3 |
|
|
Global Talent Solutions |
25.7 |
|
|
|
— |
|
|
|
25.7 |
|
|
International Staffing |
3.3 |
|
|
|
— |
|
|
|
3.3 |
|
|
Corporate |
(28.2 |
) |
|
|
— |
|
|
|
(28.2 |
) |
|
Total Company |
$ |
16.8 |
|
|
|
$ |
6.3 |
|
|
|
$ |
23.1 |
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES
(continued) |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
2020 |
|
2019 |
Income tax expense
(benefit) |
|
$ |
(36.2 |
) |
|
|
$ |
6.4 |
|
|
Taxes on goodwill impairment
charge(1) |
|
23.0 |
|
|
|
— |
|
|
Taxes on investment in Persol
Holdings(2) |
|
23.8 |
|
|
|
(4.1 |
) |
|
Taxes on gain on sale of
assets(3) |
|
(8.1 |
) |
|
|
— |
|
|
Taxes on restructuring
charges(4) |
|
2.2 |
|
|
|
1.6 |
|
|
Adjusted income tax expense
(benefit) |
|
$ |
4.7 |
|
|
|
$ |
3.9 |
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
2020 |
|
2019 |
Net earnings (loss) |
|
$ |
(153.2 |
) |
|
|
$ |
22.1 |
|
|
Goodwill impairment charge,
net of taxes(1) |
|
124.7 |
|
|
|
— |
|
|
(Gain) loss on investment in
Persol Holdings, net of taxes(2) |
|
54.0 |
|
|
|
(9.1 |
) |
|
Gain on sale of assets, net of
taxes(3) |
|
(24.0 |
) |
|
|
— |
|
|
Restructuring charges, net of
taxes(4) |
|
6.5 |
|
|
|
4.7 |
|
|
Adjusted net earnings |
|
$ |
8.0 |
|
|
|
$ |
17.7 |
|
|
|
|
|
|
|
|
|
First Quarter |
|
|
2020 |
|
2019 |
|
|
Per Share |
Net earnings (loss) |
|
$ |
(3.91 |
) |
|
|
$ |
0.56 |
|
|
Goodwill impairment charge,
net of taxes(1) |
|
3.18 |
|
|
|
— |
|
|
(Gain) loss on investment in
Persol Holdings, net of taxes(2) |
|
1.38 |
|
|
|
(0.23 |
) |
|
Gain on sale of assets, net of
taxes(3) |
|
(0.61 |
) |
|
|
— |
|
|
Restructuring charges, net of
taxes(4) |
|
0.17 |
|
|
|
0.12 |
|
|
Adjusted net earnings |
|
$ |
0.20 |
|
|
|
$ |
0.45 |
|
|
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
SUBSIDIARIESRECONCILIATION OF NON-GAAP
MEASURES(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted
Accounting Principles) information excluding the 2020 goodwill
impairment charge, the 2020 and 2019 gains and losses on the
investment in Persol Holdings, the 2020 gain on sale of assets, and
the 2020 and 2019 restructuring charges, and are useful to
understand the Company's fiscal 2020 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.
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) The goodwill impairment charge is the result of an
interim impairment test the Company performed during the first
quarter of 2020, due to a triggering event caused by a decline in
the Company's common stock price.
(2) The gains and losses on the investment in Persol
Holdings represent the change in fair value of the investment
during the period presented and the related tax expense and
benefit.
(3) Gain on sale of assets in 2020 represents the excess
of the proceeds over the cost of the headquarters properties sold
during the first quarter of 2020.
(4) Restructuring charges in 2020 represent severance
costs and lease terminations in preparation for the new operating
model later in 2020. Restructuring charges in 2019 represent
severance costs primarily related to U.S. branch-based staffing
operations.
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