Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in
providing workforce solutions, today announced results for the
first quarter of 2010.
Carl T. Camden, President and Chief Executive Officer, announced
revenue for the first quarter of 2010 totaled $1.1 billion, an 8%
increase compared to the corresponding quarter in 2009. On a
constant currency basis, revenue increased by 4%.
Losses from operations for the first quarter of 2010 totaled
$1.6 million, compared to losses from operations of $30.6 million
reported for the first quarter of 2009. Included in the results
from operations for the first quarter of 2010 are restructuring
charges of $4.4 million. The loss from operations in the first
quarter of 2009 included restructuring and litigation charges of
$8.1 million. Excluding the restructuring and litigation charges,
earnings from operations were $2.8 million in the first quarter of
2010 compared to a loss from operations of $22.5 million in
2009.
Diluted losses per share from continuing operations in the first
quarter of 2010 were $0.06 compared to first quarter 2009 losses of
$0.46 per share. The restructuring and litigation charges totaled
$0.10 per share in the first quarter of 2010 and $0.21 per share in
the first quarter of 2009.
Commenting on the first quarter results, Camden was optimistic:
"After many months, we were pleased to see the economy pick up and
note positive trends in our business. Combined with our ongoing
focus on cost control, those factors helped us return to
profitability in what has typically been a weak quarter for our
industry."
That said, Camden expects 2010 will continue to be a challenging
year for Kelly, but also a year of opportunities. "It's important
that we keep a careful eye on managing costs to gain the greatest
leverage as this recovery strengthens. At the same time, as the
workforce solutions market expands, Kelly is redefining itself in
the marketplace. And our new strategic alliance with Temp Holdings
enhances our ability to execute our long-term strategy and grow our
business in two critical staffing markets."
Camden said while the Company will look to maximize profits
across all operations, it will concentrate on accelerating growth
of higher-margin Professional & Technical disciplines, as well
as outsourcing and consulting services. "Our customers' needs are
changing, and Kelly is responding with a broad array of flexible,
customized workforce solutions."
In conjunction with its first quarter earnings release, Kelly
Services, Inc. will host a conference call at 8:30 a.m. (ET) on May
12, to review the results and answer questions. The call may be
accessed in one of the following ways:
Via the Telephone:
U.S. 1 800 288-9626
International 1 651 291-5254
The pass code is Kelly Services
Via the Internet:
The call is also available via the internet through the Kelly
Services website: www.kellyservices.com
This release contains statements that are forward looking in
nature and accordingly, are subject to risks and uncertainties.
These factors include: competition, changing market and economic
conditions, currency fluctuations, changes in laws and regulations,
including tax laws, and other 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.
About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader
in providing workforce solutions. Kelly offers a comprehensive
array of outsourcing and consulting services as well as world-class
staffing on a temporary, temp-to-hire and direct-hire basis.
Serving clients around the globe, Kelly provides employment to
480,000 employees annually. Revenue in 2009 was $4.3 billion. Visit
www.kellyservices.com.
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED APRIL 4, 2010 AND MARCH 29, 2009
(UNAUDITED)
(In millions of dollars except per share data)
2010 2009 Change % Change
--------- --------- --------- ---------
Revenue from services $ 1,130.4 $ 1,042.6 $ 87.8 8.4%
Cost of services 950.4 867.1 83.3 9.6
--------- --------- --------- ---------
Gross profit 180.0 175.5 4.5 2.6
Selling, general and
administrative
expenses 181.6 206.1 (24.5) (11.9)
--------- --------- --------- ---------
Loss from operations (1.6) (30.6) 29.0 94.9
Other (expense) income, net (1.1) 1.3 (2.4) (184.6)
--------- --------- --------- ---------
Loss from continuing
operations before taxes (2.7) (29.3) 26.6 90.9
Income taxes (0.7) (13.2) 12.5 94.7
--------- --------- --------- ---------
Loss from continuing
operations (2.0) (16.1) 14.1 87.9
Earnings from discontinued
operations, net of tax - 0.6 (0.6) (100.0)
--------- --------- --------- ---------
Net loss $ (2.0) $ (15.5) $ 13.5 87.4%
========= ========= ========= =========
Basic loss per share on
common stock
Loss from continuing
operations $ (0.06) $ (0.46) $ 0.40 87.0%
Earnings from discontinued
operations 0.00 0.02 (0.02) (100.0)
Net loss (0.06) (0.45) 0.39 86.7
Diluted loss per share on
common stock
Loss from continuing
operations $ (0.06) $ (0.46) $ 0.40 87.0%
Earnings from discontinued
operations 0.00 0.02 (0.02) (100.0)
Net loss (0.06) (0.45) 0.39 86.7
STATISTICS:
Gross profit rate 15.9% 16.8% (0.9)pts.
Selling, general and
administrative expenses:
% of revenue 16.1 19.8 (3.7)
% of gross profit 100.9 117.5 (16.6)
% Return - Loss from
operations (0.1) (2.9) 2.8
Loss from continuing
operations before
taxes (0.2) (2.8) 2.6
Loss from continuing
operations (0.2) (1.5) 1.3
Net loss (0.2) (1.5) 1.3
Effective income tax rate 26.4% 45.1% (18.7)pts.
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
First Quarter
-------------------------------------
Constant
Currency
2010 2009 Change Change
------- ------- ------ --------
Americas Commercial
Revenue from services (including
fee-based income) $ 547.7 $ 482.4 13.5% 11.5%
Fee-based income 2.1 1.8 15.6 10.7
Gross profit 78.5 73.1 7.4 5.6
SG&A expenses excluding
restructuring charges 65.1 71.8 (9.5)
Restructuring charges 0.3 0.8 (54.7)
Total SG&A expenses 65.4 72.6 (10.0) (11.5)
Earnings from operations 13.1 0.5 NM
Earnings from operations
excluding restructuring charges 13.4 1.3 NM
Gross profit rate 14.3% 15.2% (0.9)pts.
Expense rates (excluding
restructuring charges):
% of revenue 11.9 14.9 (3.0)
% of gross profit 82.8 98.2 (15.4)
Operating margin (excluding
restructuring charges) 2.5 0.3 2.2
Americas PT
Revenue from services (including
fee-based income) $ 205.6 $ 197.4 4.1% 3.8%
Fee-based income 2.3 2.8 (18.3) (19.0)
Gross profit 31.5 31.5 0.3 (0.1)
SG&A expenses excluding
restructuring charges 23.0 26.2 (12.1)
Restructuring charges - - (100.0)
Total SG&A expenses 23.0 26.2 (12.1) (12.4)
Earnings from operations 8.5 5.3 62.3
Earnings from operations
excluding restructuring charges 8.5 5.3 61.9
Gross profit rate 15.3% 15.9% (0.6)pts.
Expense rates (excluding
restructuring charges):
% of revenue 11.2 13.3 (2.1)
% of gross profit 73.0 83.3 (10.3)
Operating margin (excluding
restructuring charges) 4.1 2.7 1.4
EMEA Commercial
Revenue from services (including
fee-based income) $ 204.9 $ 216.6 (5.4)% (12.4)%
Fee-based income 4.8 4.7 1.2 (7.6)
Gross profit 32.8 34.5 (5.1) (12.2)
SG&A expenses excluding
restructuring charges 32.4 40.8 (20.8)
Restructuring charges 2.7 5.8 (53.6)
Total SG&A expenses 35.1 46.6 (24.8) (30.4)
Earnings from operations (2.3) (12.1) 81.3
Earnings from operations
excluding restructuring charges 0.4 (6.3) NM
Gross profit rate 16.0% 15.9% 0.1pts.
Expense rates (excluding
restructuring charges):
% of revenue 15.8 18.8 (3.0)
% of gross profit 98.7 118.3 (19.6)
Operating margin (excluding
restructuring charges) 0.2 (2.9) 3.1
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
First Quarter
-------------------------------------
Constant
Currency
2010 2009 Change Change
------ ------ ------ --------
EMEA PT
Revenue from services (including
fee-based income) $ 34.9 $ 32.8 6.3% (0.9)%
Fee-based income 3.7 4.4 (14.7) (22.2)
Gross profit 9.4 9.4 0.5 (7.0)
Total SG&A expenses 9.5 10.0 (4.3) (11.4)
Earnings from operations (0.1) (0.6) 83.3
Gross profit rate 27.1% 28.6% (1.5)pts.
Expense rates:
% of revenue 27.3 30.4 (3.1)
% of gross profit 101.0 106.1 (5.1)
Operating margin (0.3) (1.7) 1.4
APAC Commercial
Revenue from services (including
fee-based income) $ 80.9 $ 64.4 25.6% 6.8%
Fee-based income 2.8 2.2 25.7 7.9
Gross profit 11.4 9.5 20.4 1.1
SG&A expenses excluding
restructuring charges 9.9 10.8 (8.5)
Restructuring charges 0.5 - NM
Total SG&A expenses 10.4 10.8 (3.6) (19.3)
Earnings from operations 1.0 (1.3) NM
Earnings from operations
excluding restructuring charges 1.5 (1.3) NM
Gross profit rate 14.1% 14.7% (0.6)pts.
Expense rates (excluding
restructuring charges):
% of revenue 12.2 16.7 (4.5)
% of gross profit 86.8 114.1 (27.3)
Operating margin (excluding
restructuring charges) 1.9 (2.1) 4.0
APAC PT
Revenue from services (including
fee-based income) $ 7.6 $ 6.2 22.7% 4.9%
Fee-based income 1.9 1.0 96.4 81.1
Gross profit 2.8 1.9 46.1 29.4
Total SG&A expenses 3.8 2.2 73.2 54.3
Earnings from operations (1.0) (0.3) (284.1)
Gross profit rate 36.7% 30.8% 5.9pts.
Expense rates:
% of revenue 49.1 34.7 14.4
% of gross profit 133.8 112.9 20.9
Operating margin (12.4) (4.0) (8.4)
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
First Quarter
------------------------------------------
Constant
Currency
2010 2009 Change Change
-------- -------- ------ ---------
OCG
Revenue from services
(including fee-based income) $ 55.3 $ 48.7 13.5% 12.1%
Fee-based income 6.1 6.6 (7.9) (11.4)
Gross profit 14.0 15.9 (12.3) (14.5)
SG&A expenses excluding
restructuring charges 18.4 17.0 8.5
Restructuring charges 0.1 0.1 (36.2)
Total SG&A expenses 18.5 17.1 8.2 5.3
Earnings from operations (4.5) (1.2) (280.6)
Earnings from operations
excluding restructuring
charges (4.4) (1.1) (314.6)
Gross profit rate 25.3% 32.7% (7.4)pts.
Expense rates (excluding
restructuring charges):
% of revenue 33.4 34.9 (1.5)
% of gross profit 132.1 106.8 25.3
Operating margin (excluding
restructuring charges) (8.1) (2.2) (5.9)
Corporate Expense
SG&A expenses excluding
restructuring charges $ 15.5 $ 20.4 (23.8)%
Restructuring charges 0.8 0.5 56.8
Total SG&A expenses 16.3 20.9 (22.0)
Asset Impairments $ - $ - NM%
Consolidated Total (net of
intersegment activity)
Revenue from services
(including fee-based income) $1,130.4 $1,042.6 8.4% 4.4%
Fee-based income 23.7 23.5 0.7 (6.2)
Gross profit 180.0 175.5 2.6 (1.5)
SG&A expenses excluding
restructuring charges 177.2 198.9 (11.0)
Restructuring charges 4.4 7.2 (38.6)
Total SG&A expenses 181.6 206.1 (11.9) (15.3)
Earnings from operations (1.6) (30.6) 94.9
Earnings from operations
excluding restructuring
charges 2.8 (23.4) NM
Gross profit rate 15.9% 16.8% (0.9)pts.
Expense rates (excluding
restructuring charges):
% of revenue 15.7 19.1 (3.4)
% of gross profit 98.4 113.4 (15.0)
Operating margin (excluding
restructuring charges) 0.3 (2.2) 2.5
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
April 4, January 3, March 29,
2010 2010 2009
-------- -------- --------
Current Assets
Cash and equivalents $ 55.7 $ 88.9 $ 115.4
Trade accounts receivable, less allowances
of $14.4, $15.0 and $17.2, respectively 727.3 717.9 706.3
Prepaid expenses and other current assets 79.7 70.6 55.8
Deferred taxes 18.4 21.0 29.2
-------- -------- --------
Total current assets 881.1 898.4 906.7
Property and Equipment, Net 120.0 127.1 143.1
Noncurrent Deferred Taxes 76.9 77.5 39.8
Goodwill, Net 67.3 67.3 117.8
Other Assets 133.6 131.4 107.5
-------- -------- --------
Total Assets $1,278.9 $1,301.7 $1,314.9
======== ======== ========
Current Liabilities
Short-term borrowings and current portion
of long-term debt $ 68.2 $ 79.6 $ 16.9
Accounts payable and accrued liabilities 165.8 182.6 220.7
Accrued payroll and related taxes 218.2 208.3 209.5
Accrued insurance 19.2 19.7 25.5
Income and other taxes 46.5 47.4 26.3
-------- -------- --------
Total current liabilities 517.9 537.6 498.9
Noncurrent Liabilities
Long-term debt 56.1 57.5 67.6
Accrued insurance 45.9 47.3 45.4
Accrued retirement benefits 77.7 76.9 59.2
Other long-term liabilities 15.5 16.0 15.2
-------- -------- --------
Total noncurrent liabilities 195.2 197.7 187.4
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (106.7) (107.2) (110.5)
Paid-in capital 37.4 36.9 36.3
Earnings invested in the business 569.5 571.5 660.5
Accumulated other comprehensive income 25.5 25.1 2.2
-------- -------- --------
Total stockholders' equity 565.8 566.4 628.6
-------- -------- --------
Total Liabilities and Stockholders' Equity $1,278.9 $1,301.7 $1,314.9
======== ======== ========
STATISTICS:
Working Capital $ 363.2 $ 360.8 $ 407.8
Current Ratio 1.7 1.7 1.8
Debt-to-capital % 18.0% 19.5% 11.9%
Global Days Sales Outstanding 51 51 51
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 4, 2010 AND MARCH 29, 2009
(UNAUDITED)
(In millions of dollars)
2010 2009
------ ------
Cash flows from operating activities
Net loss $ (2.0) $(15.5)
Noncash adjustments:
Depreciation and amortization 9.1 10.6
Provision for bad debts 0.1 1.5
Stock-based compensation 1.1 1.3
Other, net 0.2 (1.9)
Changes in operating assets and liabilities (27.4) 29.1
------ ------
Net cash from operating activities (18.9) 25.1
------ ------
Cash flows from investing activities
Capital expenditures (1.4) (2.0)
Acquisition of companies, net of cash received - (0.2)
Other investing activities 0.1 -
------ ------
Net cash from investing activities (1.3) (2.2)
------ ------
Cash flows from financing activities
Net change in revolving line of credit (11.2) (1.0)
Repayment of debt - (22.9)
------ ------
Net cash from financing activities (11.2) (23.9)
------ ------
Effect of exchange rates on cash and equivalents (1.8) (1.9)
------ ------
Net change in cash and equivalents (33.2) (2.9)
Cash and equivalents at beginning of period 88.9 118.3
------ ------
Cash and equivalents at end of period $ 55.7 $115.4
====== ======
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
First Quarter (Commercial, PT and OCG)
------------------------------------
% Change
Constant
2010 2009 US$ Currency
-------- -------- ------- ---------
Americas
United States $ 710.2 $ 644.8 10.1% 10.1%
Canada 51.6 40.9 26.1 5.5
Mexico 19.0 14.7 28.9 14.3
Puerto Rico 14.7 15.7 (5.9) (5.9)
-------- --------
Total Americas 795.5 716.1 11.1 9.6
EMEA
France 67.3 61.7 9.1 3.4
United Kingdom 37.6 62.6 (39.8) (44.5)
Switzerland 31.4 28.5 10.0 1.7
Russia 23.3 13.9 67.7 47.9
Portugal 18.4 11.7 57.6 49.5
Italy 16.7 18.9 (11.7) (16.2)
Germany 16.3 15.4 5.6 0.2
Norway 13.9 13.1 6.3 (9.4)
Other 19.2 28.2 (32.0) (37.2)
-------- --------
Total EMEA 244.1 254.0 (3.9) (10.9)
APAC
Australia 27.6 20.4 35.6 (0.2)
Singapore 18.9 14.9 26.4 17.4
Malaysia 14.6 12.1 20.4 11.7
India 13.7 7.0 96.7 81.6
Other 16.0 18.1 (11.5) (27.2)
-------- --------
Total APAC 90.8 72.5 25.3 6.5
Total Kelly Services, Inc. $1,130.4 $1,042.6 8.4% 4.4%
======== ========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
First Quarter
----------------
2010 2009
------- -------
Pretax loss from operations $ (1.6) $ (30.6)
Restructuring charges (Note 1) 4.4 7.2
Litigation charges - 0.9
------- -------
Earnings (loss) from operations
excluding restructuring and
litigation charges $ 2.8 $ (22.5)
======= =======
First Quarter
----------------------------------
2010 2009
---------------- ----------------
Amount Per Share Amount Per Share
------- ------- ------- -------
Loss from continuing operations, net
of taxes $ (2.0) $ (0.06) $ (16.1) $ (0.46)
Restructuring charges, net of taxes
(Note 1) 3.6 0.10 6.4 0.19
Litigation charges, net of taxes - - 0.6 0.02
------- -------
Earnings (loss) from continuing
operations excluding restructuring
and litigation charges, net of taxes $ 1.6 $ 0.05 $ (9.1) $ (0.26)
======= ======= ======= =======
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting
Principles) information excluding the restructuring and litigation charges
is useful to understand the Company's first quarter financial performance
and increases comparability. Specifically, Management believes that
excluding these items allows for a more meaningful comparison of current
period operating performance with the operating results of prior periods.
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) Restructuring charges represent global costs incurred in connection
with the reduction in the number of permanent employees and the
consolidation, sale or closure of branch locations. These costs
include severance, lease terminations, asset write-offs and other
miscellaneous costs.
ANALYST CONTACT: James Polehna (248) 244-4586
james_polehna@kellyservices.com MEDIA CONTACT: Jane Stehney (248)
244-5630 jane_stehney@kellyservices.com
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