Financial Highlights
Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in
providing workforce solutions, today announced results for the
fourth quarter of 2018.
George S. Corona, President and Chief Executive Officer,
announced revenue for the fourth quarter of 2018 totaled $1.4
billion, a 0.5% decrease, or an increase of 0.6% in constant
currency, compared to the corresponding quarter of
2017.
Earnings from operations for the fourth quarter of 2018 totaled
$33.1 million, compared to the $28.4 million reported for the
fourth quarter of 2017.
Diluted losses per share in the fourth quarter of 2018 were
$0.62 compared to earnings per share of $0.45 in the fourth quarter
of 2017. Included in the loss per share in the fourth quarter
of 2018 is the unfavorable impact of $1.49 due to the non-cash
after-tax loss on our investment in Persol Holdings common
stock. Effective in 2018, changes in the fair value of our
investment in Persol Holdings common stock are reflected as gains
or losses on our Consolidated Statement of Earnings below earnings
from operations. Adjusted for the non-cash after-tax loss on
Persol Holdings common stock, diluted earnings per share for the
quarter were $0.87. Earnings per share in the fourth quarter
of 2017 were unfavorably impacted by the $0.35 non-cash, tax charge
resulting from the Tax Cuts and Job Act and were $0.80 on an
adjusted basis.
Diluted earnings per share for the full year of 2018 were $0.58
compared to $1.81 for 2017. Full-year earnings per share for
2018 were unfavorably impacted by the $1.69 non-cash after tax loss
on Persol Holdings common stock. 2017 earnings per share were
unfavorably impacted by the $0.35 non-cash income tax charge
resulting from the Tax Cuts and Jobs Act and by the $0.04
restructuring charge, net of tax. On an adjusted basis,
diluted earnings per share were $2.27 in 2018 compared to $2.20 in
2017. The impact of these adjustments are more fully
described in our included reconciliation of non-GAAP measures.
“The company delivered a good quarter and a solid year in a
challenging labor market,” said Kelly Services President and Chief
Executive Officer George S. Corona. “We are pleased with the
flexibility and resourcefulness of our Kelly team members, and with
the strategic investments we made in people, products and
technology. We are optimistic about 2019, knowing these
strategic investments will help us capitalize on the expanding
specialty talent solutions markets, where there are abundant
opportunities for growth and increased profitability.”
In conjunction with its fourth quarter earnings release, Kelly
Services has published a financial presentation on the Investor
Relations page of our public website and will host a conference
call at 9:00 a.m. (ET) on February 13 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: |
U.S.International |
1 800 288-96261 651
291-5254 |
The pass
code is Kelly Services |
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,
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, 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 Asia
Pacific, 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 the 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
cyber attacks 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 Services®
As a global leader in providing workforce solutions, Kelly
Services, Inc. (Nasdaq: KELYA, KELYB) and its subsidiaries, offer a
comprehensive array of outsourcing and consulting services as well
as world-class staffing on a temporary, temporary-to-hire, and
direct-hire basis. Kelly® directly employs more than 500,000 people
around the world in addition to having a role in connecting
thousands more with work through its global network of talent
suppliers and partners. Revenue in 2018 was $5.5 billion.
Visit kellyservices.com and connect with us
on Facebook, LinkedIn, and Twitter.
KLYA-FIN
ANALYST CONTACT:James
Polehna (248)
244-4586 james_polehna@kellyservices.com |
|
MEDIA CONTACT:Jane
Stehney (248) 574-9800jane_stehney@kellyservices.com |
KELLY SERVICES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
EARNINGS |
FOR THE 13 WEEKS ENDED DECEMBER 30, 2018 AND
DECEMBER 31, 2017 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
2017 |
|
Change |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services |
$ |
1,414.7 |
|
$ |
1,422.3 |
|
$ |
(7.6 |
) |
|
(0.5 |
) |
% |
0.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
1,160.3 |
|
|
1,159.3 |
|
|
1.0 |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
254.4 |
|
|
263.0 |
|
|
(8.6 |
) |
|
(3.3 |
) |
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
221.3 |
|
|
234.6 |
|
|
(13.3 |
) |
|
(5.7 |
) |
|
(4.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations |
|
33.1 |
|
|
28.4 |
|
|
4.7 |
|
|
16.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on investment in
Persol Holdings |
|
(83.2 |
) |
|
— |
|
|
(83.2 |
) |
|
(100.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
1.2 |
|
|
0.9 |
|
|
0.3 |
|
|
20.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before taxes and equity in net earnings (loss) of
affiliate |
|
(48.9 |
) |
|
29.3 |
|
|
(78.2 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
(23.8 |
) |
|
12.7 |
|
|
(36.5 |
) |
|
(288.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) before equity in net earnings (loss) of
affiliate |
|
(25.1 |
) |
|
16.6 |
|
|
(41.7 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings
(loss) of affiliate |
|
1.2 |
|
|
1.1 |
|
|
0.1 |
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) |
$ |
(23.9 |
) |
$ |
17.7 |
|
$ |
(41.6 |
) |
|
NM |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share |
$ |
(0.62 |
) |
$ |
0.46 |
|
$ |
(1.08 |
) |
|
NM |
% |
|
|
Diluted
earnings (loss) per share |
$ |
(0.62 |
) |
$ |
0.45 |
|
$ |
(1.07 |
) |
|
NM |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing fee-based
income (included in revenue from services) |
$ |
16.3 |
|
$ |
15.9 |
|
$ |
0.4 |
|
|
2.0 |
|
% |
4.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
18.0 |
|
% |
18.5 |
|
% |
(0.5 |
) |
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion rate |
|
13.0 |
|
|
10.8 |
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Return: |
|
|
|
|
|
|
|
|
|
|
|
Earnings
from operations |
|
2.3 |
|
|
2.0 |
|
|
0.3 |
|
|
|
|
|
|
Net
earnings (loss) |
|
(1.7 |
) |
|
1.2 |
|
|
(2.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate |
|
48.8 |
|
% |
43.2 |
|
% |
5.6 |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding (millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
38.9 |
|
|
38.4 |
|
|
|
|
|
|
|
|
Diluted |
|
38.9 |
|
|
39.2 |
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
EARNINGS |
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND
DECEMBER 31, 2017 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
2017 |
|
Change |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from
services |
$ |
5,513.9 |
|
$ |
5,374.4 |
|
$ |
139.5 |
|
|
2.6 |
|
% |
2.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
4,541.7 |
|
|
4,420.3 |
|
|
121.4 |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
972.2 |
|
|
954.1 |
|
|
18.1 |
|
|
1.9 |
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
884.8 |
|
|
870.8 |
|
|
14.0 |
|
|
1.6 |
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations |
|
87.4 |
|
|
83.3 |
|
|
4.1 |
|
|
5.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on investment in
Persol Holdings |
|
(96.2 |
) |
|
— |
|
|
(96.2 |
) |
|
(100.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(0.6 |
) |
|
(1.6 |
) |
|
1.0 |
|
|
58.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
before taxes and equity in net earnings (loss) of
affiliate |
|
(9.4 |
) |
|
81.7 |
|
|
(91.1 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
(27.1 |
) |
|
12.8 |
|
|
(39.9 |
) |
|
(312.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
before equity in net earnings (loss) of affiliate |
|
17.7 |
|
|
68.9 |
|
|
(51.2 |
) |
|
(74.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings
(loss) of affiliate |
|
5.2 |
|
|
2.7 |
|
|
2.5 |
|
|
92.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
22.9 |
|
$ |
71.6 |
|
$ |
(48.7 |
) |
|
(68.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share |
$ |
0.59 |
|
$ |
1.84 |
|
$ |
(1.25 |
) |
|
(67.9 |
) |
% |
|
|
Diluted
earnings per share |
$ |
0.58 |
|
$ |
1.81 |
|
$ |
(1.23 |
) |
|
(68.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing fee-based
income (included in revenue from services) |
$ |
68.6 |
|
$ |
57.3 |
|
$ |
11.3 |
|
|
19.6 |
|
% |
19.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
17.6 |
|
% |
17.8 |
|
% |
(0.2 |
) |
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion rate |
|
9.0 |
|
|
8.7 |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Return: |
|
|
|
|
|
|
|
|
|
|
|
Earnings
from operations |
|
1.6 |
|
|
1.5 |
|
|
0.1 |
|
|
|
|
|
|
Net
earnings |
|
0.4 |
|
|
1.3 |
|
|
(0.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate |
|
289.2 |
|
% |
15.7 |
|
% |
273.5 |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
shares outstanding (millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
38.8 |
|
|
38.3 |
|
|
|
|
|
|
|
|
Diluted |
|
39.1 |
|
|
39.0 |
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
RESULTS OF OPERATIONS BY SEGMENT |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
|
2017 |
|
Change |
|
Change |
|
Americas
Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
647.6 |
|
|
$ |
642.4 |
|
|
0.8 |
|
% |
1.4 |
|
% |
Gross
profit |
|
118.8 |
|
|
|
121.2 |
|
|
(2.0 |
) |
|
(1.5 |
) |
|
Total
SG&A expenses |
|
90.4 |
|
|
|
93.4 |
|
|
(3.3 |
) |
|
(2.8 |
) |
|
Earnings
from operations |
|
28.4 |
|
|
|
27.8 |
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
18.3 |
|
% |
|
18.9 |
|
% |
(0.6 |
) |
pts. |
|
|
Conversion rate |
|
23.9 |
|
|
|
22.8 |
|
|
1.1 |
|
|
|
|
Return on
sales |
|
4.4 |
|
|
|
4.3 |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Talent
Solutions |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
503.3 |
|
|
$ |
503.1 |
|
|
— |
|
% |
0.3 |
|
% |
Gross
profit |
|
99.3 |
|
|
|
101.5 |
|
|
(2.2 |
) |
|
(1.7 |
) |
|
Total
SG&A expenses |
|
72.5 |
|
|
|
75.9 |
|
|
(4.4 |
) |
|
(3.9 |
) |
|
Earnings
from operations |
|
26.8 |
|
|
|
25.6 |
|
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
19.7 |
|
% |
|
20.2 |
|
% |
(0.5 |
) |
pts. |
|
|
Conversion rate |
|
27.0 |
|
|
|
25.3 |
|
|
1.7 |
|
|
|
|
Return on
sales |
|
5.3 |
|
|
|
5.1 |
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
268.1 |
|
|
$ |
282.2 |
|
|
(5.0 |
) |
% |
(1.4 |
) |
% |
Gross
profit |
|
36.9 |
|
|
|
41.0 |
|
|
(9.8 |
) |
|
(6.3 |
) |
|
Total
SG&A expenses |
|
33.1 |
|
|
|
35.4 |
|
|
(6.1 |
) |
|
(2.7 |
) |
|
Earnings
from operations |
|
3.8 |
|
|
|
5.6 |
|
|
(33.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
13.8 |
|
% |
|
14.5 |
|
% |
(0.7 |
) |
pts. |
|
|
Conversion rate |
|
10.2 |
|
|
|
13.8 |
|
|
(3.6 |
) |
|
|
|
Return on
sales |
|
1.4 |
|
|
|
2.0 |
|
|
(0.6 |
) |
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
RESULTS OF OPERATIONS BY SEGMENT |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December Year to Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
|
2017 |
|
Change |
|
Change |
|
Americas
Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
2,417.7 |
|
|
$ |
2,345.9 |
|
|
3.1 |
|
% |
3.4 |
|
% |
Gross
profit |
|
441.3 |
|
|
|
429.1 |
|
|
2.9 |
|
|
3.1 |
|
|
SG&A
expenses excluding restructuring charges |
|
364.2 |
|
|
|
346.0 |
|
|
5.2 |
|
|
5.5 |
|
|
Restructuring charges |
|
— |
|
|
|
0.4 |
|
|
(100.0 |
) |
|
(100.0 |
) |
|
Total
SG&A expenses |
|
364.2 |
|
|
|
346.4 |
|
|
5.1 |
|
|
5.4 |
|
|
Earnings
from operations |
|
77.1 |
|
|
|
82.7 |
|
|
(6.7 |
) |
|
|
|
Earnings
from operations excluding restructuring charges |
|
77.1 |
|
|
|
83.1 |
|
|
(7.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
18.3 |
|
% |
|
18.3 |
|
% |
— |
|
pts. |
|
|
Conversion rate |
|
17.5 |
|
|
|
19.3 |
|
|
(1.8 |
) |
|
|
|
Conversion rate excluding restructuring charges |
|
17.5 |
|
|
|
19.3 |
|
|
(1.8 |
) |
|
|
|
Return on
sales |
|
3.2 |
|
|
|
3.5 |
|
|
(0.3 |
) |
|
|
|
Return on
sales excluding restructuring charges |
|
3.2 |
|
|
|
3.5 |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Talent
Solutions |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
1,997.4 |
|
|
$ |
1,998.9 |
|
|
(0.1 |
) |
% |
(0.1 |
) |
% |
Gross
profit |
|
381.1 |
|
|
|
373.7 |
|
|
2.0 |
|
|
1.8 |
|
|
SG&A
expenses excluding restructuring charges |
|
296.5 |
|
|
|
294.7 |
|
|
0.6 |
|
|
0.4 |
|
|
Restructuring charges |
|
— |
|
|
|
2.0 |
|
|
(100.0 |
) |
|
(100.0 |
) |
|
Total
SG&A expenses |
|
296.5 |
|
|
|
296.7 |
|
|
— |
|
|
(0.2 |
) |
|
Earnings
from operations |
|
84.6 |
|
|
|
77.0 |
|
|
9.8 |
|
|
|
|
Earnings
from operations excluding restructuring charges |
|
84.6 |
|
|
|
79.0 |
|
|
7.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
19.1 |
|
% |
|
18.7 |
|
% |
0.4 |
|
pts. |
|
|
Conversion rate |
|
22.2 |
|
|
|
20.6 |
|
|
1.6 |
|
|
|
|
Conversion rate excluding restructuring charges |
|
22.2 |
|
|
|
21.1 |
|
|
1.1 |
|
|
|
|
Return on
sales |
|
4.2 |
|
|
|
3.9 |
|
|
0.3 |
|
|
|
|
Return on
sales excluding restructuring charges |
|
4.2 |
|
|
|
4.0 |
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Staffing |
|
|
|
|
|
|
|
|
|
|
Revenue
from services |
$ |
1,116.6 |
|
|
$ |
1,048.2 |
|
|
6.5 |
|
% |
4.0 |
|
% |
Gross
profit |
|
152.3 |
|
|
|
153.7 |
|
|
(0.9 |
) |
|
(3.2 |
) |
|
Total
SG&A expenses |
|
132.3 |
|
|
|
131.6 |
|
|
0.5 |
|
|
(1.4 |
) |
|
Earnings
from operations |
|
20.0 |
|
|
|
22.1 |
|
|
(9.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit rate |
|
13.6 |
|
% |
|
14.7 |
|
% |
(1.1 |
) |
pts. |
|
|
Conversion rate |
|
13.2 |
|
|
|
14.4 |
|
|
(1.2 |
) |
|
|
|
Return on
sales |
|
1.8 |
|
|
|
2.1 |
|
|
(0.3 |
) |
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
Dec. 30, 2018 |
|
Dec. 31, 2017 |
|
Current
Assets |
|
|
|
|
|
Cash and
equivalents |
$ |
35.3 |
|
$ |
32.5 |
|
|
Trade accounts
receivable, less allowances of |
|
|
|
|
|
$13.2 and $12.9,
respectively |
|
1,293.3 |
|
|
1,286.7 |
|
|
Prepaid expenses
and other current assets |
|
71.9 |
|
|
65.1 |
|
|
Total current
assets |
|
1,400.5 |
|
|
1,384.3 |
|
|
|
|
|
|
|
|
Noncurrent
Assets |
|
|
|
|
|
Property
and equipment, net |
|
86.3 |
|
|
86.1 |
|
|
Deferred
taxes |
|
198.7 |
|
|
183.4 |
|
|
Goodwill,
net |
|
107.3 |
|
|
107.1 |
|
|
Investment in Persol Holdings |
|
135.1 |
|
|
228.1 |
|
|
Investment in equity affiliate |
|
121.3 |
|
|
117.4 |
|
|
Other
assets |
|
265.2 |
|
|
271.8 |
|
|
Total noncurrent
assets |
|
913.9 |
|
|
993.9 |
|
|
|
|
|
|
|
|
Total
Assets |
$ |
2,314.4 |
|
$ |
2,378.2 |
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
Short-term
borrowings |
$ |
2.2 |
|
$ |
10.2 |
|
|
Accounts payable
and accrued liabilities |
|
540.6 |
|
|
537.7 |
|
|
Accrued payroll
and related taxes |
|
266.0 |
|
|
287.4 |
|
|
Accrued workers'
compensation and other claims |
|
26.0 |
|
|
25.7 |
|
|
Income and other
taxes |
|
62.7 |
|
|
65.2 |
|
|
Total current
liabilities |
|
897.5 |
|
|
926.2 |
|
|
|
|
|
|
|
|
Noncurrent
Liabilities |
|
|
|
|
|
Accrued workers'
compensation and other claims |
|
50.5 |
|
|
49.9 |
|
|
Accrued
retirement benefits |
|
162.9 |
|
|
178.1 |
|
|
Other long-term
liabilities |
|
44.0 |
|
|
72.5 |
|
|
Total noncurrent
liabilities |
|
257.4 |
|
|
300.5 |
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
Common
stock |
|
40.1 |
|
|
40.1 |
|
|
Treasury
stock |
|
(26.0 |
) |
|
(35.2 |
) |
|
Paid-in
capital |
|
24.4 |
|
|
32.2 |
|
|
Earnings
invested in the business |
|
1,138.1 |
|
|
983.6 |
|
|
Accumulated
other comprehensive income (loss) |
|
(17.1 |
) |
|
130.8 |
|
|
|
|
|
|
|
|
Total stockholders'
equity |
|
1,159.5 |
|
|
1,151.5 |
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity |
$ |
2,314.4 |
|
$ |
2,378.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statistics: |
|
|
|
|
|
Working
Capital |
$ |
503.0 |
|
$ |
458.1 |
|
|
Current
Ratio |
|
1.6 |
|
|
1.5 |
|
|
Debt-to-capital
% |
|
0.2 |
|
% |
0.9 |
|
% |
Global Days Sales
Outstanding |
|
55 |
|
|
55 |
|
|
Year-to-Date Free
Cash Flow |
$ |
35.8 |
|
$ |
46.2 |
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND
DECEMBER 31, 2017 |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
|
Net
earnings |
$ |
22.9 |
|
$ |
71.6 |
|
Adjustments to reconcile net earnings to net cash from operating
activities: |
|
|
|
|
Depreciation and amortization |
|
26.2 |
|
|
22.7 |
|
Provision
for bad debts |
|
3.0 |
|
|
5.6 |
|
Stock-based compensation |
|
8.1 |
|
|
9.1 |
|
Loss on
investment in Persol Holdings |
|
96.2 |
|
|
— |
|
Equity in
net earnings of PersolKelly Asia Pacific |
|
(5.2 |
) |
|
(2.7 |
) |
Other,
net |
|
(0.8 |
) |
|
0.2 |
|
Changes
in operating assets and liabilities, net of acquisition |
|
(89.0 |
) |
|
(35.7 |
) |
|
|
|
|
|
Net cash from operating activities |
|
61.4 |
|
|
70.8 |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Capital
expenditures |
|
(25.6 |
) |
|
(24.6 |
) |
Acquisition of company, net of cash received |
|
— |
|
|
(37.2 |
) |
Investment in equity securities |
|
(5.0 |
) |
|
— |
|
(Loan to)
proceeds from repayment of loan to equity affiliate |
|
(7.0 |
) |
|
0.6 |
|
Proceeds
from company-owned life insurance |
|
7.9 |
|
|
— |
|
Other
investing activities |
|
(0.1 |
) |
|
0.2 |
|
|
|
|
|
|
Net cash used in investing activities |
|
(29.8 |
) |
|
(61.0 |
) |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Net
change in short-term borrowings |
|
(7.8 |
) |
|
10.1 |
|
Dividend
payments |
|
(11.8 |
) |
|
(11.6 |
) |
Payments
of tax withholding for restricted shares |
|
(6.9 |
) |
|
(1.8 |
) |
Other
financing activities |
|
— |
|
|
(0.1 |
) |
|
|
|
|
|
Net cash used in financing activities |
|
(26.5 |
) |
|
(3.4 |
) |
|
|
|
|
|
Effect of
exchange rates on cash, cash equivalents and restricted
cash |
|
(1.9 |
) |
|
(3.8 |
) |
|
|
|
|
|
Net change in
cash, cash equivalents and restricted cash |
|
3.2 |
|
|
2.6 |
|
Cash, cash
equivalents and restricted cash at beginning of year |
|
36.9 |
|
|
34.3 |
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash at end of year |
$ |
40.1 |
|
$ |
36.9 |
|
|
|
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
REVENUE FROM SERVICES |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter (Americas, International and
GTS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
2017 |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
United
States |
$ |
1,031.6 |
|
$ |
1,027.8 |
|
|
0.4 |
|
% |
0.4 |
|
% |
Canada |
|
34.8 |
|
|
34.5 |
|
|
1.2 |
|
|
5.1 |
|
|
Mexico |
|
32.3 |
|
|
33.8 |
|
|
(4.4 |
) |
|
(0.1 |
) |
|
Puerto
Rico |
|
22.4 |
|
|
17.1 |
|
|
31.0 |
|
|
31.0 |
|
|
Brazil |
|
8.6 |
|
|
10.3 |
|
|
(16.4 |
) |
|
1.5 |
|
|
Total
Americas |
|
1,129.7 |
|
|
1,123.5 |
|
|
0.6 |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
EMEA |
|
|
|
|
|
|
|
|
|
France |
|
66.2 |
|
|
75.0 |
|
|
(11.8 |
) |
|
(8.9 |
) |
|
Switzerland |
|
56.4 |
|
|
55.6 |
|
|
1.2 |
|
|
2.2 |
|
|
Portugal |
|
46.4 |
|
|
52.0 |
|
|
(10.7 |
) |
|
(7.8 |
) |
|
Russia |
|
24.7 |
|
|
23.9 |
|
|
2.9 |
|
|
17.2 |
|
|
United
Kingdom |
|
23.2 |
|
|
24.4 |
|
|
(4.9 |
) |
|
(1.9 |
) |
|
Italy |
|
19.4 |
|
|
16.6 |
|
|
16.6 |
|
|
20.4 |
|
|
Germany |
|
12.1 |
|
|
16.6 |
|
|
(27.3 |
) |
|
(25.0 |
) |
|
Ireland |
|
10.3 |
|
|
8.6 |
|
|
20.5 |
|
|
24.3 |
|
|
Norway |
|
8.0 |
|
|
8.4 |
|
|
(4.0 |
) |
|
(0.7 |
) |
|
Other |
|
13.0 |
|
|
13.0 |
|
|
0.4 |
|
|
4.5 |
|
|
Total
EMEA |
|
279.7 |
|
|
294.1 |
|
|
(4.9 |
) |
|
(1.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
APAC |
|
5.3 |
|
|
4.7 |
|
|
12.4 |
|
|
20.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly
Services, Inc. |
$ |
1,414.7 |
|
$ |
1,422.3 |
|
|
(0.5 |
) |
% |
0.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
REVENUE FROM SERVICES |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
December Year to Date (Americas, International
and GTS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2018 |
|
2017 |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
United
States |
$ |
3,930.0 |
|
$ |
3,894.6 |
|
|
0.9 |
|
% |
0.9 |
|
% |
Canada |
|
142.4 |
|
|
140.3 |
|
|
1.6 |
|
|
1.5 |
|
|
Mexico |
|
125.0 |
|
|
118.8 |
|
|
5.2 |
|
|
7.5 |
|
|
Puerto
Rico |
|
96.6 |
|
|
68.3 |
|
|
41.5 |
|
|
41.5 |
|
|
Brazil |
|
35.2 |
|
|
48.6 |
|
|
(27.6 |
) |
|
(18.6 |
) |
|
Total
Americas |
|
4,329.2 |
|
|
4,270.6 |
|
|
1.4 |
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
EMEA |
|
|
|
|
|
|
|
|
|
France |
|
278.9 |
|
|
277.1 |
|
|
0.6 |
|
|
(3.7 |
) |
|
Switzerland |
|
212.7 |
|
|
216.9 |
|
|
(2.0 |
) |
|
(2.4 |
) |
|
Portugal |
|
196.9 |
|
|
176.0 |
|
|
11.9 |
|
|
6.9 |
|
|
United
Kingdom |
|
108.8 |
|
|
88.7 |
|
|
22.6 |
|
|
18.1 |
|
|
Russia |
|
100.4 |
|
|
93.2 |
|
|
7.7 |
|
|
15.8 |
|
|
Italy |
|
77.5 |
|
|
61.9 |
|
|
25.2 |
|
|
20.0 |
|
|
Germany |
|
57.1 |
|
|
59.9 |
|
|
(4.7 |
) |
|
(9.3 |
) |
|
Ireland |
|
44.6 |
|
|
32.0 |
|
|
39.5 |
|
|
33.4 |
|
|
Norway |
|
34.4 |
|
|
33.3 |
|
|
3.3 |
|
|
1.8 |
|
|
Other |
|
51.2 |
|
|
46.5 |
|
|
10.1 |
|
|
6.4 |
|
|
Total
EMEA |
|
1,162.5 |
|
|
1,085.5 |
|
|
7.1 |
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
APAC |
|
22.2 |
|
|
18.3 |
|
|
21.4 |
|
|
24.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly
Services, Inc. |
$ |
5,513.9 |
|
$ |
5,374.4 |
|
|
2.6 |
|
% |
2.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND
SUBSIDIARIES |
RECONCILIATION OF NON-GAAP
MEASURES |
FOR THE 13 AND 52 WEEKS ENDED DECEMBER 30,
2018 AND DECEMBER 31, 2017 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
Fourth Quarter |
|
December Year to Date |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Earnings from
operations |
|
$ |
33.1 |
|
|
$ |
28.4 |
|
|
$ |
87.4 |
|
|
$ |
83.3 |
|
Restructuring charges
(Note 3) |
|
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
Adjusted earnings from
operations |
|
$ |
33.1 |
|
|
$ |
28.4 |
|
|
$ |
87.4 |
|
|
$ |
85.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
December Year to Date |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense |
|
$ |
(23.8 |
) |
|
$ |
12.7 |
|
|
$ |
(27.1 |
) |
|
$ |
12.8 |
|
Tax benefit on
investment in Persol Holdings (Note 1) |
|
25.4 |
|
|
— |
|
|
29.4 |
|
|
— |
|
2017 U.S. tax law
change (Note 2) |
|
— |
|
|
(13.9 |
) |
|
— |
|
|
(13.9 |
) |
Tax expense on
restructuring charges (Note 3) |
|
— |
|
|
— |
|
|
— |
|
|
0.7 |
|
Adjusted income tax
expense (benefit) |
|
$ |
1.6 |
|
|
$ |
(1.2 |
) |
|
$ |
2.3 |
|
|
$ |
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
December Year to Date |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net earnings
(loss) |
|
$ |
(23.9 |
) |
|
$ |
17.7 |
|
|
$ |
22.9 |
|
|
$ |
71.6 |
|
Loss on investment in
Persol Holdings, net of taxes (Note 1) |
|
57.8 |
|
|
— |
|
|
66.8 |
|
|
— |
|
2017 U.S. tax law
change (Note 2) |
|
— |
|
|
13.9 |
|
|
— |
|
|
13.9 |
|
Restructuring charges,
net of taxes (Note 3) |
|
— |
|
|
— |
|
|
— |
|
|
1.7 |
|
Adjusted net
earnings |
|
$ |
33.9 |
|
|
$ |
31.6 |
|
|
$ |
89.7 |
|
|
$ |
87.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
December Year to Date |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
Per Share |
|
Per Share |
Net earnings
(loss) |
|
$ |
(0.62 |
) |
|
$ |
0.45 |
|
|
$ |
0.58 |
|
|
$ |
1.81 |
|
Loss on investment in
Persol Holdings, net of taxes (Note 1) |
|
1.49 |
|
|
— |
|
|
1.69 |
|
|
— |
|
2017 U.S. tax law
change (Note 2) |
|
— |
|
|
0.35 |
|
|
— |
|
|
0.35 |
|
Restructuring charges,
net of taxes (Note 3) |
|
— |
|
|
— |
|
|
— |
|
|
0.04 |
|
Adjusted net
earnings |
|
$ |
0.87 |
|
|
$ |
0.80 |
|
|
$ |
2.27 |
|
|
$ |
2.20 |
|
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 2018 loss on
investment in Persol Holdings, the effect of the 2017 U.S. tax law
change and the 2017 restructuring charges is useful to understand
the Company's fiscal 2018 financial performance and increases
comparability. Specifically, Management believes that
removing the impact of 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) The loss on the investment in Persol Holdings in 2018
represents the change in fair value of the investment during the
period presented and the related tax benefit.
(2) 2017 U.S. tax law change represents the impact of
revaluing net deferred tax assets as a result of the U.S. Tax Cuts
and Jobs Act.
(3) Restructuring charges in 2017 represent costs related
primarily to optimizing our GTS service delivery models to deliver
expected cost savings.
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