Kelly (Nasdaq: KELYA) (Nasdaq: KELYB), a leading specialty talent
solutions provider, today announced results for the third quarter
of 2020.
Peter Quigley, president and chief executive officer, announced
revenue for the third quarter of 2020 totaled $1.0 billion, an
18.1% decline compared to the corresponding quarter of 2019.
Revenues declined year-over-year in the quarter as the
continuing effects of the COVID-19 crisis impacted customer
demand.
Losses from operations for the third quarter of 2020 totaled
$2.4 million, compared to earnings of $17.1 million reported for
the third quarter of 2019. The 2020 third quarter results include a
non-cash charge to allowance for doubtful accounts related to a
customer dispute and an adjustment to restructuring charges. The
third quarter of 2019 results included an adjustment to
restructuring charges. On an adjusted basis, earnings from
operations were $7.0 million compared to $17.0 million in the
corresponding quarter of 2019.
Diluted earnings per share in the third quarter of 2020 were
$0.42 compared to a loss per share of $0.27 in the third quarter of
2019. Included in the earnings per share in the third quarter of
2020 is a non-cash gain, net of tax, on Kelly’s investment in
Persol Holdings common stock of $0.29, partially offset by a loss
of $0.17 related to the customer dispute charge, net of tax.
Included in the loss per share in the third quarter of 2019 is
$0.70 from a non-cash loss per share on Kelly’s investment in
Persol Holdings common stock, net of tax. On an adjusted basis,
earnings per share were $0.29 for the third quarter of 2020
compared to $0.43 for the corresponding quarter of 2019.
“As a gradual recovery from the pandemic continued into the
third quarter, revenue trends in all of Kelly’s segments showed
some sequential improvement,” stated Quigley. “Our higher-margin
specialties, such as outsourcing & consulting, science, and
virtual call center, proved to be particularly resilient. Kelly has
also made significant progress on reinventing ourselves in a
tumultuous year. We executed on our plan to adopt a new operating
model, and we reported third quarter financial results by our five
specialty business segments: Science, Engineering & Technology;
Education; Professional & Industrial; OCG; and International.
This is an important step forward in redefining Kelly as a
specialty talent provider in skill sets modern organizations need
to grow and thrive. While we continue to carefully manage expenses
and track the trajectory of the crisis, we expect our disciplined
specialty focus to deliver profitable growth in a post-pandemic
business environment. I’m proud of our teams for the agility,
creativity, and character they’ve shown in response to this crisis,
and I’m encouraged by the early traction we’re seeing as a result
of their efforts.”
In conjunction with its third 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 November 5 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 November 5, 2020 at (866) 207-1041 (toll-free) and (402)
970-0847 (caller-paid). The access code is 8818296#. 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.
MEDIA
CONTACT: |
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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 SEPTEMBER 27, 2020 AND SEPTEMBER 29,
2019 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
1,038.2 |
|
|
$ |
1,267.7 |
|
|
$ |
(229.5 |
) |
|
|
(18.1 |
) |
|
% |
(18.2 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
847.2 |
|
|
|
1,040.0 |
|
|
|
(192.8 |
) |
|
|
(18.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
191.0 |
|
|
|
227.7 |
|
|
|
(36.7 |
) |
|
|
(16.1 |
) |
|
|
(16.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
193.4 |
|
|
|
210.6 |
|
|
|
(17.2 |
) |
|
|
(8.2 |
) |
|
|
(8.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(2.4 |
) |
|
|
17.1 |
|
|
|
(19.5 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on investment in Persol Holdings |
|
16.8 |
|
|
|
(39.3 |
) |
|
|
56.1 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
(0.7 |
) |
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
|
(286.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before
taxes and equity in net earnings (loss) of affiliate |
|
13.7 |
|
|
|
(22.4 |
) |
|
|
36.1 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(1.2 |
) |
|
|
(12.8 |
) |
|
|
11.6 |
|
|
|
90.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
before equity in net earnings (loss) of affiliate |
|
14.9 |
|
|
|
(9.6 |
) |
|
|
24.5 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings (loss) of affiliate |
|
1.8 |
|
|
|
(0.9 |
) |
|
|
2.7 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
16.7 |
|
|
$ |
(10.5 |
) |
|
$ |
27.2 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
$ |
0.42 |
|
|
$ |
(0.27 |
) |
|
$ |
0.69 |
|
|
|
NM |
|
|
|
|
|
Diluted earnings (loss) per share |
$ |
0.42 |
|
|
$ |
(0.27 |
) |
|
$ |
0.69 |
|
|
|
NM |
|
|
|
|
|
|
|
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|
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|
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|
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STATISTICS: |
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent placement revenue
(included in revenue from services) |
$ |
9.1 |
|
|
$ |
15.1 |
|
|
$ |
(6.0 |
) |
|
|
(40.2 |
) |
|
% |
(40.6 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
18.4 |
|
|
% |
18.0 |
|
|
% |
0.4 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion rate |
|
(1.3 |
) |
|
|
7.5 |
|
|
|
(8.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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% Return: |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(0.2 |
) |
|
|
1.3 |
|
|
|
(1.5 |
) |
|
|
|
|
|
|
Net earnings (loss) |
|
1.6 |
|
|
|
(0.8 |
) |
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
(8.5 |
) |
|
% |
57.3 |
|
|
% |
(65.8 |
) |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares
outstanding (millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
39.3 |
|
|
|
39.1 |
|
|
|
|
|
|
|
|
|
Diluted |
|
39.4 |
|
|
|
39.1 |
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF EARNINGS |
FOR THE 39 WEEKS ENDED SEPTEMBER 27, 2020 AND SEPTEMBER 29,
2019 |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
3,274.6 |
|
|
$ |
4,017.8 |
|
|
$ |
(743.2 |
) |
|
|
(18.5 |
) |
|
% |
(18.0 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
2,671.1 |
|
|
|
3,294.5 |
|
|
|
(623.4 |
) |
|
|
(18.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
603.5 |
|
|
|
723.3 |
|
|
|
(119.8 |
) |
|
|
(16.6 |
) |
|
|
(16.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
591.0 |
|
|
|
666.9 |
|
|
|
(75.9 |
) |
|
|
(11.4 |
) |
|
|
(11.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge |
|
147.7 |
|
|
|
— |
|
|
|
147.7 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of assets |
|
(32.1 |
) |
|
|
(12.3 |
) |
|
|
(19.8 |
) |
|
|
(161.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(103.1 |
) |
|
|
68.7 |
|
|
|
(171.8 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on investment in Persol Holdings |
|
(31.4 |
) |
|
|
35.1 |
|
|
|
(66.5 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
3.6 |
|
|
|
(1.1 |
) |
|
|
4.7 |
|
|
|
421.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before
taxes and equity in net earnings (loss) of affiliate |
|
(130.9 |
) |
|
|
102.7 |
|
|
|
(233.6 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(36.5 |
) |
|
|
6.3 |
|
|
|
(42.8 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
before equity in net earnings (loss) of affiliate |
|
(94.4 |
) |
|
|
96.4 |
|
|
|
(190.8 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net earnings (loss) of affiliate |
|
(1.0 |
) |
|
|
(1.0 |
) |
|
|
— |
|
|
|
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(95.4 |
) |
|
$ |
95.4 |
|
|
$ |
(190.8 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
$ |
(2.43 |
) |
|
$ |
2.42 |
|
|
$ |
(4.85 |
) |
|
|
NM |
|
|
|
|
|
Diluted earnings (loss) per share |
$ |
(2.43 |
) |
|
$ |
2.41 |
|
|
$ |
(4.84 |
) |
|
|
NM |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent placement revenue
(included in revenue from services) |
$ |
28.9 |
|
|
$ |
46.7 |
|
|
$ |
(17.8 |
) |
|
|
38.1 |
|
|
% |
(37.6 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
18.4 |
|
|
% |
18.0 |
|
|
% |
0.4 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion rate |
|
(17.1 |
) |
|
|
9.5 |
|
|
|
(26.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Return: |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations |
|
(3.1 |
) |
|
|
1.7 |
|
|
|
(4.8 |
) |
|
|
|
|
|
|
Net earnings (loss) |
|
(2.9 |
) |
|
|
2.4 |
|
|
|
(5.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
27.9 |
|
|
% |
6.1 |
|
|
% |
21.8 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of shares
outstanding (millions): |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
39.3 |
|
|
|
39.0 |
|
|
|
|
|
|
|
|
|
Diluted |
|
39.3 |
|
|
|
39.2 |
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RESULTS OF OPERATIONS BY SEGMENT |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC
% |
|
|
|
2020 |
|
|
2019 |
|
Change |
|
Change |
|
Professional & Industrial |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
446.5 |
|
|
|
$ |
538.0 |
|
|
|
(17.0 |
) |
|
% |
(17.0 |
) |
|
% |
Gross profit |
|
77.1 |
|
|
|
|
91.8 |
|
|
|
(16.1 |
) |
|
|
(16.0 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
65.4 |
|
|
|
|
77.7 |
|
|
|
(15.8 |
) |
|
|
(15.8 |
) |
|
|
Restructuring charges |
|
(0.1 |
) |
|
|
|
(0.1 |
) |
|
|
(24.7 |
) |
|
|
(24.7 |
) |
|
|
Total SG&A expenses |
|
65.3 |
|
|
|
|
77.6 |
|
|
|
(15.8 |
) |
|
|
(15.8 |
) |
|
|
Earnings (loss) from operations |
|
11.8 |
|
|
|
|
14.2 |
|
|
|
(17.6 |
) |
|
|
|
|
Earnings (loss) from operations excluding restructuring
charges |
|
11.7 |
|
|
|
|
14.1 |
|
|
|
(17.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
17.3 |
|
|
% |
|
17.1 |
|
|
% |
0.2 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Science, Engineering & Technology |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
244.0 |
|
|
|
$ |
285.2 |
|
|
|
(14.4 |
) |
|
% |
(14.4 |
) |
|
% |
Gross profit |
|
50.7 |
|
|
|
|
58.3 |
|
|
|
(13.1 |
) |
|
|
(13.1 |
) |
|
|
Total SG&A expenses |
|
31.3 |
|
|
|
|
36.0 |
|
|
|
(13.0 |
) |
|
|
(13.1 |
) |
|
|
Earnings (loss) from operations |
|
19.4 |
|
|
|
|
22.3 |
|
|
|
(13.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
20.8 |
|
|
% |
|
20.4 |
|
|
% |
0.4 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Education |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
27.5 |
|
|
|
$ |
57.1 |
|
|
|
(51.8 |
) |
|
% |
(51.8 |
) |
|
% |
Gross profit |
|
4.1 |
|
|
|
|
8.6 |
|
|
|
(51.1 |
) |
|
|
(51.1 |
) |
|
|
Total SG&A expenses |
|
11.6 |
|
|
|
|
13.8 |
|
|
|
(15.5 |
) |
|
|
(15.5 |
) |
|
|
Earnings (loss) from operations |
|
(7.5 |
) |
|
|
|
(5.2 |
) |
|
|
(43.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
15.2 |
|
|
% |
|
15.0 |
|
|
% |
0.2 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outsourcing & Consulting |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
87.9 |
|
|
|
$ |
94.4 |
|
|
|
(7.0 |
) |
|
% |
(7.4 |
) |
|
% |
Gross profit |
|
29.1 |
|
|
|
|
29.5 |
|
|
|
(1.5 |
) |
|
|
(2.5 |
) |
|
|
Total SG&A expenses |
|
25.4 |
|
|
|
|
29.1 |
|
|
|
(12.7 |
) |
|
|
(13.7 |
) |
|
|
Earnings (loss) from operations |
|
3.7 |
|
|
|
|
0.4 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
33.1 |
|
|
% |
|
31.3 |
|
|
% |
1.8 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
232.4 |
|
|
|
$ |
293.4 |
|
|
|
(20.8 |
) |
|
% |
(21.1 |
) |
|
% |
Gross profit |
|
30.0 |
|
|
|
|
39.5 |
|
|
|
(23.9 |
) |
|
|
(24.5 |
) |
|
|
Total SG&A expenses |
|
39.9 |
|
|
|
|
35.3 |
|
|
|
13.1 |
|
|
|
14.3 |
|
|
|
Earnings (loss) from operations |
|
(9.9 |
) |
|
|
|
4.2 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
12.9 |
|
|
% |
|
13.5 |
|
|
% |
(0.6 |
) |
|
pts. |
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RESULTS OF OPERATIONS BY SEGMENT |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
September Year to Date |
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
|
2019 |
|
Change |
|
Change |
|
Professional & Industrial |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
1,346.7 |
|
|
|
$ |
1,668.7 |
|
|
|
(19.3 |
) |
|
% |
(19.2 |
) |
|
% |
Gross profit |
|
241.1 |
|
|
|
|
291.6 |
|
|
|
(17.3 |
) |
|
|
(17.3 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
206.1 |
|
|
|
|
241.7 |
|
|
|
(14.7 |
) |
|
|
(14.6 |
) |
|
|
Restructuring charges |
|
4.3 |
|
|
|
|
5.2 |
|
|
|
(18.8 |
) |
|
|
(18.8 |
) |
|
|
Total SG&A expenses |
|
210.4 |
|
|
|
|
246.9 |
|
|
|
(14.8 |
) |
|
|
(14.7 |
) |
|
|
Earnings (loss) from operations |
|
30.7 |
|
|
|
|
44.7 |
|
|
|
(31.4 |
) |
|
|
|
|
Earnings (loss) from operations excluding restructuring
charges |
|
35.0 |
|
|
|
|
49.9 |
|
|
|
(30.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
17.9 |
|
|
% |
|
17.5 |
|
|
% |
0.4 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Science, Engineering & Technology |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
761.5 |
|
|
|
$ |
859.7 |
|
|
|
(11.4 |
) |
|
% |
(11.4 |
) |
|
% |
Gross profit |
|
156.0 |
|
|
|
|
171.8 |
|
|
|
(9.3 |
) |
|
|
(9.2 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
98.6 |
|
|
|
|
111.0 |
|
|
|
(11.2 |
) |
|
|
(11.2 |
) |
|
|
Restructuring charges |
|
0.5 |
|
|
|
|
0.4 |
|
|
|
45.2 |
|
|
|
45.2 |
|
|
|
Total SG&A expenses |
|
99.1 |
|
|
|
|
111.4 |
|
|
|
(11.1 |
) |
|
|
(11.0 |
) |
|
|
Earnings (loss) from operations |
|
56.9 |
|
|
|
|
60.4 |
|
|
|
(5.9 |
) |
|
|
|
|
Earnings (loss) from operations excluding restructuring
charges |
|
57.4 |
|
|
|
|
60.8 |
|
|
|
(5.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
20.5 |
|
|
% |
|
20.0 |
|
|
% |
0.5 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Education |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
195.1 |
|
|
|
$ |
313.9 |
|
|
|
(37.8 |
) |
|
% |
(37.8 |
) |
|
% |
Gross profit |
|
28.8 |
|
|
|
|
49.9 |
|
|
|
(42.2 |
) |
|
|
(42.2 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
36.9 |
|
|
|
|
41.5 |
|
|
|
(11.0 |
) |
|
|
(11.0 |
) |
|
|
Restructuring charges |
|
0.8 |
|
|
|
|
— |
|
|
|
NM |
|
|
|
NM |
|
|
|
Total SG&A expenses |
|
37.7 |
|
|
|
|
41.5 |
|
|
|
(9.1 |
) |
|
|
(9.1 |
) |
|
|
Earnings (loss) from operations |
|
(8.9 |
) |
|
|
|
8.4 |
|
|
|
NM |
|
|
|
|
|
Earnings (loss) from operations excluding restructuring
charges |
|
(8.1 |
) |
|
|
|
8.4 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
14.8 |
|
|
% |
|
15.9 |
|
|
% |
(1.1 |
) |
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outsourcing & Consulting |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
261.0 |
|
|
|
$ |
282.3 |
|
|
|
(7.6 |
) |
|
% |
(7.3 |
) |
|
% |
Gross profit |
|
87.1 |
|
|
|
|
90.7 |
|
|
|
(4.0 |
) |
|
|
(3.7 |
) |
|
|
Total SG&A expenses |
|
79.1 |
|
|
|
|
90.9 |
|
|
|
(13.0 |
) |
|
|
(13.0 |
) |
|
|
Earnings (loss) from operations |
|
8.0 |
|
|
|
|
(0.2 |
) |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
33.4 |
|
|
% |
|
32.2 |
|
|
% |
1.2 |
|
|
pts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
Revenue from services |
$ |
710.6 |
|
|
|
$ |
893.6 |
|
|
|
(20.5 |
) |
|
% |
(18.7 |
) |
|
% |
Gross profit |
|
90.5 |
|
|
|
|
119.3 |
|
|
|
(24.1 |
) |
|
|
(22.5 |
) |
|
|
SG&A expenses excluding restructuring charges |
|
100.3 |
|
|
|
|
107.2 |
|
|
|
(6.4 |
) |
|
|
(4.5 |
) |
|
|
Restructuring charges |
|
1.1 |
|
|
|
|
— |
|
|
|
NM |
|
|
|
NM |
|
|
|
Total SG&A expenses |
|
101.4 |
|
|
|
|
107.2 |
|
|
|
(5.4 |
) |
|
|
(3.5 |
) |
|
|
Earnings (loss) from operations |
|
(10.9 |
) |
|
|
|
12.1 |
|
|
|
NM |
|
|
|
|
|
Earnings (loss) from operations excluding restructuring
charges |
|
(9.8 |
) |
|
|
|
12.1 |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit rate |
|
12.7 |
|
|
% |
|
13.3 |
|
|
% |
(0.6 |
) |
|
pts. |
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
September 27, 2020 |
|
December 29, 2019 |
|
September 29, 2019 |
|
Current Assets |
|
|
|
|
|
|
|
Cash and equivalents |
$ |
248.2 |
|
|
$ |
25.8 |
|
|
$ |
22.8 |
|
|
|
Trade accounts receivable,
less allowances of |
|
|
|
|
|
|
|
$11.4, $12.9, and $12.2,
respectively |
|
1,111.4 |
|
|
|
1,282.2 |
|
|
|
1,262.3 |
|
|
|
Prepaid expenses and other
current assets |
|
71.4 |
|
|
|
76.5 |
|
|
|
80.7 |
|
|
|
Properties held for sale |
|
— |
|
|
|
21.2 |
|
|
|
— |
|
|
|
Total current assets |
|
1,431.0 |
|
|
|
1,405.7 |
|
|
|
1,365.8 |
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
Property and equipment,
net |
|
40.8 |
|
|
|
43.1 |
|
|
|
82.7 |
|
|
|
Operating lease right-of-use
assets |
|
84.0 |
|
|
|
60.4 |
|
|
|
62.2 |
|
|
|
Deferred taxes |
|
273.3 |
|
|
|
229.1 |
|
|
|
221.0 |
|
|
|
Goodwill, net |
|
— |
|
|
|
127.8 |
|
|
|
127.8 |
|
|
|
Investment in Persol
Holdings |
|
145.8 |
|
|
|
173.2 |
|
|
|
174.9 |
|
|
|
Investment in equity
affiliate |
|
115.6 |
|
|
|
117.2 |
|
|
|
120.4 |
|
|
|
Other assets |
|
301.2 |
|
|
|
324.1 |
|
|
|
321.5 |
|
|
|
Total noncurrent assets |
|
960.7 |
|
|
|
1,074.9 |
|
|
|
1,110.5 |
|
|
|
|
|
|
|
|
|
|
|
Total
Assets |
$ |
2,391.7 |
|
|
$ |
2,480.6 |
|
|
$ |
2,476.3 |
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Short-term borrowings |
$ |
0.5 |
|
|
$ |
1.9 |
|
|
$ |
17.5 |
|
|
|
Accounts payable and accrued
liabilities |
|
458.4 |
|
|
|
503.6 |
|
|
|
484.6 |
|
|
|
Operating lease
liabilities |
|
19.5 |
|
|
|
20.1 |
|
|
|
19.8 |
|
|
|
Accrued payroll and related
taxes |
|
240.7 |
|
|
|
267.6 |
|
|
|
285.3 |
|
|
|
Accrued workers' compensation
and other claims |
|
25.0 |
|
|
|
25.7 |
|
|
|
25.1 |
|
|
|
Income and other taxes |
|
52.4 |
|
|
|
65.2 |
|
|
|
67.7 |
|
|
|
Total current liabilities |
|
796.5 |
|
|
|
884.1 |
|
|
|
900.0 |
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
Operating lease
liabilities |
|
68.1 |
|
|
|
43.3 |
|
|
|
45.3 |
|
|
|
Accrued payroll and related taxes |
|
75.7 |
|
|
|
— |
|
|
|
— |
|
|
|
Accrued workers' compensation
and other claims |
|
44.4 |
|
|
|
45.8 |
|
|
|
48.7 |
|
|
|
Accrued retirement
benefits |
|
188.2 |
|
|
|
187.4 |
|
|
|
179.0 |
|
|
|
Other long-term
liabilities |
|
52.7 |
|
|
|
55.5 |
|
|
|
55.5 |
|
|
|
Total noncurrent liabilities |
|
429.1 |
|
|
|
332.0 |
|
|
|
328.5 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
Common stock |
|
40.1 |
|
|
|
40.1 |
|
|
|
40.1 |
|
|
|
Treasury stock |
|
(17.2 |
) |
|
|
(20.9 |
) |
|
|
(21.3 |
) |
|
|
Paid-in capital |
|
20.6 |
|
|
|
22.5 |
|
|
|
22.3 |
|
|
|
Earnings invested in the
business |
|
1,139.5 |
|
|
|
1,238.6 |
|
|
|
1,224.6 |
|
|
|
Accumulated other
comprehensive income (loss) |
|
(16.9 |
) |
|
|
(15.8 |
) |
|
|
(17.9 |
) |
|
|
Total stockholders' equity |
|
1,166.1 |
|
|
|
1,264.5 |
|
|
|
1,247.8 |
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders'
Equity |
$ |
2,391.7 |
|
|
$ |
2,480.6 |
|
|
$ |
2,476.3 |
|
|
|
|
|
|
|
|
|
|
|
STATISTICS: |
|
|
|
|
|
|
|
Working Capital |
$ |
634.5 |
|
|
$ |
521.6 |
|
|
$ |
465.8 |
|
|
|
Current Ratio |
|
1.8 |
|
|
|
1.6 |
|
|
|
1.5 |
|
|
|
Debt-to-capital % |
|
0.0 |
|
|
% |
0.1 |
|
|
% |
1.4 |
|
|
% |
Global Days Sales
Outstanding |
|
61 |
|
|
|
58 |
|
|
|
59 |
|
|
|
Year-to-Date Free Cash
Flow |
$ |
204.2 |
|
|
$ |
82.2 |
|
|
$ |
60.4 |
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE 39 WEEKS ENDED SEPTEMBER 27, 2020 AND SEPTEMBER 29,
2019 |
(UNAUDITED) |
(In millions of dollars) |
|
|
2020 |
|
2019 |
Cash flows from
operating activities: |
|
|
|
|
Net earnings (loss) |
$ |
(95.4 |
) |
$ |
95.4 |
|
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 |
|
18.0 |
|
|
23.8 |
|
Operating lease asset amortization |
|
15.9 |
|
|
16.9 |
|
Provision for credit losses and sales allowances |
|
10.7 |
|
|
3.2 |
|
Stock-based compensation |
|
2.9 |
|
|
4.7 |
|
(Gain) loss on investment in Persol Holdings |
|
31.4 |
|
|
(35.1 |
) |
(Gain) loss on sale of assets |
|
(32.1 |
) |
|
(12.3 |
) |
Equity in net (earnings) loss of PersolKelly Pte. Ltd. |
|
1.0 |
|
|
1.0 |
|
Other, net |
|
1.8 |
|
|
(1.0 |
) |
Changes in operating assets and liabilities, net of
acquisitions |
|
137.6 |
|
|
(22.4 |
) |
|
|
|
|
|
Net cash from operating activities |
|
216.5 |
|
|
74.2 |
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Capital expenditures |
|
(12.3 |
) |
|
(13.8 |
) |
Proceeds from sale of assets |
|
55.5 |
|
|
13.8 |
|
Acquisition of companies, net of cash received |
|
(36.4 |
) |
|
(86.4 |
) |
Proceeds from company-owned life insurance |
|
2.3 |
|
|
3.0 |
|
Proceeds from sale of Brazil, net of cash disposed |
|
1.2 |
|
|
— |
|
Loans to equity affiliate |
|
— |
|
|
(4.4 |
) |
Investment in equity securities |
|
(0.2 |
) |
|
(1.0 |
) |
Other investing activities |
|
0.2 |
|
|
— |
|
|
|
|
|
|
Net cash from (used in) investing activities |
|
10.3 |
|
|
(88.8 |
) |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Net change in short-term borrowings |
|
(1.5 |
) |
|
15.2 |
|
Financing lease payments |
|
(1.0 |
) |
|
(0.4 |
) |
Dividend payments |
|
(3.0 |
) |
|
(8.9 |
) |
Payments of tax withholding for stock awards |
|
(1.2 |
) |
|
(2.3 |
) |
Other financing
activities |
|
(0.1 |
) |
|
— |
|
|
|
|
|
|
Net cash (used in) from financing activities |
|
(6.8 |
) |
|
3.6 |
|
|
|
|
|
|
Effect of exchange
rates on cash, cash equivalents and restricted cash |
|
3.4 |
|
|
(0.5 |
) |
|
|
|
|
|
Net change in cash,
cash equivalents and restricted cash |
|
223.4 |
|
|
(11.5 |
) |
Cash, cash equivalents
and restricted cash at beginning of period |
|
31.0 |
|
|
40.1 |
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
254.4 |
|
$ |
28.6 |
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
REVENUE FROM SERVICES BY GEOGRAPHY |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
United States |
$ |
740.6 |
|
$ |
903.2 |
|
|
(18.0 |
) |
|
% |
(18.0 |
) |
|
% |
Canada |
|
30.3 |
|
|
34.6 |
|
|
(12.5 |
) |
|
|
(11.7 |
) |
|
|
Mexico |
|
27.4 |
|
|
32.4 |
|
|
(15.7 |
) |
|
|
(4.2 |
) |
|
|
Puerto Rico |
|
18.4 |
|
|
18.8 |
|
|
(2.4 |
) |
|
|
(2.4 |
) |
|
|
Brazil |
|
1.8 |
|
|
8.4 |
|
|
(78.3 |
) |
|
|
(71.0 |
) |
|
|
Total Americas
Region |
|
818.5 |
|
|
997.4 |
|
|
(17.9 |
) |
|
|
(17.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
Switzerland |
|
49.6 |
|
|
50.6 |
|
|
(2.0 |
) |
|
|
(8.5 |
) |
|
|
France |
|
48.8 |
|
|
59.7 |
|
|
(18.2 |
) |
|
|
(22.0 |
) |
|
|
Portugal |
|
31.7 |
|
|
44.0 |
|
|
(28.0 |
) |
|
|
(31.6 |
) |
|
|
Russia |
|
27.2 |
|
|
29.9 |
|
|
(8.8 |
) |
|
|
3.7 |
|
|
|
United Kingdom |
|
16.4 |
|
|
24.9 |
|
|
(34.1 |
) |
|
|
(37.1 |
) |
|
|
Italy |
|
14.5 |
|
|
18.5 |
|
|
(21.8 |
) |
|
|
(25.5 |
) |
|
|
Germany |
|
7.0 |
|
|
11.5 |
|
|
(39.7 |
) |
|
|
(42.6 |
) |
|
|
Ireland |
|
4.9 |
|
|
7.1 |
|
|
(31.6 |
) |
|
|
(35.0 |
) |
|
|
Other |
|
12.0 |
|
|
16.6 |
|
|
(27.6 |
) |
|
|
(28.9 |
) |
|
|
Total Europe
Region |
|
212.1 |
|
|
262.8 |
|
|
(19.3 |
) |
|
|
(21.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total Asia-Pacific
Region |
|
7.6 |
|
|
7.5 |
|
|
1.0 |
|
|
|
(0.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly Services,
Inc. |
$ |
1,038.2 |
|
$ |
1,267.7 |
|
|
(18.1 |
) |
|
% |
(18.2 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
REVENUE FROM SERVICES BY GEOGRAPHY |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
September Year to Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
CC % |
|
|
|
2020 |
|
2019 |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
United States |
$ |
2,369.2 |
|
$ |
2,913.4 |
|
|
(18.7 |
) |
|
% |
(18.7 |
) |
|
% |
Canada |
|
88.7 |
|
|
100.8 |
|
|
(12.0 |
) |
|
|
(10.6 |
) |
|
|
Mexico |
|
78.6 |
|
|
89.6 |
|
|
(12.3 |
) |
|
|
(1.8 |
) |
|
|
Puerto Rico |
|
56.1 |
|
|
57.6 |
|
|
(2.7 |
) |
|
|
(2.7 |
) |
|
|
Brazil |
|
17.0 |
|
|
25.1 |
|
|
(31.9 |
) |
|
|
(17.5 |
) |
|
|
Total Americas
Region |
|
2,609.6 |
|
|
3,186.5 |
|
|
(18.1 |
) |
|
|
(17.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
|
|
|
|
|
|
|
|
France |
|
141.2 |
|
|
188.6 |
|
|
(25.1 |
) |
|
|
(25.1 |
) |
|
|
Switzerland |
|
141.2 |
|
|
150.0 |
|
|
(5.9 |
) |
|
|
(10.1 |
) |
|
|
Portugal |
|
99.1 |
|
|
135.5 |
|
|
(26.9 |
) |
|
|
(26.7 |
) |
|
|
Russia |
|
88.6 |
|
|
84.1 |
|
|
5.3 |
|
|
|
14.1 |
|
|
|
United Kingdom |
|
56.5 |
|
|
81.6 |
|
|
(30.7 |
) |
|
|
(30.4 |
) |
|
|
Italy |
|
42.5 |
|
|
59.8 |
|
|
(29.0 |
) |
|
|
(28.9 |
) |
|
|
Germany |
|
22.1 |
|
|
32.5 |
|
|
(32.1 |
) |
|
|
(31.9 |
) |
|
|
Ireland |
|
14.0 |
|
|
28.1 |
|
|
(50.2 |
) |
|
|
(50.3 |
) |
|
|
Other |
|
38.7 |
|
|
51.5 |
|
|
(24.9 |
) |
|
|
(21.9 |
) |
|
|
Total Europe
Region |
|
643.9 |
|
|
811.7 |
|
|
(20.7 |
) |
|
|
(20.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total Asia-Pacific
Region |
|
21.1 |
|
|
19.6 |
|
|
7.6 |
|
|
|
11.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Kelly Services,
Inc. |
$ |
3,274.6 |
|
$ |
4,017.8 |
|
|
(18.5 |
) |
|
% |
(18.0 |
) |
|
% |
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES |
THIRD QUARTER |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
2020 |
|
2019 |
SG&A
Expenses: |
As Reported |
|
Customer Dispute(4) |
|
Restructuring(5) |
|
Adjusted |
|
Adjusted |
Professional & Industrial |
$ |
65.3 |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
$ |
65.4 |
|
|
$ |
77.7 |
|
Science, Engineering &
Technology |
31.3 |
|
|
— |
|
|
— |
|
|
31.3 |
|
|
36.0 |
|
Education |
11.6 |
|
|
— |
|
|
— |
|
|
11.6 |
|
|
13.8 |
|
Outsourcing &
Consulting |
25.4 |
|
|
— |
|
|
— |
|
|
25.4 |
|
|
29.1 |
|
International |
39.9 |
|
|
(9.5 |
) |
|
— |
|
|
30.4 |
|
|
35.3 |
|
Corporate |
19.9 |
|
|
— |
|
|
— |
|
|
19.9 |
|
|
18.8 |
|
Intersegment |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total Company |
$ |
193.4 |
|
|
$ |
(9.5 |
) |
|
$ |
0.1 |
|
|
$ |
184.0 |
|
|
$ |
210.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
Earnings (loss) from
Operations: |
As Reported |
|
Customer Dispute(4) |
|
Restructuring(5) |
|
Adjusted |
|
Adjusted |
Professional & Industrial |
$ |
11.8 |
|
|
$ |
— |
|
|
$ |
(0.1 |
) |
|
$ |
11.7 |
|
|
$ |
14.1 |
|
Science, Engineering &
Technology |
19.4 |
|
|
— |
|
|
— |
|
|
19.4 |
|
|
22.3 |
|
Education |
(7.5 |
) |
|
— |
|
|
— |
|
|
(7.5 |
) |
|
(5.2 |
) |
Outsourcing &
Consulting |
3.7 |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
0.4 |
|
International |
(9.9 |
) |
|
9.5 |
|
|
— |
|
|
(0.4 |
) |
|
4.2 |
|
Corporate |
(19.9 |
) |
|
— |
|
|
— |
|
|
(19.9 |
) |
|
(18.8 |
) |
Total Company |
$ |
(2.4 |
) |
|
$ |
9.5 |
|
|
$ |
(0.1 |
) |
|
$ |
7.0 |
|
|
$ |
17.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES |
THIRD QUARTER |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
2019 |
SG&A
Expenses: |
As Reported |
|
Restructuring(5) |
|
Adjusted |
Professional & Industrial |
$ |
77.6 |
|
|
$ |
0.1 |
|
|
$ |
77.7 |
|
Science, Engineering &
Technology |
36.0 |
|
|
— |
|
|
36.0 |
|
Education |
13.8 |
|
|
— |
|
|
13.8 |
|
Outsourcing &
Consulting |
29.1 |
|
|
— |
|
|
29.1 |
|
International |
35.3 |
|
|
— |
|
|
35.3 |
|
Corporate |
18.8 |
|
|
— |
|
|
18.8 |
|
Intersegment |
— |
|
|
— |
|
|
— |
|
Total Company |
$ |
210.6 |
|
|
$ |
0.1 |
|
|
$ |
210.7 |
|
|
|
|
|
|
|
|
2019 |
Earnings (loss) from
Operations: |
As Reported |
|
Restructuring(5) |
|
Adjusted |
Professional &
Industrial |
$ |
14.2 |
|
|
$ |
(0.1 |
) |
|
$ |
14.1 |
|
Science, Engineering &
Technology |
22.3 |
|
|
— |
|
|
22.3 |
|
Education |
(5.2 |
) |
|
— |
|
|
(5.2 |
) |
Outsourcing &
Consulting |
0.4 |
|
|
— |
|
|
0.4 |
|
International |
4.2 |
|
|
— |
|
|
4.2 |
|
Corporate |
(18.8 |
) |
|
— |
|
|
(18.8 |
) |
Total Company |
$ |
17.1 |
|
|
$ |
(0.1 |
) |
|
$ |
17.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES |
SEPTEMBER YEAR TO DATE |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
SG&A
Expenses: |
As Reported |
|
Goodwill impairment(1) |
|
Gain on saleof assets(3) |
|
Customer Dispute(4) |
|
Restructuring(5) |
|
Adjusted |
|
Adjusted |
Professional & Industrial |
$ |
210.4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(4.3 |
) |
|
$ |
206.1 |
|
|
$ |
241.7 |
|
Science, Engineering &
Technology |
99.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
|
98.6 |
|
|
111.0 |
|
Education |
37.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.8 |
) |
|
36.9 |
|
|
41.5 |
|
Outsourcing &
Consulting |
79.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
79.1 |
|
|
90.9 |
|
International |
101.4 |
|
|
— |
|
|
— |
|
|
(9.5 |
) |
|
(1.1 |
) |
|
90.8 |
|
|
107.2 |
|
Corporate |
63.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
(1.7 |
) |
|
61.6 |
|
|
69.0 |
|
Total Company |
$ |
591.0 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(9.5 |
) |
|
$ |
(8.4 |
) |
|
$ |
573.1 |
|
|
$ |
661.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
Earnings (loss) from
Operations: |
As Reported |
|
Goodwill impairment(1) |
|
Gain on sale of assets(3) |
|
Customer Dispute(4) |
|
Restructuring(5) |
|
Adjusted |
|
Adjusted |
Professional & Industrial |
$ |
30.7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4.3 |
|
|
$ |
35.0 |
|
|
$ |
49.9 |
|
Science, Engineering &
Technology |
56.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.5 |
|
|
57.4 |
|
|
60.8 |
|
Education |
(8.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
0.8 |
|
|
(8.1 |
) |
|
8.4 |
|
Outsourcing &
Consulting |
8.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8.0 |
|
|
(0.2 |
) |
International |
(10.9 |
) |
|
— |
|
|
— |
|
|
9.5 |
|
|
1.1 |
|
|
(0.3 |
) |
|
12.1 |
|
Corporate |
(178.9 |
) |
|
147.7 |
|
|
(32.1 |
) |
|
— |
|
|
1.7 |
|
|
(61.6 |
) |
|
(69.0 |
) |
Total Company |
$ |
(103.1 |
) |
|
$ |
147.7 |
|
|
$ |
(32.1 |
) |
|
$ |
9.5 |
|
|
$ |
8.4 |
|
|
$ |
30.4 |
|
|
$ |
62.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES |
SEPTEMBER YEAR TO DATE |
(UNAUDITED) |
(In millions of dollars) |
|
|
|
|
|
|
|
|
|
2019 |
SG&A
Expenses: |
As Reported |
|
Gain on saleof assets(3) |
|
Restructuring(5) |
|
Adjusted |
Professional & Industrial |
$ |
246.9 |
|
|
$ |
— |
|
|
$ |
(5.2 |
) |
|
$ |
241.7 |
|
Science, Engineering &
Technology |
111.4 |
|
|
— |
|
|
(0.4 |
) |
|
111.0 |
|
Education |
41.5 |
|
|
— |
|
|
— |
|
|
41.5 |
|
Outsourcing &
Consulting |
90.9 |
|
|
— |
|
|
— |
|
|
90.9 |
|
International |
107.2 |
|
|
— |
|
|
— |
|
|
107.2 |
|
Corporate |
69.0 |
|
|
— |
|
|
— |
|
|
69.0 |
|
Intersegment |
— |
|
|
— |
|
|
— |
|
|
— |
|
Total Company |
$ |
666.9 |
|
|
$ |
— |
|
|
$ |
(5.6 |
) |
|
$ |
661.3 |
|
|
|
|
|
|
|
|
|
|
2019 |
Earnings (loss) from
Operations: |
As Reported |
|
Gain on saleof assets(3) |
|
Restructuring(5) |
|
Adjusted |
Professional &
Industrial |
$ |
44.7 |
|
|
$ |
— |
|
|
$ |
5.2 |
|
|
$ |
49.9 |
|
Science, Engineering &
Technology |
60.4 |
|
|
— |
|
|
0.4 |
|
|
60.8 |
|
Education |
8.4 |
|
|
— |
|
|
— |
|
|
8.4 |
|
Outsourcing &
Consulting |
(0.2 |
) |
|
— |
|
|
— |
|
|
(0.2 |
) |
International |
12.1 |
|
|
— |
|
|
— |
|
|
12.1 |
|
Corporate |
(56.7 |
) |
|
(12.3 |
) |
|
— |
|
|
(69.0 |
) |
Total Company |
$ |
68.7 |
|
|
$ |
(12.3 |
) |
|
$ |
5.6 |
|
|
$ |
62.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
RECONCILIATION OF NON-GAAP MEASURES
(continued) |
(UNAUDITED) |
(In millions of dollars except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
September Year to Date |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Income tax expense (benefit) |
|
$ |
(1.2 |
) |
|
$ |
(12.8 |
) |
|
$ |
(36.5 |
) |
|
$ |
6.3 |
|
Taxes on goodwill impairment
charge(1) |
|
— |
|
|
— |
|
|
23.0 |
|
|
— |
|
Taxes on investment in Persol
Holdings(2) |
|
(5.2 |
) |
|
12.1 |
|
|
9.6 |
|
|
(10.7 |
) |
Taxes on gain on sale of
assets(3) |
|
— |
|
|
— |
|
|
(8.1 |
) |
|
(3.3 |
) |
Taxes on customer
dispute(4) |
|
2.8 |
|
|
— |
|
|
2.8 |
|
|
— |
|
Taxes on restructuring
charges(5) |
|
— |
|
|
— |
|
|
2.2 |
|
|
1.5 |
|
Adjusted income tax expense
(benefit) |
|
$ |
(3.6 |
) |
|
$ |
(0.7 |
) |
|
$ |
(7.0 |
) |
|
$ |
(6.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
September Year to Date |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net earnings (loss) |
|
$ |
16.7 |
|
|
$ |
(10.5 |
) |
|
$ |
(95.4 |
) |
|
$ |
95.4 |
|
Goodwill impairment charge,
net of taxes(1) |
|
— |
|
|
— |
|
|
124.7 |
|
|
— |
|
(Gain) loss on investment in
Persol Holdings, net of taxes(2) |
|
(11.6 |
) |
|
27.2 |
|
|
21.8 |
|
|
(24.4 |
) |
(Gain) loss on sale of assets,
net of taxes(3) |
|
0.1 |
|
|
— |
|
|
(23.9 |
) |
|
(9.0 |
) |
Customer dispute, net of
taxes(4) |
|
6.7 |
|
|
— |
|
|
6.7 |
|
|
— |
|
Restructuring charges, net of
taxes(5) |
|
(0.1 |
) |
|
(0.1 |
) |
|
6.2 |
|
|
4.1 |
|
Adjusted net earnings |
|
$ |
11.8 |
|
|
$ |
16.6 |
|
|
$ |
40.1 |
|
|
$ |
66.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
September Year to Date |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
Per Share |
|
Per Share |
Net earnings (loss) |
|
$ |
0.42 |
|
|
$ |
(0.27 |
) |
|
$ |
(2.43 |
) |
|
$ |
2.41 |
|
Goodwill impairment charge,
net of taxes(1) |
|
— |
|
|
— |
|
|
3.18 |
|
|
— |
|
(Gain) loss on investment in
Persol Holdings, net of taxes(2) |
|
(0.29 |
) |
|
0.70 |
|
|
0.56 |
|
|
(0.62 |
) |
Gain on sale of assets, net of
taxes(3) |
|
— |
|
|
— |
|
|
(0.61 |
) |
|
(0.23 |
) |
Customer dispute, net of
taxes(4) |
|
0.17 |
|
|
— |
|
|
0.17 |
|
|
— |
|
Restructuring charges, net of
taxes(5) |
|
— |
|
|
— |
|
|
0.16 |
|
|
0.11 |
|
Adjusted net earnings |
|
$ |
0.29 |
|
|
$ |
0.43 |
|
|
$ |
1.02 |
|
|
$ |
1.67 |
|
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 and 2019 gains on sale of
assets, the 2020 customer dispute, and the 2020 and 2019
restructuring charges, 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 primarily represents
the excess of the proceeds over the cost of the headquarters
properties sold during the first quarter of 2020. Gain on
sale of assets in 2019 primarily represents the excess of the
proceeds over the cost of an unused parcel of land located near the
Company headquarters sold during the second quarter of 2019.
(4) Customer dispute represents a non-cash charge in
Mexico to increase the reserve against a long-term receivable from
a former customer based on an updated probability of loss
assessment.
(5) Restructuring charges in 2020 represent severance
costs and lease terminations in preparation for the new operating
model adopted in the third quarter of 2020. Restructuring
charges in 2019 represent severance costs primarily related to U.S.
branch-based staffing operations.
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