MEDIA CONTACT: | ANALYST CONTACT: | ||
Jane Stehney | James Polehna | ||
(248) 765-6864 | (248) 244-4586 | ||
stehnja@kellyservices.com | james.polehna@kellyservices.com |
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||
FOR THE 13 WEEKS ENDED APRIL 3, 2022 AND APRIL 4, 2021 | |||||||||||
(UNAUDITED) | |||||||||||
(In millions of dollars except per share data) | |||||||||||
% | CC % | ||||||||||
2022 | 2021 | Change | Change | Change | |||||||
Revenue from services | $ | 1,296.4 | $ | 1,205.9 | $ | 90.5 | 7.5 | % | 9.0 | % | |
Cost of services | 1,037.8 | 992.6 | 45.2 | 4.6 | |||||||
Gross profit | 258.6 | 213.3 | 45.3 | 21.2 | 22.6 | ||||||
Selling, general and administrative expenses | 235.2 | 202.7 | 32.5 | 16.0 | 17.2 | ||||||
Earnings (loss) from operations | 23.4 | 10.6 | 12.8 | 120.5 | |||||||
Gain (loss) on investment in Persol Holdings | (67.2) | 30.0 | (97.2) | NM | |||||||
Loss on currency translation from liquidation of subsidiary(1) | (20.4) | — | (20.4) | NM | |||||||
Other income (expense), net | 2.8 | (3.4) | 6.2 | 181.7 | |||||||
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate | (61.4) | 37.2 | (98.6) | NM | |||||||
Income tax expense (benefit) | (13.0) | 10.5 | (23.5) | (223.9) | |||||||
Net earnings (loss) before equity in net earnings (loss) of affiliate | (48.4) | 26.7 | (75.1) | NM | |||||||
Equity in net earnings (loss) of affiliate | 0.8 | (1.1) | 1.9 | NM | |||||||
Net earnings (loss) | $ | (47.6) | $ | 25.6 | $ | (73.2) | NM | ||||
Basic earnings (loss) per share | $ | (1.23) | $ | 0.65 | $ | (1.88) | NM | ||||
Diluted earnings (loss) per share | $ | (1.23) | $ | 0.64 | $ | (1.87) | NM | ||||
STATISTICS: | |||||||||||
Permanent placement revenue (included in revenue from services) | $ | 26.6 | $ | 16.0 | $ | 10.6 | 66.2 | % | 68.9 | % | |
Gross profit rate | 19.9 | % | 17.7 | % | 2.2 | pts. | |||||
Conversion rate | 9.1 | % | 5.0 | % | 4.1 | pts. | |||||
Adjusted EBITDA | $ | 31.6 | $ | 16.9 | $ | 14.7 | |||||
Adjusted EBITDA margin | 2.4 | % | 1.4 | % | 1.0 | pts. | |||||
Effective income tax rate | 21.2 | % | 28.3 | % | (7.1) | pts. | |||||
Average number of shares outstanding (millions): | |||||||||||
Basic | 38.6 | 39.3 | |||||||||
Diluted | 38.6 | 39.5 |
(1) Subsequent to the sale of the Persol Holdings investment, the Company commenced the dissolution process of the Kelly Services Japan subsidiary, which was considered substantially liquidated as of the first quarter-end 2022, resulting in the recognition of the $20.4 million loss on currency translation from liquidation of this subsidiary in the first quarter of 2022. |
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars) | ||||||||||
First Quarter | ||||||||||
% | CC % | |||||||||
2022 | 2021 | Change | Change | |||||||
Professional & Industrial | ||||||||||
Revenue from services | $ | 444.3 | $ | 467.6 | (5.0) | % | (5.0) | % | ||
Gross profit | 83.1 | 75.9 | 9.4 | 9.4 | ||||||
Total SG&A expenses | 71.4 | 69.4 | 2.8 | 2.8 | ||||||
Earnings (loss) from operations | 11.7 | 6.5 | 79.6 | |||||||
Gross profit rate | 18.7 | % | 16.2 | % | 2.5 | pts. | ||||
Science, Engineering & Technology | ||||||||||
Revenue from services | $ | 317.1 | $ | 254.7 | 24.5 | % | 24.6 | % | ||
Gross profit | 73.8 | 53.2 | 38.8 | 38.9 | ||||||
Total SG&A expenses | 53.2 | 35.7 | 49.0 | 49.1 | ||||||
Earnings (loss) from operations | 20.6 | 17.5 | 18.0 | |||||||
Gross profit rate | 23.3 | % | 20.9 | % | 2.4 | pts. | ||||
Education | ||||||||||
Revenue from services | $ | 173.4 | $ | 111.6 | 55.4 | % | 55.4 | % | ||
Gross profit | 26.6 | 17.2 | 54.8 | 54.8 | ||||||
Total SG&A expenses | 18.6 | 14.2 | 31.2 | 31.2 | ||||||
Earnings (loss) from operations | 8.0 | 3.0 | 166.1 | |||||||
Gross profit rate | 15.3 | % | 15.4 | % | (0.1) | pts. | ||||
Outsourcing & Consulting | ||||||||||
Revenue from services | $ | 109.1 | $ | 99.3 | 9.8 | % | 10.5 | % | ||
Gross profit | 37.3 | 31.3 | 19.0 | 20.3 | ||||||
Total SG&A expenses | 34.3 | 28.4 | 20.5 | 21.4 | ||||||
Earnings (loss) from operations | 3.0 | 2.9 | 4.3 | |||||||
Gross profit rate | 34.2 | % | 31.5 | % | 2.7 | pts. | ||||
International | ||||||||||
Revenue from services | $ | 252.8 | $ | 272.9 | (7.4) | % | (1.0) | % | ||
Gross profit | 37.8 | 35.7 | 6.0 | 12.9 | ||||||
Total SG&A expenses | 33.2 | 33.1 | 0.4 | 6.6 | ||||||
Earnings (loss) from operations | 4.6 | 2.6 | 75.2 | |||||||
Gross profit rate | 15.0 | % | 13.1 | % | 1.9 | pts. |
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED) | |||||||
(In millions of dollars) | |||||||
April 3, 2022 | January 2, 2022 | April 4, 2021 | |||||
Current Assets | |||||||
Cash and equivalents | $ | 230.3 | $ | 112.7 | $ | 239.4 | |
Trade accounts receivable, less allowances of | |||||||
$12.2, $12.6, and $12.6, respectively | 1,523.8 | 1,423.2 | 1,279.7 | ||||
Prepaid expenses and other current assets | 72.2 | 52.8 | 76.5 | ||||
Total current assets | 1,826.3 | 1,588.7 | 1,595.6 | ||||
Noncurrent Assets | |||||||
Property and equipment, net | 32.0 | 35.3 | 38.9 | ||||
Operating lease right-of-use assets | 71.8 | 75.8 | 79.0 | ||||
Deferred taxes | 303.6 | 302.8 | 286.4 | ||||
Goodwill, net | 155.8 | 114.8 | 3.5 | ||||
Investment in Persol Holdings | — | 264.3 | 181.7 | ||||
Investment in equity affiliate | — | 123.4 | 118.7 | ||||
Other assets | 396.1 | 389.1 | 306.3 | ||||
Total noncurrent assets | 959.3 | 1,305.5 | 1,014.5 | ||||
Total Assets | $ | 2,785.6 | $ | 2,894.2 | $ | 2,610.1 | |
Current Liabilities | |||||||
Short-term borrowings | $ | 0.2 | $ | — | $ | 1.1 | |
Accounts payable and accrued liabilities | 711.6 | 687.2 | 554.3 | ||||
Operating lease liabilities | 16.1 | 17.5 | 18.8 | ||||
Accrued payroll and related taxes | 338.9 | 318.4 | 309.9 | ||||
Accrued workers' compensation and other claims | 20.4 | 20.8 | 21.9 | ||||
Income and other taxes | 109.1 | 51.3 | 56.9 | ||||
Total current liabilities | 1,196.3 | 1,095.2 | 962.9 | ||||
Noncurrent Liabilities | |||||||
Operating lease liabilities | 58.7 | 61.4 | 63.9 | ||||
Accrued payroll and related taxes | — | 57.6 | 58.5 | ||||
Accrued workers' compensation and other claims | 36.4 | 37.0 | 40.7 | ||||
Accrued retirement benefits | 205.1 | 220.0 | 204.7 | ||||
Other long-term liabilities | 15.6 | 86.8 | 63.7 | ||||
Total noncurrent liabilities | 315.8 | 462.8 | 431.5 | ||||
Stockholders' Equity | |||||||
Common stock | 38.5 | 40.1 | 40.1 | ||||
Treasury stock | (13.0) | (15.1) | (15.7) | ||||
Paid-in capital | 22.8 | 23.9 | 20.6 | ||||
Earnings invested in the business | 1,239.9 | 1,315.0 | 1,188.5 | ||||
Accumulated other comprehensive income (loss) | (14.7) | (27.7) | (17.8) | ||||
Total stockholders' equity | 1,273.5 | 1,336.2 | 1,215.7 | ||||
Total Liabilities and Stockholders' Equity | $ | 2,785.6 | $ | 2,894.2 | $ | 2,610.1 | |
STATISTICS: | |||||||
Working Capital | $ | 630.0 | $ | 493.5 | $ | 632.7 | |
Current Ratio | 1.5 | 1.5 | 1.7 | ||||
Debt-to-capital % | 0.0 | % | 0.0 | % | 0.1 | % | |
Global Days Sales Outstanding | 62 | 60 | 60 | ||||
Year-to-Date Free Cash Flow | $ | (107.8) | $ | 73.8 | $ | 7.8 |
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
FOR THE 13 WEEKS ENDED APRIL 3, 2022 AND APRIL 4, 2021 | ||||
(UNAUDITED) | ||||
(In millions of dollars) | ||||
2022 | 2021 | |||
Cash flows from operating activities: | ||||
Net earnings (loss) | $ | (47.6) | $ | 25.6 |
Adjustments to reconcile net earnings (loss) to net cash from operating activities: | ||||
Depreciation and amortization | 7.5 | 5.9 | ||
Operating lease asset amortization | 5.0 | 5.2 | ||
Provision for credit losses and sales allowances | 0.8 | (0.1) | ||
Stock-based compensation | 2.1 | 1.4 | ||
(Gain) loss on investment in Persol Holdings | 67.2 | (30.0) | ||
Loss on currency translation from liquidation of subsidiary | 20.4 | — | ||
Gain on foreign currency remeasurement | (5.5) | — | ||
Equity in net (earnings) loss of PersolKelly Pte. Ltd. | (0.8) | 1.1 | ||
Other, net | 0.8 | 1.3 | ||
Changes in operating assets and liabilities, net of acquisitions | (156.0) | 0.1 | ||
Net cash (used in) from operating activities | (106.1) | 10.5 | ||
Cash flows from investing activities: | ||||
Capital expenditures | (1.7) | (2.7) | ||
Acquisition of companies, net of cash received | (58.3) | — | ||
Proceeds from company-owned life insurance | — | 10.4 | ||
Proceeds from sale of Persol Holdings investment | 196.9 | — | ||
Proceeds from sale of equity method investment | 119.5 | — | ||
Other investing activities | 0.7 | 0.2 | ||
Net cash from investing activities | 257.1 | 7.9 | ||
Cash flows from financing activities: | ||||
Net change in short-term borrowings | 0.2 | 0.8 | ||
Financing lease payments | (0.3) | (0.2) | ||
Dividend payments | (1.9) | — | ||
Payments of tax withholding for stock awards | (0.8) | (0.5) | ||
Buyback of common shares | (27.2) | — | ||
Contingent consideration payments | (0.7) | — | ||
Net cash (used in) from financing activities | (30.7) | 0.1 | ||
Effect of exchange rates on cash, cash equivalents and restricted cash | (1.7) | (1.4) | ||
Net change in cash, cash equivalents and restricted cash | 118.6 | 17.1 | ||
Cash, cash equivalents and restricted cash at beginning of period | 119.5 | 228.1 | ||
Cash, cash equivalents and restricted cash at end of period | $ | 238.1 | $ | 245.2 |
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||
REVENUE FROM SERVICES BY GEOGRAPHY | |||||||||
(UNAUDITED) | |||||||||
(In millions of dollars) | |||||||||
First Quarter | |||||||||
% | CC % | ||||||||
2022 | 2021 | Change | Change | ||||||
Americas | |||||||||
United States | $ | 956.6 | $ | 858.5 | 11.4 | % | 11.4 | % | |
Canada | 39.1 | 34.1 | 14.8 | 14.9 | |||||
Puerto Rico | 27.6 | 24.2 | 14.0 | 14.0 | |||||
Mexico | 10.3 | 34.6 | (70.1) | (70.0) | |||||
Total Americas Region | 1,033.6 | 951.4 | 8.7 | 8.7 | |||||
Europe | |||||||||
Switzerland | 55.0 | 52.7 | 4.3 | 6.3 | |||||
France | 54.6 | 54.3 | 0.6 | 8.0 | |||||
Portugal | 41.9 | 43.7 | (4.2) | 2.9 | |||||
Russia | 29.7 | 32.6 | (9.1) | 6.3 | |||||
Italy | 19.5 | 18.1 | 7.6 | 15.5 | |||||
United Kingdom | 15.0 | 17.0 | (11.9) | (9.3) | |||||
Other | 36.3 | 27.8 | 30.8 | 40.3 | |||||
Total Europe Region | 252.0 | 246.2 | 2.3 | 9.5 | |||||
Total Asia-Pacific Region | 10.8 | 8.3 | 29.6 | 35.4 | |||||
Total Kelly Services, Inc. | $ | 1,296.4 | $ | 1,205.9 | 7.5 | % | 9.0 | % |
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||
RECONCILIATION OF NON-GAAP MEASURES | ||||
(UNAUDITED) | ||||
(In millions of dollars except per share data) | ||||
First Quarter | ||||
2022 | 2021 | |||
Income tax expense (benefit) | $ (13.0) | $ 10.5 | ||
Taxes on investment in Persol Holdings(1) | 18.4 | (9.2) | ||
Taxes on foreign currency matters(2) | (1.5) | — | ||
Adjusted income tax expense (benefit) | $ 3.9 | $ 1.3 | ||
First Quarter | ||||
2022 | 2021 | |||
Net earnings (loss) | $ (47.6) | $ 25.6 | ||
(Gain) loss on investment in Persol Holdings, net of taxes(1) | 48.8 | (20.8) | ||
Loss on foreign currency matters, net of taxes(2) | 16.4 | — | ||
Adjusted net earnings | $ 17.6 | $ 4.8 | ||
First Quarter | ||||
2022 | 2021 | |||
Per Share | ||||
Net earnings (loss) | $ (1.23) | $ 0.64 | ||
(Gain) loss on investment in Persol Holdings, net of taxes(1) | 1.26 | (0.52) | ||
Loss on foreign currency matters, net of taxes(2) | 0.43 | — | ||
Adjusted net earnings | $ 0.46 | $ 0.12 |
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 SUBSIDIARIES | |||
RECONCILIATION OF NON-GAAP MEASURES | |||
(UNAUDITED) | |||
(In millions of dollars) | |||
First Quarter | |||
2022 | 2021 | ||
Net earnings (loss) | $ (47.6) | $ 25.6 | |
Other (income) expense, net(2) | (2.8) | 3.4 | |
Income tax expense (benefit) | (13.0) | 10.5 | |
Depreciation and amortization | 8.2 | 6.3 | |
EBITDA | (55.2) | 45.8 | |
Equity in net (earnings) loss of affiliate | (0.8) | 1.1 | |
(Gain) loss on investment in Persol Holdings(1) | 67.2 | (30.0) | |
Loss on foreign currency matters(2) | 20.4 | — | |
Adjusted EBITDA | $ 31.6 | $ 16.9 | |
Adjusted EBITDA margin | 2.4% | 1.4% |
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(1) In 2022, the loss on the investment in Persol Holdings represents the change in fair value up until the date of the sale of the investment on February 15, 2022 as well as the loss on the sale of the investment during the period presented and the related tax benefit. In 2021, the gain on the investment in Persol Holdings represents the change in fair value of the investment during the period presented and the related tax expense.
(2) In 2022, the loss on foreign currency matters includes a $20.4 million loss on currency translation resulting from the substantially complete liquidation of the Company's Japan entity, partially offset by a $5.5 million foreign exchange gain on the Japan entity's USD-denominated cash balance. The foreign exchange gain is included in other (income) expense, net in the EBITDA calculation.
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