Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - KELLY SERVICES INC | a3auditq216earningsrelea.htm |
| 8-K - 8-K - KELLY SERVICES INC | form8-k2016secondquarterco.htm |
Exhibit 99.1
KELLY SERVICES® REPORTS
SECOND QUARTER 2016 EARNINGS
AND ANNOUNCES QUARTERLY DIVIDEND
Second Quarter Highlights
• | Total Revenue declines 0.7% (up 0.6% in constant currency) |
• | Gross Profit up 3.7% (up 4.8% in constant currency); Gross Profit Rate up 70 basis points |
• | Earnings per share of $0.23 (Adjusted EPS of $0.29) versus $0.18, a 28% increase |
• | TS Kelly Asia Pacific Joint Venture completed, forming one of the region’s largest workforce solutions providers |
TROY, MI (August 10, 2016) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the second quarter of 2016.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2016 totaled $1.4 billion, a 0.7% decrease (a 0.6% increase on a constant currency basis) compared to the corresponding quarter of 2015.
Earnings from operations for the second quarter of 2016 totaled $9.9 million, compared to $11.5 million reported for the second quarter of 2015. Included in the results of operations in the second quarter of 2016 are restructuring charges of $3.4 million. Excluding the restructuring charges, earnings from operations were $13.3 million in the second quarter of 2016.
Diluted earnings per share in the second quarter of 2016 were $0.23 compared to $0.18 per share in the second quarter of 2015. Excluding restructuring charges, earnings per share were $0.29 in the second quarter of 2016.
Commenting on the second quarter, Camden stated, “We are pleased with Kelly’s ability to deliver strategic growth, improve Gross Profit, and increase shareholder value in the second quarter. The finalization of our Joint Venture in APAC positions us for growth in staffing-related services while enabling us to accelerate investments in OCG, which remains a Kelly-owned entity.” Referring to the apparent slow-down in U.S. staffing demand facing the workforce solutions industry in the second quarter, Camden commented, “Kelly responded quickly to flat top-line growth in the Americas by managing Gross Profit, adjusting our operating costs, and delivering solid leverage. We remain committed to increasing shareholder value by efficiently delivering the best workforce solutions for our customers around the world.”
Kelly also reported that on August 9, its board of directors declared a dividend of $0.075 per share. The dividend is payable September 2, 2016 to shareholders of record as of the close of business on August 23, 2016.
In conjunction with its second 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 August 10 to review the results and answer questions. The call may be accessed in one of the following ways:
1
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, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual 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, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, disability and medical benefit plans, the impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws ), the risk of additional tax or unclaimed property liabilities in excess of our estimates, 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. In 2016, the Company is commemorating 70 years of industry leadership. Kelly® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. Revenue in 2015 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.
KLYA-FIN
# # #
ANALYST CONTACT: | MEDIA CONTACT: |
James Polehna | Jane Stehney |
(248) 244-4586 | (248) 244-5630 |
james_polehna@kellyservices.com | jane_stehney@kellyservices.com |
2
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 13 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2016 | 2015 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 1,375.5 | $ | 1,385.0 | $ | (9.5 | ) | (0.7 | ) | % | 0.6 | % | ||||
Cost of services | 1,145.0 | 1,162.7 | (17.7 | ) | (1.5 | ) | ||||||||||
Gross profit | 230.5 | 222.3 | 8.2 | 3.7 | 4.8 | |||||||||||
Selling, general and administrative expenses | 220.6 | 210.8 | 9.8 | 4.6 | 5.7 | |||||||||||
Earnings from operations | 9.9 | 11.5 | (1.6 | ) | (13.9 | ) | ||||||||||
Other expense, net | 0.2 | 1.0 | (0.8 | ) | (74.8 | ) | ||||||||||
Earnings before taxes | 9.7 | 10.5 | (0.8 | ) | (8.2 | ) | ||||||||||
Income tax expense | 0.8 | 3.7 | (2.9 | ) | (78.5 | ) | ||||||||||
Net earnings | $ | 8.9 | $ | 6.8 | $ | 2.1 | 30.2 | % | ||||||||
Basic earnings per share | $ | 0.23 | $ | 0.18 | $ | 0.05 | 27.8 | % | ||||||||
Diluted earnings per share | $ | 0.23 | $ | 0.18 | $ | 0.05 | 27.8 | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 16.8 | % | 16.1 | % | 0.7 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 16.0 | 15.2 | 0.8 | |||||||||||||
% of gross profit | 95.7 | 94.8 | 0.9 | |||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 0.7 | 0.8 | (0.1 | ) | ||||||||||||
Earnings before taxes | 0.7 | 0.8 | (0.1 | ) | ||||||||||||
Net earnings | 0.6 | 0.5 | 0.1 | |||||||||||||
Effective income tax rate | 8.3 | % | 35.3 | % | (27.0 | ) | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 38.0 | 37.7 | ||||||||||||||
Diluted | 38.3 | 37.8 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 39.0 | 38.8 | ||||||||||||||
Diluted | 39.2 | 38.8 | ||||||||||||||
3
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2016 | 2015 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 2,724.6 | $ | 2,705.6 | $ | 19.0 | 0.7 | % | 2.5 | % | ||||||
Cost of services | 2,261.4 | 2,263.0 | (1.6 | ) | (0.1 | ) | ||||||||||
Gross profit | 463.2 | 442.6 | 20.6 | 4.6 | 6.2 | |||||||||||
Selling, general and administrative expenses | 438.6 | 419.0 | 19.6 | 4.7 | 6.2 | |||||||||||
Earnings from operations | 24.6 | 23.6 | 1.0 | 4.2 | ||||||||||||
Other expense, net | 1.0 | 3.5 | (2.5 | ) | (70.9 | ) | ||||||||||
Earnings before taxes | 23.6 | 20.1 | 3.5 | 17.2 | ||||||||||||
Income tax expense | 3.5 | 9.6 | (6.1 | ) | (63.4 | ) | ||||||||||
Net earnings | $ | 20.1 | $ | 10.5 | $ | 9.6 | 90.5 | % | ||||||||
Basic earnings per share | $ | 0.52 | $ | 0.27 | $ | 0.25 | 92.6 | % | ||||||||
Diluted earnings per share | $ | 0.51 | $ | 0.27 | $ | 0.24 | 88.9 | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 17.0 | % | 16.4 | % | 0.6 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 16.1 | 15.5 | 0.6 | |||||||||||||
% of gross profit | 94.7 | 94.7 | — | |||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 0.9 | 0.9 | — | |||||||||||||
Earnings before taxes | 0.9 | 0.7 | 0.2 | |||||||||||||
Net earnings | 0.7 | 0.4 | 0.3 | |||||||||||||
Effective income tax rate | 14.9 | % | 47.6 | % | (32.7 | ) | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 38.0 | 37.7 | ||||||||||||||
Diluted | 38.2 | 37.8 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 39.0 | 38.8 | ||||||||||||||
Diluted | 39.2 | 38.8 | ||||||||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Second Quarter | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 635.3 | $ | 651.3 | (2.5 | ) | % | (1.3 | ) | % | ||||
Staffing fee-based income included in revenue from services | 3.6 | 3.5 | 2.9 | 3.7 | ||||||||||
Gross profit | 98.9 | 95.9 | 3.2 | 4.2 | ||||||||||
Gross profit rate | 15.6 | % | 14.7 | % | 0.9 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 241.6 | $ | 246.2 | (1.9 | ) | % | (1.7 | ) | % | ||||
Staffing fee-based income included in revenue from services | 4.3 | 4.9 | (11.1 | ) | (10.8 | ) | ||||||||
Gross profit | 41.3 | 42.1 | (2.0 | ) | (1.9 | ) | ||||||||
Gross profit rate | 17.1 | % | 17.1 | % | — | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 876.9 | $ | 897.5 | (2.3 | ) | % | (1.4 | ) | % | ||||
Staffing fee-based income included in revenue from services | 7.9 | 8.4 | (5.2 | ) | (4.7 | ) | ||||||||
Gross profit | 140.2 | 138.0 | 1.6 | 2.3 | ||||||||||
SG&A expenses excluding restructuring charges | 111.7 | 112.6 | (0.8 | ) | (0.2 | ) | ||||||||
Restructuring charges | 2.2 | — | NM | |||||||||||
Total SG&A expenses | 113.9 | 112.6 | 1.2 | 1.8 | ||||||||||
Earnings from operations | 26.3 | 25.4 | 3.6 | |||||||||||
Earnings from operations excluding restructuring charges | 28.5 | 25.4 | 12.2 | |||||||||||
Gross profit rate | 16.0 | % | 15.4 | % | 0.6 | pts. | ||||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 12.7 | 12.5 | 0.2 | |||||||||||
% of gross profit | 79.6 | 81.6 | (2.0 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 3.3 | 2.8 | 0.5 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 197.1 | $ | 195.7 | 0.8 | % | 3.0 | % | ||||||
Staffing fee-based income included in revenue from services | 3.7 | 3.2 | 16.6 | 21.4 | ||||||||||
Gross profit | 27.1 | 26.8 | 1.5 | 3.4 | ||||||||||
Gross profit rate | 13.8 | % | 13.7 | % | 0.1 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 43.1 | $ | 42.9 | 0.5 | % | 2.2 | % | ||||||
Staffing fee-based income included in revenue from services | 2.5 | 2.5 | (4.4 | ) | (1.0 | ) | ||||||||
Gross profit | 8.7 | 9.1 | (5.5 | ) | (3.6 | ) | ||||||||
Gross profit rate | 20.0 | % | 21.2 | % | (1.2 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 240.2 | $ | 238.6 | 0.7 | % | 2.8 | % | ||||||
Staffing fee-based income included in revenue from services | 6.2 | 5.7 | 7.4 | 11.6 | ||||||||||
Gross profit | 35.8 | 35.9 | (0.3 | ) | 1.6 | |||||||||
SG&A expenses excluding restructuring charges | 32.0 | 34.2 | (6.3 | ) | (3.9 | ) | ||||||||
Restructuring charges | 1.2 | — | NM | |||||||||||
Total SG&A expenses | 33.2 | 34.2 | (3.0 | ) | (0.6 | ) | ||||||||
Earnings from operations | 2.6 | 1.7 | 54.4 | |||||||||||
Earnings from operations excluding restructuring charges | 3.8 | 1.7 | 121.7 | |||||||||||
Gross profit rate | 14.9 | % | 15.0 | % | (0.1 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.3 | 14.3 | (1.0 | ) | ||||||||||
% of gross profit | 89.6 | 95.3 | (5.7 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.5 | 0.7 | 0.8 | |||||||||||
5
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Second Quarter | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 87.9 | $ | 90.3 | (2.6 | ) | % | 1.6 | % | |||||
Staffing fee-based income included in revenue from services | 1.7 | 1.8 | (7.1 | ) | (3.5 | ) | ||||||||
Gross profit | 10.3 | 11.2 | (8.6 | ) | (4.7 | ) | ||||||||
Gross profit rate | 11.7 | % | 12.4 | % | (0.7 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 9.2 | $ | 10.3 | (11.4 | ) | % | (7.8 | ) | % | ||||
Staffing fee-based income included in revenue from services | 1.4 | 1.5 | (6.1 | ) | (1.1 | ) | ||||||||
Gross profit | 2.5 | 2.7 | (7.8 | ) | (3.6 | ) | ||||||||
Gross profit rate | 27.4 | % | 26.4 | % | 1.0 | pts. | ||||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 97.1 | $ | 100.6 | (3.5 | ) | % | 0.6 | % | |||||
Staffing fee-based income included in revenue from services | 3.1 | 3.3 | (6.6 | ) | (2.4 | ) | ||||||||
Gross profit | 12.8 | 13.9 | (8.4 | ) | (4.5 | ) | ||||||||
Total SG&A expenses | 11.6 | 12.3 | (5.4 | ) | (1.5 | ) | ||||||||
Earnings from operations | 1.2 | 1.6 | (31.4 | ) | ||||||||||
Gross profit rate | 13.2 | % | 13.9 | % | (0.7 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 12.0 | 12.2 | (0.2 | ) | ||||||||||
% of gross profit | 91.2 | 88.3 | 2.9 | |||||||||||
Return on sales | 1.2 | 1.6 | (0.4 | ) | ||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 173.9 | $ | 165.0 | 5.4 | % | 5.9 | % | ||||||
Gross profit | 42.8 | 35.7 | 20.1 | 20.9 | ||||||||||
Total SG&A expenses | 38.0 | 32.2 | 18.1 | 19.0 | ||||||||||
Earnings from operations | 4.8 | 3.5 | 38.2 | |||||||||||
Gross profit rate | 24.6 | % | 21.6 | % | 3.0 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 21.8 | 19.5 | 2.3 | |||||||||||
% of gross profit | 88.7 | 90.2 | (1.5 | ) | ||||||||||
Return on sales | 2.8 | 2.1 | 0.7 | |||||||||||
Corporate | ||||||||||||||
Total SG&A expenses | $ | 25.0 | $ | 20.7 | 20.5 | % | ||||||||
6
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
June Year to Date | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 1,283.9 | $ | 1,292.7 | (0.7 | ) | % | 0.9 | % | |||||
Staffing fee-based income included in revenue from services | 7.2 | 7.0 | 3.0 | 4.0 | ||||||||||
Gross profit | 201.0 | 193.7 | 3.8 | 5.1 | ||||||||||
Gross profit rate | 15.7 | % | 15.0 | % | 0.7 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 478.7 | $ | 479.0 | (0.1 | ) | % | 0.1 | % | |||||
Staffing fee-based income included in revenue from services | 9.3 | 8.4 | 10.9 | 12.1 | ||||||||||
Gross profit | 82.9 | 81.0 | 2.3 | 2.5 | ||||||||||
Gross profit rate | 17.3 | % | 16.9 | % | 0.4 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 1,762.6 | $ | 1,771.7 | (0.5 | ) | % | 0.7 | % | |||||
Staffing fee-based income included in revenue from services | 16.5 | 15.4 | 7.3 | 8.4 | ||||||||||
Gross profit | 283.9 | 274.7 | 3.3 | 4.3 | ||||||||||
SG&A expenses excluding restructuring charges | 228.3 | 226.1 | 1.0 | 1.9 | ||||||||||
Restructuring charges | 2.2 | — | NM | |||||||||||
Total SG&A expenses | 230.5 | 226.1 | 1.9 | 2.9 | ||||||||||
Earnings from operations | 53.4 | 48.6 | 9.9 | |||||||||||
Earnings from operations excluding restructuring charges | 55.6 | 48.6 | 14.4 | |||||||||||
Gross profit rate | 16.1 | % | 15.5 | % | 0.6 | pts. | ||||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.0 | 12.8 | 0.2 | |||||||||||
% of gross profit | 80.4 | 82.3 | (1.9 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 3.2 | 2.7 | 0.5 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 372.6 | $ | 374.0 | (0.4 | ) | % | 2.9 | % | |||||
Staffing fee-based income included in revenue from services | 7.1 | 6.7 | 6.5 | 11.5 | ||||||||||
Gross profit | 50.7 | 51.4 | (1.3 | ) | 1.7 | |||||||||
Gross profit rate | 13.6 | % | 13.7 | % | (0.1 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 84.7 | $ | 83.2 | 1.8 | % | 4.7 | % | ||||||
Staffing fee-based income included in revenue from services | 5.1 | 5.1 | (0.5 | ) | 4.3 | |||||||||
Gross profit | 17.4 | 17.8 | (2.4 | ) | 0.8 | |||||||||
Gross profit rate | 20.5 | % | 21.4 | % | (0.9 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 457.3 | $ | 457.2 | — | % | 3.3 | % | ||||||
Staffing fee-based income included in revenue from services | 12.2 | 11.8 | 3.5 | 8.4 | ||||||||||
Gross profit | 68.1 | 69.2 | (1.6 | ) | 1.5 | |||||||||
SG&A expenses excluding restructuring charges | 62.3 | 67.7 | (7.8 | ) | (4.7 | ) | ||||||||
Restructuring charges | 1.2 | — | NM | |||||||||||
Total SG&A expenses | 63.5 | 67.7 | (6.2 | ) | (3.0 | ) | ||||||||
Earnings from operations | 4.6 | 1.5 | 205.2 | |||||||||||
Earnings from operations excluding restructuring charges | 5.8 | 1.5 | 280.2 | |||||||||||
Gross profit rate | 14.9 | % | 15.1 | % | (0.2 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.6 | 14.8 | (1.2 | ) | ||||||||||
% of gross profit | 91.6 | 97.8 | (6.2 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.2 | 0.3 | 0.9 | |||||||||||
7
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
June Year to Date | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 170.7 | $ | 175.9 | (2.9 | ) | % | 3.1 | % | |||||
Staffing fee-based income included in revenue from services | 2.9 | 3.3 | (12.1 | ) | (7.1 | ) | ||||||||
Gross profit | 23.3 | 24.2 | (3.7 | ) | 1.2 | |||||||||
Gross profit rate | 13.7 | % | 13.8 | % | (0.1 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 18.3 | $ | 20.8 | (12.2 | ) | % | (7.0 | ) | % | ||||
Staffing fee-based income included in revenue from services | 2.8 | 3.1 | (9.7 | ) | (3.3 | ) | ||||||||
Gross profit | 5.0 | 5.6 | (10.7 | ) | (4.9 | ) | ||||||||
Gross profit rate | 27.4 | % | 26.9 | % | 0.5 | pts. | ||||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 189.0 | $ | 196.7 | (3.9 | ) | % | 2.1 | % | |||||
Staffing fee-based income included in revenue from services | 5.7 | 6.4 | (10.9 | ) | (5.2 | ) | ||||||||
Gross profit | 28.3 | 29.8 | (5.0 | ) | 0.1 | |||||||||
Total SG&A expenses | 22.7 | 24.4 | (7.0 | ) | (1.4 | ) | ||||||||
Earnings from operations | 5.6 | 5.4 | 3.8 | |||||||||||
Gross profit rate | 15.0 | % | 15.2 | % | (0.2 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 12.0 | 12.4 | (0.4 | ) | ||||||||||
% of gross profit | 80.3 | 82.0 | (1.7 | ) | ||||||||||
Return on sales | 3.0 | 2.7 | 0.3 | |||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 342.1 | $ | 314.5 | 8.8 | % | 9.5 | % | ||||||
Gross profit | 85.1 | 71.2 | 19.6 | 20.6 | ||||||||||
Total SG&A expenses | 74.9 | 64.9 | 15.5 | 16.7 | ||||||||||
Earnings from operations | 10.2 | 6.3 | 61.3 | |||||||||||
Gross profit rate | 24.9 | % | 22.6 | % | 2.3 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 21.9 | 20.6 | 1.3 | |||||||||||
% of gross profit | 88.0 | 91.1 | (3.1 | ) | ||||||||||
Return on sales | 3.0 | 2.0 | 1.0 | |||||||||||
Corporate | ||||||||||||||
Total SG&A expenses | $ | 49.2 | $ | 38.2 | 28.8 | % | ||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars) | ||||||||||
July 3, 2016 | Jan. 3, 2016 | June 28, 2015 | ||||||||
Current Assets | ||||||||||
Cash and equivalents | $ | 33.3 | $ | 42.2 | $ | 48.7 | ||||
Trade accounts receivable, less allowances of | ||||||||||
$11.0, $10.5 and $9.4, respectively | 1,079.8 | 1,139.1 | 1,152.3 | |||||||
Prepaid expenses and other current assets | 47.8 | 45.8 | 50.6 | |||||||
Deferred taxes | — | — | 35.8 | |||||||
Current assets held for sale | 94.0 | — | — | |||||||
Total current assets | 1,254.9 | 1,227.1 | 1,287.4 | |||||||
Noncurrent Assets | ||||||||||
Property and equipment, net | 81.5 | 88.9 | 88.6 | |||||||
Noncurrent deferred taxes | 197.0 | 189.3 | 144.6 | |||||||
Goodwill, net | 88.3 | 90.3 | 90.3 | |||||||
Other assets | 368.4 | 344.0 | 321.7 | |||||||
Total noncurrent assets | 735.2 | 712.5 | 645.2 | |||||||
Total Assets | $ | 1,990.1 | $ | 1,939.6 | $ | 1,932.6 | ||||
Current Liabilities | ||||||||||
Short-term borrowings | $ | 26.9 | $ | 55.5 | $ | 89.9 | ||||
Accounts payable and accrued liabilities | 403.7 | 405.5 | 380.4 | |||||||
Accrued payroll and related taxes | 259.2 | 268.1 | 296.5 | |||||||
Accrued insurance | 27.1 | 26.7 | 27.1 | |||||||
Income and other taxes | 50.9 | 60.0 | 62.8 | |||||||
Current liabilities held for sale | 48.0 | — | — | |||||||
Total current liabilities | 815.8 | 815.8 | 856.7 | |||||||
Noncurrent Liabilities | ||||||||||
Accrued insurance | 41.1 | 40.0 | 44.3 | |||||||
Accrued retirement benefits | 148.5 | 141.0 | 146.5 | |||||||
Other long-term liabilities | 50.6 | 47.4 | 40.6 | |||||||
Total noncurrent liabilities | 240.2 | 228.4 | 231.4 | |||||||
Stockholders' Equity | ||||||||||
Common stock | 40.1 | 40.1 | 40.1 | |||||||
Treasury stock | (42.1 | ) | (44.3 | ) | (49.0 | ) | ||||
Paid-in capital | 28.1 | 25.4 | 27.5 | |||||||
Earnings invested in the business | 828.8 | 813.5 | 774.1 | |||||||
Accumulated other comprehensive income | 79.2 | 60.7 | 51.8 | |||||||
Total stockholders' equity | 934.1 | 895.4 | 844.5 | |||||||
Total Liabilities and Stockholders' Equity | $ | 1,990.1 | $ | 1,939.6 | $ | 1,932.6 | ||||
STATISTICS: | ||||||||||
Working Capital (including net assets held for sale) | $ | 439.1 | $ | 411.3 | $ | 430.7 | ||||
Current Ratio | 1.5 | 1.5 | 1.5 | |||||||
Debt-to-capital % | 2.8 | % | 5.8 | % | 9.6 | % | ||||
Global Days Sales Outstanding | 53 | 54 | 56 | |||||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015 | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2016 | 2015 | |||||
Cash flows from operating activities: | ||||||
Net earnings | $ | 20.1 | $ | 10.5 | ||
Noncash adjustments: | ||||||
Depreciation and amortization | 10.9 | 11.0 | ||||
Provision for bad debts | 3.5 | 2.1 | ||||
Stock-based compensation | 4.5 | 3.1 | ||||
Other, net | (0.7 | ) | (0.3 | ) | ||
Changes in operating assets and liabilities | 2.9 | (52.9 | ) | |||
Net cash from (used in) operating activities | 41.2 | (26.5 | ) | |||
Cash flows from investing activities: | ||||||
Capital expenditures | (4.3 | ) | (6.7 | ) | ||
Investment in equity affiliate | — | (0.5 | ) | |||
Other investing activities | (0.4 | ) | (0.1 | ) | ||
Net cash used in investing activities | (4.7 | ) | (7.3 | ) | ||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | (29.1 | ) | (1.4 | ) | ||
Dividend payments | (4.8 | ) | (3.8 | ) | ||
Other financing activities | 0.2 | — | ||||
Net cash used in financing activities | (33.7 | ) | (5.2 | ) | ||
Effect of exchange rates on cash and equivalents | 6.4 | 4.6 | ||||
Net change in cash and equivalents | 9.2 | (34.4 | ) | |||
Less: cash balance included in current assets held for sale | (18.1 | ) | — | |||
Cash and equivalents at beginning of period | 42.2 | 83.1 | ||||
Cash and equivalents at end of period | $ | 33.3 | $ | 48.7 | ||
10
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
Second Quarter (Commercial, PT and OCG) | |||||||||||||
% | CC % | ||||||||||||
2016 | 2015 | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 930.8 | $ | 923.6 | 0.8 | % | 0.8 | % | |||||
Canada | 35.8 | 41.6 | (14.1 | ) | (10.6 | ) | |||||||
Mexico | 25.4 | 32.0 | (20.2 | ) | (5.5 | ) | |||||||
Puerto Rico | 22.5 | 26.6 | (15.3 | ) | (15.3 | ) | |||||||
Brazil | 10.2 | 9.9 | 3.8 | 20.6 | |||||||||
Total Americas | 1,024.7 | 1,033.7 | (0.9 | ) | (0.1 | ) | |||||||
EMEA | |||||||||||||
France | 61.3 | 60.9 | 0.7 | (1.2 | ) | ||||||||
Switzerland | 54.6 | 54.6 | (0.1 | ) | 3.0 | ||||||||
Portugal | 38.7 | 33.9 | 14.5 | 12.1 | |||||||||
United Kingdom | 23.1 | 27.1 | (15.0 | ) | (9.2 | ) | |||||||
Russia | 16.6 | 22.2 | (25.3 | ) | (6.8 | ) | |||||||
Germany | 15.7 | 14.3 | 9.2 | 7.0 | |||||||||
Italy | 15.1 | 13.0 | 16.0 | 13.9 | |||||||||
Norway | 8.4 | 10.0 | (15.6 | ) | (10.0 | ) | |||||||
Other | 14.8 | 10.3 | 44.3 | 42.2 | |||||||||
Total EMEA | 248.3 | 246.3 | 0.8 | 2.9 | |||||||||
APAC | |||||||||||||
Singapore | 33.0 | 33.0 | 0.2 | 1.3 | |||||||||
Australia | 32.1 | 32.9 | (2.3 | ) | 2.0 | ||||||||
Malaysia | 14.5 | 15.9 | (9.6 | ) | (0.8 | ) | |||||||
New Zealand | 9.5 | 10.3 | (7.7 | ) | (1.9 | ) | |||||||
Other | 13.4 | 12.9 | 3.7 | 8.6 | |||||||||
Total APAC | 102.5 | 105.0 | (2.4 | ) | 1.8 | ||||||||
Total Kelly Services, Inc. | $ | 1,375.5 | $ | 1,385.0 | (0.7 | ) | % | 0.6 | % | ||||
11
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
June Year to Date (Commercial, PT and OCG) | |||||||||||||
% | CC % | ||||||||||||
2016 | 2015 | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 1,865.5 | $ | 1,806.6 | 3.3 | % | 3.3 | % | |||||
Canada | 70.3 | 84.3 | (16.6 | ) | (10.6 | ) | |||||||
Mexico | 52.0 | 63.9 | (18.5 | ) | (2.6 | ) | |||||||
Puerto Rico | 45.0 | 51.4 | (12.5 | ) | (12.5 | ) | |||||||
Brazil | 20.2 | 23.8 | (14.9 | ) | 11.7 | ||||||||
Total Americas | 2,053.0 | 2,030.0 | 1.1 | 2.2 | |||||||||
EMEA | |||||||||||||
France | 117.8 | 117.3 | 0.5 | 0.6 | |||||||||
Switzerland | 101.2 | 102.7 | (1.5 | ) | 2.0 | ||||||||
Portugal | 72.4 | 65.2 | 11.1 | 11.2 | |||||||||
United Kingdom | 46.7 | 50.7 | (8.1 | ) | (2.1 | ) | |||||||
Germany | 31.1 | 27.7 | 12.1 | 12.3 | |||||||||
Russia | 30.6 | 40.4 | (24.3 | ) | (7.8 | ) | |||||||
Italy | 28.5 | 25.5 | 11.6 | 11.5 | |||||||||
Norway | 16.0 | 19.4 | (17.1 | ) | (9.6 | ) | |||||||
Other | 28.5 | 21.3 | 33.9 | 34.6 | |||||||||
Total EMEA | 472.8 | 470.2 | 0.5 | 3.8 | |||||||||
APAC | |||||||||||||
Singapore | 64.8 | 64.3 | 0.8 | 2.9 | |||||||||
Australia | 60.6 | 63.3 | (4.3 | ) | 2.0 | ||||||||
Malaysia | 27.7 | 31.4 | (11.9 | ) | (0.9 | ) | |||||||
New Zealand | 19.2 | 20.8 | (7.8 | ) | 1.3 | ||||||||
Other | 26.5 | 25.6 | 3.6 | 10.7 | |||||||||
Total APAC | 198.8 | 205.4 | (3.2 | ) | 2.9 | ||||||||
Total Kelly Services, Inc. | $ | 2,724.6 | $ | 2,705.6 | 0.7 | % | 2.5 | % | |||||
12
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
FOR THE 13 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
2016 | 2015 | |||||||||||||||
As Reported | Restructuring Charges (Note 1) | Adjusted Earnings | Reported Earnings | % Change | ||||||||||||
Revenue from services | $ | 1,375.5 | $ | — | $ | 1,375.5 | $ | 1,385.0 | (0.7 | ) | % | |||||
Cost of services | 1,145.0 | — | 1,145.0 | 1,162.7 | (1.5 | ) | ||||||||||
Gross profit | 230.5 | — | 230.5 | 222.3 | 3.7 | |||||||||||
SG&A expenses | 220.6 | (3.4 | ) | 217.2 | 210.8 | 3.0 | ||||||||||
Earnings from operations | 9.9 | 3.4 | 13.3 | 11.5 | 15.9 | |||||||||||
Other expense, net | 0.2 | — | 0.2 | 1.0 | (74.8 | ) | ||||||||||
Earnings before taxes | 9.7 | 3.4 | 13.1 | 10.5 | 24.4 | |||||||||||
Inc. tax expense (benefit) | 0.8 | 0.9 | 1.7 | 3.7 | (55.5 | ) | ||||||||||
Net earnings | $ | 8.9 | $ | 2.5 | $ | 11.4 | $ | 6.8 | 68.1 | % | ||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.23 | $ | 0.07 | $ | 0.29 | $ | 0.18 | 61.1 | % | ||||||
Diluted | $ | 0.23 | $ | 0.07 | $ | 0.29 | $ | 0.18 | 61.1 | % | ||||||
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. | ||||||||||||||||
13
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
FOR THE 26 WEEKS ENDED JULY 3, 2016 AND JUNE 28, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
2016 | 2015 | |||||||||||||||
As Reported | Restructuring Charges (Note 1) | Adjusted Earnings | Reported Earnings | % Change | ||||||||||||
Revenue from services | $ | 2,724.6 | $ | — | $ | 2,724.6 | $ | 2,705.6 | 0.7 | % | ||||||
Cost of services | 2,261.4 | — | 2,261.4 | 2,263.0 | (0.1 | ) | ||||||||||
Gross profit | 463.2 | — | 463.2 | 442.6 | 4.6 | |||||||||||
SG&A expenses | 438.6 | (3.4 | ) | 435.2 | 419.0 | 3.8 | ||||||||||
Earnings from operations | 24.6 | 3.4 | 28.0 | 23.6 | 18.8 | |||||||||||
Other expense, net | 1.0 | — | 1.0 | 3.5 | (70.9 | ) | ||||||||||
Earnings before taxes | 23.6 | 3.4 | 27.0 | 20.1 | 34.4 | |||||||||||
Inc. tax expense (benefit) | 3.5 | 0.9 | 4.4 | 9.6 | (54.5 | ) | ||||||||||
Net earnings | $ | 20.1 | $ | 2.5 | $ | 22.6 | $ | 10.5 | 115.0 | % | ||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.52 | $ | 0.07 | $ | 0.58 | $ | 0.27 | 114.8 | % | ||||||
Diluted | $ | 0.51 | $ | 0.07 | $ | 0.58 | $ | 0.27 | 114.8 | % | ||||||
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. | ||||||||||||||||
14
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 charges is useful to understand the Company's fiscal 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of restructuring charges 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 in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.
15