Financial Highlights
Q4 revenue down 5.4%; down 5.2% in constant currencyQ4 operating earnings of $13.1 million, including a $15.8 million asset impairment charge, compared to $33.1 million last yearQ4 earnings (loss) per share of $0.43, compared to ($0.62) last year or $0.67 compared to $0.87 on an adjusted basisFull year 2019 earnings from operations down 6.5% to $81.8 millionTROY, Mich., Feb. 13, 2020 (GLOBE NEWSWIRE) — Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2019.Peter Quigley, president and chief executive officer, announced revenue for the fourth quarter of 2019 totaled $1.3 billion, a 5.4% decrease, or 5.2% in constant currency, compared to the corresponding quarter of 2018.Earnings from operations for the fourth quarter of 2019 totaled $13.1 million, compared to the $33.1 million reported for the fourth quarter of 2018. The 2019 fourth quarter results include a $15.8 million impairment charge related to a technology development project. Diluted earnings per share in the fourth quarter of 2019 were $0.43 compared to a loss per share of $0.62 in the fourth quarter of 2018. Included in the earnings per share in the fourth quarter of 2019 was a $0.30 impairment charge, net of tax and a $0.01 gain, net of tax on Persol Holdings common stock. 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 Kelly’s investment in Persol Holdings common stock.Diluted earnings per share for the full year 2019 were $2.84 compared to $0.58 for 2018. Full-year earnings per share for 2019 were unfavorably impacted $0.40 by the after-tax impact of asset impairments and restructuring charges, and were favorably impacted $1.08 by the after-tax gain on Persol common stock, the gain on sale of assets, and the impact of recent acquisitions. Full-year earnings per share for 2018 were unfavorably impacted by the $1.69 non-cash after-tax loss on Persol Holdings common stock. On an adjusted basis, diluted earnings per share were $2.16 in 2019 compared to $2.27 in 2018. The impacts of these adjustments are more fully described in the included reconciliation of non-GAAP measures.“Q4 continued the underlying dynamics we saw in Q3, including a weaker manufacturing sector, economic headwinds in Europe, and disruption from the 2019 restructuring of our U.S. operations,” noted Quigley. “The efficiencies we’ve gained are already bringing us increased agility and we have delivered good GP rate improvement, however, we have not yet delivered on top-line growth.” Quigley has made returning to growth a top priority since becoming CEO, while also taking other significant steps in his first 120 days: the sale and lease-back of the company’s HQ building to free up capital; the acquisition of Insight to further strengthen Kelly Education’s leading U.S. market position; the appointment of Kelly’s first-ever Chief Growth Officer; deployment of new front-office technology in the U.S. and Europe; and other actions designed to accelerate Kelly’s shift toward a more responsive, tech-enabled delivery model.Today, Quigley announced three additional changes designed to accelerate growth and intensify Kelly’s specialty focus:The company will be managed by specialty: Professional & Industrial (formerly Commercial); Education; STEM (including Science, Engineering, and IT); OCG; and International. Each specialty will be led by a president, reporting directly to Quigley, who will work to accelerate each specialty’s top- and bottom-line results.
Kelly will accelerate its M&A initiatives as part of an ambitious program to drive financial performance through growth in higher-margin businesses, focusing its capital allocations on investments and acquisitions that align with the company’s specialty solutions strategy.
Kelly will share growth targets via its growth map, providing regular updates on progress against key financial goals the company intends to achieve. “There’s no question there are a lot of positive changes underway at Kelly,” stated Quigley. “Although they’re at different stages of progress, they are necessary to address market challenges head-on, modernize our delivery models, leverage more agile operations, open new doors for organic and inorganic growth, and put us on a path to becoming a specialty talent company that delivers results for clients, talent, and shareholders.”Kelly also reported that on February 12, its board of directors declared a dividend of $0.075 per share. The dividend is payable March 9, 2020 to shareholders of record as of the close of business on February 24, 2020.In conjunction with its fourth quarter and full year earnings release, Kelly Services 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 February 13 to review the results and answer questions. The call may be accessed in one of the following ways:Via the Internet:
kellyservices.comVia the Telephone (new process)
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please enter “#”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 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 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 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 Services®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 approximately 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.KLYA-FIN
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)Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2019 and 2018 gains and losses on the investment in Persol Holdings, the 2019 restructuring charges, the 2019 acquisitions, the 2019 gain on sale of assets and the 2019 asset impairment charge are useful to understand the Company’s fiscal 2019 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.
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