Kelly Services® Reports 1st Quarter 2015 Results

May 6, 2015
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TROY, MI -- (Marketwired) -- 05/06/15 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter of 2015.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2015 totaled $1.3 billion, a 1% decrease (a 4% increase on a constant currency basis) compared to the corresponding quarter of 2014.

Earnings from operations for the first quarter of 2015 totaled $12.1 million, compared to $6.3 million reported for the first quarter of 2014.

Diluted earnings per share in the first quarter of 2015 were $0.10 compared to $0.07 per share in the first quarter of 2014.

Commenting on the first quarter, Camden stated, "We're pleased with Kelly's overall performance and our ability to double operating earnings over the same period last year. Our U.S. local markets are off to a strong start in 2015, and our expanded PT sales and recruiting teams are showing the solid growth we expected from our 2014 investments. In addition, our continued success in our OCG segment reflects our ability to help some of the world's largest companies design and deliver more holistic solutions for acquiring and managing their talent."

Kelly also reported that on May 5, its board of directors declared a dividend of $0.05 per share. The dividend is payable June 2 to shareholders of record as of the close of business on May 18.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 6, to review the results and answer questions. The call may be accessed in one of the following ways:

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, 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 or market developments, 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 and the expiration and/or reinstatement of the U.S. work opportunity credit program), 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®

Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provided employment to approximately 555,000 employees in 2014. Revenue in 2014 was $5.6 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN

   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED MARCH 29, 2015 AND MARCH 30, 2014  
(UNAUDITED)  
(In millions of dollars except per share data)  
   
                      %     CC %  
    2015     2014     Change     Change     Change  
                               
Revenue from services   $ 1,320.6     $ 1,330.8     $ (10.2 )   (0.8 )%   4.4 %
                                     
Cost of services     1,100.3       1,108.5       (8.2 )   (0.7 )      
                                     
Gross profit     220.3       222.3       (2.0 )   (0.9 )   3.8  
                                     
Selling, general and administrative expenses     208.2       216.0       (7.8 )   (3.6 )   1.0  
                                     
Earnings from operations     12.1       6.3       5.8     94.0        
                                     
Other expense, net     2.5       1.7       0.8     (51.5 )      
                                     
Earnings before taxes     9.6       4.6       5.0     109.4        
                                     
Income tax expense     5.9       2.1       3.8     183.7        
                                     
Net earnings   $ 3.7     $ 2.5     $ 1.2     48.3 %      
                                     
Basic earnings per share   $ 0.10     $ 0.07     $ 0.03     42.9 %      
Diluted earnings per share   $ 0.10     $ 0.07     $ 0.03     42.9 %      
                                     
                                     
STATISTICS:                                    
                                     
Gross profit rate     16.7 %     16.7 %     -- pts.            
                                     
Selling, general and administrative expenses:                                    
  % of revenue     15.8       16.2       (0.4 )            
  % of gross profit     94.5       97.2       (2.7 )            
                                     
% Return:                                    
  Earnings from operations     0.9       0.5       0.4              
  Earnings before taxes     0.7       0.3       0.4              
  Net earnings     0.3       0.2       0.1              
                                     
Effective income tax rate     61.1 %     45.1 %     16.0 pts.            
                                     
Average number of shares outstanding (millions):                                    
  Basic     37.7       37.4                      
  Diluted     37.8       37.4                      
                                     
Shares adjusted for nonvested restricted awards (millions):                                    
  Basic     38.8       38.5                      
  Diluted     38.8       38.5                      
                                       
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
       
    First Quarter  
                      Constant  
                      Currency  
    2015     2014     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services   $ 641.4     $ 613.2     4.6 %   6.2 %
    Staffing fee-based income included in revenue from services     3.5       3.2     6.0     8.4  
    Gross profit     97.8       91.8     6.6     7.9  
    Gross profit rate     15.3 %     15.0 %   0.3 pts.      
  PT                            
    Revenue from services   $ 232.8     $ 236.4     (1.5 )%   (1.1 )%
    Staffing fee-based income included in revenue from services     3.5       3.6     (2.6 )   (2.0 )
    Gross profit     38.9       39.8     (2.1 )   (1.7 )
    Gross profit rate     16.7 %     16.8 %   (0.1 ) pts.      
  Total Americas                            
    Revenue from services   $ 874.2     $ 849.6     2.9 %   4.2 %
    Staffing fee-based income included in revenue from services     7.0       6.8     1.5     3.0  
    Gross profit     136.7       131.6     4.0     5.0  
    Total SG&A expenses     113.5       109.5     3.7     4.7  
    Earnings from operations     23.2       22.1     5.2        
                                 
    Gross profit rate     15.6 %     15.5 %   0.1 pts.      
    Expense rates:                            
      % of revenue     13.0       12.9     0.1        
      % of gross profit     83.0       83.3     (0.3 )      
    Return on sales     2.7       2.6     0.1        
                             
EMEA                            
  Commercial                            
    Revenue from services   $ 178.3     $ 221.9     (19.7 )%   (1.8 )%
    Staffing fee-based income included in revenue from services     3.5       4.8     (26.9 )   (7.2 )
    Gross profit     24.6       32.9     (25.2 )   (8.9 )
    Gross profit rate     13.8 %     14.8 %   (1.0 ) pts.      
  PT                            
    Revenue from services   $ 40.3     $ 47.7     (15.4 )%   2.2 %
    Staffing fee-based income included in revenue from services     2.6       3.6     (28.8 )   (10.9 )
    Gross profit     8.7       11.1     (21.8 )   (4.5 )
    Gross profit rate     21.5 %     23.3 %   (1.8 ) pts.      
  Total EMEA                            
    Revenue from services   $ 218.6     $ 269.6     (18.9 )%   (1.1 )%
    Staffing fee-based income included in revenue from services     6.1       8.4     (27.7 )   (8.8 )
    Gross profit     33.3       44.0     (24.4 )   (7.8 )
    Total SG&A expenses     33.5       41.9     (20.1 )   (3.1 )
    Earnings from operations     (0.2 )     2.1     NM        
                                 
    Gross profit rate     15.2 %     16.3 %   (1.1 ) pts.      
    Expense rates:                            
      % of revenue     15.3       15.5     (0.2 )      
      % of gross profit     100.5       95.1     5.4        
    Return on sales     (0.1 )     0.8     (0.9 )      
                             
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    First Quarter  
                      Constant  
                      Currency  
    2015     2014     Change     Change  
APAC                            
  Commercial                            
    Revenue from services   $ 85.6     $ 83.0     3.2 %   12.5 %
    Staffing fee-based income included in revenue from services     1.5       1.9     (21.6 )   (15.7 )
    Gross profit     13.0       12.3     5.3     14.7  
    Gross profit rate     15.2 %     14.8 %   0.4 pts.      
  PT                            
    Revenue from services   $ 10.5     $ 8.6     22.1 %   34.1 %
    Staffing fee-based income included in revenue from services     1.6       1.7     (4.3 )   3.0  
    Gross profit     2.9       2.8     4.8     13.9  
    Gross profit rate     27.5 %     32.0 %   (4.5 ) pts.      
  Total APAC                            
    Revenue from services   $ 96.1     $ 91.6     5.0 %   14.5 %
    Staffing fee-based income included in revenue from services     3.1       3.6     (13.5 )   (6.9 )
    Gross profit     15.9       15.1     5.2     14.5  
    Total SG&A expenses     12.1       14.3     (15.5 )   (8.3 )
    Earnings from operations     3.8       0.8     410.2        
                                 
    Gross profit rate     16.5 %     16.5 %   -- pts.      
    Expense rates:                            
      % of revenue     12.6       15.7     (3.1 )      
      % of gross profit     76.4       95.1     (18.7 )      
    Return on sales     3.9       0.8     3.1        
                             
OCG                            
    Revenue from services   $ 149.5     $ 134.4     11.2 %   12.6 %
    Gross profit     35.5       32.6     8.9     10.0  
    Total SG&A expenses     32.7       31.4     4.0     6.5  
    Earnings from operations     2.8       1.2     138.6        
                                 
    Gross profit rate     23.8 %     24.3 %   (0.5 ) pts.      
    Expense rates:                            
      % of revenue     21.9       23.4     (1.5 )      
      % of gross profit     92.0       96.3     (4.3 )      
    Return on sales     1.9       0.9     1.0        
                                 
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
                   
    March 29, 2015     Dec. 28, 2014     March 30, 2014  
Current Assets                        
  Cash and equivalents   $ 49.4     $ 83.1     $ 57.9  
  Trade accounts receivable, less allowances of $11.5, $10.7 and $10.2, respectively     1,099.3       1,122.8       1,080.2  
  Prepaid expenses and other current assets     52.0       47.9       61.6  
  Deferred taxes     32.4       34.4       29.2  
Total current assets     1,233.1       1,288.2       1,228.9  
                         
Property and Equipment, Net     89.8       93.0       90.8  
                         
Noncurrent Deferred Taxes     147.9       146.3       129.3  
                         
Goodwill, Net     90.3       90.3       90.3  
                         
Other Assets     305.2       300.1       265.1  
                         
Total Assets   $ 1,866.3     $ 1,917.9     $ 1,804.4  
                         
Current Liabilities                        
  Short-term borrowings   $ 80.6     $ 91.9     $ 54.8  
  Accounts payable and accrued liabilities     344.4       364.0       321.7  
  Accrued payroll and related taxes     292.8       308.5       291.2  
  Accrued insurance     26.7       26.9       25.5  
  Income and other taxes     64.6       68.8       68.4  
                         
Total current liabilities     809.1       860.1       761.6  
                         
Noncurrent Liabilities                        
  Accrued insurance     43.5       43.9       45.4  
  Accrued retirement benefits     144.9       140.8       140.4  
  Other long-term liabilities     37.7       39.4       31.8  
                         
Total noncurrent liabilities     226.1       224.1       217.6  
                         
Stockholders' Equity                        
  Common stock     40.1       40.1       40.1  
  Treasury stock     (49.7 )     (49.8 )     (56.0 )
  Paid-in capital     25.9       24.9       27.5  
  Earnings invested in the business     769.2       767.4       751.9  
  Accumulated other comprehensive income     45.6       51.1       61.7  
                         
Total stockholders' equity     831.1       833.7       825.2  
                         
Total Liabilities and Stockholders' Equity   $ 1,866.3     $ 1,917.9     $ 1,804.4  
                         
                         
STATISTICS:                        
  Working Capital   $ 424.0     $ 428.1     $ 467.3  
  Current Ratio     1.5       1.5       1.6  
  Debt-to-capital %     8.8 %     9.9 %     6.2 %
  Global Days Sales Outstanding     57       54       57  
                           
                           
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 13 WEEKS ENDED MARCH 29, 2015 AND MARCH 30, 2014  
(UNAUDITED)  
(In millions of dollars)  
             
    2015     2014  
Cash flows from operating activities:                
  Net earnings   $ 3.7     $ 2.5  
  Noncash adjustments:                
    Depreciation and amortization     5.5       5.3  
    Provision for bad debts     1.2       1.6  
    Stock-based compensation     1.2       1.7  
    Other, net     (0.6 )     0.3  
  Changes in operating assets and liabilities     (27.4 )     (102.2 )
                 
    Net cash used in operating activities     (16.4 )     (90.8 )
                 
Cash flows from investing activities:                
  Capital expenditures     (2.6 )     (3.3 )
  Investment in equity affiliate     --       (0.6 )
  Other investing activities     (0.2 )     0.1  
                 
    Net cash used in investing activities     (2.8 )     (3.8 )
                 
Cash flows from financing activities:                
  Net change in short-term borrowings     (11.0 )     26.5  
  Dividend payments     (1.9 )     (1.9 )
                 
    Net cash (used in) from financing activities     (12.9 )     24.6  
                 
Effect of exchange rates on cash and equivalents     (1.6 )     2.2  
                 
Net change in cash and equivalents     (33.7 )     (67.8 )
Cash and equivalents at beginning of period     83.1       125.7  
                 
                 
Cash and equivalents at end of period   $ 49.4     $ 57.9  
                 
   
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    First Quarter (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2015   2014   US$     Currency  
                         
Americas                        
  United States   $ 883.0   $ 839.9   5.1 %   5.1 %
  Canada     42.7     46.7   (8.6 )   2.3  
  Mexico     31.9     30.7   4.1     17.6  
  Puerto Rico     24.8     25.1   (0.8 )   (0.8 )
  Brazil     13.9     15.9   (12.5 )   (1.0 )
Total Americas     996.3     958.3   4.0     5.1  
                         
EMEA                        
  France     56.4     62.8   (10.3 )   8.7  
  Switzerland     48.1     62.3   (22.7 )   (17.4 )
  Portugal     31.3     26.6   17.8     43.2  
  United Kingdom     23.6     27.8   (15.2 )   (7.5 )
  Russia     18.2     34.9   (47.9 )   (6.6 )
  Germany     13.4     16.7   (19.7 )   (3.0 )
  Italy     12.5     14.9   (15.7 )   2.4  
  Norway     9.4     14.4   (34.8 )   (17.1 )
  Other     11.0     17.1   (35.6 )   (21.8 )
Total EMEA     223.9     277.5   (19.3 )   (1.7 )
                         
APAC                        
  Singapore     31.3     30.3   3.2     10.2  
  Australia     30.4     26.5   14.9     31.0  
  Malaysia     15.5     16.5   (6.7 )   2.3  
  New Zealand     10.5     12.3   (14.7 )   (5.2 )
  Other     12.7     9.4   35.0     36.7  
Total APAC     100.4     95.0   5.5     15.2  
                         
Total Kelly Services, Inc.   $ 1,320.6   $ 1,330.8   (0.8 )%   4.4 %
                         

Source: Kelly Services

 

 

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