Kelly Services® Reports 1st Quarter Results

May 8, 2013

TROY, MI -- (Marketwired) -- 05/08/13 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter of 2013.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2013 totaled $1.3 billion, a 3% decrease compared to the corresponding quarter of 2012.

Earnings from operations for the first quarter of 2013 totaled $7.1 million, compared to $14.7 million reported for the first quarter of 2012.

Diluted earnings per share from continuing operations in the first quarter of 2013 were $0.34 compared to $0.24 per share in the first quarter of 2012.

"The sluggish economic growth we saw throughout 2012 continued into the first quarter of 2013, accompanied by a softening in demand for temporary labor," noted Camden. "Given these tough conditions, we're pleased to report that Kelly's performance exceeded expectations. We delivered an operating profit and controlled our expenses while moving ahead with strategic investments."

Camden acknowledged that the persistently slow pace of this recovery may be a medium-term reality, but remains confident that Kelly is positioned for long-term growth. "Our strategy was designed with the modern labor market in mind. We're winning higher-margin business, expanding key customer relationships, and strengthening our talent supply chain. The growth we're seeing in our professional and technical solutions and in our outsourcing and consulting group confirms that we're on the right track."

Kelly also reported that on May 7, its board of directors declared a dividend of $0.05 per share. The dividend is payable June 4 to shareholders of record as of the close of business on May 20.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 8, 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, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers' compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, 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 retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws), the net financial impact of the Patient Protection and Affordable Care Act on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, 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 provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, and Twitter. Download The Talent Project, a free iPad app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012
(UNAUDITED)
(In millions of dollars except per share data)

		2013			2012			Change			% Change

Revenue from services		$	1,314.8		$	1,354.8		$	(40.0	)	(3.0	)%

Cost of services			1,097.9			1,131.1			(33.2	)	(2.9	)

Gross profit			216.9			223.7			(6.8	)	(3.1	)

Selling, general and administrative expenses			209.8			209.0			0.8		0.4


Earnings from operations			7.1			14.7			(7.6	)	(51.8	)

Other expense, net			1.0			0.6			0.4		58.9

Earnings from continuing operations before taxes			6.1			14.1			(8.0	)	(56.6	)

Income tax (benefit) expense			(6.8	)		4.9			(11.7	)	(239.4	)

Earnings from continuing operations			12.9			9.2			3.7		40.0

Earnings from discontinued operations, net of tax			-			0.4			(0.4	)	(100.0	)

Net earnings		$	12.9		$	9.6		$	3.3		33.8	%

Basic earnings per share on common stock
	Earnings from continuing operations	$	0.34		$	0.24		$	0.10		41.7	%
	Earnings from discontinued operations		-			0.01			(0.01	)	(100.0	)
	Net earnings		0.34			0.26			0.08		30.8

Diluted earnings per share on common stock
	Earnings from continuing operations	$	0.34		$	0.24		$	0.10		41.7	%
	Earnings from discontinued operations		-			0.01			(0.01	)	(100.0	)
	Net earnings		0.34			0.26			0.08		30.8


STATISTICS:

Gross profit rate			16.5	%		16.5	%		-		pts.

Selling, general and administrative expenses:
	% of revenue		16.0			15.4			0.6
	% of gross profit		96.7			93.4			3.3

% Return:
	Earnings from operations		0.5			1.1			(0.6	)
	Earnings from continuing operations before taxes		0.5			1.0			(0.5	)
	Earnings from continuing operations		1.0			0.7			0.3
	Net earnings		1.0			0.7			0.3

Effective income tax rate			(110.9	)%		34.6	%		(145.5	)	pts.

Average number of shares outstanding (millions):
	Basic		37.2			36.9
	Diluted		37.2			36.9

Shares adjusted for nonvested restricted awards (millions):
	Basic		38.2			37.8
	Diluted		38.2			37.8


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				First Quarter
												Constant
												Currency
				2013			2012			Change		Change
AMERICAS
	Commercial
		Revenue from services (including fee-based income)		$	638.3		$	669.3		(4.6	)%	(4.3	)%
		Fee-based income			3.9			3.5		13.3		14.4
		Gross profit			93.5			98.0		(4.5	)	(4.2	)

		Gross profit rate			14.7	%		14.6	%	0.1	pts.

	PT
		Revenue from services (including fee-based income)		$	251.0		$	250.1		0.4	%	0.4	%
		Fee-based income			3.9			3.4		13.4		13.5
		Gross profit			40.4			40.2		0.4		0.4

		Gross profit rate			16.1	%		16.1	%	-	pts.

	Total Americas
		Revenue from services (including fee-based income)		$	889.3		$	919.4		(3.3	)%	(3.0	)%
		Fee-based income			7.8			6.9		13.4		14.0
		Gross profit			133.9			138.2		(3.1	)	(2.9	)
		Total SG&A expenses			109.2			102.9		6.1		6.3
		Earnings from operations			24.7			35.3		(30.0	)

		Gross profit rate			15.1	%		15.0	%	0.1	pts.
		Expense rates:
			% of revenue		12.3			11.2		1.1
			% of gross profit		81.6			74.5		7.1
		Operating margin			2.8			3.8		(1.0	)

EMEA
	Commercial
		Revenue from services (including fee-based income)		$	201.0		$	213.0		(5.6	)%	(5.5	)%
		Fee-based income			5.5			6.1		(9.9	)	(9.8	)
		Gross profit			31.1			33.5		(7.2	)	(7.1	)

		Gross profit rate			15.5	%		15.7	%	(0.2)	pts.

	PT
		Revenue from services (including fee-based income)		$	43.5		$	42.2		3.0	%	3.1	%
		Fee-based income			4.0			4.6		(13.2	)	(13.0	)
		Gross profit			10.7			11.3		(5.4	)	(5.3	)

		Gross profit rate			24.6	%		26.8	%	(2.2)	pts.

	Total EMEA
		Revenue from services (including fee-based income)		$	244.5		$	255.2		(4.2	)%	(4.1	)%
		Fee-based income			9.5			10.7		(11.3	)	(11.2	)
		Gross profit			41.8			44.8		(6.7	)	(6.6	)
		SG&A expenses excluding restructuring charges			42.2			44.5		(5.2	)
		Restructuring charges			(0.2	)		-		NM
		Total SG&A expenses			42.0			44.5		(5.6	)	(5.5	)
		Earnings from operations			(0.2	)		0.3		NM
		Earnings from operations excluding restructuring charges			(0.4	)		0.3		NM

		Gross profit rate			17.1	%		17.6	%	(0.5)	pts.
		Expense rates (excluding restructuring charges):
			% of revenue		17.2			17.4		(0.2	)
			% of gross profit		100.8			99.2		1.6
		Operating margin (excluding restructuring charges)			(0.1	)		0.1		(0.2	)


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				First Quarter
												Constant
												Currency
				2013			2012			Change		Change
APAC
	Commercial
		Revenue from services (including fee-based income)		$	81.5		$	88.3		(7.7	)%	(7.4	)%
		Fee-based income			2.7			3.3		(18.7	)	(17.4	)
		Gross profit			11.6			13.1		(11.5	)	(11.0	)

		Gross profit rate			14.2	%		14.8	%	(0.6	) pts.

	PT
		Revenue from services (including fee-based income)		$	10.2		$	12.8		(20.9	)%	(20.0	)%
		Fee-based income			2.0			4.0		(51.0	)	(50.5	)
		Gross profit			3.3			5.2		(36.6	)	(35.9	)

		Gross profit rate			32.5	%		40.5	%	(8.0	) pts.

	Total APAC
		Revenue from services (including fee-based income)		$	91.7		$	101.1		(9.4	)%	(9.0	)%
		Fee-based income			4.7			7.3		(36.2	)	(35.4	)
		Gross profit			14.9			18.3		(18.7	)	(18.1	)
		SG&A expenses excluding restructuring charges			15.6			19.7		(20.9	)
		Restructuring charges			0.2			-		NM
		Total SG&A expenses			15.8			19.7		(19.9	)	(19.3	)
		Earnings from operations			(0.9	)		(1.4	)	35.7
		Earnings from operations excluding restructuring charges			(0.7	)		(1.4	)	50.1

		Gross profit rate			16.2	%		18.1	%	(1.9	) pts.
		Expense rates (excluding restructuring charges):
			% of revenue		17.0			19.4		(2.4	)
			% of gross profit		104.7			107.6		(2.9	)
		Operating margin (excluding restructuring charges)			(0.8	)		(1.4	)	0.6

OCG
		Revenue from services (including fee-based income)		$	99.0		$	86.7		14.2	%	14.4	%
		Fee-based income			14.6			11.6		25.8		26.3
		Gross profit			27.1			23.1		17.0		17.3
		Total SG&A expenses			25.4			22.6		12.2		12.5
		Earnings from operations			1.7			0.5		233.4

		Gross profit rate			27.3	%		26.7	%	0.6	pts.
		Expense rates:
			% of revenue		25.6			26.1		(0.5	)
			% of gross profit		93.8			97.8		(4.0	)
		Operating margin			1.7			0.6		1.1


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)

			Mar. 31, 2013			Dec. 30, 2012			Apr. 1, 2012
Current Assets
	Cash and equivalents		$	62.1		$	76.3		$	88.3
	Trade accounts receivable, less allowances of $10.1, $10.4 and $12.9, respectively			999.8			1,013.9			977.9
	Prepaid expenses and other current assets			56.8			57.5			64.2
	Deferred taxes			36.3			44.9			34.3

		Total current assets		1,155.0			1,192.6			1,164.7

Property and Equipment, Net				87.5			89.9			90.3

Noncurrent Deferred Taxes				106.6			82.8			96.4

Goodwill, Net				90.3			89.5			89.8

Other Assets				208.6			180.9			165.5

Total Assets			$	1,648.0		$	1,635.7		$	1,606.7

Current Liabilities
	Short-term borrowings		$	50.2		$	64.1		$	94.7
	Accounts payable and accrued liabilities			311.8			295.6			275.7
	Accrued payroll and related taxes			250.2			264.5			273.8
	Accrued insurance			31.4			32.8			30.5
	Income and other taxes			61.2			65.3			61.1

		Total current liabilities		704.8			722.3			735.8

Noncurrent Liabilities
	Accrued insurance			41.6			43.5			51.8
	Accrued retirement benefits			120.2			111.0			101.5
	Other long-term liabilities			22.9			17.9			24.6

		Total noncurrent liabilities		184.7			172.4			177.9

Stockholders' Equity
	Common stock			40.1			40.1			40.1
	Treasury stock			(61.1	)		(61.6	)		(66.6	)
	Paid-in capital			27.8			27.1			29.8
	Earnings invested in the business			711.0			700.0			665.2
	Accumulated other comprehensive income			40.7			35.4			24.5

		Total stockholders' equity		758.5			741.0			693.0

Total Liabilities and Stockholders' Equity			$	1,648.0		$	1,635.7		$	1,606.7


STATISTICS:
	Working Capital		$	450.2		$	470.3		$	428.9
	Current Ratio			1.6			1.7			1.6
	Debt-to-capital %			6.2	%		8.0	%		12.0	%
	Global Days Sales Outstanding			54			53			54


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012
(UNAUDITED)
(In millions of dollars)


				2013			2012

Cash flows from operating activities
	Net earnings			$	12.9		$	9.6
	Noncash adjustments:
		Depreciation and amortization			5.3			5.7
		Provision for bad debts			0.4			0.2
		Stock-based compensation			1.2			1.4
		Other, net			0.2			-
	Changes in operating assets and liabilities				(14.1	)		(3.5	)

			Net cash from operating activities		5.9			13.4

Cash flows from investing activities
	Capital expenditures				(2.8	)		(4.0	)
	Other investing activities				0.2			(0.4	)

			Net cash used in investing activities		(2.6	)		(4.4	)

Cash flows from financing activities
	Net change in short-term borrowings				(13.7	)		(2.3	)
	Dividend payments				(1.9	)		(1.9	)

			Net cash used in financing activities		(15.6	)		(4.2	)

Effect of exchange rates on cash and equivalents					(1.9	)		2.5

Net change in cash and equivalents					(14.2	)		7.3
Cash and equivalents at beginning of period					76.3			81.0


Cash and equivalents at end of period				$	62.1		$	88.3


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)

		First Quarter (Commercial, PT and OCG)
						% Change
								Constant
		2013		2012		US$		Currency

Americas
	United States	$	839.5	$	858.5	(2.2	)%	(2.2	)%
	Canada		56.0		59.5	(5.9	)	(5.2	)
	Mexico		30.4		25.5	19.6		16.7
	Puerto Rico		23.1		25.9	(10.7	)	(10.7	)
	Brazil		18.5		18.0	2.4		16.4
Total Americas			967.5		987.4	(2.0	)	(1.8	)

EMEA
	France		57.3		62.8	(8.8	)	(9.3	)
	Switzerland		53.4		53.6	(0.3	)	0.8
	Russia		34.5		33.6	2.5		3.8
	United Kingdom		25.8		27.7	(6.7	)	(5.5	)
	Portugal		17.8		18.2	(2.5	)	(2.8	)
	Germany		16.0		18.7	(14.4	)	(14.9	)
	Norway		14.8		16.5	(9.9	)	(12.3	)
	Italy		15.1		16.3	(7.3	)	(7.7	)
	Other		17.4		15.6	11.2		10.2
Total EMEA			252.1		263.0	(4.2	)	(4.0	)

APAC
	Australia		32.7		33.9	(3.3	)	(1.6	)
	Singapore		26.1		24.2	8.1		6.0
	Malaysia		16.7		17.8	(6.5	)	(5.7	)
	New Zealand		11.5		13.1	(12.7	)	(14.3	)
	Other		8.2		15.4	(46.9	)	(43.8	)
Total APAC			95.2		104.4	(8.8	)	(8.4	)

Total Kelly Services, Inc.		$	1,314.8	$	1,354.8	(3.0	)%	(2.7	)%

ANALYST CONTACT:
James Polehna
(248) 244-4586
james_polehna@kellyservices.com

MEDIA CONTACT:
Jane Stehney
(248) 244-5630
jane_stehney@kellyservices.com

Source: Kelly Services, Inc.

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Press Release Details

Kelly Services® Reports 1st Quarter Results