UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 6, 2014
KELLY SERVICES, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE | 0-1088 | 38-1510762 |
(State or other | (Commission | (IRS Employer |
jurisdiction of | File Number) | Identification |
incorporation) | Number) | |
999 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
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(Address of principal executive offices)
(Zip Code)
(248) 362-4444
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
1
Item 2.02. Results of Operations and Financial Condition
Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months and six months ended June 29, 2014. A copy of the press release is attached as exhibit 99.1 herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release dated August 6, 2014.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
KELLY SERVICES, INC. | ||
Date: August 6, 2014 | ||
/s/ Patricia Little Patricia Little Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
Date: August 6, 2014 | ||
/s/ Michael E. Debs Michael E. Debs Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | ||
3
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Press release dated August 6, 2014 |
4
Exhibit 99.1
KELLY SERVICES® REPORTS 2nd QUARTER RESULTS
TROY, MI (August 6, 2014) -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the second quarter of 2014.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the second quarter of 2014 totaled $1.4 billion, a 3.2% increase compared to the corresponding quarter of 2013.
Earnings from operations for the second quarter of 2014 totaled $5.9 million, compared to $16.4 million reported for the second quarter of 2013. Included in the results of operations in the second quarter of 2014 are restructuring charges of $1.8 million. The results of operations in the second quarter of 2013 included impairment charges of $1.7 million and restructuring charges of $0.8 million. Excluding the impairment and restructuring charges, earnings from operations were $7.7 million in the second quarter of 2014, compared to adjusted earnings of $18.9 million last year.
Diluted earnings per share in the second quarter of 2014 were $0.07 compared to $0.26 per share in the second quarter of 2013. Adjusted earnings per share were $0.10 in the second quarter of 2014 compared to $0.33 in the second quarter of 2013.
“Our second quarter results aligned with our expectations, and we’re pleased with how we’ve executed our strategy in the first half of 2014,” said Camden. “Our investments in OCG continue to yield double-digit revenue, GP, and earnings growth, confirming this segment is meeting the market’s increased demand for higher-margin talent supply chain solutions. We’re also making the aggressive investments needed to drive growth in specialty staffing across our local US markets, while continuing to invest in the success of our large account base.”
Kelly also reported that on August 5, its board of directors declared a dividend of $0.05 per share. The dividend is payable September 8 to shareholders of record as of the close of business on August 18.
In conjunction with its second quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on August 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
1
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, our ability to retain the services of our senior management, local management and field personnel, our ability to adequately protect our intellectual property rights, including our brand, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, 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 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, 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 net financial 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, our ability to access credit markets and continued availability of financing for funding working capital, 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) 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 540,000 employees in 2013. Revenue in 2013 was $5.4 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.
# # #
ANALYST CONTACT: | MEDIA CONTACT: |
James Polehna | Jane Stehney |
(248) 244-4586 | (248) 244-5630 |
james_polehna@kellyservices.com | jane_stehney@kellyservices.com |
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KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||
FOR THE 13 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013 | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars except per share data) | |||||||||||||
2014 | 2013 | Change | % Change | ||||||||||
Revenue from services | $ | 1,410.5 | $ | 1,366.9 | $ | 43.6 | 3.2 | % | |||||
Cost of services | 1,182.4 | 1,146.2 | 36.2 | 3.2 | |||||||||
Gross profit | 228.1 | 220.7 | 7.4 | 3.4 | |||||||||
Selling, general and administrative expenses | 222.2 | 202.6 | 19.6 | 9.7 | |||||||||
Asset impairments | — | 1.7 | (1.7 | ) | (100.0 | ) | |||||||
Earnings from operations | 5.9 | 16.4 | (10.5 | ) | (64.8 | ) | |||||||
Other expense, net | 0.3 | 1.6 | (1.3 | ) | 84.0 | ||||||||
Earnings before taxes | 5.6 | 14.8 | (9.2 | ) | (62.7 | ) | |||||||
Income tax expense | 2.8 | 4.8 | (2.0 | ) | (41.8 | ) | |||||||
Net earnings | $ | 2.8 | $ | 10.0 | $ | (7.2 | ) | (72.6 | ) | % | |||
Basic earnings per share | $ | 0.07 | $ | 0.26 | $ | (0.19 | ) | (73.1 | ) | % | |||
Diluted earnings per share | $ | 0.07 | $ | 0.26 | $ | (0.19 | ) | (73.1 | ) | % | |||
STATISTICS: | |||||||||||||
Gross profit rate | 16.2 | % | 16.1 | % | 0.1 | pts. | |||||||
Selling, general and administrative expenses: | |||||||||||||
% of revenue | 15.8 | 14.8 | 1.0 | ||||||||||
% of gross profit | 97.5 | 91.8 | 5.7 | ||||||||||
% Return: | |||||||||||||
Earnings from operations | 0.4 | 1.2 | (0.8 | ) | |||||||||
Earnings before taxes | 0.4 | 1.1 | (0.7 | ) | |||||||||
Net earnings | 0.2 | 0.7 | (0.5 | ) | |||||||||
Effective income tax rate | 50.2 | % | 32.2 | % | 18.0 | pts. | |||||||
Average number of shares outstanding | |||||||||||||
(millions): | |||||||||||||
Basic | 37.4 | 37.2 | |||||||||||
Diluted | 37.4 | 37.2 | |||||||||||
Shares adjusted for nonvested restricted awards | |||||||||||||
(millions): | |||||||||||||
Basic | 38.5 | 38.2 | |||||||||||
Diluted | 38.6 | 38.2 | |||||||||||
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KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013 | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars except per share data) | |||||||||||||
2014 | 2013 | Change | % Change | ||||||||||
Revenue from services | $ | 2,741.3 | $ | 2,681.7 | $ | 59.6 | 2.2 | % | |||||
Cost of services | 2,290.9 | 2,244.1 | 46.8 | 2.1 | |||||||||
Gross profit | 450.4 | 437.6 | 12.8 | 2.9 | |||||||||
Selling, general and administrative expenses | 438.2 | 412.4 | 25.8 | 6.3 | |||||||||
Asset impairments | — | 1.7 | (1.7 | ) | (100.0 | ) | |||||||
Earnings from operations | 12.2 | 23.5 | (11.3 | ) | (48.9 | ) | |||||||
Other expense, net | 2.0 | 2.6 | (0.6 | ) | 26.2 | ||||||||
Earnings before taxes | 10.2 | 20.9 | (10.7 | ) | (51.7 | ) | |||||||
Income tax expense (benefit) | 4.9 | (2.0 | ) | 6.9 | 338.4 | ||||||||
Net earnings | $ | 5.3 | $ | 22.9 | $ | (17.6 | ) | (77.0 | ) | % | |||
Basic earnings per share | $ | 0.14 | $ | 0.60 | $ | (0.46 | ) | (76.7 | ) | % | |||
Diluted earnings per share | $ | 0.14 | $ | 0.60 | $ | (0.46 | ) | (76.7 | ) | % | |||
STATISTICS: | |||||||||||||
Gross profit rate | 16.4 | % | 16.3 | % | 0.1 | pts. | |||||||
Selling, general and administrative expenses: | |||||||||||||
% of revenue | 16.0 | 15.4 | 0.6 | ||||||||||
% of gross profit | 97.3 | 94.3 | 3.0 | ||||||||||
% Return: | |||||||||||||
Earnings from operations | 0.4 | 0.9 | (0.5 | ) | |||||||||
Earnings before taxes | 0.4 | 0.8 | (0.4 | ) | |||||||||
Net earnings | 0.2 | 0.9 | (0.7 | ) | |||||||||
Effective income tax rate | 47.9 | % | (9.7 | ) | % | 57.6 | pts. | ||||||
Average number of shares outstanding | |||||||||||||
(millions): | |||||||||||||
Basic | 37.4 | 37.2 | |||||||||||
Diluted | 37.4 | 37.2 | |||||||||||
Shares adjusted for nonvested restricted awards | |||||||||||||
(millions): | |||||||||||||
Basic | 38.5 | 38.2 | |||||||||||
Diluted | 38.6 | 38.2 | |||||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Second Quarter | ||||||||||||||
Constant | ||||||||||||||
Currency | ||||||||||||||
2014 | 2013 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 661.1 | $ | 648.8 | 1.9 | % | 2.8 | % | ||||||
Staffing fee-based income included in revenue from services | 3.4 | 3.2 | 4.5 | 6.3 | ||||||||||
Gross profit | 96.5 | 94.2 | 2.5 | 3.3 | ||||||||||
Gross profit rate | 14.6 | % | 14.5 | % | 0.1 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 244.2 | $ | 251.2 | (2.8 | ) | % | (2.6 | ) | % | ||||
Staffing fee-based income included in revenue from services | 3.7 | 3.5 | 5.4 | 6.1 | ||||||||||
Gross profit | 39.0 | 39.0 | — | 0.2 | ||||||||||
Gross profit rate | 16.0 | % | 15.5 | % | 0.5 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 905.3 | $ | 900.0 | 0.6 | % | 1.3 | % | ||||||
Staffing fee-based income included in revenue from services | 7.1 | 6.7 | 5.0 | 6.2 | ||||||||||
Gross profit | 135.5 | 133.2 | 1.8 | 2.4 | ||||||||||
Total SG&A expenses | 112.6 | 102.5 | 9.9 | 10.6 | ||||||||||
Earnings from operations | 22.9 | 30.7 | (25.5 | ) | ||||||||||
Gross profit rate | 15.0 | % | 14.8 | % | 0.2 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 12.4 | 11.4 | 1.0 | |||||||||||
% of gross profit | 83.1 | 77.0 | 6.1 | |||||||||||
Return on sales | 2.5 | 3.4 | (0.9 | ) | ||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 237.0 | $ | 219.8 | 7.8 | % | 4.6 | % | ||||||
Staffing fee-based income included in revenue from services | 5.0 | 5.0 | 1.0 | 0.9 | ||||||||||
Gross profit | 34.5 | 33.8 | 2.1 | (0.9 | ) | |||||||||
Gross profit rate | 14.6 | % | 15.4 | % | (0.8 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 49.7 | $ | 43.1 | 15.1 | % | 10.3 | % | ||||||
Staffing fee-based income included in revenue from services | 3.6 | 3.8 | (6.3 | ) | (7.0 | ) | ||||||||
Gross profit | 11.3 | 10.5 | 7.0 | 3.7 | ||||||||||
Gross profit rate | 22.6 | % | 24.4 | % | (1.8 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 286.7 | $ | 262.9 | 9.0 | % | 5.5 | % | ||||||
Staffing fee-based income included in revenue from services | 8.6 | 8.8 | (2.2 | ) | (2.5 | ) | ||||||||
Gross profit | 45.8 | 44.3 | 3.2 | 0.2 | ||||||||||
SG&A expenses excluding restructuring charges | 42.3 | 39.9 | 5.9 | |||||||||||
Restructuring charges | 0.8 | — | NM | |||||||||||
Total SG&A expenses | 43.1 | 39.9 | 7.8 | 4.4 | ||||||||||
Earnings from operations | 2.7 | 4.4 | (38.5 | ) | ||||||||||
Earnings from operations excluding restructuring charges | 3.5 | 4.4 | (20.6 | ) | ||||||||||
Gross profit rate | 16.0 | % | 16.9 | % | (0.9 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 14.7 | 15.2 | (0.5 | ) | ||||||||||
% of gross profit | 92.3 | 90.0 | 2.3 | |||||||||||
Return on sales (excluding restructuring charges) | 1.2 | 1.7 | (0.5 | ) | ||||||||||
5
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Second Quarter | ||||||||||||||
Constant | ||||||||||||||
Currency | ||||||||||||||
2014 | 2013 | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 86.5 | $ | 87.7 | (1.3 | ) | % | 1.5 | % | |||||
Staffing fee-based income included in revenue from services | 2.0 | 2.5 | (20.8 | ) | (17.5 | ) | ||||||||
Gross profit | 11.7 | 12.5 | (6.8 | ) | (4.2 | ) | ||||||||
Gross profit rate | 13.5 | % | 14.3 | % | (0.8 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 10.0 | $ | 10.0 | (0.2 | ) | % | 3.9 | % | |||||
Staffing fee-based income included in revenue from services | 2.1 | 2.5 | (14.2 | ) | (10.7 | ) | ||||||||
Gross profit | 3.3 | 3.8 | (11.4 | ) | (7.7 | ) | ||||||||
Gross profit rate | 33.2 | % | 37.4 | % | (4.2 | ) | pts. | |||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 96.5 | $ | 97.7 | (1.2 | ) | % | 1.8 | % | |||||
Staffing fee-based income included in revenue from services | 4.1 | 5.0 | (17.5 | ) | (14.1 | ) | ||||||||
Gross profit | 15.0 | 16.3 | (7.8 | ) | (5.0 | ) | ||||||||
SG&A expenses excluding restructuring charges | 14.8 | 15.4 | (3.5 | ) | ||||||||||
Restructuring charges | 1.0 | — | NM | |||||||||||
Total SG&A expenses | 15.8 | 15.4 | 3.3 | 7.1 | ||||||||||
Earnings from operations | (0.8 | ) | 0.9 | NM | ||||||||||
Earnings from operations excluding restructuring charges | 0.2 | 0.9 | (82.8 | ) | ||||||||||
Gross profit rate | 15.5 | % | 16.6 | % | (1.1 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 15.4 | 15.7 | (0.3 | ) | ||||||||||
% of gross profit | 99.0 | 94.5 | 4.5 | |||||||||||
Return on sales (excluding restructuring charges) | 0.2 | 0.9 | (0.7 | ) | ||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 137.9 | $ | 118.3 | 16.5 | % | 16.8 | % | ||||||
Gross profit | 32.9 | 27.7 | 18.6 | (18.5 | ) | |||||||||
SG&A expenses excluding restructuring charges | 31.1 | 26.9 | 15.3 | |||||||||||
Restructuring charges | — | 0.8 | (100.0 | ) | ||||||||||
Total SG&A expenses | 31.1 | 27.7 | 12.2 | 12.1 | ||||||||||
Asset impairments | — | 1.7 | (100.0 | ) | ||||||||||
Earnings from operations | 1.8 | (1.7 | ) | NM | ||||||||||
Earnings from operations excluding restructuring charges | 1.8 | (0.9 | ) | NM | ||||||||||
Gross profit rate | 23.9 | % | 23.4 | % | 0.5 | pts. | ||||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 22.5 | 22.8 | (0.3 | ) | ||||||||||
% of gross profit | 94.4 | 97.1 | (2.7 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.3 | (0.7 | ) | 2.0 | ||||||||||
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KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
June Year to Date | ||||||||||||||
Constant | ||||||||||||||
Currency | ||||||||||||||
2014 | 2013 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 1,274.3 | $ | 1,287.1 | (1.0 | ) | % | — | % | |||||
Staffing fee-based income included in revenue from services | 6.6 | 6.5 | 2.9 | 5.0 | ||||||||||
Gross profit | 188.3 | 187.7 | 0.3 | 1.3 | ||||||||||
Gross profit rate | 14.8 | % | 14.6 | % | 0.2 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 480.6 | $ | 493.8 | (2.7 | ) | % | (2.5 | ) | % | ||||
Staffing fee-based income included in revenue from services | 7.3 | 6.9 | 6.1 | 6.8 | ||||||||||
Gross profit | 78.8 | 77.3 | 2.0 | 2.2 | ||||||||||
Gross profit rate | 16.4 | % | 15.6 | % | 0.8 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 1,754.9 | $ | 1,780.9 | (1.5 | ) | % | (0.7 | ) | % | ||||
Staffing fee-based income included in revenue from services | 13.9 | 13.4 | 4.5 | 5.9 | ||||||||||
Gross profit | 267.1 | 265.0 | 0.8 | 1.6 | ||||||||||
Total SG&A expenses | 222.1 | 210.4 | 5.6 | 6.4 | ||||||||||
Earnings from operations | 45.0 | 54.6 | (17.7 | ) | ||||||||||
Gross profit rate | 15.2 | % | 14.9 | % | 0.3 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 12.7 | 11.8 | 0.9 | |||||||||||
% of gross profit | 83.2 | 79.4 | 3.8 | |||||||||||
Return on sales | 2.6 | 3.1 | (0.5 | ) | ||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 458.9 | $ | 420.8 | 9.1 | % | 7.0 | % | ||||||
Staffing fee-based income included in revenue from services | 9.8 | 10.3 | (4.7 | ) | (3.5 | ) | ||||||||
Gross profit | 67.4 | 64.9 | 3.9 | 2.0 | ||||||||||
Gross profit rate | 14.7 | % | 15.4 | % | (0.7 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 97.4 | $ | 86.6 | 12.4 | % | 8.6 | % | ||||||
Staffing fee-based income included in revenue from services | 7.2 | 7.8 | (7.6 | ) | (7.5 | ) | ||||||||
Gross profit | 22.4 | 21.2 | 5.4 | 3.0 | ||||||||||
Gross profit rate | 23.0 | % | 24.5 | % | (1.5 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 556.3 | $ | 507.4 | 9.6 | % | 7.3 | % | ||||||
Staffing fee-based income included in revenue from services | 17.0 | 18.1 | (6.0 | ) | (5.2 | ) | ||||||||
Gross profit | 89.8 | 86.1 | 4.3 | 2.3 | ||||||||||
SG&A expenses excluding restructuring charges | 84.2 | 82.1 | 2.6 | |||||||||||
Restructuring charges | 0.8 | (0.2 | ) | NM | ||||||||||
Total SG&A expenses | 85.0 | 81.9 | 3.7 | 1.4 | ||||||||||
Earnings from operations | 4.8 | 4.2 | 15.0 | |||||||||||
Earnings from operations excluding restructuring charges | 5.6 | 4.0 | 38.6 | |||||||||||
Gross profit rate | 16.1 | % | 17.0 | % | (0.9 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 15.1 | 16.2 | (1.1 | ) | ||||||||||
% of gross profit | 93.7 | 95.2 | (1.5 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.0 | 0.8 | 0.2 | |||||||||||
7
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
June Year to Date | ||||||||||||||
Constant | ||||||||||||||
Currency | ||||||||||||||
2014 | 2013 | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 169.5 | $ | 169.2 | 0.2 | % | 5.3 | % | ||||||
Staffing fee-based income included in revenue from services | 3.9 | 4.7 | (17.9 | ) | (12.4 | ) | ||||||||
Gross profit | 24.0 | 24.1 | (0.4 | ) | 4.7 | |||||||||
Gross profit rate | 14.2 | % | 14.2 | % | — | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 18.6 | $ | 20.2 | (7.8 | ) | % | (1.7 | ) | % | ||||
Staffing fee-based income included in revenue from services | 3.8 | 4.5 | (14.5 | ) | (9.1 | ) | ||||||||
Gross profit | 6.1 | 7.1 | (13.8 | ) | (8.1 | ) | ||||||||
Gross profit rate | 32.7 | % | 34.9 | % | (2.2 | ) | pts. | |||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 188.1 | $ | 189.4 | (0.7 | ) | % | 4.5 | % | |||||
Staffing fee-based income included in revenue from services | 7.7 | 9.2 | (16.3 | ) | (10.8 | ) | ||||||||
Gross profit | 30.1 | 31.2 | (3.4 | ) | 1.8 | |||||||||
SG&A expenses excluding restructuring charges | 29.1 | 31.0 | (5.7 | ) | ||||||||||
Restructuring charges | 1.0 | 0.2 | 364.2 | |||||||||||
Total SG&A expenses | 30.1 | 31.2 | (2.9 | ) | 2.9 | |||||||||
Earnings from operations | — | — | NM | |||||||||||
Earnings from operations excluding restructuring charges | 1.0 | 0.2 | 335.1 | |||||||||||
Gross profit rate | 16.0 | % | 16.4 | % | (0.4 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 15.5 | 16.3 | (0.8 | ) | ||||||||||
% of gross profit | 97.0 | 99.3 | (2.3 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 0.5 | 0.1 | 0.4 | |||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 272.3 | $ | 225.7 | 20.6 | % | 21.1 | % | ||||||
Gross profit | 65.5 | 56.9 | 15.1 | 15.3 | ||||||||||
SG&A expenses excluding restructuring charges | 62.5 | 53.6 | 16.6 | |||||||||||
Restructuring charges | — | 0.8 | (100.0 | ) | ||||||||||
Total SG&A expenses | 62.5 | 54.4 | 15.0 | 15.2 | ||||||||||
Asset impairments | — | 1.7 | (100.0 | ) | ||||||||||
Earnings from operations | 3.0 | 0.8 | 226.9 | |||||||||||
Earnings from operations excluding restructuring charges | 3.0 | 1.6 | 82.1 | |||||||||||
Gross profit rate | 24.1 | % | 25.2 | % | (1.1 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 22.9 | 23.7 | (0.8 | ) | ||||||||||
% of gross profit | 95.4 | 94.1 | 1.3 | |||||||||||
Return on sales (excluding restructuring charges) | 1.1 | 0.7 | 0.4 | |||||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars) | ||||||||||
June 29, 2014 | Dec. 29, 2013 | June 30, 2013 | ||||||||
Current Assets | ||||||||||
Cash and equivalents | $ | 62.8 | $ | 125.7 | $ | 70.3 | ||||
Trade accounts receivable, less allowances of | ||||||||||
$9.2, $9.9 and $9.8, respectively | 1,132.9 | 1,023.1 | 1,038.8 | |||||||
Prepaid expenses and other current assets | 57.6 | 52.2 | 60.0 | |||||||
Deferred taxes | 31.5 | 35.5 | 39.0 | |||||||
Total current assets | 1,284.8 | 1,236.5 | 1,208.1 | |||||||
Property and Equipment, Net | 91.4 | 92.0 | 87.2 | |||||||
Noncurrent Deferred Taxes | 130.8 | 121.7 | 103.1 | |||||||
Goodwill, Net | 90.3 | 90.3 | 90.3 | |||||||
Other Assets | 295.7 | 258.1 | 227.8 | |||||||
Total Assets | $ | 1,893.0 | $ | 1,798.6 | $ | 1,716.5 | ||||
Current Liabilities | ||||||||||
Short-term borrowings | $ | 89.5 | $ | 28.3 | $ | 83.2 | ||||
Accounts payable and accrued liabilities | 328.4 | 342.4 | 289.2 | |||||||
Accrued payroll and related taxes | 300.5 | 294.9 | 277.9 | |||||||
Accrued insurance | 25.2 | 27.6 | 31.2 | |||||||
Income and other taxes | 74.9 | 68.8 | 64.9 | |||||||
Total current liabilities | 818.5 | 762.0 | 746.4 | |||||||
Noncurrent Liabilities | ||||||||||
Accrued insurance | 44.7 | 46.0 | 41.4 | |||||||
Accrued retirement benefits | 147.4 | 134.7 | 123.2 | |||||||
Other long-term liabilities | 41.9 | 33.3 | 28.2 | |||||||
Total noncurrent liabilities | 234.0 | 214.0 | 192.8 | |||||||
Stockholders' Equity | ||||||||||
Common stock | 40.1 | 40.1 | 40.1 | |||||||
Treasury stock | (55.5 | ) | (56.2 | ) | (60.6 | ) | ||||
Paid-in capital | 29.0 | 26.0 | 28.9 | |||||||
Earnings invested in the business | 752.8 | 751.3 | 719.1 | |||||||
Accumulated other comprehensive income | 74.1 | 61.4 | 49.8 | |||||||
Total stockholders' equity | 840.5 | 822.6 | 777.3 | |||||||
Total Liabilities and Stockholders' Equity | $ | 1,893.0 | $ | 1,798.6 | $ | 1,716.5 | ||||
STATISTICS: | ||||||||||
Working Capital | $ | 466.3 | $ | 474.5 | $ | 461.7 | ||||
Current Ratio | 1.6 | 1.6 | 1.6 | |||||||
Debt-to-capital % | 9.6 | % | 3.3 | % | 9.7 | % | ||||
Global Days Sales Outstanding | 57 | 52 | 54 | |||||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 26 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013 | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2014 | 2013 | |||||
Cash flows from operating activities: | ||||||
Net earnings | $ | 5.3 | $ | 22.9 | ||
Noncash adjustments: | ||||||
Impairment of assets | — | 1.7 | ||||
Depreciation and amortization | 10.8 | 10.5 | ||||
Provision for bad debts | 2.6 | 0.5 | ||||
Stock-based compensation | 3.5 | 2.6 | ||||
Other, net | 0.7 | 0.7 | ||||
Changes in operating assets and liabilities | (130.4 | ) | (53.1 | ) | ||
Net cash used in operating activities | (107.5 | ) | (14.2 | ) | ||
Cash flows from investing activities: | ||||||
Capital expenditures | (8.9 | ) | (7.7 | ) | ||
Investment in equity affiliate | (5.4 | ) | — | |||
Other investing activities | 0.4 | (0.2 | ) | |||
Net cash used in investing activities | (13.9 | ) | (7.9 | ) | ||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | 61.2 | 19.1 | ||||
Dividend payments | (3.8 | ) | (3.8 | ) | ||
Net cash from financing activities | 57.4 | 15.3 | ||||
Effect of exchange rates on cash and equivalents | 1.1 | 0.8 | ||||
Net change in cash and equivalents | (62.9 | ) | (6.0 | ) | ||
Cash and equivalents at beginning of period | 125.7 | 76.3 | ||||
Cash and equivalents at end of period | $ | 62.8 | $ | 70.3 | ||
10
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
Second Quarter (Commercial, PT and OCG) | |||||||||||||
% Change | |||||||||||||
Constant | |||||||||||||
2014 | 2013 | US$ | Currency | ||||||||||
Americas | |||||||||||||
United States | $ | 888.3 | $ | 864.3 | 2.8 | % | 2.8 | % | |||||
Canada | 49.6 | 55.0 | (9.8 | ) | (3.9 | ) | |||||||
Mexico | 34.6 | 35.9 | (3.4 | ) | 0.5 | ||||||||
Puerto Rico | 27.6 | 26.1 | 5.8 | 5.8 | |||||||||
Brazil | 13.7 | 13.4 | 1.9 | 14.4 | |||||||||
Total Americas | 1,013.8 | 994.7 | 1.9 | 2.6 | |||||||||
EMEA | |||||||||||||
France | 69.3 | 62.3 | 11.2 | 5.9 | |||||||||
Switzerland | 66.7 | 63.6 | 5.0 | (0.9 | ) | ||||||||
Russia | 32.8 | 34.6 | (5.1 | ) | 4.8 | ||||||||
Portugal | 32.5 | 21.1 | 53.7 | 46.5 | |||||||||
United Kingdom | 28.4 | 25.8 | 10.1 | 0.5 | |||||||||
Italy | 16.6 | 14.7 | 12.8 | 7.5 | |||||||||
Germany | 16.5 | 15.9 | 4.3 | (0.7 | ) | ||||||||
Norway | 14.4 | 15.4 | (6.2 | ) | (3.7 | ) | |||||||
Other | 18.0 | 17.3 | 3.7 | (0.4 | ) | ||||||||
Total EMEA | 295.2 | 270.7 | 9.1 | 5.6 | |||||||||
APAC | |||||||||||||
Singapore | 31.1 | 28.0 | 11.0 | 11.2 | |||||||||
Australia | 30.0 | 35.3 | (15.0 | ) | (9.8 | ) | |||||||
Malaysia | 16.8 | 17.2 | (2.5 | ) | 2.8 | ||||||||
New Zealand | 13.2 | 12.0 | 10.1 | 5.0 | |||||||||
Other | 10.4 | 9.0 | 15.1 | 25.9 | |||||||||
Total APAC | 101.5 | 101.5 | (0.1 | ) | 3.1 | ||||||||
Total Kelly Services, Inc. | $ | 1,410.5 | $ | 1,366.9 | 3.2 | % | 3.2 | % | |||||
11
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
June Year to Date (Commercial, PT and OCG) | |||||||||||||
% Change | |||||||||||||
Constant | |||||||||||||
2014 | 2013 | US$ | Currency | ||||||||||
Americas | |||||||||||||
United States | $ | 1,728.2 | $ | 1,703.8 | 1.4 | % | 1.4 | % | |||||
Canada | 96.3 | 111.0 | (13.3 | ) | (6.4 | ) | |||||||
Mexico | 65.3 | 66.3 | (1.5 | ) | 2.9 | ||||||||
Puerto Rico | 52.7 | 49.2 | 7.1 | 7.1 | |||||||||
Brazil | 29.6 | 31.9 | (7.2 | ) | 6.1 | ||||||||
Total Americas | 1,972.1 | 1,962.2 | 0.5 | 1.2 | |||||||||
EMEA | |||||||||||||
France | 132.1 | 119.6 | 10.5 | 5.8 | |||||||||
Switzerland | 129.0 | 117.0 | 10.3 | 4.9 | |||||||||
Russia | 67.7 | 69.1 | (2.0 | ) | 10.7 | ||||||||
Portugal | 59.1 | 38.9 | 51.9 | 45.3 | |||||||||
United Kingdom | 56.2 | 51.6 | 8.9 | 0.7 | |||||||||
Germany | 33.2 | 31.9 | 4.2 | (0.2 | ) | ||||||||
Italy | 31.5 | 29.8 | 5.7 | 1.2 | |||||||||
Norway | 28.8 | 30.2 | (4.7 | ) | 0.5 | ||||||||
Other | 35.1 | 34.7 | 1.0 | (2.5 | ) | ||||||||
Total EMEA | 572.7 | 522.8 | 9.6 | 7.2 | |||||||||
APAC | |||||||||||||
Singapore | 61.4 | 54.1 | 13.5 | 15.0 | |||||||||
Australia | 56.5 | 68.0 | (17.0 | ) | (8.1 | ) | |||||||
Malaysia | 33.3 | 33.9 | (1.6 | ) | 4.5 | ||||||||
New Zealand | 25.5 | 23.5 | 8.8 | 6.1 | |||||||||
Other | 19.8 | 17.2 | 14.9 | 28.5 | |||||||||
Total APAC | 196.5 | 196.7 | (0.1 | ) | 5.3 | ||||||||
Total Kelly Services, Inc. | $ | 2,741.3 | $ | 2,681.7 | 2.2 | % | 2.7 | % | |||||
12
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
FOR THE 13 WEEKS ENDED JUNE 29, 2014 AND JUNE 30, 2013 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
2014 | 2013 | |||||||||||||||
As reported | Restructuring Charges (Note 1) | Adjusted Earnings | Adjusted Earnings | % Change | ||||||||||||
Revenue from services | $ | 1,410.5 | $ | — | $ | 1,410.5 | $ | 1,366.9 | 3.2 | % | ||||||
Cost of services | 1,182.4 | — | 1,182.4 | 1,146.2 | 3.2 | |||||||||||
Gross profit | 228.1 | — | 228.1 | 220.7 | 3.4 | |||||||||||
SG&A expenses | 222.2 | (1.8 | ) | 220.4 | 201.8 | 9.2 | ||||||||||
Earnings from operations | 5.9 | 1.8 | 7.7 | 18.9 | (59.5 | ) | ||||||||||
Other expense, net | 0.3 | — | 0.3 | 1.6 | 84.0 | |||||||||||
Earnings before taxes | 5.6 | 1.8 | 7.4 | 17.3 | (57.1 | ) | ||||||||||
Inc. tax expense (benefit) | 2.8 | 0.6 | 3.4 | 4.8 | (28.2 | ) | ||||||||||
Net earnings | $ | 2.8 | $ | 1.2 | $ | 4.0 | $ | 12.5 | (68.2 | ) | % | |||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.07 | $ | 0.03 | $ | 0.10 | $ | 0.33 | (69.7 | ) | % | |||||
Diluted | $ | 0.07 | $ | 0.03 | $ | 0.10 | $ | 0.33 | (69.7 | ) | % | |||||
2013 | ||||||||||||||||
As reported | Restructuring Charges (Note 1) | Asset Impairments (Note 2) | Adjusted Earnings | |||||||||||||
Revenue from services | $ | 1,366.9 | $ | — | $ | — | $ | 1,366.9 | ||||||||
Cost of services | 1,146.2 | — | — | 1,146.2 | ||||||||||||
Gross profit | 220.7 | — | — | 220.7 | ||||||||||||
SG&A expenses | 202.6 | (0.8 | ) | — | 201.8 | |||||||||||
Asset impairments | 1.7 | — | (1.7 | ) | — | |||||||||||
Earnings from operations | 16.4 | 0.8 | 1.7 | 18.9 | ||||||||||||
Other expense, net | 1.6 | — | — | 1.6 | ||||||||||||
Earnings before taxes | 14.8 | 0.8 | 1.7 | 17.3 | ||||||||||||
Inc. tax expense (benefit) | 4.8 | — | — | 4.8 | ||||||||||||
Net earnings | $ | 10.0 | $ | 0.8 | $ | 1.7 | $ | 12.5 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.26 | $ | 0.02 | $ | 0.04 | $ | 0.33 | ||||||||
Diluted | $ | 0.26 | $ | 0.02 | $ | 0.04 | $ | 0.33 | ||||||||
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 JUNE 29, 2014 AND JUNE 30, 2013 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
2014 | 2013 | |||||||||||||||
As reported | Restructuring Charges (Note 1) | Adjusted Earnings | Adjusted Earnings | % Change | ||||||||||||
Revenue from services | $ | 2,741.3 | $ | — | $ | 2,741.3 | $ | 2,681.7 | 2.2 | % | ||||||
Cost of services | 2,290.9 | — | 2,290.9 | 2,244.1 | 2.1 | |||||||||||
Gross profit | 450.4 | — | 450.4 | 437.6 | 2.9 | |||||||||||
SG&A expenses | 438.2 | (1.8 | ) | 436.4 | 411.6 | 6.1 | ||||||||||
Earnings from operations | 12.2 | 1.8 | 14.0 | 26.0 | (46.5 | ) | ||||||||||
Other expense, net | 2.0 | — | 2.0 | 2.6 | 26.2 | |||||||||||
Earnings before taxes | 10.2 | 1.8 | 12.0 | 23.4 | (48.8 | ) | ||||||||||
Inc. tax expense (benefit) | 4.9 | 0.6 | 5.5 | (1.9 | ) | 384.4 | ||||||||||
Net earnings | $ | 5.3 | $ | 1.2 | $ | 6.5 | $ | 25.3 | (74.4 | ) | % | |||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.14 | $ | 0.03 | $ | 0.17 | $ | 0.66 | (74.2 | ) | % | |||||
Diluted | $ | 0.14 | $ | 0.03 | $ | 0.17 | $ | 0.66 | (74.2 | ) | % | |||||
2013 | ||||||||||||||||
As reported | Restructuring Charges (Note 1) | Asset Impairments (Note 2) | Adjusted Earnings | |||||||||||||
Revenue from services | $ | 2,681.7 | $ | — | $ | — | $ | 2,681.7 | ||||||||
Cost of services | 2,244.1 | — | — | 2,244.1 | ||||||||||||
Gross profit | 437.6 | — | — | 437.6 | ||||||||||||
SG&A expenses | 412.4 | (0.8 | ) | — | 411.6 | |||||||||||
Asset impairments | 1.7 | — | (1.7 | ) | — | |||||||||||
Earnings from operations | 23.5 | 0.8 | 1.7 | 26.0 | ||||||||||||
Other expense, net | 2.6 | — | — | 2.6 | ||||||||||||
Earnings before taxes | 20.9 | 0.8 | 1.7 | 23.4 | ||||||||||||
Inc. tax expense (benefit) | (2.0 | ) | 0.1 | — | (1.9 | ) | ||||||||||
Net earnings | $ | 22.9 | $ | 0.7 | $ | 1.7 | $ | 25.3 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.60 | $ | 0.02 | $ | 0.04 | $ | 0.66 | ||||||||
Diluted | $ | 0.60 | $ | 0.02 | $ | 0.04 | $ | 0.66 | ||||||||
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 SERIVCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2014 financial performance and increases comparability. Specifically, Management believes that excluding 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.
(1) Restructuring charges in 2014 relate to costs incurred for exiting the staffing business in Sweden and closing branches in Australia. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.
(2) Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.
15