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): February 4, 2016
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)) |
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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 year ended January 3, 2016. 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 February 4, 2016.
99.2 Presentation materials for February 4, 2016 conference call.
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. | ||
February 4, 2016 | ||
/s/ Olivier G. Thirot Olivier G. Thirot Senior Vice President and Chief Financial Officer (Principal Financial Officer) | ||
February 4, 2016 | ||
/s/ Laura S. Lockhart Laura S. Lockhart Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) | ||
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EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Press release dated February 4, 2016 |
99.2 | Presentation materials for February 4, 2016 conference call |
4
Exhibit 99.1
KELLY SERVICES® REPORTS
STRONG FINISH TO THE YEAR AND SOLID 2015 RESULTS
Fourth Quarter Highlights
• | Earnings from operations triple from a year ago, excluding restructuring |
• | Earnings per share of $0.88 versus $0.54, excluding restructuring, a 63% increase year-over-year |
• | OCG segment revenue up 14% year-over-year (up 16% in constant currency) |
• | Total Company revenue up 3% year-over-year (up 7% in constant currency) |
TROY, MI (February 4, 2016) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2015.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2015 totaled
$1.5 billion, a 3% increase (a 7% increase on a constant currency basis) compared to the corresponding quarter of 2014. Revenue for the full year totaled $5.5 billion, a 1% decrease (a 5% increase on a constant currency basis) compared to the prior year. Fourth quarter 2015 and fiscal 2015 include 14 and 53 weeks, respectively.
Earnings from operations for the fourth quarter of 2015 totaled $26.5 million, compared to $2.6 million reported for the fourth quarter of 2014. The results of operations in the fourth quarter of 2014 included restructuring charges of $6.2 million. Excluding the restructuring charges, earnings from operations were $8.8 million in the fourth quarter of 2014.
Earnings from operations for the full year of 2015 totaled $66.7 million compared to $21.9 million in 2014. Included in the results from operations for 2014 are restructuring charges of $12.0 million. Excluding this item, earnings from operations were $33.9 million in 2014.
Diluted earnings per share in the fourth quarter of 2015 were $0.88 compared to $0.44 per share in the fourth quarter of 2014. Included in diluted earnings per share for the fourth quarter of 2014 are restructuring charges of $0.10 per share. Excluding this item, diluted earnings per share for the fourth quarter of 2014 were $0.54 per share.
Diluted earnings per share for the full year of 2015 were $1.39 compared to $0.61 per share in 2014. The diluted earnings per share for 2014 included restructuring charges of $0.19 per share. Excluding this item, diluted earnings per share for 2014 were $0.81 per share.
Commenting on the fourth quarter, Camden stated, “Kelly’s fourth quarter performance capped off a year of solid earnings growth, and we are very pleased with our strong operating leverage and strategic execution throughout 2015. All told, excluding the 2014 restructuring charges, we dropped nearly 70% of our full-year constant currency GP dollar growth to the bottom line. Kelly has entered 2016 as a more efficient organization keenly focused on profitability…and we expect our investments in PT and OCG to continue yielding results as we expand Kelly’s role as a trusted talent advisor to our clients worldwide.”
1
In conjunction with its fourth quarter and full year earnings release, Kelly Services has published a financial presentation regarding the fourth quarter and full year results on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on February 4, 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, 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. 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 14 WEEKS ENDED JANUARY 3, 2016 AND 13 WEEKS ENDED DECEMBER 28, 2014 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2015 | 2014 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 1,461.6 | $ | 1,425.0 | $ | 36.6 | 2.6 | % | 7.3 | % | ||||||
Cost of services | 1,212.1 | 1,192.4 | 19.7 | 1.7 | ||||||||||||
Gross profit | 249.5 | 232.6 | 16.9 | 7.2 | 11.7 | |||||||||||
Selling, general and administrative expenses | 223.0 | 230.0 | (7.0 | ) | (3.1 | ) | 0.5 | |||||||||
Earnings from operations | 26.5 | 2.6 | 23.9 | NM | ||||||||||||
Other expense, net | 0.7 | 1.1 | (0.4 | ) | (40.9 | ) | ||||||||||
Earnings before taxes | 25.8 | 1.5 | 24.3 | NM | ||||||||||||
Income tax (benefit) expense | (8.4 | ) | (15.5 | ) | 7.1 | 46.1 | ||||||||||
Net earnings | $ | 34.2 | $ | 17.0 | $ | 17.2 | 99.5 | % | ||||||||
Basic earnings per share | $ | 0.88 | $ | 0.44 | $ | 0.44 | 100.0 | % | ||||||||
Diluted earnings per share | $ | 0.88 | $ | 0.44 | $ | 0.44 | 100.0 | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 17.1 | % | 16.3 | % | 0.8 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 15.3 | 16.1 | (0.8 | ) | ||||||||||||
% of gross profit | 89.4 | 98.8 | (9.4 | ) | ||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 1.8 | 0.2 | 1.6 | |||||||||||||
Earnings before taxes | 1.8 | 0.1 | 1.7 | |||||||||||||
Net earnings | 2.3 | 1.2 | 1.1 | |||||||||||||
Effective income tax rate | (32.4 | ) | % | (949.7 | ) | % | 917.3 | pts. | ||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 38.0 | 37.7 | ||||||||||||||
Diluted | 38.0 | 37.7 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 38.9 | 38.9 | ||||||||||||||
Diluted | 38.9 | 38.9 | ||||||||||||||
3
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 53 WEEKS ENDED JANUARY 3, 2016 AND 52 WEEKS ENDED DECEMBER 28, 2014 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2015 | 2014 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 5,518.2 | $ | 5,562.7 | $ | (44.5 | ) | (0.8 | ) | % | 4.7 | % | ||||
Cost of services | 4,597.9 | 4,654.3 | (56.4 | ) | (1.2 | ) | ||||||||||
Gross profit | 920.3 | 908.4 | 11.9 | 1.3 | 6.4 | |||||||||||
Selling, general and administrative expenses | 853.6 | 886.5 | (32.9 | ) | (3.7 | ) | 0.8 | |||||||||
Earnings from operations | 66.7 | 21.9 | 44.8 | 206.2 | ||||||||||||
Other expense, net | 4.2 | 5.3 | (1.1 | ) | (19.9 | ) | ||||||||||
Earnings before taxes | 62.5 | 16.6 | 45.9 | 277.4 | ||||||||||||
Income tax expense (benefit) | 8.7 | (7.1 | ) | 15.8 | 221.4 | |||||||||||
Net earnings | $ | 53.8 | $ | 23.7 | $ | 30.1 | 126.9 | % | ||||||||
Basic earnings per share | $ | 1.39 | $ | 0.61 | $ | 0.78 | 127.9 | % | ||||||||
Diluted earnings per share | $ | 1.39 | $ | 0.61 | $ | 0.78 | 127.9 | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 16.7 | % | 16.3 | % | 0.4 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 15.5 | 15.9 | (0.4 | ) | ||||||||||||
% of gross profit | 92.8 | 97.6 | (4.8 | ) | ||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 1.2 | 0.4 | 0.8 | |||||||||||||
Earnings before taxes | 1.1 | 0.3 | 0.8 | |||||||||||||
Net earnings | 1.0 | 0.4 | 0.6 | |||||||||||||
Effective income tax rate | 13.9 | % | (43.2 | ) | % | 57.1 | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 37.8 | 37.5 | ||||||||||||||
Diluted | 37.9 | 37.5 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 38.8 | 38.6 | ||||||||||||||
Diluted | 38.9 | 38.6 | ||||||||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Fourth Quarter | ||||||||||||||
2015 | 2014 | % | CC % | |||||||||||
(14 Wks) | (13 Wks) | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 696.1 | $ | 694.5 | 0.2 | % | 2.7 | % | ||||||
Staffing fee-based income included in revenue from services | 3.7 | 4.0 | (5.5 | ) | (3.2 | ) | ||||||||
Gross profit | 110.0 | 99.6 | 10.3 | 12.5 | ||||||||||
Gross profit rate | 15.8 | % | 14.4 | % | 1.4 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 250.1 | $ | 232.9 | 7.4 | % | 7.8 | % | ||||||
Staffing fee-based income included in revenue from services | 4.5 | 3.9 | 17.0 | 18.7 | ||||||||||
Gross profit | 43.0 | 37.5 | 14.5 | 15.0 | ||||||||||
Gross profit rate | 17.2 | % | 16.1 | % | 1.1 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 946.2 | $ | 927.4 | 2.0 | % | 4.0 | % | ||||||
Staffing fee-based income included in revenue from services | 8.2 | 7.9 | 5.6 | 7.7 | ||||||||||
Gross profit | 153.0 | 137.1 | 11.4 | 13.2 | ||||||||||
Total SG&A expenses | 116.8 | 113.9 | 2.5 | 4.4 | ||||||||||
Earnings from operations | 36.2 | 23.2 | 55.2 | |||||||||||
Gross profit rate | 16.2 | % | 14.8 | % | 1.4 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 12.3 | 12.3 | — | |||||||||||
% of gross profit | 76.3 | 83.0 | (6.7 | ) | ||||||||||
Return on sales | 3.8 | 2.5 | 1.3 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 200.5 | $ | 204.5 | (2.0 | ) | % | 10.8 | % | |||||
Staffing fee-based income included in revenue from services | 3.3 | 3.3 | (0.8 | ) | 15.8 | |||||||||
Gross profit | 27.5 | 29.6 | (6.9 | ) | 5.7 | |||||||||
Gross profit rate | 13.7 | % | 14.4 | % | (0.7 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 44.7 | $ | 44.8 | (0.3 | ) | % | 12.3 | % | |||||
Staffing fee-based income included in revenue from services | 2.4 | 2.8 | (17.9 | ) | (3.7 | ) | ||||||||
Gross profit | 9.4 | 9.6 | (3.4 | ) | 10.3 | |||||||||
Gross profit rate | 21.0 | % | 21.7 | % | (0.7 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 245.2 | $ | 249.3 | (1.7 | ) | % | 11.1 | % | |||||
Staffing fee-based income included in revenue from services | 5.7 | 6.1 | (8.6 | ) | 6.9 | |||||||||
Gross profit | 36.9 | 39.2 | (6.1 | ) | 6.8 | |||||||||
Total SG&A expenses | 29.7 | 36.4 | (18.4 | ) | (8.2 | ) | ||||||||
Earnings from operations | 7.2 | 2.8 | 152.4 | |||||||||||
Gross profit rate | 15.0 | % | 15.7 | % | (0.7 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 12.1 | 14.6 | (2.5 | ) | ||||||||||
% of gross profit | 80.6 | 92.8 | (12.2 | ) | ||||||||||
Return on sales | 2.9 | 1.1 | 1.8 | |||||||||||
5
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Fourth Quarter | ||||||||||||||
2015 | 2014 | % | CC % | |||||||||||
(14 Wks) | (13 Wks) | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 88.1 | $ | 91.3 | (3.5 | ) | % | 11.3 | % | |||||
Staffing fee-based income included in revenue from services | 1.3 | 2.0 | (34.0 | ) | (26.1 | ) | ||||||||
Gross profit | 10.4 | 11.8 | (12.1 | ) | 1.0 | |||||||||
Gross profit rate | 11.8 | % | 12.9 | % | (1.1 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 9.8 | $ | 11.2 | (12.7 | ) | % | 0.6 | % | |||||
Staffing fee-based income included in revenue from services | 1.2 | 2.0 | (38.0 | ) | (27.5 | ) | ||||||||
Gross profit | 2.4 | 3.3 | (28.7 | ) | (17.4 | ) | ||||||||
Gross profit rate | 24.5 | % | 29.9 | % | (5.4 | ) | pts. | |||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 97.9 | $ | 102.5 | (4.5 | ) | % | 10.1 | % | |||||
Staffing fee-based income included in revenue from services | 2.5 | 4.0 | (36.0 | ) | (26.8 | ) | ||||||||
Gross profit | 12.8 | 15.1 | (15.7 | ) | (3.1 | ) | ||||||||
Total SG&A expenses | 11.2 | 13.1 | (13.8 | ) | (1.4 | ) | ||||||||
Earnings from operations | 1.6 | 2.0 | (27.5 | ) | ||||||||||
Gross profit rate | 13.0 | % | 14.8 | % | (1.8 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 11.4 | 12.7 | (1.3 | ) | ||||||||||
% of gross profit | 87.8 | 85.8 | 2.0 | |||||||||||
Return on sales | 1.6 | 2.1 | (0.5 | ) | ||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 187.5 | $ | 164.7 | 13.8 | % | 15.6 | % | ||||||
Gross profit | 48.0 | 42.3 | 13.8 | 16.1 | ||||||||||
Total SG&A expenses | 34.0 | 32.6 | 4.0 | 6.4 | ||||||||||
Earnings from operations | 14.0 | 9.7 | 47.1 | |||||||||||
Gross profit rate | 25.6 | % | 25.6 | % | — | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 18.1 | 19.8 | (1.7 | ) | ||||||||||
% of gross profit | 70.7 | 77.4 | (6.7 | ) | ||||||||||
Return on sales | 7.5 | 5.8 | 1.7 | |||||||||||
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KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
December Year to Date | ||||||||||||||
2015 | 2014 | % | CC % | |||||||||||
(53 Wks) | (52 Wks) | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 2,604.3 | $ | 2,609.6 | (0.2 | ) | % | 2.0 | % | |||||
Staffing fee-based income included in revenue from services | 14.5 | 14.4 | 1.0 | 3.5 | ||||||||||
Gross profit | 400.3 | 379.6 | 5.4 | 7.4 | ||||||||||
Gross profit rate | 15.4 | % | 14.5 | % | 0.9 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 971.9 | $ | 956.0 | 1.7 | % | 2.1 | % | ||||||
Staffing fee-based income included in revenue from services | 17.6 | 15.6 | 13.0 | 14.1 | ||||||||||
Gross profit | 165.0 | 155.9 | 5.9 | 6.3 | ||||||||||
Gross profit rate | 17.0 | % | 16.3 | % | 0.7 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 3,576.2 | $ | 3,565.6 | 0.3 | % | 2.0 | % | ||||||
Staffing fee-based income included in revenue from services | 32.1 | 30.0 | 7.2 | 9.0 | ||||||||||
Gross profit | 565.3 | 535.5 | 5.5 | 7.1 | ||||||||||
Total SG&A expenses | 456.6 | 446.8 | 2.2 | 3.7 | ||||||||||
Earnings from operations | 108.7 | 88.7 | 22.7 | |||||||||||
Gross profit rate | 15.8 | % | 15.0 | % | 0.8 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 12.8 | 12.5 | 0.3 | |||||||||||
% of gross profit | 80.8 | 83.5 | (2.7 | ) | ||||||||||
Return on sales | 3.0 | 2.5 | 0.5 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 773.5 | $ | 894.7 | (13.6 | ) | % | 2.7 | % | |||||
Staffing fee-based income included in revenue from services | 13.2 | 17.3 | (23.7 | ) | (5.8 | ) | ||||||||
Gross profit | 106.6 | 130.6 | (18.4 | ) | (2.9 | ) | ||||||||
Gross profit rate | 13.8 | % | 14.6 | % | (0.8 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 171.5 | $ | 190.3 | (9.8 | ) | % | 6.5 | % | |||||
Staffing fee-based income included in revenue from services | 10.1 | 13.5 | (25.7 | ) | (8.8 | ) | ||||||||
Gross profit | 36.6 | 42.9 | (14.8 | ) | 2.0 | |||||||||
Gross profit rate | 21.3 | % | 22.6 | % | (1.3 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 945.0 | $ | 1,085.0 | (12.9 | ) | % | 3.4 | % | |||||
Staffing fee-based income included in revenue from services | 23.3 | 30.8 | (24.5 | ) | (7.1 | ) | ||||||||
Gross profit | 143.2 | 173.5 | (17.5 | ) | (1.7 | ) | ||||||||
SG&A expenses excluding restructuring charges | 129.2 | 160.6 | (19.6 | ) | (5.0 | ) | ||||||||
Restructuring charges | — | 0.8 | (100.0 | ) | — | |||||||||
Total SG&A expenses | 129.2 | 161.4 | (20.0 | ) | (5.5 | ) | ||||||||
Earnings from operations | 14.0 | 12.1 | 16.1 | |||||||||||
Earnings from operations excluding restructuring charges | 14.0 | 12.9 | 8.8 | |||||||||||
Gross profit rate | 15.2 | % | 16.0 | % | (0.8 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.7 | 14.8 | (1.1 | ) | ||||||||||
% of gross profit | 90.2 | 92.5 | (2.3 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.5 | 1.2 | 0.3 | |||||||||||
7
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
December Year to Date | ||||||||||||||
2015 | 2014 | % | CC % | |||||||||||
(53 Wks) | (52 Wks) | Change | Change | |||||||||||
APAC | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 347.2 | $ | 351.8 | (1.3 | ) | % | 12.6 | % | |||||
Staffing fee-based income included in revenue from services | 6.0 | 7.9 | (23.8 | ) | (14.7 | ) | ||||||||
Gross profit | 45.3 | 47.5 | (4.6 | ) | 8.3 | |||||||||
Gross profit rate | 13.0 | % | 13.5 | % | (0.5 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 40.5 | $ | 40.4 | 0.4 | % | 14.9 | % | ||||||
Staffing fee-based income included in revenue from services | 5.6 | 7.8 | (27.3 | ) | (17.9 | ) | ||||||||
Gross profit | 10.5 | 12.7 | (17.6 | ) | (6.3 | ) | ||||||||
Gross profit rate | 26.0 | % | 31.6 | % | (5.6 | ) | pts. | |||||||
Total APAC | ||||||||||||||
Revenue from services | $ | 387.7 | $ | 392.2 | (1.1 | ) | % | 12.9 | % | |||||
Staffing fee-based income included in revenue from services | 11.6 | 15.7 | (25.5 | ) | (16.3 | ) | ||||||||
Gross profit | 55.8 | 60.2 | (7.4 | ) | 5.2 | |||||||||
SG&A expenses excluding restructuring charges | 46.7 | 56.4 | (17.0 | ) | (5.9 | ) | ||||||||
Restructuring charges | — | 1.3 | (100.0 | ) | — | |||||||||
Total SG&A expenses | 46.7 | 57.7 | (19.0 | ) | (8.1 | ) | ||||||||
Earnings from operations | 9.1 | 2.5 | 261.6 | |||||||||||
Earnings from operations excluding restructuring charges | 9.1 | 3.8 | 134.2 | |||||||||||
Gross profit rate | 14.4 | % | 15.4 | % | (1.0 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 12.1 | 14.4 | (2.3 | ) | ||||||||||
% of gross profit | 83.9 | 93.6 | (9.7 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 2.3 | 1.0 | 1.3 | |||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 673.8 | $ | 586.8 | 14.8 | % | 16.6 | % | ||||||
Gross profit | 160.6 | 143.6 | 11.9 | 14.2 | ||||||||||
Total SG&A expenses | 132.1 | 127.3 | 3.7 | 6.4 | ||||||||||
Earnings from operations | 28.5 | 16.3 | 75.8 | |||||||||||
Gross profit rate | 23.8 | % | 24.5 | % | (0.7 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 19.6 | 21.7 | (2.1 | ) | ||||||||||
% of gross profit | 82.2 | 88.7 | (6.5 | ) | ||||||||||
Return on sales | 4.2 | 2.8 | 1.4 | |||||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(UNAUDITED) | |||||||
(In millions of dollars) | |||||||
Jan. 3, 2016 | Dec. 28, 2014 | ||||||
Current Assets | |||||||
Cash and equivalents | $ | 42.2 | $ | 83.1 | |||
Trade accounts receivable, less allowances of | |||||||
$10.5 and $10.7, respectively | 1,139.1 | 1,122.8 | |||||
Prepaid expenses and other current assets | 45.8 | 47.9 | |||||
Deferred taxes | — | 34.4 | |||||
Total current assets | 1,227.1 | 1,288.2 | |||||
Property and Equipment, Net | 88.9 | 93.0 | |||||
Noncurrent Deferred Taxes | 189.3 | 146.3 | |||||
Goodwill, Net | 90.3 | 90.3 | |||||
Other Assets | 344.0 | 300.1 | |||||
Total Assets | $ | 1,939.6 | $ | 1,917.9 | |||
Current Liabilities | |||||||
Short-term borrowings | $ | 55.5 | $ | 91.9 | |||
Accounts payable and accrued liabilities | 405.5 | 364.0 | |||||
Accrued payroll and related taxes | 268.1 | 308.5 | |||||
Accrued insurance | 26.7 | 26.9 | |||||
Income and other taxes | 60.0 | 68.8 | |||||
Total current liabilities | 815.8 | 860.1 | |||||
Noncurrent Liabilities | |||||||
Accrued insurance | 40.0 | 43.9 | |||||
Accrued retirement benefits | 141.0 | 140.8 | |||||
Other long-term liabilities | 47.4 | 39.4 | |||||
Total noncurrent liabilities | 228.4 | 224.1 | |||||
Stockholders' Equity | |||||||
Common stock | 40.1 | 40.1 | |||||
Treasury stock | (44.3 | ) | (49.8 | ) | |||
Paid-in capital | 25.4 | 24.9 | |||||
Earnings invested in the business | 813.5 | 767.4 | |||||
Accumulated other comprehensive income | 60.7 | 51.1 | |||||
Total stockholders' equity | 895.4 | 833.7 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,939.6 | $ | 1,917.9 | |||
STATISTICS: | |||||||
Working Capital | $ | 411.3 | $ | 428.1 | |||
Current Ratio | 1.5 | 1.5 | |||||
Debt-to-capital % | 5.8 | % | 9.9 | % | |||
Global Days Sales Outstanding | 54 | 54 | |||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 53 WEEKS ENDED JANUARY 3, 2016 AND 52 WEEKS ENDED DECEMBER 28, 2014 | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2015 | 2014 | |||||
Cash flows from operating activities: | ||||||
Net earnings | $ | 53.8 | $ | 23.7 | ||
Noncash adjustments: | ||||||
Depreciation and amortization | 22.3 | 21.7 | ||||
Provision for bad debts | 3.7 | 5.3 | ||||
Stock-based compensation | 6.1 | 5.3 | ||||
Other, net | (4.7 | ) | (2.2 | ) | ||
Changes in operating assets and liabilities | (57.7 | ) | (123.8 | ) | ||
Net cash from (used in) operating activities | 23.5 | (70.0 | ) | |||
Cash flows from investing activities: | ||||||
Capital expenditures | (16.9 | ) | (21.7 | ) | ||
Investment in equity affiliate | (0.5 | ) | (5.7 | ) | ||
Other investing activities | (0.2 | ) | 0.2 | |||
Net cash used in investing activities | (17.6 | ) | (27.2 | ) | ||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | (34.7 | ) | 63.9 | |||
Dividend payments | (7.7 | ) | (7.6 | ) | ||
Other financing activities | 0.2 | 0.3 | ||||
Net cash (used in) from financing activities | (42.2 | ) | 56.6 | |||
Effect of exchange rates on cash and equivalents | (4.6 | ) | (2.0 | ) | ||
Net change in cash and equivalents | (40.9 | ) | (42.6 | ) | ||
Cash and equivalents at beginning of period | 83.1 | 125.7 | ||||
Cash and equivalents at end of period | $ | 42.2 | $ | 83.1 | ||
10
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
Fourth Quarter (Commercial, PT and OCG) | |||||||||||||
2015 | 2014 | % | CC % | ||||||||||
(14 Wks) | (13 Wks) | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 998.8 | $ | 933.9 | 6.9 | % | 6.9 | % | |||||
Canada | 38.0 | 50.0 | (24.0 | ) | (11.0 | ) | |||||||
Mexico | 35.3 | 36.7 | (3.9 | ) | 16.3 | ||||||||
Puerto Rico | 24.7 | 26.6 | (7.1 | ) | (7.1 | ) | |||||||
Brazil | 8.7 | 13.9 | (37.5 | ) | (1.7 | ) | |||||||
Total Americas | 1,105.5 | 1,061.1 | 4.2 | 6.0 | |||||||||
EMEA | |||||||||||||
France | 65.6 | 66.4 | (1.1 | ) | 12.8 | ||||||||
Switzerland | 55.5 | 57.8 | (4.0 | ) | (1.3 | ) | |||||||
Portugal | 33.8 | 32.4 | 4.2 | 18.9 | |||||||||
United Kingdom | 26.7 | 23.2 | 15.1 | 20.3 | |||||||||
Russia | 18.2 | 20.9 | (12.9 | ) | 22.2 | ||||||||
Germany | 16.2 | 16.8 | (4.0 | ) | 9.5 | ||||||||
Italy | 14.5 | 13.9 | 3.9 | 18.7 | |||||||||
Norway | 9.7 | 11.9 | (18.1 | ) | 2.1 | ||||||||
Other | 13.0 | 13.6 | (4.4 | ) | 9.4 | ||||||||
Total EMEA | 253.2 | 256.9 | (1.4 | ) | 11.3 | ||||||||
APAC | |||||||||||||
Singapore | 33.0 | 32.7 | 0.7 | 9.5 | |||||||||
Australia | 31.1 | 32.6 | (4.6 | ) | 13.5 | ||||||||
Malaysia | 14.1 | 16.2 | (12.7 | ) | 11.4 | ||||||||
New Zealand | 11.2 | 13.2 | (14.5 | ) | 0.4 | ||||||||
Other | 13.5 | 12.3 | 9.2 | 19.5 | |||||||||
Total APAC | 102.9 | 107.0 | (3.8 | ) | 11.0 | ||||||||
Total Kelly Services, Inc. | $ | 1,461.6 | $ | 1,425.0 | 2.6 | % | 7.3 | % | |||||
11
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
December Year to Date (Commercial, PT and OCG) | |||||||||||||
2015 | 2014 | % | CC % | ||||||||||
(53 Wks) | (52 Wks) | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 3,705.2 | $ | 3,535.8 | 4.8 | % | 4.8 | % | |||||
Canada | 160.2 | 198.2 | (19.2 | ) | (6.9 | ) | |||||||
Mexico | 130.5 | 139.0 | (6.1 | ) | 11.9 | ||||||||
Puerto Rico | 99.9 | 105.0 | (4.8 | ) | (4.8 | ) | |||||||
Brazil | 42.9 | 57.1 | (24.9 | ) | 1.7 | ||||||||
Total Americas | 4,138.7 | 4,035.1 | 2.6 | 4.2 | |||||||||
EMEA | |||||||||||||
France | 246.0 | 268.6 | (8.4 | ) | 9.4 | ||||||||
Switzerland | 216.2 | 253.5 | (14.7 | ) | (10.3 | ) | |||||||
Portugal | 132.5 | 124.8 | 6.2 | 27.0 | |||||||||
United Kingdom | 105.1 | 105.6 | (0.4 | ) | 7.3 | ||||||||
Russia | 75.6 | 117.3 | (35.5 | ) | 3.2 | ||||||||
Germany | 59.3 | 67.5 | (12.3 | ) | 4.7 | ||||||||
Italy | 54.0 | 60.2 | (10.3 | ) | 7.1 | ||||||||
Norway | 39.2 | 55.5 | (29.5 | ) | (9.6 | ) | |||||||
Other | 45.8 | 64.5 | (29.0 | ) | (15.2 | ) | |||||||
Total EMEA | 973.7 | 1,117.5 | (12.9 | ) | 3.3 | ||||||||
APAC | |||||||||||||
Singapore | 129.9 | 127.5 | 1.9 | 10.5 | |||||||||
Australia | 123.2 | 121.4 | 1.5 | 21.8 | |||||||||
Malaysia | 59.5 | 66.2 | (10.1 | ) | 6.7 | ||||||||
New Zealand | 41.4 | 51.4 | (19.4 | ) | (4.4 | ) | |||||||
Other | 51.8 | 43.6 | 18.6 | 26.9 | |||||||||
Total APAC | 405.8 | 410.1 | (1.0 | ) | 13.1 | ||||||||
Total Kelly Services, Inc. | $ | 5,518.2 | $ | 5,562.7 | (0.8 | ) | % | 4.7 | % | ||||
12
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
FOR THE 14 WEEKS ENDED JANUARY 3, 2016 AND 13 WEEKS ENDED DECEMBER 28, 2014 | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars except per share data) | ||||||||||
2015 | 2014 | |||||||||
As reported | Adjusted Earnings | % Change | ||||||||
Revenue from services | $ | 1,461.6 | $ | 1,425.0 | 2.6 | % | ||||
Cost of services | 1,212.1 | 1,192.4 | 1.7 | |||||||
Gross profit | 249.5 | 232.6 | 7.2 | |||||||
SG&A expenses | 223.0 | 223.8 | (0.4 | ) | ||||||
Earnings from operations | 26.5 | 8.8 | 196.7 | |||||||
Other expense, net | 0.7 | 1.1 | (40.9 | ) | ||||||
Earnings before taxes | 25.8 | 7.7 | 229.2 | |||||||
Inc. tax (benefit) expense* | (8.4 | ) | (13.1 | ) | 36.2 | |||||
Net earnings | $ | 34.2 | $ | 20.8 | 63.1 | % | ||||
Earnings per share: | ||||||||||
Basic | $ | 0.88 | $ | 0.54 | 63.0 | % | ||||
Diluted | $ | 0.88 | $ | 0.54 | 63.0 | % | ||||
* Income tax benefit for the fourth quarters of 2015 and 2014 includes $13.9 million and $13.6 million, respectively, related to the retroactive reinstatement of work opportunity credits for the entire year. | ||||||||||
2014 | ||||||||||
As reported | Restructuring Charges (Note 1) | Adjusted Earnings | ||||||||
Revenue from services | $ | 1,425.0 | $ | — | $ | 1,425.0 | ||||
Cost of services | 1,192.4 | — | 1,192.4 | |||||||
Gross profit | 232.6 | — | 232.6 | |||||||
SG&A expenses | 230.0 | (6.2 | ) | 223.8 | ||||||
Earnings from operations | 2.6 | 6.2 | 8.8 | |||||||
Other expense, net | 1.1 | — | 1.1 | |||||||
Earnings before taxes | 1.5 | 6.2 | 7.7 | |||||||
Inc. tax (benefit) expense | (15.5 | ) | 2.4 | (13.1 | ) | |||||
Net earnings | $ | 17.0 | $ | 3.8 | $ | 20.8 | ||||
Earnings per share: | ||||||||||
Basic | $ | 0.44 | $ | 0.10 | $ | 0.54 | ||||
Diluted | $ | 0.44 | $ | 0.10 | $ | 0.54 | ||||
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 53 WEEKS ENDED JANUARY 3, 2016 AND 52 WEEKS ENDED DECEMBER 28, 2014 | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars except per share data) | ||||||||||
2015 | 2014 | |||||||||
As reported | Adjusted Earnings | % Change | ||||||||
Revenue from services | $ | 5,518.2 | $ | 5,562.7 | (0.8 | ) | % | |||
Cost of services | 4,597.9 | 4,654.3 | (1.2 | ) | ||||||
Gross profit | 920.3 | 908.4 | 1.3 | |||||||
SG&A expenses | 853.6 | 874.5 | (2.4 | ) | ||||||
Earnings from operations | 66.7 | 33.9 | 97.2 | |||||||
Other expense, net | 4.2 | 5.3 | (19.9 | ) | ||||||
Earnings before taxes | 62.5 | 28.6 | 118.6 | |||||||
Inc. tax expense (benefit) | 8.7 | (2.6 | ) | 432.2 | ||||||
Net earnings | $ | 53.8 | $ | 31.2 | 72.4 | % | ||||
Earnings per share: | ||||||||||
Basic | $ | 1.39 | $ | 0.81 | 71.6 | % | ||||
Diluted | $ | 1.39 | $ | 0.81 | 71.6 | % | ||||
2014 | ||||||||||
As reported | Restructuring Charges (Note 1) | Adjusted Earnings | ||||||||
Revenue from services | $ | 5,562.7 | $ | — | $ | 5,562.7 | ||||
Cost of services | 4,654.3 | — | 4,654.3 | |||||||
Gross profit | 908.4 | — | 908.4 | |||||||
SG&A expenses | 886.5 | (12.0 | ) | 874.5 | ||||||
Earnings from operations | 21.9 | 12.0 | 33.9 | |||||||
Other expense, net | 5.3 | — | 5.3 | |||||||
Earnings before taxes | 16.6 | 12.0 | 28.6 | |||||||
Inc. tax (benefit) expense | (7.1 | ) | 4.5 | (2.6 | ) | |||||
Net earnings | $ | 23.7 | $ | 7.5 | $ | 31.2 | ||||
Earnings per share: | ||||||||||
Basic | $ | 0.61 | $ | 0.19 | $ | 0.81 | ||||
Diluted | $ | 0.61 | $ | 0.19 | $ | 0.81 | ||||
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 is useful to understand the Company's financial performance and increases comparability. Specifically, Management believes that excluding this item 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 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand.
15
Kelly Services, Inc. Fourth Quarter 2015 Conference Call 1 February 4, 2016 Exhibit 99.2
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. 2 Safe Harbor Statement
– Earnings from Operations triple YOY* • Dropped more than 70% of constant currency GP growth to the bottom line* – OCG revenue growth at 16% YOY in constant currency – Branch-based PT revenue growth of 19%, excluding impact of 53rd week – Earnings per share of $0.88 versus $0.54 in 2014* Fourth Quarter 2015 Highlights 3 ----- *Excluding 2014 restructuring charges.
• Fourth quarter results represent solid GP rate improvement and continued operating leverage. • Year-over-year revenue growth reflects an additional week as a result of the 53-week fiscal year – or about half of the constant currency revenue growth. Fourth Quarter 2015 Financial Summary ----- (1) Q4 2015 includes 14 weeks. (2) Change from 2014 Actual results, excluding 2014 restructuring charges. EPS as adjusted was $0.54. (3) Constant Currency represent year-over-year changes resulting from translating 2015 financial data into USD using 2014 exchange rates. 4 Actual Results (1) Change(2) Constant Currency Change (3) Revenue $1.5B 2.6% 7.3% GP % 17.1% 80 bps Earnings from Operations $26.5M 196.7% 220.8% ROS % 1.8% 120 bps EPS $0.88 $0.34
• Overall revenue growth reflects an additional week of revenue due to the 53-week year – accounting for about half of the constant currency revenue growth. • OCG Revenue growth at 14%, as reported, 16% in constant currency. • Americas PT growth reflects strong double-digit growth in branch-delivered business, partially offset by headwinds in centralized accounts. • EMEA and APAC constant currency growth continues despite uncertain economic conditions. Fourth Quarter 2015 Revenue Growth 47% 17% 17% 6% 13% Business Mix Americas Commercial Americas PT EMEA APAC OCG -5% -2% 1% 4% 7% 10% 13% 16% Total Americas Commercial Americas PT EMEA APAC OCG YOY Growth Reported Constant Currency 5
• Americas Commercial and PT staffing, and OCG comprise 81% of total Company GP. • GP Growth in the Americas represents increasing GP rate on modest revenue growth. • OCG GP growth reflects continued CWO and BPO growth – from both new and existing business. • EMEA reflects growth in temporary staffing business coupled with positive perm fee growth. • APAC GP reflects softness in perm fees and lower temp GP rate due to increases in large account business. Fourth Quarter 2015 Gross Profit 6 -20% -15% -10% -5% 0% 5% 10% 15% 20% Total Americas Commercial Americas PT EMEA APAC OCG YOY Growth Reported Constant Currency 44% 17% 15% 5% 19% Business Mix Americas Commercial Americas PT EMEA APAC OCG
• Americas GP rate reflects management of temporary employee payroll taxes and other benefits costs. Fourth Quarter 2015 Gross Profit Rate 16.3% 17.1% 7 15.6% 15.8% 16.0% 16.2% 16.4% 16.6% 16.8% 17.0% 17.2% Q4 2014 GP Rate EMEA/APAC GP Rate Total Perm Fees AMER GP Rate FX Q4 2015 GP Rate
$190 $195 $200 $205 $210 $215 $220 $225 Q4 2014 SG&A (1) FX Management Simplification EMEA/APAC AMER staffing OCG Corporate Q4 2015 SG&A • Americas staffing SG&A reflect increasing employee compensation expenses in branch-delivered business as a result of strong earnings growth. • Corporate expense reflects the impact of litigation related expenses. Fourth Quarter 2015 SG&A 8 $ in millions ----- (1) Excludes 2014 restructuring charges. $224 $223
Constant Currency Leverage - 2015 9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Q1 Q2 Q3 Q4 FY ----- Note: Constant currency leverage represents the constant currency earnings from operations year-over-year change divided by the constant currency gross profit year-over-year change. See Press Release for further details on reported amounts. • 2015 constant currency leverage results reflect consistent focus in GP growth and effective cost management.
10 Full Year Conversion Rate • 2015 was a year of strong performance – and increasing Conversion rates – for all business units. • Total Company Conversion rates nearly doubled. ----- (1) Excluding restructuring charges. (2) Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit. $ in Millions Gross Profit Earnings from Operations Conversion rate (2) Gross Profit Earnings from Operations (1) Conversion rate (1)(2) Change Americas 565.3$ 108.7$ 19.2% 535.5$ 88.7$ 16.6% 2.6% EMEA 143.2 14.0 9.8% 173.5 12.9 7.4% 2.4% APAC 55.8 9.1 16.3% 60.2 3.8 6.3% 10.0% OCG 160.6 28.5 17.7% 143.6 16.3 11.4% 6.3% Total Company 920.3$ 66.7$ 7.2% 908.4$ 33.9$ 3.7% 3.5% 2015 2014
$50 $55 $60 $65 $70 $75 $80 $85 $90 $95 2014 2015 Q1 2015 Q2 2015 Q3 2015 • DSO at 54 days is consistent with the same quarter a year ago. • Debt to Equity ratio at 5.8% improved 4.1% from same period last year. Fourth Quarter 2015 Balance Sheet Data 11 $ in millions $ in millions Debt to Equity ratio 9.9% 8.8% 9.6% 8.2% 5.8% DSO 54 57 56 57 54 $1,060 $1,080 $1,100 $1,120 $1,140 $1,160 2014 2015 Q1 2 2015 Q3 2015 Accounts Receivab e (and DSO) Debt (and Debt to Equity ratio)
• Revenue up 4.5% to 5.5% YOY in constant currency • Gross Profit Rate up YOY • SG&A up 4% to 5% YOY – Down slightly on a sequential basis from Q4 2015 • Moderating operating leverage as a result of Q1’s lower seasonal volume 2016 Outlook – First Quarter 12
• Revenue up 3.5% to 4.5% YOY in constant currency • Gross Profit Rate up slightly YOY • SG&A up 2% to 3% YOY • Annual tax rate at 20%, including impact Work Opportunity Credits (1) 2016 Outlook – Full Year 13 ----- (1) Reinstated in December 2015, and effective through 2019.