View:
Download DOC
Download PDF
Download XLS
Document



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 1, 2018
 
 
KELLY SERVICES, INC.
---------------------------------------------------------------------
(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
-------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
 
(248) 362-4444
----------------------------------------------------------------------
(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 year ended December 31, 2017. 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 1, 2018.
99.2    Presentation materials for February 1, 2018 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 1, 2018
 
 
 
 
 
 
 
 
 
/s/ Olivier G. Thirot
Olivier G. Thirot
 
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) 

 
 
 
 
February 1, 2018
 
 
 
 
 
 
 
 
 
/s/ Laura S. Lockhart
Laura S. Lockhart 

Vice President, Corporate Controller and
Chief Accounting Officer
(Principal Accounting Officer)
 






















3




EXHIBIT INDEX
  
Exhibit No.
                   Description
 
 
Press release dated February 1, 2018
Presentation materials for February 1, 2018 conference call


4
Exhibit
Exhibit 99.1


https://cdn.kscope.io/d5e86816ec2acc02037a24575b75ce9d-pressreleaseheadera11.jpg

KELLY SERVICES® REPORTS
FOURTH QUARTER EARNINGS
AND SOLID 2017 RESULTS

Financial Highlights
•
Q4 revenue up 9.0%, up 7.3% in constant currency
•
Q4 operating earnings of $28.4 million, up 43%
•
Q4 earnings per share of $0.45, or $0.80 on an adjusted basis compared to $0.51, a 57% increase year-over-year on an adjusted basis
•
Full-year 2017 operating earnings up 32% to $83 million
    
TROY, MI (February 1, 2018) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2017.

George S. Corona, President and Chief Executive Officer, announced revenue for the fourth quarter of 2017 totaled $1.4 billion, a 9.0% increase, or 7.3% in constant currency, compared to the corresponding quarter of 2016. Revenue for the full year totaled $5.4 billion, a 1.9% increase, or 1.3% in constant currency, compared to the prior year. For the full year, revenue comparisons are unfavorably impacted by the transfer of the APAC staffing operations to the PersolKelly Asia Pacific JV (the "JV") in the third quarter of 2016 after which the JV is accounted for as an equity method investment.
    
Earnings from operations for the fourth quarter of 2017 totaled $28.4 million, compared to $19.8 million reported for the fourth quarter of 2016. Earnings from operations for the full year totaled $83.3 million compared to $63.2 million in 2016.

Diluted earnings per share in the fourth quarter of 2017 were $0.45 compared to $0.51 per share in the fourth quarter of 2016. Earnings per share in the fourth quarter of 2017 were unfavorably impacted by $0.35 due to a non-cash, income tax charge resulting from the Tax Cuts and Jobs Act which was enacted in late 2017.

Diluted earnings per share for the full year of 2017 were $1.81 compared to $3.08 per share in 2016. Full year earnings per share for 2017 were unfavorably impacted by the $0.35 non-cash, tax charge and 2016 full year earnings per share were favorably impacted by $1.62 related to the after-tax gain on APAC JV transaction. The impact of these adjustments are more fully described in our reconciliation of non-GAAP measures included on page 11.

Reflecting on the results, Corona stated, “Our fourth quarter performance reinforces that 2017 was a successful year of focus and acceleration for Kelly. We created and carried strong momentum through all four quarters, grew the top line, improved our GP and conversion rate, and increased our earnings from operations by 32% over last year—all while accelerating investments that position Kelly for long-term growth.”
    
In conjunction with its fourth quarter earnings release, Kelly Services has published a financial presentation on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on February 1 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
Kellyservices.com

Via the Telephone:
U.S.
1 800 288-9626
International
1 651 291-5254
The pass code is Kelly Services

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 and disruptions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual property assets could be infringed upon or compromised, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates including PersolKelly Asia Pacific, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks 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, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyber attacks or other breaches of network or information technology security, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology 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, unemployment compensation, disability and medical benefit plans, 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® directly employs nearly 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2017 was $5.4 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) 574-9800
james_polehna@kellyservices.com
jane_stehney@kellyservices.com


2

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED DECEMBER 31, 2017 AND JANUARY 1, 2017
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,422.3

$
1,304.4

$
117.9

 
9.0

%
7.3

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,159.3

 
1,076.4

 
82.9

 
7.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
263.0

 
228.0

 
35.0

 
15.4

 
13.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
234.6

 
208.2

 
26.4

 
12.7

 
11.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
28.4

 
19.8

 
8.6

 
43.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income, net
 
0.9

 
0.7

 
0.2

 
43.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
29.3

 
20.5

 
8.8

 
43.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
12.7

 
1.8

 
10.9

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
16.6

 
18.7

 
(2.1
)
 
(10.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.1

 
1.1

 
—

 
(9.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
17.7

$
19.8

$
(2.1
)
 
(10.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.46

$
0.51

$
(0.05
)
 
(9.8
)
%
 
 
Diluted earnings per share
$
0.45

$
0.51

$
(0.06
)
 
(11.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
15.9

$
12.2

$
3.7

 
30.6

%
26.5

%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.5

%
17.5

%
1.0

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
10.8

 
8.7

 
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
2.0

 
1.5

 
0.5

 
 
 
 
 
Net earnings
 
1.2

 
1.5

 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
43.2

%
8.8

%
34.4

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.4

 
38.2

 
 
 
 
 
 
 
     Diluted
 
39.2

 
38.6

 
 
 
 
 
 
 

3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 31, 2017 AND JANUARY 1, 2017
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,374.4

$
5,276.8

$
97.6

 
1.9

%
1.3

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,420.3

 
4,370.5

 
49.8

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
954.1

 
906.3

 
47.8

 
5.3

 
4.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
870.8

 
843.1

 
27.7

 
3.3

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
83.3

 
63.2

 
20.1

 
31.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on investment in PersolKelly Asia Pacific
 
—

 
87.2

 
(87.2
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
(1.6
)
 
(0.7
)
 
(0.9
)
 
(139.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
81.7

 
149.7

 
(68.0
)
 
(45.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
12.8

 
30.0

 
(17.2
)
 
(57.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
68.9

 
119.7

 
(50.8
)
 
(42.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
2.7

 
1.1

 
1.6

 
142.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
71.6

$
120.8

$
(49.2
)
 
(40.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
1.84

$
3.10

$
(1.26
)
 
(40.6
)
%
 
 
Diluted earnings per share
$
1.81

$
3.08

$
(1.27
)
 
(41.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
57.3

$
58.5

$
(1.2
)
 
(2.2
)
%
(3.7
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.8

%
17.2

%
0.6

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
8.7

 
7.0

 
1.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.5

 
1.2

 
0.3

 
 
 
 
 
Net earnings
 
1.3

 
2.3

 
(1.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
15.7

%
20.0

%
(4.3
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.3

 
38.1

 
 
 
 
 
 
 
     Diluted
 
39.0

 
38.4

 
 
 
 
 
 
 

4

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
 
2016
 
Change
 
Change
 
AMERICAS STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
642.4

 
$
576.9

 
11.4

%
10.9

%
Gross profit
 
121.2

 
 
105.3

 
15.1

 
14.7

 
Total SG&A expenses
 
93.4

 
 
83.5

 
12.0

 
11.7

 
Earnings from operations
 
27.8

 
 
21.8

 
27.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.9

%
 
18.3

%
0.6

 pts.
 
 
Conversion rate
 
22.8

 
 
20.7

 
2.1

 
 
 
Return on sales
 
4.3

 
 
3.8

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLOBAL TALENT SOLUTIONS
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
503.1

 
$
490.6

 
2.6

%
2.2

%
Gross profit
 
101.5

 
 
88.7

 
14.5

 
13.8

 
Total SG&A expenses
 
75.9

 
 
74.1

 
2.5

 
1.8

 
Earnings from operations
 
25.6

 
 
14.6

 
75.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
20.2

%
 
18.1

%
2.1

 pts.
 
 
Conversion rate
 
25.3

 
 
16.5

 
8.8

 
 
 
Return on sales
 
5.1

 
 
3.0

 
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERNATIONAL STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
282.2

 
$
241.5

 
16.9

%
9.1

%
Gross profit
 
41.0

 
 
35.0

 
17.0

 
9.0

 
Total SG&A expenses
 
35.4

 
 
30.6

 
15.4

 
8.4

 
Earnings from operations
 
5.6

 
 
4.4

 
27.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.5

%
 
14.5

%
—

 pts.
 
 
Conversion rate
 
13.8

 
 
12.6

 
1.2

 
 
 
Return on sales
 
2.0

 
 
1.8

 
0.2

 
 
 


5

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
 
2016
 
Change
 
Change
 
AMERICAS STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,345.9

 
$
2,191.6

 
7.0

%
6.8

%
Gross profit
 
429.1

 
 
398.2

 
7.8

 
7.6

 
SG&A expenses excluding restructuring charges
 
346.0

 
 
327.6

 
5.7

 
5.5

 
Restructuring charges
 
0.4

 
 
1.8

 
(80.0
)
 
(79.8
)
 
Total SG&A expenses
 
346.4

 
 
329.4

 
5.2

 
5.0

 
Earnings from operations
 
82.7

 
 
68.8

 
20.0

 
 
 
Earnings from operations excluding restructuring charges
 
83.1

 
 
70.6

 
17.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.3

%
 
18.2

%
0.1

 pts.
 
 
Conversion rate
 
19.3

 
 
17.3

 
2.0

 
 
 
Conversion rate excluding restructuring charges
 
19.3

 
 
17.7

 
1.6

 
 
 
Return on sales
 
3.5

 
 
3.1

 
0.4

 
 
 
Return on sales excluding restructuring charges
 
3.5

 
 
3.2

 
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLOBAL TALENT SOLUTIONS
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,998.9

 
$
1,977.1

 
1.1

%
1.0

%
Gross profit
 
373.7

 
 
345.9

 
8.1

 
7.9

 
SG&A expenses excluding restructuring charges
 
294.7

 
 
287.3

 
2.6

 
2.5

 
Restructuring charges
 
2.0

 
 
0.4

 
415.5

 
417.6

 
Total SG&A expenses
 
296.7

 
 
287.7

 
3.1

 
3.0

 
Earnings from operations
 
77.0

 
 
58.2

 
32.4

 
 
 
Earnings from operations excluding restructuring charges
 
79.0

 
 
58.6

 
35.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.7

%
 
17.5

%
1.2

 pts.
 
 
Conversion rate
 
20.6

 
 
16.8

 
3.8

 
 
 
Conversion rate excluding restructuring charges
 
21.1

 
 
16.9

 
4.2

 
 
 
Return on sales
 
3.9

 
 
2.9

 
1.0

 
 
 
Return on sales excluding restructuring charges
 
4.0

 
 
3.0

 
1.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
INTERNATIONAL STAFFING
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,048.2

 
$
1,127.1

 
(7.0
)
%
(9.0
)
%
Gross profit
 
153.7

 
 
166.4

 
(7.7
)
 
(9.8
)
 
SG&A expenses excluding restructuring charges
 
131.6

 
 
145.7

 
(9.8
)
 
(11.6
)
 
Restructuring charges
 
—

 
 
1.2

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
131.6

 
 
146.9

 
(10.4
)
 
(12.2
)
 
Earnings from operations
 
22.1

 
 
19.5

 
13.3

 
 
 
Earnings from operations excluding restructuring charges
 
22.1

 
 
20.7

 
7.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
14.7

%
 
14.8

%
(0.1
)
 pts.
 
 
Conversion rate
 
14.4

 
 
11.7

 
2.7

 
 
 
Conversion rate excluding restructuring charges
 
14.4

 
 
12.4

 
2.0

 
 
 
Return on sales
 
2.1

 
 
1.7

 
0.4

 
 
 
Return on sales excluding restructuring charges
 
2.1

 
 
1.8

 
0.3

 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
Dec. 31, 2017
 
Jan. 1, 2017
 
Current Assets
 
 
 
 
 
  Cash and equivalents
$
33.3

$
29.6

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
    $12.9 and $12.5, respectively
 
1,284.0

 
1,138.3

 
  Prepaid expenses and other current assets
 
65.1

 
46.7

 
Total current assets
 
1,382.4

 
1,214.6

 
 
 
 
 
 
 
Noncurrent Assets
 
 
 
 
 
Property and equipment, net
 
86.1

 
80.8

 
Deferred taxes
 
183.4

 
180.1

 
Goodwill, net
 
107.1

 
88.4

 
Investment in equity affiliate
 
117.4

 
114.8

 
Other assets
 
499.9

 
349.4

 
Total noncurrent assets
 
993.9

 
813.5

 
 
 
 
 
 
 
Total Assets
$
2,376.3

$
2,028.1

 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
  Short-term borrowings
$
10.2

$
—

 
  Accounts payable and accrued liabilities
 
534.1

 
455.1

 
  Accrued payroll and related taxes
 
287.6

 
241.5

 
  Accrued insurance
 
25.7

 
23.4

 
  Income and other taxes
 
66.7

 
51.1

 
Total current liabilities
 
924.3

 
771.1

 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
  Accrued insurance
 
49.9

 
45.5

 
  Accrued retirement benefits
 
178.1

 
157.4

 
  Other long-term liabilities
 
72.5

 
42.1

 
Total noncurrent liabilities
 
300.5

 
245.0

 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
  Treasury stock
 
(35.2
)
 
(39.0
)
 
  Paid-in capital
 
32.2

 
28.6

 
  Earnings invested in the business
 
983.6

 
923.6

 
  Accumulated other comprehensive income
 
130.8

 
58.7

 
 
 
 
 
 
 
Total stockholders' equity
 
1,151.5

 
1,012.0

 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
2,376.3

$
2,028.1

 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 Working Capital
$
458.1

$
443.5

 
 Current Ratio
 
1.5

 
1.6

 
 Debt-to-capital %
 
0.9

%
—

%
 Global Days Sales Outstanding
 
55

 
53

 
 Year-to-Date Free Cash Flow
$
47.4

$
26.9

 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 31, 2017 AND JANUARY 1, 2017
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net earnings
$
71.6

$
120.8

Noncash adjustments:
 
 
 
 
Depreciation and amortization
 
22.7

 
21.3

Provision for bad debts
 
5.6

 
11.0

Stock-based compensation
 
9.2

 
10.2

Gain on investment in PersolKelly Asia Pacific equity affiliate
 
—

 
(87.2
)
Other, net
 
(2.5
)
 
(3.9
)
Changes in operating assets and liabilities
 
(36.3
)
 
(32.6
)
 
 
 
 
 
Net cash from operating activities
 
70.3

 
39.6

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(22.9
)
 
(12.7
)
Acquisition of company, net of cash received
 
(37.2
)
 
—

Net cash proceeds from investment in PersolKelly Asia Pacific equity affiliate
 
—

 
23.3

Proceeds from repayment of loan to PersolKelly equity affiliate
 
0.6

 
—

Other investing activities
 
0.2

 
(0.3
)
 
 
 
 
 
Net cash (used in) from investing activities
 
(59.3
)
 
10.3

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
10.1

 
(55.9
)
Dividend payments
 
(11.6
)
 
(10.7
)
Payments of tax withholding for restricted shares
 
(1.8
)
 
(2.2
)
Other financing activities
 
(0.1
)
 
(0.3
)
 
 
 
 
 
Net cash used in financing activities
 
(3.4
)
 
(69.1
)
 
 
 
 
 
Effect of exchange rates on cash and equivalents
 
(3.9
)
 
6.6

 
 
 
 
 
Net change in cash and equivalents
 
3.7

 
(12.6
)
Cash and equivalents at beginning of period
 
29.6

 
42.2

 
 
 
 
 
 
 
 
 
 
Cash and equivalents at end of period
$
33.3

$
29.6

 
 
 
 
 


8

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
1,027.8

$
956.7

 
7.4

%
7.4

%
Canada
 
34.5

 
34.5

 
(0.1
)
 
(5.0
)
 
Mexico
 
33.8

 
28.0

 
20.9

 
15.5

 
Puerto Rico
 
17.1

 
18.3

 
(6.6
)
 
(6.6
)
 
Brazil
 
10.3

 
13.3

 
(22.8
)
 
(24.6
)
 
Total Americas
 
1,123.5

 
1,050.8

 
6.9

 
6.6

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
75.0

 
61.1

 
22.7

 
12.3

 
Switzerland
 
55.6

 
54.3

 
2.5

 
1.1

 
Portugal
 
52.0

 
40.3

 
29.3

 
18.3

 
United Kingdom
 
24.4

 
18.5

 
32.2

 
23.7

 
Russia
 
23.9

 
20.9

 
14.3

 
6.1

 
Germany
 
16.6

 
14.3

 
16.6

 
6.7

 
Italy
 
16.6

 
14.2

 
17.0

 
7.1

 
Ireland
 
8.6

 
7.7

 
10.8

 
1.5

 
Norway
 
8.4

 
8.0

 
4.3

 
1.5

 
Other
 
13.0

 
10.3

 
26.3

 
15.5

 
Total EMEA
 
294.1

 
249.6

 
17.9

 
10.0

 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
4.7

 
4.0

 
16.3

 
13.0

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,422.3

$
1,304.4

 
9.0

%
7.3

%
 
 
 
 
 
 
 
 
 
 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2017
 
2016
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
3,894.6

$
3,722.5

 
4.6

%
4.6

%
Canada
 
140.3

 
139.7

 
0.4

 
(1.6
)
 
Mexico
 
118.8

 
107.6

 
10.5

 
10.8

 
Puerto Rico
 
68.3

 
84.2

 
(18.9
)
 
(18.9
)
 
Brazil
 
48.6

 
46.8

 
3.8

 
(5.8
)
 
Total Americas
 
4,270.6

 
4,100.8

 
4.1

 
4.0

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
277.1

 
239.7

 
15.6

 
13.0

 
Switzerland
 
216.9

 
210.5

 
3.1

 
3.0

 
Portugal
 
176.0

 
151.9

 
15.9

 
13.0

 
Russia
 
93.2

 
69.9

 
33.3

 
16.9

 
United Kingdom
 
88.7

 
84.7

 
4.8

 
9.6

 
Italy
 
61.9

 
56.3

 
10.0

 
7.5

 
Germany
 
59.9

 
59.6

 
0.6

 
(1.7
)
 
Norway
 
33.3

 
32.4

 
2.7

 
1.1

 
Ireland
 
32.0

 
25.8

 
23.9

 
21.3

 
Other
 
46.5

 
38.1

 
22.2

 
19.1

 
Total EMEA
 
1,085.5

 
968.9

 
12.1

 
9.7

 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
18.3

 
207.1

 
(91.2
)
 
(91.4
)
 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
5,374.4

$
5,276.8

 
1.9

%
1.3

%
 
 
 
 
 
 
 
 
 
 


10

 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 AND 52 WEEKS ENDED DECEMBER 31, 2017 AND JANUARY 1, 2017
 (UNAUDITED)
 (In millions of dollars except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Revenue from services
 
$
1,422.3

 
$
1,304.4

 
$
5,374.4

 
$
5,276.8

Disposal of APAC businesses (Note 1)
 
—

 
—

 
—

 
(191.1
)
Adjusted revenue from services
 
$
1,422.3

 
$
1,304.4

 
$
5,374.4

 
$
5,085.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Gross profit
 
$
263.0

 
$
228.0

 
$
954.1

 
$
906.3

Disposal of APAC businesses (Note 1)
 
—

 
—

 
—

 
(30.2
)
Adjusted gross profit
 
$
263.0

 
$
228.0

 
$
954.1

 
$
876.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Earnings from operations
 
$
28.4

 
$
19.8

 
$
83.3

 
$
63.2

Disposal of APAC businesses (Note 1)
 
—

 
—

 
—

 
(5.9
)
Restructuring charges (Note 2)
 
—

 
—

 
2.4

 
3.4

Adjusted earnings from operations
 
$
28.4

 
$
19.8

 
$
85.7

 
$
60.7

 
 
Fourth Quarter
 
 
2017
 
2016
 
 
Amount
 
Per Share
 
Amount
 
Per Share
 
 
 
 
 
 
 
 
 
Net earnings
 
$
17.7

 
$
0.45

 
$
19.8

 
$
0.51

2017 U.S. tax law change (Note 3)
 
13.9

 
0.35

 
—

 
—

Adjusted net earnings
 
$
31.6

 
$
0.80

 
$
19.8

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
2017
 
2016
 
 
Amount
 
Per Share
 
Amount
 
Per Share
 
 
 
 
 
 
 
 
 
Net earnings
 
$
71.6

 
$
1.81

 
$
120.8

 
$
3.08

Disposal of APAC businesses (Note 1)
 
—

 
—

 
(4.5
)
 
(0.12
)
Restructuring charges, net of taxes (Note 2)
 
1.7

 
0.04

 
2.2

 
0.06

2017 U.S. tax law change (Note 3)
 
13.9

 
0.35

 
—

 
—

Gain on investment in equity affiliate, net of taxes (Note 4)
 
—

 
—

 
(63.7
)
 
(1.62
)
Adjusted net earnings
 
$
87.2

 
$
2.20

 
$
54.8

 
$
1.40


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.

11

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2016 disposal of APAC businesses, 2017 and 2016 restructuring charges, the effect of the 2017 U.S. tax law change and the 2016 gain on investment of equity affiliate is useful to understand the Company's fiscal 2017 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) Disposal of APAC businesses represents the 2016 operational results of business contributed to PersolKelly Asia Pacific in the third quarter of 2016.

(2) Restructuring charges in 2017 represent costs related primarily to optimizing our GTS service delivery models to deliver expected cost savings. Restructuring charges in 2016 include costs related to actions taken in the Americas and International regions designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.

(3) 2017 U.S. tax law change represents the impact of revaluing net deferred tax assets.

(4) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in PersolKelly Asia Pacific in the third quarter of 2016.






12
a4q2017earningsreleasesu
Kelly Services, Inc. Fourth Quarter and Full Year 2017 February 1, 2018 Exhibit 99.2

 
Safe Harbor Statement 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

 
Fourth Quarter 2017 Highlights (YOY Comparisons)  Total revenue increased 9.0% – Increased 7.3% on a constant currency basis  Gross profit up 15.4% – up 13.7% on a constant currency basis  Earnings from operations of $28.4 million, up 43%  Diluted earnings per share of $0.45, compared to $0.51 per share last year – Excluding $0.35 non-cash charge related to the Tax Cuts and Jobs Act in 2017, diluted earnings per share up $0.29, a 57% increase 3

 
 Revenue increase reflects strong growth in Americas Staffing and International Staffing  Continued GP rate improvement reflects lower employee tax and benefits costs in the U.S., higher perm fees, on-going structural progress as we move to higher margin solutions in GTS, partially offset by changes in business mix in Americas Staffing  Earnings from operations reflects solid GP growth, offset by higher performance based incentives, the addition of resources to support market opportunities and expenses related to future growth and efficiency projects  EPS includes a $0.35 non-cash impact from the Tax Cuts and Jobs Act ----- (1)Constant Currency represent year-over-year changes resulting from translating 2017 financial data into USD using 2016 exchange rates. Fourth Quarter 2017 Financial Summary 4 Actual Results Change Constant Currency Change(1) Reve ue $1.4B 9.0% 7.3% GP % 18.5% 100 bps Earnings from Operations $28.4M 43.3% 38.9% ROS % 2.0% 50 bps EPS $0.45 ($0.06)

 
Full Year 2017 Financial Summary 5 Actual Results Change Constant Currency Change(1) Revenue $5.4B 1.9% 1.3% GP % 17.8% 60 bps Earnings from Operations $83.3M 31.7% 29.6% ROS % 1.5% 30 bps EPS $1.81 ($1.27)  Reported results are negatively effected by the impact of the 2016 gain on the APAC JV transaction and first half 2016 APAC staffing operating results ----- (1)Constant Currency represent year-over-year changes resulting from translating 2017 financial data into USD using 2016 exchange rates.

 
Full Year 2017 Financial Summary (Excluding US Tax Law Impact, APAC, and Restructuring) 6  Revenue growth reflects strong growth in Americas Staffing and International Staffing as well as modest growth in the GTS segment  Earnings from Operations, ROS % and EPS all reflect the efficient conversion of top-line growth to strong bottom line performance ----- (1) Change excludes: ⁻ 2017 restructuring charges of $2.4 million, $1.7 million net of tax, or $0.04 per share; ⁻ 2017 U.S. tax law change of $13.9 million, or $0.35 per share; ⁻ 2016 gain on investment of $87.2 million, $63.7 million net of tax or $1.62 per share; ⁻ 2016 restructuring charges of $3.4 million, $2.2 million net of tax, or $0.06 per share; and ⁻ operational results related to APAC businesses contributed to PersolKelly Asia Pacific in the third quarter of 2016. (2)Constant Currency represent year-over-year changes resulting from translating 2017 financial data into USD using 2016 exchange rates. Actual Results Change(1) Constant Currency Change(2) Revenue $5.4B 5.7% 5.1% GP % 17.8% 60 bps Earnings from Operations $85.7M 41.0% 38.8% ROS % 1.6% 40 bps EPS $2.20 $0.80

 
----- (1)Disposal of APAC businesses represents the 2016 operational results of business contributed to PersolKelly Asia Pacific in the third quarter of 2016. (2)Restructuring charges, net of taxes include $2.4 million of restructuring charges, $1.7 million net of tax or $0.04 per share in Q1 2017 and $3.4 million of restructuring charges, $2.2 million net of tax or $0.06 per share in Q2 2016. (3)U.S. tax law change in 2017 represents the non-cash impact on income tax expense related to the enactment of Tax Cuts and Jobs Act in December 2017. (4)Gain on investment in equity affiliate of $87.2 million, $63.7 million net of income tax expense or $1.62 per share in 2016. Fourth Quarter and Full Year 2017 EPS Summary 7 $ in Millions except per share data Amount Per Share Amount Per Share Amount Per Share Amount Per Share Net earnings $ 17.7 $ 0.45 $ 19.8 $ 0.51 $ 71.6 $ 1.81 $ 120.8 $ 3.08 Disposal of APAC businesses(1) - - - - - - (4.5) (0.12) Restructuring charges, net of taxes(2) - - - - 1.7 0.04 2.2 0.06 U.S. tax law change(3) 13.9 0.35 - - 13.9 0.35 - - Gain on investment in equity affiliate, net of taxes(4) - - - - - - (63.7) (1.62) Adjusted net earnings $ 31.6 $ 0.80 $ 19.8 $ 0.51 $ 87.2 $ 2.20 $ 54.8 $ 1.40 Fourth Quarter Full Year 2017 2016 2017 2016  As adjusted, both Q4 and full year net earnings increased by 59% and EPS increased by 57%

 
 Americas Staffing revenues reflect continued solid top-line growth in Commercial, Education and PT specialties  International Staffing delivered strong growth across the regions in Europe Fourth Quarter 2017 Revenue Growth 8 45% 20% 35% Business Mix Americas Staffing International Staffing Global Talent Solutions 0% 5% 10% 15% 20% Total Americas Staffing International Staffing Global Talent Solutions YoY Growth Reported Constant Currency

 
Fourth Quarter 2017 Gross Profit Growth  Americas Staffing GP increase comes from both strong top-line growth and GP rate improvement from lower employee benefits costs and higher perm fees  International Staffing GP progress reflects top-line growth and a flat GP rate  GTS GP increase reflects solid GP rate improvement on modest revenue growth 9 46% 16% 39% Business Mix Americas Staffing International Staffing Global Talent Solutions 0% 5% 10% 15% 20% Total Americas Staffing International Staffing Global Talent Solutions YoY Growth Reported Constant Currency

 
17.5% 18.5% 16.0% 16.5% 17.0% 17.5% 18.0% 18.5% 19.0% 19.5% 20.0% Q4 2016 GP Rate Global Talent Solutions Perm Fees Americas Staffing Q4 2017 GP Rate Fourth Quarter 2017 Gross Profit Rate  GTS rate improvement from improved mix of higher margin solutions and lower employee benefits costs  Higher perm fees in both the Americas Staffing and International Staffing segments also contributed to rate improvement  Americas Staffing GP rate improved due to lower employee benefits costs partially offset by unfavorable business mix 70 bps 10 10 bps 20 bps

 
$208 $235 $190 $195 $200 $205 $210 $215 $220 $225 $230 $235 $240 Q4 2016 SG&A Americas Staffing Corporate International Staffing FX Global Talent Solutions Q4 2017 SG&A Fourth Quarter 2017 SG&A  Americas Staffing expenses were up due to additional sales and recruiting resources to capitalize on market opportunities and increased performance based compensation expenses  Corporate expenses primarily reflect higher performance based compensation expense and additional expenses for projects related to technology and process automation  GTS expenses reflect higher performance based compensation, additional costs from new customer wins partially offset by lower bad debt expense due to a 2016 write-off $ in Millions $3 $3 $10 $1 $10 11

 
Fourth Quarter 2017 Conversion Rate  Americas Staffing conversion rate reflects strong top-line and GP growth  GTS improved by 880 bps and reflects the impact of an improving GP rate, cost management efforts and lower bad debt expense  International Staffing conversion rate improvement reflect strong GP growth partially offset by higher level of recruiting resources  Total Company conversion rate improvement, while solid, is also impacted by higher Corporate performance based incentive expenses $ in Millions 12 ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit. 2017 2016 Gross Earnings Conversion Gross Earnings Conversion Change Profit from Ops Rate(1) Profit from Ops Rate(1) (bps) Americas Staffing 121.2$ 27.8$ 22.8% 105.3$ 21.8$ 20.7% 210 Global Talent Solutions 101.5 25.6 25.3% 88.7 14.6 16.5% 880 International Staffing 41.0 5.6 13.8% 35.0 4.4 12.6% 120 Total Company 263.0$ 28.4$ 10.8% 228.0$ 19.8$ 8.7% 210

 
Full Year 2017 Conversion Rate $ in Millions 13 2017 2016 Gross Earnings Conversion Gross Earnings Conversion Change Profit from Ops Rate(1) Profit from Ops Rate(1) (bps) Americas Staffing 429.1$ 82.7$ 19.3% 398.2$ 68.8$ 17.3% 200 Global Talent Solutions 373.7 77.0 20.6% 345.9 58.2 16.8% 380 International Staffing 153.7 22.1 14.4% 166.4 19.5 11.7% 270 Total Company 954.1$ 83.3$ 8.7% 906.3$ 63.2$ 7.0% 170  Americas Staffing conversion rate reflects strong top-line and GP growth  GTS improved by 380 bps and reflects the impact of an improving GP rate and cost management efforts  International Staffing improved as a result of the deconsolidation of the APAC staffing business which carried a lower conversion rate, and reflects strong EMEA GP growth, but is partially offset by higher level of recruiting resources  Total Company conversion rate improvement, while solid, is also impacted by higher Corporate performance based incentive expenses ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit.

 
Fourth Quarter 2017 Balance Sheet Data 14  DSO is up 2 days versus the same period last year, but down 3 days from the Q3 seasonal peak  Year end debt was $10 million. 2017 balances reflect the impact of cash paid for the Teachers On Call acquisition $ in Millions DSO 53 55 55 58 55 Debt-to- 0.0% 0.0% 0.1% 2.1% 0.9% Equity Ratio $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 2016 2017 Q1 2017 Q2 2017 Q3 2017 Accounts Receivable $0 $20 $40 2016 2017 Q1 2017 Q2 2017 Q3 2017 Debt (and Debt-to-Equity Ratio)

 
2018 Outlook – Full Year  Revenue up 5% to 6% YOY – 100 basis point improvement due to currency – Includes impact from acquisition of Teachers On Call, net of the sale of our healthcare staffing business – Impact of revenue recognition not expected to be material  Gross profit rate up slightly YOY  SG&A up 4% to 5% YOY – Includes impact of additional spending on technology and efficiency initiatives  Annual tax rate in low to mid-teens – Reflects impact of Tax Cuts and Jobs Act  Impact of the new standard related to accounting for equity investments effective in Q1 2018 will be recognized below Earnings from Operations and is not included in the 2018 Outlook 15

 
Teachers On Call acquisition  Stock purchase completed on September 5, 2017  Teachers On Call is a U.S. based provider of substitute teacher staffing services for K-12 public, private, and charter schools, and early child care centers focused on the upper mid-west  Complements Kelly Educational Staffing geographic and service footprint  Expands on Kelly’s existing leading position in the U.S. educational staffing market 16