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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 13, 2019
 
 
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 30, 2018. 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 13, 2019.
99.2    Presentation materials for February 13, 2019 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 13, 2019
 
 
 
 
 
 
 
 
 
/s/ Olivier G. Thirot
Olivier G. Thirot
 
Executive Vice President and Chief Financial Officer
(Principal Financial Officer) 

 
 
 
 
February 13, 2019
 
 
 
 
 
 
 
 
 
/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 13, 2019
Presentation materials for February 13, 2019 conference call


4
Exhibit
Exhibit 99.1


https://cdn.kscope.io/aa857cc5ed34359dc087aab84bb73782-pressreleaseheadera11.jpg
KELLY SERVICES® REPORTS
FOURTH QUARTER EARNINGS
Financial Highlights
•
Q4 revenue down 0.5%; up 0.6% in constant currency
•
Q4 operating earnings up 17% from last year
•
Q4 earnings (loss) per share of $(0.62), compared to $0.45 last year or $0.87 compared to $0.80 on an adjusted basis
•
Full year 2018 earnings from operations up 5% to $87 million
    
TROY, MI (February 13, 2019) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter of 2018.

George S. Corona, President and Chief Executive Officer, announced revenue for the fourth quarter of 2018 totaled $1.4 billion, a 0.5% decrease, or an increase of 0.6% in constant currency, compared to the corresponding quarter of 2017.
    
Earnings from operations for the fourth quarter of 2018 totaled $33.1 million, compared to the $28.4 million reported for the fourth quarter of 2017.

Diluted losses per share in the fourth quarter of 2018 were $0.62 compared to earnings per share of $0.45 in the fourth quarter of 2017. Included in the loss per share in the fourth quarter of 2018 is the unfavorable impact of $1.49 due to the non-cash after-tax loss on our investment in Persol Holdings common stock. Effective in 2018, changes in the fair value of our investment in Persol Holdings common stock are reflected as gains or losses on our Consolidated Statement of Earnings below earnings from operations. Adjusted for the non-cash after-tax loss on Persol Holdings common stock, diluted earnings per share for the quarter were $0.87. Earnings per share in the fourth quarter of 2017 were unfavorably impacted by the $0.35 non-cash, tax charge resulting from the Tax Cuts and Job Act and were $0.80 on an adjusted basis.

Diluted earnings per share for the full year of 2018 were $0.58 compared to $1.81 for 2017. Full-year earnings per share for 2018 were unfavorably impacted by the $1.69 non-cash after tax loss on Persol Holdings common stock. 2017 earnings per share were unfavorably impacted by the $0.35 non-cash income tax charge resulting from the Tax Cuts and Jobs Act and by the $0.04 restructuring charge, net of tax. On an adjusted basis, diluted earnings per share were $2.27 in 2018 compared to $2.20 in 2017. The impact of these adjustments are more fully described in our included reconciliation of non-GAAP measures.

“The company delivered a good quarter and a solid year in a challenging labor market,” said Kelly Services President and Chief Executive Officer George S. Corona. “We are pleased with the flexibility and resourcefulness of our Kelly team members, and with the strategic investments we made in people, products and technology. We are optimistic about 2019, knowing these strategic investments will help us capitalize on the expanding specialty talent solutions markets, where there are abundant opportunities for growth and increased profitability.”

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 13 to review the results and answer questions. The call may be accessed in one of the following ways:

1

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

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 particular to doing business with the government or government contractors, risks associated with conducting business in foreign countries, including foreign currency fluctuations, the exposure to potential market and currency exchange risks relating to our investment in Persol Holdings, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, 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 projects, our ability to maintain adequate financial and management processes and controls, risk of potential impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, the impact of changes in laws and regulations (including federal, state and international tax laws), competition law risks, the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to realize value from our tax credit and net operating loss carryforwards, 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 more than 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 2018 was $5.5 billion.  Visit kellyservices.com and connect with us on Facebook, LinkedIn, and 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 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
2017
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,414.7

$
1,422.3

$
(7.6
)
 
(0.5
)
%
0.6

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,160.3

 
1,159.3

 
1.0

 
0.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
254.4

 
263.0

 
(8.6
)
 
(3.3
)
 
(2.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
221.3

 
234.6

 
(13.3
)
 
(5.7
)
 
(4.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
33.1

 
28.4

 
4.7

 
16.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on investment in Persol Holdings
 
(83.2
)
 
—

 
(83.2
)
 
(100.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income, net
 
1.2

 
0.9

 
0.3

 
20.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate
 
(48.9
)
 
29.3

 
(78.2
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
 
(23.8
)
 
12.7

 
(36.5
)
 
(288.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) before equity in net earnings (loss) of affiliate
 
(25.1
)
 
16.6

 
(41.7
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
1.2

 
1.1

 
0.1

 
10.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss)
$
(23.9
)
$
17.7

$
(41.6
)
 
NM

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
(0.62
)
$
0.46

$
(1.08
)
 
NM

%
 
 
Diluted earnings (loss) per share
$
(0.62
)
$
0.45

$
(1.07
)
 
NM

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
16.3

$
15.9

$
0.4

 
2.0

%
4.4

%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.0

%
18.5

%
(0.5
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
13.0

 
10.8

 
2.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
2.3

 
2.0

 
0.3

 
 
 
 
 
Net earnings (loss)
 
(1.7
)
 
1.2

 
(2.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
48.8

%
43.2

%
5.6

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.9

 
38.4

 
 
 
 
 
 
 
     Diluted
 
38.9

 
39.2

 
 
 
 
 
 
 

3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
2017
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
5,513.9

$
5,374.4

$
139.5

 
2.6

%
2.2

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,541.7

 
4,420.3

 
121.4

 
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
972.2

 
954.1

 
18.1

 
1.9

 
1.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
884.8

 
870.8

 
14.0

 
1.6

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
87.4

 
83.3

 
4.1

 
5.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on investment in Persol Holdings
 
(96.2
)
 
—

 
(96.2
)
 
(100.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
(0.6
)
 
(1.6
)
 
1.0

 
58.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate
 
(9.4
)
 
81.7

 
(91.1
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
 
(27.1
)
 
12.8

 
(39.9
)
 
(312.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
17.7

 
68.9

 
(51.2
)
 
(74.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
5.2

 
2.7

 
2.5

 
92.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
22.9

$
71.6

$
(48.7
)
 
(68.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.59

$
1.84

$
(1.25
)
 
(67.9
)
%
 
 
Diluted earnings per share
$
0.58

$
1.81

$
(1.23
)
 
(68.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Staffing fee-based income (included in revenue from services)
$
68.6

$
57.3

$
11.3

 
19.6

%
19.0

%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.6

%
17.8

%
(0.2
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
9.0

 
8.7

 
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.6

 
1.5

 
0.1

 
 
 
 
 
Net earnings
 
0.4

 
1.3

 
(0.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
289.2

%
15.7

%
273.5

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
38.8

 
38.3

 
 
 
 
 
 
 
     Diluted
 
39.1

 
39.0

 
 
 
 
 
 
 

4

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
 
2017
 
Change
 
Change
 
Americas Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
647.6

 
$
642.4

 
0.8

%
1.4

%
Gross profit
 
118.8

 
 
121.2

 
(2.0
)
 
(1.5
)
 
Total SG&A expenses
 
90.4

 
 
93.4

 
(3.3
)
 
(2.8
)
 
Earnings from operations
 
28.4

 
 
27.8

 
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.3

%
 
18.9

%
(0.6
)
 pts.
 
 
Conversion rate
 
23.9

 
 
22.8

 
1.1

 
 
 
Return on sales
 
4.4

 
 
4.3

 
0.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Talent Solutions
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
503.3

 
$
503.1

 
—

%
0.3

%
Gross profit
 
99.3

 
 
101.5

 
(2.2
)
 
(1.7
)
 
Total SG&A expenses
 
72.5

 
 
75.9

 
(4.4
)
 
(3.9
)
 
Earnings from operations
 
26.8

 
 
25.6

 
4.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
19.7

%
 
20.2

%
(0.5
)
 pts.
 
 
Conversion rate
 
27.0

 
 
25.3

 
1.7

 
 
 
Return on sales
 
5.3

 
 
5.1

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
268.1

 
$
282.2

 
(5.0
)
%
(1.4
)
%
Gross profit
 
36.9

 
 
41.0

 
(9.8
)
 
(6.3
)
 
Total SG&A expenses
 
33.1

 
 
35.4

 
(6.1
)
 
(2.7
)
 
Earnings from operations
 
3.8

 
 
5.6

 
(33.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
13.8

%
 
14.5

%
(0.7
)
 pts.
 
 
Conversion rate
 
10.2

 
 
13.8

 
(3.6
)
 
 
 
Return on sales
 
1.4

 
 
2.0

 
(0.6
)
 
 
 


5

KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
 
2017
 
Change
 
Change
 
Americas Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,417.7

 
$
2,345.9

 
3.1

%
3.4

%
Gross profit
 
441.3

 
 
429.1

 
2.9

 
3.1

 
SG&A expenses excluding restructuring charges
 
364.2

 
 
346.0

 
5.2

 
5.5

 
Restructuring charges
 
—

 
 
0.4

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
364.2

 
 
346.4

 
5.1

 
5.4

 
Earnings from operations
 
77.1

 
 
82.7

 
(6.7
)
 
 
 
Earnings from operations excluding restructuring charges
 
77.1

 
 
83.1

 
(7.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.3

%
 
18.3

%
—

 pts.
 
 
Conversion rate
 
17.5

 
 
19.3

 
(1.8
)
 
 
 
Conversion rate excluding restructuring charges
 
17.5

 
 
19.3

 
(1.8
)
 
 
 
Return on sales
 
3.2

 
 
3.5

 
(0.3
)
 
 
 
Return on sales excluding restructuring charges
 
3.2

 
 
3.5

 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Talent Solutions
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,997.4

 
$
1,998.9

 
(0.1
)
%
(0.1
)
%
Gross profit
 
381.1

 
 
373.7

 
2.0

 
1.8

 
SG&A expenses excluding restructuring charges
 
296.5

 
 
294.7

 
0.6

 
0.4

 
Restructuring charges
 
—

 
 
2.0

 
(100.0
)
 
(100.0
)
 
Total SG&A expenses
 
296.5

 
 
296.7

 
—

 
(0.2
)
 
Earnings from operations
 
84.6

 
 
77.0

 
9.8

 
 
 
Earnings from operations excluding restructuring charges
 
84.6

 
 
79.0

 
7.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
19.1

%
 
18.7

%
0.4

 pts.
 
 
Conversion rate
 
22.2

 
 
20.6

 
1.6

 
 
 
Conversion rate excluding restructuring charges
 
22.2

 
 
21.1

 
1.1

 
 
 
Return on sales
 
4.2

 
 
3.9

 
0.3

 
 
 
Return on sales excluding restructuring charges
 
4.2

 
 
4.0

 
0.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,116.6

 
$
1,048.2

 
6.5

%
4.0

%
Gross profit
 
152.3

 
 
153.7

 
(0.9
)
 
(3.2
)
 
Total SG&A expenses
 
132.3

 
 
131.6

 
0.5

 
(1.4
)
 
Earnings from operations
 
20.0

 
 
22.1

 
(9.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
13.6

%
 
14.7

%
(1.1
)
 pts.
 
 
Conversion rate
 
13.2

 
 
14.4

 
(1.2
)
 
 
 
Return on sales
 
1.8

 
 
2.1

 
(0.3
)
 
 
 


6

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
Dec. 30, 2018
 
Dec. 31, 2017
 
Current Assets
 
 
 
 
 
  Cash and equivalents
$
35.3

$
32.5

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
    $13.2 and $12.9, respectively
 
1,293.3

 
1,286.7

 
  Prepaid expenses and other current assets
 
71.9

 
65.1

 
Total current assets
 
1,400.5

 
1,384.3

 
 
 
 
 
 
 
Noncurrent Assets
 
 
 
 
 
Property and equipment, net
 
86.3

 
86.1

 
Deferred taxes
 
198.7

 
183.4

 
Goodwill, net
 
107.3

 
107.1

 
Investment in Persol Holdings
 
135.1

 
228.1

 
Investment in equity affiliate
 
121.3

 
117.4

 
Other assets
 
265.2

 
271.8

 
Total noncurrent assets
 
913.9

 
993.9

 
 
 
 
 
 
 
Total Assets
$
2,314.4

$
2,378.2

 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
  Short-term borrowings
$
2.2

$
10.2

 
  Accounts payable and accrued liabilities
 
540.6

 
537.7

 
  Accrued payroll and related taxes
 
266.0

 
287.4

 
  Accrued workers' compensation and other claims
 
26.0

 
25.7

 
  Income and other taxes
 
62.7

 
65.2

 
Total current liabilities
 
897.5

 
926.2

 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
  Accrued workers' compensation and other claims
 
50.5

 
49.9

 
  Accrued retirement benefits
 
162.9

 
178.1

 
  Other long-term liabilities
 
44.0

 
72.5

 
Total noncurrent liabilities
 
257.4

 
300.5

 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
  Treasury stock
 
(26.0
)
 
(35.2
)
 
  Paid-in capital
 
24.4

 
32.2

 
  Earnings invested in the business
 
1,138.1

 
983.6

 
  Accumulated other comprehensive income (loss)
 
(17.1
)
 
130.8

 
 
 
 
 
 
 
Total stockholders' equity
 
1,159.5

 
1,151.5

 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
2,314.4

$
2,378.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Statistics:
 
 
 
 
 
 Working Capital
$
503.0

$
458.1

 
 Current Ratio
 
1.6

 
1.5

 
 Debt-to-capital %
 
0.2

%
0.9

%
 Global Days Sales Outstanding
 
55

 
55

 
 Year-to-Date Free Cash Flow
$
35.8

$
46.2

 

7

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net earnings
$
22.9

$
71.6

Adjustments to reconcile net earnings to net cash from operating activities:
 
 
 
 
Depreciation and amortization
 
26.2

 
22.7

Provision for bad debts
 
3.0

 
5.6

Stock-based compensation
 
8.1

 
9.1

Loss on investment in Persol Holdings
 
96.2

 
—

Equity in net earnings of PersolKelly Asia Pacific
 
(5.2
)
 
(2.7
)
Other, net
 
(0.8
)
 
0.2

Changes in operating assets and liabilities, net of acquisition
 
(89.0
)
 
(35.7
)
 
 
 
 
 
Net cash from operating activities
 
61.4

 
70.8

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(25.6
)
 
(24.6
)
Acquisition of company, net of cash received
 
—

 
(37.2
)
Investment in equity securities
 
(5.0
)
 
—

(Loan to) proceeds from repayment of loan to equity affiliate
 
(7.0
)
 
0.6

Proceeds from company-owned life insurance
 
7.9

 
—

Other investing activities
 
(0.1
)
 
0.2

 
 
 
 
 
Net cash used in investing activities
 
(29.8
)
 
(61.0
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
(7.8
)
 
10.1

Dividend payments
 
(11.8
)
 
(11.6
)
Payments of tax withholding for restricted shares
 
(6.9
)
 
(1.8
)
Other financing activities
 
—

 
(0.1
)
 
 
 
 
 
Net cash used in financing activities
 
(26.5
)
 
(3.4
)
 
 
 
 
 
Effect of exchange rates on cash, cash equivalents and restricted cash
 
(1.9
)
 
(3.8
)
 
 
 
 
 
Net change in cash, cash equivalents and restricted cash
 
3.2

 
2.6

Cash, cash equivalents and restricted cash at beginning of year
 
36.9

 
34.3

 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash at end of year
$
40.1

$
36.9

 
 
 
 
 


8

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
2017
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
1,031.6

$
1,027.8

 
0.4

%
0.4

%
Canada
 
34.8

 
34.5

 
1.2

 
5.1

 
Mexico
 
32.3

 
33.8

 
(4.4
)
 
(0.1
)
 
Puerto Rico
 
22.4

 
17.1

 
31.0

 
31.0

 
Brazil
 
8.6

 
10.3

 
(16.4
)
 
1.5

 
Total Americas
 
1,129.7

 
1,123.5

 
0.6

 
1.0

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
66.2

 
75.0

 
(11.8
)
 
(8.9
)
 
Switzerland
 
56.4

 
55.6

 
1.2

 
2.2

 
Portugal
 
46.4

 
52.0

 
(10.7
)
 
(7.8
)
 
Russia
 
24.7

 
23.9

 
2.9

 
17.2

 
United Kingdom
 
23.2

 
24.4

 
(4.9
)
 
(1.9
)
 
Italy
 
19.4

 
16.6

 
16.6

 
20.4

 
Germany
 
12.1

 
16.6

 
(27.3
)
 
(25.0
)
 
Ireland
 
10.3

 
8.6

 
20.5

 
24.3

 
Norway
 
8.0

 
8.4

 
(4.0
)
 
(0.7
)
 
Other
 
13.0

 
13.0

 
0.4

 
4.5

 
Total EMEA
 
279.7

 
294.1

 
(4.9
)
 
(1.4
)
 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
5.3

 
4.7

 
12.4

 
20.7

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,414.7

$
1,422.3

 
(0.5
)
%
0.6

%
 
 
 
 
 
 
 
 
 
 


9

KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
December Year to Date (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2018
 
2017
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
3,930.0

$
3,894.6

 
0.9

%
0.9

%
Canada
 
142.4

 
140.3

 
1.6

 
1.5

 
Mexico
 
125.0

 
118.8

 
5.2

 
7.5

 
Puerto Rico
 
96.6

 
68.3

 
41.5

 
41.5

 
Brazil
 
35.2

 
48.6

 
(27.6
)
 
(18.6
)
 
Total Americas
 
4,329.2

 
4,270.6

 
1.4

 
1.5

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
278.9

 
277.1

 
0.6

 
(3.7
)
 
Switzerland
 
212.7

 
216.9

 
(2.0
)
 
(2.4
)
 
Portugal
 
196.9

 
176.0

 
11.9

 
6.9

 
United Kingdom
 
108.8

 
88.7

 
22.6

 
18.1

 
Russia
 
100.4

 
93.2

 
7.7

 
15.8

 
Italy
 
77.5

 
61.9

 
25.2

 
20.0

 
Germany
 
57.1

 
59.9

 
(4.7
)
 
(9.3
)
 
Ireland
 
44.6

 
32.0

 
39.5

 
33.4

 
Norway
 
34.4

 
33.3

 
3.3

 
1.8

 
Other
 
51.2

 
46.5

 
10.1

 
6.4

 
Total EMEA
 
1,162.5

 
1,085.5

 
7.1

 
4.5

 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
22.2

 
18.3

 
21.4

 
24.3

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
5,513.9

$
5,374.4

 
2.6

%
2.2

%
 
 
 
 
 
 
 
 
 
 


10

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 AND 52 WEEKS ENDED DECEMBER 30, 2018 AND DECEMBER 31, 2017
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Earnings from operations
 
$
33.1

 
$
28.4

 
$
87.4

 
$
83.3

Restructuring charges (Note 3)
 
—

 
—

 
—

 
2.4

Adjusted earnings from operations
 
$
33.1

 
$
28.4

 
$
87.4

 
$
85.7

 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
 
$
(23.8
)
 
$
12.7

 
$
(27.1
)
 
$
12.8

Tax benefit on investment in Persol Holdings (Note 1)
 
25.4

 
—

 
29.4

 
—

2017 U.S. tax law change (Note 2)
 
—

 
(13.9
)
 
—

 
(13.9
)
Tax expense on restructuring charges (Note 3)
 
—

 
—

 
—

 
0.7

Adjusted income tax expense (benefit)
 
$
1.6

 
$
(1.2
)
 
$
2.3

 
$
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2018
 
2017
 
2018
 
2017
Net earnings (loss)
 
$
(23.9
)
 
$
17.7

 
$
22.9

 
$
71.6

Loss on investment in Persol Holdings, net of taxes (Note 1)
 
57.8

 
—

 
66.8

 
—

2017 U.S. tax law change (Note 2)
 
—

 
13.9

 
—

 
13.9

Restructuring charges, net of taxes (Note 3)
 
—

 
—

 
—

 
1.7

Adjusted net earnings
 
$
33.9

 
$
31.6

 
$
89.7

 
$
87.2

 
 
 
 
 
 
 
 
 
 
 
Fourth Quarter
 
December Year to Date
 
 
2018
 
2017
 
2018
 
2017
 
 
Per Share
 
Per Share
Net earnings (loss)
 
$
(0.62
)
 
$
0.45

 
$
0.58

 
$
1.81

Loss on investment in Persol Holdings, net of taxes (Note 1)
 
1.49

 
—

 
1.69

 
—

2017 U.S. tax law change (Note 2)
 
—

 
0.35

 
—

 
0.35

Restructuring charges, net of taxes (Note 3)
 
—

 
—

 
—

 
0.04

Adjusted net earnings
 
$
0.87

 
$
0.80

 
$
2.27

 
$
2.20


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 2018 loss on investment in Persol Holdings, the effect of the 2017 U.S. tax law change and the 2017 restructuring charges is useful to understand the Company's fiscal 2018 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) The loss on the investment in Persol Holdings in 2018 represents the change in fair value of the investment during the period presented and the related tax benefit.

(2) 2017 U.S. tax law change represents the impact of revaluing net deferred tax assets as a result of the U.S. Tax Cuts and Jobs Act.

(3) Restructuring charges in 2017 represent costs related primarily to optimizing our GTS service delivery models to deliver expected cost savings.







12
q42018earningsreleasesup
Exhibit 99.2 Fourth Quarter and Full Year 2018 February 13, 2019

 
Fourth Quarter Takeaways MODEST TOP‐LINE  GROWTH(1) DELIVERING SOLID  in challenging talent  PROFITS  supply environment Earnings from Operations  Revenue down 0.5%;  up 16.7% to $33.1 million Up 0.6% in constant  currency(1) FOCUSING ON OUR  FUTURE Aligning resources with  growth Divested legal staffing  and solutions business to  further refine our focus  ----- 2 (1)Constant Currency represents year-over-year changes resulting from translating 2018 financial data into USD using 2017 exchange rates.

 
Fourth Quarter 2018 Financial Summary Constant  Currency  Actual Results Change Change(1) Revenue $1.4B (0.5%) 0.6% GP % 18.0%     (50) bps Earnings from Operations $33.1M 16.7% 18.2% ROS %2.3%30        bps EPS ($0.62) ($1.07) • Revenue growth in constant currency reflects modest growth in Americas Staffing and Global Talent  Solutions (GTS) in the face of a challenging talent environment in the U.S., partially offset by lower  revenue in International Staffing • GP rate declines on higher employee related costs in Americas Staffing and GTS and the impact of  customer mix in International Staffing partially offset by structural progress in GTS GP rates • Earnings from operations is better than last year as lower performance based compensation and  expense control efforts deliver an improving expense leverage • EPS includes $1.49 unfavorable non‐cash impact from loss on equity investment due to adoption of a  required accounting standard effective in Q1 2018 ----- (1)Constant Currency represents year-over-year changes resulting from translating 2018 financial data into USD using 2017 exchange rates. 3

 
Fourth Quarter 2018 Financial Summary (Excluding Loss on Investment in Persol Holdings and 2017 U.S. Tax Law Impact) Constant  Currency  Actual Results Change Change(2) Revenue $1.4B (0.5%) 0.6% GP % 18.0%     (50) bps Earnings from Operations $33.1M 16.7% 18.2% ROS % 2.3%       30 bps EPS(1) $0.87$         0.07 • Revenue growth in constant currency reflects modest growth in Americas Staffing and GTS in the face of  a challenging talent environment in the U.S., partially offset by lower revenue in International Staffing • GP rate declines on higher employee related costs in Americas Staffing and GTS and the impact of  customer mix in International Staffing partially offset by structural progress in GTS GP rates • Earnings from operations is better than last year as lower performance based compensation and  expense control efforts deliver an improving expense leverage • EPS improves as strong conversion rate improvements offset declines in GP ----- (1)Change excludes: - 2018 loss on investment in Persol Holdings of $83.2 million, $57.8 million net of income tax benefit or $1.49 per share; and - 2017 U.S. tax law change of $13.9 million, or $0.35 per share, represents the impact of revaluing net deferred tax assets. (2)Constant Currency represents year-over-year changes resulting from translating 2018 financial data into USD using 2017 exchange rates. 4

 
Full Year 2018 Financial Summary Constant  Currency  Actual Results Change Change(1) Revenue $5.5B 2.6% 2.2% GP % 17.6%     (20) bps Earnings from Operations $87.4M 5.0% 4.0% ROS %1.6%10        bps EPS $0.58 ($1.23) • Revenue increase reflects growth in Americas Staffing and International Staffing and flat results in GTS • GP rate declines on higher employee related costs in Americas Staffing and GTS and the impact of  customer mix in International Staffing partially offset by structural progress in GTS GP rates • Earnings from operations is better than last year due to lower performance based compensation and  expense control efforts • EPS includes $1.69 unfavorable non‐cash impact from loss on equity investment due to adoption of a  required accounting standard effective in Q1 2018 ----- (1)Constant Currency represents year-over-year changes resulting from translating 2018 financial data into USD using 2017 exchange rates. 5

 
Full Year 2018 Financial Summary (Excluding Loss on Investment in Persol Holdings, 2017 U.S. Tax Law Impact, and Restructuring) Constant  Currency  Actual Results Change Change(2) Revenue $5.5B 2.6% 2.2% GP % 17.6%     (20) bps Earnings from Operations $87.4M 2.1% 1.1% ROS % 1.6%              ‐ EPS(1) $2.27$         0.07 • Revenue increase reflects growth in Americas Staffing and International Staffing and flat results in GTS • GP rate declines on higher employee related costs in Americas Staffing and GTS and the impact of  customer mix in International Staffing partially offset by structural progress in GTS GP rates • Earnings from operations is better than last year due to lower performance based compensation and  expense control efforts • EPS improves on modest top‐line improvement ----- (1)Change excludes: - 2018 loss on investment in Persol Holdings of $96.2 million, $66.8 million net of income tax benefit or $1.69 per share; - 2017 U.S. tax law change of $13.9 million, or $0.35 per share, represents the impact of revaluing net deferred tax assets; and - 2017 restructuring charges of $2.4 million, $1.7 million net of tax, or $0.04 per share in Q1 2017. (2)Constant Currency represents year-over-year changes resulting from translating 2018 financial data into USD using 2017 exchange rates. 6

 
Fourth Quarter 2018 EPS Summary $ in Millions except per share data Fourth Quarter 2018 2017 Amount Per Share Amount Per Share Net earnings (loss)  $      (23.9)  $    (0.62)  $       17.7  $       0.45  Loss on investment in Persol Holdings, net of taxes(1)            57.8          1.49             ‐             ‐ 2017 U.S. tax law change(2)              ‐             ‐          13.9          0.35 Adjusted net earnings  $         33.9  $       0.87  $       31.6  $       0.80  • As adjusted, net earnings and EPS improve as improving earnings from operations are partially offset by  higher income tax expense  ----- (1)Loss on investment in Persol Holdings of $83.2 million, $57.8 million net of tax expense or $1.49 per share in Q4 2018. (2)2017 U.S. tax law change of $13.9 million, or $0.35 per share, represents the impact of revaluing net deferred tax assets. 7

 
Full Year 2018 EPS Summary $ in Millions except per share data Full Year 2018 2017 Amount Per Share Amount Per Share Net earnings  $         22.9  $       0.58  $       71.6  $       1.81  Loss on investment in Persol Holdings, net of taxes(1)            66.8          1.69             ‐             ‐ 2017 U.S. tax law change(2)              ‐             ‐          13.9          0.35 Restructuring charges, net of taxes(3)              ‐             ‐            1.7          0.04 Adjusted net earnings  $         89.7  $      2.27  $       87.2  $       2.20  • As adjusted, net earnings and EPS improve as improving earnings from operations and higher equity  earnings in the PersolKelly APAC JV are partially offset by a higher income tax expense  ----- (1)Loss on investment in Persol Holdings of $96.2 million, $66.8 million net of tax expense or $1.69 per share in Q4 2018. (2)2017 U.S. tax law change of $13.9 million, or $0.35 per share, represents the impact of revaluing net deferred tax assets. (3)2017 restructuring charges of $2.4 million, $1.7 million net of tax, or $0.04 per share in Q1 2017. 8

 
Fourth Quarter 2018 Revenue Growth Revenue Mix by Segment Revenue Growth by Segment Reported Constant Currency 4% 2% 1.4% 0.8% 0.6% 0.3% 36% 0.0% 46% 0% -0.5% -2% -1.4% 19% -4% -5.0% -6% Total Americas Global Talent International Americas Staffing International Staffing Global Talent Solutions Staffing Solutions Staffing • Americas Staffing revenue reflects continuing growth in KES partially offset by declines in Commercial  and PT specialties in the face of talent supply challenges in the U.S. • GTS revenue reflects higher revenue in outsourced solutions offset by declines in centrally delivered  staffing • International Staffing revenue declined in Western Europe 9

 
Fourth Quarter 2018 Gross Profit Growth Gross Profit Mix by Segment Gross Profit Growth by Segment Reported Constant Currency 10% 5% 39% 47% 0% -1.5% -2.3% -2.0% -2.2%-1.7% -5% -3.3% -6.3% 15% -10% -9.8% -15% Total Americas Global Talent International Americas Staffing International Staffing Global Talent Solutions Staffing Solutions Staffing • Americas Staffing year over year comparisons reflects higher employee related costs and unfavorable  customer mix • GTS GP reflects higher employee related costs partially offset by structural rate improvement • International Staffing reflects declines in GP rate related to customer mix, partially offset by higher perm  fees 10

 
Fourth Quarter 2018 Gross Profit Rate 20.0% 19.5% 19.0% 18.5% 18.5% (20 bps) 18.0% 18.0% (20 bps) (10 bps) 17.5% 17.0% 16.5% 16.0% 15.5% 15.0% Q4 2017 GP Rate Americas International Global Talent Q4 2018 GP Rate Staffing Staffing Solutions • Americas Staffing GP rate was negatively impacted by higher employee related costs and  unfavorable customer mix • International Staffing GP rate was negatively impacted by customer mix • GTS GP rates reflects higher employee related costs partially offset by structural GP rate  improvement from product mix • Perm fees growth continued, although at a slower pace, and did not have an impact on the  overall GP rate  11

 
Fourth Quarter 2018 SG&A $ in Millions $250 $240 $235 $230 ($5) ($3) $221 ($3) $220 ($2) ($1) $210 $200 $190 Q4 2017 SG&A Corporate Americas Global Talent FX International Q4 2018 SG&A Staffing Solutions Staffing • Corporate expense decrease primarily reflects lower performance based compensation • Americas Staffing expenses were down due to lower performance based compensation and  effective cost management • GTS expense reflects lower performance based compensation and continued cost  management 12

 
Fourth Quarter 2018 Conversion Rate $ in Millions 2018 2017 Gross Earnings Conversion Gross Earnings Conversion Change  Profit from Ops Rate(1) Profit from Ops Rate(1) (bps) Americas Staffing $            118.8 $               28.4 23.9%$             121.2 $               27.8 22.8%       110 Global Talent Solutions                  99.3                  26.8 27.0%                101.5                  25.6 25.3%       170 International Staffing                  36.9                    3.8 10.2%                  41.0                    5.6 13.8%      (360) Total Company $            254.4 $               33.1 13.0%$             263.0 $               28.4 10.8%       220 • Americas Staffing and GTS conversion rate reflects slowing GP and effective cost management • International Staffing conversion rate reflects declining GP partially offset by effective cost  management • Total Company conversion rate improvement reflects the impact of effective cost  management, including lower performance based compensation, in response to GP declines ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit. 13

 
Full Year 2018 Conversion Rate $ in Millions 2018 2017 Gross Earnings Conversion Gross Earnings Conversion Change  Profit from Ops Rate(1) Profit from Ops Rate(1) (bps) Americas Staffing $            441.3 $               77.1 17.5%$             429.1 $               82.7 19.3%      (180) Global Talent Solutions                381.1                  84.6 22.2%                373.7                  77.0 20.6%       160 International Staffing                152.3                  20.0 13.2%                153.7                  22.1 14.4%      (120) Total Company $            972.2 $               87.4 9.0%$             954.1 $               83.3 8.7%          30 • Americas Staffing reflects the impact of higher expenses • GTS conversion rate reflects modest GP growth and effective cost management • International Staffing conversion rate reflects GP declines • Total Company conversion rate improvement reflects effective cost management, including  lower performance based compensation, in response to slow top line growth and modest GP  rate declines. Also, total Company conversion rate includes a favorable impact of 2017  restructuring charges ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit. 14

 
Full Year 2018 Conversion Rate (Excluding Restructuring) $ in Millions 2018 2017 Gross Earnings Conversion Gross Earnings Conversion Change  Profit from Ops Rate(1) Profit from Ops(2) Rate(1) (bps) Americas Staffing $            441.3 $               77.1 17.5%$             429.1 $               83.1 19.3%      (180) Global Talent Solutions                381.1                  84.6 22.2%                373.7                  79.0 21.1%       110 International Staffing                152.3                  20.0 13.2%                153.7                  22.1 14.4%      (120) Total Company $            972.2 $               87.4 9.0%$             954.1 $               85.7 9.0%        ‐ • Americas Staffing reflects the impact of higher expenses • GTS conversion rate reflects modest GP growth and effective cost management • International Staffing conversion rate reflects GP declines • Total Company conversion rate is flat and reflects the impact of effective cost management,  including lower performance based compensation, in response to slow top line growth and  modest GP rate declines ----- (1)Conversion rate represents earnings from operations as a percent of gross profit, or return on gross profit. (2)Excludes $2.4 million of restructuring charges in Q1 2017. 15

 
Fourth Quarter 2018 Balance Sheet Data $ in Millions Accounts Receivable Net Debt $1,400 $40 $1,291 $1,294 $1,293 $1,300 $1,287 $1,249 $33 $1,200 $1,100 $1,000 $20 $900 $800 $10 $700 $8 $600 $2 $2 $500 $0 2017 2018 Q1 2018 Q2 2018 Q3 2018 2017 2018 Q1 2018 Q2 2018 Q3 2018 • DSO is in line with Q4 2017 and down from Q3 2018 due to seasonality • Quarter end debt was $2 million compared to $10 million at year end 16

 
2019 Outlook – Full Year  Reported Revenue from up 3.5% to 5.5% YOY • 50 basis point unfavorable impact due to currency • 50 basis points unfavorable impact from the sale of our legal staffing and  solutions business at the end of 2018 • Growth rates expected to improve progressively throughout the year  • Includes inorganic growth from recent acquisitions expected to add 2‐3%  of revenue growth  Gross profit rate up YOY • Includes acceleration expected from recent acquisitions  SG&A up 4% to 6% YOY, including additional performance based  incentive compensation and investment in technology and efficiency  initiatives • Includes 2‐3% of expense growth from recent acquisitions, including  additional organic investment and amortization of purchased intangible  assets  Overall, conversion rate expected to improve 17

 
Kelly Strategic M&A Actions: 2016 - Present Sept. 2017 Dec. 2018 Kelly acquires Kelly sells Kelly Legal July 2016 Te a c h e r s O n C a l l April 2018 Managed Services to Jan. 2019 Kelly and Persol form a JV Kelly sells Kelly Trustpoint.One Kelly acquires Global combining the staffing Healthcare Resources to Technology operations in APAC InGenesis Associates, LLC (GTA) 2016 2017 2018 2019 “We are focusing our efforts and investment  dollars in order to accelerate our strategic intent to  become a Specialty Talent Solutions Provider.  As  Aug. 2018 part of that strategic path forward, we will  July 2018 Kelly invests in Jan. 2019 aggressively pursue investments in our specialty  Kelly Innovation Fund BTG Kelly acquires NextGen areas in order to provide Kelly with a solid platform  invests in Kenzie Global Resources, LLC for high‐margin growth.” Academy (NextGen) George Corona, President & CEO, Kelly Services 18

 
Recent Acquisitions: NextGen & GTA  Leading provider of telecommunications, wireless, and connected  technology staffing solutions to Fortune 500 companies   Works side‐by‐side with clients, across the U.S. and in select global  markets, to meet the staffing challenges of the ever‐changing tech  landscape  Leading provider of engineering, technology, and business consulting  solutions and services in the telecommunication industry  Provides telecommunication network design, implementation,  testing optimization, and software development services  Couples high‐value engineering, technology, and business consulting  services with proprietary software products and solutions 19

 
Developments and Initiatives Driving Improvement  Acquired a minority equity interest in BTG, a U.S.‐based marketplace  that connects highly skilled independent talent to some of the  world’s largest businesses, in September 2018  Aligns with Kelly’s passion for empowering the future of  independent work  Seed funding provided to Kenzie Academy, a tech apprenticeship  program that develops modern tech workers  Inaugural investment from the Kelly Innovation Fund in Q2 2018  Formed partnership with InGenesis in sale of U.S. healthcare staffing  business in Q1 2018  Partnership allowed Kelly to monetize business and deploy resources  towards other areas where Kelly has scale or specialization 20

 
Non-GAAP Measures Management believes that the non‐GAAP (Generally Accepted Accounting Principles) information excluding  the 2018 loss on investment in Persol Holdings, the effect of the 2017 U.S. tax law change and the 2017  restructuring charges is useful to understand the Company's fiscal 2018 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. A reconciliation to the most comparable GAAP measures is included  with our earnings release dated February 13, 2019 and is available on our Investor Relations website. 21

 
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 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 particular to doing business with the government or government contractors, risks associated with conducting business in foreign countries, including foreign currency fluctuations, the exposure to potential market and currency exchange risks relating to our investment in Persol Holdings, risks associated with violations of anti‐corruption, trade protection and other laws and regulations, availability of qualified full‐time employees, 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 projects, our ability to maintain adequate financial and management processes and controls, risk of potential impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, the impact of changes in laws and regulations (including federal, state and international tax laws), competition law risks, the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to realize value from our tax credit and net operating loss carryforwards, 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. 22