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): May 04, 2020
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(Exact name of Registrant as specified in its charter)
| (State or other | (Commission | (IRS Employer | ||||||
| jurisdiction of | File Number) | Identification | ||||||
| incorporation) | Number) | |||||||
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(Address of principal executive offices)
(Zip Code)
(248 ) 362-4444
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02. Results of Operations and Financial Condition
Kelly Services, Inc. (the “Company”) today released financial information containing highlighted financial data for the three months ended March 29, 2020. A copy of the press release is attached as exhibit 99.1 herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | ||||
| Press Release dated May 4, 2020. | |||||
| Presentation materials for May 4, 2020 conference call. | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
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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. | ||||||||
| May 4, 2020 | ||||||||
/s/ Olivier G. Thirot Olivier G. Thirot Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||
| May 4, 2020 | ||||||||
/s/ Laura S. Lockhart Laura S. Lockhart Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) | ||||||||
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EXHIBIT INDEX
| Exhibit No. | Description | ||||
| 99.1 | Press Release dated May 4, 2020. | ||||
| 99.2 | Presentation materials for May 4, 2020 conference call. | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
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Exhibit 99.1
KELLY® REPORTS
FIRST QUARTER EARNINGS
Financial Highlights
•Q1 revenue down 8.8%; 2.7% of the decline due to estimated impact of COVID-19 crisis
•Q1 operating earnings decline on $147.7 million non-cash goodwill impairment charge, partially offset by a gain on sale of headquarters buildings; operating earnings declined 46% on an adjusted basis
•Q1 loss per share of $3.91, compared to earnings of $0.56 last year; Q1 earnings per share on an adjusted basis of $0.20 compared to $0.45 last year
TROY, Mich. (May 4, 2020) – Kelly (Nasdaq: KELYA) (Nasdaq: KELYB), a leading specialty talent solutions provider, today announced results for the first quarter of 2020.
Peter Quigley, president and chief executive officer, announced revenue for the first quarter of 2020 totaled $1.3 billion, an 8.8% decrease, or 8.3% in constant currency, compared to the corresponding quarter of 2019. Included in the revenue decline is an estimated year-over-year decrease of 2.7% as a result of lower demand during the second half of March as customers reacted to the COVID-19 crisis.
Loss from operations for the first quarter of 2020 totaled $111.8 million, compared to the $16.8 million of earnings from operations reported for the first quarter of 2019. The 2020 first quarter results include a $147.7 million non-cash goodwill impairment charge, an $8.7 million restructuring charge and a gain on the sale of headquarters buildings of $32.1 million. The first quarter of 2019 included a restructuring charge of $6.3 million. On an adjusted basis, earnings from operations were $12.5 million for the first quarter of 2020 compared to $23.1 million for the first quarter of 2019.
Diluted loss per share in the first quarter of 2020 is $3.91 compared to earnings per share of $0.56 in the first quarter of 2019. Included in the loss per share in the first quarter of 2020 is a non-cash goodwill impairment charge of $3.18 per share, net of tax, a $1.38 per share non-cash loss, net of tax, on Persol Holdings common stock, a $0.17 per share restructuring charge, net of tax, and a gain on the sale of headquarters buildings of $0.61, per share net of tax. Included in the earnings per share in the first quarter of 2019 is a $0.23 from a non-cash gain per share on Kelly’s investment in Persol Holdings common stock, net of tax and a $0.12 per share restructuring charge, net of tax. On an adjusted basis, earnings per share were $0.20 for the first quarter of 2020 compared to $0.45 for the corresponding quarter of 2019.
“Kelly began the year with signs of stabilization in our U.S. staffing business, and continued growth in our outcome and consulting businesses,” stated Quigley. “However, the sudden and dramatic disruption sparked by COVID-19 in mid-March was unlike anything we’ve seen in our nearly 75 years. Negative market reaction to the crisis, including declines in our share price, triggered a goodwill impairment charge in the quarter that had a significant impact on our reported results. While we continue to closely manage the financial impact of the pandemic, the non-cash impairment charge does not change our views, or confidence, in our ability to weather the COVID-19 crisis or to capitalize on opportunities when the crisis ends. We’re moving forward with our transformation into a specialty talent solutions provider by taking prudent, near-term measures to protect our financial flexibility, while preserving our ability to capture growth coming out of this crisis. And, of course, our top priority has been, and continues to be, the health and safety of our people.”
In conjunction with its first quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9:00 a.m. (ET) on May 4 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Internet:
Kellyservices.com
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Via the Telephone
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please enter “#”
A recording of the conference call will be available after 2:30 p.m. ET on May 4, 2020 at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 5222215#. The recording will also be available at kellyservices.com during this period.
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, the recent novel coronavirus (COVID-19) outbreak, 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 and services connecting talent to independent work, 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 Pte. Ltd., 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 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 cyberattacks 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®
Kelly, Inc. (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 440,000 people around the world, and we connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2019 was $5.4 billion. Visit kellyservices.com and let us help with what’s next for you.
KLYA-FIN
# # #
| MEDIA CONTACT: | ANALYST CONTACT: | ||||||||||
| Jane Stehney | James Polehna | ||||||||||
| (248) 574-9800 | (248) 244-4586 | ||||||||||
| stehnja@kellyservices.com | james.polehna@kellyservices.com | ||||||||||
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| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||||||||||||||||
| FOR THE 13 WEEKS ENDED MARCH 29, 2020 AND MARCH 31, 2019 | |||||||||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| (In millions of dollars except per share data) | |||||||||||||||||||||||||||||||||||
| % | CC % | ||||||||||||||||||||||||||||||||||
| 2020 | 2019 | Change | Change | Change | |||||||||||||||||||||||||||||||
| Revenue from services | $ | 1,261.1 | $ | 1,382.6 | $ | (121.5) | (8.8) | % | (8.3) | % | |||||||||||||||||||||||||
| Cost of services | 1,037.8 | 1,131.0 | (93.2) | (8.2) | |||||||||||||||||||||||||||||||
| Gross profit | 223.3 | 251.6 | (28.3) | (11.3) | (10.9) | ||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 219.5 | 234.8 | (15.3) | (6.5) | (6.3) | ||||||||||||||||||||||||||||||
| Goodwill impairment charge | 147.7 | — | 147.7 | NM | |||||||||||||||||||||||||||||||
| Gain on sale of assets | (32.1) | — | (32.1) | NM | |||||||||||||||||||||||||||||||
| Earnings (loss) from operations | (111.8) | 16.8 | (128.6) | NM | |||||||||||||||||||||||||||||||
| Gain (loss) on investment in Persol Holdings | (77.8) | 13.2 | (91.0) | NM | |||||||||||||||||||||||||||||||
| Other income (expense), net | 1.7 | (1.1) | 2.8 | 234.5 | |||||||||||||||||||||||||||||||
| Earnings (loss) before taxes and equity in net earnings (loss) of affiliate | (187.9) | 28.9 | (216.8) | NM | |||||||||||||||||||||||||||||||
| Income tax expense (benefit) | (36.2) | 6.4 | (42.6) | NM | |||||||||||||||||||||||||||||||
| Net earnings (loss) before equity in net earnings (loss) of affiliate | (151.7) | 22.5 | (174.2) | NM | |||||||||||||||||||||||||||||||
| Equity in net earnings (loss) of affiliate | (1.5) | (0.4) | (1.1) | (312.1) | |||||||||||||||||||||||||||||||
| Net earnings (loss) | $ | (153.2) | $ | 22.1 | $ | (175.3) | NM | ||||||||||||||||||||||||||||
| Basic earnings (loss) per share | $ | (3.91) | $ | 0.56 | $ | (4.47) | NM | ||||||||||||||||||||||||||||
| Diluted earnings (loss) per share | $ | (3.91) | $ | 0.56 | $ | (4.47) | NM | ||||||||||||||||||||||||||||
| STATISTICS: | |||||||||||||||||||||||||||||||||||
| Staffing fee-based income (included in revenue from services) | $ | 12.3 | $ | 15.9 | $ | (3.6) | (22.9) | % | (22.1) | % | |||||||||||||||||||||||||
| Gross profit rate | 17.7 | % | 18.2 | % | (0.5) | pts. | |||||||||||||||||||||||||||||
| Conversion rate | (50.1) | 6.7 | (56.8) | ||||||||||||||||||||||||||||||||
| % Return: | |||||||||||||||||||||||||||||||||||
| Earnings (loss) from operations | (8.9) | 1.2 | (10.1) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) | (12.1) | 1.6 | (13.7) | ||||||||||||||||||||||||||||||||
| Effective income tax rate | 19.3 | % | 22.2 | % | (2.9) | pts. | |||||||||||||||||||||||||||||
| Average number of shares outstanding (millions): | |||||||||||||||||||||||||||||||||||
| Basic | 39.2 | 39.0 | |||||||||||||||||||||||||||||||||
| Diluted | 39.2 | 39.1 | |||||||||||||||||||||||||||||||||
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| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
| RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||||||||||||||
| (In millions of dollars) | ||||||||||||||||||||||||||||||||
| First Quarter | ||||||||||||||||||||||||||||||||
| % | CC % | |||||||||||||||||||||||||||||||
| 2020 | 2019 | Change | Change | |||||||||||||||||||||||||||||
| Americas Staffing | ||||||||||||||||||||||||||||||||
| Revenue from services | $ | 533.4 | $ | 626.5 | (14.9) | % | (14.6) | % | ||||||||||||||||||||||||
| Gross profit | 93.6 | 117.2 | (20.2) | (20.0) | ||||||||||||||||||||||||||||
| SG&A expenses excluding restructuring charges | 87.9 | 94.9 | (7.4) | (7.4) | ||||||||||||||||||||||||||||
| Restructuring charges | 5.6 | 6.3 | (10.6) | (10.6) | ||||||||||||||||||||||||||||
| Total SG&A expenses | 93.5 | 101.2 | (7.6) | (7.6) | ||||||||||||||||||||||||||||
| Earnings from operations | 0.1 | 16.0 | (99.5) | |||||||||||||||||||||||||||||
| Earnings from operations excluding restructuring charges | 5.7 | 22.3 | (74.4) | |||||||||||||||||||||||||||||
| Gross profit rate | 17.5 | % | 18.7 | % | (1.2) | pts. | ||||||||||||||||||||||||||
| Conversion rate | 0.1 | 13.7 | (13.6) | |||||||||||||||||||||||||||||
| Conversion rate excluding restructuring charges | 6.1 | 19.1 | (13.0) | |||||||||||||||||||||||||||||
| Return on sales | — | 2.6 | (2.6) | |||||||||||||||||||||||||||||
| Return on sales excluding restructuring charges | 1.1 | 3.6 | (2.5) | |||||||||||||||||||||||||||||
| Global Talent Solutions | ||||||||||||||||||||||||||||||||
| Revenue from services | $ | 503.2 | $ | 501.0 | 0.4 | % | 0.6 | % | ||||||||||||||||||||||||
| Gross profit | 100.2 | 100.4 | (0.2) | 0.1 | ||||||||||||||||||||||||||||
| SG&A expenses excluding restructuring charges | 72.8 | 74.7 | (2.5) | (2.2) | ||||||||||||||||||||||||||||
| Restructuring charges | 0.9 | — | NM | NM | ||||||||||||||||||||||||||||
| Total SG&A expenses | 73.7 | 74.7 | (1.3) | (1.0) | ||||||||||||||||||||||||||||
| Earnings from operations | 26.5 | 25.7 | 2.9 | |||||||||||||||||||||||||||||
| Earnings from operations excluding restructuring charges | 27.4 | 25.7 | 6.4 | |||||||||||||||||||||||||||||
| Gross profit rate | 19.9 | % | 20.0 | % | (0.1) | pts. | ||||||||||||||||||||||||||
| Conversion rate | 26.5 | 25.7 | 0.8 | |||||||||||||||||||||||||||||
| Conversion rate excluding restructuring charges | 27.4 | 25.7 | 1.7 | |||||||||||||||||||||||||||||
| Return on sales | 5.3 | 5.1 | 0.2 | |||||||||||||||||||||||||||||
| Return on sales excluding restructuring charges | 5.5 | 5.1 | 0.4 | |||||||||||||||||||||||||||||
| International Staffing | ||||||||||||||||||||||||||||||||
| Revenue from services | $ | 227.6 | $ | 258.9 | (12.1) | % | (10.7) | % | ||||||||||||||||||||||||
| Gross profit | 29.9 | 34.6 | (13.4) | (11.8) | ||||||||||||||||||||||||||||
| SG&A expenses excluding restructuring charges | 28.2 | 31.3 | (9.7) | (8.5) | ||||||||||||||||||||||||||||
| Restructuring charges | 1.1 | — | NM | NM | ||||||||||||||||||||||||||||
| Total SG&A expenses | 29.3 | 31.3 | (6.2) | (5.0) | ||||||||||||||||||||||||||||
| Earnings from operations | 0.6 | 3.3 | (81.7) | |||||||||||||||||||||||||||||
| Earnings from operations excluding restructuring charges | 1.7 | 3.3 | (48.8) | |||||||||||||||||||||||||||||
| Gross profit rate | 13.2 | % | 13.3 | % | (0.1) | pts. | ||||||||||||||||||||||||||
| Conversion rate | 2.0 | 9.5 | (7.5) | |||||||||||||||||||||||||||||
| Conversion rate excluding restructuring charges | 5.6 | 9.5 | (3.9) | |||||||||||||||||||||||||||||
| Return on sales | 0.3 | 1.3 | (1.0) | |||||||||||||||||||||||||||||
| Return on sales excluding restructuring charges | 0.7 | 1.3 | (0.6) | |||||||||||||||||||||||||||||
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| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||
| (In millions of dollars) | |||||||||||||||||||||||
| March 29, 2020 | Dec. 29, 2019 | March 31, 2019 | |||||||||||||||||||||
| Current Assets | |||||||||||||||||||||||
| Cash and equivalents | $ | 48.3 | $ | 25.8 | $ | 30.9 | |||||||||||||||||
| Trade accounts receivable, less allowances of | |||||||||||||||||||||||
| $11.1, $12.9, and $12.0, respectively | 1,236.1 | 1,282.2 | 1,283.1 | ||||||||||||||||||||
| Prepaid expenses and other current assets | 81.4 | 76.5 | 86.2 | ||||||||||||||||||||
| Properties held for sale | — | 21.2 | — | ||||||||||||||||||||
| Total current assets | 1,365.8 | 1,405.7 | 1,400.2 | ||||||||||||||||||||
| Noncurrent Assets | |||||||||||||||||||||||
| Property and equipment, net | 38.1 | 43.1 | 86.0 | ||||||||||||||||||||
| Operating lease right-of-use assets | 89.2 | 60.4 | 69.5 | ||||||||||||||||||||
| Deferred taxes | 249.5 | 229.1 | 204.6 | ||||||||||||||||||||
| Goodwill, net | — | 127.8 | 127.8 | ||||||||||||||||||||
| Investment in Persol Holdings | 96.8 | 173.2 | 147.2 | ||||||||||||||||||||
| Investment in equity affiliate | 116.3 | 117.2 | 121.2 | ||||||||||||||||||||
| Other assets | 306.1 | 324.1 | 315.7 | ||||||||||||||||||||
| Total noncurrent assets | 896.0 | 1,074.9 | 1,072.0 | ||||||||||||||||||||
| Total Assets | $ | 2,261.8 | $ | 2,480.6 | $ | 2,472.2 | |||||||||||||||||
| Current Liabilities | |||||||||||||||||||||||
| Short-term borrowings | $ | 1.7 | $ | 1.9 | $ | 74.2 | |||||||||||||||||
| Accounts payable and accrued liabilities | 475.5 | 503.6 | 496.6 | ||||||||||||||||||||
| Operating lease liabilities | 19.2 | 20.1 | 21.2 | ||||||||||||||||||||
| Accrued payroll and related taxes | 259.7 | 267.6 | 292.1 | ||||||||||||||||||||
| Accrued workers' compensation and other claims | 26.1 | 25.7 | 24.4 | ||||||||||||||||||||
| Income and other taxes | 60.6 | 65.2 | 64.9 | ||||||||||||||||||||
| Total current liabilities | 842.8 | 884.1 | 973.4 | ||||||||||||||||||||
| Noncurrent Liabilities | |||||||||||||||||||||||
| Operating lease liabilities | 72.7 | 43.3 | 50.6 | ||||||||||||||||||||
| Accrued workers' compensation and other claims | 46.4 | 45.8 | 47.9 | ||||||||||||||||||||
| Accrued retirement benefits | 164.5 | 187.4 | 176.0 | ||||||||||||||||||||
| Other long-term liabilities | 35.3 | 55.5 | 46.5 | ||||||||||||||||||||
| Total noncurrent liabilities | 318.9 | 332.0 | 321.0 | ||||||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||||||
| Common stock | 40.1 | 40.1 | 40.1 | ||||||||||||||||||||
| Treasury stock | (18.0) | (20.9) | (21.9) | ||||||||||||||||||||
| Paid-in capital | 19.5 | 22.5 | 21.0 | ||||||||||||||||||||
| Earnings invested in the business | 1,081.7 | 1,238.6 | 1,157.2 | ||||||||||||||||||||
| Accumulated other comprehensive income (loss) | (23.2) | (15.8) | (18.6) | ||||||||||||||||||||
| Total stockholders' equity | 1,100.1 | 1,264.5 | 1,177.8 | ||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 2,261.8 | $ | 2,480.6 | $ | 2,472.2 | |||||||||||||||||
| STATISTICS: | |||||||||||||||||||||||
| Working Capital | $ | 523.0 | $ | 521.6 | $ | 426.8 | |||||||||||||||||
| Current Ratio | 1.6 | 1.6 | 1.4 | ||||||||||||||||||||
| Debt-to-capital % | 0.2 | % | 0.1 | % | 5.9 | % | |||||||||||||||||
| Global Days Sales Outstanding | 59 | 58 | 58 | ||||||||||||||||||||
| Year-to-Date Free Cash Flow | $ | 5.4 | $ | 82.2 | $ | 17.0 | |||||||||||||||||
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| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| FOR THE 13 WEEKS ENDED MARCH 29, 2020 AND MARCH 31, 2019 | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars) | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net earnings (loss) | $ | (153.2) | $ | 22.1 | ||||||||||
| Adjustments to reconcile net earnings (loss) to net cash from operating activities: | ||||||||||||||
| Goodwill impairment charge | 147.7 | — | ||||||||||||
| Deferred income taxes on goodwill impairment charge | (23.0) | — | ||||||||||||
| Depreciation and amortization | 6.0 | 7.6 | ||||||||||||
| Operating lease asset amortization | 5.3 | 5.8 | ||||||||||||
| Provision for bad debts | (0.4) | 0.3 | ||||||||||||
| Stock-based compensation | 1.2 | 3.2 | ||||||||||||
| (Gain) loss on investment in Persol Holdings | 77.8 | (13.2) | ||||||||||||
| (Gain) loss on sale of assets | (32.1) | — | ||||||||||||
| Equity in net (earnings) loss of PersolKelly Pte. Ltd. | 1.5 | 0.4 | ||||||||||||
| Other, net | 0.7 | (0.4) | ||||||||||||
| Changes in operating assets and liabilities, net of acquisitions | (23.1) | (4.6) | ||||||||||||
| Net cash from operating activities | 8.4 | 21.2 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures | (3.0) | (4.2) | ||||||||||||
| Acquisition of companies, net of cash received | (36.3) | (86.4) | ||||||||||||
| Investment in equity securities | (0.3) | — | ||||||||||||
| Proceeds from sale of assets | 55.5 | — | ||||||||||||
| Other investing activities | — | 0.3 | ||||||||||||
| Net cash from (used in) investing activities | 15.9 | (90.3) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Net change in short-term borrowings | (0.1) | 72.0 | ||||||||||||
| Financing lease payments | (0.3) | — | ||||||||||||
| Dividend payments | (3.0) | (3.0) | ||||||||||||
| Payments of tax withholding for stock awards | (1.1) | (2.3) | ||||||||||||
| Other financing activities | (0.1) | — | ||||||||||||
| Net cash (used in) from financing activities | (4.6) | 66.7 | ||||||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 2.8 | (1.9) | ||||||||||||
| Net change in cash, cash equivalents and restricted cash | 22.5 | (4.3) | ||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 31.0 | 40.1 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 53.5 | $ | 35.8 | ||||||||||
6
| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| REVENUE FROM SERVICES | |||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||
| (In millions of dollars) | |||||||||||||||||||||||||||||
| First Quarter (Americas, International and GTS) | |||||||||||||||||||||||||||||
| % | CC % | ||||||||||||||||||||||||||||
| 2020 | 2019 | Change | Change | ||||||||||||||||||||||||||
| Americas | |||||||||||||||||||||||||||||
| United States | $ | 928.5 | $ | 1,018.9 | (8.9) | % | (8.9) | % | |||||||||||||||||||||
| Canada | 32.8 | 33.0 | (0.7) | — | |||||||||||||||||||||||||
| Mexico | 28.7 | 27.5 | 4.4 | 7.3 | |||||||||||||||||||||||||
| Puerto Rico | 17.7 | 19.2 | (7.6) | (7.6) | |||||||||||||||||||||||||
| Brazil | 9.1 | 8.5 | 7.5 | 18.8 | |||||||||||||||||||||||||
| Total Americas | 1,016.8 | 1,107.1 | (8.2) | (8.0) | |||||||||||||||||||||||||
| EMEA | |||||||||||||||||||||||||||||
| France | 52.5 | 64.3 | (18.3) | (15.8) | |||||||||||||||||||||||||
| Switzerland | 44.2 | 49.5 | (10.8) | (13.3) | |||||||||||||||||||||||||
| Portugal | 43.6 | 44.8 | (2.5) | 0.3 | |||||||||||||||||||||||||
| Russia | 32.1 | 25.4 | 26.4 | 26.7 | |||||||||||||||||||||||||
| United Kingdom | 22.3 | 26.2 | (14.9) | (13.6) | |||||||||||||||||||||||||
| Italy | 14.7 | 20.6 | (28.6) | (26.4) | |||||||||||||||||||||||||
| Germany | 8.0 | 11.1 | (27.9) | (25.8) | |||||||||||||||||||||||||
| Ireland | 5.0 | 10.1 | (50.9) | (49.4) | |||||||||||||||||||||||||
| Other | 15.2 | 18.0 | (15.6) | (10.6) | |||||||||||||||||||||||||
| Total EMEA | 237.6 | 270.0 | (12.0) | (10.6) | |||||||||||||||||||||||||
| Total APAC | 6.7 | 5.5 | 20.5 | 27.6 | |||||||||||||||||||||||||
| Total Kelly Services, Inc. | $ | 1,261.1 | $ | 1,382.6 | (8.8) | % | (8.3) | % | |||||||||||||||||||||
7
| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||||||||||||||||||
| FIRST QUARTER | |||||||||||||||||||||||||||||||||||
| (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| (In millions of dollars) | |||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||
| SG&A Expenses: | As Reported | Goodwill Impairment(1) | Gain on sale of assets(3) | Restructuring(4) | Adjusted | Adjusted | |||||||||||||||||||||||||||||
| Americas Staffing | $ | 93.5 | $ | — | $ | — | $ | (5.6) | $ | 87.9 | $ | 94.9 | |||||||||||||||||||||||
| Global Talent Solutions | 73.7 | — | — | (0.9) | 72.8 | 74.7 | |||||||||||||||||||||||||||||
| International Staffing | 29.3 | — | — | (1.1) | 28.2 | 31.3 | |||||||||||||||||||||||||||||
| Corporate | 23.4 | — | — | (1.1) | 22.3 | 28.2 | |||||||||||||||||||||||||||||
| Intersegment | (0.4) | — | — | — | (0.4) | (0.6) | |||||||||||||||||||||||||||||
| Total Company | $ | 219.5 | $ | — | $ | — | $ | (8.7) | $ | 210.8 | $ | 228.5 | |||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||
| Earnings (loss) from Operations: | As Reported | Goodwill Impairment(1) | Gain on sale of assets(3) | Restructuring(4) | Adjusted | Adjusted | |||||||||||||||||||||||||||||
| Americas Staffing | $ | 0.1 | $ | — | $ | — | $ | 5.6 | $ | 5.7 | $ | 22.3 | |||||||||||||||||||||||
| Global Talent Solutions | 26.5 | — | — | 0.9 | 27.4 | 25.7 | |||||||||||||||||||||||||||||
| International Staffing | 0.6 | — | — | 1.1 | 1.7 | 3.3 | |||||||||||||||||||||||||||||
| Corporate | (139.0) | 147.7 | (32.1) | 1.1 | (22.3) | (28.2) | |||||||||||||||||||||||||||||
| Total Company | $ | (111.8) | $ | 147.7 | $ | (32.1) | $ | 8.7 | $ | 12.5 | $ | 23.1 | |||||||||||||||||||||||
| 2019 | |||||||||||||||||
| SG&A Expenses: | As Reported | Restructuring(4) | Adjusted | ||||||||||||||
| Americas Staffing | $ | 101.2 | $ | (6.3) | $ | 94.9 | |||||||||||
| Global Talent Solutions | 74.7 | — | 74.7 | ||||||||||||||
| International Staffing | 31.3 | — | 31.3 | ||||||||||||||
| Corporate | 28.2 | — | 28.2 | ||||||||||||||
| Intersegment | (0.6) | — | (0.6) | ||||||||||||||
| Total Company | $ | 234.8 | $ | (6.3) | $ | 228.5 | |||||||||||
| 2019 | |||||||||||||||||
| Earnings from Operations: | As Reported | Restructuring(4) | Adjusted | ||||||||||||||
| Americas Staffing | $ | 16.0 | $ | 6.3 | $ | 22.3 | |||||||||||
| Global Talent Solutions | 25.7 | — | 25.7 | ||||||||||||||
| International Staffing | 3.3 | — | 3.3 | ||||||||||||||
| Corporate | (28.2) | — | (28.2) | ||||||||||||||
| Total Company | $ | 16.8 | $ | 6.3 | $ | 23.1 | |||||||||||
8
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES (continued) | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars except per share data) | ||||||||||||||
| First Quarter | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Income tax expense (benefit) | $ | (36.2) | $ | 6.4 | ||||||||||
Taxes on goodwill impairment charge(1) | 23.0 | — | ||||||||||||
Taxes on investment in Persol Holdings(2) | 23.8 | (4.1) | ||||||||||||
Taxes on gain on sale of assets(3) | (8.1) | — | ||||||||||||
Taxes on restructuring charges(4) | 2.2 | 1.6 | ||||||||||||
| Adjusted income tax expense (benefit) | $ | 4.7 | $ | 3.9 | ||||||||||
| First Quarter | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Net earnings (loss) | $ | (153.2) | $ | 22.1 | ||||||||||
Goodwill impairment charge, net of taxes(1) | 124.7 | — | ||||||||||||
(Gain) loss on investment in Persol Holdings, net of taxes(2) | 54.0 | (9.1) | ||||||||||||
Gain on sale of assets, net of taxes(3) | (24.0) | — | ||||||||||||
Restructuring charges, net of taxes(4) | 6.5 | 4.7 | ||||||||||||
| Adjusted net earnings | $ | 8.0 | $ | 17.7 | ||||||||||
| First Quarter | ||||||||||||||
| 2020 | 2019 | |||||||||||||
| Per Share | ||||||||||||||
| Net earnings (loss) | $ | (3.91) | $ | 0.56 | ||||||||||
Goodwill impairment charge, net of taxes(1) | 3.18 | — | ||||||||||||
(Gain) loss on investment in Persol Holdings, net of taxes(2) | 1.38 | (0.23) | ||||||||||||
Gain on sale of assets, net of taxes(3) | (0.61) | — | ||||||||||||
Restructuring charges, net of taxes(4) | 0.17 | 0.12 | ||||||||||||
| Adjusted net earnings | $ | 0.20 | $ | 0.45 | ||||||||||
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.
9
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 goodwill impairment charge, the 2020 and 2019 gains and losses on the investment in Persol Holdings, the 2020 gain on sale of assets, and the 2020 and 2019 restructuring charges, and are useful to understand the Company's fiscal 2020 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.
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 goodwill impairment charge is the result of an interim impairment test the Company performed during the first quarter of 2020, due to a triggering event caused by a decline in the Company's common stock price.
(2) The gains and losses on the investment in Persol Holdings represent the change in fair value of the investment during the period presented and the related tax expense and benefit.
(3) Gain on sale of assets in 2020 represents the excess of the proceeds over the cost of the headquarters properties sold during the first quarter of 2020.
(4) Restructuring charges in 2020 represent severance costs and lease terminations in preparation for the new operating model later in 2020. Restructuring charges in 2019 represent severance costs primarily related to U.S. branch-based staffing operations.
10
Exhibit 99.2 FIRST QUARTER 2020 MAY 4, 2020
FIRST QUARTER TAKEAWAYS Impact of COVID-19 pandemic begins in the second half of March • Q1 Revenue down 8.8%, down 8.3% in constant currency(1) • Impact from COVID-19 related demand declines of 2.7% year-over-year • Non-cash goodwill impairment charge in the quarter triggered by negative market response to the COVID-19 pandemic, including declines in our share price Near-term COVID-19 pandemic response • Developed guiding principles to align with our commitment to talent, customers, employees and the communities we serve • Initiated short-term cost reductions and took steps to preserve financial flexibility • Preparing to return our talent to work Continued focus on our future • Acquired Insight, an educational staffing specialty business • Completed the Corporate campus sale and leaseback transaction to unlock capital to invest in growth platforms • Completed Q1 2020 restructuring actions to reduce costs and prepare for our technology- enabled, specialty solutions operating model (1)Constant Currency represents year-over-year changes resulting from translating 2020 financial data into USD using 2019 exchange rates. 2
FIRST QUARTER 2020 FINANCIAL SUMMARY Constant Currency Actual Results Change Change(1) Revenue $1.3B (8.8%) (8.3%) Gross Profit % 17.7% (50) bps Loss from Operations ($111.8M) NM NM Loss Per Share ($3.91) ($4.47) • Revenue declined in Americas Staffing and International Staffing segments in the face of a weakening manufacturing sector in the U.S. and softening demand in Europe, respectively. GTS continued to deliver revenue growth in the first quarter. Demand declines related to the COVID-19 pandemic resulted in reduced revenue by 2.7% for the quarter, with impacts in Americas Staffing and International Staffing • GP rate declined on higher employee-related costs and lower perm fees, which more than offset structural improvement in product mix • Loss from Operations in Q1 2020 primarily due to $147.7 million non-cash goodwill impairment charge, partially offset by a $32.1 million gain on sale of the HQ campus • Q1 2020 EPS includes $3.18 goodwill impairment charge and a $1.38 impact from the non-cash loss on Persol Holdings common stock, net of tax, compared to an after-tax gain of $0.23 in 2019 (1)Constant Currency represents year-over-year changes resulting from translating 2020 financial data into USD using 2019 exchange rates. 3
FIRST QUARTER 2020 FINANCIAL SUMMARY (Excluding Goodwill Impairment Charge, Gain/loss on investment in Persol Holdings, Gain on Sale of Assets and Restructuring) Constant Currency Actual Results Change Change(3) Revenue $1.3B (8.8%) (8.3%) Gross Profit % 17.7% (50) bps Earnings from Operations(1) $12.5M (46.0%) (43.9%) Earnings Per Share(1),(2) $0.20 ($0.25) • Revenue declined in Americas Staffing and International Staffing segments in the face of a weakening manufacturing sector in the U.S. and softening demand in Europe, respectively. GTS continued to deliver revenue growth in the first quarter. Demand declines related to the COVID-19 pandemic resulted in reduced revenue by 2.7% for the quarter, with impacts in Americas Staffing and International Staffing • GP rate declined on higher employee-related costs and lower perm fees, which more than offset structural improvement in product mix • Earnings from Operations declined as the effect of declining revenues and gross profit was only partially offset by reduced expenses from efforts to align costs with GP trends and lower performance-based incentive expenses • EPS declined on lower earnings (1)Change excludes: ‒ $147.7 million of goodwill impairment charges, $124.7 million net of tax or $3.18 per share in Q1 2020. ‒ $32.1 million of gain on sale of assets, $24.0 million net of tax or $0.61 per share in Q1 2020. ‒ $8.7 million of restructuring charges, $6.5 million net of tax or $0.17 per share in Q1 2020. ‒ $6.3 million of restructuring charges, $4.7 million net of tax or $0.12 per share in Q1 2019. (2) Excludes $77.8 million loss on investment in Persol Holdings, $54.0 million net of tax or $1.38 per share in Q1 2020 and $13.2 million gain on investment in Persol Holdings, $9.1 million net of tax or $0.23 per share in Q1 2019. (3)Constant Currency represents year-over-year changes resulting from translating 2020 financial data into USD using 2019 exchange rates. 4
FIRST QUARTER 2020 EPS SUMMARY $ in millions except per share data First Quarter 2020 2019 Amount Per Share Amount Per Share Net earnings (loss) ($153.2) ($3.91) $22.1 $0.56 Goodwill impairment charge, net of taxes(1) 124.7 3.18 - - (Gain) loss on investment in Persol Holdings, 54.0 1.38 (9.1) (0.23) net of taxes(2) Gain on sale of assets, net of taxes(3) (24.0) (0.61) - - Restructuring charges, net of taxes(4) 6.5 0.17 4.7 0.12 Adjusted net earnings $8.0 $0.20 $17.7 $0.45 • As adjusted, net earnings and EPS declined on lower earnings from operations (1)Goodwill impairment charge of $147.7 million, $124.7 million net of tax or $3.18 per share in Q1 2020. (2)Loss on investment in Persol Holdings of $77.8 million, $54.0 million net of tax or $1.38 per share in Q1 2020 and gain on investment in Persol Holdings of $13.2 million, $9.1 million net of tax or $0.23 per share in Q1 2019. (3)Gain on sale of assets of $32.1 million, $24.0 million net of tax or $0.61 per share represents the excess of the proceeds over the cost of the headquarters properties sold during Q1 2020. (4)Restructuring charges of $8.7 million, $6.5 million net of tax or $0.17 per share in Q1 2020 and $6.3 million, $4.7 million net of tax or $0.12 per share in Q1 2019. 5
FIRST QUARTER 2020 REVENUE GROWTH REVENUE MIX BY SEGMENT(1) REVENUE GROWTH BY SEGMENT 10% 5% 0.6% 0.6% Americas 0.4% Reported Staffing 0% 40% 42% Constant International Currency Staffing (5%) Organic Global Talent (2) (10%) (8.3%) Growth Solutions (8.8%) (9.4%) (10.7%) (10.7%) 18% (15%) (12.1%) (14.6%) (14.9%) (16.9%) (20%) Total Americas Global Talent International Staffing Solutions Staffing • Americas Staffing revenue declined on lower volume, particularly in education and light industrial, which were impacted by the COVID-19 pandemic in the last two weeks of March • GTS revenue growth includes growth in outcome-based services. However, this growth was partially offset by declines in centrally delivered staffing. The COVID-19 impact was not significant • International Staffing reflects continued declines in market demand which was accelerated with the impact of COVID- 19 in March (1)Revenue Mix by Segment includes the results from acquisition. (2)Organic growth represents revenue growth excluding the results of acquisition on a constant currency basis. 6
FIRST QUARTER 2020 GROSS PROFIT GROWTH GROSS PROFIT MIX BY SEGMENT(1) GROSS PROFIT GROWTH BY SEGMENT 10% 5% 0.1% 0% (0.2%) 42% Reported 45% Americas (5%) Staffing Constant (10%) International Currency (11.3%) (10.9%) (11.8%) Staffing (15%) (13.4%) Global Talent (20%) 13% Solutions (20.2%)(20.0%) (25%) Total Americas Global Talent International Staffing Solutions Staffing • Americas Staffing GP reflects the impact of lower revenues and higher employee-related costs • GTS GP reflects the impact of slightly higher revenues and flat GP rate as higher employee-related costs offset the structural rate improvement from changes in product mix • International Staffing reflects the impact of lower revenue (1)Gross Profit Mix by Segment includes the results from acquisition. 7
FIRST QUARTER 2020 GROSS PROFIT RATE GROWTH 19.0% 18.5% 18.2% 18.0% 17.7% (40) bps (10) bps 17.5% 17.0% 16.5% 16.0% 15.5% 15.0% Q1 2019 GP Rate Americas Perm Fees Q1 2020 GP Rate Staffing • Overall GP rate declined on higher employee-related costs and lower perm fees • Americas Staffing GP rate declined on higher employee-related costs 8
FIRST QUARTER 2020 SG&A $ in millions $250 $9 $240 $235 $230 ($13) ($6) $220 ($3) $219 ($2) ($1) $210 $200 $190 Q1 2019 SG&A Restructuring Americas Corporate International Global Talent FX Q1 2020 SG&A Staffing Staffing Solutions • Restructuring charges reflect actions taken prior to COVID-19 to align cost with revenues, prepare for our new operating model and align the U.S. branch-based facilities footprint with a more technology-enabled service delivery methodology • Americas Staffing expenses were down due to lower performance-based compensation and lower salary expense as a result of the Q1 2019 restructuring actions in U.S. Operations • International Staffing, GTS and Corporate expenses reflect continued cost management 9
FIRST QUARTER 2020 BALANCE SHEET DATA $ in millions ACCOUNTS RECEIVABLE SHORT-TERM BORROWINGS $1,500 $80 $74 $1,283 $1,282 $1,300 $1,236 $60 $1,100 $40 $900 $20 $700 $2 $2 $500 $0 Q1 2019 Q4 2019 Q1 2020 Q1 2019 Q4 2019 Q1 2020 Excluding Acquisitions Acquisitions • Accounts Receivable reflects the impact of the recent acquisition of Insight. Including the acquisition, DSO is 59 days, up 1 day from a year ago. There is no COVID-19 related impact on collections or payment terms to date • Q1 2019 debt reflects borrowings for the acquisition of NextGen and GTA, which were repaid in 2019 • Ended the quarter with no borrowings on U.S credit facilities. Insight acquisition funded during the quarter ‒ U.S. credit facilities include a $150 million securitization facility and a $200 million revolving credit facility 10
PORTFOLIO PROGRESS We are using M&A activity to increase our focus on specialization. Kelly and Kelly sells Kelly sells Kelly acquires Kelly acquires Persol form a Kelly Healthcare Kelly Legal Global Insight JV combining Resources to Managed Technology the staffing InGenesis Services to Associates operations in Trustpoint.One APAC 2016 2017 2018 2019 2020 Kelly Innovation Fund Kelly acquires Kelly announces Kelly acquires invests in Kenzie Kelly invests NextGen Global sale/leaseback of Teachers On Call Academy in BTG Resources HQ real estate 11
RECENT ACQUISITION: INSIGHT • Education service staffing company with experience in partnering with school districts in Illinois, Massachusetts, New Jersey and Pennsylvania 12
NON-GAAP MEASURES Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 goodwill impairment charge, 2020 and 2019 gains and losses on the investment in Persol Holdings, the 2020 and 2019 restructuring charges, and the 2020 gain on sale of assets are useful to understand the Company's fiscal 2020 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Additionally, the Company does not acquire businesses on a predictable cycle and the terms of each acquisition are unique and may vary significantly. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance. 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. 13
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, the recent novel coronavirus (COVID-19) outbreak, 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 and services connecting talent to independent work, 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 Pte. Ltd., 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 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 cyberattacks 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. 14