0000055135-19-000021.txt : 20190807 0000055135-19-000021.hdr.sgml : 20190807 20190807074854 ACCESSION NUMBER: 0000055135-19-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 36 CONFORMED PERIOD OF REPORT: 20190807 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190807 DATE AS OF CHANGE: 20190807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KELLY SERVICES INC CENTRAL INDEX KEY: 0000055135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 381510762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01088 FILM NUMBER: 191003854 BUSINESS ADDRESS: STREET 1: 999 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 2483624444 MAIL ADDRESS: STREET 1: 999 WEST BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 8-K 1 form8-k2019secondquart.htm 8-K Document
false0000055135 0000055135 2019-08-07 2019-08-07 0000055135 exch:XNMS us-gaap:CommonClassBMember 2019-08-07 2019-08-07 0000055135 exch:XNMS us-gaap:CommonClassAMember 2019-08-07 2019-08-07


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 
Date of Report (Date of earliest event reported): August 7, 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))

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. ☐

Securities registered pursuant to Section 12(b) of the Act:
Title of each
class
Trading
Symbols
Name of each exchange
on which registered
Class A Common
KELYA
NASDAQ Global Market
Class B Common
KELYB
NASDAQ Global Market

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 and six months ended June 30, 2019. 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 August 7, 2019.
Presentation materials for August 7, 2019 conference call.
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.


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.
 
August 7, 2019
 
 
 
 
 
 
 
 
 
/s/ Olivier G. Thirot
Olivier G. Thirot
 
Executive Vice President and Chief Financial Officer
(Principal Financial Officer) 

 
 
 
 
 
 
 
August 7, 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
 
 
99.1
Press Release dated August 7, 2019.
99.2
Presentation materials for August 7, 2019 conference call.
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.


4

EX-99.1 2 a20192qearningsrelease.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

pressreleaseheadera17.jpg

KELLY SERVICES® REPORTS
SECOND QUARTER EARNINGS

Financial Highlights
Q2 revenue down 1.4%; down 0.2% in constant currency
Q2 operating earnings up 71% from last year, up 10% excluding the gain on sale of assets
Q2 earnings per share of $2.12 compared to a loss of $0.40, or $0.72 compared to $0.54 last year on an adjusted basis
    
TROY, MI (August 7, 2019) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the second quarter of 2019.

George S. Corona, President and Chief Executive Officer, announced revenue for the second quarter of 2019 totaled $1.4 billion, a 1.4% decrease, or 0.2% in constant currency, compared to the corresponding quarter of 2018. Second quarter 2019 results include the impact of the January 2019 acquisitions of NextGen and Global Technology Associates, providers of specialty engineering talent to the U.S. telecommunications industry. Excluding the recent acquisitions, adjusted revenue declined 4.2% in the second quarter, or 3.1% in constant currency.
    
Earnings from operations for the second quarter of 2019 totaled $34.8 million, compared to the $20.4 million reported for the second quarter of 2018. Included in earnings from operations in the second quarter of 2019 is a $12.3 million gain on sale of assets, primarily relating to the sale of unused land, and a $0.6 million benefit from the reversal of a portion of the restructuring charge taken in Q1 related to revitalizing the Americas Staffing delivery model. Excluding the gain on sale of assets, restructuring charges and recent acquisitions, adjusted earnings from operations totaled $17.7 million, down 14% compared to the same period in 2018.

Diluted earnings per share in the second quarter of 2019 were $2.12 compared to a loss per share of $0.40 in the second quarter of 2018. Included in earnings per share in the second quarter of 2019 is the favorable impact of $1.07 due to the non-cash after-tax gain on our investment in Persol Holdings common stock compared to a loss of $0.94 in the second quarter of 2018. Second quarter 2019 earnings per share also include the benefit of the gain on the sale of assets, net of tax of $0.23. Adjusted for the net of tax impact of restructuring charges, recent acquisitions, gains and losses on Persol Holdings common stock and the gain on sale of assets, diluted earnings per share for the quarter were $0.72 compared to $0.54 in the corresponding quarter of 2018.

“We’re pleased with the growth in gross profit, earnings and the improved free cash flow we delivered during the second quarter,” said Kelly President and CEO George Corona. “We continued to effectively manage costs and successfully integrated our two recent acquisitions that are outperforming expectations and making a strong impact on our business,” he said. “Our focus for the remainder of the year is on advancing our specialty talent solutions strategy to further accelerate the growth of our business.”

Kelly also reported that on August 7, its board of directors declared a dividend of $0.075 per share. The dividend is payable August 30, 2019 to shareholders of record as of the close of business on August 20, 2019.

In conjunction with its second 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 August 7 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
Kellyservices.com

1



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® 
Kelly Services, 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 more than 500,000 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 2018 was $5.5 billion. Visit kellyservices.com and let us help with what’s next for you.



KLYA-FIN

# # #


ANALYST & MEDIA CONTACT:    
James Polehna        
(248) 244-4586    
james_polehna@kellyservices.com


2


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED JUNE 30, 2019 AND JULY 1, 2018
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
2018
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,367.5

$
1,386.9

$
(19.4
)
 
(1.4
)
%
(0.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
1,123.5

 
1,146.4

 
(22.9
)
 
(2.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
244.0

 
240.5

 
3.5

 
1.4

 
2.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
221.5

 
220.1

 
1.4

 
0.6

 
1.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of assets
 
12.3

 

 
12.3

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
34.8

 
20.4

 
14.4

 
70.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on investment in Persol Holdings
 
61.2

 
(52.5
)
 
113.7

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
0.2

 
0.6

 
(0.4
)
 
(51.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate
 
96.2

 
(31.5
)
 
127.7

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
 
12.7

 
(15.6
)
 
28.3

 
181.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) before equity in net earnings (loss) of affiliate
 
83.5

 
(15.9
)
 
99.4

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
0.3

 
0.5

 
(0.2
)
 
(29.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss)
$
83.8

$
(15.4
)
$
99.2

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
2.12

$
(0.40
)
$
2.52

 
NM

 
 
 
Diluted earnings (loss) per share
$
2.12

$
(0.40
)
$
2.52

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permanent placement income (included in revenue from services)
$
15.7

$
17.3

$
(1.6
)
 
(9.7
)
%
(7.5
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
17.8

%
17.3

%
0.5

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
14.2

 
8.5

 
5.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
2.5

 
1.5

 
1.0

 
 
 
 
 
Net earnings (loss)
 
6.1

 
(1.1
)
 
7.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
13.2

%
49.6

%
(36.4
)
pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
39.1

 
38.8

 
 
 
 
 
 
 
     Diluted
 
39.2

 
38.8

 
 
 
 
 
 
 

3


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 26 WEEKS ENDED JUNE 30, 2019 AND JULY 1, 2018
(UNAUDITED)
(In millions of dollars except per share data)
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
2018
 
Change
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
2,750.1

$
2,756.8

$
(6.7
)
 
(0.2
)
%
1.3

%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
2,254.5

 
2,278.1

 
(23.6
)
 
(1.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
495.6

 
478.7

 
16.9

 
3.5

 
4.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
456.3

 
446.3

 
10.0

 
2.2

 
3.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of assets
 
12.3

 

 
12.3

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
51.6

 
32.4

 
19.2

 
59.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on investment in Persol Holdings
 
74.4

 
(28.8
)
 
103.2

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
(0.9
)
 
(1.1
)
 
0.2

 
13.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings before taxes and equity in net earnings (loss) of affiliate
 
125.1

 
2.5

 
122.6

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
 
19.1

 
(9.2
)
 
28.3

 
307.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings before equity in net earnings (loss) of affiliate
 
106.0

 
11.7

 
94.3

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in net earnings (loss) of affiliate
 
(0.1
)
 
2.0

 
(2.1
)
 
(101.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings
$
105.9

$
13.7

$
92.2

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
2.69

$
0.35

$
2.34

 
NM

 
 
 
Diluted earnings per share
$
2.68

$
0.35

$
2.33

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permanent placement income (included in revenue from services)
$
31.6

$
33.9

$
(2.3
)
 
(6.8
)
%
(3.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.0

%
17.4

%
0.6

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate
 
10.4

 
6.8

 
3.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
% Return:
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
 
1.9

 
1.2

 
0.7

 
 
 
 
 
Net earnings
 
3.9

 
0.5

 
3.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
15.3

%
(366.2
)
%
381.5

pts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding (millions):
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
39.0

 
38.7

 
 
 
 
 
 
 
     Diluted
 
39.2

 
38.8

 
 
 
 
 
 
 

4


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
 
2018
 
Change
 
Change
 
Americas Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
597.6

 
$
604.0

 
(1.0
)
%
(0.9
)
%
Gross profit
 
108.8

 
 
108.5

 
0.2

 
0.4

 
SG&A expenses excluding restructuring charges
 
93.8

 
 
90.7

 
3.4

 
3.6

 
Restructuring charges
 
(0.6
)
 
 

 
NM

 
NM

 
Total SG&A expenses
 
93.2

 
 
90.7

 
2.7

 
3.0

 
Earnings from operations
 
15.6

 
 
17.8

 
(12.4
)
 
 
 
Earnings from operations excluding restructuring charges
 
15.0

 
 
17.8

 
(15.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.2

%
 
18.0

%
0.2

 pts.
 
 
Conversion rate
 
14.3

 
 
16.4

 
(2.1
)
 
 
 
Conversion rate excluding restructuring charges
 
13.8

 
 
16.4

 
(2.6
)
 
 
 
Return on sales
 
2.6

 
 
2.9

 
(0.3
)
 
 
 
Return on sales excluding restructuring charges
 
2.5

 
 
2.9

 
(0.4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Talent Solutions
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
505.9

 
$
500.7

 
1.0

%
1.4

%
Gross profit
 
99.7

 
 
92.7

 
7.5

 
8.2

 
Total SG&A expenses
 
74.3

 
 
75.0

 
(0.9
)
 
(0.2
)
 
Earnings from operations
 
25.4

 
 
17.7

 
43.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
19.7

%
 
18.5

%
1.2

 pts.
 
 
Conversion rate
 
25.4

 
 
19.1

 
6.3

 
 
 
Return on sales
 
5.0

 
 
3.5

 
1.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
268.1

 
$
286.6

 
(6.5
)
%
(1.8
)
%
Gross profit
 
36.1

 
 
39.9

 
(9.4
)
 
(4.8
)
 
Total SG&A expenses
 
32.6

 
 
33.5

 
(2.6
)
 
1.9

 
Earnings from operations
 
3.5

 
 
6.4

 
(44.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
13.5

%
 
13.9

%
(0.4
)
 pts.
 
 
Conversion rate
 
9.7

 
 
16.0

 
(6.3
)
 
 
 
Return on sales
 
1.3

 
 
2.2

 
(0.9
)
 
 
 

5


KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
June Year to Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
 
2018
 
Change
 
Change
 
Americas Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,224.1

 
$
1,208.3

 
1.3

%
1.6

%
Gross profit
 
226.0

 
 
216.5

 
4.4

 
4.7

 
SG&A expenses excluding restructuring charges
 
188.7

 
 
182.6

 
3.3

 
3.6

 
Restructuring charges
 
5.7

 
 

 
NM

 
NM

 
Total SG&A expenses
 
194.4

 
 
182.6

 
6.4

 
6.8

 
Earnings from operations
 
31.6

 
 
33.9

 
(6.6
)
 
 
 
Earnings from operations excluding restructuring charges
 
37.3

 
 
33.9

 
10.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
18.5

%
 
17.9

%
0.6

 pts.
 
 
Conversion rate
 
14.0

 
 
15.6

 
(1.6
)
 
 
 
Conversion rate excluding restructuring charges
 
16.5

 
 
15.6

 
0.9

 
 
 
Return on sales
 
2.6

 
 
2.8

 
(0.2
)
 
 
 
Return on sales excluding restructuring charges
 
3.1

 
 
2.8

 
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Talent Solutions
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
1,006.9

 
$
986.5

 
2.1

%
2.5

%
Gross profit
 
200.1

 
 
184.5

 
8.5

 
9.3

 
Total SG&A expenses
 
149.0

 
 
150.8

 
(1.2
)
 
(0.4
)
 
Earnings from operations
 
51.1

 
 
33.7

 
51.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
19.9

%
 
18.7

%
1.2

 pts.
 
 
Conversion rate
 
25.5

 
 
18.3

 
7.2

 
 
 
Return on sales
 
5.1

 
 
3.4

 
1.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Staffing
 
 
 
 
 
 
 
 
 
 
Revenue from services
$
527.0

 
$
571.3

 
(7.8
)
%
(1.6
)
%
Gross profit
 
70.7

 
 
79.0

 
(10.5
)
 
(4.5
)
 
Total SG&A expenses
 
63.9

 
 
67.6

 
(5.5
)
 
0.4

 
Earnings from operations
 
6.8

 
 
11.4

 
(40.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit rate
 
13.4

%
 
13.8

%
(0.4
)
 pts.
 
 
Conversion rate
 
9.6

 
 
14.4

 
(4.8
)
 
 
 
Return on sales
 
1.3

 
 
2.0

 
(0.7
)
 
 
 


6


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
June 30, 2019
 
Dec. 30, 2018
 
July 1, 2018
 
Current Assets
 
 
 
 
 
 
 
  Cash and equivalents
$
37.2

$
35.3

$
33.9

 
  Trade accounts receivable, less allowances of
 
 
 
 
 
 
 
    $12.1, $13.2, and $13.1, respectively
 
1,273.6

 
1,293.3

 
1,248.9

 
  Prepaid expenses and other current assets
 
82.1

 
71.9

 
64.5

 
Total current assets
 
1,392.9

 
1,400.5

 
1,347.3

 
 
 
 
 
 
 
 
 
Noncurrent Assets
 
 
 
 
 
 
 
  Property and equipment, net
 
83.4

 
86.3

 
84.7

 
  Operating lease right-of-use assets
 
66.9

 

 

 
  Deferred taxes
 
217.5

 
198.7

 
191.7

 
  Goodwill
 
127.8

 
107.3

 
107.3

 
  Investment in Persol Holdings
 
213.7

 
135.1

 
203.2

 
  Investment in equity affiliate
 
122.0

 
121.3

 
122.0

 
  Other assets
 
318.1

 
265.2

 
278.4

 
Total noncurrent assets
 
1,149.4

 
913.9

 
987.3

 
 
 
 
 
 
 
 
 
Total Assets
$
2,542.3

$
2,314.4

$
2,334.6

 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
  Short-term borrowings
$
19.3

$
2.2

$
1.7

 
  Accounts payable and accrued liabilities
 
513.7

 
540.6

 
505.5

 
  Operating lease liabilities
 
20.3

 

 

 
  Accrued payroll and related taxes
 
283.5

 
266.0

 
284.7

 
  Accrued workers' compensation and other claims
 
25.1

 
26.0

 
25.3

 
  Income and other taxes
 
69.2

 
62.7

 
60.7

 
Total current liabilities
 
931.1

 
897.5

 
877.9

 
 
 
 
 
 
 
 
 
Noncurrent Liabilities
 
 
 
 
 
 
 
  Operating lease liabilities
 
49.3

 

 

 
  Accrued workers' compensation and other claims
 
48.8

 
50.5

 
49.2

 
  Accrued retirement benefits
 
178.0

 
162.9

 
182.2

 
  Other long-term liabilities
 
66.9

 
44.0

 
64.4

 
Total noncurrent liabilities
 
343.0

 
257.4

 
295.8

 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
  Common stock
 
40.1

 
40.1

 
40.1

 
  Treasury stock
 
(21.5
)
 
(26.0
)
 
(27.4
)
 
  Paid-in capital
 
23.2

 
24.4

 
23.4

 
  Earnings invested in the business
 
1,238.1

 
1,138.1

 
1,134.8

 
  Accumulated other comprehensive income (loss)
 
(11.7
)
 
(17.1
)
 
(10.0
)
 
Total stockholders' equity
 
1,268.2

 
1,159.5

 
1,160.9

 
 
 
 
 
 
 
 
 
Total Liabilities and Stockholders' Equity
$
2,542.3

$
2,314.4

$
2,334.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATISTICS:
 
 
 
 
 
 
 
 Working Capital
$
461.8

$
503.0

$
469.4

 
 Current Ratio
 
1.5

 
1.6

 
1.5

 
 Debt-to-capital %
 
1.5

%
0.2

%
0.1

%
 Global Days Sales Outstanding
 
57

 
55

 
55

 
 Year-to-Date Free Cash Flow
$
64.8

$
35.8

$
22.9

 

7


KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WEEKS ENDED JUNE 30, 2019 AND JULY 1, 2018
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
Net earnings
$
105.9

$
13.7

Adjustments to reconcile net earnings to net cash from operating activities:
 
 
 
 
Depreciation and amortization
 
15.6

 
12.9

Operating lease asset amortization
 
11.5

 

Provision for bad debts
 
1.8

 
1.5

Stock-based compensation
 
5.2

 
4.7

(Gain) loss on investment in Persol Holdings
 
(74.4
)
 
28.8

(Gain) loss on sale of assets
 
(12.3
)
 

Equity in net (earnings) loss of PersolKelly Asia Pacific
 
0.1

 
(2.0
)
Other, net
 
(0.6
)
 
(0.6
)
Changes in operating assets and liabilities, net of acquisitions
 
20.7

 
(25.8
)
 
 
 
 
 
Net cash from operating activities
 
73.5

 
33.2

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(8.7
)
 
(10.3
)
Acquisition of companies, net of cash received
 
(86.4
)
 

Proceeds from sale of assets
 
13.8

 

Proceeds from company-owned life insurance
 
3.0

 

Other investing activities
 
(1.3
)
 
(0.6
)
 
 
 
 
 
Net cash used in investing activities
 
(79.6
)
 
(10.9
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
17.1

 
(8.4
)
Dividend payments
 
(5.9
)
 
(5.9
)
Payments of tax withholding for stock awards
 
(2.3
)
 
(6.2
)
  Other financing activities
 
(0.3
)
 

 
 
 
 
 
Net cash from (used in) financing activities
 
8.6

 
(20.5
)
 
 
 
 
 
Effect of exchange rates on cash, cash equivalents and restricted cash
 
(0.1
)
 
(0.1
)
 
 
 
 
 
Net change in cash, cash equivalents and restricted cash
 
2.4

 
1.7

Cash, cash equivalents and restricted cash at beginning of period
 
40.1

 
36.9

 
 
 
 
 
Cash, cash equivalents and restricted cash at end of period
$
42.5

$
38.6



8


    
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
Second Quarter (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
2018
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
991.3

$
981.2

 
1.0

%
1.0

%
Canada
 
33.2

 
37.0

 
(10.4
)
 
(7.2
)
 
Mexico
 
29.7

 
30.0

 
(1.2
)
 
(2.9
)
 
Puerto Rico
 
19.6

 
26.2

 
(25.0
)
 
(25.0
)
 
Brazil
 
8.2

 
9.0

 
(9.3
)
 
3.0

 
Total Americas
 
1,082.0

 
1,083.4

 
(0.1
)
 

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
64.6

 
72.0

 
(10.2
)
 
(4.8
)
 
Switzerland
 
49.9

 
52.8

 
(5.6
)
 
(4.0
)
 
Portugal
 
46.7

 
51.2

 
(8.9
)
 
(3.4
)
 
United Kingdom
 
30.5

 
28.5

 
7.0

 
13.3

 
Russia
 
28.8

 
25.6

 
12.8

 
17.2

 
Italy
 
20.7

 
19.3

 
7.5

 
13.7

 
Ireland
 
10.9

 
11.7

 
(6.8
)
 
(1.2
)
 
Germany
 
9.9

 
14.8

 
(33.7
)
 
(29.7
)
 
Other
 
16.9

 
22.0

 
(23.0
)
 
(17.8
)
 
Total EMEA
 
278.9

 
297.9

 
(6.3
)
 
(1.6
)
 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
6.6

 
5.6

 
18.1

 
26.3

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
1,367.5

$
1,386.9

 
(1.4
)
%
(0.2
)
%
 
 
 
 
 
 
 
 
 
 


9


KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
 
 
 
 
 
 
 
 
 
 
 
 
June Year to Date (Americas, International and GTS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
CC %
 
 
 
2019
 
2018
 
Change
 
Change
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
 
 
 
 
 
 
 
United States
$
2,010.2

$
1,955.9

 
2.8

%
2.8

%
Canada
 
66.2

 
70.6

 
(6.2
)
 
(2.1
)
 
Mexico
 
57.2

 
60.4

 
(5.4
)
 
(5.1
)
 
Puerto Rico
 
38.8

 
46.0

 
(15.7
)
 
(15.7
)
 
Brazil
 
16.7

 
18.5

 
(9.8
)
 
3.7

 
Total Americas
 
2,189.1

 
2,151.4

 
1.7

 
2.0

 
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
France
 
128.9

 
143.9

 
(10.4
)
 
(4.0
)
 
Switzerland
 
99.4

 
102.5

 
(3.0
)
 
0.3

 
Portugal
 
91.5

 
102.3

 
(10.6
)
 
(4.3
)
 
United Kingdom
 
56.7

 
57.5

 
(1.4
)
 
4.8

 
Russia
 
54.2

 
51.7

 
5.0

 
14.9

 
Italy
 
41.3

 
39.8

 
3.9

 
11.2

 
Ireland
 
21.0

 
23.0

 
(8.6
)
 
(2.1
)
 
Germany
 
21.0

 
31.2

 
(32.9
)
 
(28.0
)
 
Other
 
34.9

 
42.8

 
(18.4
)
 
(11.9
)
 
Total EMEA
 
548.9

 
594.7

 
(7.7
)
 
(1.6
)
 
 
 
 
 
 
 
 
 
 
 
Total APAC
 
12.1

 
10.7

 
13.7

 
22.8

 
 
 
 
 
 
 
 
 
 
 
Total Kelly Services, Inc.
$
2,750.1

$
2,756.8

 
(0.2
)
%
1.3

%
 
 
 
 
 
 
 
 
 
 


10


 KELLY SERVICES, INC. AND SUBSIDIARIES
 RECONCILIATION OF NON-GAAP MEASURES
SECOND QUARTER
 (UNAUDITED)
 (In millions of dollars)
 
 
 
 
 
2019
 
2018
Revenue from Services:
As Reported
 
Restructuring(2)
 
Acquisitions(3)
 
Adjusted
 
As Reported
Americas Staffing
$
597.6

 
$

 
$
(22.7
)
 
$
574.9

 
$
604.0

Global Talent Solutions
505.9

 

 
(16.7
)
 
489.2

 
500.7

International Staffing
268.1

 

 

 
268.1

 
286.6

Intersegment
(4.1
)
 

 

 
(4.1
)
 
(4.4
)
Total Company
$
1,367.5

 
$

 
$
(39.4
)
 
$
1,328.1

 
$
1,386.9

 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
Gross Profit:
As Reported
 
Restructuring(2)
 
Acquisitions(3)
 
Adjusted
 
As Reported
Americas Staffing
$
108.8

 
$

 
$
(7.0
)
 
$
101.8

 
$
108.5

Global Talent Solutions
99.7

 

 
(4.1
)
 
95.6

 
92.7