Financial Highlights
- Q3 revenue declined 18.1% as COVID-19 related demand declines persist
- Q3 operating loss of
$2.4 million , or earnings of$7.0 million as adjusted, compared to earnings of$17.0 million last year as adjusted - Q3 earnings per share of
$0.42 or$0.29 as adjusted, compared to$0.43 last year as adjusted
Losses from operations for the third quarter of 2020 totaled
Diluted earnings per share in the third quarter of 2020 were
“As a gradual recovery from the pandemic continued into the third quarter, revenue trends in all of Kelly’s segments showed some sequential improvement,” stated Quigley. “Our higher-margin specialties, such as outsourcing & consulting, science, and virtual call center, proved to be particularly resilient. Kelly has also made significant progress on reinventing ourselves in a tumultuous year. We executed on our plan to adopt a new operating model, and we reported third quarter financial results by our five specialty business segments: Science, Engineering & Technology; Education; Professional & Industrial; OCG; and International. This is an important step forward in redefining Kelly as a specialty talent provider in skill sets modern organizations need to grow and thrive. While we continue to carefully manage expenses and track the trajectory of the crisis, we expect our disciplined specialty focus to deliver profitable growth in a post-pandemic business environment. I’m proud of our teams for the agility, creativity, and character they’ve shown in response to this crisis, and I’m encouraged by the early traction we’re seeing as a result of their efforts.”
In conjunction with its third 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
Via the Internet:
Kellyservices.com
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
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
About Kelly®
MEDIA CONTACT: | ANALYST CONTACT: | ||
(248) 574-9800 | (248) 244-4586 | ||
stehnja@kellyservices.com | james.polehna@kellyservices.com |
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||
FOR THE 13 WEEKS ENDED | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
(In millions of dollars except per share data) | |||||||||||||||||||||
% | CC % | ||||||||||||||||||||
2020 | 2019 | Change | Change | Change | |||||||||||||||||
Revenue from services | $ | 1,038.2 | $ | 1,267.7 | $ | (229.5 | ) | (18.1 | ) | % | (18.2 | ) | % | ||||||||
Cost of services | 847.2 | 1,040.0 | (192.8 | ) | (18.5 | ) | |||||||||||||||
Gross profit | 191.0 | 227.7 | (36.7 | ) | (16.1 | ) | (16.3 | ) | |||||||||||||
Selling, general and administrative expenses | 193.4 | 210.6 | (17.2 | ) | (8.2 | ) | (8.1 | ) | |||||||||||||
Earnings (loss) from operations | (2.4 | ) | 17.1 | (19.5 | ) | NM | |||||||||||||||
Gain (loss) on investment in Persol Holdings | 16.8 | (39.3 | ) | 56.1 | NM | ||||||||||||||||
Other income (expense), net | (0.7 | ) | (0.2 | ) | (0.5 | ) | (286.4 | ) | |||||||||||||
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate | 13.7 | (22.4 | ) | 36.1 | NM | ||||||||||||||||
Income tax expense (benefit) | (1.2 | ) | (12.8 | ) | 11.6 | 90.9 | |||||||||||||||
Net earnings (loss) before equity in net earnings (loss) of affiliate | 14.9 | (9.6 | ) | 24.5 | NM | ||||||||||||||||
Equity in net earnings (loss) of affiliate | 1.8 | (0.9 | ) | 2.7 | NM | ||||||||||||||||
Net earnings (loss) | $ | 16.7 | $ | (10.5 | ) | $ | 27.2 | NM | |||||||||||||
Basic earnings (loss) per share | $ | 0.42 | $ | (0.27 | ) | $ | 0.69 | NM | |||||||||||||
Diluted earnings (loss) per share | $ | 0.42 | $ | (0.27 | ) | $ | 0.69 | NM | |||||||||||||
STATISTICS: | |||||||||||||||||||||
Permanent placement revenue (included in revenue from services) | $ | 9.1 | $ | 15.1 | $ | (6.0 | ) | (40.2 | ) | % | (40.6 | ) | % | ||||||||
Gross profit rate | 18.4 | % | 18.0 | % | 0.4 | pts. | |||||||||||||||
Conversion rate | (1.3 | ) | 7.5 | (8.8 | ) | ||||||||||||||||
% Return: | |||||||||||||||||||||
Earnings (loss) from operations | (0.2 | ) | 1.3 | (1.5 | ) | ||||||||||||||||
Net earnings (loss) | 1.6 | (0.8 | ) | 2.4 | |||||||||||||||||
Effective income tax rate | (8.5 | ) | % | 57.3 | % | (65.8 | ) | pts. | |||||||||||||
Average number of shares outstanding (millions): | |||||||||||||||||||||
Basic | 39.3 | 39.1 | |||||||||||||||||||
Diluted | 39.4 | 39.1 |
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||
FOR THE 39 WEEKS ENDED | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
(In millions of dollars except per share data) | |||||||||||||||||||||
% | CC % | ||||||||||||||||||||
2020 | 2019 | Change | Change | Change | |||||||||||||||||
Revenue from services | $ | 3,274.6 | $ | 4,017.8 | $ | (743.2 | ) | (18.5 | ) | % | (18.0 | ) | % | ||||||||
Cost of services | 2,671.1 | 3,294.5 | (623.4 | ) | (18.9 | ) | |||||||||||||||
Gross profit | 603.5 | 723.3 | (119.8 | ) | (16.6 | ) | (16.2 | ) | |||||||||||||
Selling, general and administrative expenses | 591.0 | 666.9 | (75.9 | ) | (11.4 | ) | (11.0 | ) | |||||||||||||
147.7 | — | 147.7 | NM | ||||||||||||||||||
Gain on sale of assets | (32.1 | ) | (12.3 | ) | (19.8 | ) | (161.6 | ) | |||||||||||||
Earnings (loss) from operations | (103.1 | ) | 68.7 | (171.8 | ) | NM | |||||||||||||||
Gain (loss) on investment in Persol Holdings | (31.4 | ) | 35.1 | (66.5 | ) | NM | |||||||||||||||
Other income (expense), net | 3.6 | (1.1 | ) | 4.7 | 421.4 | ||||||||||||||||
Earnings (loss) before taxes and equity in net earnings (loss) of affiliate | (130.9 | ) | 102.7 | (233.6 | ) | NM | |||||||||||||||
Income tax expense (benefit) | (36.5 | ) | 6.3 | (42.8 | ) | NM | |||||||||||||||
Net earnings (loss) before equity in net earnings (loss) of affiliate | (94.4 | ) | 96.4 | (190.8 | ) | NM | |||||||||||||||
Equity in net earnings (loss) of affiliate | (1.0 | ) | (1.0 | ) | — | (1.8 | ) | ||||||||||||||
Net earnings (loss) | $ | (95.4 | ) | $ | 95.4 | $ | (190.8 | ) | NM | ||||||||||||
Basic earnings (loss) per share | $ | (2.43 | ) | $ | 2.42 | $ | (4.85 | ) | NM | ||||||||||||
Diluted earnings (loss) per share | $ | (2.43 | ) | $ | 2.41 | $ | (4.84 | ) | NM | ||||||||||||
STATISTICS: | |||||||||||||||||||||
Permanent placement revenue (included in revenue from services) | $ | 28.9 | $ | 46.7 | $ | (17.8 | ) | 38.1 | % | (37.6 | ) | % | |||||||||
Gross profit rate | 18.4 | % | 18.0 | % | 0.4 | pts. | |||||||||||||||
Conversion rate | (17.1 | ) | 9.5 | (26.6 | ) | ||||||||||||||||
% Return: | |||||||||||||||||||||
Earnings (loss) from operations | (3.1 | ) | 1.7 | (4.8 | ) | ||||||||||||||||
Net earnings (loss) | (2.9 | ) | 2.4 | (5.3 | ) | ||||||||||||||||
Effective income tax rate | 27.9 | % | 6.1 | % | 21.8 | pts. | |||||||||||||||
Average number of shares outstanding (millions): | |||||||||||||||||||||
Basic | 39.3 | 39.0 | |||||||||||||||||||
Diluted | 39.3 | 39.2 |
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
(In millions of dollars) | ||||||||||||||||||
Third Quarter | ||||||||||||||||||
% | CC % | |||||||||||||||||
2020 | 2019 | Change | Change | |||||||||||||||
Professional & Industrial | ||||||||||||||||||
Revenue from services | $ | 446.5 | $ | 538.0 | (17.0 | ) | % | (17.0 | ) | % | ||||||||
Gross profit | 77.1 | 91.8 | (16.1 | ) | (16.0 | ) | ||||||||||||
SG&A expenses excluding restructuring charges | 65.4 | 77.7 | (15.8 | ) | (15.8 | ) | ||||||||||||
Restructuring charges | (0.1 | ) | (0.1 | ) | (24.7 | ) | (24.7 | ) | ||||||||||
Total SG&A expenses | 65.3 | 77.6 | (15.8 | ) | (15.8 | ) | ||||||||||||
Earnings (loss) from operations | 11.8 | 14.2 | (17.6 | ) | ||||||||||||||
Earnings (loss) from operations excluding restructuring charges | 11.7 | 14.1 | (17.5 | ) | ||||||||||||||
Gross profit rate | 17.3 | % | 17.1 | % | 0.2 | pts. | ||||||||||||
Science, Engineering & Technology | ||||||||||||||||||
Revenue from services | $ | 244.0 | $ | 285.2 | (14.4 | ) | % | (14.4 | ) | % | ||||||||
Gross profit | 50.7 | 58.3 | (13.1 | ) | (13.1 | ) | ||||||||||||
Total SG&A expenses | 31.3 | 36.0 | (13.0 | ) | (13.1 | ) | ||||||||||||
Earnings (loss) from operations | 19.4 | 22.3 | (13.2 | ) | ||||||||||||||
Gross profit rate | 20.8 | % | 20.4 | % | 0.4 | pts. | ||||||||||||
Education | ||||||||||||||||||
Revenue from services | $ | 27.5 | $ | 57.1 | (51.8 | ) | % | (51.8 | ) | % | ||||||||
Gross profit | 4.1 | 8.6 | (51.1 | ) | (51.1 | ) | ||||||||||||
Total SG&A expenses | 11.6 | 13.8 | (15.5 | ) | (15.5 | ) | ||||||||||||
Earnings (loss) from operations | (7.5 | ) | (5.2 | ) | (43.2 | ) | ||||||||||||
Gross profit rate | 15.2 | % | 15.0 | % | 0.2 | pts. | ||||||||||||
Outsourcing & Consulting | ||||||||||||||||||
Revenue from services | $ | 87.9 | $ | 94.4 | (7.0 | ) | % | (7.4 | ) | % | ||||||||
Gross profit | 29.1 | 29.5 | (1.5 | ) | (2.5 | ) | ||||||||||||
Total SG&A expenses | 25.4 | 29.1 | (12.7 | ) | (13.7 | ) | ||||||||||||
Earnings (loss) from operations | 3.7 | 0.4 | NM | |||||||||||||||
Gross profit rate | 33.1 | % | 31.3 | % | 1.8 | pts. | ||||||||||||
International | ||||||||||||||||||
Revenue from services | $ | 232.4 | $ | 293.4 | (20.8 | ) | % | (21.1 | ) | % | ||||||||
Gross profit | 30.0 | 39.5 | (23.9 | ) | (24.5 | ) | ||||||||||||
Total SG&A expenses | 39.9 | 35.3 | 13.1 | 14.3 | ||||||||||||||
Earnings (loss) from operations | (9.9 | ) | 4.2 | NM | ||||||||||||||
Gross profit rate | 12.9 | % | 13.5 | % | (0.6 | ) | pts. |
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
(In millions of dollars) | ||||||||||||||||||
September Year to Date | ||||||||||||||||||
% | CC % | |||||||||||||||||
2020 | 2019 | Change | Change | |||||||||||||||
Professional & Industrial | ||||||||||||||||||
Revenue from services | $ | 1,346.7 | $ | 1,668.7 | (19.3 | ) | % | (19.2 | ) | % | ||||||||
Gross profit | 241.1 | 291.6 | (17.3 | ) | (17.3 | ) | ||||||||||||
SG&A expenses excluding restructuring charges | 206.1 | 241.7 | (14.7 | ) | (14.6 | ) | ||||||||||||
Restructuring charges | 4.3 | 5.2 | (18.8 | ) | (18.8 | ) | ||||||||||||
Total SG&A expenses | 210.4 | 246.9 | (14.8 | ) | (14.7 | ) | ||||||||||||
Earnings (loss) from operations | 30.7 | 44.7 | (31.4 | ) | ||||||||||||||
Earnings (loss) from operations excluding restructuring charges | 35.0 | 49.9 | (30.1 | ) | ||||||||||||||
Gross profit rate | 17.9 | % | 17.5 | % | 0.4 | pts. | ||||||||||||
Science, Engineering & Technology | ||||||||||||||||||
Revenue from services | $ | 761.5 | $ | 859.7 | (11.4 | ) | % | (11.4 | ) | % | ||||||||
Gross profit | 156.0 | 171.8 | (9.3 | ) | (9.2 | ) | ||||||||||||
SG&A expenses excluding restructuring charges | 98.6 | 111.0 | (11.2 | ) | (11.2 | ) | ||||||||||||
Restructuring charges | 0.5 | 0.4 | 45.2 | 45.2 | ||||||||||||||
Total SG&A expenses | 99.1 | 111.4 | (11.1 | ) | (11.0 | ) | ||||||||||||
Earnings (loss) from operations | 56.9 | 60.4 | (5.9 | ) | ||||||||||||||
Earnings (loss) from operations excluding restructuring charges | 57.4 | 60.8 | (5.6 | ) | ||||||||||||||
Gross profit rate | 20.5 | % | 20.0 | % | 0.5 | pts. | ||||||||||||
Education | ||||||||||||||||||
Revenue from services | $ | 195.1 | $ | 313.9 | (37.8 | ) | % | (37.8 | ) | % | ||||||||
Gross profit | 28.8 | 49.9 | (42.2 | ) | (42.2 | ) | ||||||||||||
SG&A expenses excluding restructuring charges | 36.9 | 41.5 | (11.0 | ) | (11.0 | ) | ||||||||||||
Restructuring charges | 0.8 | — | NM | NM | ||||||||||||||
Total SG&A expenses | 37.7 | 41.5 | (9.1 | ) | (9.1 | ) | ||||||||||||
Earnings (loss) from operations | (8.9 | ) | 8.4 | NM | ||||||||||||||
Earnings (loss) from operations excluding restructuring charges | (8.1 | ) | 8.4 | NM | ||||||||||||||
Gross profit rate | 14.8 | % | 15.9 | % | (1.1 | ) | pts. | |||||||||||
Outsourcing & Consulting | ||||||||||||||||||
Revenue from services | $ | 261.0 | $ | 282.3 | (7.6 | ) | % | (7.3 | ) | % | ||||||||
Gross profit | 87.1 | 90.7 | (4.0 | ) | (3.7 | ) | ||||||||||||
Total SG&A expenses | 79.1 | 90.9 | (13.0 | ) | (13.0 | ) | ||||||||||||
Earnings (loss) from operations | 8.0 | (0.2 | ) | NM | ||||||||||||||
Gross profit rate | 33.4 | % | 32.2 | % | 1.2 | pts. | ||||||||||||
International | ||||||||||||||||||
Revenue from services | $ | 710.6 | $ | 893.6 | (20.5 | ) | % | (18.7 | ) | % | ||||||||
Gross profit | 90.5 | 119.3 | (24.1 | ) | (22.5 | ) | ||||||||||||
SG&A expenses excluding restructuring charges | 100.3 | 107.2 | (6.4 | ) | (4.5 | ) | ||||||||||||
Restructuring charges | 1.1 | — | NM | NM | ||||||||||||||
Total SG&A expenses | 101.4 | 107.2 | (5.4 | ) | (3.5 | ) | ||||||||||||
Earnings (loss) from operations | (10.9 | ) | 12.1 | NM | ||||||||||||||
Earnings (loss) from operations excluding restructuring charges | (9.8 | ) | 12.1 | NM | ||||||||||||||
Gross profit rate | 12.7 | % | 13.3 | % | (0.6 | ) | pts. |
CONSOLIDATED BALANCE SHEETS | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
Current Assets | |||||||||||||
Cash and equivalents | $ | 248.2 | $ | 25.8 | $ | 22.8 | |||||||
Trade accounts receivable, less allowances of | |||||||||||||
1,111.4 | 1,282.2 | 1,262.3 | |||||||||||
Prepaid expenses and other current assets | 71.4 | 76.5 | 80.7 | ||||||||||
Properties held for sale | — | 21.2 | — | ||||||||||
Total current assets | 1,431.0 | 1,405.7 | 1,365.8 | ||||||||||
Noncurrent Assets | |||||||||||||
Property and equipment, net | 40.8 | 43.1 | 82.7 | ||||||||||
Operating lease right-of-use assets | 84.0 | 60.4 | 62.2 | ||||||||||
Deferred taxes | 273.3 | 229.1 | 221.0 | ||||||||||
— | 127.8 | 127.8 | |||||||||||
Investment in Persol Holdings | 145.8 | 173.2 | 174.9 | ||||||||||
Investment in equity affiliate | 115.6 | 117.2 | 120.4 | ||||||||||
Other assets | 301.2 | 324.1 | 321.5 | ||||||||||
Total noncurrent assets | 960.7 | 1,074.9 | 1,110.5 | ||||||||||
Total Assets | $ | 2,391.7 | $ | 2,480.6 | $ | 2,476.3 | |||||||
Current Liabilities | |||||||||||||
Short-term borrowings | $ | 0.5 | $ | 1.9 | $ | 17.5 | |||||||
Accounts payable and accrued liabilities | 458.4 | 503.6 | 484.6 | ||||||||||
Operating lease liabilities | 19.5 | 20.1 | 19.8 | ||||||||||
Accrued payroll and related taxes | 240.7 | 267.6 | 285.3 | ||||||||||
Accrued workers' compensation and other claims | 25.0 | 25.7 | 25.1 | ||||||||||
Income and other taxes | 52.4 | 65.2 | 67.7 | ||||||||||
Total current liabilities | 796.5 | 884.1 | 900.0 | ||||||||||
Noncurrent Liabilities | |||||||||||||
Operating lease liabilities | 68.1 | 43.3 | 45.3 | ||||||||||
Accrued payroll and related taxes | 75.7 | — | — | ||||||||||
Accrued workers' compensation and other claims | 44.4 | 45.8 | 48.7 | ||||||||||
Accrued retirement benefits | 188.2 | 187.4 | 179.0 | ||||||||||
Other long-term liabilities | 52.7 | 55.5 | 55.5 | ||||||||||
Total noncurrent liabilities | 429.1 | 332.0 | 328.5 | ||||||||||
Stockholders' Equity | |||||||||||||
Common stock | 40.1 | 40.1 | 40.1 | ||||||||||
(17.2 | ) | (20.9 | ) | (21.3 | ) | ||||||||
Paid-in capital | 20.6 | 22.5 | 22.3 | ||||||||||
Earnings invested in the business | 1,139.5 | 1,238.6 | 1,224.6 | ||||||||||
Accumulated other comprehensive income (loss) | (16.9 | ) | (15.8 | ) | (17.9 | ) | |||||||
Total stockholders' equity | 1,166.1 | 1,264.5 | 1,247.8 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,391.7 | $ | 2,480.6 | $ | 2,476.3 | |||||||
STATISTICS: | |||||||||||||
Working Capital | $ | 634.5 | $ | 521.6 | $ | 465.8 | |||||||
Current Ratio | 1.8 | 1.6 | 1.5 | ||||||||||
Debt-to-capital % | 0.0 | % | 0.1 | % | 1.4 | % | |||||||
Global Days Sales Outstanding | 61 | 58 | 59 | ||||||||||
Year-to-Date Free Cash Flow | $ | 204.2 | $ | 82.2 | $ | 60.4 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 39 WEEKS ENDED | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2020 | 2019 | |||||
Cash flows from operating activities: | ||||||
Net earnings (loss) | $ | (95.4 | ) | $ | 95.4 | |
Adjustments to reconcile net earnings (loss) to net cash from operating activities: | ||||||
147.7 | — | |||||
Deferred income taxes on goodwill impairment charge | (23.0 | ) | — | |||
Depreciation and amortization | 18.0 | 23.8 | ||||
Operating lease asset amortization | 15.9 | 16.9 | ||||
Provision for credit losses and sales allowances | 10.7 | 3.2 | ||||
Stock-based compensation | 2.9 | 4.7 | ||||
(Gain) loss on investment in Persol Holdings | 31.4 | (35.1 | ) | |||
(Gain) loss on sale of assets | (32.1 | ) | (12.3 | ) | ||
Equity in net (earnings) loss of | 1.0 | 1.0 | ||||
Other, net | 1.8 | (1.0 | ) | |||
Changes in operating assets and liabilities, net of acquisitions | 137.6 | (22.4 | ) | |||
Net cash from operating activities | 216.5 | 74.2 | ||||
Cash flows from investing activities: | ||||||
Capital expenditures | (12.3 | ) | (13.8 | ) | ||
Proceeds from sale of assets | 55.5 | 13.8 | ||||
Acquisition of companies, net of cash received | (36.4 | ) | (86.4 | ) | ||
Proceeds from company-owned life insurance | 2.3 | 3.0 | ||||
Proceeds from sale of | 1.2 | — | ||||
Loans to equity affiliate | — | (4.4 | ) | |||
Investment in equity securities | (0.2 | ) | (1.0 | ) | ||
Other investing activities | 0.2 | — | ||||
Net cash from (used in) investing activities | 10.3 | (88.8 | ) | |||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | (1.5 | ) | 15.2 | |||
Financing lease payments | (1.0 | ) | (0.4 | ) | ||
Dividend payments | (3.0 | ) | (8.9 | ) | ||
Payments of tax withholding for stock awards | (1.2 | ) | (2.3 | ) | ||
Other financing activities | (0.1 | ) | — | |||
Net cash (used in) from financing activities | (6.8 | ) | 3.6 | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | 3.4 | (0.5 | ) | |||
Net change in cash, cash equivalents and restricted cash | 223.4 | (11.5 | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | 31.0 | 40.1 | ||||
Cash, cash equivalents and restricted cash at end of period | $ | 254.4 | $ | 28.6 | ||
REVENUE FROM SERVICES BY GEOGRAPHY | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(In millions of dollars) | |||||||||||||||
Third Quarter | |||||||||||||||
% | CC % | ||||||||||||||
2020 | 2019 | Change | Change | ||||||||||||
$ | 740.6 | $ | 903.2 | (18.0 | ) | % | (18.0 | ) | % | ||||||
30.3 | 34.6 | (12.5 | ) | (11.7 | ) | ||||||||||
27.4 | 32.4 | (15.7 | ) | (4.2 | ) | ||||||||||
18.4 | 18.8 | (2.4 | ) | (2.4 | ) | ||||||||||
1.8 | 8.4 | (78.3 | ) | (71.0 | ) | ||||||||||
818.5 | 997.4 | (17.9 | ) | (17.5 | ) | ||||||||||
49.6 | 50.6 | (2.0 | ) | (8.5 | ) | ||||||||||
48.8 | 59.7 | (18.2 | ) | (22.0 | ) | ||||||||||
31.7 | 44.0 | (28.0 | ) | (31.6 | ) | ||||||||||
27.2 | 29.9 | (8.8 | ) | 3.7 | |||||||||||
16.4 | 24.9 | (34.1 | ) | (37.1 | ) | ||||||||||
14.5 | 18.5 | (21.8 | ) | (25.5 | ) | ||||||||||
7.0 | 11.5 | (39.7 | ) | (42.6 | ) | ||||||||||
4.9 | 7.1 | (31.6 | ) | (35.0 | ) | ||||||||||
Other | 12.0 | 16.6 | (27.6 | ) | (28.9 | ) | |||||||||
212.1 | 262.8 | (19.3 | ) | (21.5 | ) | ||||||||||
7.6 | 7.5 | 1.0 | (0.9 | ) | |||||||||||
$ | 1,038.2 | $ | 1,267.7 | (18.1 | ) | % | (18.2 | ) | % | ||||||
REVENUE FROM SERVICES BY GEOGRAPHY | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(In millions of dollars) | |||||||||||||||
September Year to Date | |||||||||||||||
% | CC % | ||||||||||||||
2020 | 2019 | Change | Change | ||||||||||||
$ | 2,369.2 | $ | 2,913.4 | (18.7 | ) | % | (18.7 | ) | % | ||||||
88.7 | 100.8 | (12.0 | ) | (10.6 | ) | ||||||||||
78.6 | 89.6 | (12.3 | ) | (1.8 | ) | ||||||||||
56.1 | 57.6 | (2.7 | ) | (2.7 | ) | ||||||||||
17.0 | 25.1 | (31.9 | ) | (17.5 | ) | ||||||||||
2,609.6 | 3,186.5 | (18.1 | ) | (17.6 | ) | ||||||||||
141.2 | 188.6 | (25.1 | ) | (25.1 | ) | ||||||||||
141.2 | 150.0 | (5.9 | ) | (10.1 | ) | ||||||||||
99.1 | 135.5 | (26.9 | ) | (26.7 | ) | ||||||||||
88.6 | 84.1 | 5.3 | 14.1 | ||||||||||||
56.5 | 81.6 | (30.7 | ) | (30.4 | ) | ||||||||||
42.5 | 59.8 | (29.0 | ) | (28.9 | ) | ||||||||||
22.1 | 32.5 | (32.1 | ) | (31.9 | ) | ||||||||||
14.0 | 28.1 | (50.2 | ) | (50.3 | ) | ||||||||||
Other | 38.7 | 51.5 | (24.9 | ) | (21.9 | ) | |||||||||
643.9 | 811.7 | (20.7 | ) | (20.3 | ) | ||||||||||
21.1 | 19.6 | 7.6 | 11.1 | ||||||||||||
$ | 3,274.6 | $ | 4,017.8 | (18.5 | ) | % | (18.0 | ) | % | ||||||
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
THIRD QUARTER | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
(In millions of dollars) | |||||||||||||||||||
2020 | 2019 | ||||||||||||||||||
SG&A Expenses: | As Reported | Customer Dispute(4) | Restructuring(5) | Adjusted | Adjusted | ||||||||||||||
Professional & Industrial | $ | 65.3 | $ | — | $ | 0.1 | $ | 65.4 | $ | 77.7 | |||||||||
Science, Engineering & Technology | 31.3 | — | — | 31.3 | 36.0 | ||||||||||||||
Education | 11.6 | — | — | 11.6 | 13.8 | ||||||||||||||
Outsourcing & Consulting | 25.4 | — | — | 25.4 | 29.1 | ||||||||||||||
International | 39.9 | (9.5 | ) | — | 30.4 | 35.3 | |||||||||||||
Corporate | 19.9 | — | — | 19.9 | 18.8 | ||||||||||||||
Intersegment | — | — | — | — | — | ||||||||||||||
$ | 193.4 | $ | (9.5 | ) | $ | 0.1 | $ | 184.0 | $ | 210.7 | |||||||||
2020 | 2019 | ||||||||||||||||||
Earnings (loss) from Operations: | As Reported | Customer Dispute(4) | Restructuring(5) | Adjusted | Adjusted | ||||||||||||||
Professional & Industrial | $ | 11.8 | $ | — | $ | (0.1 | ) | $ | 11.7 | $ | 14.1 | ||||||||
Science, Engineering & Technology | 19.4 | — | — | 19.4 | 22.3 | ||||||||||||||
Education | (7.5 | ) | — | — | (7.5 | ) | (5.2 | ) | |||||||||||
Outsourcing & Consulting | 3.7 | — | — | 3.7 | 0.4 | ||||||||||||||
International | (9.9 | ) | 9.5 | — | (0.4 | ) | 4.2 | ||||||||||||
Corporate | (19.9 | ) | — | — | (19.9 | ) | (18.8 | ) | |||||||||||
$ | (2.4 | ) | $ | 9.5 | $ | (0.1 | ) | $ | 7.0 | $ | 17.0 | ||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||
THIRD QUARTER | |||||||||||
(UNAUDITED) | |||||||||||
(In millions of dollars) | |||||||||||
2019 | |||||||||||
SG&A Expenses: | As Reported | Restructuring(5) | Adjusted | ||||||||
Professional & Industrial | $ | 77.6 | $ | 0.1 | $ | 77.7 | |||||
Science, Engineering & Technology | 36.0 | — | 36.0 | ||||||||
Education | 13.8 | — | 13.8 | ||||||||
Outsourcing & Consulting | 29.1 | — | 29.1 | ||||||||
International | 35.3 | — | 35.3 | ||||||||
Corporate | 18.8 | — | 18.8 | ||||||||
Intersegment | — | — | — | ||||||||
$ | 210.6 | $ | 0.1 | $ | 210.7 | ||||||
2019 | |||||||||||
Earnings (loss) from Operations: | As Reported | Restructuring(5) | Adjusted | ||||||||
Professional & Industrial | $ | 14.2 | $ | (0.1 | ) | $ | 14.1 | ||||
Science, Engineering & Technology | 22.3 | — | 22.3 | ||||||||
Education | (5.2 | ) | — | (5.2 | ) | ||||||
Outsourcing & Consulting | 0.4 | — | 0.4 | ||||||||
International | 4.2 | — | 4.2 | ||||||||
Corporate | (18.8 | ) | — | (18.8 | ) | ||||||
$ | 17.1 | $ | (0.1 | ) | $ | 17.0 | |||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||||||||||
SEPTEMBER YEAR TO DATE | |||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||
(In millions of dollars) | |||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||
SG&A Expenses: | As Reported | impairment(1) | Gain on sale of assets(3) | Customer Dispute(4) | Restructuring(5) | Adjusted | Adjusted | ||||||||||||||||||||
Professional & Industrial | $ | 210.4 | $ | — | $ | — | $ | — | $ | (4.3 | ) | $ | 206.1 | $ | 241.7 | ||||||||||||
Science, Engineering & Technology | 99.1 | — | — | — | (0.5 | ) | 98.6 | 111.0 | |||||||||||||||||||
Education | 37.7 | — | — | — | (0.8 | ) | 36.9 | 41.5 | |||||||||||||||||||
Outsourcing & Consulting | 79.1 | — | — | — | — | 79.1 | 90.9 | ||||||||||||||||||||
International | 101.4 | — | — | (9.5 | ) | (1.1 | ) | 90.8 | 107.2 | ||||||||||||||||||
Corporate | 63.3 | — | — | — | (1.7 | ) | 61.6 | 69.0 | |||||||||||||||||||
$ | 591.0 | $ | — | $ | — | $ | (9.5 | ) | $ | (8.4 | ) | $ | 573.1 | $ | 661.3 | ||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||
Earnings (loss) from Operations: | As Reported | impairment(1) | Gain on sale of assets(3) | Customer Dispute(4) | Restructuring(5) | Adjusted | Adjusted | ||||||||||||||||||||
Professional & Industrial | $ | 30.7 | $ | — | $ | — | $ | — | $ | 4.3 | $ | 35.0 | $ | 49.9 | |||||||||||||
Science, Engineering & Technology | 56.9 | — | — | — | 0.5 | 57.4 | 60.8 | ||||||||||||||||||||
Education | (8.9 | ) | — | — | — | 0.8 | (8.1 | ) | 8.4 | ||||||||||||||||||
Outsourcing & Consulting | 8.0 | — | — | — | — | 8.0 | (0.2 | ) | |||||||||||||||||||
International | (10.9 | ) | — | — | 9.5 | 1.1 | (0.3 | ) | 12.1 | ||||||||||||||||||
Corporate | (178.9 | ) | 147.7 | (32.1 | ) | — | 1.7 | (61.6 | ) | (69.0 | ) | ||||||||||||||||
$ | (103.1 | ) | $ | 147.7 | $ | (32.1 | ) | $ | 9.5 | $ | 8.4 | $ | 30.4 | $ | 62.0 | ||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||
SEPTEMBER YEAR TO DATE | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(In millions of dollars) | |||||||||||||||
2019 | |||||||||||||||
SG&A Expenses: | As Reported | Gain on sale of assets(3) | Restructuring(5) | Adjusted | |||||||||||
Professional & Industrial | $ | 246.9 | $ | — | $ | (5.2 | ) | $ | 241.7 | ||||||
Science, Engineering & Technology | 111.4 | — | (0.4 | ) | 111.0 | ||||||||||
Education | 41.5 | — | — | 41.5 | |||||||||||
Outsourcing & Consulting | 90.9 | — | — | 90.9 | |||||||||||
International | 107.2 | — | — | 107.2 | |||||||||||
Corporate | 69.0 | — | — | 69.0 | |||||||||||
Intersegment | — | — | — | — | |||||||||||
$ | 666.9 | $ | — | $ | (5.6 | ) | $ | 661.3 | |||||||
2019 | |||||||||||||||
Earnings (loss) from Operations: | As Reported | Gain on sale of assets(3) | Restructuring(5) | Adjusted | |||||||||||
Professional & Industrial | $ | 44.7 | $ | — | $ | 5.2 | $ | 49.9 | |||||||
Science, Engineering & Technology | 60.4 | — | 0.4 | 60.8 | |||||||||||
Education | 8.4 | — | — | 8.4 | |||||||||||
Outsourcing & Consulting | (0.2 | ) | — | — | (0.2 | ) | |||||||||
International | 12.1 | — | — | 12.1 | |||||||||||
Corporate | (56.7 | ) | (12.3 | ) | — | (69.0 | ) | ||||||||
$ | 68.7 | $ | (12.3 | ) | $ | 5.6 | $ | 62.0 | |||||||
RECONCILIATION OF NON-GAAP MEASURES (continued) | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
Third Quarter | September Year to Date | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Income tax expense (benefit) | $ | (1.2 | ) | $ | (12.8 | ) | $ | (36.5 | ) | $ | 6.3 | |||||
Taxes on goodwill impairment charge(1) | — | — | 23.0 | — | ||||||||||||
Taxes on investment in Persol Holdings(2) | (5.2 | ) | 12.1 | 9.6 | (10.7 | ) | ||||||||||
Taxes on gain on sale of assets(3) | — | — | (8.1 | ) | (3.3 | ) | ||||||||||
Taxes on customer dispute(4) | 2.8 | — | 2.8 | — | ||||||||||||
Taxes on restructuring charges(5) | — | — | 2.2 | 1.5 | ||||||||||||
Adjusted income tax expense (benefit) | $ | (3.6 | ) | $ | (0.7 | ) | $ | (7.0 | ) | $ | (6.2 | ) | ||||
Third Quarter | September Year to Date | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net earnings (loss) | $ | 16.7 | $ | (10.5 | ) | $ | (95.4 | ) | $ | 95.4 | ||||||
— | — | 124.7 | — | |||||||||||||
(Gain) loss on investment in Persol Holdings, net of taxes(2) | (11.6 | ) | 27.2 | 21.8 | (24.4 | ) | ||||||||||
(Gain) loss on sale of assets, net of taxes(3) | 0.1 | — | (23.9 | ) | (9.0 | ) | ||||||||||
Customer dispute, net of taxes(4) | 6.7 | — | 6.7 | — | ||||||||||||
Restructuring charges, net of taxes(5) | (0.1 | ) | (0.1 | ) | 6.2 | 4.1 | ||||||||||
Adjusted net earnings | $ | 11.8 | $ | 16.6 | $ | 40.1 | $ | 66.1 | ||||||||
Third Quarter | September Year to Date | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Per Share | Per Share | |||||||||||||||
Net earnings (loss) | $ | 0.42 | $ | (0.27 | ) | $ | (2.43 | ) | $ | 2.41 | ||||||
— | — | 3.18 | — | |||||||||||||
(Gain) loss on investment in Persol Holdings, net of taxes(2) | (0.29 | ) | 0.70 | 0.56 | (0.62 | ) | ||||||||||
Gain on sale of assets, net of taxes(3) | — | — | (0.61 | ) | (0.23 | ) | ||||||||||
Customer dispute, net of taxes(4) | 0.17 | — | 0.17 | — | ||||||||||||
Restructuring charges, net of taxes(5) | — | — | 0.16 | 0.11 | ||||||||||||
Adjusted net earnings | $ | 0.29 | $ | 0.43 | $ | 1.02 | $ | 1.67 |
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.
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 and 2019 gains on sale of assets, the 2020 customer dispute, and the 2020 and 2019 restructuring charges, 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 primarily represents the excess of the proceeds over the cost of the headquarters properties sold during the first quarter of 2020. Gain on sale of assets in 2019 primarily represents the excess of the proceeds over the cost of an unused parcel of land located near the Company headquarters sold during the second quarter of 2019.
(4) Customer dispute represents a non-cash charge in
(5) Restructuring charges in 2020 represent severance costs and lease terminations in preparation for the new operating model adopted in the third quarter of 2020. Restructuring charges in 2019 represent severance costs primarily related to
Source:
2020 GlobeNewswire, Inc., source