Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - KELLY SERVICES INC | a3q2016earningsreleasesu.htm |
| 8-K - 8-K - KELLY SERVICES INC | form8-k2016thirdquartercov.htm |
Exhibit 99.1
KELLY SERVICES® REPORTS
THIRD QUARTER 2016 EARNINGS
AND ANNOUNCES EPS
Third Quarter Highlights
• | APAC Joint Venture completed |
• | Total Revenue declines 8%; down 1% adjusted for APAC JV transaction |
• | Operating earnings increase 13%; up 29% adjusted for APAC JV transaction |
• | Earnings per share of $2.06 (Adjusted EPS of $0.44) versus $0.23 (Adjusted EPS of $0.19), a 132% increase on an adjusted basis |
TROY, MI (November 7, 2016) -- Kelly Services (Nasdaq: KELYA) (Nasdaq: KELYB), a global leader in providing workforce solutions, today announced results for the third quarter of 2016.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2016 totaled $1.2 billion, a 7.6% decrease (a 7.1% decrease on a constant currency basis) compared to the corresponding quarter of 2015. During the third quarter of 2016, Kelly transferred its APAC staffing operations to the TS Kelly Asia Pacific joint venture and recorded a gain of $87.2 million. Kelly retains a 49% ownership interest in the newly formed joint venture. Excluding the APAC staffing operations from the third quarter of 2015, adjusted 2016 third quarter revenue was down 0.7% year over year (a 0.1% decrease on a constant currency basis).
Earnings from operations for the third quarter of 2016 totaled $18.8 million, compared to $16.6 million reported for the third quarter of 2015. Excluding the APAC staffing operations from the third quarter of 2015, adjusted earnings from operations were $14.5 million; therefore, Kelly’s third quarter 2016 earnings increased 29% year-over-year on an adjusted basis.
Diluted earnings per share in the third quarter of 2016 were $2.06 compared to $0.23 per share in the third quarter of 2015. Excluding the gain from 2016 third quarter results and APAC staffing operations from 2015 third quarter results, adjusted earnings per share were $0.44 in the third quarter of 2016 and $0.19 in the third quarter of 2015.
Commenting on the third quarter, Camden stated, “Sorting through the financial complexity around the JV transaction, Kelly’s third quarter performance reflects good operating leverage on basically flat revenue. We increased our gross profit rate, reduced expenses, and turned in healthy operating earnings and solid returns for our shareholders. Our U.S. Staffing segment showed competitive strength and agility in an uncertain economic environment, and our OCG business delivered year-over-year GP improvement. With the APAC JV now firmly in place, we are operating as a more focused, disciplined company relentlessly committed to profitability.”
1
In conjunction with its third 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 November 7 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Internet:
www.kellyservices.com
Via the Telephone:
U.S. | 1 800 288-9626 |
International | 1 651 291-5254 |
The pass code is Kelly Services
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual assets could be infringed upon or compromised, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates including TS Kelly Asia Pacific, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers’ compensation, disability and medical benefit plans, the impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws ), the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein, and we have no intention to update these statements.
About Kelly Services®
As a global leader in providing workforce solutions, Kelly Services, Inc. (Nasdaq: KELYA, KELYB) and its subsidiaries, offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. In 2016, the Company is commemorating 70 years of industry leadership. Kelly® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. Revenue in 2015 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.
KLYA-FIN
# # #
ANALYST CONTACT: | MEDIA CONTACT: |
James Polehna | Jane Stehney |
(248) 244-4586 | (248) 244-5630 |
james_polehna@kellyservices.com | jane_stehney@kellyservices.com |
2
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2016 | 2015 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 1,247.8 | $ | 1,351.0 | $ | (103.2 | ) | (7.6 | ) | % | (7.1 | ) | % | |||
Cost of services | 1,032.7 | 1,122.8 | (90.1 | ) | (8.0 | ) | ||||||||||
Gross profit | 215.1 | 228.2 | (13.1 | ) | (5.8 | ) | (5.3 | ) | ||||||||
Selling, general and administrative expenses | 196.3 | 211.6 | (15.3 | ) | (7.3 | ) | (6.9 | ) | ||||||||
Earnings from operations | 18.8 | 16.6 | 2.2 | 13.1 | ||||||||||||
Gain on investment in TS Kelly Asia Pacific | 87.2 | — | 87.2 | NM | ||||||||||||
Other expense, net | (0.4 | ) | — | (0.4 | ) | NM | ||||||||||
Earnings before taxes | 105.6 | 16.6 | 89.0 | NM | ||||||||||||
Income tax expense | 24.7 | 7.5 | 17.2 | 230.6 | ||||||||||||
Net earnings | $ | 80.9 | $ | 9.1 | $ | 71.8 | NM | % | ||||||||
Basic earnings per share | $ | 2.08 | $ | 0.23 | $ | 1.85 | NM | % | ||||||||
Diluted earnings per share | $ | 2.06 | $ | 0.23 | $ | 1.83 | NM | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 17.2 | % | 16.9 | % | 0.3 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 15.7 | 15.7 | — | |||||||||||||
% of gross profit | 91.3 | 92.7 | (1.4 | ) | ||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 1.5 | 1.2 | 0.3 | |||||||||||||
Earnings before taxes | 8.5 | 1.2 | 7.3 | |||||||||||||
Net earnings | 6.5 | 0.7 | 5.8 | |||||||||||||
Effective income tax rate | 23.4 | % | 45.2 | % | (21.8 | ) | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 38.1 | 37.9 | ||||||||||||||
Diluted | 38.4 | 37.9 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 39.0 | 38.8 | ||||||||||||||
Diluted | 39.2 | 38.8 | ||||||||||||||
3
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||
% | CC % | |||||||||||||||
2016 | 2015 | Change | Change | Change | ||||||||||||
Revenue from services | $ | 3,972.4 | $ | 4,056.6 | $ | (84.2 | ) | (2.1 | ) | % | (0.7 | ) | % | |||
Cost of services | 3,294.1 | 3,385.8 | (91.7 | ) | (2.7 | ) | ||||||||||
Gross profit | 678.3 | 670.8 | 7.5 | 1.1 | 2.3 | |||||||||||
Selling, general and administrative expenses | 634.9 | 630.6 | 4.3 | 0.7 | 1.8 | |||||||||||
Earnings from operations | 43.4 | 40.2 | 3.2 | 7.9 | ||||||||||||
Gain on investment in TS Kelly Asia Pacific | 87.2 | — | 87.2 | NM | ||||||||||||
Other expense, net | (1.4 | ) | (3.5 | ) | 2.1 | 61.2 | ||||||||||
Earnings before taxes | 129.2 | 36.7 | 92.5 | 252.3 | ||||||||||||
Income tax expense | 28.2 | 17.1 | 11.1 | 65.4 | ||||||||||||
Net earnings | $ | 101.0 | $ | 19.6 | $ | 81.4 | 414.7 | % | ||||||||
Basic earnings per share | $ | 2.59 | $ | 0.51 | $ | 2.08 | NM | % | ||||||||
Diluted earnings per share | $ | 2.58 | $ | 0.51 | $ | 2.07 | NM | % | ||||||||
STATISTICS: | ||||||||||||||||
Gross profit rate | 17.1 | % | 16.5 | % | 0.6 | pts. | ||||||||||
Selling, general and administrative expenses: | ||||||||||||||||
% of revenue | 16.0 | 15.5 | 0.5 | |||||||||||||
% of gross profit | 93.6 | 94.0 | (0.4 | ) | ||||||||||||
% Return: | ||||||||||||||||
Earnings from operations | 1.1 | 1.0 | 0.1 | |||||||||||||
Earnings before taxes | 3.3 | 0.9 | 2.4 | |||||||||||||
Net earnings | 2.5 | 0.5 | 2.0 | |||||||||||||
Effective income tax rate | 21.8 | % | 46.5 | % | (24.7 | ) | pts. | |||||||||
Average number of shares outstanding (millions): | ||||||||||||||||
Basic | 38.0 | 37.8 | ||||||||||||||
Diluted | 38.3 | 37.8 | ||||||||||||||
Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
Basic | 39.0 | 38.8 | ||||||||||||||
Diluted | 39.2 | 38.8 | ||||||||||||||
4
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Third Quarter | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 603.7 | $ | 615.5 | (1.9 | ) | % | (1.3 | ) | % | ||||
Staffing fee-based income included in revenue from services | 4.2 | 3.8 | 10.0 | 10.1 | ||||||||||
Gross profit | 94.9 | 96.6 | (1.8 | ) | (1.3 | ) | ||||||||
Gross profit rate | 15.7 | % | 15.7 | % | — | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 239.6 | $ | 242.8 | (1.3 | ) | % | (1.3 | ) | % | ||||
Staffing fee-based income included in revenue from services | 4.4 | 4.7 | (6.9 | ) | (6.9 | ) | ||||||||
Gross profit | 41.4 | 41.0 | 1.0 | 1.0 | ||||||||||
Gross profit rate | 17.3 | % | 16.9 | % | 0.4 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 843.3 | $ | 858.3 | (1.8 | ) | % | (1.3 | ) | % | ||||
Staffing fee-based income included in revenue from services | 8.6 | 8.5 | 0.6 | 0.7 | ||||||||||
Gross profit | 136.3 | 137.6 | (1.0 | ) | (0.6 | ) | ||||||||
Total SG&A expenses | 112.2 | 113.7 | (1.4 | ) | (1.2 | ) | ||||||||
Earnings from operations | 24.1 | 23.9 | 1.0 | |||||||||||
Gross profit rate | 16.2 | % | 16.0 | % | 0.2 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 13.3 | 13.2 | 0.1 | |||||||||||
% of gross profit | 82.3 | 82.7 | (0.4 | ) | ||||||||||
Return on sales | 2.9 | 2.8 | 0.1 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 197.6 | $ | 199.0 | (0.8 | ) | % | 1.0 | % | |||||
Staffing fee-based income included in revenue from services | 3.3 | 3.2 | 5.0 | 6.7 | ||||||||||
Gross profit | 26.8 | 27.7 | (3.5 | ) | (2.5 | ) | ||||||||
Gross profit rate | 13.6 | % | 13.9 | % | (0.3 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 41.7 | $ | 43.6 | (4.3 | ) | % | (2.9 | ) | % | ||||
Staffing fee-based income included in revenue from services | 2.2 | 2.6 | (16.1 | ) | (14.4 | ) | ||||||||
Gross profit | 8.2 | 9.4 | (11.7 | ) | (10.6 | ) | ||||||||
Gross profit rate | 19.9 | % | 21.6 | % | (1.7 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 239.3 | $ | 242.6 | (1.4 | ) | % | 0.3 | % | |||||
Staffing fee-based income included in revenue from services | 5.5 | 5.8 | (4.6 | ) | (2.9 | ) | ||||||||
Gross profit | 35.0 | 37.1 | (5.6 | ) | (4.6 | ) | ||||||||
Total SG&A expenses | 30.6 | 31.8 | (3.5 | ) | (2.0 | ) | ||||||||
Earnings from operations | 4.4 | 5.3 | (17.8 | ) | ||||||||||
Gross profit rate | 14.7 | % | 15.3 | % | (0.6 | ) | pts. | |||||||
Expense rates: | ||||||||||||||
% of revenue | 12.8 | 13.1 | (0.3 | ) | ||||||||||
% of gross profit | 87.3 | 85.4 | 1.9 | |||||||||||
Return on sales | 1.9 | 2.2 | (0.3 | ) | ||||||||||
5
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
Third Quarter | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 178.2 | $ | 171.8 | 3.7 | % | 3.9 | % | ||||||
Gross profit | 45.0 | 41.4 | 8.5 | 8.9 | ||||||||||
Total SG&A expenses | 37.3 | 33.2 | 12.3 | 12.8 | ||||||||||
Earnings from operations | 7.7 | 8.2 | (7.0 | ) | ||||||||||
Gross profit rate | 25.2 | % | 24.1 | % | 1.1 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 20.9 | 19.3 | 1.6 | |||||||||||
% of gross profit | 83.0 | 80.2 | 2.8 | |||||||||||
Return on sales | 4.3 | 4.8 | (0.5 | ) | ||||||||||
Corporate | ||||||||||||||
Total SG&A expenses | $ | 17.4 | $ | 22.9 | (24.4 | ) | % | |||||||
6
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
September Year to Date | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
AMERICAS | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 1,887.6 | $ | 1,908.2 | (1.1 | ) | % | 0.2 | % | |||||
Staffing fee-based income included in revenue from services | 11.4 | 10.8 | 5.5 | 6.1 | ||||||||||
Gross profit | 295.9 | 290.3 | 1.9 | 2.9 | ||||||||||
Gross profit rate | 15.7 | % | 15.2 | % | 0.5 | pts. | ||||||||
PT | ||||||||||||||
Revenue from services | $ | 718.3 | $ | 721.8 | (0.5 | ) | % | (0.4 | ) | % | ||||
Staffing fee-based income included in revenue from services | 13.7 | 13.1 | 4.4 | 5.2 | ||||||||||
Gross profit | 124.3 | 122.0 | 1.8 | 2.0 | ||||||||||
Gross profit rate | 17.3 | % | 16.9 | % | 0.4 | pts. | ||||||||
Total Americas | ||||||||||||||
Revenue from services | $ | 2,605.9 | $ | 2,630.0 | (0.9 | ) | % | — | % | |||||
Staffing fee-based income included in revenue from services | 25.1 | 23.9 | 4.9 | 5.6 | ||||||||||
Gross profit | 420.2 | 412.3 | 1.9 | 2.7 | ||||||||||
SG&A expenses excluding restructuring charges | 340.5 | 339.8 | 0.2 | 0.9 | ||||||||||
Restructuring charges | 2.2 | — | NM | |||||||||||
Total SG&A expenses | 342.7 | 339.8 | 0.8 | 1.5 | ||||||||||
Earnings from operations | 77.5 | 72.5 | 7.0 | |||||||||||
Earnings from operations excluding restructuring charges | 79.7 | 72.5 | 10.0 | |||||||||||
Gross profit rate | 16.1 | % | 15.7 | % | 0.4 | pts. | ||||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.1 | 12.9 | 0.2 | |||||||||||
% of gross profit | 81.0 | 82.4 | (1.4 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 3.1 | 2.8 | 0.3 | |||||||||||
EMEA | ||||||||||||||
Commercial | ||||||||||||||
Revenue from services | $ | 570.2 | $ | 573.0 | (0.5 | ) | % | 2.3 | % | |||||
Staffing fee-based income included in revenue from services | 10.4 | 9.9 | 6.0 | 10.0 | ||||||||||
Gross profit | 77.5 | 79.1 | (2.1 | ) | 0.2 | |||||||||
Gross profit rate | 13.6 | % | 13.8 | % | (0.2 | ) | pts. | |||||||
PT | ||||||||||||||
Revenue from services | $ | 126.4 | $ | 126.8 | (0.3 | ) | % | 2.1 | % | |||||
Staffing fee-based income included in revenue from services | 7.3 | 7.7 | (5.8 | ) | (2.1 | ) | ||||||||
Gross profit | 25.6 | 27.2 | (5.7 | ) | (3.2 | ) | ||||||||
Gross profit rate | 20.3 | % | 21.5 | % | (1.2 | ) | pts. | |||||||
Total EMEA | ||||||||||||||
Revenue from services | $ | 696.6 | $ | 699.8 | (0.5 | ) | % | 2.2 | % | |||||
Staffing fee-based income included in revenue from services | 17.7 | 17.6 | 0.8 | 4.7 | ||||||||||
Gross profit | 103.1 | 106.3 | (3.0 | ) | (0.6 | ) | ||||||||
SG&A expenses excluding restructuring charges | 92.9 | 99.5 | (6.5 | ) | (3.8 | ) | ||||||||
Restructuring charges | 1.2 | — | NM | |||||||||||
Total SG&A expenses | 94.1 | 99.5 | (5.3 | ) | (2.7 | ) | ||||||||
Earnings from operations | 9.0 | 6.8 | 30.5 | |||||||||||
Earnings from operations excluding restructuring charges | 10.2 | 6.8 | 46.7 | |||||||||||
Gross profit rate | 14.8 | % | 15.2 | % | (0.4 | ) | pts. | |||||||
Expense rates (excluding restructuring charges): | ||||||||||||||
% of revenue | 13.4 | 14.2 | (0.8 | ) | ||||||||||
% of gross profit | 90.1 | 93.5 | (3.4 | ) | ||||||||||
Return on sales (excluding restructuring charges) | 1.5 | 1.0 | 0.5 | |||||||||||
7
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
(UNAUDITED) | ||||||||||||||
(In millions of dollars) | ||||||||||||||
September Year to Date | ||||||||||||||
% | CC % | |||||||||||||
2016 | 2015 | Change | Change | |||||||||||
OCG | ||||||||||||||
Revenue from services | $ | 520.3 | $ | 486.3 | 7.0 | % | 7.5 | % | ||||||
Gross profit | 130.1 | 112.6 | 15.5 | 16.3 | ||||||||||
Total SG&A expenses | 112.2 | 98.1 | 14.4 | 15.3 | ||||||||||
Earnings from operations | 17.9 | 14.5 | 22.8 | |||||||||||
Gross profit rate | 25.0 | % | 23.1 | % | 1.9 | pts. | ||||||||
Expense rates: | ||||||||||||||
% of revenue | 21.6 | 20.2 | 1.4 | |||||||||||
% of gross profit | 86.3 | 87.1 | (0.8 | ) | ||||||||||
Return on sales | 3.4 | 3.0 | 0.4 | |||||||||||
Corporate | ||||||||||||||
Total SG&A expenses | $ | 66.6 | $ | 61.1 | 8.8 | % | ||||||||
8
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars) | ||||||||||
October 2, 2016 | Jan. 3, 2016 | September 27, 2015 | ||||||||
Current Assets | ||||||||||
Cash and equivalents | $ | 27.6 | $ | 42.2 | $ | 44.9 | ||||
Trade accounts receivable, less allowances of | ||||||||||
$11.1, $10.5 and $9.7, respectively | 1,125.8 | 1,139.1 | 1,160.3 | |||||||
Prepaid expenses and other current assets | 53.0 | 45.8 | 49.0 | |||||||
Deferred taxes | — | — | 35.0 | |||||||
Total current assets | 1,206.4 | 1,227.1 | 1,289.2 | |||||||
Noncurrent Assets | ||||||||||
Property and equipment, net | 80.5 | 88.9 | 88.3 | |||||||
Noncurrent deferred taxes | 179.8 | 189.3 | 140.8 | |||||||
Goodwill, net | 88.4 | 90.3 | 90.3 | |||||||
Investment in equity affiliate | 113.6 | 9.4 | 9.4 | |||||||
Other assets | 370.6 | 334.6 | 331.9 | |||||||
Total noncurrent assets | 832.9 | 712.5 | 660.7 | |||||||
Total Assets | $ | 2,039.3 | $ | 1,939.6 | $ | 1,949.9 | ||||
Current Liabilities | ||||||||||
Short-term borrowings | $ | 8.7 | $ | 55.5 | $ | 76.8 | ||||
Accounts payable and accrued liabilities | 408.7 | 405.5 | 385.2 | |||||||
Accrued payroll and related taxes | 276.9 | 268.1 | 312.8 | |||||||
Accrued insurance | 26.8 | 26.7 | 25.9 | |||||||
Income and other taxes | 56.9 | 60.0 | 59.5 | |||||||
Total current liabilities | 778.0 | 815.8 | 860.2 | |||||||
Noncurrent Liabilities | ||||||||||
Accrued insurance | 40.2 | 40.0 | 42.2 | |||||||
Accrued retirement benefits | 153.9 | 141.0 | 139.5 | |||||||
Other long-term liabilities | 50.7 | 47.4 | 48.4 | |||||||
Total noncurrent liabilities | 244.8 | 228.4 | 230.1 | |||||||
Stockholders' Equity | ||||||||||
Common stock | 40.1 | 40.1 | 40.1 | |||||||
Treasury stock | (39.1 | ) | (44.3 | ) | (46.9 | ) | ||||
Paid-in capital | 26.2 | 25.4 | 26.7 | |||||||
Earnings invested in the business | 906.8 | 813.5 | 781.3 | |||||||
Accumulated other comprehensive income | 82.5 | 60.7 | 58.4 | |||||||
Total stockholders' equity | 1,016.5 | 895.4 | 859.6 | |||||||
Total Liabilities and Stockholders' Equity | $ | 2,039.3 | $ | 1,939.6 | $ | 1,949.9 | ||||
STATISTICS: | ||||||||||
Working Capital | $ | 428.4 | $ | 411.3 | $ | 429.0 | ||||
Current Ratio | 1.6 | 1.5 | 1.5 | |||||||
Debt-to-capital % | 0.9 | % | 5.8 | % | 8.2 | % | ||||
Global Days Sales Outstanding | 56 | 54 | 57 | |||||||
9
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | ||||||
(UNAUDITED) | ||||||
(In millions of dollars) | ||||||
2016 | 2015 | |||||
Cash flows from operating activities: | ||||||
Net earnings | $ | 101.0 | $ | 19.6 | ||
Noncash adjustments: | ||||||
Depreciation and amortization | 16.0 | 16.6 | ||||
Provision for bad debts | 6.1 | 3.3 | ||||
Stock-based compensation | 5.5 | 4.6 | ||||
Gain on investment in TS Kelly Asia Pacific equity affiliate | (87.2 | ) | — | |||
Other, net | (2.2 | ) | (0.7 | ) | ||
Changes in operating assets and liabilities | (13.1 | ) | (44.9 | ) | ||
Net cash from (used in) operating activities | 26.1 | (1.5 | ) | |||
Cash flows from investing activities: | ||||||
Capital expenditures | (7.8 | ) | (12.3 | ) | ||
Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate | 18.8 | — | ||||
Investment in TS Kelly equity affiliate | — | (0.5 | ) | |||
Other investing activities | (0.4 | ) | (0.4 | ) | ||
Net cash from (used in) investing activities | 10.6 | (13.2 | ) | |||
Cash flows from financing activities: | ||||||
Net change in short-term borrowings | (47.8 | ) | (13.8 | ) | ||
Dividend payments | (7.7 | ) | (5.7 | ) | ||
Other financing activities | 0.4 | 0.2 | ||||
Net cash used in financing activities | (55.1 | ) | (19.3 | ) | ||
Effect of exchange rates on cash and equivalents | 3.8 | (4.2 | ) | |||
Net change in cash and equivalents | (14.6 | ) | (38.2 | ) | ||
Cash and equivalents at beginning of period | 42.2 | 83.1 | ||||
Cash and equivalents at end of period | $ | 27.6 | $ | 44.9 | ||
10
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
Third Quarter (Commercial, PT and OCG) | |||||||||||||
% | CC % | ||||||||||||
2016 | 2015 | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 900.3 | $ | 899.8 | 0.1 | % | 0.1 | % | |||||
Canada | 34.9 | 37.9 | (7.8 | ) | (8.5 | ) | |||||||
Mexico | 27.6 | 31.3 | (12.3 | ) | 0.4 | ||||||||
Puerto Rico | 20.9 | 23.8 | (12.2 | ) | (12.2 | ) | |||||||
Brazil | 13.3 | 10.4 | 27.9 | 28.1 | |||||||||
Total Americas | 997.0 | 1,003.2 | (0.6 | ) | (0.3 | ) | |||||||
EMEA | |||||||||||||
France | 60.8 | 63.1 | (3.7 | ) | (4.1 | ) | |||||||
Switzerland | 55.0 | 58.0 | (5.2 | ) | (3.9 | ) | |||||||
Portugal | 39.2 | 33.5 | 16.9 | 16.5 | |||||||||
United Kingdom | 19.5 | 27.7 | (29.3 | ) | (16.4 | ) | |||||||
Russia | 18.4 | 17.0 | 7.9 | 11.2 | |||||||||
Germany | 14.2 | 15.4 | (7.7 | ) | (8.1 | ) | |||||||
Italy | 13.6 | 14.0 | (2.8 | ) | (3.1 | ) | |||||||
Norway | 8.4 | 10.1 | (17.3 | ) | (15.9 | ) | |||||||
Other | 17.4 | 11.5 | 50.8 | 50.3 | |||||||||
Total EMEA | 246.5 | 250.3 | (1.5 | ) | 0.2 | ||||||||
APAC | |||||||||||||
Australia | 3.6 | 28.8 | (87.5 | ) | (88.0 | ) | |||||||
Singapore | 0.1 | 32.6 | (99.7 | ) | (99.7 | ) | |||||||
New Zealand | 0.1 | 9.4 | (99.1 | ) | (99.2 | ) | |||||||
Malaysia | 0.1 | 14.0 | (99.5 | ) | (99.5 | ) | |||||||
Other | 0.4 | 12.7 | (96.5 | ) | (96.4 | ) | |||||||
Total APAC | 4.3 | 97.5 | (95.6 | ) | (95.7 | ) | |||||||
Total Kelly Services, Inc. | $ | 1,247.8 | $ | 1,351.0 | (7.6 | ) | % | (7.1 | ) | % | |||
11
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
REVENUE FROM SERVICES | |||||||||||||
(UNAUDITED) | |||||||||||||
(In millions of dollars) | |||||||||||||
September Year to Date (Commercial, PT and OCG) | |||||||||||||
% | CC % | ||||||||||||
2016 | 2015 | Change | Change | ||||||||||
Americas | |||||||||||||
United States | $ | 2,765.8 | $ | 2,706.4 | 2.2 | % | 2.2 | % | |||||
Canada | 105.2 | 122.2 | (13.9 | ) | (9.9 | ) | |||||||
Mexico | 79.6 | 95.2 | (16.4 | ) | (1.6 | ) | |||||||
Puerto Rico | 65.9 | 75.2 | (12.4 | ) | (12.4 | ) | |||||||
Brazil | 33.5 | 34.2 | (1.8 | ) | 16.7 | ||||||||
Total Americas | 3,050.0 | 3,033.2 | 0.6 | 1.4 | |||||||||
EMEA | |||||||||||||
France | 178.6 | 180.4 | (1.0 | ) | (1.0 | ) | |||||||
Switzerland | 156.2 | 160.7 | (2.8 | ) | (0.1 | ) | |||||||
Portugal | 111.6 | 98.7 | 13.1 | 13.0 | |||||||||
United Kingdom | 66.2 | 78.4 | (15.5 | ) | (7.2 | ) | |||||||
Russia | 49.0 | 57.4 | (14.8 | ) | (2.2 | ) | |||||||
Germany | 45.3 | 43.1 | 5.0 | 5.0 | |||||||||
Italy | 42.1 | 39.5 | 6.5 | 6.3 | |||||||||
Norway | 24.4 | 29.5 | (17.2 | ) | (11.8 | ) | |||||||
Other | 45.9 | 32.8 | 39.8 | 40.1 | |||||||||
Total EMEA | 719.3 | 720.5 | (0.2 | ) | 2.5 | ||||||||
APAC | |||||||||||||
Singapore | 64.9 | 96.9 | (33.0 | ) | (31.6 | ) | |||||||
Australia | 64.2 | 92.1 | (30.3 | ) | (26.2 | ) | |||||||
Malaysia | 27.8 | 45.4 | (38.9 | ) | (31.4 | ) | |||||||
New Zealand | 19.3 | 30.2 | (36.1 | ) | (29.8 | ) | |||||||
Other | 26.9 | 38.3 | (29.5 | ) | (24.7 | ) | |||||||
Total APAC | 203.1 | 302.9 | (32.9 | ) | (28.9 | ) | |||||||
Total Kelly Services, Inc. | $ | 3,972.4 | $ | 4,056.6 | (2.1 | ) | % | (0.7 | ) | % | |||
12
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||||||||||
FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
(In millions of dollars except per share data) | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
As Reported | Gain on Investment in Equity Affiliate (Note 1) | Adjusted Earnings | Adjusted Earnings | % Change | CC % Change | ||||||||||||||
Revenue from services | $ | 1,247.8 | $ | — | $ | 1,247.8 | $ | 1,257.0 | (0.7 | ) | % | (0.1 | ) | % | |||||
Cost of services | 1,032.7 | — | 1,032.7 | 1,042.6 | (1.0 | ) | |||||||||||||
Gross profit | 215.1 | — | 215.1 | 214.4 | 0.3 | 0.8 | |||||||||||||
SG&A expenses | 196.3 | — | 196.3 | 199.9 | (1.8 | ) | (1.4 | ) | |||||||||||
Earnings from operations | 18.8 | — | 18.8 | 14.5 | 29.4 | ||||||||||||||
Gain on investment in TS Kelly Asia Pacific | 87.2 | (87.2 | ) | — | — | — | |||||||||||||
Other (expense) income, net | (0.4 | ) | — | (0.4 | ) | 0.1 | NM | ||||||||||||
Earnings before taxes | 105.6 | (87.2 | ) | 18.4 | 14.6 | 26.7 | |||||||||||||
Inc. tax expense (benefit) | 24.7 | (23.5 | ) | 1.2 | 7.1 | (83.1 | ) | ||||||||||||
Net earnings | $ | 80.9 | $ | (63.7 | ) | $ | 17.2 | $ | 7.5 | 130.7 | % | ||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 2.08 | $ | (1.63 | ) | $ | 0.44 | $ | 0.19 | 131.6 | % | ||||||||
Diluted | $ | 2.06 | $ | (1.62 | ) | $ | 0.44 | $ | 0.19 | 131.6 | % | ||||||||
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. | |||||||||||||||||||
13
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | ||||||||||
(UNAUDITED) | ||||||||||
(In millions of dollars except per share data) | ||||||||||
2015 | ||||||||||
As Reported | Disposal of APAC Businesses (Note 2) | Adjusted Earnings | ||||||||
Revenue from services | $ | 1,351.0 | $ | (94.0 | ) | $ | 1,257.0 | |||
Cost of services | 1,122.8 | (80.2 | ) | 1,042.6 | ||||||
Gross profit | 228.2 | (13.8 | ) | 214.4 | ||||||
SG&A expenses | 211.6 | (11.7 | ) | 199.9 | ||||||
Earnings from operations | 16.6 | (2.1 | ) | 14.5 | ||||||
Other income, net | — | 0.1 | 0.1 | |||||||
Earnings before taxes | 16.6 | (2.0 | ) | 14.6 | ||||||
Inc. tax expense (benefit) | 7.5 | (0.4 | ) | 7.1 | ||||||
Net earnings | $ | 9.1 | $ | (1.6 | ) | $ | 7.5 | |||
Earnings per share: | ||||||||||
Basic | $ | 0.23 | $ | (0.04 | ) | $ | 0.19 | |||
Diluted | $ | 0.23 | $ | (0.04 | ) | $ | 0.19 | |||
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. | ||||||||||
14
KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||||
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | ||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||
(In millions of dollars except per share data) | ||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
As Reported | Gain on Investment in Equity Affiliate (Note 1) | Restructuring Charges (Note 3) | Adjusted Earnings | Adjusted Earnings | % Change | CC % Change | ||||||||||||||||
Revenue from services | $ | 3,972.4 | $ | — | $ | — | $ | 3,972.4 | $ | 3,962.6 | 0.2 | % | 1.7 | % | ||||||||
Cost of services | 3,294.1 | — | — | 3,294.1 | 3,305.6 | (0.3 | ) | |||||||||||||||
Gross profit | 678.3 | — | — | 678.3 | 657.0 | 3.2 | 4.5 | |||||||||||||||
SG&A expenses | 634.9 | — | (3.4 | ) | 631.5 | 618.9 | 2.0 | 3.2 | ||||||||||||||
Earnings from operations | 43.4 | — | 3.4 | 46.8 | 38.1 | 22.8 | ||||||||||||||||
Gain on investment in TS Kelly Asia Pacific | 87.2 | (87.2 | ) | — | — | — | — | |||||||||||||||
Other expense, net | (1.4 | ) | — | — | (1.4 | ) | (3.4 | ) | 60.3 | |||||||||||||
Earnings before taxes | 129.2 | (87.2 | ) | 3.4 | 45.4 | 34.7 | 31.1 | |||||||||||||||
Inc. tax expense (benefit) | 28.2 | (23.5 | ) | 0.9 | 5.6 | 16.7 | (66.6 | ) | ||||||||||||||
Net earnings | $ | 101.0 | $ | (63.7 | ) | $ | 2.5 | $ | 39.8 | $ | 18.0 | 121.5 | % | |||||||||
Earnings per share: | ||||||||||||||||||||||
Basic | $ | 2.59 | $ | (1.63 | ) | $ | 0.07 | $ | 1.02 | $ | 0.46 | 121.7 | % | |||||||||
Diluted | $ | 2.58 | $ | (1.63 | ) | $ | 0.07 | $ | 1.02 | $ | 0.46 | 121.7 | % | |||||||||
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. | ||||||||||||||||||||||
15
KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||
RECONCILIATION OF NON-GAAP MEASURES | |||||||||||
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015 | |||||||||||
(UNAUDITED) | |||||||||||
(In millions of dollars except per share data) | |||||||||||
2015 | |||||||||||
As Reported | Disposal of APAC Businesses (Note 2) | Adjusted Earnings | |||||||||
Revenue from services | $ | 4,056.6 | $ | (94.0 | ) | $ | 3,962.6 | ||||
Cost of services | 3,385.8 | (80.2 | ) | 3,305.6 | |||||||
Gross profit | 670.8 | (13.8 | ) | 657.0 | |||||||
SG&A expenses | 630.6 | (11.7 | ) | 618.9 | |||||||
Earnings from operations | 40.2 | (2.1 | ) | 38.1 | |||||||
Other (expense) income, net | (3.5 | ) | 0.1 | (3.4 | ) | ||||||
Earnings before taxes | 36.7 | (2.0 | ) | 34.7 | |||||||
Inc. tax expense (benefit) | 17.1 | (0.4 | ) | 16.7 | |||||||
Net earnings | $ | 19.6 | $ | (1.6 | ) | $ | 18.0 | ||||
Earnings per share: | |||||||||||
Basic | $ | 0.51 | $ | (0.04 | ) | $ | 0.46 | ||||
Diluted | $ | 0.51 | $ | (0.04 | ) | $ | 0.46 | ||||
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. | |||||||||||
16
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2016 gain on investment in equity affiliate, 2016 restructuring charges and disposal of APAC businesses is useful to understand the Company's fiscal 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
(1) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in TS Kelly Asia Pacific.
(2) Disposal of APAC businesses represents the 2015 operational results of business contributed to TS Kelly Asia Pacific in the third quarter of 2016.
(3) Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.
17