Exhibit 99.1
KELLY SERVICES® REPORTS 4th QUARTER AND FULL YEAR 2014 RESULTS
TROY, MI (January 29, 2015) -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2014.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2014 totaled $1.4 billion, a 3% increase (a 6% increase on a constant currency basis) compared to the corresponding quarter of 2013. Revenue for the full year totaled $5.6 billion, a 3% increase (a 4% increase on a constant currency basis) compared to the prior year.
Earnings from operations for the fourth quarter of 2014 totaled $2.6 million, compared to $9.6 million reported for the fourth quarter of 2013. Included in the results of operations in the fourth quarter of 2014 are restructuring charges of $6.2 million. The results of operations in the fourth quarter of 2013 included restructuring charges of $0.3 million. Excluding the restructuring charges from both years, earnings from operations were $8.8 million in the fourth quarter of 2014, compared to adjusted earnings of $9.9 million last year.
Earnings from operations for the full year of 2014 totaled $21.9 million compared to $53.3 million in 2013. Included in the results from operations for 2014 are restructuring charges of $12.0 million. Included in the results from operations for 2013 are asset impairment charges of $1.7 million and restructuring charges of $1.6 million. Excluding these items from both years, earnings from operations were $33.9 million in 2014 compared to $56.6 million in 2013.
Diluted earnings per share in the fourth quarter of 2014 were $0.44 compared to $0.45 per share in the fourth quarter of 2013. Included in diluted earnings per share from continuing operations for the fourth quarter of 2014 are restructuring charges of $0.10 per share. Included in diluted earnings per share from continuing operations for the fourth quarter of 2013 are restructuring charges of $0.01 per share. Excluding these charges from both years, diluted earnings per share from continuing operations for the fourth quarter of 2014 were $0.54 per share compared to $0.45 per share in 2013.
Diluted earnings per share from continuing operations for the full year of 2014 were $0.61 compared to $1.54 per share in 2013. Included in diluted earnings per share from continuing operations for 2014 are restructuring charges of $0.19 per share. Included in diluted earnings per share from continuing operations for 2013 are restructuring charges of $0.04 per share and asset impairment charges of $0.04 per share. Excluding these charges from both periods, diluted earnings per share from continuing operations for 2014 were $0.81 per share compared to $1.62 per share in 2013.
Commenting on the fourth quarter, Camden stated, “The fourth quarter capped a year of significant investment at Kelly, and we’re pleased that our performance confirms those investments are gaining traction. With our new delivery models fully in place, we have begun capitalizing on improved U.S. market conditions and increased demand for specialized staffing. The strong results delivered by our OCG segment reflects our ongoing ability to also meet the growing demand for holistic talent management solutions, especially among our largest customers.”
In conjunction with its fourth quarter and full year earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 29, to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone:
| U.S. | 1 800 288-9626 |
| International | 1 651 291-5254 |
The pass code is Kelly Services
1
Via the Internet:
The call is also available via the internet through the Kelly Services website:
www.kellyservices.com
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, 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, 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 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 or market developments, 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 and the expiration and/or reinstatement of the U.S. work opportunity credit program), 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®
Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provided employment to approximately 555,000 employees in 2014. Revenue in 2014 was $5.6 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 |
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| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
| FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013 | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| (In millions of dollars except per share data) | ||||||||||||||||
| % | CC % | |||||||||||||||
| 2014 | 2013 | Change | Change | Change | ||||||||||||
| Revenue from services | $ | 1,425.0 | $ | 1,385.8 | $ | 39.2 | 2.8 | % | 5.7 | % | ||||||
| Cost of services | 1,192.4 | 1,154.3 | 38.1 | 3.3 | ||||||||||||
| Gross profit | 232.6 | 231.5 | 1.1 | 0.5 | 3.4 | |||||||||||
| Selling, general and administrative expenses | 230.0 | 221.9 | 8.1 | 3.6 | 6.8 | |||||||||||
| Earnings from operations | 2.6 | 9.6 | (7.0 | ) | (71.7 | ) | ||||||||||
| Other expense, net | 1.1 | 0.6 | 0.5 | 89.6 | ||||||||||||
| Earnings before taxes | 1.5 | 9.0 | (7.5 | ) | (81.8 | ) | ||||||||||
| Income tax benefit | (15.5 | ) | (8.2 | ) | (7.3 | ) | (89.3 | ) | ||||||||
| Net earnings | $ | 17.0 | $ | 17.2 | $ | (0.2 | ) | (0.2 | ) | % | ||||||
| Basic earnings per share | $ | 0.44 | $ | 0.45 | $ | (0.01 | ) | (2.2 | ) | % | ||||||
| Diluted earnings per share | $ | 0.44 | $ | 0.45 | $ | (0.01 | ) | (2.2 | ) | % | ||||||
| STATISTICS: | ||||||||||||||||
| Gross profit rate | 16.3 | % | 16.7 | % | (0.4 | ) | pts. | |||||||||
| Selling, general and administrative expenses: | ||||||||||||||||
| % of revenue | 16.1 | 16.0 | 0.1 | |||||||||||||
| % of gross profit | 98.8 | 95.9 | 2.9 | |||||||||||||
| % Return: | ||||||||||||||||
| Earnings from operations | 0.2 | 0.7 | (0.5 | ) | ||||||||||||
| Earnings before taxes | 0.1 | 0.6 | (0.5 | ) | ||||||||||||
| Net earnings | 1.2 | 1.2 | — | |||||||||||||
| Effective income tax rate | (949.7 | ) | % | (91.1 | ) | % | (858.6 | ) | pts. | |||||||
| Average number of shares outstanding (millions): | ||||||||||||||||
| Basic | 37.7 | 37.4 | ||||||||||||||
| Diluted | 37.7 | 37.4 | ||||||||||||||
| Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
| Basic | 38.9 | 38.6 | ||||||||||||||
| Diluted | 38.9 | 38.6 | ||||||||||||||
3
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
| FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013 | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| (In millions of dollars except per share data) | ||||||||||||||||
| % | CC % | |||||||||||||||
| 2014 | 2013 | Change | Change | Change | ||||||||||||
| Revenue from services | $ | 5,562.7 | $ | 5,413.1 | $ | 149.6 | 2.8 | % | 3.8 | % | ||||||
| Cost of services | 4,654.3 | 4,523.6 | 130.7 | 2.9 | ||||||||||||
| Gross profit | 908.4 | 889.5 | 18.9 | 2.1 | 3.2 | |||||||||||
| Selling, general and administrative expenses | 886.5 | 834.5 | 52.0 | 6.2 | 7.3 | |||||||||||
| Asset impairments | — | 1.7 | (1.7 | ) | (100.0 | ) | ||||||||||
| Earnings from operations | 21.9 | 53.3 | (31.4 | ) | (59.1 | ) | ||||||||||
| Other expense, net | 5.3 | 4.5 | 0.8 | 15.3 | ||||||||||||
| Earnings before taxes | 16.6 | 48.8 | (32.2 | ) | (66.0 | ) | ||||||||||
| Income tax benefit | (7.1 | ) | (10.1 | ) | 3.0 | 29.6 | ||||||||||
| Net earnings | $ | 23.7 | $ | 58.9 | $ | (35.2 | ) | (59.8 | ) | % | ||||||
| Basic earnings per share | $ | 0.61 | $ | 1.54 | $ | (0.93 | ) | (60.4 | ) | % | ||||||
| Diluted earnings per share | $ | 0.61 | $ | 1.54 | $ | (0.93 | ) | (60.4 | ) | % | ||||||
| STATISTICS: | ||||||||||||||||
| Gross profit rate | 16.3 | % | 16.4 | % | (0.1 | ) | pts. | |||||||||
| Selling, general and administrative expenses: | ||||||||||||||||
| % of revenue | 15.9 | 15.4 | 0.5 | |||||||||||||
| % of gross profit | 97.6 | 93.8 | 3.8 | |||||||||||||
| % Return: | ||||||||||||||||
| Earnings from operations | 0.4 | 1.0 | (0.6 | ) | ||||||||||||
| Earnings before taxes | 0.3 | 0.9 | (0.6 | ) | ||||||||||||
| Net earnings | 0.4 | 1.1 | (0.7 | ) | ||||||||||||
| Effective income tax rate | (43.2 | ) | % | (20.8 | ) | % | (22.4 | ) | pts. | |||||||
| Average number of shares outstanding (millions): | ||||||||||||||||
| Basic | 37.5 | 37.3 | ||||||||||||||
| Diluted | 37.5 | 37.3 | ||||||||||||||
| Shares adjusted for nonvested restricted awards (millions): | ||||||||||||||||
| Basic | 38.6 | 38.3 | ||||||||||||||
| Diluted | 38.6 | 38.3 | ||||||||||||||
4
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars) | ||||||||||||||
| Fourth Quarter | ||||||||||||||
| Constant | ||||||||||||||
| Currency | ||||||||||||||
| 2014 | 2013 | Change | Change | |||||||||||
| AMERICAS | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 694.5 | $ | 641.5 | 8.3 | % | 9.3 | % | ||||||
| Staffing fee-based income included in revenue from services | 4.0 | 3.4 | 16.0 | 17.4 | ||||||||||
| Gross profit | 99.6 | 95.7 | 4.2 | 5.2 | ||||||||||
| Gross profit rate | 14.4 | % | 14.9 | % | (0.5 | ) | pts. | |||||||
| PT | ||||||||||||||
| Revenue from services | $ | 232.9 | $ | 234.1 | (0.5 | ) | % | (0.2 | ) | % | ||||
| Staffing fee-based income included in revenue from services | 3.9 | 3.7 | 4.1 | 5.0 | ||||||||||
| Gross profit | 37.5 | 39.0 | (3.6 | ) | (3.3 | ) | ||||||||
| Gross profit rate | 16.1 | % | 16.6 | % | (0.5 | ) | pts. | |||||||
| Total Americas | ||||||||||||||
| Revenue from services | $ | 927.4 | $ | 875.6 | 5.9 | % | 6.7 | % | ||||||
| Staffing fee-based income included in revenue from services | 7.9 | 7.1 | 9.8 | 10.9 | ||||||||||
| Gross profit | 137.1 | 134.7 | 2.0 | 2.7 | ||||||||||
| Total SG&A expenses | 113.9 | 109.2 | 4.4 | 5.1 | ||||||||||
| Earnings from operations | 23.2 | 25.5 | (8.5 | ) | ||||||||||
| Gross profit rate | 14.8 | % | 15.4 | % | (0.6 | ) | pts. | |||||||
| Expense rates: | ||||||||||||||
| % of revenue | 12.3 | 12.5 | (0.2 | ) | ||||||||||
| % of gross profit | 83.0 | 81.1 | 1.9 | |||||||||||
| Return on sales | 2.5 | 2.9 | (0.4 | ) | ||||||||||
| EMEA | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 204.5 | $ | 232.2 | (12.0 | ) | % | (2.4 | ) | % | ||||
| Staffing fee-based income included in revenue from services | 3.3 | 4.9 | (31.9 | ) | (19.2 | ) | ||||||||
| Gross profit | 29.6 | 34.8 | (15.1 | ) | (5.6 | ) | ||||||||
| Gross profit rate | 14.4 | % | 15.0 | % | (0.6 | ) | pts. | |||||||
| PT | ||||||||||||||
| Revenue from services | $ | 44.8 | $ | 48.0 | (6.5 | ) | % | 2.7 | % | |||||
| Staffing fee-based income included in revenue from services | 2.8 | 3.3 | (16.0 | ) | (2.5 | ) | ||||||||
| Gross profit | 9.6 | 10.6 | (8.7 | ) | 1.8 | |||||||||
| Gross profit rate | 21.7 | % | 22.2 | % | (0.5 | ) | pts. | |||||||
| Total EMEA | ||||||||||||||
| Revenue from services | $ | 249.3 | $ | 280.2 | (11.0 | ) | % | (1.5 | ) | % | ||||
| Staffing fee-based income included in revenue from services | 6.1 | 8.2 | (25.5 | ) | (12.5 | ) | ||||||||
| Gross profit | 39.2 | 45.4 | (13.6 | ) | (3.9 | ) | ||||||||
| SG&A expenses excluding restructuring charges | 36.4 | 42.2 | (13.7 | ) | ||||||||||
| Restructuring charges | — | 0.3 | (100.0 | ) | ||||||||||
| Total SG&A expenses | 36.4 | 42.5 | (14.4 | ) | (2.9 | ) | ||||||||
| Earnings from operations | 2.8 | 2.9 | (2.2 | ) | ||||||||||
| Earnings from operations excluding restructuring charges | 2.8 | 3.2 | (11.8 | ) | ||||||||||
| Gross profit rate | 15.7 | % | 16.2 | % | (0.5 | ) | pts. | |||||||
| Expense rates (excluding restructuring charges): | ||||||||||||||
| % of revenue | 14.6 | 15.1 | (0.5 | ) | ||||||||||
| % of gross profit | 92.8 | 92.9 | (0.1 | ) | ||||||||||
| Return on sales (excluding restructuring charges) | 1.1 | 1.1 | — | |||||||||||
5
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars) | ||||||||||||||
| Fourth Quarter | ||||||||||||||
| Constant | ||||||||||||||
| Currency | ||||||||||||||
| 2014 | 2013 | Change | Change | |||||||||||
| APAC | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 91.3 | $ | 87.3 | 4.6 | % | 9.7 | % | ||||||
| Staffing fee-based income included in revenue from services | 2.0 | 2.2 | (6.9 | ) | (3.4 | ) | ||||||||
| Gross profit | 11.8 | 12.5 | (5.4 | ) | (0.8 | ) | ||||||||
| Gross profit rate | 12.9 | % | 14.3 | % | (1.4 | ) | pts. | |||||||
| PT | ||||||||||||||
| Revenue from services | $ | 11.2 | $ | 9.3 | 20.1 | % | 26.9 | % | ||||||
| Staffing fee-based income included in revenue from services | 2.0 | 2.1 | (6.3 | ) | (2.2 | ) | ||||||||
| Gross profit | 3.3 | 3.5 | (4.6 | ) | 0.2 | |||||||||
| Gross profit rate | 29.9 | % | 37.7 | % | (7.8 | ) | pts. | |||||||
| Total APAC | ||||||||||||||
| Revenue from services | $ | 102.5 | $ | 96.6 | 6.1 | % | 11.4 | % | ||||||
| Staffing fee-based income included in revenue from services | 4.0 | 4.3 | (6.6 | ) | (2.8 | ) | ||||||||
| Gross profit | 15.1 | 16.0 | (5.2 | ) | (0.6 | ) | ||||||||
| Total SG&A expenses | 13.1 | 14.7 | (11.4 | ) | (6.8 | ) | ||||||||
| Earnings from operations | 2.0 | 1.3 | 63.9 | |||||||||||
| Gross profit rate | 14.8 | % | 16.5 | % | (1.7 | ) | pts. | |||||||
| Expense rates: | ||||||||||||||
| % of revenue | 12.7 | 15.2 | (2.5 | ) | ||||||||||
| % of gross profit | 85.8 | 91.8 | (6.0 | ) | ||||||||||
| Return on sales | 2.1 | 1.4 | 0.7 | |||||||||||
| OCG | ||||||||||||||
| Revenue from services | $ | 164.7 | $ | 148.5 | 10.9 | % | 11.9 | % | ||||||
| Gross profit | 42.3 | 36.5 | 15.8 | 17.1 | ||||||||||
| Total SG&A expenses | 32.6 | 29.0 | 12.5 | 14.8 | ||||||||||
| Earnings from operations | 9.7 | 7.5 | 28.5 | |||||||||||
| Gross profit rate | 25.6 | % | 24.6 | % | 1.0 | pts. | ||||||||
| Expense rates: | ||||||||||||||
| % of revenue | 19.8 | 19.6 | 0.2 | |||||||||||
| % of gross profit | 77.4 | 79.6 | (2.2 | ) | ||||||||||
| Return on sales | 5.8 | 5.0 | 0.8 | |||||||||||
6
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars) | ||||||||||||||
| December Year to Date | ||||||||||||||
| Constant | ||||||||||||||
| Currency | ||||||||||||||
| 2014 | 2013 | Change | Change | |||||||||||
| AMERICAS | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 2,609.6 | $ | 2,545.6 | 2.5 | % | 3.4 | % | ||||||
| Staffing fee-based income included in revenue from services | 14.4 | 13.2 | 8.7 | 10.1 | ||||||||||
| Gross profit | 379.6 | 370.2 | 2.6 | 3.4 | ||||||||||
| Gross profit rate | 14.5 | % | 14.5 | % | — | pts. | ||||||||
| PT | ||||||||||||||
| Revenue from services | $ | 956.0 | $ | 967.8 | (1.2 | ) | % | (1.0 | ) | % | ||||
| Staffing fee-based income included in revenue from services | 15.6 | 14.5 | 7.4 | 8.1 | ||||||||||
| Gross profit | 155.9 | 155.1 | 0.6 | 0.8 | ||||||||||
| Gross profit rate | 16.3 | % | 16.0 | % | 0.3 | pts. | ||||||||
| Total Americas | ||||||||||||||
| Revenue from services | $ | 3,565.6 | $ | 3,513.4 | 1.5 | % | 2.2 | % | ||||||
| Staffing fee-based income included in revenue from services | 30.0 | 27.7 | 8.0 | 9.1 | ||||||||||
| Gross profit | 535.5 | 525.3 | 2.0 | 2.6 | ||||||||||
| Total SG&A expenses | 446.8 | 419.8 | 6.5 | 7.1 | ||||||||||
| Earnings from operations | 88.7 | 105.5 | (15.9 | ) | ||||||||||
| Gross profit rate | 15.0 | % | 14.9 | % | 0.1 | pts. | ||||||||
| Expense rates: | ||||||||||||||
| % of revenue | 12.5 | 11.9 | 0.6 | |||||||||||
| % of gross profit | 83.5 | 79.9 | 3.6 | |||||||||||
| Return on sales | 2.5 | 3.0 | (0.5 | ) | ||||||||||
| EMEA | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 894.7 | $ | 877.5 | 2.0 | % | 3.5 | % | ||||||
| Staffing fee-based income included in revenue from services | 17.3 | 19.8 | (12.5 | ) | (8.0 | ) | ||||||||
| Gross profit | 130.6 | 133.6 | (2.3 | ) | (0.6 | ) | ||||||||
| Gross profit rate | 14.6 | % | 15.2 | % | (0.6 | ) | pts. | |||||||
| PT | ||||||||||||||
| Revenue from services | $ | 190.3 | $ | 179.7 | 5.9 | % | 6.4 | % | ||||||
| Staffing fee-based income included in revenue from services | 13.5 | 15.0 | (10.0 | ) | (6.4 | ) | ||||||||
| Gross profit | 42.9 | 42.6 | 0.7 | 2.2 | ||||||||||
| Gross profit rate | 22.6 | % | 23.7 | % | (1.1 | ) | pts. | |||||||
| Total EMEA | ||||||||||||||
| Revenue from services | $ | 1,085.0 | $ | 1,057.2 | 2.6 | % | 4.0 | % | ||||||
| Staffing fee-based income included in revenue from services | 30.8 | 34.8 | (11.4 | ) | (7.3 | ) | ||||||||
| Gross profit | 173.5 | 176.2 | (1.6 | ) | 0.1 | |||||||||
| SG&A expenses excluding restructuring charges | 160.6 | 164.3 | (2.3 | ) | ||||||||||
| Restructuring charges | 0.8 | 0.4 | 60.5 | |||||||||||
| Total SG&A expenses | 161.4 | 164.7 | (2.1 | ) | (0.1 | ) | ||||||||
| Earnings from operations | 12.1 | 11.5 | 5.5 | |||||||||||
| Earnings from operations excluding restructuring charges | 12.9 | 11.9 | 7.9 | |||||||||||
| Gross profit rate | 16.0 | % | 16.7 | % | (0.7 | ) | pts. | |||||||
| Expense rates (excluding restructuring charges): | ||||||||||||||
| % of revenue | 14.8 | 15.5 | (0.7 | ) | ||||||||||
| % of gross profit | 92.5 | 93.2 | (0.7 | ) | ||||||||||
| Return on sales (excluding restructuring charges) | 1.2 | 1.1 | 0.1 | |||||||||||
7
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||
| RESULTS OF OPERATIONS BY SEGMENT | ||||||||||||||
| (UNAUDITED) | ||||||||||||||
| (In millions of dollars) | ||||||||||||||
| December Year to Date | ||||||||||||||
| Constant | ||||||||||||||
| Currency | ||||||||||||||
| 2014 | 2013 | Change | Change | |||||||||||
| APAC | ||||||||||||||
| Commercial | ||||||||||||||
| Revenue from services | $ | 351.8 | $ | 344.1 | 2.2 | % | 5.6 | % | ||||||
| Staffing fee-based income included in revenue from services | 7.9 | 9.2 | (14.7 | ) | (11.5 | ) | ||||||||
| Gross profit | 47.5 | 49.3 | (3.7 | ) | (0.4 | ) | ||||||||
| Gross profit rate | 13.5 | % | 14.3 | % | (0.8 | ) | pts. | |||||||
| PT | ||||||||||||||
| Revenue from services | $ | 40.4 | $ | 38.6 | 4.5 | % | 9.0 | % | ||||||
| Staffing fee-based income included in revenue from services | 7.8 | 8.8 | (11.4 | ) | (7.9 | ) | ||||||||
| Gross profit | 12.7 | 14.0 | (8.8 | ) | (5.0 | ) | ||||||||
| Gross profit rate | 31.6 | % | 36.2 | % | (4.6 | ) | pts. | |||||||
| Total APAC | ||||||||||||||
| Revenue from services | $ | 392.2 | $ | 382.7 | 2.5 | % | 6.0 | % | ||||||
| Staffing fee-based income included in revenue from services | 15.7 | 18.0 | (13.1 | ) | (9.8 | ) | ||||||||
| Gross profit | 60.2 | 63.3 | (4.8 | ) | (1.4 | ) | ||||||||
| SG&A expenses excluding restructuring charges | 56.4 | 60.2 | (6.3 | ) | ||||||||||
| Restructuring charges | 1.3 | 0.3 | 373.4 | |||||||||||
| Total SG&A expenses | 57.7 | 60.5 | (4.5 | ) | (0.8 | ) | ||||||||
| Earnings from operations | 2.5 | 2.8 | (11.0 | ) | ||||||||||
| Earnings from operations excluding restructuring charges | 3.8 | 3.1 | 24.7 | |||||||||||
| Gross profit rate | 15.4 | % | 16.5 | % | (1.1 | ) | pts. | |||||||
| Expense rates (excluding restructuring charges): | ||||||||||||||
| % of revenue | 14.4 | 15.7 | (1.3 | ) | ||||||||||
| % of gross profit | 93.6 | 95.1 | (1.5 | ) | ||||||||||
| Return on sales (excluding restructuring charges) | 1.0 | 0.8 | 0.2 | |||||||||||
| OCG | ||||||||||||||
| Revenue from services | $ | 586.8 | $ | 509.5 | 15.2 | % | 15.7 | % | ||||||
| Gross profit | 143.6 | 128.2 | 12.0 | 12.4 | ||||||||||
| SG&A expenses excluding restructuring charges | 127.3 | 110.6 | 15.1 | |||||||||||
| Restructuring charges | — | 0.9 | (100.0 | ) | ||||||||||
| Total SG&A expenses | 127.3 | 111.5 | 14.3 | 15.0 | ||||||||||
| Asset impairments | — | 1.7 | (100.0 | ) | ||||||||||
| Earnings from operations | 16.3 | 15.0 | 7.3 | |||||||||||
| Earnings from operations excluding restructuring charges | 16.3 | 15.9 | 1.8 | |||||||||||
| Gross profit rate | 24.5 | % | 25.2 | % | (0.7 | ) | pts. | |||||||
| Expense rates (excluding restructuring charges): | ||||||||||||||
| % of revenue | 21.7 | 21.7 | — | |||||||||||
| % of gross profit | 88.7 | 86.3 | 2.4 | |||||||||||
| Return on sales (excluding restructuring charges) | 2.8 | 3.1 | (0.3 | ) | ||||||||||
8
| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (UNAUDITED) | |||||||
| (In millions of dollars) | |||||||
| Dec. 28, 2014 | Dec. 29, 2013 | ||||||
| Current Assets | |||||||
| Cash and equivalents | $ | 83.1 | $ | 125.7 | |||
| Trade accounts receivable, less allowances of | |||||||
| $10.7 and $9.9, respectively | 1,122.8 | 1,023.1 | |||||
| Prepaid expenses and other current assets | 47.9 | 52.2 | |||||
| Deferred taxes | 34.4 | 35.5 | |||||
| Total current assets | 1,288.2 | 1,236.5 | |||||
| Property and Equipment, Net | 93.0 | 92.0 | |||||
| Noncurrent Deferred Taxes | 146.3 | 121.7 | |||||
| Goodwill, Net | 90.3 | 90.3 | |||||
| Other Assets | 300.1 | 258.1 | |||||
| Total Assets | $ | 1,917.9 | $ | 1,798.6 | |||
| Current Liabilities | |||||||
| Short-term borrowings | $ | 91.9 | $ | 28.3 | |||
| Accounts payable and accrued liabilities | 364.0 | 342.4 | |||||
| Accrued payroll and related taxes | 308.5 | 294.9 | |||||
| Accrued insurance | 26.9 | 27.6 | |||||
| Income and other taxes | 68.8 | 68.8 | |||||
| Total current liabilities | 860.1 | 762.0 | |||||
| Noncurrent Liabilities | |||||||
| Accrued insurance | 43.9 | 46.0 | |||||
| Accrued retirement benefits | 140.8 | 134.7 | |||||
| Other long-term liabilities | 39.4 | 33.3 | |||||
| Total noncurrent liabilities | 224.1 | 214.0 | |||||
| Stockholders' Equity | |||||||
| Common stock | 40.1 | 40.1 | |||||
| Treasury stock | (49.8 | ) | (56.2 | ) | |||
| Paid-in capital | 24.9 | 26.0 | |||||
| Earnings invested in the business | 767.4 | 751.3 | |||||
| Accumulated other comprehensive income | 51.1 | 61.4 | |||||
| Total stockholders' equity | 833.7 | 822.6 | |||||
| Total Liabilities and Stockholders' Equity | $ | 1,917.9 | $ | 1,798.6 | |||
| STATISTICS: | |||||||
| Working Capital | $ | 428.1 | $ | 474.5 | |||
| Current Ratio | 1.5 | 1.6 | |||||
| Debt-to-capital % | 9.9 | % | 3.3 | % | |||
| Global Days Sales Outstanding | 54 | 52 | |||||
9
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013 | ||||||
| (UNAUDITED) | ||||||
| (In millions of dollars) | ||||||
| 2014 | 2013 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings | $ | 23.7 | $ | 58.9 | ||
| Noncash adjustments: | ||||||
| Impairment of assets | — | 1.7 | ||||
| Depreciation and amortization | 21.7 | 20.4 | ||||
| Provision for bad debts | 5.3 | 2.0 | ||||
| Stock-based compensation | 5.3 | 3.8 | ||||
| Other, net | (0.4 | ) | 0.6 | |||
| Changes in operating assets and liabilities | (125.6 | ) | 27.9 | |||
| Net cash (used in) from operating activities | (70.0 | ) | 115.3 | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (21.7 | ) | (20.0 | ) | ||
| Investment in equity affiliate | (5.7 | ) | — | |||
| Other investing activities | 0.2 | (0.8 | ) | |||
| Net cash used in investing activities | (27.2 | ) | (20.8 | ) | ||
| Cash flows from financing activities: | ||||||
| Net change in short-term borrowings | 63.9 | (35.8 | ) | |||
| Dividend payments | (7.6 | ) | (7.6 | ) | ||
| Other financing activities | 0.3 | (0.3 | ) | |||
| Net cash from (used in) financing activities | 56.6 | (43.7 | ) | |||
| Effect of exchange rates on cash and equivalents | (2.0 | ) | (1.4 | ) | ||
| Net change in cash and equivalents | (42.6 | ) | 49.4 | |||
| Cash and equivalents at beginning of period | 125.7 | 76.3 | ||||
| Cash and equivalents at end of period | $ | 83.1 | $ | 125.7 | ||
10
| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
| REVENUE FROM SERVICES | |||||||||||||
| (UNAUDITED) | |||||||||||||
| (In millions of dollars) | |||||||||||||
| Fourth Quarter (Commercial, PT and OCG) | |||||||||||||
| % Change | |||||||||||||
| Constant | |||||||||||||
| 2014 | 2013 | US$ | Currency | ||||||||||
| Americas | |||||||||||||
| United States | $ | 933.9 | $ | 872.6 | 7.0 | % | 7.0 | % | |||||
| Canada | 50.0 | 52.4 | (4.5 | ) | 3.2 | ||||||||
| Mexico | 36.7 | 33.9 | 8.2 | 15.2 | |||||||||
| Puerto Rico | 26.6 | 24.6 | 8.3 | 8.3 | |||||||||
| Brazil | 13.9 | 14.0 | (0.6 | ) | 7.6 | ||||||||
| Total Americas | 1,061.1 | 997.5 | 6.4 | 7.1 | |||||||||
| EMEA | |||||||||||||
| France | 66.4 | 66.1 | 0.4 | 9.2 | |||||||||
| Switzerland | 57.8 | 70.3 | (17.9 | ) | (12.7 | ) | |||||||
| Portugal | 32.4 | 27.3 | 18.9 | 29.4 | |||||||||
| United Kingdom | 23.2 | 27.2 | (14.7 | ) | (13.0 | ) | |||||||
| Russia | 20.9 | 33.0 | (36.6 | ) | (9.3 | ) | |||||||
| Germany | 16.8 | 17.5 | (4.1 | ) | 4.2 | ||||||||
| Italy | 13.9 | 15.3 | (8.7 | ) | (0.8 | ) | |||||||
| Norway | 11.9 | 14.8 | (19.9 | ) | (9.8 | ) | |||||||
| Other | 13.6 | 16.9 | (19.4 | ) | (12.0 | ) | |||||||
| Total EMEA | 256.9 | 288.4 | (10.9 | ) | (1.5 | ) | |||||||
| APAC | |||||||||||||
| Singapore | 32.7 | 30.6 | 7.0 | 10.8 | |||||||||
| Australia | 32.6 | 30.2 | 7.9 | 16.8 | |||||||||
| Malaysia | 16.2 | 16.1 | 0.6 | 5.4 | |||||||||
| New Zealand | 13.2 | 14.0 | (6.1 | ) | (0.6 | ) | |||||||
| Other | 12.3 | 9.0 | 37.1 | 37.5 | |||||||||
| Total APAC | 107.0 | 99.9 | 7.1 | 12.6 | |||||||||
| Total Kelly Services, Inc. | $ | 1,425.0 | $ | 1,385.8 | 2.8 | % | 5.7 | % | |||||
11
| KELLY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
| REVENUE FROM SERVICES | |||||||||||||
| (UNAUDITED) | |||||||||||||
| (In millions of dollars) | |||||||||||||
| December Year to Date (Commercial, PT and OCG) | |||||||||||||
| % Change | |||||||||||||
| Constant | |||||||||||||
| 2014 | 2013 | US$ | Currency | ||||||||||
| Americas | |||||||||||||
| United States | $ | 3,535.8 | $ | 3,419.9 | 3.4 | % | 3.4 | % | |||||
| Canada | 198.2 | 216.3 | (8.4 | ) | (1.9 | ) | |||||||
| Mexico | 139.0 | 133.3 | 4.3 | 8.7 | |||||||||
| Puerto Rico | 105.0 | 98.2 | 6.9 | 6.9 | |||||||||
| Brazil | 57.1 | 59.0 | (3.2 | ) | 5.8 | ||||||||
| Total Americas | 4,035.1 | 3,926.7 | 2.8 | 3.4 | |||||||||
| EMEA | |||||||||||||
| France | 268.6 | 248.1 | 8.3 | 8.3 | |||||||||
| Switzerland | 253.5 | 255.9 | (0.9 | ) | (2.5 | ) | |||||||
| Portugal | 124.8 | 90.3 | 38.2 | 38.5 | |||||||||
| Russia | 117.3 | 135.0 | (13.1 | ) | 2.2 | ||||||||
| United Kingdom | 105.6 | 105.3 | 0.3 | (5.1 | ) | ||||||||
| Germany | 67.5 | 66.8 | 1.1 | 1.2 | |||||||||
| Italy | 60.2 | 58.9 | 2.2 | 1.9 | |||||||||
| Norway | 55.5 | 61.1 | (9.2 | ) | (3.2 | ) | |||||||
| Other | 64.5 | 67.6 | (4.6 | ) | (4.4 | ) | |||||||
| Total EMEA | 1,117.5 | 1,089.0 | 2.6 | 4.0 | |||||||||
| APAC | |||||||||||||
| Singapore | 127.5 | 114.1 | 11.8 | 13.2 | |||||||||
| Australia | 121.4 | 130.6 | (7.1 | ) | (0.7 | ) | |||||||
| Malaysia | 66.2 | 67.2 | (1.4 | ) | 2.4 | ||||||||
| New Zealand | 51.4 | 50.1 | 2.5 | 1.4 | |||||||||
| Other | 43.6 | 35.4 | 23.2 | 30.2 | |||||||||
| Total APAC | 410.1 | 397.4 | 3.2 | 6.8 | |||||||||
| Total Kelly Services, Inc. | $ | 5,562.7 | $ | 5,413.1 | 2.8 | % | 3.8 | % | |||||
12
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
| FOR THE 13 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013 | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| (In millions of dollars except per share data) | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
| As reported | Restructuring Charges (Note 1) | Adjusted Earnings | Adjusted Earnings | % Change | ||||||||||||
| Revenue from services | $ | 1,425.0 | $ | — | $ | 1,425.0 | $ | 1,385.8 | 2.8 | % | ||||||
| Cost of services | 1,192.4 | — | 1,192.4 | 1,154.3 | 3.3 | |||||||||||
| Gross profit | 232.6 | — | 232.6 | 231.5 | 0.5 | |||||||||||
| SG&A expenses | 230.0 | (6.2 | ) | 223.8 | 221.6 | 1.1 | ||||||||||
| Earnings from operations | 2.6 | 6.2 | 8.8 | 9.9 | (9.7 | ) | ||||||||||
| Other expense, net | 1.1 | — | 1.1 | 0.6 | 89.6 | |||||||||||
| Earnings before taxes | 1.5 | 6.2 | 7.7 | 9.3 | (15.7 | ) | ||||||||||
| Inc. tax (benefit) expense* | (15.5 | ) | 2.4 | (13.1 | ) | (8.2 | ) | (60.2 | ) | |||||||
| Net earnings | $ | 17.0 | $ | 3.8 | $ | 20.8 | $ | 17.5 | 19.8 | % | ||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.44 | $ | 0.10 | $ | 0.54 | $ | 0.45 | 20.0 | % | ||||||
| Diluted | $ | 0.44 | $ | 0.10 | $ | 0.54 | $ | 0.45 | 20.0 | % | ||||||
| * Income tax benefit for the fourth quarter of 2014 includes $13.6 million related to the retroactive reinstatement of work opportunity credits for the entire year. | ||||||||||||||||
| 2013 | ||||||||||||||||
| As reported | Restructuring Charges (Note 1) | Adjusted Earnings | ||||||||||||||
| Revenue from services | $ | 1,385.8 | $ | — | $ | 1,385.8 | ||||||||||
| Cost of services | 1,154.3 | — | 1,154.3 | |||||||||||||
| Gross profit | 231.5 | — | 231.5 | |||||||||||||
| SG&A expenses | 221.9 | (0.3 | ) | 221.6 | ||||||||||||
| Earnings from operations | 9.6 | 0.3 | 9.9 | |||||||||||||
| Other expense, net | 0.6 | — | 0.6 | |||||||||||||
| Earnings before taxes | 9.0 | 0.3 | 9.3 | |||||||||||||
| Inc. tax (benefit) expense | (8.2 | ) | — | (8.2 | ) | |||||||||||
| Net earnings | $ | 17.2 | $ | 0.3 | $ | 17.5 | ||||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.45 | $ | 0.01 | $ | 0.45 | ||||||||||
| Diluted | $ | 0.45 | $ | 0.01 | $ | 0.45 | ||||||||||
| Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year. | ||||||||||||||||
13
| KELLY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||
| FOR THE 52 WEEKS ENDED DECEMBER 28, 2014 AND DECEMBER 29, 2013 | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| (In millions of dollars except per share data) | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
| As reported | Restructuring Charges (Note 1) | Adjusted Earnings | Adjusted Earnings | % Change | ||||||||||||
| Revenue from services | $ | 5,562.7 | $ | — | $ | 5,562.7 | $ | 5,413.1 | 2.8 | % | ||||||
| Cost of services | 4,654.3 | — | 4,654.3 | 4,523.6 | 2.9 | |||||||||||
| Gross profit | 908.4 | — | 908.4 | 889.5 | 2.1 | |||||||||||
| SG&A expenses | 886.5 | (12.0 | ) | 874.5 | 832.9 | 5.0 | ||||||||||
| Earnings from operations | 21.9 | 12.0 | 33.9 | 56.6 | (40.2 | ) | ||||||||||
| Other expense, net | 5.3 | — | 5.3 | 4.5 | 15.3 | |||||||||||
| Earnings before taxes | 16.6 | 12.0 | 28.6 | 52.1 | (45.0 | ) | ||||||||||
| Inc. tax (benefit) expense | (7.1 | ) | 4.5 | (2.6 | ) | (10.0 | ) | 74.0 | ||||||||
| Net earnings | $ | 23.7 | $ | 7.5 | $ | 31.2 | $ | 62.1 | (49.7 | ) | % | |||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.61 | $ | 0.19 | $ | 0.81 | $ | 1.62 | (50.0 | ) | % | |||||
| Diluted | $ | 0.61 | $ | 0.19 | $ | 0.81 | $ | 1.62 | (50.0 | ) | % | |||||
| 2013 | ||||||||||||||||
| As reported | Restructuring Charges (Note 1) | Asset Impairments (Note 2) | Adjusted Earnings | |||||||||||||
| Revenue from services | $ | 5,413.1 | $ | — | $ | — | $ | 5,413.1 | ||||||||
| Cost of services | 4,523.6 | — | — | 4,523.6 | ||||||||||||
| Gross profit | 889.5 | — | — | 889.5 | ||||||||||||
| SG&A expenses | 834.5 | (1.6 | ) | — | 832.9 | |||||||||||
| Asset impairments | 1.7 | — | (1.7 | ) | — | |||||||||||
| Earnings from operations | 53.3 | 1.6 | 1.7 | 56.6 | ||||||||||||
| Other expense, net | 4.5 | — | — | 4.5 | ||||||||||||
| Earnings before taxes | 48.8 | 1.6 | 1.7 | 52.1 | ||||||||||||
| Inc. tax (benefit) expense | (10.1 | ) | 0.1 | — | (10.0 | ) | ||||||||||
| Net earnings | $ | 58.9 | $ | 1.5 | $ | 1.7 | $ | 62.1 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 1.54 | $ | 0.04 | $ | 0.04 | $ | 1.62 | ||||||||
| Diluted | $ | 1.54 | $ | 0.04 | $ | 0.04 | $ | 1.62 | ||||||||
| 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 SERIVCES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges and asset impairment charges is useful to understand the Company's fiscal 2014 financial performance and increases comparability. Specifically, Management believes that excluding 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) Restructuring charges in 2014 includes costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand. Restructuring charges in 2013 relate to the Company's decision to exit the executive search business operating in Germany, and primarily relate to severance costs from exiting this business.
(2) Asset impairment charges represent the write-off of the carrying value of long-lived assets related to the decision to exit the executive search business operating in Germany.
15