KELYA - Earnings call transcript Q3 2017

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Operator

Good morning ladies and gentlemen and welcome to the Kelly Services Third Quarter Earnings Conference Call. All parties will be on a listen-only until the question-and-answer portion of the presentation. Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. I would now like to turn the meeting over to your host, Mr. CEO. and President Corona, George Sir, you begin. may

George Corona

Thank Kelly Services John. on call our Thank call. you to Welcome today's CFO. Thirot, Olivier morning. good is XXXX me and With you, third conference quarter

any that a include comments, Actual by Q&A about results you remind differ statements me comments during from including forward-looking future this for expectations our materially made no performance. our our company's could the on call, performance. have we for suggested of this Let those SEC obligation to Please refer actual these factors made and risk to statements call. the filings that description the influence update could future

Before was represented several in exception the we which point growth impacted me by year-over-year let quarter. I'll a will performance European be currencies present the currency. third in the review constant against with quarter our nominal weakening currency results, dollar of revenue out that comparisons international our of in our Kelly's U.S.

the leadership of resources share And share in will quarter last year our eventful achieved staffing of the a Now other shareholders. implementation few last turning to Teachers factors million further million We from third the Call, market. $XX.X up JV We was K-XX year through on compared in to our impact will earnings our addition for strengthening solid pleased several returns front the events for operations our in per and to compared APAC third that X.X% transaction. lean company to were transform platform per compensation diluted last and I Kelly's On again you of office delivered the am a educational walk planned $X.XX revenue compared acquired fronts. once positions we results, earnings and reflecting announced performance sales Kelly's year. based Olivier a talent face of in digital healthy growth, $X.XX to earnings operating minutes. and We which even was that weather quarter billion us report our recruiting $X.X $XX.X increase the and reflecting unprecedented of good top-line

Excluding XX% the the a we year-over-year ability topline quarter. continued than year quarter was to third performance momentum of It solid our make investments that key our on pleased the our first are that deliver saw particularly increased impact, in future. build and half EPS more the growth and to with in in we

effective of Canada, business and Global Mexico, consulting and business of Solutions the call in which The the how delivered me closely branch business Now let before elements operative performed Staffing we includes segment Canada and. Rico. includes realigned segments. we specific GTS our into Puerto business Operations segment the look remind you we segment January Puerto and more that EMEA OCG includes our in the local our quarter, results United Americas States, at United our International Rico, staffing global X, the our Staffing States, third in business Staffing The our Talent staffing outsourcing three and Centralized

in the with Now over increase QX. X% and professional look staffing, we America a compared Commercial quarter specialties. quarter X% third let's the third the year is reported staffing technical staffing these increased in prior revenue in increase same how QX Americas the of educational X% X% to the year-over-year and year. last to and the staffing staffing, starting period compared in America take revenue at Kelly commercial performed increased segments comprised staffing.

business the and rate of office see was in to addition quarters our industrial continued growth third offset of X% the On in building loss the our the quarter. clerical of returned primary newly saw Teachers factors, professional on quarter the demand and in half quarter hurricanes of revenue the by revenue Revenue the was specialties the the light from X% Kelly acquired in in This We caused the the down delivered by to Americas we from the in of of third for decline. growth trend months prior experienced compared firm to September in accelerate revenue year in staffing growth after two States. for several slack Total which X% educational the first QX. were United volatile Call year by the year-over-year. third technical remained up fees increase impacted

the demand in primarily to the in gross for resources in in quarter America basis and by with staffing as commercial adding result third points mix. line were well due XX.X% profit PT from Specialties XX as business staffing rate up of performance sales staffing Americas down based ago was mainly The quarter Expenses year year-over-year a compensation. X% and

to expect in Staffing the the achieved Americas $XX.X $XX.X year. last from fourth investments We these of leverage start segment to operating compared to million in improve Also million quarter. the profit quarter, an

or operations, a international to the on Revenue across Europe. demand increased basis. in compared by Let's increased was currency international in year driven now staffing U.S. growth start our constant nominal I'll turn dollars XX% the prior with XX% staffing Americas. to This

out the and higher we income a international For higher to branch network, XX.X% as $X.X in recruitments was headquarter period The our the staffing staffing up we business. year attributable X% add staffing continued segment's segment. operating The international third XX% staffing's to redeployed in partially revenue due ease in the same XX.X% funded largely the areas. my by to year Netting in expenses due of mix. everything is reference international comments this mainly Fee for over Europe. the increase were pleased of into than will quarter dollars be constant compared remainder targeted quarter volume the based GP by performance hours, [indiscernible] year-over-year in were growth up third the in for GP currency. reported on X% with quarter Eastern in solid earlier are last down year customer the prior profit to the X% in driven Expenses rate to million was

combination practices reported This delivered segment OCG segment segment reporting I'll this the GTS first but our operations. profit segment. is quarter. process and Now from while centralized the revenue results our a discuss X% clients in Revenue separately, let's grew our previously outcome quarter. staffing The centrally let's outsourcing year-over-year Talent plus the Global two turn a us; how in was gross of our outsourcing segment GTS by reflects business buying are revenue declines to contingent and services. X% up as staffing for that based primary whole in at in fulfillment results year-over-year up take our Solutions performed reported practices. ways of business' GTS KellyConnect look a was third offset payroll each the talent and workforce

Now at profit in of let's look gross two GTS results each businesses. the

up outsourcing, was process business payroll recruitment X% process of we delivered fulfillment and made from improvement up decline in and our outsourcing, talent an X% quarter. profit reported is contingent staffing centrally fulfillment outsourcing Gross talent year-over-year business the practices. workforce Our the last

increases investment year. growth Gross outcome year-over-year our QX XX% services staffing as quarters made delivered driven results legal These BPO. offset centrally services continue new both were We services practice. in practices. advisory BPO, we KellyConnect, services in see The our momentum by GP the GP GP and in BPO and by to profit primarily recently comprised programs on year-over-year nice KellyConnect GP in three for of our partially results in CWO RPO year-over-year KellyConnect the practices. Kelly as or continued return last managed in well based from the outcome second confirms declines business practice and in of growth our practice increased double-digit during based strong this half and in last is

quarter quarter were costs. GTS coupled based new quarter the salary to XXX cost from in GTS reductions basis and year-over-year customer of increases practice cost. was in the this staffing line performance as up largely first other programs up addition increases employee delivery double-digit XX% in and by segment we million increased favorable $XX.X took to incentive ago, GP mix year-over-year was a to count the the to with in third benefit profit lower also business continue to offset due in we costs existing Comp operating quarter Expenses Overall optimize quarter lead another head points segment. somewhat programs actions gross business the our These up for saw related year profit centralized rate practice. in and third BPO this were with year-over-year demand. with the quarter XX.X% Also We in for over and withstand main third Workers the along X% GTS solid due

will turn for cover over results the company. call Now who the our Olivier, I'll entire quarterly to

Olivier Thirot

up X.X% billion, $X.X George. third you, last to Revenue year. quarter Thank totaled compared the

the the from currency U.S. described, the the growth On other the our revenue revenue currencies growth. George dollar several of against total currency in a X.X% basis quarter. of over increased our X.X% As in constant benefited weakening European

reported as currency basis XXX to in So points [indiscernible]. you

QX locally Our nearly another about to in our of growth performance total business by fees, added up we the segment. points quarter digital XX revenue Staffing On in basis in Overall primary staffing [ph] currency rate. placement [indiscernible] good acquisition and of [indiscernible] driven employment Teachers international year-over-year X% Call performance improving growth our our reflects Americas internationally. trends are

was up Overall $XX fees currency of impact X.X%. million gross year-over-year the Excluding X%. at were or profit up

basis XX compared up points year. quarter to the when XX.X% last was rate profit gross Our third

gross offset X.X% delivered QX focus for million generating for the our $XX.X the in profits the our we quarter in markets. in conversion business [indiscernible]. by the This our of as the on of compensation litigation expense. and leverage expense opportunities reflect rate with overall U.S. levels million. our rate to are catch expenses [indiscernible] higher comes to solid international of internal reached as About within businesses. of our compared that in GP compared efforts And our level by internal changes margin results based We the GP growth level a collaborations solutions our compensation international we operations Our to of reflects margin quarter staffing to expenses. have GP the of to to we return segment half solutions which higher within growth expenses XXXX expense even due related global were expense up be reflect performance performance year-over-year. increases increase improvement X.X% from made good [indiscernible] after Americas third reflect XXXX. right return based and our continually X.X% offset to and of relatively as Americas sales on compensation a based locally talent ongoing as XX shift low market business Within performance investments and future staffing but in rates flat expenses well business impact unbelievable normalized third for $XX.X These in erosion four structural staffing growth in our on investment corporate SG&A

As quarter the a reminder, for closing benefit $XX.X our [ph] APAC gain Income $X.X XXXX. transaction third including July the JV of million tax XXXX million. third in was quarter the on pretax results

JV tax expense X.X% this includes XXXX per and of after the X.X%. on to the tax includes diluted deferred transaction. related compared quarter $X.XX benefit tax of XXXX to of our XXXX. for our [ph] the valuation the third QX JV gain APAC earnings compared third per to tax share impact our rate tax those Our quarter gain increasing effective in APAC to the tax tax share of the $X.XX on advance per XXXX items [ph] effective Adjusted the impact $X.XX related the was QX QX XXXX for XXXX share finally, releasing expense And transaction. of totaled rate quarter

than impact more increased APAC Excluding transaction, year-over-year. of JV XX% EPS the the

the XXX acquisition of to on for there about Now [indiscernible] as We growth. XXX from continued ahead year, pressure demand we some of revenue is Teachers in and up be that X% anticipate basis our bias expect points the reduced fourth believe be of hurricane our Call. have some basis moderate quarter continuing points this downward improvement On and coming revenue we currency expected will impacted from impact look about the of the to rest to coming X% may

incentive We This be we year are year increase based the expense have SG&A Teachers and On track to as to last of in discussions to good growth up full compensation the leverage. with would expect to X.X%. SG&A performance be [indiscernible] compensation performance Call. margin expense on due in is increase acquisition operating based deliver X.X% to consistent as [Indiscernible] to increased

tax due income tax the be need annual XXXX to digit in Our issue and expected allowance. funds to rate single favorable the in valuation usually is [indiscernible] our mid will additional

XXXX. million $XX.X at Now totaled cash to QX moving to $XX.X million sheet, the compared balance

reflects receivable The same as [ph] was the as from increased $XX.X is the quarter This technology free our end and down $XX.X end quarter the quarter business year-to-date in totaled due spending $XX.X compared related seasonal a XXXX. since range year our cash acquisition higher million of increase during digital and the and cash some million to remainder investment customers as seasonality reflects currency primarily free Teachers the we the prior begin up to generated flow this we was was XXXX the from generated of the increase year. range in to last at cash including far in cash in The the days, In of $XX.X XXXX. of As balance of normal that platform ago. XX to of staffing received staffing year. connection compared year to school impact million third days was on million compared net $XX.X of On Global cash with million talent relating free also increased Accounts Call. the the and flow timing year and to end is in to XX% XXXX DSO the cash X educational days projects flow billion, our up of due of $X.X higher as year [indiscernible] from infrastructure DSO X last flow there [ph]. the of year. would faced

back will George slide on his over for turn the more quarter thoughts. I concluding performance [indiscernible]. For to review and it information now our please third deck

George Corona

accelerate in for the solutions quarters, topline quarter as and we performance Thank Olivier. two the are drive It year and progress been technology, even that we're building Kelly continuing in pleased our growth, has after confirmed a invest far you, progress strong momentum that so our making with to the future. good we we are will third first talent, in

strong Our Americas segment staffing continues revenue growth. momentum it capturing forward

than focused operating teams local are Our more ever.

in Our results investments On yielding educational acquisition position strengthens the further K-XX market. are [ph] the of Kelly’s Teachers in and targeted areas leadership Call staffing

We as forward. expect investments continued return these move we on

our expenses on to approach It international more core to focused opportunities continues Our tightly clearly help across segment talent line closely solutions Europe bottom and global quarter. they capture top new deliver growth specialties as actively pursuing remains solutions. a was holistic talent companies as managing we and a segment navigate successful

the increased solid in return demonstrated our Our a efficiency shareholders, all top-line, our and with performance while continued deliver ability to grow to operate to continuing invest the future.

platform On Our talent as positioning our world work a we and the decision strategically are Call acquisition of and for are Teachers evolves. to implement not of that the we stop growth, Kelly confirmed to long-term content short-term digital at

the of our joint Looking market reached has has beyond our terms anniversary and reporting venture its segments, met slowly APAC one-year and expectations in expanding our our personal strengthening relationship. presence Kelly

disasters teams. performance. financial pleased truly our quarter one that exceptional of colleagues we am all came support reminder to will I customers Events third character are of and a true our has encountered, in be the natural your as questions. happy I Kelly with our and we needs proud Kelly served answer to of how meeting the to together through also now are Finally, the the candidates. and staying another very Olivier

Operator

We Investors. instructions] with ahead. Mayfax line Louis go will of [Operator Please go to Moser

Louis Moser

sustainability the of a what great going the wondering quarter. forward? I is Congratulations quarter on was first

George Corona

saw You mean in growth that the and the we revenue third quarter?

Louis Moser

revenue, per so and the earnings Yes, growth forth. share

George Corona

as the any we growth continuing we the than see fact fourth fourth forward for the pace of certainly, quarter what quarter. we going we look going have into that said So, And further but international is also there and look we the we in that are that out investing as our demand Americas recruiting we think predominantly, in that demonstrates demonstrated segment resources into future. continuing in sales not

Louis Moser

much. Okay, thanks very

Operator

And Mr. further no in we have questions Corona queue.

George Corona

I thank Okay, on for thank John the and call. you everyone being

Operator

at Ladies until December and at available November XX:XX go replay. for It gentlemen, conference will today this Time, X is starts Eastern AM X, midnight.

may for code your you The again access XXX-XXX-XXXX. does Those any dialing access That with You time Thank replay is at conference today. numbers XXXXXX. X-XXX-XXX-XXXX the your XXX-XXX-XXXX participation. XXXXXX. conclude code for or or by X-XXX-XXX-XXXX access the

may disconnect. now You

Kelly Services (KELYA) 8 Nov 172017 Q3 Earnings call transcript