KELYA - Earnings call transcript Q4 2017

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Operator

Ladies and gentlemen, thank you for standing by. Good morning and welcome to Kelly Services’ Fourth Quarter and Full Year 2017 Earnings Conference Call. All parties will be on 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. to meeting like host, to now Mr. would turn over the your I and Corona, CEO. George President may you Sir, begin.

George Corona

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

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

for GP help point with our nominal of strategic acceleration talent is and a future we also Kelly. represented making in exception comparisons technology line investments strong the in out was that earnings top staffing and success. walk constant conversion our let As while through segment, our will that currency year-over-year operating year our results focus improved of and international this XXXX and which increased rate, drove our currency. power in me morning, We growth, and

in to billion compared XXXX, Turning billion, compared excluding revenue year, quarter APAC and was for full $X.X up Revenue our to operations. $X.X fourth Kelly's results. X% the year billion last was to staffing $X.X

share XXXX. earnings compared quarter last operating $XX $XX per operations for to from $XX compared Kelly's for the of last from For $XX earnings $X.XX operations year, and the were earnings of million $X.XX full earnings the we fourth to period per continuing year. reported quarter, achieved compared million million of share for same year to we million

year-over-year earnings Cuts the APAC to the Act. share $X.XX in in are per the year, venture last were to compared and of Tax earnings joint part the $X.XX for full XXXX same year. differences share period attributable The per For large Jobs

non-cash All these investment charges, strategic yielded and strong both that our in full XX% per and quarter XXXX year-over-year. year a told, sharpened fourth year for earnings up Kelly. accelerated priorities we Excluding was focus, established share were results which

over a segments, each with at performance the in of Now, X% and the fourth revenue Americas. starting to XX% and the let’s Americas quarter Educational is same in prior Professional business Staffing Commercial consistent comprised the increased Staffing Staffing, QX period our compared Americas the of look we QX closer Staffing with Technical take increase increase year. X% Staffing and in revenue X% Specialties. in the Kelly last to compared the Commercial reported QX. increase increased year and of

well XX% Our fourth was fourth Educational rate of On Staffing quarter the Call. new Teachers customer existing impacted favorably revenue Kelly customers, in as Commercial delivered came growth from growth growth in of as the This quarter. by Staffing wins. acquisition September

and and up On areas. fees sales first a firm year growth made Commercial combined results specialties. total resources Growth Teachers year we and recruiters the began On Professional XX% in Americas fourth in growth sequential in fourth year-over-year Technical to the the in with investments of the in Excluding specialties were as professional the X% accelerated and yield our all all compared half quarter in in both in with technical basis, the the and during XX% quarter. Revenue Specialties. Call, prior increased year-over-year grew increased KES

increased mix. up capture during changes Staffing segment the a resources year-over-year, year Americas by XX quarter, profit effective Call. compensation quarter to of gross for Americas the as increases fourth the previous as due in and offset told, the result XX% demand, Staffing the in Expenses employee year the up $XX.X the in partially achieved points firm fees, and adding the of cost XX.X%, management to in ago operating was On of from quarter, were related performance recruiting basis year. Staffing For All primarily and profit addition half by XX% rate from business the Teachers up Americas well an sales based in first of of million higher

the the the from $XX For year, full profit, XXXX, last year million Americas in excluding operating delivered up XX% restructuring.

a International the in Revenue our the XX% prior regions to U.S. to year the dollars. turn Americas. basis, now outside increased in growth across revenue X%, compared in Staffing driven increased On Let’s Staffing constant International currency nominal by operations Europe.

increased on was comments up the GP be a For my The on XX% constant by X% period same XX% International year. profit over reference, year-over-year. Fee the increased ease dollars was last volume up year, X% revenue, Staffing in of mainly income million, line GP Staffing’s staffing rate Netting basis. fourth attributable to over XX.X%, operating business. with $X.X year-over-year. out, everything fourth was hours the currency will higher based quarter prior International for the attempt of our in The expense remainder quarter driven fourth year. prior quarter

delivered year. year full exclude both the results year, XXXX million, operations up restructuring XXXX The staffing APAC business. this results segment of and our XX% full earnings $XX.X For of expenses from the over the last

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

deliver our price double are exercising higher in GP accounts, We with growth solutions. margin while and invest by rates to and GP to digit continuing higher discipline margin loan exiting pleased ability

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

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

practice. We as CWO as continue our to our double-digit growth in programs in see year-over-year increases in from QX, nice GP practice RPO well new GP

from costs. also BPO, and business both We performance result costs. a of advisory of with services is bad due services reduction were due comprised incentive year-over-year the salary off our manage reported All increased the X% based outcome practice related practices were the staffing finish million, GTS’ delivered and employee primarily debt full of PPO write expense based in Kelly Gross XX% in GTS a legal for of centrally increase to had by practices. year-over-year, outcome increases new up management strong of in addition continued solid a and coupled GP programs head had profit The services related Overall, our KellyConnect, profit ago. was $XX quarter quarter XX% gross in operations fourth of to The year. These increases our year-over-year services an told, costs XXXX operating was year GTS for XXXX. as effective coupled driven excluding mix. in the to BPO. offset quarter XXXX. a year-over-year significant Expenses outcome momentum performance segment XX% partially fourth management over increases KellyConnect over and basis up based costs expansions in earnings XX.X% and largely with and double year-over-year a restructuring, and count effective million, services $XX.X GTS quarter, the are increase fourth based new This program of GP by related employee year-over-year due both strong digit to profit kept of for wins. points in the results the result favorable customer a XXX rate up

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

Olivier Thirot

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

by was foreign points favorably Our due basis reported XXX revenue impacted exchange. to

a up revenue on basis, was fourth X.X%. quarter the currency So growth constant for

added Teachers Overall, which QX top points in also Global reflects revenue rate. performance line top our performance our acquisition Solutions. fee performance total in Talent growth both International Americas modest and from International were placement QX line basis growth Staffing, Call, well to up continued in Our and as Staffing. fees rate with our result Staffing growth of includes our as revenue strong the Americas XXX about strong On year-over-year XX%

Overall, Excluding fees or currency, the were profit up gross impact up million of XX%. XX%. $XX was

of to XXXX. XX.X%, the gross up XXX basis rate first for Our points the was quarter profit when compared quarter

Americas segment. Americas of our were and earnings was based management Our of we result higher as GP growth in cost well shift rate higher corporate GP related GP Staffing continued expenses as compensation in in up business unit is XX% as year-over-year in and This year-over-year. SG&A offset GTS effective structural as our in half a reflects operations. from segment. both improvement solutions margin employee performance our businesses, About rate changes of at both mix within and in that expenses by Staffing GTS due improvement to increase to direct our our operating partially solid improvement

up several operations compared were to are opportunities. invest accelerating we Americas operations from market $XX.X have fourth In investment $XX.X the Staffing in in improve Earnings of to are we earnings and technology million, initiatives million with designed XXXX our to process we addition, our continued in our capitalize And on automation. XX%. quarter

million, over our like to excluding XXX For period XX% basis for and the the $XX.X was On like period XX.X% is operations up $XX.X as a of or million, XXXX. conversion the our or from to $XX.XX basis. $XX.X year That compared to full a restructuring improvement XXXX. million restructuring operations million was first APAC basis points on earnings staffing excluding quarter, a rate compared same

XXX In full points cost. basis addition, conversion X%, for rate the restructuring year excluding to up was our

gross and achieved which approach with to higher of performance earnings balanced reflects efforts we GP and growth improvement to top Our a combination our a profit growth, from expense. both produce line

of Income million XXXX fourth XXXX, million effort to we million fourth are revaluation finally, Tax initiatives is XXXX Jobs for totaled non-cash Our continue the the quarter savings redeploy And the was the $X.X into XXXX. Cuts tax those of compared for increase $XX.X future. the result expense expense to as charge assets starting some per $X.XX designed including and share earnings expenses tax net to deferred share to diluted of and control a in efficiency reported in per to Act. will $XX.X quarter the and compared our growth due in improve $X.XX of

a share Cuts charge Act. to per $X.XX per include earnings Jobs share related Tax and XXXX Our the

Now, looking to ahead XXXX.

the X% up basis that of X%, be the to and the revenue year points. of year. due have accounts we staffing do including We the early price large we on move to will approximately of impact slow For rates will we growth XXX the year, full exited improve anticipate in then we revenue part FX as anticipate to revenue through progressively several discipline as the of remainder

We margin expense solutions. We on profit business year-over-year expect due and spending gross technology X% includes which in be rate up move our mix efficiency up as anticipate changes on SG&A initiatives. a be slightly higher to to to we to the X%, additional basis to

in information the impact recognition, personal also earnings and quarter be the be first XXXX. do in effective to to of impact Form both related the reflected in of of revenue beginning on accounting of will be We’ll expect equity of on the operations, in from the the impacted P&L shares below holdings. include which does We’ll accounting SEC this investment to outlook changes unrealized month. will not in accounting gains XXXX gains change our and losses by of further material. we Those losses our change treatment filed another XX-K, be related later with provide which these our Our

the overseas law focus to priorities. tax lower Our expected the the and excess Act. not range, the we’ll will and affect Tax rate going is the since while of the reflecting is Accordingly, expected our is repatriation Jobs change already balances. cash change to mid to material effective XXXX Cut not the tax minimize cash strategic law benefit cash tax managed unplanned annual is our forward, impact or rate low tax And of global teens ongoing income impact from be to be in

$XX borrowings totaled end moving at Now, $XX to was to XXXX. balance Cash sheet. million Debt the $XX million at end compared million of to compared the XXXX. year no

end was the improvement cash in to was $XX year earnings $XX of additional our focus improving cash days cash to On we XX Accounts Call increased billion on In Our $X.X of in our funding year-to-date, free acquisition from flow even receivable and of XXXX. days million DSO level of debt while flow at free year-over-year. Global generation generated third and Teachers of quarter continued XXXX. flow XX% the reflects compared XX flow million cash capital reflects The XXXX. compared expenditures. operations increased

For fourth it slide our deck, available site. our quarter more is back now please I on on review turn over George information Web thoughts. to for concluding his the performance, will which

George Corona

as operations Thank was momentum GP our demonstrated We profitability delivering Kelly. our invested in improved throughout we quarters, and you, for we in drivers. gains strong volume future. four and even improved rate, rate a line as We solid top year-over-year delivered earnings Olivier. conversion growth both from in value XXXX good year growth and all carried gains created and our

Our and focus. with to Americas International Staffing energy execute operations continue

seeing with growth rate we GP in XXXX. global align achieved sales investments in solutions and higher and margin solutions, market with rates. invest deliver are growth higher and talent In continue talent that the to in from demands our recruiting We’re benefits we pleased we

and with in GTS growth are by operating delivered strong XXXX. pleased the We GP earnings

committed As our drive technology the to and with we will future. year in talent are the confidence look at we ahead, that invest

strengths, investments like know where are focusing our our before. leveraging win connect on technology with we accelerating to can We and never talent we

biggest be grow great difference to Our the personally in can their to On exit the talented like that decision the would to in to Call answer your focus Teachers and and XXXX now work acquisition make for happy and of connecting and companies I exemplifies with excellence teams now thank healthcare our solutions and and Olivier integrity. future. all commitment Kelly’s I for questions. people and will in

Operator

go we’ll with to John Research. Please And Northcoast ahead. Instructions] of [Operator Healy line go

John Healy

accelerate the us the talk understand move could little year? we rate impact bit And the where I you the the there year may general if level cadence hoping you’ve throughout a contract hoping just a might you be more year-over-year was that then along accounts how with done lost. help cadence growth that the items of I as XXXX. as some should of George, things. that that that it for about can revenue some M&A you’ve and this well Is is those segment just was as

George Corona

fill of me Let start the details. in lot and will then a Olivier

as of the the quarter first we bit be at year, growth So go lower the the look we little look of throughout profitability we've will growth yes, primarily because saying, pricing them as those as and we’re a customers rate we rate discipline result exited, that will the at and increase of accounts.

talk quarter, see let Olivier down of the that so and the that. throughout of year. doing accelerated with you'll I'll associated about first pace we And we've quarter bit that fourth been in the the rate this year, accelerate some come bit in details growth it a and will as little of then a

Olivier Thirot

follow was what saying. George up mean on I to

the you for these margin, we even value GP GP when good the I half equal, to or I GP is for or but revenue staffing look don’t that about line a customers at on you at we impact course, their basis. margin, improvement, a we the and profile pricing at on customers, of we margin as low rate usually expect the mean, mean side GTS idea a value GP less Of have especially give side that these are Knowing beginning staffing. might year. of an on GP have GP pure overall the bottom know of big it’s customers, be discipline

divestiture bit is is to consider a that is course going our to the healthcare of revenue the thing other little beginning down the in the of our at of think first, push least year. I at

the guidance, growth X% at X% back Looking in to mean I revenue.

you look overall X.X%. been we at XXXX, have If at

see because the accelerating as last value two We expect more And QX. dynamic GP and of our seen seen to to and QX QX the as added we QX for pure solutions. to explaining, have continue more XXXX, was type in to from as we George overtime volume move have we years, and we improve more rates

George Corona

we services, doing the to our marketplace that John, big make And say be for us reevaluate which and able would the see things to the we’re I has portfolio our demand confidence in sure given that a make good difference.

John Healy

guys which I it you And previous wanted compared ask to is acceleration conversion for think to about just I in the nice rate, quarter, the mentioned X% years. was you a

over number, maybe Just curious like of you push to next that your can you couple that would think you thoughts that years? the on where ideally see maybe where

George Corona

we we John, to what is on as that. to still every we we see future what have the guidance don’t move make to to room and see number. before, a a improve, into significant talked that for year improving there. is But give lot progress forward that continue there expect we room is There on out Kelly based we’ve said on of that

John Healy

just that this is many of probably is seen is there much accelerating question the you also acquisition I’ve not final to you take think And sold portfolio do? there in one the maybe or Do quarter. will XXXX, and place you in do the fourth years, guys for year me, trending business much the left first in

George Corona

John, portfolio, we As we future. it to look will the and at now continue evaluate the into

player see should to right want look And continue Teachers we is well continue to of there we invest the other that to say capital that Call can as good be also the we’re things example to to the perfectly in what now, nothing On really that. continue we strength. where at is significant we’ll a we the we And to areas on So deploy look a the horizon at we to in of but the transaction expect as do. have portfolio side at

Olivier Thirot

focus it’s invest. making on think, I we about sure selective all most are where and we

Operator

while moments, a in. Mr. few no [Operator And in Corona, instructions] questions coming further

George Corona

thank you and you John well everyone. you. Okay, thank Thank

Operator

Ladies starts through and last for midnight. XX:XX today March conference and Time It this replay. is XXXX at available Eastern AM gentlemen, at X,

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Kelly Services (KELYA) 1 Feb 182017 Q4 Earnings call transcript