KELYA - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Kelly Services Third Quarter 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. A third quarter webcast presentation is also available on Kelly's website for this morning's call. to meeting like host, to now Mr. would turn over the your I and Quigley, CEO. Peter President ahead. go Please

Peter Quigley

Thank you, is everyone, you be conference Chief John. found Hello, Officer, through call. third Kelly Financial presentation language, With quarter our Services in safe me which will our today who Olivier harbor our and Thirot, walk welcome can to materials.

Olivier Thirot

morning, Thank you, Peter, everyone. and good

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

data measures call, in of basis. discussed In our financial non-GAAP our an certain our a during to exclude results on QX into insight discussion operations. adjusted of items will addition, an of References acquisition and the growth Discussion trends organic certain reported designed Softworld. give be in to are on basis today the on adjusted

today's that the on provided have using We website. also we are our on slide deck call

Peter. you, to back Now,

Peter Quigley

more we in that towards chain these and we transitory. post-pandemic of October workers that of enhanced will and supply unemployment continue have continues weaker the the with disruptions eye off jobs even confident industries. will we report, multiple our to of We're vaccine the a Delta foundation that the continued disruption entered on on U.S. progress expiration with health, child and schools with more QX, at sidelines launched ease, demand shortages with the by world, markets are demand make July, the last strategies. a goal. expect continues us quarter new masking the concerns the variant regarding and staying recovery mandates narrow. firmly jobs slope business talent supply we and potential despite taking model Thanks, the will reopening At anticipated and gap Olivier. The be report economic longer-term and the requirements to and challenges workforce lay there recovery operating in pace recovery. midst had smart strong by the aligning moderate September. the To between benefits impact future, the by is followed evidenced skilled reenter where The our many in It is supply results and as than we're although the the the Kelly, care, our caused place, year in good appears Clearly, at as for related the chain positive bottlenecks tactics workforce strong of of in workers across news short-term August to the pandemic, strategy start the without specialty the managing and for an

internally actions. environment customers with and as financial current both as adapt to Now, nonfinancial we're well the adjusting helping externally

continue model operating against execute growth We to inorganic growth our optimize invest in our organic plans. and

discussion, have in see you'll the demand our affirms course. we today's further solutions increased As the for that charted right

August our constrained pre-pandemic growth Industrial, to the and share has drove new exceed wins International delivered and details five a top Constraints in school of Kelly's few and quarter. demand performance many our its supply, third operating This hand surrounding as talent instructional than our supply Professional line year-over-year segments, and requirements professional also in staffing OCG Science, on from questions continued recruiting revenue Education, business. organic challenging and and increased highlights. made Education customers COVID Delta September, the industrial challenging continue growth on Before in from talent core been more to increased as districts and provide customer mask complications disrupted K-XX staffing in All existing third Though have weaker-than-expected business. resumed performance, to learning I off meet and demand Technology, by Engineering quarter vaccine well delivery Olivier customer particularly to variant to it normal. make in-person as I'll growth. it

global quarter's an existing full-time to a aligns see Report, some recently customer growth, talent manage are our continues offsetting top better our demand to which continued line pre-COVID our channels this segment, Agility which customers relationships. of growth, mentioned The that year-over-year our industrial companies trends growth we we office In aggregated that XX% and contingent digital our to International mentioned we Helix Softworld value team's both workforce with in and and during last volume story and particularly solution I added gives professional light customer market segment, advances. in top with year-over-year Russia revenue GP we're growth industry-first our look OCG quarter, and technology in Europe uncertain that the When in Along in XX% delivered staffing hours with and fourth And P&I beating growth. world's unprecedented revenue, solutions clients needs, UX inorganically. in UX that organically as performance largest revenue deliver dollar KellyConnect the saw of released and call with Portugal. of Workforce increased Helix our times. the OCG's success attract strong France, and consecutive in We QX. acquisition drive and quarter pleased at access specialty, workforce pleased outcome-based continued we Overall, SET we and their understand softness on these QX line our new enabling insights is and to

I'll Olivier results. more to about turn do we to discuss we're share leverage it. now call, Kelly's to a over actions However, that QX growth, address I'll to the later this better the details dynamic have work it in including taking to

Olivier Thirot

Peter. you, Thank

Peter disruptions on are operations services, business mentioned, impact the ongoing continue our talent. as of our results in and reflect QX our COVID-XX the customers stemming we the our of supply well from impacting economic be as constraints for the uncertainty As but improving current continued to Overall, labor customers' the to demand availability we seeing fulfill market. talent challenged demand of for chain

the those impact fourth quarter of Before represented results, current results with comparable most declines expense year. the it's continued the of of QX in of period of the I the pandemic of beginning line related temporary to review revenue actions, the on last which beginning reflect on a our the steady XXXX. severe helpful top COVID-XX XXXX and period of slow the to responded until recovery. anemic We but mitigation tail

improved from lows expense discussed we have temporary discontinued. As and most revenues calls, on have been mitigation crisis-driven have actions past

Now, the looking from at favorable prior of third points up the XX% including XXXX; XX quarter currency basis of totaled $X.X year, revenue billion, impact.

pre-COVID XXX period We segments basis. constant acquisition our currency QX. in in results XXXX corresponding by XXX reported QX is year-over-year of to Softworld overall organic to rate organic basis on a period QX saw and revenue Our recovery basis revenue rate. our rate All than added current higher points measure five growth, comparing the revenue recovery we growth revenue points XX%,

period Education the comparable school continues third was closures. growth by to quarter, significant as segment For our impacted year-over-year report highest the XXXX rate the

XXXX, is compared exceeding This and Education new to revenue also period comparable by and the demand now customer growth for reflects existing customers. pre-pandemic We the wins in revenue quarter, XX%. measure at

market. anticipated by While talent more been in has segment constrained the revenue challenging a growth is than it strong,

our continues customers' Education Our ensure we business of to demand. that to increasing supply secure needed work the meet to talent

As school steps continue take we restarted leaders fall, with this seen commitment instructional to have in-person schools delivery. from the to necessary

local and near instructional volatility term in may to response still changing schools However, is demand the conditions in the possible. modify delivery in

in growth well for in a segment XX% XX% existing OCG up another delivered versus growth continues over year. revenue wins with products. in portion has up chain weakness Our disruptions result both year-over-year across manufacturing. same levels by all uncertainty and four Revenue ability resulting now QX the verticals, of to OCG and in fulfill Professional although reflects programs industry is revenue XXXX. our last demand in exceeded most strong current period Industrial staffing past in broader across growth for quarters The customer perform And quarter of pre-COVID our now demand of been in customer supply. are and supply to the and segment limited a talent the is talent in customer new revenues continuing product has

a the quarter. demand crisis, hours several currency. we X% result, to up oil to of year-over-year quarter, and solid our There to and XX% continue basis as Permanent And deliver earlier demand in limitations currency results was revenue in declined X% Mexico in of XX% year-over-year fees At market. partially science growth the the customers which in understanding placement were track a the constant EMEA gas expense was in but International continued the exceed and quarter rates, where served. constant by from current of a talent up have outcome-based from results on a Softworld volume in increase quarter. revenue hours the staffing year-over-year well the industry business to growth bill telecommunications, life was from up pre-pandemic in on impacted the of impact and XXX% of acquisition X% revenue the higher revenue a on positive sector the up enacted segment revenue period a sequentially. as recovery demand, upward levels the lower on an at large reported The countries, delivering that customers. revenue COVID-XX current volume continues clinical finally, XX% and by but continued in And Year-over-year result our the in in pressure impact year-over-year wages recovery X% growth demand basis. of the was in reflecting experienced placed legislation. customers. net the sluggish. after recently of trends customers' was in with was our performing staffing As dynamic Organic most by at driven of offset organic in revenue to due remains Demand SET reported, be

in up We sequentially, Europe. our over levels exceeded increases XXXX segment profit flat the were were acquisitions the same QX at period coupled from but in P&I International compared in quarter the with was reflecting XX% Overall, continue to the more also to gross in impacted up Greenwood/Asher cautious of XX.X%. SET, Education Fees the segment. for the fees prior term activity pandemic year fees see and Overall now up in XXXX. pre-COVID in environment

XX.X% was Our XX.X% profit year. prior third in rate the compared to of the gross quarter

points basis was staffing rate which GP a which the a business an as XX our combination higher Softworld, higher by product of result coupled XX from of with year-over-year basis by These driven of unfavorable fees and contributed margin offset recovers, partially lower generates higher factors improvement costs. as acquisition Our points margins. additional employee-related mix perm were

Within International fees acquisition and I Softworld rates SET on product the rate P&I segments, variability caused mix and employee-related partially burn in mix. expand GP and did between staffing higher the we costs by rate benefited unfavorable just by mentioned, the The the GP factors of impact fees. from and higher offset some the higher GP business improved decline were and burn only outcome-based

on Expenses P&I impact temporary added adjusted the attrition reflects productivity non-cash an in dispute. which growth operating quarter year-over-year incentive as demand expenses SG&A business related performance-based for in in certain Softworld, of a impacted in as programs. and third talent declines Expenses expense of efforts the lower was include up basis grew customer mitigation intangible basis. expense The in rate. included basis, GP resulted XXX a other to our compensation by as in amortization a the year. were well XXXX expenses year-over-year the to charge outcome-based XXXX XX.X%. expenses On our addition, negatively XX.X% prior organic in points rate increase the customer reported In expenses and increase expenses of

former excluding future. resources growth growth. contingent consideration and Our made performance in increased €X.X below international, the XXXX ahead revenue Expenses to result to current in the pre-pandemic segment we levels. Education in charge also in in in under demand that We are on owners P&I as year-over-year our of of Expand in expect expectations. line SET customer are revenue Asher due and OCG near that we growth. with Expense do prior reflect have for a the include levels of have Education year, exceeded Greenwood and in expense results dispute the but positioned capitalize million that the the dash related to operating services [ph] of specialty investments increasing remained

loss operations compared from for to million reported million of were quarter $X Our in a XXXX. $X.X third QX the earnings

customer our included results charge operating asset of of amortization. a the dispute XXXX reported Softworld intangible million. Our earnings million, to results QX $X.X a of $X.X non-cash related are Included inclusive in of

back before earnings Now, Holdings. unrealized our company to tax turning the a also in gains and on Persol the investment equity Kelly's include as whole; losses

For million stock was million Persol earnings a item. benefit tax Income pretax of $XX.X for the common recognized on expense pretax gain non-cash line quarter to These with year. income tax our quarter, we third recognized XXXX are $X.X $XX.X separate the our million the gain compared as below in prior gains from operations million. compared $XX.X the

XX.X%. was tax effective Our quarter for rate the

which increase of a higher taxed share Adjusting gains And customer compared the finally, for compared resulted EPS at XXXX the $X.XX share on share of charge in from stock, share than higher higher $X.XX related U.S. Persol Japanese in net for per rate QX gains Persol non-cash statutory reported as of per share the result tax. Persol shares XXXX third rate in tax the XXXX. customer quarter the $X.XX tax XXXX. of was and QX XXXX a the our to effective earnings per per gains dispute and impact of was The rate. $X.XX Our primarily to is on the was to the dispute charge, earnings per

the balance briefly sheet. to moving Now

days $XX billion $XXX of balance at zero million a the $XXX cash to XXXX a year to receivable $XXX cash million million we We nearly paid consistent year-end debt totaled quarter no compared beginning year-end at had of reflects quarter. Accounts net end, reduction was the and at fund cash cash the of Softworld XXXX with acquisition As year. second of the and that $X.X debt ago. and The have of our million in received at used the as stages last cash rapid on pandemic. Year-to-date, capital increase increased higher reflected Global XX% an from day cash flow. in we generated $XX year-over-year two XX our demand million the was the declined XXXX. Free period also same of early year decline and over decline year-over-year, one days, DSO. lower flow revenues COVID-XX revenue in and free in customer reflecting year-end working XXXX the a of DSO in of increase

As previously able Softworld completed balances. to in the we're acquisition fund mentioned, QX with entire and acquisition the we cash existing

balances Softworld debt Our needed the current manage cash are levels while on now to And begin daily didn't require tax to credit facilities financing, now, may including working U.S. of repayment in line borrow existing acquisition with we pre-COVID levels liquidity. support balances deferred revenue continue the Peter. as to you, of to to capital, or And recover levels. XX% QX XXXX payroll back the surpass the

Peter Quigley

pipelines, by the Thanks for services encouraged healthy We're increased five spend details, encouraged continues. sales also and expanded our in all customer by that demand segments. recovery capturing the customer new we're We're as Olivier. those for wins

last demand will and as to to quarter a in trajectory. recruiting the our mentioned would I did and meet support in We maintain recovery that steady Kelly warranted resources add executing and we're the anticipation that growth. committed just sales strategy increased As third specialty quarter,

expectations, leverage Greenwood and management our to realign series by are was is bottom for and While news, need during XXXX, will of clear impact cost as some initiated into to third to the it's cost able that provide we with these quarter our detail our his the increase more more example, structure in exceeding Olivier adjustment we the of we Asure's increase cost actions Last to current environment. the efficiencies which performance, triggered go the ensure review drop due good designed we GP expense actions on to the better that operational base line. deliver a to dollars [ph] week, of expected initial outlook.

level, of in continue going patterns. our demand work labor challenges that through fulfillment mentioned, levels, is business following are Olivier pre-pandemic a not jobs recovery exceeds market any macro across a industries. As millions unfulfilled while On in P&I previous to we

are instructional as fewer have parents schools work. resumed to returning Even in-person delivery,

proper is the circumstances, strong supply. only to more their skills, market adequate a than people, Not each preferences. highlighting reminder and As a then with ready, I quarter, and just also with recovery mismatch those is serving the life Businesses be on they before job. mentioned COVID, made come was matching work it that need priorities own the of up willing present skills last labor is the and need up to workers structural talent right requires able work that workers individual for and them of stay

of there the for difficult many this While initiative connecting job to is it there's that aren't it work. to workers, access pool barriers prevent about Equity talent increasing enough press reality seekers work. available Work more from coverage tackling plenty how by find difficult Kelly's systemic addressing around on, with head is people conversations how at is

of who access For example, outdated practices. U.S., employment in screening people the work background to to millions can't due want

clients. Our stand connects and our of talented opportunities, Kelly employers job Institute Where KellyXX the need seekers barriers with then nonviolent, upskilling talent training certifications their whom in apprenticeships, criminal offers who program Certification we have way, to backgrounds in skills. educational match non-relevant with

intelligence a us other and their methodologies the allow we specific solve customers, micro custom talent assess on developing largest recruitment challenges. and also and talent with with work competitive talent set to fix unnecessary complicated help processes. overly continue drop to We and benefits, to requirements wages collaborate close them onboarding customers We to that the landscape our frameworks gap. job With level, reports delivering

than ago. challenges six the chain if COVID-related we labor longer Even months expected temporary, current we shortages supply disruptions talent are as even believe we the tackle market, last in structural

growth to a all segments specialization as will longer that across deliver confident strategy than the and will line pre-pandemic additional from bottom growth return take we XXXX. on now I'll when welcome thoughts the anticipated provide Olivier Kelly our year to began, So back, progresses. while remain top recovery

Olivier Thirot

Thank Peter. you,

of we the results. included beginning Softworld our completed have in Softworld second As outlook. is activity Softworld reflected mentioned, impact purchase our of The and of the the XXXX at of quarter, in months we nine

in in the will saw our we in and growth quarter demand rate. specialty the structural acquisition a second improvement As revenue accelerate technology result results, will margin third the high in high-margin Softworld our GP and

on for continuation forward, and in we current on the increases third are the of look of well fulfillment. of our As as the continuation quarter a level views demand of putting results current pressure reflect talent mismatch, trend steady longer-than-expected as

expect point the to For the in impact basis acquisition. we X.X% revenue be Softworld including XX.X% currency to to XXX and full XXX now up year, a nominal from

we Our to business are supply the expand or taking improve address COVID-XX, the that no expectation there continues changes material that in governmental related talent reflects will to of us. current mismatch talent steps the restrictions are to to demand and available

As last in expecting well in our current slower than noted, are as specialties recovery as outlook lower-margin of education. quarter, our we reflects pace a primarily

by line the revenue mix. segments that the or has XXXX revenue talent depend targeted growth Mexico. already each supply pre-COVID We intended that expect concentration, legislation levels later time enacted crossed We'll milestone expect operating in OCG growth. that and so do accelerate product will impacted in for do served other to that to will be industry segment course, our International segment's negatively to growth of revenue organic will geographies recently further continue rate and initiatives beyond. on launch We reach are

from point rate XX to GP approximately basis XX.X%, a Softworld expect including be We our the acquisition. impact

gradual growth in specialties. on Our in more of our faster our GP business and pace growth reflect fee-based lower-margin expectations the

in are actions cost the place are definitive meaningful taken steps offsetting of in cost the our impact past have We year XXXX. of expiration driving and partially savings that the temporary in

specialty in As also organic to discussed education growth. in QX, and investments accelerate we insight, are selective OCG initiatives, our making growth

amortization XX to basis we XXX our including be to a the expectation from non-cash XX% of basis up points intangible asset XX% impact in, in SG&A Softworld expense Softworld. acquisition. adjusted is from on expect all an point Included So basis

In have expense XX% expense structure expectations. line to addition to growth our our XX% we top to just expected growth with alliance mentioned, review our it continued to I ensure

of that declared now, expected morning payable of allocation recovery Directors the capital this policy common including Peter. and that continue that per shares have which $X.XX delivering you, our finally, week, These we and credit, efficiencies continues, management progress will be a the And As last enterprise to extended Peter provide materials. our our to of our to with $X.X the series of a top as $X.XX our support reflected mentioned, and cost least in expectations our actions that million of are mid-teens, that Class the basis in has units actions align are centralized operational initiated additional has level is dividend as a and measures the as expenses result designed review expense third of the our current business deliver And measures Peter both results. executed including line million last growth, that of outlook our operating Board Directors. to the within back announced review, work discussed these growth XXXX. B been we as our the included profitable We'll tax includes an tax are increase to and the to rate charge opportunity QX a strategy, in The EBITDA of is EBITDA with our acquisition effective on to functions for to impact We assess at dividend on expect our of share in we topline continue an if for in with at utilizing which as annual margin management $XX operating quarter beginning we'll units ongoing of technology structural intended demand income we QX savings XXXX. earnings productivity we cost on of also challenges assessment Board impact our strategy, A quarter recovery, refine expected through restructuring quarter.

Peter Quigley

norms. crisis tempered and that. the preceded and issues optimism has that subsequent you, by challenge than recovery recovery variant quarter delta which chain continues Like it, to the with expectations been the the this anticipated including Thank supply that The slowed second we have back Olivier. entered more realities,

Kelly's however, journey, optimism long-term firm. Our strategic about stands

encouraged our toward growth are demand SG&A eager and into the fee Sustained our future points provide. the investments pre-COVID solutions GP We by and customers' better in deliver exceeds taking a levels. are growth staffing is leverage. time, we topline steps bring in our that and to businesses for that outsourcing their At workforce same we market line with our and

following to we outcome our of in and tutoring are side not is for pace moving newer Kelly K-XX of the we professional may product. evidenced through The for are and The value growth we appropriate what we top limitations our base progress delivering is early growth, As pursuit solution of we're with Kelly. trends all same heading. celebrated all We're time, lifted has and recovery, recovery, be decades, our talent the M&A XXth expect in right and not related the with in figuring a even by We're as our a specialties organic on taking and specialization needs which strategy predictable state is to we're our and current John, for question in are and now. two designed acquisition COVID is the its to of we're customers We can forward uncertainty employees. the we these services recovery becoming October is that but state is worlds now anniversary yet investing the and call are where by our no the about company Softworld, opportunities At bottom-line open pursuing future revenue targeted eye over off path, in there but P&I encouraged enterprise. We're in challenges you the undeterred accomplished questions. the to best thrive. with and meet that the out of high-value a Kelly's provider come. are about markets where other the very help post-pandemic to talent has caused COVID normalized. create cost living confident Essentially, pandemic. a market this the specialty shareholders

Operator

Certainly. line Vogel [Operator go ahead. first, Company. with Josh & the of Sidoti And Instructions] Please from

Josh Vogel

morning, Peter Olivier. good Thanks, and

Olivier Thirot

morning. Good

Peter Quigley

Good morning, Josh.

Josh Vogel

I have a couple here. of questions

could on around you first annual organic management investments one But you that I with feel we specialties. these SG&A the actions should faster still starting selected $XX should in Olivier next in plus cost in that other year. side, savings continued think, than year? mind, bring, next revenue grow that The said, million With comfortable

Olivier Thirot

business invested, taken to as technology instance as have we our the would complement for namely engineering Yes. we as have going our we targeted SET, business. a say advantage where of where I this meaningful as our to clearly, of some recovery mean, year, invest as in and soon that areas, well outlook, Softworld, I including QX are see to leverage in specifically areas

as that believe it's rate we a start to going to soon we our meaningful we going incremental believe So that in to confirmed QX, conversion XXXX. see are as and of recovery be

Josh Vogel

uncertainty was obviously, Education particular. you're as there next terms record we a assume and XXXX Education impressive Thank did you. recovery to year other even remains And XXXX? or I revenue? believe rate that around can whatever, in showing surpass In is in positioned in of year, what an you variants

Olivier Thirot

September now versus did the and where we the and that confirmed, -- by are XX% exit to up did QX XXXX beyond positioned believe we QX, grow to at exceed continue this despite headwinds to year, Certainly. vaccination of of Josh, current I we has exceed mentioning well And mean, to clearly of when looking continue think are been we we it basically that the today, are starting I XXXX. including I mention year. exceed XXXX we COVID variant, are

Peter Quigley

supply. now there continuing terms for school think right are with And willingness to upside terms we the K-XX, children vaccination with districts while in in of there's greater increase certainly supply albeit emergency the wages, rates with talent only and talent authorization the showing a Josh, in new headwinds increase, of to slowly

Olivier Thirot

Yes.

add to maybe before, for the not to we we X%. in something, Just about Education wage is see have inflation seen now, QX Josh, X% that

following because in the need So more think business. seems several what good for education is like the we for be quarters attract it to talent news can more we P&I, have which were seen get we our the inflation, I we can

Josh Vogel

of insights. people is fee-based Shifting coming Thank time. willing the of a and that, work. you. We're need out you likely they're are pandemic, response on seeing Those recession, full Historically, out talent, in this see the gears. pickup the them great coming to a take

I'm that we to gross this trying to see year, environment? I I do what focusing it business that get normal report you'll year. next sorry, a So next probably in is what fair but I'm could into as slow in guess, get at be give could And do and more historical we down drop is -- when if assume and next should comments think and quarter, you give profit of more kind XXXX? on you obviously keep headwind perm

Peter Quigley

that to to XXXX, have amount for suggests permanent on into number the talent especially pent-up end relying I'll runway profit. let call the their nearly the you GDP the our satisfy customers if demand consider in to is now on placement -- or a not Well, that think recovery. significant a I likely hire projections Olivier attempt is comment talent decent demand we're at significant. of of of, the are it, gross for I'll But And that

Olivier Thirot

QX, QX was directly business by flat is at it XXXX, about XXXX, here I'm growing in and fee to in QX. when you our to Josh, versus XX% going look Yes. refer XX%

was long not Of I XXXX But think, Peter but the see probably XX% knowing think in versus that we as times. in lower should I QX have mentioning, we sustainable certainly the mean, I not seen, dynamic course, the going future, run. have the for shortage structural the at we continue, of backward growth, pace near probably a mentioned talent that several is

Josh Vogel

to now both the a is want from valuation period. thank how also particularly a right. can bill? it about we of some And have finite your But you just benefit, announced you seems long-term opportunities but business, that? like you may more I Great, just with recently All infrastructure and beneficiary I more or know potential details, you think And of macro. are over a at be discuss that disconnect P&I peers. will level, it there a company you in the see

Peter Quigley

Sure.

business exposure to of manufacturing, benefits, logistics, customers and customers positioned likely U.S., of anytime our example. in and in think take either in we investment to in downstream also massive are and directly benefit services are delivering towers we're broadband terms advantage be of to areas for a the therefore, strong that in I that, that the goods may Kelly. have there's indirectly, that But

Josh Vogel

All running want asset, right. each tax around is call consequences liquid cannibalize How come as the it's revenue around, go ascertaining street repatriation this walk value benefit? listening one, from just could price is just just Would potentially brought a of stock I to a so I coming you quarters up into gains everyone's today? think of may. a with assets theme several better if really last either? And don't a investors Japanese please better you underappreciated, for or or I on let's million of They I how have here. And Great. they're and APAC? if what capital Persol again it, seem me get these your to especially the one piece the when valued cap. sell and where that sense one-third I place this through of couple at in a $XX assets. call the could Can market conference

Olivier Thirot

Josh. you, Thank Yes.

of balance our a the of portion is our big really $XXX value the at sheet above market Persol asset at APAC combine and course, the of it, look at is the basically, end value QX, of cap you XX% our one-third. million, of which, JV, if So looking with you

Persol is In liquidity, course, of terms publicly Japan. in a of traded company

So to there monetize Persol. is, of and course, several that if we needed, times have opportunity, said

this is investment been of X%. be gain cash on because So sorry, has tax be of think basically substantial the if XX%, joint on capital is rate would region phenomenal rate, very time. the monetization, the tax the for over about Japanese and venture in would Persol tax return And which you the which X% the course to

Peter Quigley

Yes.

not Persol. two Just of to is million, plus approximately the it's clear, a venture that companies. joint $XXX joint liquid, The that million venture be between $XXX the

update in continue that's and the that share to have for is, they always value So And why price. that's different potential we we'll we deck, investors and with our the that a of clear. not anomaly investor to reasons steer to in that They bottom-line we try to investors -- in overlook. But don't that -- to question. our -- necessarily asset slightly is think and the you liquidity response agree recognized we

Josh Vogel

I all thank my for all taking insights and do appreciate Agreed. you questions. those

Peter Quigley

Josh. Thanks, Yes.

Olivier Thirot

Josh. you, Thank

Operator

Research. ahead. Next, go with John we'll go Please Northcoast of the line to Healy

Peter Quigley

Hi, John.

John Healy

Good morning, guys.

Olivier Thirot

Good morning.

John Healy

could hoping spend that but acquisition are just year, on the maybe that properties maybe about seems Softworld I next a could was color have. minutes of guys type we some talking obviously, at winner it see we that the like out which of and playing And you couple if was maybe a this year? guys pace evaluating the you do pipeline

Peter Quigley

scouted a exceptional as is by like to Softworld earnings excellent that we the contribute Yes, they healthy. a as them, market to properties for The question. prospects, has The or not bigger as we've that acquisitive, before it's we our since either looking refer an John, strategy. but a we seen were pace. probably The that at come company them platform management, and become a processes platform, and we've accelerated only we've as acquired expecting and revenue growth mean on, pipeline and build are part high-quality that we have of technology can that for properties what thanks out become number more healthy we're is to of

as our recruiting So, growth one as Softworld of company. month supported additional that in example. part an those were investment resources their and as saw of sales We platforms the they using through as early Softworld first and

So those are the kinds of properties.

think there fastest-growing I properties in be bias will towards specialties. a our

that and of we ensure would we're comment. market, ensuring very we're hold to -- Olivier order on mindful a ourselves technology, I'll OCG and engineering, valuations ask there activity, our that standard Olivier practice looking telecom, is to don't lot And Education. ask overpay And maybe of be science, this comment In while that we that. to for just to at. I'll companies what in So these

Olivier Thirot

bets. point you quickly inorganic and we that some, our know I balance have no mean sheet fund is the leverage first would to say I Yes. ample on capabilities

on of Second there lot point activity is, a market. the course, is of

are are proactive, we We mind principles very that but we are using. some keeping in financial

we internal of You know rate return. that are using

Our rate which XX% high. pretty is plus, is

are are be acquisition. add property accretive usually, using looking where that of or as We soon basically quarter the platforms can as type we And usually expecting at also of the organic would earning a we investment.

of we program double significant As acquire I said, We investment good did already still acquired in a months have think we as had of later, a play XX-XX%. accelerate that, And this Softworld soon the around we to basically as April top example. organic property. couple beginning Softworld and digit, is in was is line place growth

John Healy

what's little kind the on what's felt -- hopefully, side more just side or other one domestic do to super And Is cost That's now And move savings. maybe a to this of sense? something cost oriented? the trying little is a the kind conceptually this a maybe go changing of cost and on Is you wanted of could at just and longer-term a helpful. kind was to understand on I'm bit ask of the to of more sharply? of Or COVID, additionally, that to looking you something little while phase for start is the makes back things? they bit phase just trying where were of it multiple maybe approach little Great. this be hoping, potentially it a to deeper, largely just could you centralized more changing? centralized a wanted it recruitment bit maybe I Olivier, operationally office? I'm

Peter Quigley

five But optimize the customer, some additional refining a And new when closer that model Olivier sense the units are way. the supporting or the expected and to to us to are historically model a previously John, in a And the comment from be there expense push rationalize launched of we're savings of of GP let that operating financial. today business I'm certain now realizing, that that to were business centralized closer standpoint, units makes it that from have. and the functions ways because more think that that generation. we to talking last base that result held been we model July, into revenue the as some of I'll all an we would cost the portion had our a we unit there perspective puts allows further activity and on operating about business

Olivier Thirot

Yes.

of expectation least million our meaningful that, to $XX really on add to Just at is deliver savings.

to efficient it our to kind of basically be are corporate, but of getting accelerate more is a Some and in lot them leverage. business be going going of kept units

or were also Now, if the to run, I at the with to you looking we run today, about mid- think Peter long long the as mentioning are and business unit metrics productivity last couple efficiency and is we for of streamline looking an our have the that time. are ongoing continue at, including discussed that quarters. This to really over we process technologies improve

John Healy

you thank Okay, guys.

Peter Quigley

Thanks, John.

Olivier Thirot

Thanks.

Operator

Research. Steinke Barrington is ahead. with next Our from go Please question Kevin

Peter Quigley

Kevin. morning, Good

Olivier Thirot

Good morning.

Kevin Steinke

that taking -- you're gain talent traction. Hey, about outlook you initiatives ask supply your morning. the to increase Good to assumes mentioned wanted that I will

And you of with requirements. seen willing work talk you customers what can some front? outdated for mentioned you things example, how about that educational the successes So mentioned, to you on you've background our on screening,

a you traction to trying supply customers' to get being and sense the of you're talent initiatives seeing those your initiatives? to your with on with improve Just work willingness and able

Peter Quigley

convictions allowing a for for other Kevin, almost by their we in are it's other background. revisit talent been obviously we particularly diversity KellyXX But and place rarely to Toyota background by our also actually screening with of the screening, talent important I'll who increased talent turnover found have are XX%, they had by to there's at And increasing willing baseline education facility. we we their that We've willing policies, case there. customers wages, hundreds manufacturing the background or programs consider to customers by factor. with also that an that considered education But frankly in their would XX%. the criminal is give that's up an and Toyota, screening example, be these the relook we're of lowered XX% we're conviction huge seeing list requirements at are willingness I add you screen and established approach. study undertaking to recently revisited. that but criminal the nonviolent, decades the pool And to kind of candidates case been shared in with in that candidates the background have just at passed increased whether for that top of starved funnel And people story the program of XX%. literally working of They a their their targeted with among non-relatable Toyota work work open that with many Toyota. to Toyota

Kevin Steinke

or up wage factor wages work Great. seeing That's assume you dynamic another would factor true are And there. that it to current you're the your the really you kind as and in to interesting customers? the or seeing of wages another -- mentioned attract with I what's is the helpful. is customers mark talent environment, need your there is

Peter Quigley

retention discussion to increases retention of the evidence practice. seeing I'll much real companies board this about engage not raising are just because because seeing wages increases wages we're has across that continues talent, to it's attraction it's least including only of as across willingness the be a some that stagnated are years Education We're comment but And in after of Yes. talent the pretty let choice. Olivier environment, attraction wage in on suffering of our much at but -- And challenge. and a the talent, We're board, finally a the in willing seeing, well. talent not in of pretty

Olivier Thirot

Yes.

we explain tenants. I to to is I seen see attract said, education with That's in wages. education Kelly and new. need in them in really do say As something market really they but X%. X% what past. not also education to what and would increase meaningful to a some little we do those now it's I conversations new mentioned our meaningful conditions have customers to have market-related, the And bit in the the we Kevin,

inflation, something higher similar only inflation, is can P&I. not it's what is in have have of we I X%, discussions which P&I than X% higher education. outcome in seen high, is that externally see we something So driven. would say than now the we pretty numerous within for very to inflation supply wage to of also an That's past. Current environment And on amongst big It's of, and they with things, combination be their is this new and discussions imbalance pressure, customers financially do how them also but other course, where to a market market also have educate what numerous that a competitive need P&I between Kelly demand. and there on they this

Kevin Steinke

Right.

potentially there placement in guidance also we lower at P&I, circling specialties. into I margin or a see was that's could And have back, obviously as of you're just about But international helpful. know -- margin but higher-margin discussion X-year and kind not next permanent this earlier gross your Okay, hopefully giving recovery of year, about think the XXXX. growth and moving specialties. we just point, for drivers your in positive you and But

kind balancing will that So of you comment? too about out? is margin that have secular and in you for growth in expansion place or Do all just place are remain think drivers how thinking to you outweigh the it early

Olivier Thirot

done of and or are But we at guidance outlook what have Yes. I mean, structurally in seen dynamics give past. XXXX. yet formal course, to the of we for ready kind not you have look we if what

GP as in was a our XXXX Just reminder, XX.X%. margin

XX.X%. at now are We

fee margin about we QX, high-value our especially a XX companies at with of have high business initiatives. pure now, this QX, years gross to good XXXX. I and basis organic seen and we now. we going it ease that because, current we seen you to might I is Peter be business have course, type And for I not is have fee But in about year-over-year. or continue mentioning basically many XX margin. acquisitions is more growth, QX, continue Softworld Softworld that we think call for of growth said, XX, improvement to see that could the what EBITDA looking a see improvement also, bit accelerated, the If of have points was push seen kind basis little past, because XX the XX What with margins But we we at at we now especially pace, of high-value XX% versus coming future inorganic the profile basically structural XX% like have example you the in to mean, from And continue trend, as year. that net the the type that is in this margin are is that are in and points of again providing inorganic, on in we look and as of organic improvement see have in it other organically the meaning structural the it

Kevin Steinke

All right, thank you helpful. that's

last mentioned Just maybe initiative? had that front? for system the along far on just how You on call, office And going are front the further maybe your accelerating recruiters? in deployment the of you an update what's on on

Peter Quigley

legacy be a high for more from tech one. priority to versatile we a Kevin, modern us, continues our It and Yes. as transition stack to to look

work tech indicated legacy to the to I stack of tools benefit call, are improvements in And we our last available that And of best-in-class in some front disentangle the will order so from enable and there be continues. recruiters. the as office the as that incremental

sure of not financially, as continuing our and the we're energy as to in quickly we're focus team. that getting time to possible. work to that that's terms endpoint But only So on make the of IT

Kevin Steinke

an just customers to one to? currently chain maybe like how supply more way in your here, frame of much would Maybe disruptions terms having are qualitatively business just ability to your but impact, way they or Great. any your two the of on operate of

Peter Quigley

seen automotive. we exposure have considerable pronounced impact to started That we have in the automotive. first, and most Well,

it's three relieved I the I shortages dynamic chip think is provider that has us uncertain. four would shortages. last we've industries. say, it's the the and other for a other staffing is And still way seen, its although to disruption or there's The part months some extent, in found is challenge into

to who have forced down We a don't they can't they a failure shut -- delivery operations or because have of enough of are customers parts.

challenging other it's policy ports But remarks, opening of will, the issues. from load evening the that we So government balancing a and this the out and temporary I course X/XX of of is eventually, with believe supply on an see focused mentioned just standpoint. we federal the as in chain my changes over that now time,

Kevin Steinke

for for right. the insight. Thanks Thanks All questions. all taking

Peter Quigley

Thanks, Kevin.

Olivier Thirot

Thank you, Kevin.

Operator

NOBLE the Joe Our of next from is Gomes Capital. with line question

Peter Quigley

Good morning, Joe.

Olivier Thirot

morning. Good

Joe Gomes

optimum itself. So I Maybe bit there? looking there? Kelly the mean, availability talent for number is Are it there's been a you about impacting of candidate a lot are of talk add of here, consultants running entire to that the about the obviously, could availability the and out business, at people? you just internally supply. out little have you How touch you Kelly level, candidates

Peter Quigley

market also now to Well, pandemic released are companies talent, that in recruiters the significant. staffing Joe, business, other the not recruiters process entire during do go the for and talent decided find they teams the the of gone in recruiters have also everybody to or we as recruiters as during our their scrambles let acquisition also that -- or base sidelines. to And competition on is for pandemic that only on have our things a that business. some considerable for positive is recruitment their stay but outsourcing includes of The

sort it as recruiters, competitive talent in to find recruiters this the seeing really talent. we're recruiters, segments. ongoing demand enough the having our recruitment outsourcing the that at keeping staffing and So people an But our for across clearly, business process productivity outcome-based in that ensuring is as and significant is job are of whose well challenge environment

Joe Gomes

wins side, what it the wins there? detail, has the so be speak, Okay, color key you that how was especially clients. I And mentioned if a And to of more you little rate, size some wondering you or couple mean I of education historically? been thank last to compared the in on maybe new is might quarters, win some that. to us of able for give

Peter Quigley

everything both of for that outsourced instructors. wins between. and school the for demand across districts Kelly the it we've in Probably highest seeing education. months, The we've XX We're for in probably seen as support never wins new high. The XX, amount last and small had large finding

that think, they pipeline than is, -- And disclose share. are there robust. what in the we're rate shapes all continues geographies. and fair to win don't So we're I come And very we while winning confident be more our our

Joe Gomes

my taking Thanks Great. for questions.

Peter Quigley

Okay, Joe.

Olivier Thirot

you, Joe. Thank

Operator

we no And in Mr. have queue. Quigley, further questions

Peter Quigley

Okay, John.

Olivier Thirot

Thank you, John.

Peter Quigley

your for you Thank support.

always, appreciate it. we As

Operator

does welcome. conclude participation. Ladies your conference gentlemen, today. very that You're and you your Thank for for

may now disconnect. You

Kelly Services (KELYA) 10 Nov 212021 Q3 Earnings call transcript