KELYA - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to Kelly Services Fourth Quarter and Full Year 2021 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 fourth 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. fourth 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 Softworld. into insight discussion operations. adjusted of items will addition, an acquisition References XXXX and the growth Discussion trends organic certain reported designed of give be in to are on basis today the on adjusted

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

Now, back to you, Peter.

Peter Quigley

Olivier. Thanks,

turn with ownership joint in unlock our partner transactions to morning's APAC dollars tax our interest as we a venture announced talent that an XXX like announcement Kelly’s specialty bold we We're I’d to high in this than margin this valued we Before that in our transformation PersolKelly. our high fourth personnel provider. growth million agreement specialties. accelerate regarding cross accomplishing address ownership and to performance, quarter step and to a our significant redeploy more growth through unwind solutions after Today, reduce can strategically our

now investments us in As financial you unprecedented shareholding our amount PersolKelly capital to contributes Persol cash JV improvements Persol that a pursue our half noted of billion qualitative improvement. to kinds improvement in At of our same results. contributing To in our ownership any existing existing our EBITDA give and make drive we of and sense more time, our results. invest improvements are and These investor to a neither the available businesses, continuing APAC we margin, to structural between with long provides scope and have rate prior in strategy. materials, are while transactions GP capacity, in the quantitative multiyear actions, capital. an the of Monetizing borrowing in high from of calls, than resources to businesses we've specialty growth demonstrably growth nor that term dollars need our the our high these the and

other senior Kelly its enduring across supplier unequivocally considerable APAC region in leading and are growth the our will leaders, premier a parent relationship. in MSP, customers to committed company practice the OCG as PersolKelly remain talent a will to PersolKelly, region. to has OCG regularly its unwinding Kelly formation, myself has Persol’s success support continue Persol OCG enjoyed a last this we and its business our and with and will The as we RPO in including since be where part own that years and While and global partner of relentlessly meet will exceptional, original continue in profitable in solutions. we require to staffing to partner several business APAC the it Persol APAC best-in-class interest valued JV And continue to enjoyed and continue Kelly

these our GP despite including of our assets that in Yet increased headwinds, disruptions businesses. largest It's supply the Kelly's XXXX had chair through in a well follow decisions solid APAC in year a transformative and of known journey. ever of Our progress overall rate with chain noncore acquisition we improvements monetize to our made talent purchase on-going structural We on supply. challenges, Softworld. pressures growth

worst segments behind Our a them. put P&I of the pandemic and Education

digit in in Our business Softworld and double business, outcome telecom. based drove and noticeable with technology science growth set acceleration

APAC over Our at our international recovery that in We're strategic segment regional and began ability focusing to its value delivered we we year create ended with OCG on than scaling progress on continued better I'll positioned turn more And years made for local Kelly's now the its now again the We it to results. double Olivier and transactions, continued well QX XXXX. leverage. specialties, details digit growth in by are pleased disposal it. capital shareholder the tremendous after to and proved we ahead.

Olivier Thirot

Thank you Peter.

So our to recent most but outlook. back you review I after wouldn't will know, detail results, transactions in APAC the our more I come just XXXX

for trend value results, operating important prior Before XX-week year extra the to I review one an where business our XXXX year. impact to that Kelly. results include week year-over-year QX of our the in week is will impact a provide in the additional And understand current the XXXX the fiscal point the XXXX was of underlying activity related the material comparisons. of

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

week about revenues as were the points legislation. XXX of basis the in impact XXX impact a Softworld, currency the from staffing well impact constant up impact Included the the the basis impacts as X% favorable our XXX basis, resulting our as of of in points acquisition the unfavorable week, from the changes basis points. market increase, that comparison Mexican Excluding unfavourably extra of extra on by

pre-COVID which results on current We XXXX period currency monitor constant compares basis. valued rate, a to recovery revenue the our also corresponding

recovery organic revenue XX%, consistent QX Our rate with QX. is

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

For the quarter, which QX Recovery was XX%, Education's rate the rate. was than lower

instructors. our in-person to vacancies, the mandates growth challenging than learning, been return more with in demand for full talent anticipated has districts school high a Although constrained by wins, from levels new we time market, strict especially teacher customer of have strong vaccine and

we continues surge, is may demand. to and business seen into recent with in secure of it's ensure meet And instructional that demand to modify needed their to work conditions, in have Education response customers the early in schools Omicron term talent continue Also, will volatility local to XXXX. Our headwinds likely delivery we in the as increasing these response near our supply still possible. changing

perform products, has up for exceeded year, professional same the OCG in past XX% all XX%, versus in this reflects another QX levels growth, revenue from the quarter, of with OCG growth excluding approximately and X% up up week industrial demand continues OCD our quarters with declined Our XXXX. delivered pre-COVID the segment is five to market. notable now or product extra RPO last Revenue in customer’s in and XXXX. adjustment extra quarter segment when to in year-over-year talent for the well XXXX. challenging in as in revenue delivered of over in our impact and the year-over-year growth period revenue X% impact XX% for the week accounting

of talent and have environment. continued chain disruptions resulted to Our supply portion reflect customer challenge manufacturing the which demand impact the to a of broad results is variant Omicron in and the the the current fulfill across uncertainty in segment in

delivering talent the X.X% growth positive and on And and week constant demand the delivered business region offset X.X% the the organic period, well of by telecommunications which from staffing in additional negatively which product, year-over-year week continue a excluding rate to outcome our international region on from as we on bill volume specialties. recovery excluding Recovery growth in EMEA customers in in quarter market. on in the the of and finally trend has year, hour’s offset pressure based rates in in continued in up in the result, the in our than upward an up Revenue XXXX net X.X% by legislation XX% X% we Organic revenue basis, industry. and the revenue was business needs currency this And the on contraction are X.X% understand our strong. experienced XXXX. year-over-year have growth revenue extra center up expands meeting staffing the XX% organic of a week acquisition to year-over-year the call higher an of X.X% remained revenue currency partially trend in more growth basis in the well revenue when fees constant wages in restrictions was current prepared the after enacted additional comparable the quarter. in an As in period. performing results segments, in been and for And impact changing decline as segment. Revenue was reported demand, quarter. solutions XX% placement in with well lower The earlier revenue declined the the impact dynamic permanent due placed up in XXXX comparable demand basis customers served. other where talent the as as the The impacted were are basis, our as first COVID-XX Mexico result on Across impact by SET reported all crisis, the a based was our XX% of an the staffing is up client's year-over-year track XX.X% for decrease when Softworld segment sequentially. in earlier outcome

fees We acquisition same in see gross International Greenwood/Asher. levels in up the exceed down in impacted was includes continue P&I, Europe. the in of XX% up also environment were to profit Overall Overall but XXXX. at sequentially up year, Fees recent for the over significant now the to placement compared reflecting cautious activity SET which and were prior increase the more X.X%. in our quarter period Education, pre-COVID segment pandemic

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

an basis driven higher with rate XXX of GP related points improvement which business XX additional year-over-year a fees result contributed by generates the costs. coupled of basis points, lower as higher from and combination These margins. basis Softworld of a employee of mix, which term Our points factors favorable and acquisition XX was were

reported additional performance our reflect continued growth based investment also expense increase The X.X% basis, incentive in expenses added in the fourth rate. XXXX expenses On fourth impacted by is adjusted quarter growth quarter challenges. of organic XXX the our years X segments impacted quarter. which factor expenses amortization in include rate segment the both [Indiscernible] XXXX on of these in in approximately a quarter degrees, the were intangible the first GP first varying operating Expenses and The Softworld, basis. organic basis trend and to other in year-over-year. higher growth every points expenses improve an expenses expense week XXXX. in for Expenses the include X.X% million year-over-year up year-over-year compensation grew While by SG&A of initiatives.

include will recorded As results mentioned, of and as $X.X delivered corporate expense. on our we range a expected XXXX. we our earnings beginning million annual an This I exceed million report QX the the XXXX savings primary restructuring the QX when of basis had expectation $XX in within previous our charges was

the were reported compared QX quarter for $XX.X XXXX. in million Our charges. each fourth $X.X period million in approximately construction from million of Included earnings $X operations to is

So on inclusive to an full asset year-over-year. are And of our results our year. XX% reported on million quickly operating the Softworld for of improved basis, $X.X adjusted Included operations the also QX QX results from earnings comment of XXXX in intangible amortization. earnings

in compared XXXX. as million year the of earnings XXXX, million, loss were reported $XX.X from to For $XX.X operations a

XXXX XX%. the of impact $XX.X The charge $XX.X charges, and in the the compared current basis, improvement million improved the reflect from as sale crisis a challenge restructuring million, were a market. improvement the of XXXX. customer dispute economy assets recovering of the demand restructuring in customer goodwill in lows tenant on On operation and XXXX from fulfilling in of charges XXXX, earnings to again like-for-like to impairment excluding related driven Adjusted and demand, in charge, an

also capital to back turning before QX. on our holdings. in earnings Kelly's investment the unrealized losses tax include Now equity gains and

expense item. Kelly This gain in in of onetime to value policy a $XX the common XXXX, in below representation XX changes fourth compared the in below a we the a on cash gain by prior and from earnings gain $XX.X our year. $XX.X Income reported gains from million realized operations as expense a quarter acquisition quarter settlement For fair the XXXX Softworld. the proceeds on warranty with million. line related to related operations earnings non-cash tax the $X.X the tax from investment of million million recognize pretax of received a million income claim insurance of to for fourth compared Persol the we of our connection quarter, separate are Also the pretax recognized stock with purchased were have

was was tax and share, XXXX. tax. XX%. of the compared share rate quarter share increase share, finally, $X.XX barriers in higher reported gains and per the for earnings effective per for the Persol Adjusting $X.XX gain $X.XX, gains share XXXX quarter up in Our per in to to earnings on insurance for $X.XX in And again on per settlement both of from EPS resulted was The fourth share Persol per charges XXXX primarily restructuring net the XX%. on settlement QX XXXX, insurance QX compared

receivable at flow Free the taxes, billings And approximately we January million to year in year-over-year, had to received $XXX required in of the free million defer of regulations late ability to to a pay companies tax the billion million federal the payroll Xrd payments form generated Global defer end million The cash we XX reflected customers on the the under flows, on XXXX, third balances, timing Peter. Difficulty]. $XX million no had that the used in increased partially DSO to impact you, the balance $XXX of paid paid [Technical sales includes approximately moving flows Softworld Now $XX Act, deferred of year by at reflecting which higher December MSP of free consistent cash XXXX. cash reflects outflows cash debt cash reported XXXX $XXX.X our million tax of offset generation. million was balance the to at to net cash year, expect the cash of $X.X was and year-over-year Accounts acquisition the debt outstanding. certain with totaled which In the reduction We which allows deadline, Xrd deferred was used payments net well XXXX, as compared partially and in end to And $XX payroll basis. We CARES paid of repay sheet to and as in to ago. under the ahead due change XX% revenue, of a days zero XXXX the in the cash $XXX increase XXXX Xrd our nearly now, Xrd a January XXXX, payroll CARES primarily Act. back January remaining by our to the XXXX related clarify, there January the is to offset days repayment XXXX in XXXX. XXXX. We January balance flows. on to was cash

Peter Quigley

details Thanks for Olivier. those

pipelines, XXXX, new As healthy our across encouraged for our enter wins all by reflected five increased services we're our of we sales and demand in segments. customer

this by our availability of labor participation shortages constrain shortages overtime, deliver the expect strategic induced to that the business units contributions we growing performance. talent talent each the and are our relaxation challenge talent. the specialty force to of year continue While expect rate may of ahead, encouraged demand, COVID we to improvements to in and In we restrictions subside recent

in And to will Our productivity segment lead margin will adopt on growing P&I greater outcome specialties focus margin. and efficiencies create and gross and higher technologies XXXX. improving staffing updated we approach new higher and to should that based

insights, continue should growth continue inorganic and XXXX will deliver in to K-XX XXXX expect balancing we and segments strategies to cost on capture returns SET segment. Softworld tech Education the to edge and through need effectively strong In adjacencies, and leverage workforce organic the investments see its growth digit investments, deliver recovery. and clients the in further a digit double as enabled continues cutting and that double growth our OCG, expect growth market to guide We future expand meaningful to the segment solutions deliver continued base. to with manage

and focused our our growth infrastructure addition of leveraged local we growth our welcome to we in In in by efficiency. drive create invest growing growth, delivering robust back, RPO I'll the enabled together continued five And strategies expect we team's business regional for International Olivier. intend what increased our as our business. Kelly's our from segment, value. shareholder new expect MSP segment, The more fast in now specialties, to aggressive operating in organic smart in and and growth are and we with about year share will XXXX To to designed model, Kelly beyond inorganic use that capital, drive to expect ahead, results

Olivier Thirot

Thank Peter. you,

of level current pressure results a some the steady trend XXXX continuation As expect we of continuation mismatch, the of ahead, current we increases well fulfillment. putting of on demand, reflect look in on as talent the as and

those believe at levels also all recent trends upward XXXX. continue wages the skill into and on will We inflation pressure in

full X.X% year, expect X.X% up we in the be For nominal currency. revenue to to

Our changes expectation to to or to steps mismatch and be the constant with of negatively governmental current challenged in reflect to rate in impact COVID-XX, demand will year. supply anniversary the available us. older related remains address the be will restrictions business continues the internationals folks will taking XXXX impacted the second Even the legislation talent the improve continue growth Mexico of in material early supply no Education that there as talent revenue expand until by half change to are and talent are that we we

a that will that addition, expect begin finally, organic In we changes P&I measurable of large in of initiatives customers workforce provide growth. acceleration potentially few to expect the targeted revenue we And and SET. some in our create could strategies growth headwinds

We expect XX.X%. be our about GP rate to

gradual more pace in improvements in expectations lower in continued based and margin growth shift specialty. continued The reflect rate Our of to in margin mix GP our a our business. [Indiscernible] fee inflation structural higher growth

savings additional take to steps cost leverage. meaningful and provide continue to We drive

this continuation before. QX in XXXX initiatives restructuring is Our of a

business improvements each to XXXX. we on In as productivity unit focus continue addition, move in into we'll

As to accelerate past, digital and in initiatives we’ll growth roadmap in technology discussed make to and against deliver the our targeted top investments continue our to growth line organic strategy.

So to adjusted SG&A be all X.X% in, we expense on to an basis. the expect up X.X%

and includes the EBITDA in our adjusted and our basis points rate we strategy, execute to margin opportunity of in we through points are margin improve on EBITDA effective expect EBITDA the we XX extended adjusted And work XXXX. As profitable for outlook EBITDA XXXX, has additional Based inorganic XX on which progress utilizing teens, adjusted high to growth. delivering which X.X% organic credit, organic we as measures finally, in of expect income impact delivered been basis the XXXX. an tax adjusted tax from our the

allows As a we JV and of focus have substantial the to Peter region. stake that discussed, JV selling and common XXXX approval has the our our cash created expansion balance now, to PersolKelly Pacific acting to on OCG in we And board's the the beyond. continued joint growing and all in we’ll significant us monetize our look build the in on of noted, the formation a appreciation market profitable Asia in have to of transactions a QX on with impact with realize By we'll of value in region, as continue investment we the significant in most shares sheet and APAC. flows Persol have venture business

now arrangement to joint-venture, net most Based income of prices, is the million complete Persol and $XXX of of owned common unwinding Persol B Holdings borrowing complete shares to in our this month available million $XXX $XXX which to of the to in we’ll available XXX million we accelerate the investment million investment Class value pay generate forward. and to back sale generate transaction JV to this cash the to proven expect the will transaction, capital, the All-in and repurchase to XX.X% our the Holding. in costs XXX debt, due. which and approximately on expected interest And PersolKelly net And combined build taxes net sale generate the recent are with have market on the positions of payable. common our XX of ability cross-shareholding no generate that proceeds us bases. approximately expected A by taxes million With moving nearly more representing expect Peter. cash of Class you, expected additional capacities -- cash we’ll of free than share a of flow cash confirmation million We in our shareholder of

Peter Quigley

Olivier. you, Thank

capital from our Persol we it's announcement we an our headquarters to Kelly and crisis. We during we're exciting partnership careers, and and to And customers their staffing Brazil PersolKelly skilled for have growth, that to continued have we today's support sustainable Kelly's reflects pursue we clearly lie continue can for to we beyond chosen our questions. for extraordinary points specialties sold bold we good specialty. And two talent an their where and the inorganic solutions the year growth five our shareholders control, transformative in us the unlock provide focus. a more recovery growth With we back operating business gearing properties, outsourcing growth demand every up market launched would since emerges We for take our thankful the script next our steps and a of in not of we where the commitment our XXXX next. year It's leaders proves our laser capital our on ago, lean would to era world our honored of solutions, believe aggressive within know that all announced specialties, win our but growth path this have Helix increased collaboration, in right do for JV, board value as specialty a in of noble promises. said, support additional ahead. our a it would since have unit Education call invest confidence suppliers they we open global and change their and growth pandemic fulfilling for ever their by be two acquisitions followed employees Kelly purpose the led experienced professional companies in for fee on what's innovative steps and we heralding products We the defined the investments future significant said, with of their regarding K-XX make worst driving strategy, high strategy Kelly's more tutoring, growth, customer’s as and and for XXXX specialty. enters workforces, The even committed shareholders. journey Kelly its said, focused in and all and model and years drive share clients aggressively strategy. We new Sustained meaningful on unlocking with pandemic our and leased made We an are increase acquisition largest and their path behind We can progress, to in while and and and such since directors best with and margin with we and UX of with talent for to year launched to and we company's growth. a organic days ahead, We're the turning operations. the SET since our will to two continuing their Softworld we reasons, to are purchase as an exceptional said, day, agility new unprecedented would make a of to to our Kelly's provide. predicted opportunities ago, toward real we of for create eager into we you entrusting and staffing recovery new businesses years sold our may John, specialty specialty growth have the this our progress talent now us drive the stakeholders. to to

Operator

from And of ahead. line Instructions] with the first Healy go Please Research. John Northcoast [Operator

John Healy

congrats getting and assets on have. you year you to monetizing the unique Thank milestone closer these the and of of close the

spend $XXX of on know fund minute just capital is also sure million million that count sheet I incremental the end. your would net half the on shares. reducing share I at transaction, about that that a year million to make want you've to And of wanted Just to the a the a had to cash transformation. call or or capital it by balance you be and relative XXX incremental so talked that

Additionally, we But the maybe you contemplating, potentially about in of terms are look stock where is, transformation. capital given price some at talk can you XX? returning as of shares the that shrinkage,

Olivier Thirot

to up. Good I'm follow going morning, to and Peter is John. going start It’s Olivier So

about it you XXX explaining is of the buyback million, number If XX the one was two, million of two of call. I I'm tax, during the in think number approximately the net net that and

Peter, from sell, initiating two are personal something? deducted want shares. we to. it's add of tax, net about do referring that is the $XXX then JV, basically the buyback to numbers million which our And addition now the the really XX.X% to estimate proceeds those of you million coming is So XX the of trade million that $XXX was from I our an net of estimation of blog

Peter Quigley

for John, comments. you morning, thank Good the and

discussions lot our about So capital we with a with obviously, directors, of time spend talking allocation. board of

to on-going stock, years our do I believe, due growth was for, on to Softworld profile that owned overpay buying use believe that this we the shares, I Persol. capital of of as transaction liquidity part the it But won't ago, call two said, of as back affect are is the We that board fact to to $XX.X capital finding with growth by discussions through the best this attractive our add we that and And of allocation. margin we million our inorganic our high that's like intend to don't growth, around what that profile. but subject to add organic targets strategy quality, with to substantially our

Olivier Thirot

that about But as unique shared and the price, think about is of strategic course, between opportunity have mindful And feat. we as continue are to price. feat, be I million with, very going but know a right extremely also, on, we at are you strategy. John, to using put bar we balance return, that possible strategic is the are up right know combined accelerate X.X to of would say paying pay And our ensure to we you making there $XXX EBITDA of to the million rate we times amongst mindful to also sheet cash course really health [Indiscernible] XX% of table we inorganic another high things, one that so pretty I good to, have an a nice is the which set, is we on XXX like those KPI, leverage internal the something sure

John Healy

clearly, of Great. sort kind business success and, there. that, that just there's just happening growth the about right that HR doing categories to pandemic, within to the structural how that I potential. well about may be or case traction some we areas that, elevated of post Any seeing emerge now, you're more you the what you wanted or there. like And ask may provide and mean, as feel solutions services or there's and some a exceptionally and are

Peter Quigley

also address continue and in by to growth outcome model, solution, segment, talent expectations business allows see way have mentioned it's for We're to coming companies terms operations. XXXX. we seeing I the shortage last think the the also as less pandemic our of of conventional more base. business launched we the out a of skilled we're of in excellent customers think that broad which opportunity recognize that seeing demand. had, using uptake John, we're professional to seeing professional in outsourcing adopt and that industrial in and the which and basically in remarks, of a the I our flexibility I we benefit that's noncore what solution And year my them

John Healy

Great, thank you much. so

Peter Quigley

Thanks, John.

Olivier Thirot

Thanks, John.

Operator

is Gomes from question NOBLE Our ahead. Capital. Joe go Please with next

Joe Gomes

of And transaction let the year. me congratulations end also at add the Good morning. for my the

Peter Quigley

Thanks, Joe.

Joe Gomes

a Just, XX in the nine and growing you goal for to half half full and year. of a have a revenue

in also, do believing that be in we in COVID? better that of reflection all guidance, your fourth shorter on, a came bit a that? just versus what that in to kind you saw. behind job you behind on much research was into SG&A was restraining quarter, a that what the with that, the up the little or wondering benefits expenses something You is And, Going were late else did should there restructuring have

Peter Quigley

SG&A. the let I'll Joe, Yes, on comment Olivier

line constrained late particular starting Education result the the created quarter, and as fourth top headwinds And in for disruptions our that to supply is the as of quarter, be in in are the the worst third in particularly the in fourth P&I we mandates, segment. both think on-going implications the Omicron as even talent in of other fourth our think quarter, the and well absences was but chain XXXX a I availability some and quarter vaccine us. behind going in

I’ll So SG&A. attribute terms I let comment the of would in Olivier topline, on that's what

Olivier Thirot

Yes.

week. XXrd again and I QX, back also the of to impact So would mention this

I so to you about, [Indiscernible] did a to years, with I week. of additional about or about have time, growth So even that one at putting exiting which X%, think we mean, need XXXX mention, revenue really an the as is this deal

of more of X%, about we don't a course seeing we say including, half. like world would three So and but are, I at say where about

wise pretty XXXX. run in know okay, that acceleration it some rate we fag the was I revenue a we of need So would otherwise, I think end that say

saying the I when conversion we That the yes, to use we year. would I much look right. basically incremental if more QX up say, bottom how push mean, been deliver On SG&A line. we challenging, no, well, last at, has of you to which $XXX is rate, of to GP, like you're

rate We we think in better, XX%. show have incremental started so XX%, leverage XXXX. ITR, We our was conversion can again in to about QX, especially do meaningful called

the reasons the recovery in phase. a say, is improvement our management, challenging of which little would cost in, One is basically, I bit

as be XXXX, thing where XX XXXX from in this million. is on of outcome The business with what we starting XXXX to more combined improvement excess would that each provide And or meaningful leverage benefit on we to should move efficiency QX continue conversion incremental in XXXX. in in the second and improvements, call savings unit action, really focusing rate we productivity into expect

Joe Gomes

do acquisition. you yourself look any thinking, and Okay, these find that. the the you in, challenges And in set, to just that you markets? for of having you're stronger especially in pool peers a you I And your about talk was thank candidate skill at relative talent if markets

Peter Quigley

back and of space. in is We And on the believe behind segments. increase, in Omicron of for indicated, we to lines. across we to us, is lower, continue have talent experience attracting the lower we're as come there look wages all the Education to it can notwithstanding opportunity in five that to terms a people quarters, putting Education. think as may continues stayed Education, growth In to strong think begin pool they talent concerns demand that, the our side attractive more with so challenge. work, I Well, gaining that the last parents the increase wage, to schools fill we've stabilization, few In challenges of and the healthcare the believe abate best-in-class additional

Joe Gomes

does talking is over or months? if I'll throw of since Is one pipeline What more, the past, less How in are monetization looking of the investments attractive seeing in gotten it more we it here. Okay, look terms valuations? Or may in that acquisition I six at today? nine attractive? kind we're

Peter Quigley

XXXX, there Well the properties. a solid remains, probably the would was the say I properties tax to But potential market Joe, pipeline on around is market attractive identifying issues -- robust. in in due for changes. the spike

As to going Olivier overpay. earlier, we're not mentioned

We leverage that use be OCG there interested if ability particularly in our the can area Again, In we're in RPO appropriate; are will be in and to also space, that as valuations But practices. enhance would is acquisition our what engineering, telecom K-XX adjacencies, we in from practice, away our think we reasonable. is Softworld. or MSP we particularly deals think in or opportunities that reflected technology we the if to properties as interested well. demonstrated an are walk OCG our would the of are and the to assuming businesses science, Education areas beyond valuation in and our

Olivier Thirot

I available leverage knowing and we have billion sheet caps combined [ph] would just balance that we capital now, say of add, have the transaction, by available. half a flow, cash

go Peter have was as during this opportunity mentioning, remarks, bolder. to bigger, an we prepared So

software to get now to because transformation, at there more level we have looking our especially are accelerate, bolder, of getting… around is and the not that we properties So at where we bigger, go

Joe Gomes

really look Thank unfolds. forward questions. the Great. taking that all how appreciate you I I seeing to you. guys

Peter Quigley

Joe. Thanks,

Olivier Thirot

Joe. you, Thank

Operator

with ahead Kevin Please Next, we'll the go Research. of Steinke Barrington go line to

Kevin Steinke

Good morning.

Peter Quigley

Kevin. Morning,

Kevin Steinke

morning. Good

line that is want for having ask also outlook to there XXXX. the Just for more Mexico from XXXX? a building growth outlook And of you're about impact Should meaningful growth that any currency we bit on top little think impact a guidance? that into

Olivier Thirot

especially of XX I impact give look guidance basis mean, at course, was usually nominal comment QX point. I currency. about unfavorable we would When you in on revenue the Yes, our

item basis full did that I the things are on line point, you of if first by changing. as So this impact of XXXX have time about as new mentioned. the QX impact major your see unless XXX would I top XXXX It about in where wouldn't, a not Mexico, legislation. our but to Back us think for points we

So in September we that us impact accrue come did going it's change. [Ph] in is going something to to the of quarters be until anniversary XXXX. this to We

in rate business. have especially think you the some GP It that, seen our when a margin. on why positive it saying beyond we QX our impact I improvement, is look revenue, at on international is in partly

moving see now which QX, we is is rate of we much to revenue model value the Mexico, we impact our in in over to because, business reflect an we the And of opportunity higher down course, about gross to what it's knowing do in really this which less what So Kelly. is emerging. start adjusted course cost our is to The we is we have customers type basically see now and and proposition change GP profit up. in solutions, on that reduction the revenue to also last XX%, new Mexico, move for margin offer what the thing our is in than the the see dollar there on of base

say impact on I change the anniversary, significant So revenue, But we on it less would dollar. GP yes, of are line that an September. impact much to until in see on the bottom limited impact we I to revenue, I mean, continue And going would on overall. the this call

Kevin Steinke

Okay, thanks.

margin was for And to market to to like you some sense strategy higher to be solutions. just Mexico, correct? it that that sounds in make in it so Is relate still up and it market move the that helpful

Olivier Thirot

Yes.

Kevin Steinke

think you And also changes you workforce that customer Olivier factoring I about some know could P&I all. don't their Okay. the at strategies within on thinking and in SET. potential mentioned, expand XXXX outlook, I to if

Peter Quigley

market, contingent companies Olivier comment well. talent let their challenging as I'll Kevin, use are But modifying Yes this essentially historical in of labor.

are and permanent the board, able there are across retain to concerned For that, to example, given are contingent because placement employees, for customers example, attract using about earlier their as talent, turnover. being but of opposed they to they not labor, are moving own

the impact top at rate would are historical than employees a that practices that are And approach. our are line towards existing have could taking Some moving macro those environment revenue companies due kinds companies be. the particular, of an converting higher on much in changes to if

of will the more we're revert in it's In companies a existing of some permanent normal we back just more terms probably it's a kinds reflection we think to relaxed, models instances, We of contingent use get So when in a expect business don't constraints the those seeing. things the market. changes practice labor. change. think that And are talent of

Kevin Steinke

hiring, into stance that's permanent that factor aggressive customers by guess, that gross helpful. I Okay, margin your more with And much on outlook. how does yes some

called margin You you growth gross permanent how of just out you are are what growth XXXX? in about maybe placement and expecting, kind continued thinking placement permanent helping out or in

Olivier Thirot

outlook, Yes, basically when rate XX.X%, GP which which project we the basis is, versus you think about a up about points XX of is XXXX.

about rate but versus coming points, favorably impacted for XXXX was our are from you XXXX wage basis XX that know might basis by remember up Just to point about XX we GP subsidies. in XXXX you

basis say that XX very similar we the the something XX on basis points, of kind so like like-for-like basis XXXX. be for points would So I would see more

the XXXX was sharing QX, fees now. type I more up grow don't to we seen our in have at versus continue in to fee expect QX XX% that the XXXX. we today business Of course, versus than of is of and XX% XXXX, level

dynamic but that, continue we But is in know than XXXX. to believe pace that are seen to to we get continue, this fee going the in talent we to what lower business. certainly So, have with good we the shortage, traction going

some we seen have we not the to and to So yes, certainly. fund well, plan fee but continue we XXXX expect business with in impact

Kevin Steinke

helpful. that's Okay,

me. for here more couple a Just

mentioned persist think terms it comments outlook growth sounded about up on growth? of to you assuming XXXX. also expect on there would is that that in And Is throughout your impact the prepared impact in that revenue assuming of that any you'd something kind frame like, the of talent you're for way of I supply amount the continued year?

Peter Quigley

I Well, projecting it's it not immediately. Kevin, I going don't we're persists mean, to that year. end the know throughout

demand able continue progress people good we to the the likely fill And mirror, are have, mentioned the news us. is, care more and worst labor better. is that for with Omicron increasing, health rear I think believe all and to back that that being force wages are behind is open as to of with the We participation basis rate view believe earlier, in the demand regular coming schools we with direction. concerns that's As on stabilized the the we rate again a to the the more being right us. is in work, issue Because

necessarily going through the that it's foresee I So year. to don't persist

think going improvement the gradual to throughout we're to continue see year. I

Olivier Thirot

the early Yes, little Education, start for we but and bit did it today to mention of it’s probably especially going be XXXX. a challenging,

the I wage overall, good inflation news in QX. is think

inflation customers of able have wage in especially seen of market Education. inflation the the on wage in about We as X% supply. QX. very to also realize well shy at at interestingly some discussions environment outcome with helpful we help as new That's in And in terms us P&I them have of be It's one for P&I XX% to seen the have we talents. to in attract of

us. that it's because is But for really for also helpful good, talents. is it's all good good because inflation attract because to So us

Kevin Steinke

Right.

expecting XXXX X.X% base the makes SG&A, adjusted sense. in Okay, number just charges? X.X% roll -- what's growth to you're off Is we restructuring that that should the the base? that the of excluding And it lastly,

Olivier Thirot

what it's say or really, Usually, would exactly were I to. we that's, referring structuring. excluding that's Yes,

have four get be best So the five That half. you the there. we apply run; and way and probably would a should to a to half a

Kevin Steinke

continue And in improvement you. to thank and congratulations forward looking Great, APAC your XXXX. to on monetization

Peter Quigley

Thanks, Kevin.

Olivier Thirot

Kevin. you, Thank

Operator

Vogel with go Next, Sidoti. go Josh we'll Please ahead. to

Josh Vogel

the Hey, with at good news those that for deck of yes, and exciting just there covering certainly monetizing helpful APAC the the investments. detail. Peter end slide thanks congratulations, in Olivier. morning, more And And

into that to a some going like a covered maybe deeper I little the QX, a But just the what want when questions bit off we you other lot So I of maybe build lot of heard. of I'm and that had just looking at how curious, questions just the just was gross profit guidance of I much from forecast above QX? coming that into big number? guidance bridge, was out a baked Basically how when tailwind obviously much you perm. was like issued the

Olivier Thirot

seen. Yes, we I bit would improvement then say we little below, a to nice But were what are year-over-year. expecting

so after Basically basis This since push far, So forth one course, our acquisition. of points. fully margin we basis was anticipated. about XX is points have XX you seen by the

year QX, some bit at say of are visibility little end time basis we permanent points cautious usually some to XX are be when have companies temporary end placement the So but on I start a on QX term because on recruitment. close each would some especially year to we you of that, putting their placement, stop QX,

end QX of far usually, So forecast, the really it's especially difficult QX. to

favorable more it's anticipate have we one quarter on are related these is them of in of The we of difficult XXXX. little actually more a good related in employee but is bit things front overall, costs. we of have [Indiscernible] quarter employee anticipated kinds called We a I from QX. just costs. the to sometime like little traction which bridge can how movement the like specific It rest, we quarterly would where the quarters, for fluctuation, you a what front end XXXX bit was look seen But say, anticipated more of placement bit know to In term have end a can usually always couple than little especially at at year, news. usually well,

But I than So what than anticipated. overall, anticipating. we're different massively better slightly would say, not

Josh Vogel

higher of I kind out curious SET. off, a And from a employer certainly was it. costs mention And so helpful. that's do it was that of That's like one just tailwind related you the in that, just But there?

Olivier Thirot

Difficult anything tax to of and we say there including it because know, I lot than of But play. temporary comp. several workers payroll items, a some is more at have else. probably are healthcare things would

say we would temporary, I majority of yes, it although shall the probably So see. is

Josh Vogel

P&I about had and Okay and wage Education. comments some you at inflation

mean rates those and or XX% you think by in I better? bill that even said your were metrics was Education? they So X% up P&I were Does

Olivier Thirot

did and you job wage it's when basically, in done to SET, same spread roughly look rate have you up QX, further sign improve eight is already as plus our up. rate. that very moving basically weight very trying our good we this the good strong say, look our a you wage X% way, a which interesting moving really the QX, at you inflation a done And wage faster that inflation that's in said, And interestingly when our I And would that's meaning was is mentioning. inflation. we bill in at I can we spread a know because our at get SET, up, where deal in basically and to boosting the persons are outcome spread pace P&I, meaning meaning Education pushing and have XX% went organically a see in our

seen have reset. to We

Josh Vogel

lot be and because great. then -- that that's software looking bit And add? you about there's on and the built and extra a quarter of of but moving wage an outlook? much year understanding bill What just into parts. already right, a rate your of headwind, are does expectations much gave how at improvement full know how software there's questions inflation what All that of guidance And Mexico other little revenue a I outlook the also,

Olivier Thirot

seen software growth. you about boost at Yes, so basis XXX you on did about software look a if provide ever that of basically, of QX points

going April again we anniversary that fifth. to So see the until unless we acquisition in and Softworld are of QX the XXXX on

in no, you of basis can divided points be take very to the roughly by for about QX, you're I So I if it's but sorry, XXXX point would I'm divided the because course. basis four, -- speaking, be sorry, XXX by level QX mess speak mean, be going going say XXX to we only high think it you should making impact, as

-- inflation, up. you also P&I, forecasted the The now to we the in for we of more that XX% we Meaning I January XX% we we in X.X% inflation see. was sharing can Sorry Education, also what of supply wage at slow with believe for of the mix is down be in the ease. are usually careful because than balance. not type going current clear, And the Like inflation, have and improvement today. demand you because environment, believe to

usually are So we pretty cautious.

very, on type But much we usually high be double today. are we we below So digit very say the the And surprise, positive are not a too especially baking on I a that cautious XX% mentioning of revenue, may would at wage on far of surprise are beginning judge again, inflation. XXXX.

Josh Vogel

you. of models just understood benefit one, us of Now out the housekeeping thank And the and of for more those last kind building here.

to we a income statement? With repurchase, on section share count they balance sheet? what should the would the and the we share using A lose B the -- equity that What count on be Class should does do

Olivier Thirot

precise, I X.X basically the and mainly B A like XXXX be I it's think -- shares. to roughly mean, mean, shares so is some shares negligible. it's Yes, I so million something

shares. our is of shares. is It's A about So million really X% X.X outstanding the majority

have but going get you in So it call it's to EPS I EPS, the future. an on wouldn't impact major when impact

Josh Vogel

Well, APAC and great. on related Okay, congrats news. thank you the again,

Peter Quigley

it. Appreciate Josh. Thanks,

Olivier Thirot

Thank you, Josh.

Operator

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

Peter Quigley

very can end And call. your you Okay thank I John, much. the think Appreciate we support.

Olivier Thirot

you all. you, Thank John. Thank

Operator

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

now disconnect. may You

Kelly Services (KELYA) 14 Feb 222021 Q4 Earnings call transcript