KELYA - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to Kelly Services' Second Quarter Earnings Conference Call. [Operator Instructions]. Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. A second quarter webcast presentation is also available on Kelly's website for this morning's call. the to turn host, now would meeting your over Mr. I President and Quigley, CEO. Peter Please go ahead.

Peter Quigley

Hello, welcome found Olivier everyone, Second Art. language, walk you, Thank and safe our presentation Call. Financial who harbor me materials. you Chief through Quarter can to With today our our is be Thirot, which Officer, will in Conference Services' Kelly

Olivier Thirot

Thank you, Peter, and good morning, everyone.

statements differ performance. comments made by the from include forward-looking including Actual suggested during Q&A, future for could call, any about this reminder, our expectations a materially As those results our may comments.

update no obligation for statements have risk call. the We this of future Please description to to factors filings the SEC actual made influence could company's our on that the refer performance. a

on the in in we of or items PTS, beginning and Softworld and Discussion acquisitions the our included organic designed trends the In and our our adjusted basis. operations. an growth an date, on QX to RocketPower in X XXXX is organic a full certain to RocketPower results reported results results of non-GAAP call, XXXX April since metrics our addition, in give consolidated of acquisition Pediatric be during Therapeutic of acquisition operations the Services financial quarter. of pass PTS. of on in our References And of basis certain discussion did anniversary the adjusted are data into measures today the exclude in our May insight for discussed QX, Softworld are included growth will XXXX.

now available deck back using on And website. call slide today's are is we that the Finally, to you, Peter. our on

Peter Quigley

Olivier. Thanks,

created million slow in and of we years. Ukraine pace our in set we specialty in and X period proven and redeploying and operating SET, marked for more other deploy that capital holdings, reporting shortages, the who than no to largest-ever $XXX acquired disruptions model. capital become and acquisition market-leading economic strategic with anniversary RPO tutoring, segments available came RocketPower second APAC pursuit our Even reducing capture Selling education operating to Kelly's be by strategy. of carry in and powerful quarter the X global specialty staff K-XX Therapeutic these technology executive second K-XX OCG, ownership about while and pandemic, our laser scale future. to focus these solutions the and And acquisitions, supply in X down specialty investments growth fast-growing extended X growth. execution, debt more Kelly's enabler exceptional has unwinding in para MSP In in the in are to a model, critical intend It JV for work high-margin of putting We've In uncertainty, of Russia's growth launched launched We in high-margin of each ownership we been our all specialty facing the our capital and after experts focused growth Brazil, our with acquired that our a adjacency. margin years. historic Persol the education of and higher monetizing years past an to focused business. our PTS add opportunities rapid in close, arranged to past products most market, X with labor an aggressive Pediatric higher new real don't Softworld RPO effectively and over Greenwood/Asher optimized to breadth made practices and a it Services, education we design into to specialty, We new identifying on each fund and to chain and operations and investments space. recent we've to new this As has have technology war a designed we staffing our search. specialty, estate within expand over noncore purchase acquired the cross our and in fast-growing enhanced executing

and see drive Turning shifts that approach to economic our demand higher-margin our for as second by we said hiring uncertainty growth. excellent inflationary in strategy into off caused to against is some We we and supply pursue Specialties business. a of QX. quarter are interest higher-margin growth, would disruptions specialization results. pursuit our successfully further Kelly remains Despite guarded hikes, pressures, rate revenue specialties We confirmation And paying translating in mix that GP executed importantly, chain intentional industries, more towards we to profitable solid.

significantly rate was is Our and GP acquisitions. our by QX overall bolstered than it higher last year, organic specialty

continuing QX. in rate in the also segments products improved positive our GP in growth technology continued of our in dollars second segment, organic reflecting double-digit specialty, continued Softworld, Our and a we in quarter. trend margin positive In specialties, each which deliver each the X improved includes saw business mix higher-margin gross and SET, towards to shift

delivered year-over-year search fees. increase Greenwood/Asher segment and strong executive Education growth in Our substantial drove a

July, shared to higher placement our a And trajectory. we final In Russian a which EMEA business gross One regarding Kelly's revenue deliver we and delivered for note our permanent revenue, primarily the in on We last OCG P&I, to continued change completed growth by were notwithstanding a segment. company. segment, considering includes and operations. now Russian P&I robust fees. X to delivery RocketPower, growth profit that to impressive customer our options quarter transfer growth Our International, that International continued our transaction growth discussed MSP due last delivered calls, In decline large in RPO we in in practice. in its Russian

details it exit. operating him Kelly result, turn of regarding results. QX a now in will a additional at Russia. to the As look is details impact the of provide Kelly's our closer no I'll over longer for Olivier

Olivier Thirot

Peter. you, Thank

XXXX, currency impact. quarter unfavorable of basis $X.X from including of second the X.X% XXX revenue prior up points billion, year, totaled For the

revenues our and RocketPower up were unfavorable the market QX Russia. in PTS Included favorable revenue declines as resulting XXX in from as X.X% in in well that quarter points of are constant and currency. legislation the acquisitions staffing XXXX impact increase So XXX impact changes market from basis basis point through for Mexico from

Peter as on fees call in on large As was as which our to for which pressure in products as of direct our staffing been -- partially segment's bill mentioned center up offset of has at impacted Outcome-based customers' our contraction direct hours staffing second volume, rates About which in demand Revenue volume. resulting XX% our revenue a revenue model, a to P&I partially in we and center XX% the year-over-year Professional from be from outcome-based Industrial revenue outlook the our market. our staffing quarter talent current were call hire and by hire business part higher look in by the XX% segment, The declined specialties down And account growth finally, X.X% continues XX% year-over-year shift decline of revenue a decline other by the segment services in discussed offset from upward from in the quarter. outcome-based continued. specialty. we demand lower Perm wages our May in call. has the declined comes outcome-based

up was Revenue segment. the X%. to Moving

include and telecommunications. for Demand to reported In technology fees reported in results continued, includes demand XX% growth. outcome-based up year-over-year. recovery solid segment, of basis. to double-digit The specialty, continued in a growth with placement Softworld a see have our remain growth SET also continues We solutions strong XX% year-over-year up permanent PTS. acquisition the on our Education which strong, continued be May

XX% revenue as of talent the by wins that in with are in and disruptions was So reflect were rate. still impacted earlier demand pay our basis in continued search Permanent COVID-related XXXX. XX% and robust primary customer as meaningful have executive an growth comparable fees, off, new business in the seeing higher up year year-over-year. we XXXX education broaden Steps fill Greenwood/Asher to the trends to our taken improvement placement on organic year-over-year. supply well growth was Revenue period Education

of segment was QX. Organic continued in X% quarter. up growth results to beginning on OCG deliver OCG basis. reported the growth, year-over-year are in with The constant currency the revenues in RocketPower Our XX% results revenue a included

reflecting X% of X% QX MSP nominal Revenue product, on growth our RocketPower, strong very impacted negatively growth to delivered some addition was results in year-over-year positive, the currency this of down EMEA currency in PPO due organic International declines to in enacted early in declined offset revenue for up Revenue constant exits growth XXXX. basis XX% the RPO, The demand segment product growth by OCG the customer in Mexico basis. and was region partially in customer In as legislation on a in our was result currency. double-digit a in well of trend a by in XXXX. impact as as constant

of As Peter early July And by reported Overall noted, was Russia in XX.X% operations X% XX.X% up currency. XX% constant a constant year-over-year a permanent of the QX. grew in revenue completed for in Constant excluding transaction currency. our year-over-year basis that on in resulted currency the finally, segment up quarter. EMEA, in in fees we placement in gross International Russia was the profit have in growth sale

and organic increased constant PTS, an RocketPower GP basis. on currency XX.X% Excluding

of improving for compared gross to in profit Our improvement. XX.X% growth second of strong XXX quarter quarter XX.X% result year, last a gross an the point was basis a profit the rate,

and in Our solid acquisition basis acquisitions to improving RocketPower added GP our strategy rate. continues total. The of PTS contribute to points

improvement second a improved the in well, of basis the and the products points up expenses dollars of business basis in points intangible XX.X% XX rate. and from on shift has each In mix XX.X% costs. as continued added improved SG&A addition, we RocketPower other in And basis. higher-margin XXX rate a which basis Favorable resulting and gross employee-related higher points basis GP our business basis drive coming were organic XXX for combined business segment XX and XX rate Expenses on basis as and currency the and by organically. constant to impact towards expense rate constant when to specialties. expenses continues each include growth of reflecting the lower quarter was perm units, our points XXXX operating well GP year-over-year improved PTS, in mix segment reported with currency from year-over-year gross look as margin points across amortization fees profit

organic on majority constant QX, higher talent. reflects X.X% in grew Consistent expenses for full-time our increase expenses of SG&A compensation-related currency the So year-over-year. with the an basis,

held These business, doing incentive of need continued pressure to as the well to in line to such completed base gain with decision assets. GP our quarter, charge we our as the charge subsidiaries on the are difference attract to is value to adjustments underutilized performance-based real for for related additional gain business related produced continuing the to a in which of with growth. cost The client-facing Russia of Russian compensation to inflationary smaller operations, continued sale transition reflect Russia have of our towards reflected the the assets we monetize and charge operations noncore The Russian end between our Also QX, growth higher $X.X in of current and the of our deployed pay. and our and We longer our to our operating trend operating the in expense commensurate talent sale the reflects follows provided Even The and were transfer add increase earnings Russian on impact growth to property be revenue environment. headcount the and carrying impairment increases of in teams and a of firm million quarter. relates in for as transaction from of sale fair the no part efforts $XX.X impairment million growth our In the from to exceeded to leverage periods. July, Russian retain assets value at assets there. operations.

from operations Our $X.X second the reported for million. earnings quarter were

intangible more up of were reflecting in and with the $XX.X we are charge, operations $XX.X the of in Persol asset in of compared XX% earnings just of Persol an earned of inclusive reminder a our Holdings in operating that XXXX. the the impairment adjusted on first consistent Excluding and to PTS and from QX XX%, asset our XXXX. gain the than QX million rate of amortization. most and incremental earnings investment RocketPower of Included the conversion QX APAC million XXXX, of monetize And results transaction quarter $X million, sales

anniversary related of although and these be million transactions. until impact losses those second our prior there So will to compared year income further include gains XXXX no periods $X.X expense period million. with P&L periods from tax for will the benefit investments investments, was Income those we the -- comparable $X.X quarter tax

XXXX. rate tax impairment the of on impairment finally, $X.XX decrease per our assets tax adjusting gain The was expense tax XX.X%. EPS assets, on of impact of income to EPS higher the was as to Our earnings share primarily earnings adjusted XXXX on assets, compared of to in Russia the per gain Adjusted adjusted XX.X%. was of well in the of rate on same for all and effective quarter pretax $X.XX $X.XX charge the Russia sale as gain from quarter share net compared in is adjusted for sale related share And tax, was those for QX declined per shares, second period EPS and a share XXXX for XXXX, the XXXX. XXXX, charge XXXX transactions the QX $X.XX Persol higher reported of our per of per the resulted compared in to although XXXX share earnings effective in

to change the in XXXX a U.K. Our benefit tax primarily the was tax of tax charge a benefit -- rate due

moving to Now balance sheet. the

end second the quarter. of the As of

noncore so advance Our transactions commitment to strategy. our this reflects monetizing that capital demonstrate sheet significant far specialty and year X relocating to our balance assets

XXXX. extent, we of Global ago. resulting also Persol result as a DSO DSO facilities, to an tax our at to arrangement A First, which of We and MSP liabilities Holdings income second billion of million and acquired of year-end XXXX totaled Kelly in customers repay and in quarter cash customer CARES XX% in available XX of mix Global payments. the increase $XX use now our and from APAC credit the increase partially used shares to debt $XXX Persol timing end XXXX well the an and to higher B approximately most the the with an free of the increase completed balances, payable second payables, the $XX common also compared of accounts end over of in the quarter in Free March no terms million cash in our in XXXX of $XXX XXXX, to we quarter QX, cash with lesser then working And of XXXX. year-over-year, $XXX conclude Persol the million days an X the Holdings Through deferred QX, capacity of to other at includes Peter. of $X.X to reflecting the taxes a And on of MSP capital joint federal sale the of million impact our use the and PTS cash you, investment year with increased pay to At as cross-shareholding the flow sale With approximately of RocketPower increasing payroll free the under the receivable of was and in common February, investment the investment common payment as DSO of accrued as flows. the DSO. flow, the $XX primarily million nearly we result deploy. increase extended were end of back as well mitigating Persol. of to Act. increased year-over-year in May. Accounts our capital. supplier a Class had in as of we shares repurchase At consistent reflecting in of have and venture, sale million a X increased revenue was ample on second increase available continue debt days, in stock

Peter Quigley

details, Thanks for wins our by Olivier. in growth demand and encouraged new ongoing customer those We're across segments.

year's We units our to this specialty strategic each of business deliver expect to contributions performance.

segment. and enterprise future. we by see improvement and we've P&I the near-term technology we our inorganic our In discussed productivity this line top in wanted anticipate calls on explained on most discipline segment, the and improvements GP said growth to we into deployed SET year the meaningful with In which challenges followed dip prior organic technology later good QX, returns delivered as deployments, to upgrades BPO, overall Our contributed a we investments. and SG&A in segment, in late notwithstanding showed we

in telecommunications quarter business districts growth our specialty QX. improve during fast-growing and that this the we of acquisition expand growth PTS and yet across fill second revenue we our acquisition further and OCG, that rates the meaningful RocketPower go new beyond. another SET the in Our K-XX half K-XX first invest our nice we saw and In met second GP rates year, in RPO will our in creates fill significant from improved segment. contributions quarter. second remainder within our capture education, the committed specialty, quarter high-demand expectation, to including live and began expect Education XXXX of won business, adjacencies. We and our year, high-margin, for said would We of growth we the of yielding In

back growth aggressive capital drive growth X EMEA focus deliver Olivier. expect our continue beyond. our business year more Our of healthy and couldn't quarter and we from in XXXX. second though and what our to some second designed local disciplined completely have we in share To regional welcome International of Mexico's together the the in GP in delivered Kelly expected segment, continued wins offset about MSP are and specialties quarter. XXXX in legacy also use legislative from growth it operations our segments, to sizable we These ahead, begun organic said of RPO in in stakeholders to the changes, And produce growth the for negative top business impact and strategies with I'll line value XXXX the

Olivier Thirot

Thank you, Peter.

look results on second the and ahead. quarter we reflect As

even will economic that while growing a expect in uncertainty, demand talent challenges meet for demand. to that steady our with deal services We continuing with be we there finding

pressure that interest the increasing gradual the unusual higher at as We to and And are full to wages continue, of on in levels inflation year although expect half rates may on year. businesses the Kelly, they put our growth industries wage react pressure rates. events a will upward of Specific that pace more X all there are certain signs skill of and outlook. consumers impact second

This in operations. points. basis revenues QX our First early XXXX for International reduce is approximately transaction Kelly overall segment the by XXX Russian sell to will and our

line will one change rely of second use A strategy business. a on-site earlier customers' employees. year, to calls. and one in address our competition the on number enough from mentioned of there challenges is labor expected impact Second decided of we staffing differently heavy this talent hiring of contingent in labor not as a fully today this instead the large to customers' by talent to with its top changing Even one this today's in transitions full-time that that offset on half with customer Kelly work directly change and of large will be large

of that means our revenue including currencies, the we growth now reported several impact the to euro, addition from more In the against negative on U.S. dollar strengthening expect significant FX rate. a

of XXX be full headwinds, to with business basis currency. of points revenue expect we changes outlook impact. in legislative year our XXX Mexico well nominal is impact XXX So currency PTS as on in points basis from inorganic Russian about RocketPower X% up Included unfavorable a of the that point those basis and revenue growth and sale in and a from the X.X% basis unfavorable to as

our by full revenue to basis conditions. current we on So on year are growth moderating currency a based XXX basis, the XXX for points outlook constant

impact conditions. assumes or change deterioration material significant outlook Our macroeconomic in COVID-XX-related no in

be quarter. with our rate guidance, we revenue QX fourth While by expect revenue we than growth growth we improving the quarterly not mentioned providing year organic rate full slightly are driven the factors expectation, lower may have in

quarter growth as will be full our seasonal of peak We expect schools entire the rate Education from segment, as as growth benefit that traditional from will for in our fourth in P&I. quarter session revenue the well a quarter

to we XX.X%. XXX full reported around a includes GP point XXXX our year from for XX on rate point is in improvement our a from sustained A of basis based in and outlook recent higher basis to be improvement of XX basis lower-margin a XXXX of These continued GP specialties our reflect structural rate gradual basis expect the growth growth margin We business, GP acquisitions. rate. in a our in points specialties. XX.X% expectations This more continued improvement and fee-based our pace on our shift mix

Given outlook, GP our GP the rate will XX%. year revenue dollar full be we that expect our growth and for

to basis, expenses. Part on the increases organic To expenses to on X% environment retain X% in incentive as on current focused growing address of the our competitive continue We we we up an ensuring remain is reflecting need to as performance-based talent. of compensation SG&A well increasing inflationary expect in pressure adjusted talent, attract full-time for and that compensation equation are virility initiatives. the

In of focus business addition, talent to initiatives growth. necessary in the enhance improving assignment. produce the workforce our talent all future to productivity We our on across for of on investment that place units that we the ensuring remain we continue and committed technology

We basis the that XXX PTS expense. acquisitions, X points will also expect expense of add RocketPower growth, including approximately SG&A recent amortization intangible of impact and our

EBITDA low And tax tax in delivered the expect on outlook rate adjusted includes to work we was margin utilizing progress credit, margin opportunity in effective for X.X% to income which our the from been are EBITDA mid-XXs -- EBITDA range, impact inorganic point basis strategies, an which between which we of to XX XX extended through delivering the to finally, expect adjusted the a has Based XXXX. XXXX. adjusted XXXX, in as organic execute margin adjusted adjusted X.X%, profitable of improve and additional we EBITDA growth. we and our As measures our X.X%

to effective largely Russian charge impairment higher nondeductible. tax the expected that our is Our related rate assets reflects

you, Now back Peter. to

Peter Quigley

Olivier. Thanks,

Kelly, short-term year now and talent this half our headwinds of solutions. signaled undeterred and and we economic for the a pattern of shortages, We first followed uncertainty. progress The continuing XXXX coupled familiar services for a with by would remain that bold of demand strong

and optimized strategy, that to to GP we committed growth. guided which leadership operating firmly on confident continue willing and seasoned company from a continues improve model, more proactive well-capitalized We're changes net are business nimble, We success. a to well-defined and and able Kelly's adapt our market focuses benefit by to is attention in to quickly team our specialization which mix, margin, our our wholly

Our actions putting have deploy created to work the growth unprecedented support effectiveness decisive to will drive which that capital are capital signals take that action to with we Kelly our and to shareholder value.

We wisely. have chosen specialties our

are specialty and investments needed We driving high-margin are know bring growth growth we that and in Kelly's pursuing and technology where acquisitions on we can talent delivering significant GP life. we the win, while in from to strategy alike, organic to improvement investing

we Kelly value of clients, year, shareholders. to questions. strategy for the can creating continue execute to and is the stakeholders, talent, Art, in As half second open all you suppliers the our of our call now

Operator

Northcoast with we'll Kartik Mehta And Instructions]. question, first our to [Operator go Research. for

Kartik Mehta

half June in anticipating or I a had today maybe question I'm to inflation. know if little even on wage seen wondering bit you're talked what in wage changes inflation. second was compared any the in first quarter, July. maybe Olivier maybe wage just inflation it a Peter, about the you've less

Peter Quigley

higher we're somewhat say, it still let has provide the It's from Kartik, I'll wage I normal, moderated a considerably But inflation. of support. beginning tempering but of the seeing, Yes. Olivier some year. than would

Olivier Thirot

clearly, we from QX. moving I deceleration P&I, at inflation, education, our average you said, see a P&I look to In you to XX% when X%. look when wage Yes, QX at

moving a So little bit would some quite still X% say but start lower, I elevated. of is

around start -- we For see XX%. mean to is I education, don't change. we XX% any still it

still STEM around and staying our change SET or to real X%. no So for business X%

little in P&I. in more trend. really a down it's again, than see we where any like change a of but So change, change radical is And a it's bit slowing

Kartik Mehta

hire be. that then to just there's desire Or the pulled in quickly good of business started of that trying your been permanent slowdown, kind have Just economic deteriorate? to to get an how placement past, you how a business, the indicator how sense an quickly has looking think at companies' employees? And of might when

Peter Quigley

usually the confidence rates. when a pull sort still in see pressures notwithstanding that Companies rising -- across of Yes. hiring see of situation begin can back on lack inflationary our unique the in interest to strong permanent have the they we permanent of placements future, will businesses. We in

haven't business that of begun to falloff that So our would business a of in lack confidence. see the indicate we area

Olivier Thirot

dollar you last of course, year, QX. But in We're versus And XX% basically need up QX, in think at fee up or that also business almost Yes. the when it's you is on not I right? say at When of flattening, higher but moving bit, look our look year elevated, last all. still a comps, at little to XX% fact really fees, the absolute but about would XX%. still it's you up very declining very, meaning

Operator

of line Mitra Sidoti. next, have with the we And Ramgopal

Lalishwar Ramgopal

challenges on the based the with earlier the next? of you're the was if talent over this and year I in year initiatives into environment seeing the you curious remainder terms on supply, just current having you're introduced of outlook Yes. and success your

Peter Quigley

in our expect the be the I Well, schools to to seeing rates. where QX, increase as I think the early see to year fill reopen. remainder fill districts we steps rate improvement as of and we're we And took the indicated, K-XX in education, improvements year example continue would through in

are well to underway efforts be those and successful. proving So

low ensure we to continue But as good to try wages that's talent a rate. other historic participation face and working our with going deploying shortages businesses, a low conditions. long have rate good our this working to methods we an customers number and including combat, think to ongoing to of process be are I unprecedented we in that as unemployment

Lalishwar Ramgopal

is capital for how environment, are look valuations the some? rate interest that given in And you increased of the given more are as that attractive seeing a rising of you then inorganic And Okay. much change in of fact opportunities? cost at becoming terms

Peter Quigley

conversations somewhat with period Yes. downward but We rates. a it's leverage say it that a be bankers professionals, think there have pressure lag. likely an higher seen they're other and -- appetite going But yet, we've investment of interest can't less to is and signaling a based our of there's to likely this that valuations in to on on multiples. I of

Olivier Thirot

Yes.

Just probably a we side, cash are have know you discussing, on multiple today. acquisitions all, first including still position we that our positive of of the despite

our And of call of know what assets, credit to is our line securitization. receivables, basically available. We our that something full capacity linked our you we part our have that is to leverage

is interest So have we the I strategy. our completely basically, interest that on that rate for this although acceptable are would costs increase say would us, program I continue forward helping some see to us acquisition we get securitization move impacting to still basically us fact say, to

Lalishwar Ramgopal

And then it's the personnel relates on you over sense technology, into finally, need as that how to give remainder next? next Or also of if much with really and think a how to you can you -- you more are front? as in comfortable Okay. -- to year this and investments, us it very whether do

Peter Quigley

talent. need it services to and but Well, and retain is We need need remain of wage for attract a solutions. our and only to competitive. period We inflation, the to our for industry, critical not our customers we deliver

achieve we that the we need So close that on have ensuring we're investment to keeping a that dollars eye objective.

our with to as additional increased technology our to technology ways and we operations value look we've as to continue of I we're but for the solutions customers new the efficiency bring investments, to need our providing. -- think improve well

Operator

Capital. have Gomes with we NOBLE Joe Next,

Joseph Gomes

country, in through We at Mexico down. about looking start release, down that. for ex-Russia the up, was looking know was when just was obviously, Europe, is the reasons over and by revenues you itself France EMEA although And XX.X%. So

there else be temporary or that? something kind to in might going drive there Just wondering is on France, is that going what of

Olivier Thirot

Yes. Joe, it's the would in on knowing at mention referring a is you probably better that of in first weakness to euro are FX constant currency the XX.X%, thing I and negative current basically currency. when mean I the basically the nominal look is it and

are, we currency, constant I say, in would So flat.

basically we are of is French automotive after piece is the the we growing not is what again areas or see Kelly French market manufacturing, -- that where the growing So the part a France, in namely basically market basically now are with decline. in really that big large

a areas Science XXXX, in a We and so see see might you have Life of or where pace the, on. say, would manufacturing, automotive specialty I are at seen more from now than downturn we Others economic and lower recovery but you in like

Joseph Gomes

know all else we are the have your those we talent challenges customers that put on kind you talent how second, then, what you're guys your those? retaining getting today? the of if are side, a for the it, facing challenges And but discussed own both And Okay. resolving talent aside you for and

Peter Quigley

a Joe, I side, that the time in think of hikes. on I a well interest first thesis our the rate the that increases, -- interest inflation and And as future so with lot the Well, are is they're likelihood the long of rising rate time. as demand digesting for companies doing

of In purchasing experienced the fact, some inflationary deal managers with never we have that period. an

mentioned, reflected as discussed, force there's unemployment is of we've So historic also fact it's -- to they're is it as the demand not And still job labor still the even stock come you -- down, need people down. still without taking of highs reducing as has at significantly and think I ticking there though the number satisfy in enough openings talent. the they that by

environment, we across for segments. our unique a their customers solid it's So satisfy continue current work to with to but our talent demand

Joseph Gomes

over you about some previous for Okay. And year. on education, guys wins then a talked this just second, switching gears

customer for Just kind of at that year? of requests you us and give proposals market on looks out how terms little a putting kind today of see like of the what looking maybe there the playing rest color the out that in maybe and

Peter Quigley

we've stronger activity districts don't districts with course, instructors, of for educators. in wins, year there We see the even benefit, also the demands unusually will But and the in in we in demand that has for strong, which services. school education from the school strong is We're country unusually instructors, of of this The and the the year, other also from know have wins RFP struggle this as in meet school the ongoing we to that but the activity already XXXX. our expect space, educators, so We're business. the Yes. we RFPs a year. accomplished number districts been we're XXth finding our education only are been with seeing retaining celebrating activity struggling and year -- not across

Operator

Instructions]. Steinke -- [Operator sorry, And I'm Barrington Research we with Kevin. have Keith

Kevin Steinke

that -- to to Those going -- X there the on components X% I XXX growth. not wanted to revenue are correctly, you're XXX first That's of to guidance sure growth organic building off, that in the just in so a -- XXX and basis point X% understood just X%. was to headwind then change? from the I moderation I make the before X.X% currency from to the

Olivier Thirot

nominal mention Yes. mention have I and we points. what thinking ago. especially on And mentioned anticipate it something continue assumption of XXX we plus that near we in said I that's this versus future. course, certainly, Acquisition, why consistent very a But with situation we revenue points, XXX headwind with given basis what usually, mean our have we XXX point this kind to basis unfavorable we because, need seen, FX. basis is were GAAP to months growth, impact, a QX we don't of the any mean, X

we as we of see full final at Russia. going have started course, legislation, coming of course, of are full end have in QX. And something the extent, see, to and you basis of to course, QX, an we but QX, Mexico, of continue to are mean basically as a the the and basically, as we QX. see from Russia in I of impact more to see, well in less to of impact going going But the viable the we Of end points impact QX, QX to Mexico. especially anniversary labor in are XXX basically change Russia will

Kevin Steinke

Yes, ask was helpful. prepared that's fourth the third the versus had Yes, cadence going that in Okay. mentioned to you quarter about quarter I comments.

And should thinking third we that being so factor in that the should -- how material of are quarter? just something that's due that you helpful. recent as in, to about expected that? you mean But is near-term in technology the I rollout. think completion dip or we you the Or also, P&I mentioned productivity say, about in

Peter Quigley

-- mentioned quarter Olivier of maybe QX. because factor versus the his Well, prepared education a in full as open lower our on full benefit. which open have throughout probably the slightly remarks, guidance. has does they QX biggest full not QX, But that there is But the we QX, year in QX schools than don't

So think basis, while there issue. may be some full impact that into the in provides I Olivier QX guidance the that the takes as well technology account year on

Olivier Thirot

good have might We that. that we by think have I about XX basis rate And our you GP points. feel upgraded noticed

progress. was basis QX, the QX, XXX seen have points it up You XXX.

and that basis So improve QX, XXX -- right? and XX And fact in in did mix with mix is one very rate one sorry, QX mix our the XXX the the interesting improvement of GP specialty the by similar dynamics, points. our

The I mention our is would net EBITDA to progress point in like other margin. margin,

we by of and margin our A net GP points. organic. have XX large majority move confirmed continue We to percentage that is that XX being to going basis

in something XX we points So you to we points see half first in now believe QX, a going make -- the continue that the progress and QX. this which track, and QX, to net significant XXX is have on as we X.X, on X.X; basis margin we're pleased When to the look are basis I of on about for seen QX, track. at at improvement, we is that think and are we year. also it's are And

Kevin Steinke

impressive margin has certainly here. guidance margin Yes, absolutely. on been progress and The

Peter, I there any call So some what industries. just mentioned out? industries guarded Or it's geographies does than a to so approach from be well, as great or you it would you'd comment geographic look guarded wanted more you and particular some that. can like that kind Or more hiring in Are there of little to industry touch mix geographic others? a see in perspective maybe to a on helpful. on,

Peter Quigley

geographic Yes, than think less industry. it is it's I

demand So press experts services, developers or companies, a code the your cybersecurity spotty as certain not systems so even has been reducing the shared professionals and as in California been consumer layoffs. architects, provide network and hiring the either some widely in technology but has impacted that particularly for sector not technology with

fees. when as a a in all decline looking talent. for hire to of it's been continuing for in them in and but it's has itself by their into They're somebody, placement disruption. companies a their our So still factor -- also cases, potentially demand as that of trying they most workers lack indicated probably of -- segments still People are that for industry impacted, find in our production But anticipate supply will not future. or the strength chain moderating plans, plans they permanent reveals

Kevin Steinke

growth the That's by call, down actually, XXX increased Okay. expectations to you've points. organic on basis I first And just taken basis thought you helpful. you -- XXX your points. it quarter now by that And XXX

still think the So of were you're I growth where it? you expectations, about organic of in at terms actually the that year ahead of to guess. beginning your right the way Is

Olivier Thirot

That's completely back correct. mention to I would say to P&I. one point

to in are little We more revenue to the for what customer is we bit time last the of really have quarters, have than we the this pipeline of expecting. but good -- taking with transition this in But that a terms time pipeline have couple of mentioned offset staffing. traction customers, we these

timing offsetting big say, the I would more, issue capability it's customer. would So not this rather a say, than, I of

Kevin Steinke

achieving next PTS the think then for about year? And with of talk Okay. RocketPower about associated any and steps lastly, investments Understood. maybe we and just from maybe that, plans rest the just synergies revenue as

Peter Quigley

Yes, customer had we the cases. geographic see We both in case we of of a lot synergies complementary presence. In RocketPower. And had a overlap. no

may of capability. existing and where And geographies introduction of we're we're support. to RocketPower geographies In that early. still other services go-to-market made does. only we've We're So see the PTS we joint we like pleased, lot have not on bit months in pleased currently the demand and it's efforts a very strategies has progress we don't the they where PTS, PTS, the really same competency although services had case few a there's the customers our their of Kelly joined ago. therapeutic But for their in strong provide with

business our So U.S. today, while the we're in the report that there's upside high-margin nothing market extremely think K-XX in considerable traditional leader adjacency we to where to

Operator

closing time. this at further questions ahead no there with go are Please speakers, And remarks. any

Peter Quigley

we're can the close think and you I good, Art, call.

Operator

for your AT&T using you. conclude for today. and Event for your teleconference. Thank participation, gentlemen, Ladies that and does thank conference you you Thank

You disconnect. may now

Kelly Services (KELYA) 12 Aug 222022 Q2 Earnings call transcript