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Category: Business
The SPAC Advantage in a Volatile or Bear Market
Image Credit: Kampus (Pexels)
Why it May be Prudent in a Down-Market to Allocate to Individual SPACs
When the markets were roaring upwards in 2020 investment capital was abundant, the number of Special Purpose Acquisition Companies (SPACs) going public broke records. Competition to find ideal companies to merge with to fulfill the SPAC’s mission, intensified. Almost two years have passed since SPAC IPOs’ popularity emerged following a much quieter period for these equities. The 2020 vintage SPACs are now nearing their deadlines to find acquisitions or disseminate the money held in escrow back to shareholders. What does this mean to stock market investors?
Background
IPOs offered as SPACs in 2020 broke all previous records, in terms of the number of offerings, and gross proceeds. In 2021 there was even more issuance. SPACs are not new; they have existed for decades, they are sometimes referred to as blank check companies and shell companies. They have also been called “backdoor IPOs” because it allows a private company to go public without the normal process of filing and disclosures through the regular IPO filing process. Filing for an IPO with a SPAC is much quicker for private companies than going the traditional IPO route.
Currently, there are 602 SPACs with 162.4 billion in combined funds looking to find acquisitions. There are SPACs succeeding in finding acquisition targets, tickers like BOWL, DWAC, CPSR have recently either merged or are in a deSPAC phase, headed toward merging. But it is unlikely that there are 600 well-suited, private companies looking to go public via SPAC acquisition. This isn’t necessarily bad for the investors in the stock, if there is a downside it is to the finance entities that went through the expense and management of the SPAC for two years.
Investors lose little more than opportunity while their funds were tied up. This is because when a SPAC fails to merge, the funds from the IPO, less expenses, plus accrued interest, are then all returned to the current holder of shares.
Performance
So far this year SPACs have outperformed the market significantly. This may be because SPACs don’t have as much downside, as mentioned, the initial investment is held in an escrow account that typically earns interest. Should the SPAC not merge after 24 months, investors have a fairly good idea of what they can expect to be returned to them. They may not make money, but depending on their purchase price they shouldn’t lose much. The returned cash is most often just below the initial $10 offering price. This protection prevents the SPAC from decreasing in value greatly from its offering price, while still maintaining the potential to find a target that could drive the price significantly upward. The structure demonstrates a level of safety that is not shared by other common stocks.
There is an enhanced benefit to SPAC owners in 2022 that barely existed in 2020 and early 2021 when so many of the SPACs came to market, interest rates are now averaging 3% in the escrow accounts. This is up from when rates approximated 0% when the older SPACs came to market.
SPCX used in the chart above is an actively managed ETF comprised of SPAC IPOs. Using it as a proxy for the SPAC market and comparing its performance to the S&P 500 YTD, it’s clear that SPAC stocks are a diversifier in a portfolio – they trade off their own fundamentals. The very big risk-flattening mechanism is that they effectively have a price floor for each individual SPAC.
Portfolios looking to reduce downside risk yet maintain upside potential may want to allocate into well-selected individual SPACs. To do this some investors research by evaluating the market value of the issuance and comparing it to escrow trust account value balance. What they are looking for is pre-deal shell companies that are worth more than their market price. These situations where one pays less in cash than the cash the company holds is a strategy that is gaining popularity as all markets weaken.
Source: SPAC Research
Take-Away
Competition to find perfect merger candidates intensified to an extreme never before seen for SPACs as issuance rose from 59 deals in 2019, to 248 in 2020, and 613 in 2021. A failed SPAC (one that doesn’t find a target in 24 months) is unfortunate for the finance company issuer, but it is not necessarily bad for the stockholder. Stockholders have the option if the company finds a target, of opting out and collecting their pro-rata share of the trust or retaining the stock and owning the company it acquires. If there is no acquisition within the specified period, the stockholder is cashed out at their pro-rata share of the trust. There are stocks that are trading for less than their escrow value, some investors seek these out.
For updates on small and microcap stocks, including SPACS, sign-up to receive Channelchek daily research and information.
Managing Editor, Channelchek
Suggested Reading
 Investors Watch Media SPAC Stay in the Green as Markets Falter
|
 Analysis of a SPAC
|
 Merger of a SPAC, the De-SPAC Phase Explained
|
 Lifecycle of a SPAC
|
Sources
https://www.spcxetf.com/the-fund/
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Scheduled Speakers NobleCon18
NobleCon18 Scheduled Speakers
REGISTER FREE AS AN INVESTOR | PRESENTING COMPANY INQUIRIES | PRESENTING COMPANIES LIST |
SCHEDULE OF PRESENTERS
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 Bert Alfonso – CFO Information Services (III) |
 Shone Anstey – CEO LQwD FinTech (LQWDF) |
 Robert Archer – CEO and Director Newrange Gold (NRGOF) |
 Douglas Bartole – President / CEO InPlay Oil (IPOOF) |
 Tom Bock – EVP Digital Media Solutions (DMS) |
 Michael Bondi – CFO Comtech (CMTL) |
 Michael Borton – CFO Flotek Industries (FTK) |
 Andrew Bowden – CEO Item 9 Labs (INLB) |
 David Bruce – CEO FGI Industries (FGI) |
 Brian Cantrell – SVP and CFO Alliance Resource Partners (ARLP) |
 Daniel Carcillo – CEO Wesana Health Holdings (WSNAF) |
 A.J. Cervantes Jr. – Chairman & Founder Smart for Life (SMFL) |
 Mark Chalmers – President & CEO Energy Fuels (UUUU) |
 Bradley Chhay – CFO RCI Hospitality Holdings (RICK) |
 Spencer Cole – EVP North America Vox Royalty (VOXCF) |
 Ryan Confer – CFO Genprex (GNPX) |
 Michael Connors – CEO Information Services (III) |
 Lisa Conte – CEO Jaguar Health (JAGX) |
 Robert Crane – CFO Axcella Therapeutics (AXLA) |
 Brian Culley – CEO , President & Director (New) Lineage Cell Therapeutics (LCTX) |
 Gianni Del Signore – CFO Pangaea Logistics (PANL) |
 Warren Duncan – CFO Filament Health (FLHLF) |
 Justin Dye – CEO Schwazze (SHWZ) |
 Paul Echt – CFO Media and Games Invest |
 Stephen Ehrlich – CEO Voyager Digital (VYGVF) |
 Mehran Ehsan – President & CEO Permex Petroleum (OILCF) |
 Brian Evans – CFO The GEO Group (GEO) |
 Michael Federle – CEO Forbes Global Media |
 Kyle Floyd – CEO Vox Royalty (VOXCF) |
 Scott Frohman – President Odyssey Wellness |
 Peter Gianulis – CEO Allegiant Gold (AUXXF) |
 John Gibson – CEO Flotek Industries (FTK) |
 Ryan Goepel – CFO Global Crossing Airlines (JETMF) |
 Ilan Hadar – CEO PainReform Ltd. (PRFX) |
 Arjan Haverhals – President & CEO Milestone Scientific (MLSS) |
 Wayne W. Heili – CEO Peninsula Energy (PENMF) |
 Gerri Henwood – President & CEO Baudax Bio (BXRX) |
 Matthew Hornor – President/CEO Maple Gold Mines (MGMLF) |
 Nancy Huber – CFO Schwazze (SHWZ) |
 Kathryn JohnBull – CFO DLH (DLHC) |
 Lauri Kearnes – CFO Harte Hanks (HHS) |
 John Keeler – CEO Blue Star Foods (BSFC) |
 David Kelley – CEO Chakana Copper (CHKKF) |
 Gust Kepler – CEO & Co-Founder Blackboxstocks (BLBX) |
 Giorgi Khazaradze – CEO Aurox |
 John Kiernan – CEO Alico (ALCO) |
 Rani Kohen – Executive Chairman SQL Technologies (SKYX) |
 Dmitry Kozko – CEO Motorsport Games (MSGM) |
 Sean Krakiwsky – President & CEO Nanalysis Scientific (NSCIF) |
 Eric Langan – CEO RCI Hospitality Holdings (RICK) |
 Seth Lederman, MD – Co-Founder, CEO & Chairman Tonix Pharmaceuticals (TNXP) |
 Arthur Levine – CFO EZFill (EZFL) |
 Evan Levine – CEO PsyBio Therapeutics (PSYBF) |
 Ben Lightburn – Co-Founder & CEO Filament Health (FLHLF) |
 Brian Linscott – CEO Harte Hanks (HHS) |
 Ken Londoner – CEO, Executive Chairman & Co-Founder BioSig Technologies (BSGM) |
 Frank Lopez-Balboa – CFO Cumulus Media (CMLS) |
 Paul Manley – VP Investor Relations Wrap Technologies (WRAP) |
 Joe Marinucci – CEO Digital Media Solutions (DMS) |
 Cary Marshall – VP, Corp Finance & Treasurer Alliance Resource Partners (ARLP) |
 James Martin – CFO & Corporate Secretary Cocrystal Pharma (COCP) |
 Evan Masyr – CFO Salem Media Group (SALM) |
 Leonard Mazur – Executive Chairman Citius Pharmaceuticals (CTXR) |
 Michael McConnell – CEO EZFill (EZFL) |
 John McGraw – President & CEO Izotropic Corporation (IZOZF) |
 Margot M. Micallef – Founder & CEO GABY (GABLF) |
 Bobby Mikkelsen – CFO Item 9 Labs (INLB) |
 Tim Millage – Current CFO Lee Enterprises (LEE) |
 Darren Minton – President Smart for Life (SMFL) |
 John Morrison – CFO One Stop Systems (OSS) |
 Kevin Mowbray – President / CEO / Director Lee Enterprises (LEE) |
 Shankar Musunuri, PhD – Founder, Chairman & CEO Ocugen (OCGN) |
 Nir Naor – CFO HMNC Brain Health |
 Jonathan New – CFO Motorsport Games (MSGM) |
 Matt Nicosia – CEO Vivakor (VIVK) |
 Robert Nistico – CEO Splash Beverage Group (SBEV) |
 Steve O’Laughlin – Principal Financial Officer Actinium Pharmaceuticals (ATNM) |
 George Palikaras – CEO Meta Materials Inc. (MMAT) |
 Christiana Papadopoulos – IR Mgr Sierra Metals (SMTS) |
 Zachary Parker – President and CEO DLH (DLHC) |
 Eric Pharis – COO Blackboxstocks (BLBX) |
 Michael Porcelain – CEO Comtech (CMTL) |
 Scott Powell – EVP Investor Relations VolitionRx (VNRX) |
 Evan Psaropoulos – CFO Voyager Digital (VYGVF) |
 Peter Quigley – President & CEO Kelly Services (KELYA) |
 Richard Rallo – CFO & Chief Accounting Officer Alico (ALCO) |
 Jeffrey I. Rassás – Chief Strategy Officer Item 9 Labs (INLB) |
 David Raun – CEO One Stop Systems (OSS) |
 Dave Rosa – CEO NeuroOne Medical Technologies (NMTC) |
 Stuart Rosenstein – CFO Townsquare Media (TSQ) |
 Christopher Ruddy – CEO Newsmax |
 Lena Russomagno – Associate Director of Operations Tonix Pharmaceuticals (TNXP) |
 Corey Ruttan – CEO Alvopetro Energy (ALVOF) |
 Shane Schaffer – CEO Cingulate (CING) |
 Lou Schwartz – CEO Engine Media and Gaming (GAME) |
 Tom Shannon – Founder & CEO Bowlero Corp. (BOWL) |
 Matt Singh – CCO Psyched Wellness (PSYCF) |
 Russell Skibsted – EVP, CFO & CBO Rockwell Medical (RMTI) |
 Arthur Smith – CEO Digerati Technologies (DTGI) |
 Jeremy Sobotta – President & CEO Perimeter Medical Imaging AI (PYNKF) |
 Jeff Stevens – CEO Psyched Wellness (PSYCF) |
 Sanjay Subramanian – CFO Ocugen (OCGN) |
 Dean Taylor – CEO Diamcor Mining (DMIFF) |
 Marie Tedesco – CFO Beasley Broadcast Group (BBGI) |
 Olivier Thirot – CFO Kelly Services (KELYA) |
 Suresh Venkatachari – Chairman & CEO Healthcare Triangle (HCTI) |
 Gary Vogel – CEO Eagle Bulk Shipping (EGLE) |
 William Willoughby – Director and CEO Cypress Development (CYDVF) |
 Bill Wilson – CEO Townsquare Media (TSQ) |
 Mark Wingertzahn – Chief Science Officer Wesana Health Holdings (WSNAF) |
 Robert Winspear – CFO Blackboxstocks (BLBX) |
 John Wobensmith – CEO Genco Shipping (GNK) |
 David Wolfin – President & CEO Avino Silver & Gold (ASM) |
 Zhenyu Wu – CFO Elite Education Group International (EEIQ) |
 Michael York – CFO Forbes Global Media |
 Chris Young – EVP, CFO & Treasurer Entravision Communications (EVC) |
 Apostolos Zafolias – CFO Genco Shipping (GNK) |
Scheduled Speakers – NobleCon18
NobleCon18 Confirmed Speakers
REGISTER FREE AS AN INVESTOR | PRESENTING COMPANY INQUIRIES | NOBLECON18.COM
Bert Alfonso – CFO Information Services (III) |
Robert Archer – CEO and Director Newrange Gold Corp. (NRGOF) |
Douglas Bartole – President / CEO InPlay Oil (IPOOF) |
Michael Bondi – CFO Comtech (CMTL) |
Michael Borton – CFO Flotek Industries (FTK) |
Andrew Bowden – CEO Item 9 Labs Corp. (INLB) |
Brian Cantrell – SVP and CFO Alliance Resource Partners, L.P. (ARLP) |
Daniel Carcillo – CEO Wesana Health Holdings Inc. (WSNAF) |
 John Carlesso – CEO FenixOro Gold Corp. (FDVXF) |
Mark Chalmers – President & CEO Energy Fuels (UUUU) |
Bradley Chhay – CFO RCI Hospitality Holdings, Inc. (RICK) |
Michael Connors – CEO Information Services (III) |
Lisa Conte – CEO Jaguar Health (JAGX) |
Robert Crane – CFO Axcella Therapeutics (AXLA) |
Gianni Del Signore – CFO Pangaea Logistics (PANL) |
Warren Duncan – CFO Filament Health Corp. (FLHLF) |
Justin Dye – CEO Schwazze (SHWZ) |
Stephen Ehrlich – CEO Voyager Digital Ltd. (VYGVF) |
Brian Evans – CFO The GEO Group, Inc. (GEO) |
Peter Gianulis – CEO Allegiant Gold (AUXXF) |
John Gibson – CEO Flotek Industries (FTK) |
Ryan Goepel – CFO Global Crossing Airlines Inc. (JETMF) |
Ilan Hadar – CEO PainReform Ltd. (PRFX) |
Arjan Haverhals – President & CEO Milestone Scientific (MLSS) |
Gerri Henwood – President & CEO Baudax Bio, Inc. (BXRX) |
Nancy Huber – CFO Schwazze (SHWZ) |
Kathryn JohnBull – CFO DLH (DLHC) |
Lauri Kearnes – CFO Harte Hanks (HHS) |
John Keeler – CEO Blue Star Foods Corp. (BSFC) |
David Kelley – CEO Chakana Copper Corp (CHKKF) |
Gust Kepler – CEO & Co-Founder Blackboxstocks Inc. (BLBX) |
Giorgi Khazaradze – CEO Aurox |
Eric Langan – CEO RCI Hospitality Holdings, Inc. (RICK) |
Seth Lederman, MD – Co-Founder, CEO & Chairman Tonix Pharmaceuticals (TNPX) |
Ben Lightburn – Co-Founder & CEO Filament Health Corp. (FLHLF) |
Brian Linscott – CEO Harte Hanks (HHS) |
Ken Londoner – CEO, Executive Chairman & Co-Founder BioSig Technologies (BSGM) |
Paul Manley – VP Investor Relations Wrap Technologies, Inc. (WRAP) |
Cary Marshall – VP, Corp Finance & Treasurer Alliance Resource Partners, L.P. (ARLP) |
James Martin – CFO & Corporate Secretary Cocrystal Pharma Inc. (COCP) |
Evan Masyr – CFO Salem Media Group (SALM) |
Margot M. Micallef – Founder & CEO GABY Inc. (GABLF) |
Tim Millage – CFO Lee Enterprises, Inc. (LEE) |
Kevin Mowbray – President / CEO / Director Lee Enterprises, Inc. (LEE) |
Shankar Musunuri, PhD – Founder, Chairman & CEO Ocugen (OCGN) |
Nir Naor – CFO HMNC Holding GmbH |
 Chris Naprawa – President TAAL Distributed Information Technologies (TAALF) |
Robert Nistico – CEO Splash Beverage Group, Inc. (SBEV) |
Steve O’Laughlin – Principal Financial Officer Actinium Pharmaceuticals (ATNM) |
Christiana Papadopoulos – IR Mgr Sierra Metals (SMTS) |
Zachary Parker – President and CEO DLH (DLHC) |
Eric Pharis – COO Blackboxstocks Inc. (BLBX) |
Michael Porcelain – CEO Comtech (CMTL) |
Scott Powell – EVP Investor Relations VolitionRx (VNRX) |
Evan Psaropoulos – CFO Voyager Digital Ltd. (VYGVF) |
Peter Quigley – President & CEO Kelly Services (KELYA) |
Jeffrey I. Rassás – Chief Strategy Officer Item 9 Labs Corp. (INLB) |
Dave Rosa – CEO Neuroone Medical Technologies Corp. (NMTC) |
Stuart Rosenstein – CFO Townsquare Media (TSQ) |
Lena Russomagno – Associate Director of Operations Tonix Pharmaceuticals (TNPX) |
Corey Ruttan – CEO Alvopetro Energy (ALVOF) |
 David Santrella – President, Broadcast Media Salem Media Group (SALM) |
Matt Singh – CCO Psyched Wellness Ltd. (PSYCF) |
Russell Skibsted – EVP, CFO & CBO Rockwell Medical (RMTI) |
Arthur Smith – CEO Digerati Technologies, Inc. (DTGI) |
Jeff Stevens – CEO Psyched Wellness Ltd. (PSYCF) |
Sanjay Subramanian – CFO Ocugen (OCGN) |
Marie Tedesco – CFO Beasley Broadcast Group (BBGI) |
Olivier Thirot – CFO Kelly Services (KELYA) |
Suresh Venkatachari – Chairman & CEO Healthcare Triangle (HCTI) |
William Willoughby – Director and CEO Cypress Development Corp. (CYDVF) |
Bill Wilson – CEO Townsquare Media (TSQ) |
Mark Wingertzahn – Chief Science Officer Wesana Health Holdings Inc. (WSNAF) |
Robert Winspear – CFO Blackboxstocks Inc. (BLBX) |
David Wolfin – President & CEO Avino Silver & Gold (ASM) |
Zhenyu Wu – CFO Elite Education Group International Ltd. (EEIQ) |
Chris Young – EVP, CFO & Treasurer Entravision Communications (EVC) |
The GEO Group, Inc. (GEO) – Solid Performance in a Challenging Year
Friday, February 18, 2022
The GEO Group, Inc. (GEO)
Solid Performance in a Challenging Year
With over 94,000 beds owned, leased or managed across its business lines and serving over 260,000 people daily, GEO is a leading provider of mission critical real estate to its governmental partners. The Company is the first fully integrated equity REIT specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the U.S., Australia, South Africa, and the U.K.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
4Q21 Results. The GEO Group reported solid results for the fourth quarter of 2021. Total revenue for the quarter was $557.5 million compared to guidance of $554-$559 million. We were at $555 million. GEO reported AFFO of $0.65/sh, compared to guidance of $0.65/sh -$0.67/sh. We were at $0.58/sh. Adjusted earnings were $0.38/sh versus $0.33/sh last year.
Full Year 2021. In a difficult year of COVID and non-renewal of contracts, revenue declined 4.0% to $2.26 billion. GAAP EPS was $0.58 and adjusted EPS was $1.32, compared to $0.94 and $1.30, respectively, in 2020. AFFO for 2021 was $2.48 per share, similar to the $2.51 in 2020. Adjusted EBITDA in 2021 was $466.9 million, up from $439.8 million last year …
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Is the SEC conducting Unfounded Investigations of Elon Musk
Image Credit: Maurizio Pesce
Musk’s Lawyers Suggest a Rogue U.S. Agency is being Weaponized Against Him
Tesla CEO Elon Musk’s legal representatives say the Securities and Exchange Commission (SEC) is conducting ‘unfounded investigations’ on him and the EV company. In a letter, to a federal judge, Tesla’s lawyers accuse the regulator of not distributing a $40 million fine paid after a 2018 settlement to shareholders allegedly harmed over Musk’s Twitter posts.
The correspondence sent Thursday (February 16) accuses the SEC of conducting “unfounded investigations” of Mr. Musk and Tesla. The letter was addressed to the federal judge who oversaw the settlement. As a result, Tesla has essentially become what it sees as a whistleblower against the SEC.
Background
Tesla and the SEC settled an enforcement action in 2018 that alleged that Musk had committed fraud by tweeting about a potential buyout of the company. Tesla paid $20 million to settle that case. Musk also personally paid $20 million. He also agreed to have his public statements on social media overseen by Tesla lawyers.
In correspondence sent to Tesla in both 2019 and 2020, the SEC said tweets Musk wrote regarding Tesla’s solar roof production volumes and its stock price hadn’t undergone the required preapproval and supervision. The communications involving the Commission are part of the tensions between the nation’s public market regulator and the founder of the $927 billion dollar car company. It should also be noted that after the settlement, Musk publicly mocked the SEC.
To date, the SEC hasn’t distributed the $40 million in fine money to those holding shares at the time of his 2018 tweets that claimed he planned to take Tesla private, according to the letter sent to the judge. The part of the agreement that was to be upheld by Tesla (in addition to the $40 million) is that company lawyers would preclear certain of the CEO’s tweets and other public statements. The SEC wants proof of adherence.
Tesla’s New Accusation
According to the letter signed by Tesla attorney Andrew Spiro, “The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government.” The letter addressed to U.S. District Judge Alison Nathan in Manhattan, pointed out that if the Commission was concerned “the SEC has not once come before Your Honor to seek discovery concerning compliance under the consent decree,” the letter continues, “Instead, it has gone rogue, and unilaterally opened its own investigations.” Then Spiro accuses, “The SEC has conducted these investigations wholly outside of this court’s supervision.”
Take-Away
Tesla attorney Andrew Spiro’s letter suggests that Elon Musk and the company’s board regret settling and agreeing to the social-media oversight policy, and monetary portion, which Judge Nathan approved. Also, the company decided to resolve the lawsuit because it believed that fine money would go to Tesla shareholders. In the absence of, (according to Tesla), the SEC not keeping its part of the deal, and (according to the SEC) Tesla not adequately maintaining its part of the agreement, tensions may soon come to a head.
Suggested Reading
 Tesla’s Strange Influence on the Markets
|
 Publicly Traded Chinese Companies Duty to Shareholders
|
 Elon Musk Reminds Jeff Bezos that He’s Pulling Away
|
 New Measures to Limit Government Officials Trading
|
Sources
https://www.sec.gov/news/press-release/2018-226
https://nypost.com/2022/02/17/elon-musk-lawyer-sec-gone-rogue-stiffed-tesla-investors-40m/
https://www.autonews.com/executives/elon-musk-tesla-accuse-sec-unrelenting-probe
Stay up to date. Follow us:
|
|
Is the SEC conducting “Unfounded Investigations” of Elon Musk?
Image Credit: Maurizio Pesce
Musk’s Lawyers Suggest a Rogue U.S. Agency is being Weaponized Against Him
Tesla CEO Elon Musk’s legal representatives say the Securities and Exchange Commission (SEC) is conducting ‘unfounded investigations’ on him and the EV company. In a letter, to a federal judge, Tesla’s lawyers accuse the regulator of not distributing a $40 million fine paid after a 2018 settlement to shareholders allegedly harmed over Musk’s Twitter posts.
The correspondence sent Thursday (February 16) accuses the SEC of conducting “unfounded investigations” of Mr. Musk and Tesla. The letter was addressed to the federal judge who oversaw the settlement. As a result, Tesla has essentially become what it sees as a whistleblower against the SEC.
Background
Tesla and the SEC settled an enforcement action in 2018 that alleged that Musk had committed fraud by tweeting about a potential buyout of the company. Tesla paid $20 million to settle that case. Musk also personally paid $20 million. He also agreed to have his public statements on social media overseen by Tesla lawyers.
In correspondence sent to Tesla in both 2019 and 2020, the SEC said tweets Musk wrote regarding Tesla’s solar roof production volumes and its stock price hadn’t undergone the required preapproval and supervision. The communications involving the Commission are part of the tensions between the nation’s public market regulator and the founder of the $927 billion dollar car company. It should also be noted that after the settlement, Musk publicly mocked the SEC.
To date, the SEC hasn’t distributed the $40 million in fine money to those holding shares at the time of his 2018 tweets that claimed he planned to take Tesla private, according to the letter sent to the judge. The part of the agreement that was to be upheld by Tesla (in addition to the $40 million) is that company lawyers would preclear certain of the CEO’s tweets and other public statements. The SEC wants proof of adherence.
Tesla’s New Accusation
According to the letter signed by Tesla attorney Andrew Spiro, “The SEC seems to be targeting Mr. Musk and Tesla for unrelenting investigation largely because Mr. Musk remains an outspoken critic of the government.” The letter addressed to U.S. District Judge Alison Nathan in Manhattan, pointed out that if the Commission was concerned “the SEC has not once come before Your Honor to seek discovery concerning compliance under the consent decree,” the letter continues, “Instead, it has gone rogue, and unilaterally opened its own investigations.” Then Spiro accuses, “The SEC has conducted these investigations wholly outside of this court’s supervision.”
Take-Away
Tesla attorney Andrew Spiro’s letter suggests that Elon Musk and the company’s board regret settling and agreeing to the social-media oversight policy, and monetary portion, which Judge Nathan approved. Also, the company decided to resolve the lawsuit because it believed that fine money would go to Tesla shareholders. In the absence of, (according to Tesla), the SEC not keeping its part of the deal, and (according to the SEC) Tesla not adequately maintaining its part of the agreement, tensions may soon come to a head.
Suggested Reading
Tesla’s Strange Influence on the Markets
|
Publicly Traded Chinese Companies Duty to Shareholders
|
Elon Musk Reminds Jeff Bezos that He’s Pulling Away
|
New Measures to Limit Government Officials Trading
|
Sources
https://www.sec.gov/news/press-release/2018-226
https://nypost.com/2022/02/17/elon-musk-lawyer-sec-gone-rogue-stiffed-tesla-investors-40m/
https://www.autonews.com/executives/elon-musk-tesla-accuse-sec-unrelenting-probe
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Release – Kelly Declares Quarterly Dividend
Kelly® Declares Quarterly Dividend
Research, News, and Market Data on Kelly
About Kelly®
KLYA-FIN
ANALYST & MEDIA CONTACT:
(248) 244-4586
james_polehna@kellyservices.com
SOURCE
Kelly® Declares Quarterly Dividend
Kelly® Declares Quarterly Dividend
Research, News, and Market Data on Kelly
About Kelly®
KLYA-FIN
ANALYST & MEDIA CONTACT:
(248) 244-4586
james_polehna@kellyservices.com
SOURCE
SPAC to Merge With Cannabis Financial Services Pioneer
Image Credit: Safe Harbor Financial
Cannabis Bank Sowing New Seeds as it Announces SPAC Merger
The latest SPAC or “blank check company” to find the desired target will help fulfill the growing need for banking services for cannabis-related businesses (CRB) in Colorado, and beyond. At the helm of the soon to be merged institution will be one of the pioneers that has helped lead the way by overcoming barriers to financial services for CRBs.
Career banker Sundie Seefried literally wrote the book on cannabis banking back in 2015. She says she was inspired by public safety risks posed by what was largely an all-cash business. After Colorado eased marijuana restrictions, she worked to serve this sector’s financial needs. Sundie became a leader in cannabis banking and has been providing guidance to other bankers, business owners, and policymakers. Ms. Seefried, who runs Safe Harbor Financial Corp. will soon be sowing more potent seeds within the industry.
Picture: Sundie Seefried
Seefried’s Safe Harbor Financial announced a definitive agreement Monday to be taken public by Northern Lights Acquisition (NLIT) which was formed as a special purpose acquisition corporation (SPAC).
In a news release, Seefried explained the deal will position Safe Harbor to expand its financial services and support the growth of the cannabis industry. “Our goal is to become a ‘one stop-shop’ for cannabis business financial needs,” she added.
Terms of the Agreement
Under the merger, New York-based Northern Lights (NLIT), an affiliate of Luminous Capital, will pay $70 million in cash and $115 million in common stock to acquire Safe Harbor, a subsidiary of Colorado-based Partner Colorado Credit Union. The post-transaction equity value of the company is expected to be $327 million, according to the release.
The deal has already been approved by the board of directors and managers of Northern Lights, Partners Colorado and Safe Harbor, according to the news release. It remains subject to other closing conditions including approval by the stockholders of Northern Lights.
About Safe Harbor
Safe Harbor has nearly 600 accounts across 20 states. During 2021 it processed $4 billion in transactions, for a total of $11 billion since it began operations, according to the release.
Last year, Safe Harbor unveiled a commercial cannabis lending platform. Currently, it has an actionable pipeline of more than $300 million, including both existing and new customers, the release said.
John Darwin and Joshua Mann, co-CEOs of Northern Lights, will remain on Northern Lights’ board of directors after the sale is finalized. Sundie Seefried will serve as CEO of the merged company.
Suggested Reading
 Banks and Credit Unions Are Now Allowing Services For Marijuana And Cannabis Businesses
|
 What’s in the Senate’s Marijuana Tax Proposal
|
 Marijuana is Winning the Sports Battle
|
 Clarence Thomas’ Statement on Half-in, Half-out Marijuana Laws
|
Sources
https://shfinancial.org/resources/
https://www.facebook.com/SafeHarborFinancialLLC/photos/a.278325677682904/316238937224911
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Kelly Services (KELYA) – Gearing Up For Meaningful Change
Tuesday, February 15, 2022
Kelly Services (KELYA)
Gearing Up For Meaningful Change
Kelly Services Inc is a provider of workforce solutions and consulting and staffing services. The company’s operations are divided into three business segments namely Americas Staffing, Global Talent Solutions (“GTS”) and International Staffing. It provides staffing solutions through its branch networks in Americas and International operations and also provides a suite of innovative talent fulfilment and outcome-based solutions through GTS segment. Americas Staffing generates maximum revenue from its operations.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
4Q21. Revenue of $1.25 billion was up 0.7% year-over-year (1.1% in constant currency) but up 6% when adjusting for the additional week in 2021. Consensus was $1.3 billion and we were at $1.31 billion. Kelly reported operating earnings of $15.3 million, compared to $9.5 million in 4Q20, and $19.4 million versus $13.9 million on an adjusted basis. GAAP EPS for 4Q21 was $1.80 compared to $0.59 in 4Q20. Adjusted EPS for the fourth quarter was $0.65 versus $0.41 last year. We had projected adjusted EPS of $0.32.
Monetization of APAC. Kelly entered into an agreement to sell nearly all of its PersolKelly JV and its shareholdings in Persol Group. Net cash proceeds are anticipated to be approximately $255 million, or $6.75 per KELYA share. Combined with availability under its credit facilities, Kelly has about $0.5 billion of capital to accelerate its growth in high-margin, high-growth specialties …
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Release – Kelly Reports Fourth-Quarter and Full-Year Earnings 2021
Kelly® Reports Fourth-Quarter and Full-Year Earnings 2021
Research, News, and Market Data on Kelly
Earnings from operations in the fourth quarter of 2021 totaled
Diluted earnings per share in the fourth quarter of 2021 were
“Our fourth-quarter results reflect that the economic recovery continues. While our revenue growth in the quarter was affected by talent supply, we are pleased with our ability to leverage growth into solid gross profit and earnings improvements,” said Quigley.
Operating earnings for the full year of 2021 totaled
Diluted earnings per share for the full year of 2021 were
In other actions taken today, Persol Holdings and Kelly have agreed to changes in their relationship in the APAC region.
First, Kelly will reduce its ownership interest in
Second, Kelly and Persol will discontinue their cross-shareholding. Kelly holds 9,106,800 shares of Persol Holdings common stock, and Persol owns 1,576,169 shares of Kelly’s Class A common stock and 1,475 shares of its Class B common stock. Kelly will monetize its equity holdings in Persol by selling all its shares in an open market transaction. Kelly will also buy back from Persol its equity position in Kelly. These actions will allow Kelly to realize the appreciation of its equity investment in Persol and enable the company to reinvest in Kelly’s specialty growth strategy. Both stock transactions are expected to be completed within two business days.
Persol Holdings continues to be a valued partner to Kelly, and the companies’ senior leaders will continue to regularly meet as part of this valued business partnership. PersolKelly, under the leadership of CEO
“Kelly is already building on our momentum from 2021, which included
In conjunction with its fourth-quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at
Via the Internet:
Kellyservices.com
Via the Telephone
(877) 692-8955 (toll free) or (234) 720-6979 (caller paid)
Enter access code 5728672
After the prompt, please enter ”#”
A recording of the conference call will be available after
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, changing market and economic conditions, the impact of the novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brand, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, exposure to risks associated with investments in equity affiliates including
About Kelly®
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MEDIA CONTACT: |
ANALYST CONTACT: |
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Jane Stehney |
James Polehna |
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(248) 765-6864 |
(248) 244-4586 |
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KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||||||
|
CONSOLIDATED STATEMENTS OF EARNINGS |
|||||||||||
|
FOR THE 13 WEEKS ENDED JANUARY 2, 2022 AND 14 WEEKS ENDED JANUARY 3, 2021 |
|||||||||||
|
(UNAUDITED) |
|||||||||||
|
(In millions of dollars except per share data) |
|||||||||||
|
% |
CC % |
||||||||||
|
2021 |
2020 |
Change |
Change |
Change |
|||||||
|
Revenue from services |
$ |
1,250.3 |
$ |
1,241.4 |
$ |
8.9 |
0.7 |
% |
1.1 |
% |
|
|
Cost of services |
1,004.3 |
1,017.3 |
(13.0) |
(1.3) |
|||||||
|
Gross profit |
246.0 |
224.1 |
21.9 |
9.8 |
10.1 |
||||||
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Selling, general and administrative expenses |
230.7 |
214.6 |
16.1 |
7.5 |
7.9 |
||||||
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Earnings from operations |
15.3 |
9.5 |
5.8 |
60.7 |
|||||||
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Gain (loss) on investment in Persol Holdings |
50.0 |
14.8 |
35.2 |
236.8 |
|||||||
|
Gain on insurance settlement |
19.0 |
— |
19.0 |
NM |
|||||||
|
Other income (expense), net |
0.4 |
(0.2) |
0.6 |
277.9 |
|||||||
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Earnings before taxes and equity in net earnings (loss) of affiliate |
84.7 |
24.1 |
60.6 |
251.5 |
|||||||
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Income tax expense (benefit) |
16.1 |
2.5 |
13.6 |
NM |
|||||||
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Net earnings before equity in net earnings (loss) of affiliate |
68.6 |
21.6 |
47.0 |
218.4 |
|||||||
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Equity in net earnings (loss) of affiliate |
3.1 |
1.8 |
1.3 |
72.2 |
|||||||
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Net earnings |
$ |
71.7 |
$ |
23.4 |
$ |
48.3 |
207.1 |
% |
|||
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Basic earnings per share |
$ |
1.80 |
$ |
0.59 |
$ |
1.21 |
205.1 |
% |
|||
|
Diluted earnings per share |
$ |
1.80 |
$ |
0.59 |
$ |
1.21 |
205.1 |
% |
|||
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STATISTICS: |
|||||||||||
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Permanent placement income (included in revenue from services) |
$ |
21.1 |
$ |
10.8 |
$ |
10.3 |
94.7 |
% |
95.0 |
% |
|
|
Gross profit rate |
19.7 |
% |
18.1 |
% |
1.6 |
pts. |
|||||
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Conversion rate |
6.2 |
4.2 |
2.0 |
||||||||
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Adjusted EBITDA |
$ |
27.7 |
$ |
20.4 |
$ |
7.3 |
|||||
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Adjusted EBITDA margin |
2.2 |
% |
1.6 |
% |
0.6 |
pts. |
|||||
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Effective income tax rate |
19.0 |
% |
10.6 |
% |
8.4 |
pts. |
|||||
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Average number of shares outstanding (millions): |
|||||||||||
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Basic |
39.4 |
39.3 |
|||||||||
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Diluted |
39.6 |
39.4 |
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KELLY SERVICES, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF EARNINGS |
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FOR THE 52 WEEKS ENDED JANUARY 2, 2022 AND 53 WEEKS ENDED JANUARY 3, 2021 |
|||||||||||
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(UNAUDITED) |
|||||||||||
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(In millions of dollars except per share data) |
|||||||||||
|
% |
CC % |
||||||||||
|
2021 |
2020 |
Change |
Change |
Change |
|||||||
|
Revenue from services |
$ |
4,909.7 |
$ |
4,516.0 |
$ |
393.7 |
8.7 |
% |
7.8 |
% |
|
|
Cost of services |
3,990.5 |
3,688.4 |
302.1 |
8.2 |
|||||||
|
Gross profit |
919.2 |
827.6 |
91.6 |
11.1 |
10.1 |
||||||
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Selling, general and administrative expenses |
870.6 |
805.6 |
65.0 |
8.1 |
7.3 |
||||||
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Goodwill impairment charge |
— |
147.7 |
(147.7) |
NM |
|||||||
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Gain on sale of assets |
— |
(32.1) |
32.1 |
NM |
|||||||
|
Earnings (loss) from operations |
48.6 |
(93.6) |
142.2 |
NM |
|||||||
|
Gain (loss) on investment in Persol Holdings |
121.8 |
(16.6) |
138.4 |
NM |
|||||||
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Gain on insurance settlement |
19.0 |
— |
19.0 |
NM |
|||||||
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Other income (expense), net |
(3.6) |
3.4 |
(7.0) |
(206.5) |
|||||||
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Earnings (loss) before taxes and equity in net earnings (loss) of affiliate |
185.8 |
(106.8) |
292.6 |
NM |
|||||||
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Income tax expense (benefit) |
35.1 |
(34.0) |
69.1 |
203.4 |
|||||||
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Net earnings (loss) before equity in net earnings (loss) of affiliate |
150.7 |
(72.8) |
223.5 |
NM |
|||||||
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Equity in net earnings (loss) of affiliate |
5.4 |
0.8 |
4.6 |
NM |
|||||||
|
Net earnings (loss) |
$ |
156.1 |
$ |
(72.0) |
$ |
228.1 |
NM |
% |
|||
|
Basic earnings (loss) per share |
$ |
3.93 |
$ |
(1.83) |
$ |
5.76 |
NM |
% |
|||
|
Diluted earnings (loss) per share |
$ |
3.91 |
$ |
(1.83) |
$ |
5.74 |
NM |
% |
|||
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STATISTICS: |
|||||||||||
|
Permanent placement income (included in revenue from services) |
$ |
75.4 |
$ |
39.7 |
$ |
35.7 |
89.7 |
% |
87.4 |
% |
|
|
Gross profit rate |
18.7 |
% |
18.3 |
% |
0.4 |
pts. |
|||||
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Conversion rate |
5.3 |
(11.3) |
16.6 |
||||||||
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Adjusted EBITDA |
$ |
84.1 |
$ |
69.0 |
$ |
15.1 |
|||||
|
Adjusted EBITDA margin |
1.7 |
% |
1.5 |
% |
0.2 |
pts. |
|||||
|
Effective income tax rate |
18.9 |
% |
31.8 |
% |
(12.9) |
pts. |
|||||
|
Average number of shares outstanding (millions): |
|||||||||||
|
Basic |
39.4 |
39.3 |
|||||||||
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Diluted |
39.5 |
39.3 |
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KELLY SERVICES, INC. AND SUBSIDIARIES |
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RESULTS OF OPERATIONS BY SEGMENT |
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(UNAUDITED) |
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(In millions of dollars) |
||||||||||
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Fourth Quarter |
||||||||||
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2021 |
2020 |
% |
CC % |
|||||||
|
Professional & Industrial |
||||||||||
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Revenue from services |
$ |
450.7 |
$ |
511.7 |
(11.9) |
% |
(12.1) |
% |
||
|
Gross profit |
82.3 |
89.1 |
(7.7) |
(7.9) |
||||||
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SG&A expenses excluding restructuring charges |
70.8 |
76.5 |
(7.4) |
(7.6) |
||||||
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Restructuring charges |
— |
1.7 |
NM |
NM |
||||||
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Total SG&A expenses |
70.8 |
78.2 |
(9.5) |
(9.6) |
||||||
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Earnings (loss) from operations |
11.5 |
10.9 |
5.3 |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
11.5 |
12.6 |
(9.2) |
|||||||
|
Gross profit rate |
18.2 |
% |
17.4 |
% |
0.8 |
pts. |
||||
|
Science, Engineering & Technology |
||||||||||
|
Revenue from services |
$ |
297.7 |
$ |
257.6 |
15.5 |
% |
15.5 |
% |
||
|
Gross profit |
66.1 |
53.4 |
23.7 |
23.7 |
||||||
|
SG&A expenses excluding restructuring charges |
49.2 |
35.2 |
39.7 |
39.6 |
||||||
|
Restructuring charges |
— |
0.1 |
NM |
NM |
||||||
|
Total SG&A expenses |
49.2 |
35.3 |
39.3 |
39.3 |
||||||
|
Earnings (loss) from operations |
16.9 |
18.1 |
(6.7) |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
16.9 |
18.2 |
(7.1) |
|||||||
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Gross profit rate |
22.2 |
% |
20.7 |
% |
1.5 |
pts. |
||||
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Education |
||||||||||
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Revenue from services |
$ |
132.4 |
$ |
91.8 |
44.3 |
% |
44.3 |
% |
||
|
Gross profit |
21.1 |
13.4 |
57.6 |
57.6 |
||||||
|
SG&A expenses excluding restructuring charges |
15.6 |
13.3 |
17.1 |
17.1 |
||||||
|
Restructuring charges |
— |
0.2 |
NM |
NM |
||||||
|
Total SG&A expenses |
15.6 |
13.5 |
15.3 |
15.3 |
||||||
|
Earnings (loss) from operations |
5.5 |
(0.1) |
NM |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
5.5 |
0.1 |
NM |
|||||||
|
Gross profit rate |
15.9 |
% |
14.6 |
% |
1.3 |
pts. |
||||
|
Outsourcing & Consulting |
||||||||||
|
Revenue from services |
$ |
112.1 |
$ |
102.5 |
9.3 |
% |
9.4 |
% |
||
|
Gross profit |
38.0 |
32.7 |
16.3 |
16.5 |
||||||
|
SG&A expenses excluding restructuring charges |
33.5 |
28.9 |
16.2 |
16.4 |
||||||
|
Restructuring charges |
— |
0.3 |
NM |
NM |
||||||
|
Total SG&A expenses |
33.5 |
29.2 |
15.1 |
15.4 |
||||||
|
Earnings (loss) from operations |
4.5 |
3.5 |
26.2 |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
4.5 |
3.8 |
17.6 |
|||||||
|
Gross profit rate |
34.0 |
% |
31.9 |
% |
2.1 |
pts. |
||||
|
International |
||||||||||
|
Revenue from services |
$ |
257.7 |
$ |
278.0 |
(7.2) |
% |
(5.4) |
% |
||
|
Gross profit |
38.5 |
35.5 |
8.6 |
11.0 |
||||||
|
SG&A expenses excluding restructuring charges |
35.5 |
33.2 |
6.9 |
9.2 |
||||||
|
Restructuring charges |
1.2 |
0.3 |
365.5 |
384.5 |
||||||
|
Total SG&A expenses |
36.7 |
33.5 |
9.6 |
12.1 |
||||||
|
Earnings (loss) from operations |
1.8 |
2.0 |
(7.7) |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
3.0 |
2.3 |
35.1 |
|||||||
|
Gross profit rate |
15.0 |
% |
12.8 |
% |
2.2 |
pts. |
||||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
||||||||||
|
RESULTS OF OPERATIONS BY SEGMENT |
||||||||||
|
(UNAUDITED) |
||||||||||
|
(In millions of dollars) |
||||||||||
|
December Year to Date |
||||||||||
|
2021 |
2020 |
% |
CC % |
|||||||
|
Professional & Industrial |
||||||||||
|
Revenue from services |
$ |
1,837.4 |
$ |
1,858.4 |
(1.1) |
% |
(1.5) |
% |
||
|
Gross profit |
310.0 |
330.2 |
(6.1) |
(6.5) |
||||||
|
SG&A expenses excluding restructuring charges |
278.6 |
282.6 |
(1.4) |
(1.7) |
||||||
|
Restructuring charges |
— |
6.0 |
NM |
NM |
||||||
|
Total SG&A expenses |
278.6 |
288.6 |
(3.5) |
(3.8) |
||||||
|
Earnings (loss) from operations |
31.4 |
41.6 |
(24.4) |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
31.4 |
47.6 |
(34.0) |
|||||||
|
Gross profit rate |
16.9 |
% |
17.8 |
% |
(0.9) |
pts. |
||||
|
Science, Engineering & Technology |
||||||||||
|
Revenue from services |
$ |
1,156.8 |
$ |
1,019.1 |
13.5 |
% |
13.3 |
% |
||
|
Gross profit |
253.9 |
209.4 |
21.3 |
21.1 |
||||||
|
SG&A expenses excluding restructuring charges |
180.2 |
133.8 |
34.7 |
34.5 |
||||||
|
Restructuring charges |
— |
0.6 |
NM |
NM |
||||||
|
Total SG&A expenses |
180.2 |
134.4 |
34.1 |
33.9 |
||||||
|
Earnings (loss) from operations |
73.7 |
75.0 |
(1.7) |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
73.7 |
75.6 |
(2.5) |
|||||||
|
Gross profit rate |
21.9 |
% |
20.5 |
% |
1.4 |
pts. |
||||
|
Education |
||||||||||
|
Revenue from services |
$ |
416.5 |
$ |
286.9 |
45.2 |
% |
45.2 |
% |
||
|
Gross profit |
65.1 |
42.2 |
54.1 |
54.1 |
||||||
|
SG&A expenses excluding restructuring charges |
62.1 |
50.2 |
23.6 |
23.6 |
||||||
|
Restructuring charges |
— |
1.0 |
NM |
NM |
||||||
|
Total SG&A expenses |
62.1 |
51.2 |
21.1 |
21.1 |
||||||
|
Earnings (loss) from operations |
3.0 |
(9.0) |
NM |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
3.0 |
(8.0) |
NM |
|||||||
|
Gross profit rate |
15.6 |
% |
14.7 |
% |
0.9 |
pts. |
||||
|
Outsourcing & Consulting |
||||||||||
|
Revenue from services |
$ |
432.1 |
$ |
363.5 |
18.9 |
% |
17.9 |
% |
||
|
Gross profit |
141.4 |
119.8 |
18.0 |
16.3 |
||||||
|
SG&A expenses excluding restructuring charges |
122.7 |
108.0 |
13.6 |
12.4 |
||||||
|
Restructuring charges |
— |
0.3 |
NM |
NM |
||||||
|
Total SG&A expenses |
122.7 |
108.3 |
13.3 |
12.0 |
||||||
|
Earnings (loss) from operations |
18.7 |
11.5 |
62.7 |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
18.7 |
11.8 |
58.3 |
|||||||
|
Gross profit rate |
32.7 |
% |
33.0 |
% |
(0.3) |
pts. |
||||
|
International |
||||||||||
|
Revenue from services |
$ |
1067.8 |
$ |
988.6 |
8.0 |
% |
4.9 |
% |
||
|
Gross profit |
148.8 |
126.0 |
18.1 |
14.8 |
||||||
|
SG&A expenses excluding restructuring charges |
137.7 |
133.5 |
3.1 |
0.2 |
||||||
|
Restructuring charges |
1.2 |
1.4 |
(10.2) |
(6.6) |
||||||
|
Total SG&A expenses |
138.9 |
134.9 |
2.9 |
0.1 |
||||||
|
Earnings (loss) from operations |
9.9 |
(8.9) |
NM |
|||||||
|
Earnings (loss) from operations excluding restructuring charges |
11.1 |
(7.5) |
NM |
|||||||
|
Gross profit rate |
13.9 |
% |
12.7 |
% |
1.2 |
pts. |
||||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||
|
CONSOLIDATED BALANCE SHEETS |
|||||
|
(UNAUDITED) |
|||||
|
(In millions of dollars) |
|||||
|
Jan. 2, 2022 |
Jan. 3, 2021 |
||||
|
Current Assets |
|||||
|
Cash and equivalents |
$ |
112.7 |
$ |
223.0 |
|
|
Trade accounts receivable, less allowances of |
|||||
|
$12.6 and $13.3, respectively |
1,423.2 |
1,265.2 |
|||
|
Prepaid expenses and other current assets |
52.8 |
61.4 |
|||
|
Total current assets |
1,588.7 |
1,549.6 |
|||
|
Noncurrent Assets |
|||||
|
Property and equipment, net |
35.3 |
41.0 |
|||
|
Operating lease right-of-use assets |
75.8 |
83.2 |
|||
|
Deferred taxes |
302.8 |
282.0 |
|||
|
Goodwill, net |
114.8 |
3.5 |
|||
|
Investment in Persol Holdings |
264.3 |
164.2 |
|||
|
Investment in equity affiliate |
123.4 |
118.5 |
|||
|
Other assets |
389.1 |
319.9 |
|||
|
Total noncurrent assets |
1,305.5 |
1,012.3 |
|||
|
Total Assets |
$ |
2,894.2 |
$ |
2,561.9 |
|
|
Current Liabilities |
|||||
|
Short-term borrowings |
$ |
— |
$ |
0.3 |
|
|
Accounts payable and accrued liabilities |
687.2 |
536.8 |
|||
|
Operating lease liabilities |
17.5 |
19.6 |
|||
|
Accrued payroll and related taxes |
318.4 |
293.0 |
|||
|
Accrued workers’ compensation and other claims |
20.8 |
22.7 |
|||
|
Income and other taxes |
51.3 |
53.2 |
|||
|
Total current liabilities |
1,095.2 |
925.6 |
|||
|
Noncurrent Liabilities |
|||||
|
Operating lease liabilities |
61.4 |
67.5 |
|||
|
Accrued payroll and related taxes |
57.6 |
58.5 |
|||
|
Accrued workers’ compensation and other claims |
37.0 |
42.2 |
|||
|
Accrued retirement benefits |
220.0 |
205.8 |
|||
|
Other long-term liabilities |
86.8 |
59.3 |
|||
|
Total noncurrent liabilities |
462.8 |
433.3 |
|||
|
Stockholders’ Equity |
|||||
|
Common stock |
40.1 |
40.1 |
|||
|
Treasury stock |
(15.1) |
(17.1) |
|||
|
Paid-in capital |
23.9 |
21.3 |
|||
|
Earnings invested in the business |
1,315.0 |
1,162.9 |
|||
|
Accumulated other comprehensive income (loss) |
(27.7) |
(4.2) |
|||
|
Total stockholders’ equity |
1,336.2 |
1,203.0 |
|||
|
Total Liabilities and Stockholders’ Equity |
$ |
2,894.2 |
$ |
2,561.9 |
|
|
Statistics: |
|||||
|
Working Capital |
$ |
493.5 |
$ |
624.0 |
|
|
Current Ratio |
1.5 |
1.7 |
|||
|
Debt-to-capital % |
0.0 |
% |
0.0 |
% |
|
|
Global Days Sales Outstanding |
60 |
64 |
|||
|
Year-to-Date Free Cash Flow |
$ |
73.8 |
$ |
170.5 |
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
|
FOR THE 52 WEEKS ENDED JANUARY 2, 2022 AND 53 WEEKS ENDED JANUARY 3, 2021 |
||||
|
(UNAUDITED) |
||||
|
(In millions of dollars) |
||||
|
2021 |
2020 |
|||
|
Cash flows from operating activities: |
||||
|
Net earnings (loss) |
$ |
156.1 |
$ |
(72.0) |
|
Adjustments to reconcile net earnings to net cash from operating activities: |
||||
|
Goodwill impairment charge |
— |
147.7 |
||
|
Deferred income taxes |
21.6 |
(57.1) |
||
|
Depreciation and amortization |
29.8 |
24.2 |
||
|
Operating lease asset amortization |
21.2 |
21.1 |
||
|
Provision for credit losses and sales allowances |
1.6 |
12.8 |
||
|
Stock-based compensation |
5.1 |
3.9 |
||
|
(Gain) loss on investment in Persol Holdings |
(121.8) |
16.6 |
||
|
Gain on insurance settlement |
(19.0) |
— |
||
|
Gain on sale of assets |
— |
(32.1) |
||
|
Equity in net (earnings) loss of PersolKelly Pte. Ltd. |
(5.4) |
(0.8) |
||
|
Other, net |
6.0 |
1.4 |
||
|
Changes in operating assets and liabilities, net of acquisitions |
(10.2) |
120.3 |
||
|
Net cash from operating activities |
85.0 |
186.0 |
||
|
Cash flows from investing activities: |
||||
|
Capital expenditures |
(11.2) |
(15.5) |
||
|
Proceeds from sale of assets |
— |
55.5 |
||
|
Acquisition of companies, net of cash received |
(213.0) |
(39.2) |
||
|
Proceeds from company-owned life insurance |
12.2 |
2.3 |
||
|
Proceeds from insurance settlement |
19.0 |
— |
||
|
Proceeds from sale of Brazil, net of cash disposed |
— |
1.2 |
||
|
Proceeds (payments) related to loans to equity affiliate |
5.9 |
5.6 |
||
|
Proceeds from (investment in) equity securities |
5.0 |
(0.2) |
||
|
Other investing activities |
1.4 |
0.1 |
||
|
Net cash (used in) from investing activities |
(180.7) |
9.8 |
||
|
Cash flows from financing activities: |
||||
|
Net change in short-term borrowings |
(0.2) |
(1.7) |
||
|
Financing lease payments |
(1.5) |
(2.0) |
||
|
Dividend payments |
(4.0) |
(3.0) |
||
|
Payments of tax withholding for stock awards |
(0.6) |
(1.2) |
||
|
Contingent consideration payments |
(1.6) |
— |
||
|
Other financing activities |
(0.2) |
(0.2) |
||
|
Net cash used in financing activities |
(8.1) |
(8.1) |
||
|
Effect of exchange rates on cash, cash equivalents and restricted cash |
(4.8) |
9.4 |
||
|
Net change in cash, cash equivalents and restricted cash |
(108.6) |
197.1 |
||
|
Cash, cash equivalents and restricted cash at beginning of year |
228.1 |
31.0 |
||
|
Cash, cash equivalents and restricted cash at end of year |
$ |
119.5 |
$ |
228.1 |
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||||
|
REVENUE FROM SERVICES |
|||||||||
|
(UNAUDITED) |
|||||||||
|
(In millions of dollars) |
|||||||||
|
Fourth Quarter |
|||||||||
|
2021 |
2020 |
% |
CC % |
||||||
|
(13 Wks) |
(14 Wks) |
Change |
Change |
||||||
|
Americas |
|||||||||
|
United States |
$ |
908.6 |
$ |
891.0 |
2.0 |
% |
2.0 |
% |
|
|
Canada |
38.1 |
33.8 |
12.6 |
8.6 |
|||||
|
Puerto Rico |
25.5 |
20.9 |
21.6 |
21.6 |
|||||
|
Mexico |
10.6 |
35.8 |
(70.5) |
(70.1) |
|||||
|
Total Americas Region |
982.8 |
981.5 |
0.1 |
— |
|||||
|
Europe |
|||||||||
|
Switzerland |
61.0 |
59.2 |
3.1 |
4.9 |
|||||
|
France |
55.0 |
57.0 |
(3.5) |
0.5 |
|||||
|
Portugal |
37.3 |
42.6 |
(12.4) |
(8.6) |
|||||
|
Russia |
32.9 |
29.9 |
9.8 |
4.9 |
|||||
|
Italy |
18.2 |
15.7 |
15.8 |
20.7 |
|||||
|
United Kingdom |
16.4 |
17.2 |
(4.5) |
(6.7) |
|||||
|
Germany |
9.4 |
8.0 |
17.4 |
22.3 |
|||||
|
Ireland |
8.0 |
5.9 |
36.9 |
42.4 |
|||||
|
Other |
18.1 |
15.9 |
13.5 |
17.4 |
|||||
|
Total Europe Region |
256.3 |
251.4 |
2.0 |
4.0 |
|||||
|
Total Asia-Pacific Region |
11.2 |
8.5 |
33.3 |
34.5 |
|||||
|
Total Kelly Services, Inc. |
$ |
1,250.3 |
$ |
1,241.4 |
0.7 |
% |
1.1 |
% |
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||||
|
REVENUE FROM SERVICES |
|||||||||
|
(UNAUDITED) |
|||||||||
|
(In millions of dollars) |
|||||||||
|
December Year to Date |
|||||||||
|
2021 |
2020 |
% |
CC % |
||||||
|
(52 Wks) |
(53 Wks) |
Change |
Change |
||||||
|
Americas |
|||||||||
|
United States |
$ |
3,513.4 |
$ |
3,260.2 |
7.8 |
% |
7.8 |
% |
|
|
Canada |
155.0 |
122.5 |
26.5 |
18.2 |
|||||
|
Puerto Rico |
102.1 |
77.0 |
32.5 |
32.5 |
|||||
|
Mexico |
92.7 |
114.4 |
(19.0) |
(23.2) |
|||||
|
Brazil |
— |
17.0 |
NM |
NM |
|||||
|
Total Americas Region |
3,863.2 |
3,591.1 |
7.6 |
7.2 |
|||||
|
Europe |
|||||||||
|
France |
223.1 |
198.2 |
12.5 |
8.6 |
|||||
|
Switzerland |
222.2 |
200.4 |
10.9 |
8.2 |
|||||
|
Portugal |
158.2 |
141.7 |
11.7 |
7.6 |
|||||
|
Russia |
132.2 |
118.5 |
11.5 |
14.3 |
|||||
|
Italy |
74.2 |
58.2 |
27.4 |
23.0 |
|||||
|
United Kingdom |
68.3 |
73.7 |
(7.4) |
(13.7) |
|||||
|
Germany |
34.0 |
30.1 |
13.0 |
9.7 |
|||||
|
Ireland |
26.8 |
19.9 |
34.9 |
31.4 |
|||||
|
Other |
68.0 |
54.6 |
24.5 |
20.4 |
|||||
|
Total Europe Region |
1,007.0 |
895.3 |
12.5 |
9.5 |
|||||
|
Total Asia-Pacific Region |
39.5 |
29.6 |
33.8 |
27.7 |
|||||
|
Total Kelly Services, Inc. |
$ |
4,909.7 |
$ |
4,516.0 |
8.7 |
% |
7.8 |
% |
|
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||
|
RECONCILIATION OF NON-GAAP MEASURES |
|||||||
|
FOURTH QUARTER |
|||||||
|
(UNAUDITED) |
|||||||
|
(In millions of dollars) |
|||||||
|
2021 |
2020 |
||||||
|
SG&A Expenses: |
As Reported |
Restructuring(5) |
Adjusted |
Adjusted |
|||
|
Professional & Industrial |
$ 70.8 |
$ — |
$ 70.8 |
$ 76.5 |
|||
|
Science, Engineering & Technology |
49.2 |
— |
49.2 |
35.2 |
|||
|
Education |
15.6 |
— |
15.6 |
13.3 |
|||
|
Outsourcing & Consulting |
33.5 |
— |
33.5 |
28.9 |
|||
|
International |
36.7 |
(1.2) |
35.5 |
33.2 |
|||
|
Corporate |
24.9 |
(2.9) |
22.0 |
23.1 |
|||
|
Total Company |
$ 230.7 |
$ (4.1) |
$ 226.6 |
$ 210.2 |
|||
|
2021 |
2020 |
||||||
|
Earnings (Loss) from Operations: |
As Reported |
Restructuring(5) |
Adjusted |
Adjusted |
|||
|
Professional & Industrial |
$ 11.5 |
$ — |
$ 11.5 |
$ 12.6 |
|||
|
Science, Engineering & Technology |
16.9 |
— |
16.9 |
18.2 |
|||
|
Education |
5.5 |
— |
5.5 |
0.1 |
|||
|
Outsourcing & Consulting |
4.5 |
— |
4.5 |
3.8 |
|||
|
International |
1.8 |
1.2 |
3.0 |
2.3 |
|||
|
Corporate |
(24.9) |
2.9 |
(22.0) |
(23.1) |
|||
|
Total Company |
$ 15.3 |
$ 4.1 |
$ 19.4 |
$ 13.9 |
|||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||
|
RECONCILIATION OF NON-GAAP MEASURES |
|||||
|
FOURTH QUARTER |
|||||
|
(UNAUDITED) |
|||||
|
(In millions of dollars) |
|||||
|
2020 |
|||||
|
SG&A Expenses: |
As Reported |
Restructuring(5) |
Adjusted |
||
|
Professional & Industrial |
$ 78.2 |
$ (1.7) |
$ 76.5 |
||
|
Science, Engineering & Technology |
35.3 |
(0.1) |
35.2 |
||
|
Education |
13.5 |
(0.2) |
13.3 |
||
|
Outsourcing & Consulting |
29.2 |
(0.3) |
28.9 |
||
|
International |
33.5 |
(0.3) |
33.2 |
||
|
Corporate |
24.9 |
(1.8) |
23.1 |
||
|
Total Company |
$ 214.6 |
$ (4.4) |
$ 210.2 |
||
|
2020 |
|||||
|
Earnings (Loss) from Operations: |
As Reported |
Restructuring(5) |
Adjusted |
||
|
Professional & Industrial |
$ 10.9 |
$ 1.7 |
$ 12.6 |
||
|
Science, Engineering & Technology |
18.1 |
0.1 |
18.2 |
||
|
Education |
(0.1) |
0.2 |
0.1 |
||
|
Outsourcing & Consulting |
3.5 |
0.3 |
3.8 |
||
|
International |
2.0 |
0.3 |
2.3 |
||
|
Corporate |
(24.9) |
1.8 |
(23.1) |
||
|
Total Company |
$ 9.5 |
$ 4.4 |
$ 13.9 |
||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||
|
RECONCILIATION OF NON-GAAP MEASURES |
|||||||
|
DECEMBER YEAR TO DATE |
|||||||
|
(UNAUDITED) |
|||||||
|
(In millions of dollars) |
|||||||
|
2021 |
2020 |
||||||
|
SG&A Expenses: |
As Reported |
Restructuring(5) |
Adjusted |
Adjusted |
|||
|
Professional & Industrial |
$ 278.6 |
$ — |
$ 278.6 |
$ 282.6 |
|||
|
Science, Engineering & Technology |
180.2 |
— |
180.2 |
133.8 |
|||
|
Education |
62.1 |
— |
62.1 |
50.2 |
|||
|
Outsourcing & Consulting |
122.7 |
— |
122.7 |
108.0 |
|||
|
International |
138.9 |
(1.2) |
137.7 |
124.0 |
|||
|
Corporate |
88.1 |
(2.8) |
85.3 |
84.7 |
|||
|
Total Company |
$ 870.6 |
$ (4.0) |
$ 866.6 |
$ 783.3 |
|||
|
2021 |
2020 |
||||||
|
Earnings (Loss) from Operations: |
As Reported |
Restructuring(5) |
Adjusted |
Adjusted |
|||
|
Professional & Industrial |
$ 31.4 |
$ — |
$ 31.4 |
$ 47.6 |
|||
|
Science, Engineering & Technology |
73.7 |
— |
73.7 |
75.6 |
|||
|
Education |
3.0 |
— |
3.0 |
(8.0) |
|||
|
Outsourcing & Consulting |
18.7 |
— |
18.7 |
11.8 |
|||
|
International |
9.9 |
1.2 |
11.1 |
2.0 |
|||
|
Corporate |
(88.1) |
2.8 |
(85.3) |
(84.7) |
|||
|
Total Company |
$ 48.6 |
$ 4.0 |
$ 52.6 |
$ 44.3 |
|||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||
|
RECONCILIATION OF NON-GAAP MEASURES |
|||||||
|
DECEMBER YEAR TO DATE |
|||||||
|
(UNAUDITED) |
|||||||
|
(In millions of dollars) |
|||||||
|
2020 |
|||||||
|
SG&A Expenses: |
As Reported |
Customer Dispute(4) |
Restructuring(5) |
Adjusted |
|||
|
Professional & Industrial |
$ 288.6 |
$ — |
$ (6.0) |
$ 282.6 |
|||
|
Science, Engineering & Technology |
134.4 |
— |
(0.6) |
133.8 |
|||
|
Education |
51.2 |
— |
(1.0) |
50.2 |
|||
|
Outsourcing & Consulting |
108.3 |
— |
(0.3) |
108.0 |
|||
|
International |
134.9 |
(9.5) |
(1.4) |
124.0 |
|||
|
Corporate |
88.2 |
— |
(3.5) |
84.7 |
|||
|
Total Company |
$ 805.6 |
$ (9.5) |
$ (12.8) |
$ 783.3 |
|||
|
2020 |
|||||||||||
|
Earnings (Loss) from Operations: |
As Reported |
Goodwill Impairment(1) |
Gain on sale of assets(3) |
Customer Dispute(4) |
Restructuring(5) |
Adjusted |
|||||
|
Professional & Industrial |
$ 41.6 |
$ — |
$ — |
$ — |
$ 6.0 |
$ 47.6 |
|||||
|
Science, Engineering & Technology |
75.0 |
— |
— |
— |
0.6 |
75.6 |
|||||
|
Education |
(9.0) |
— |
— |
— |
1.0 |
(8.0) |
|||||
|
Outsourcing & Consulting |
11.5 |
— |
— |
— |
0.3 |
11.8 |
|||||
|
International |
(8.9) |
— |
— |
9.5 |
1.4 |
2.0 |
|||||
|
Corporate |
(203.8) |
147.7 |
(32.1) |
— |
3.5 |
(84.7) |
|||||
|
Total Company |
$ (93.6) |
$ 147.7 |
$ (32.1) |
$ 9.5 |
$ 12.8 |
$ 44.3 |
|||||
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
||||||||
|
RECONCILIATION OF NON-GAAP MEASURES |
||||||||
|
(UNAUDITED) |
||||||||
|
(In millions of dollars except per share data) |
||||||||
|
Fourth Quarter |
December Year to Date |
|||||||
|
2021 |
2020 |
2021 |
2020 |
|||||
|
Income tax expense (benefit) |
$ 16.1 |
$ 2.5 |
$ 35.1 |
$ (34.0) |
||||
|
Taxes on goodwill impairment charge(1) |
— |
— |
— |
23.0 |
||||
|
Taxes on investment in Persol Holdings(2) |
(15.3) |
(4.5) |
(37.3) |
5.1 |
||||
|
Taxes on gain on sale of assets(3) |
— |
— |
— |
(8.1) |
||||
|
Taxes on customer dispute(4) |
— |
— |
— |
2.8 |
||||
|
Taxes on restructuring charges(5) |
1.0 |
1.0 |
1.0 |
3.2 |
||||
|
Taxes on gain on insurance settlement(6) |
(4.8) |
— |
(4.8) |
— |
||||
|
Adjusted income tax expense (benefit) |
$ (3.0) |
$ (1.0) |
$ (6.0) |
$ (8.0) |
||||
|
Fourth Quarter |
December Year to Date |
|||||||
|
2021 |
2020 |
2021 |
2020 |
|||||
|
Net earnings (loss) |
$ 71.7 |
$ 23.4 |
$ 156.1 |
$ (72.0) |
||||
|
Goodwill impairment charge, net of taxes(1) |
— |
— |
— |
124.7 |
||||
|
(Gain) loss on investment in Persol Holdings, net of taxes(2) |
(34.7) |
(10.3) |
(84.5) |
11.5 |
||||
|
(Gain) loss on sale of assets, net of taxes(3) |
— |
— |
— |
(23.9) |
||||
|
Customer dispute, net of taxes(4) |
— |
— |
— |
6.7 |
||||
|
Restructuring charges, net of taxes(5) |
3.1 |
3.4 |
3.0 |
9.6 |
||||
|
Gain on insurance settlement, net of taxes(6) |
(14.2) |
— |
(14.2) |
— |
||||
|
Adjusted net earnings |
$ 25.9 |
$ 16.5 |
$ 60.4 |
$ 56.6 |
||||
|
Fourth Quarter |
December Year to Date |
|||||||
|
2021 |
2020 |
2021 |
2020 |
|||||
|
Per Share |
Per Share |
|||||||
|
Net earnings (loss) |
$ 1.80 |
$ 0.59 |
$ 3.91 |
$ (1.83) |
||||
|
Goodwill impairment charge, net of taxes(1) |
— |
— |
— |
3.17 |
||||
|
(Gain) loss on investment in Persol Holdings, net of taxes(2) |
(0.87) |
(0.26) |
(2.12) |
0.29 |
||||
|
Gain on sale of assets, net of taxes(3) |
— |
— |
— |
(0.61) |
||||
|
Customer dispute, net of taxes(4) |
— |
— |
— |
0.17 |
||||
|
Restructuring charges, net of taxes(5) |
0.08 |
0.08 |
0.07 |
0.24 |
||||
|
Gain on insurance settlement, net of taxes(6) |
(0.36) |
— |
(0.36) |
— |
||||
|
Adjusted net earnings |
$ 0.65 |
$ 0.41 |
$ 1.51 |
$ 1.44 |
||||
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year.
|
KELLY SERVICES, INC. AND SUBSIDIARIES |
|||||||
|
RECONCILIATION OF NON-GAAP MEASURES |
|||||||
|
(UNAUDITED) |
|||||||
|
(In millions of dollars) |
|||||||
|
Fourth Quarter |
December Year to Date |
||||||
|
2021 |
2020 |
2021 |
2020 |
||||
|
Net earnings (loss) |
$ 71.7 |
$ 23.4 |
$ 156.1 |
$ (72.0) |
|||
|
Other (income) expense, net |
(0.4) |
0.2 |
3.6 |
(3.4) |
|||
|
Income tax expense (benefit) |
16.1 |
2.5 |
35.1 |
(34.0) |
|||
|
Depreciation and amortization |
8.3 |
6.5 |
31.5 |
24.7 |
|||
|
EBITDA |
95.7 |
32.6 |
226.3 |
(84.7) |
|||
|
Equity in net (earnings) loss of affiliate |
(3.1) |
(1.8) |
(5.4) |
(0.8) |
|||
|
Goodwill impairment charge(1) |
— |
— |
— |
147.7 |
|||
|
(Gain) loss on investment in Persol Holdings(2) |
(50.0) |
(14.8) |
(121.8) |
16.6 |
|||
|
Gain on sale of assets(3) |
— |
— |
— |
(32.1) |
|||
|
Customer dispute(4) |
— |
— |
— |
9.5 |
|||
|
Restructuring(5) |
4.1 |
4.4 |
4.0 |
12.8 |
|||
|
Gain on insurance settlement(6) |
(19.0) |
— |
(19.0) |
— |
|||
|
Adjusted EBITDA |
$ 27.7 |
$ 20.4 |
$ 84.1 |
$ 69.0 |
|||
|
Adjusted EBITDA margin |
2.2 % |
1.6 % |
1.7 % |
1.5 % |
|||
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 goodwill impairment charge, the 2021 and 2020 gains and losses on the investment in Persol Holdings, the 2020 gain on sale of assets, the 2020 customer dispute, the 2021 and 2020 restructuring charges and the 2021 gain on insurance settlement are useful to understand the Company’s fiscal 2021 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.
Management uses Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA Margin (percent of total GAAP revenue) which Management believes is useful to compare operating performance compared to prior periods and uses it in conjunction with GAAP measures to assess performance. Our calculation of Adjusted EBITDA may not be consistent with similarly titled measures of other companies and should be used in conjunction with GAAP measurements.
These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company’s financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company’s financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
|
(1) |
The goodwill impairment charge is the result of an interim impairment test the Company performed during the first quarter of 2020, due to a triggering event caused by a decline in the Company’s common stock price. |
|
(2) |
The gains and losses on the investment in Persol Holdings represent the change in fair value of the investment during the period presented and the related tax expense and benefit. |
|
(3) |
Gain on sale of assets in 2020 primarily represents the excess of the proceeds over the cost of the headquarters properties sold during the first quarter of 2020. |
|
(4) |
Customer dispute in 2020 represents a non-cash charge in Mexico to increase the reserve against a long-term receivable from a former customer based on an updated probability of loss assessment. |
|
(5) |
Restructuring charges in 2021 represent severance costs as part of cost management actions designed to increase operational efficiencies within enterprise functions that provide centralized support to operating units. Restructuring charges in 2020 represent severance costs and lease terminations in preparation for the new operating model adopted in the third quarter of 2020. |
|
(6) |
Gain on insurance settlement represents a payment received in the fourth quarter of 2021 related to the settlement of claims under a representations and warranties insurance policy purchased by the Company in connection with the acquisition of Softworld. |
SOURCE Kelly Services, Inc.
How Last Years Retail Traders Have Transformed
Image Credit: Diverse Stock Photos (Flickr)
Individual Investors are Finding Investment Styles to Match Today’s Market Landscape
In a research note last week, JP Morgan (JPM) wrote that Self Directed Investors influence over the direction of stocks, and the overall market is declining. A decline in trading activity was confirmed by the number of transactions at Robinhood and other brokers and even r/wallstreetbets activity. The accounts are still exposed to the stock market according to JPM, their exposure however has shifted.
Past Circumstance
While other venues of “entertainment” or “past times” were idle, the stock market never closed in response to the reality of coronavirus. This helped create over a year of focused retail trading. The booming stock market rewarded its participants and even became a source of entertainment for some. Many who had free time at home with their stimulus checks, perhaps deferring their mortgage or rent payments, joined the online trading craze that included social media interaction, and meme stock potential riches. This set of circumstances is now unwinding, and retail investors are doing less “me too” trading and investing their assets using more hands-off, long-term methods.
The JPM research note reported that the online trading app Robinhood experienced a decline in stock market transactions in December. The level of trading approached the pre-pandemic activity level. While Robinhood is a focus of many newer market participants, a decline in trading activity was also observed at other retail brokerage firms, including E*Trade and Charles Schwab.
The note also points to reduced activity on popular stock market social media forums like those on Reddit. The Reddit WallStreetBets community boomed from about 1.5 million Redditors in 2020 to more than 11 million current subscribers. JPM says that growth has plateaued, and the daily number of comments has fallen well below the peak one year ago.
The decline in trading and sharing stock ideas (and memes) coincides with the decline in value of high-flying stocks that drew the attention of investors with their spectacular growth in 2020/21. Many of these stocks that retail investors helped drive to dizzying levels have since given up all of their gains. These include Netflix, Peloton, and PayPal. “Whether one looks at the proportion of retail investors in total US stock trading or the number of stocks traded by retail investors, it is clear that US retail activity had peaked at the beginning of 2021 with diminishing peaks since then,” JPMorgan said.
Take-Away
While retail investors are abandoning the type of trades they put on in 2020 and 2021, they are still sticking with equity funds, with strong 2021 inflows into equity ETFs and mutual funds continuing into 2022, the JPM said. It’s unclear if this is due to less time to be involved, or market softness providing fewer hyped stocks. At Channelchek we have noticed a surge in traffic to our research and articles. In January 2022 we experienced a record number of visitors to our sight, presumably searching for more fundamental analysis and actionable opportunities.
Channelchek is a no-cost distribution platform for small and microcap equity research. These are the stocks that have the potential to reward investors that have a longer time horizon. Given the information provided by JPM, it is no wonder Reddit WSB traffic which has been more short-term trading oriented has declined, while Channelchek continues to see new sign-ups and is breaking records with the pace of visitors.
Managing Editor, Channelchek
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Sources
https://www.thestreet.com/investing/jp-morgan-stocks-far-from-over
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