Research News and Market Data on KELYA
August 10, 2023
- Q2 revenue down 3.9%; down 4.5% in constant currency; organic revenue down 2.2% in constant currency
- Q2 gross profit down 8.3%; GP rate, 19.8%, down 90 bps year-over-year due primarily to lower permanent placement fees as customer full-time hiring decelerates
- Q2 operating earnings of $6.2 million, including $8.0 million of transformation-related restructuring and impairment charges, or $14.2 million on an adjusted basis
- Comprehensive business transformation program expected to drive meaningful improvement in EBITDA margin beginning in the second half of 2023
TROY, Mich., Aug. 10, 2023 /PRNewswire/ — Kelly (Nasdaq: KELYA, KELYB), a leading global specialty talent solutions provider, today announced results for the second quarter of 2023.
Peter Quigley, president and chief executive officer, announced revenue for the second quarter of 2023 totaled $1.2 billion, a 3.9% decrease, or 4.5% decrease in constant currency, compared to the corresponding quarter of 2022, with organic, constant currency revenue down 2.2%. Year-over-year revenue trends were impacted by the sale of Russian operations in July 2022 and customers’ more guarded approach to hiring, partially offset by favorable currency impacts.
“In the second quarter, we remained focused on seeking out pockets of demand in more resilient markets, while the effects of ongoing macroeconomic uncertainty became more noticeable in certain parts of our portfolio,” said Quigley. “Our Education segment and higher-margin outcome-based solutions in P&I continued to deliver year-over-year growth, while lower demand for temporary and permanent placement services impacted results in our P&I and SET segments.”
Kelly reported operating earnings in the second quarter of 2023 of $6.2 million, compared to earnings of $8.2 million reported in the second quarter of 2022. Earnings in the second quarter of 2023 include $8.0 million of transformation-related restructuring and impairment charges. Excluding the transformation-related charges, adjusted earnings from operations were $14.2 million. Earnings in the second quarter of 2022 included an $18.5 million asset impairment charge related to our Russian operations and a $4.4 million gain on sale of assets related to underutilized real property and adjusted earnings were $22.3 million. Adjusted earnings declined year-over-year primarily as a result of lower revenues.
Earnings per share in the second quarter of 2023 were $0.20 compared to earnings per share of $0.06 in the second quarter of 2022. Included in the earnings per share in the second quarter of 2023 is an $0.11 loss per share related to transformation-related restructuring charges, net of tax, and a $0.05 loss per share, net of tax, related to an asset impairment charge. Included in the second quarter of 2022 is a $0.48 loss per share, net of tax, asset impairment charge, partially offset by a $0.08 per share gain on sale of real property, net of tax. On an adjusted basis, earnings per share were $0.36 in the second quarter of 2023, a decline of 20% from $0.45 per share in the corresponding quarter of 2022.
Quigley went on to provide an update on the company’s business transformation following the strategic restructuring actions it announced in July. “The change we set out to create through this transformation is no longer hypothetical. The efficiency actions we have implemented to date will deliver an immediate, meaningful improvement to the company’s EBITDA margin, creating a strong foundation for further EBITDA margin expansion going forward. With these actions unlocking additional resources to invest in our future, we are quickly shifting our focus to the growth phase of our transformation to realize the full potential of our specialty strategy.”
As a result of the strategic restructuring and additional cost optimization actions that Kelly will complete in 2023, the Company expects an adjusted EBITDA margin of approximately 3% exiting 2023. Assuming the benefit of a full year of its transformation-related savings and no change in current top-line expectations, the Company would expect to achieve a normalized, adjusted EBITDA margin in the range of 3.3% to 3.5%.
Kelly also reported that on August 9, its board of directors declared a dividend of $0.075 per share. The dividend is payable on September 6, 2023, to shareholders of record as of the close of business on August 23, 2023.
In conjunction with its second-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 9 a.m. ET on August 10 to review the results and answer questions. The call may be accessed in one of the following ways:
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 2:30 p.m. ET on August 10, 2023, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 7516480#. The recording will also be available at kellyservices.com during this period.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 450,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2022 was $5.0 billion. Learn more at kellyservices.com.
KLYA-FIN
| MEDIA CONTACT: | ANALYST CONTACT: | ||
| Jane Stehney | Scott Thomas | ||
| (248) 765-6864 | (248) 251-7264 | ||
| stehnja@kellyservices.com | scott.thomas@kellyservices.com |
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SOURCE Kelly Services, Inc.