Kelly Services Reports Record Revenue and Four-Fold Earnings Growth for the 4th Quarter and Full Year of 2004
TROY, Mich., Jan. 26 -- Kelly Services, Inc., a global provider of staffing services, today announced record revenue and strong earnings growth for fourth quarter and full year ended January 2, 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/19991208/KELLYLOGO )
Terence E. Adderley, Kelly Services chairman and chief executive officer, announced revenue for the 14 week fourth quarter of 2004 totaled $1.356 billion, a 16.4% increase compared to the $1.165 billion for the corresponding 13 week quarter in 2003. Sales for the 53 week fiscal year totaled $4.984 billion, a 15.2% increase compared to the $4.325 billion for the 52 week fiscal year of 2003.
Net earnings for the fourth quarter of 2004 totaled $8.6 million, compared to $1.8 million reported for the fourth quarter of 2003. Net earnings for the full year of 2004 totaled $22.1 million, compared to the $5.1 million earned during 2003.
Diluted earnings per share in the fourth quarter of 2004 were $0.24, as compared to fourth quarter 2003 earnings of $0.05 per share. Diluted earnings per share for the full year of 2004 were $0.62, compared to the $0.14 per share earned in 2003.
Commenting on the results, Adderley said, "Kelly turned in a very good year. Our full year sales of nearly $5 billion achieved a new sales record, exceeding the previous record we set in 2003 by $659 million.
"As the new year begins, we expect first quarter 2005 earnings to be in the range of $0.09 to $0.14, as compared to $0.03 per share in the first quarter of 2004. For the full year of 2005, we are currently forecasting earnings between $1.00 and $1.20 per share. This forecast is based on solid, but not robust, global economic growth in 2005.
"Revenue in our U.S. Commercial staffing segment, which accounted for 46% of total sales, increased 9.5% year over year during the 14 week fourth quarter. The gross profit rate in this segment increased eight-tenths of a percent, primarily due to lower workers compensation costs. Expenses decreased 2.0% compared to last year. Operating earnings totaled $36.3 million, an increase of 56.5% compared to last year.
"Revenue in our Professional, Technical, and Staffing Alternatives (PTSA) segment, which accounted for 20% of total sales, increased 21.3% year over year during the 14 week fourth quarter. Kelly Scientific Resources and Kelly Engineering Resources were the leading professional and technical performers in the fourth quarter. Kelly HR First and Kelly Vendor Management continue to be the leading staffing alternatives units. Kelly Home Care and the Automotive Services Group experienced small revenue decreases during the quarter. The PTSA gross profit rate decreased 2.1 percentage points, primarily due to gross profit decreases at Kelly Staff Leasing and Kelly Home Care, partially offset by higher fee based income. Expenses increased 7.4% as compared to last year. Operating earnings totaled $16.1 million and increased 8.9% on a year over year basis.
"Revenue in our International segment, which accounted for 34% of total sales, increased 24.1% year over year during the 14 week fourth quarter. The International gross profit rate decreased by four-tenths of a percent, primarily due to lower temporary staffing gross profit offset by growth in fee based income. Operating expenses increased by 15.2% in U.S. dollar terms. Operating earnings totaled $5.5 million, a significant improvement compared to earnings of $1.6 million last year.
"On a 13 week constant currency basis, International segment revenue increased 10.8% year over year in the fourth quarter. On a 13 week constant currency basis, total company revenue increased 8.5% year over year in the fourth quarter."
Mr. Adderley concluded, "In short, as we see it, 2005 should be another good year for Kelly. We expect to set sales records, gain market share, improve operating efficiency, and rapidly grow earnings."
In conjunction with its fourth quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on January 26, 2005 to review the results. The call may be accessed in one of the following ways:
Via the Telephone:
U.S. 1-800-553-0329
International 1-612-332-0630
The conference call leader is Terence Adderley
The passcode is Kelly Services
Via the Internet:
You may access the call via the internet through the Kelly Services website: http://www.kellyservices.com
This release contains statements that are forward looking in nature and accordingly, are subject to risks and uncertainties. These factors include: competition, changing market and economic conditions, currency fluctuations, changes in laws and regulations, including tax laws, the company's ability to effectively manage its information technology programs, and other factors discussed in this release and in the company's filings with the Securities and Exchange Commission. Actual results may differ materially from any projections contained herein.
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) is a Fortune 500 company headquartered in Troy, Mich., offering staffing solutions that include temporary staffing services, staff leasing, outsourcing, vendor on-site and full-time placement. With nearly 2,500 company owned and operated offices in 27 countries, Kelly provides to its customers nearly 700,000 employees annually, with skills including office services, accounting, engineering, information technology, law, science, marketing, light industrial, education and health care. Revenue in 2004 was $4.98 billion. Visit http://www.kellyservices.com .
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 14 WEEKS ENDED JANUARY 2, 2005 AND 13 WEEKS ENDED DECEMBER 28, 2003
(UNAUDITED)
(In thousands of dollars except per share data)
2004 2003 Change % Change
Revenue from services $1,355,922 $1,164,973 $190,949 16.4%
Cost of services 1,141,222 978,905 162,317 16.6
Gross profit 214,700 186,068 28,632 15.4
Selling, general and
administrative expenses 202,359 182,879 19,480 10.7
Earnings from operations 12,341 3,189 9,152 287.0
Interest expense, net (145) (119) (26) (21.8)
Earnings before taxes 12,196 3,070 9,126 297.3
Income taxes 3,550 1,258 2,292 182.2
Net earnings $8,646 $1,812 $6,834 377.2%
Basic earnings per share $0.24 $0.05 $0.19 380.0%
Diluted earnings per share $0.24 $0.05 $0.19 380.0%
STATISTICS:
Gross profit rate 15.8% 16.0% (0.2)%
Expenses as a % of revenue 14.9 15.7 (0.8)
% Return - Earnings from operations 0.9 0.3 0.6
Earnings before taxes 0.9 0.3 0.6
Net earnings 0.6 0.2 0.4
Effective income tax rate 29.1 41.0 (11.9)
Average number of shares outstanding
(thousands):
Basic 35,306 34,692
Diluted 35,588 34,945
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 53 WEEKS ENDED JANUARY 2, 2005 AND 52 WEEKS ENDED DECEMBER 28, 2003
(In thousands of dollars except per share data)
2004 2003 Change % Change
Revenue from services $4,984,051 $4,325,155 $658,896 15.2%
Cost of services 4,185,545 3,628,524 557,021 15.4
Gross profit 798,506 696,631 101,875 14.6
Selling, general and
administrative expenses 763,013 687,894 75,119 10.9
Earnings from operations 35,493 8,737 26,756 306.2
Interest expense, net (861) (77) (784) NM
Earnings before taxes 34,632 8,660 25,972 299.9
Income taxes 12,502 3,550 8,952 252.2
Net earnings $22,130 $5,110 $17,020 333.1%
Basic earnings per share $0.63 $0.14 $0.49 350.0%
Diluted earnings per share $0.62 $0.14 $0.48 342.9%
STATISTICS:
Gross profit rate 16.0% 16.1% (0.1)%
Expenses as a % of revenue 15.3 15.9 (0.6)
% Return - Earnings from operations 0.7 0.2 0.5
Earnings before taxes 0.7 0.2 0.5
Net earnings 0.4 0.1 0.3
Effective income tax rate 36.1 41.0 (4.9)
Average number of shares outstanding
(thousands):
Basic 35,115 35,289
Diluted 35,461 35,355
NM Percentage change not meaningful.
KELLY SERVICES, INC.
RESULTS OF OPERATIONS BY SEGMENT
(In thousands of dollars)
Fourth Quarter (Unaudited)
2004 2003
(14 weeks) (13 weeks) Change % Change
Revenue from Services:
U.S. Commercial Staffing $623,049 $569,210 $53,839 9.5%
PTSA 277,294 228,557 48,737 21.3
International 455,579 367,206 88,373 24.1
Consolidated Total $1,355,922 $1,164,973 $190,949 16.4%
Earnings from Operations:
U.S. Commercial Staffing $36,320 $23,210 $13,110 56.5%
PTSA 16,141 14,826 1,315 8.9
International 5,514 1,645 3,869 235.2
Corporate (45,634) (36,492) (9,142) (25.1)
Consolidated Total $12,341 $3,189 $9,152 287.0%
December Year to Date
2004 2003
(53 weeks) (52 weeks) Change % Change
Revenue from Services:
U.S. Commercial Staffing $2,327,910 $2,131,529 $196,381 9.2%
PTSA 1,033,427 895,002 138,425 15.5
International 1,622,714 1,298,624 324,090 25.0
Consolidated Total $4,984,051 $4,325,155 $658,896 15.2%
Earnings (Loss) from
Operations:
U.S. Commercial Staffing $119,974 $93,429 $26,545 28.4%
PTSA 63,005 52,856 10,149 19.2
International 12,831 (751) 13,582 1,808.5
Corporate (160,317) (136,797) (23,520) (17.2)
Consolidated Total $35,493 $8,737 $26,756 306.2%
KELLY SERVICES, INC.
RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
UNAUDITED
(In thousands of dollars)
Fourth Quarter
2004 2003
(14 weeks) (13 weeks) Change % Change
U.S. Commercial Staffing $623,049 $569,210 $53,839 9.5%
PTSA 277,294 228,557 48,737 21.3
International - constant currency* 423,980 367,206 56,774 15.5
Revenue from services -
constant currency 1,324,323 1,164,973 159,350 13.7%
Foreign currency impact 31,599 31,599
Revenue from services $1,355,922 $1,164,973 $190,949 16.4%
December Year to Date
2004 2003
(53 weeks) (52 weeks) Change % Change
U.S. Commercial Staffing $2,327,910 $2,131,529 $196,381 9.2%
PTSA 1,033,427 895,002 138,425 15.5
International - constant
currency* 1,493,831 1,298,624 195,207 15.0
Revenue from services -
constant currency 4,855,168 4,325,155 530,013 12.3%
Foreign currency impact 128,883 128,883
Revenue from services $4,984,051 $4,325,155 $658,896 15.2%
* Information on constant currencies is provided to allow investors to separate the impact of foreign currency translations on reported results. Constant currency results are calculated by translating the current year results at prior year average exchange rates.
KELLY SERVICES, INC.
RECONCILIATION OF CONSTANT CURRENCY
REVENUE FROM SERVICES TO REPORTED REVENUE FROM SERVICES
ADJUSTED FOR THE 53rd WEEK
(UNAUDITED)
(In thousands of dollars)
2004
Reported Less: 14th Adjusted
Revenue Week Revenue
14 Weeks Revenue 13 Weeks
U.S. Commercial Staffing $623,049 $29,936 $593,113
PTSA 277,294 13,552 263,742
International - constant currency 423,980 17,072 406,908
Revenue from services - constant
currency 1,324,323 60,560 1,263,763
Foreign currency impact 31,599 1,170 30,429
Revenue from services $1,355,922 $61,730 $1,294,192
2003
Reported
Revenue
13 Weeks Change % Change
U.S. Commercial Staffing $569,210 $23,903 4.2%
PTSA 228,557 35,185 15.4
International - constant currency 367,206 39,702 10.8
Revenue from services - constant
currency 1,164,973 98,790 8.5
Foreign currency impact 30,429
Revenue from services $1,164,973 $129,219 11.1%
2004
Reported Less: 53rd Adjusted
Revenue Week Revenue
53 Weeks Revenue 52 Weeks
U.S. Commercial Staffing $2,327,910 $29,936 $2,297,974
PTSA 1,033,427 13,552 1,019,875
International - constant currency 1,493,831 17,072 1,476,759
Revenue from services - constant
currency 4,855,168 60,560 4,794,608
Foreign currency impact 128,883 1,170 127,713
Revenue from services $4,984,051 $61,730 $4,922,321
2003
Reported
Revenue
52 Weeks Change % Change
U.S. Commercial Staffing $2,131,529 $166,445 7.8%
PTSA 895,002 124,873 14.0
International - constant currency 1,298,624 178,135 13.7
Revenue from services - constant
currency 4,325,155 469,453 10.9
Foreign currency impact 127,713
Revenue from services $4,325,155 $597,166 13.8%
Information on the 14th week of the 2004 fourth quarter and 53rd week of the 2004 fiscal year is provided to allow investors to separate the impact of this extra week on reported results, in comparison to 2003 reported results. Information on constant currencies is provided to allow investors to separate the impact of foreign currency translations on reported results. Constant currency results are calculated by translating the current year results at prior year average exchange rates. Management believes these measurements are an important analytical tool to aid in understanding underlying operating trends without distortion due to the extra week included in the 2004 fiscal year and currency fluctuations.
KELLY SERVICES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In thousands of dollars)
January 2, December 28,
2005 2003
Current Assets
Cash and equivalents $87,554 $76,378
Short-term investments 1,288 457
Trade accounts receivable, less
allowances of $16,228 and $14,983,
respectively 727,366 658,090
Prepaid expenses and other current assets 40,736 31,784
Deferred taxes 34,967 24,962
Total current assets 891,911 791,671
Property and Equipment, Net 179,786 188,122
Noncurrent Deferred Taxes 17,960 14,606
Goodwill, Net 94,652 85,788
Other Assets 63,059 57,550
Total Assets $1,247,368 $1,137,737
Current Liabilities
Short-term borrowings $34,289 $39,190
Accounts payable 102,264 92,265
Accrued payroll and related taxes 246,061 200,503
Accrued insurance 33,165 36,016
Income and other taxes 67,839 49,342
Total current liabilities 483,618 417,316
Noncurrent Liabilities
Accrued insurance 58,548 58,763
Accrued retirement benefits 50,892 48,025
Total noncurrent liabilities 109,440 106,788
Stockholders' Equity
Common stock 40,116 40,116
Treasury stock (97,693) (113,158)
Paid-in capital 22,530 19,096
Earnings invested in the business 664,813 656,726
Accumulated other comprehensive income 24,544 10,853
Total stockholders' equity 654,310 613,633
Total Liabilities and Stockholders' Equity $1,247,368 $1,137,737
STATISTICS:
Working Capital $408,293 $374,355
Current Ratio 1.8 1.9
Debt-to-Capital % 5.0% 6.0%
Global Days Sales Outstanding
Quarter 53 51
Year-to-date 54 55
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE 53 WEEKS ENDED JANUARY 2, 2005 AND 52 WEEKS ENDED DECEMBER 28, 2003
(In thousands of dollars)
2004 2003
Cash flows from operating activities
Net earnings $22,130 $5,110
Noncash adjustments:
Depreciation and amortization 44,137 47,795
Increase in trade accounts
receivable, net (48,755) (63,516)
Changes in other operating assets
and liabilities 41,848 41,204
Net cash from operating activities 59,360 30,593
Cash flows from investing activities
Capital expenditures (35,556) (30,222)
Decrease in short-term investments 105 142
Increase in other assets (736) (2,487)
Net cash from investing activities (36,187) (32,567)
Cash flows from financing activities
(Decrease) increase in short-term
borrowings (8,188) 10,280
Dividend payments (14,043) (14,143)
Stock options and other 8,422 3,865
Purchase of treasury stock (3) (26,149)
Net cash from financing activities (13,812) (26,147)
Effect of exchange rates on cash and
equivalents 1,815 3,563
Net change in cash and equivalents 11,176 (24,558)
Cash and equivalents at beginning of period 76,378 100,936
Cash and equivalents at end of period $87,554 $76,378
SOURCE Kelly Services, Inc.
CONTACT: ANALYST CONTACT: James Polehna, +1-248-244-4586,
james_polehna@kellyservices.com , or MEDIA CONTACT: Renee Walker,
+1-248-244-5362, renee_walker@kellyservices.com , both of Kelly Services,
Inc. Web site: http://www.kellyservices.com
(KELYA KELYB)