Kelly Services® Reports Strong Third Quarter 2015 Earnings and EPS Growth

04 Nov '15

TROY, MI -- (Marketwired) -- 11/04/15 -- Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB)

Quarterly Highlights

  • Earnings from operations up 51%, excluding restructuring (up 72% in constant currency)
  • Earnings per share of $0.23 versus $0.10, excluding restructuring, a 130% increase year-over-year
  • OCG segment revenue up 15% year-over-year (up 17% in constant currency)
  • Total Company revenue down 3% year-over-year (up 3% in constant currency)

Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the third quarter of 2015.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2015 totaled $1.4 billion, a 3% decrease (a 3% increase on a constant currency basis) compared to the corresponding quarter of 2014.

Earnings from operations for the third quarter of 2015 totaled $16.6 million, compared to $7.1 million reported for the third quarter of 2014. Included in the results of operations in the third quarter of 2014 are restructuring charges of $4.0 million. Excluding the restructuring charges, earnings from operations were $11.1 million in the third quarter of 2014.

Diluted earnings per share in the third quarter of 2015 were $0.23 compared to $0.03 per share in the third quarter of 2014. Adjusted earnings per share were $0.10 in the third quarter of 2014. Included in the third quarter of 2015 was a foreign exchange impact of $0.06 per share.

Commenting on the third quarter, Camden stated, "Our third quarter results confirm that Kelly is operating as a more efficient organization, delivering both top-line growth and operating leverage. Excluding the 2014 restructuring charges, we dropped nearly 50% of our constant currency GP growth to the bottom line during the quarter; our 2014 investments in PT and OCG are continuing to yield results; and we're expanding Kelly's role as a trusted talent advisor to many of the world's top companies."

Kelly also reported that on November 3, its board of directors declared a dividend of $0.05 per share. The dividend is payable December 4 to shareholders of record as of the close of business on November 16.

In conjunction with its third quarter earnings release, Kelly Services has published a financial presentation regarding the third quarter results on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on November 4, to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:

U.S. 1 800 288-9626
International 1 651 291-5254

The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website:
www.kellyservices.com

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, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry or market developments, unexpected changes in claim trends on workers' compensation, disability and medical benefit plans, the impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws and the expiration and/or reinstatement of the U.S. work opportunity credit program), the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this release and in the Company's filings with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein, and we have no intention to update these statements.

About Kelly Services®

As a global leader in providing workforce solutions, Kelly Services, Inc. (Nasdaq: KELYA, KELYB) and its subsidiaries, offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Kelly® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. Revenue in 2014 was $5.6 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED SEPTEMBER 27, 2015 AND SEPTEMBER 28, 2014
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2015 2014 Change Change Change
Revenue from services $ 1,351.0 $ 1,396.4 $ (45.4 ) (3.2 )% 3.0 %
Cost of services 1,122.8 1,171.0 (48.2 ) (4.1 )
Gross profit 228.2 225.4 2.8 1.3 7.2
Selling, general and administrative expenses 211.6 218.3 (6.7 ) (3.0 ) 2.0
Earnings from operations 16.6 7.1 9.5 134.9
Other expense, net -- 2.2 (2.2 ) (97.7 )
Earnings before taxes 16.6 4.9 11.7 242.2
Income tax expense 7.5 3.5 4.0 112.6
Net earnings $ 9.1 $ 1.4 $ 7.7 NM %
Basic earnings per share $ 0.23 $ 0.03 $ 0.20 NM %
Diluted earnings per share $ 0.23 $ 0.03 $ 0.20 NM %
STATISTICS:
Gross profit rate 16.9 % 16.1 % 0.8 pts.
Selling, general and administrative expenses:
% of revenue 15.7 15.6 0.1
% of gross profit 92.7 96.9 (4.2 )
% Return:
Earnings from operations 1.2 0.5 0.7
Earnings before taxes 1.2 0.3 0.9
Net earnings 0.7 0.1 0.6
Effective income tax rate 45.2 % 72.7 % (27.5 ) pts.
Average number of shares outstanding (millions):
Basic 37.9 37.6
Diluted 37.9 37.6
Shares adjusted for nonvested restricted awards (millions):
Basic 38.8 38.5
Diluted 38.8 38.5
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 39 WEEKS ENDED SEPTEMBER 27, 2015 AND SEPTEMBER 28, 2014
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2015 2014 Change Change Change
Revenue from services $ 4,056.6 $ 4,137.7 $ (81.1 ) (2.0 )% 3.7 %
Cost of services 3,385.8 3,461.9 (76.1 ) (2.2 )
Gross profit 670.8 675.8 (5.0 ) (0.7 ) 4.6
Selling, general and administrative expenses 630.6 656.5 (25.9 ) (4.0 ) 0.9
Earnings from operations 40.2 19.3 20.9 110.9
Other expense, net 3.5 4.2 (0.7 ) (14.5 )
Earnings before taxes 36.7 15.1 21.6 145.7
Income tax expense 17.1 8.4 8.7 104.4
Net earnings $ 19.6 $ 6.7 $ 12.9 198.2 %
Basic earnings per share $ 0.51 $ 0.17 $ 0.34 200.0 %
Diluted earnings per share $ 0.51 $ 0.17 $ 0.34 200.0 %
STATISTICS:
Gross profit rate 16.5 % 16.3 % 0.2 pts.
Selling, general and administrative expenses:
% of revenue 15.5 15.9 (0.4 )
% of gross profit 94.0 97.2 (3.2 )
% Return:
Earnings from operations 1.0 0.5 0.5
Earnings before taxes 0.9 0.4 0.5
Net earnings 0.5 0.2 0.3
Effective income tax rate 46.5 % 55.9 % (9.4 ) pts.
Average number of shares outstanding (millions):
Basic 37.8 37.5
Diluted 37.8 37.5
Shares adjusted for nonvested restricted awards (millions):
Basic 38.8 38.5
Diluted 38.8 38.5
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2015 2014 Change Change
AMERICAS
Commercial
Revenue from services $ 615.5 $ 640.8 (4.0 )% (1.1) %
Staffing fee-based income included in revenue from services 3.8 3.8 (0.1 ) 2.8
Gross profit 96.6 91.7 5.4 7.9
Gross profit rate 15.7 % 14.3 % 1.4 pts.
PT
Revenue from services $ 242.8 $ 242.5 0.1 % 0.6 %
Staffing fee-based income included in revenue from services 4.7 4.4 8.6 9.7
Gross profit 41.0 39.6 3.6 4.1
Gross profit rate 16.9 % 16.3 % 0.6 pts.
Total Americas
Revenue from services $ 858.3 $ 883.3 (2.8 )% (0.6) %
Staffing fee-based income included in revenue from services 8.5 8.2 4.6 6.5
Gross profit 137.6 131.3 4.8 6.7
Total SG&A expenses 113.7 110.8 2.6 4.5
Earnings from operations 23.9 20.5 16.9
Gross profit rate 16.0 % 14.9 % 1.1 pts.
Expense rates:
% of revenue 13.2 12.5 0.7
% of gross profit 82.7 84.5 (1.8 )
Return on sales 2.8 2.3 0.5
EMEA
Commercial
Revenue from services $ 199.0 $ 231.3 (13.9 )% 2.6 %
Staffing fee-based income included in revenue from services 3.2 4.2 (23.6 ) (4.5 )
Gross profit 27.7 33.6 (17.4 ) (1.4 )
Gross profit rate 13.9 % 14.5 % (0.6 ) pts.
PT
Revenue from services $ 43.6 $ 48.1 (9.3 )% 7.5 %
Staffing fee-based income included in revenue from services 2.6 3.5 (24.1 ) (6.2 )
Gross profit 9.4 10.9 (13.3 ) 4.6
Gross profit rate 21.6 % 22.6 % (1.0 ) pts.
Total EMEA
Revenue from services $ 242.6 $ 279.4 (13.1 )% 3.5 %
Staffing fee-based income included in revenue from services 5.8 7.7 (23.8 ) (5.3 )
Gross profit 37.1 44.5 (16.4 ) 0.1
Total SG&A expenses 31.8 40.0 (20.7 ) (6.2 )
Earnings from operations 5.3 4.5 22.4
Gross profit rate 15.3 % 15.9 % (0.6 ) pts.
Expense rates:
% of revenue 13.1 14.3 (1.2 )
% of gross profit 85.4 90.0 (4.6 )
Return on sales 2.2 1.6 0.6
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Third Quarter
Constant
Currency
2015 2014 Change Change
APAC
Commercial
Revenue from services $ 83.2 $ 91.0 (8.5 )% 9.2 %
Staffing fee-based income included in revenue from services 1.4 2.0 (28.5 ) (16.7 )
Gross profit 10.7 11.7 (8.5 ) 9.1
Gross profit rate 12.8 % 12.8 % -- pts.
PT
Revenue from services $ 9.9 $ 10.6 (6.4 )% 11.8 %
Staffing fee-based income included in revenue from services 1.3 2.0 (34.3 ) (22.6 )
Gross profit 2.5 3.3 (24.6 ) (10.8 )
Gross profit rate 25.4 % 31.5 % (6.1 ) pts.
Total APAC
Revenue from services $ 93.1 $ 101.6 (8.3 )% 9.5 %
Staffing fee-based income included in revenue from services 2.7 4.0 (31.4 ) (19.7 )
Gross profit 13.2 15.0 (12.1 ) 4.7
SG&A expenses excluding restructuring charges 11.1 14.2 (21.6 )
Restructuring charges -- 0.3 (100.0 )
Total SG&A expenses 11.1 14.5 (23.2 ) (8.8 )
Earnings from operations 2.1 0.5 297.9
Earnings from operations excluding restructuring charges 2.1 0.8 154.9
Gross profit rate 14.2 % 14.8 % (0.6 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 11.9 14.0 (2.1 )
% of gross profit 84.3 94.6 (10.3 )
Return on sales (excluding restructuring charges) 2.2 0.8 1.4
OCG
Revenue from services $ 171.8 $ 149.8 14.7 % 16.8 %
Gross profit 41.4 35.8 15.5 18.4
Total SG&A expenses 33.2 32.2 3.2 6.3
Earnings from operations 8.2 3.6 123.7
Gross profit rate 24.1 % 23.9 % 0.2 pts.
Expense rates:
% of revenue 19.3 21.5 (2.2 )
% of gross profit 80.2 89.8 (9.6 )
Return on sales 4.8 2.4 2.4
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
Constant
Currency
2015 2014 Change Change
AMERICAS
Commercial
Revenue from services $ 1,908.2 $ 1,915.1 (0.4 )% 1.8 %
Staffing fee-based income included in revenue from services 10.8 10.4 3.4 6.0
Gross profit 290.3 280.0 3.7 5.6
Gross profit rate 15.2 % 14.6 % 0.6 pts.
PT
Revenue from services $ 721.8 $ 723.1 (0.2 )% 0.2 %
Staffing fee-based income included in revenue from services 13.1 11.7 11.7 12.6
Gross profit 122.0 118.4 3.1 3.6
Gross profit rate 16.9 % 16.4 % 0.5 pts.
Total Americas
Revenue from services $ 2,630.0 $ 2,638.2 (0.3 )% 1.4 %
Staffing fee-based income included in revenue from services 23.9 22.1 7.7 9.5
Gross profit 412.3 398.4 3.5 5.0
Total SG&A expenses 339.8 332.9 2.0 3.5
Earnings from operations 72.5 65.5 11.0
Gross profit rate 15.7 % 15.1 % 0.6 pts.
Expense rates:
% of revenue 12.9 12.6 0.3
% of gross profit 82.4 83.6 (1.2 )
Return on sales 2.8 2.5 0.3
EMEA
Commercial
Revenue from services $ 573.0 $ 690.2 (17.0 )% 0.3 %
Staffing fee-based income included in revenue from services 9.9 14.0 (29.2 ) (11.0 )
Gross profit 79.1 101.0 (21.7 ) (5.4 )
Gross profit rate 13.8 % 14.6 % (0.8 ) pts.
PT
Revenue from services $ 126.8 $ 145.5 (12.8 )% 4.7 %
Staffing fee-based income included in revenue from services 7.7 10.7 (27.7 ) (10.2 )
Gross profit 27.2 33.3 (18.1 ) (0.4 )
Gross profit rate 21.5 % 22.8 % (1.3 ) pts.
Total EMEA
Revenue from services $ 699.8 $ 835.7 (16.3 )% 1.1 %
Staffing fee-based income included in revenue from services 17.6 24.7 (28.5 ) (10.7 )
Gross profit 106.3 134.3 (20.8 ) (4.1 )
SG&A expenses excluding restructuring charges 99.5 124.2 (19.9 )
Restructuring charges -- 0.8 (100.0 )
Total SG&A expenses 99.5 125.0 (20.4 ) (4.7 )
Earnings from operations 6.8 9.3 (25.5 )
Earnings from operations excluding restructuring charges 6.8 10.1 (31.5 )
Gross profit rate 15.2 % 16.1 % (0.9 ) pts.
Expense rates (excluding restructuring charges):
% of revenue 14.2 14.9 (0.7 )
% of gross profit 93.5 92.5 1.0
Return on sales (excluding restructuring charges) 1.0 1.2 (0.2 )
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
September Year to Date
Constant
Currency
2015 2014 Change Change
APAC
Commercial
Revenue from services $ 259.1 $ 260.5 (0.5 )% 13.1 %
Staffing fee-based income included in revenue from services 4.7 5.9 (20.3 ) (10.8 )
Gross profit 34.9 35.7 (2.2 ) 10.8
Gross profit rate 13.5 % 13.7 % (0.2 ) pts.
PT
Revenue from services $ 30.7 $ 29.2 5.4 % 20.5 %
Staffing fee-based income included in revenue from services 4.4 5.8 (23.7 ) (14.6 )
Gross profit 8.1 9.4 (13.6 ) (2.4 )
Gross profit rate 26.4 % 32.2 % (5.8 ) pts.
Total APAC
Revenue from services $ 289.8 $ 289.7 0.1 % 13.8 %
Staffing fee-based income included in revenue from services 9.1 11.7 (22.0 ) (12.7 )
Gross profit 43.0 45.1 (4.6 ) 8.0
SG&A expenses excluding restructuring charges 35.5 43.3 (18.0 )
Restructuring charges -- 1.3 (100.0 )
Total SG&A expenses 35.5 44.6 (20.5 ) (10.1 )
Earnings from operations 7.5 0.5 NM
Earnings from operations excluding restructuring charges 7.5 1.8 338.5
Gross profit rate 14.8 % 15.6 % (0.8 )% pts.
Expense rates (excluding restructuring charges):
% of revenue 12.3 15.0 (2.7 )
% of gross profit 82.7 96.2 (13.5 )
Return on sales (excluding restructuring charges) 2.6 0.6 2.0
OCG
Revenue from services $ 486.3 $ 422.1 15.2 % 17.0 %
Gross profit 112.6 101.3 11.1 13.4
Total SG&A expenses 98.1 94.7 3.6 6.4
Earnings from operations 14.5 6.6 116.7
Gross profit rate 23.1 % 24.0 % (0.9 ) pts.
Expense rates:
% of revenue 20.2 22.4 (2.2 )
% of gross profit 87.1 93.4 (6.3 )
Return on sales 3.0 1.6 1.4
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
September 27, 2015 December 28, 2014 September 28, 2014
Current Assets
Cash and equivalents $ 44.9 $ 83.1 $ 51.6
Trade accounts receivable, less allowances of $9.7, $10.7 and $9.2, respectively 1,160.3 1,122.8 1,158.1
Prepaid expenses and other current assets 49.0 47.9 56.8
Deferred taxes 35.0 34.4 28.9
Total current assets 1,289.2 1,288.2 1,295.4
Property and Equipment, Net 88.3 93.0 91.1
Noncurrent Deferred Taxes 140.8 146.3 132.7
Goodwill, Net 90.3 90.3 90.3
Other Assets 341.3 300.1 291.5
Total Assets $ 1,949.9 $ 1,917.9 $ 1,901.0
Current Liabilities
Short-term borrowings $ 76.8 $ 91.9 $ 88.7
Accounts payable and accrued liabilities 385.2 364.0 339.0
Accrued payroll and related taxes 312.8 308.5 318.6
Accrued insurance 25.9 26.9 24.4
Income and other taxes 59.5 68.8 74.0
Total current liabilities 860.2 860.1 844.7
Noncurrent Liabilities
Accrued insurance 42.2 43.9 43.4
Accrued retirement benefits 139.5 140.8 146.6
Other long-term liabilities 48.4 39.4 40.7
Total noncurrent liabilities 230.1 224.1 230.7
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (46.9 ) (49.8 ) (52.5 )
Paid-in capital 26.7 24.9 26.7
Earnings invested in the business 781.3 767.4 752.3
Accumulated other comprehensive income 58.4 51.1 59.0
Total stockholders' equity 859.6 833.7 825.6
Total Liabilities and Stockholders' Equity $ 1,949.9 $ 1,917.9 $ 1,901.0
STATISTICS:
Working Capital $ 429.0 $ 428.1 $ 450.7
Current Ratio 1.5 1.5 1.5
Debt-to-capital % 8.2 % 9.9 % 9.7 %
Global Days Sales Outstanding 57 54 58
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 39 WEEKS ENDED SEPTEMBER 27, 2015 AND SEPTEMBER 28, 2014
(UNAUDITED)
(In millions of dollars)
2015 2014
Cash flows from operating activities:
Net earnings $ 19.6 $ 6.7
Noncash adjustments:
Depreciation and amortization 16.6 16.2
Provision for bad debts 3.3 3.6
Stock-based compensation 4.6 4.1
Other, net (0.7 ) 1.3
Changes in operating assets and liabilities (44.9 ) (140.9 )
Net cash used in operating activities (1.5 ) (109.0 )
Cash flows from investing activities:
Capital expenditures (12.3 ) (15.0 )
Investment in equity affiliate (0.5 ) (5.4 )
Other investing activities (0.4 ) 0.2
Net cash used in investing activities (13.2 ) (20.2 )
Cash flows from financing activities:
Net change in short-term borrowings (13.8 ) 60.4
Dividend payments (5.7 ) (5.7 )
Other financing activities 0.2 0.4
Net cash (used in) from financing activities (19.3 ) 55.1
Effect of exchange rates on cash and equivalents (4.2 ) --
Net change in cash and equivalents (38.2 ) (74.1 )
Cash and equivalents at beginning of period 83.1 125.7
Cash and equivalents at end of period $ 44.9 $ 51.6
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Third Quarter (Commercial, PT and OCG)
% Change
Constant
2015 2014 US$ Currency
Americas
United States $ 899.8 $ 873.7 3.0 % 3.0 %
Canada 37.9 51.9 (27.0 ) (12.6 )
Mexico 31.3 37.0 (15.2 ) 6.1
Puerto Rico 23.8 25.7 (7.5 ) (7.5 )
Brazil 10.4 13.6 (23.5 ) 11.4
Total Americas 1,003.2 1,001.9 0.1 2.1
EMEA
France 63.1 70.1 (10.0 ) 7.4
Switzerland 58.0 66.7 (13.0 ) (8.2 )
Portugal 33.5 33.3 0.8 20.2
United Kingdom 27.7 26.2 5.7 14.0
Russia 17.0 28.7 (40.6 ) 2.9
Germany 15.4 17.5 (12.1 ) 4.8
Italy 14.0 14.8 (5.5 ) 12.6
Norway 10.1 14.8 (31.8 ) (10.5 )
Other 11.5 15.8 (27.1 ) (13.2 )
Total EMEA 250.3 287.9 (13.1 ) 3.5
APAC
Singapore 32.6 33.4 (2.3 ) 8.5
Australia 28.8 32.3 (10.7 ) 13.8
Malaysia 14.0 16.7 (16.1 ) 6.0
New Zealand 9.4 12.7 (26.4 ) (4.7 )
Other 12.7 11.5 10.4 20.9
Total APAC 97.5 106.6 (8.5 ) 9.5
Total Kelly Services, Inc. $ 1,351.0 $ 1,396.4 (3.2) % 3.0 %
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
September Year to Date (Commercial, PT and OCG)
% Change
Constant
2015 2014 US$ Currency
Americas
United States $ 2,706.4 $ 2,601.9 4.0 % 4.0 %
Canada 122.2 148.2 (17.5 ) (5.5 )
Mexico 95.2 102.3 (6.9 ) 10.4
Puerto Rico 75.2 78.4 (4.0 ) (4.0 )
Brazil 34.2 43.2 (20.8 ) 2.8
Total Americas 3,033.2 2,974.0 2.0 3.5
EMEA
France 180.4 202.2 (10.8 ) 8.4
Switzerland 160.7 195.7 (17.9 ) (12.9 )
Portugal 98.7 92.4 6.9 29.9
United Kingdom 78.4 82.4 (4.8 ) 3.7
Russia 57.4 96.4 (40.4 ) (0.9 )
Germany 43.1 50.7 (15.0 ) 3.1
Italy 39.5 46.3 (14.6 ) 3.6
Norway 29.5 43.6 (32.5 ) (12.8 )
Other 32.8 50.9 (35.6 ) (21.8 )
Total EMEA 720.5 860.6 (16.3 ) 0.9
APAC
Singapore 96.9 94.8 2.3 10.9
Australia 92.1 88.8 3.8 24.8
Malaysia 45.4 50.0 (9.3 ) 5.2
New Zealand 30.2 38.2 (21.1 ) (6.1 )
Other 38.3 31.3 22.4 29.7
Total APAC 302.9 303.1 (0.1 ) 13.8
Total Kelly Services, Inc. $ 4,056.6 $ 4,137.7 (2.0) % 3.7 %
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED SEPTEMBER 27, 2015 AND SEPTEMBER 28, 2014
(UNAUDITED)
(In millions of dollars except per share data)
2015 2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 1,351.0 $ -- $ 1,351.0 $ 1,396.4 (3.2) %
Cost of services 1,122.8 -- 1,122.8 1,171.0 (4.1 )
Gross profit 228.2 -- 228.2 225.4 1.3
SG&A expenses 211.6 -- 211.6 214.3 (1.2 )
Earnings from operations 16.6 -- 16.6 11.1 50.7
Other expense, net -- -- -- 2.2 (97.7 )
Earnings before taxes 16.6 -- 16.6 8.9 88.3
Inc. tax expense (benefit) 7.5 -- 7.5 5.0 48.8
Net earnings $ 9.1 $ -- $ 9.1 $ 3.9 141.1 %
Earnings per share:
Basic $ 0.23 $ -- $ 0.23 $ 0.10 130.0 %
Diluted $ 0.23 $ -- $ 0.23 $ 0.10 130.0 %
2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 1,396.4 $ -- $ 1,396.4
Cost of services 1,171.0 -- 1,171.0
Gross profit 225.4 -- 225.4
SG&A expenses 218.3 (4.0 ) 214.3
Earnings from operations 7.1 4.0 11.1
Other expense, net 2.2 -- 2.2
Earnings before taxes 4.9 4.0 8.9
Inc. tax expense (benefit) 3.5 1.5 5.0
Net earnings $ 1.4 $ 2.5 $ 3.9
Earnings per share:
Basic $ 0.03 $ 0.06 $ 0.10
Diluted $ 0.03 $ 0.06 $ 0.10
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
FOR THE 39 WEEKS ENDED SEPTEMBER 27, 2015 AND SEPTEMBER 28, 2014
(UNAUDITED)
(In millions of dollars except per share data)
2015 2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings Adjusted Earnings % Change
Revenue from services $ 4,056.6 $ -- $ 4,056.6 $ 4,137.7 (2.0) %
Cost of services 3,385.8 -- 3,385.8 3,461.9 (2.2 )
Gross profit 670.8 -- 670.8 675.8 (0.7 )
SG&A expenses 630.6 -- 630.6 650.7 (3.1 )
Earnings from operations 40.2 -- 40.2 25.1 61.6
Other expense, net 3.5 -- 3.5 4.2 (14.5 )
Earnings before taxes 36.7 -- 36.7 20.9 76.7
Inc. tax expense (benefit) 17.1 -- 17.1 10.5 62.4
Net earnings $ 19.6 $ -- $ 19.6 $ 10.4 91.4 %
Earnings per share:
Basic $ 0.51 $ -- $ 0.51 $ 0.27 88.9 %
Diluted $ 0.51 $ -- $ 0.51 $ 0.27 88.9 %
2014
As reported Restructuring Charges
(Note 1)
Adjusted Earnings
Revenue from services $ 4,137.7 $ -- $ 4,137.7
Cost of services 3,461.9 -- 3,461.9
Gross profit 675.8 -- 675.8
SG&A expenses 656.5 (5.8 ) 650.7
Earnings from operations 19.3 5.8 25.1
Other expense, net 4.2 -- 4.2
Earnings before taxes 15.1 5.8 20.9
Inc. tax expense (benefit) 8.4 2.1 10.5
Net earnings $ 6.7 $ 3.7 $ 10.4
Earnings per share:
Basic $ 0.17 $ 0.10 $ 0.27
Diluted $ 0.17 $ 0.10 $ 0.27
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)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the restructuring charges is useful to understand the Company's fiscal 2015 financial performance and increases comparability. Specifically, Management believes that excluding these items allows for a more meaningful comparison of current period operating performance with the operating results of prior periods. 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) Restructuring charges in 2014 include costs related to the U.S. management simplification restructuring plan, costs incurred for exiting the staffing business in Sweden, and costs related to closing branches in Australia and consolidating back office functions in Australia and New Zealand.

Source: Kelly Services

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