Kelly Services(R) Reports Third Quarter 2016 Earnings and Announces EPS

07 Nov '16

TROY, MI -- (Marketwired) -- 11/07/16 --

Third Quarter Highlights

  • APAC Joint Venture completed
  • Total Revenue declines 8%; down 1% adjusted for APAC JV transaction
  • Operating earnings increase 13%; up 29% adjusted for APAC JV transaction
  • Earnings per share of $2.06 (Adjusted EPS of $0.44) versus $0.23 (Adjusted EPS of $0.19), a 132% increase on an adjusted basis

Kelly Services(NASDAQ: KELYA)(NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the third quarter of 2016.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the third quarter of 2016 totaled $1.2 billion, a 7.6% decrease (a 7.1% decrease on a constant currency basis) compared to the corresponding quarter of 2015. During the third quarter of 2016, Kelly transferred its APAC staffing operations to the TS Kelly Asia Pacific joint venture and recorded a gain of $87.2 million. Kelly retains a 49% ownership interest in the newly formed joint venture. Excluding the APAC staffing operations from the third quarter of 2015, adjusted 2016 third quarter revenue was down 0.7% year over year (a 0.1% decrease on a constant currency basis).

Earnings from operations for the third quarter of 2016 totaled $18.8 million, compared to $16.6 million reported for the third quarter of 2015. Excluding the APAC staffing operations from the third quarter of 2015, adjusted earnings from operations were $14.5 million; therefore, Kelly's third quarter 2016 earnings increased 29% year-over-year on an adjusted basis.

Diluted earnings per share in the third quarter of 2016 were $2.06 compared to $0.23 per share in the third quarter of 2015. Excluding the gain from 2016 third quarter results and APAC staffing operations from 2015 third quarter results, adjusted earnings per share were $0.44 in the third quarter of 2016 and $0.19 in the third quarter of 2015.

Commenting on the third quarter, Camden stated, "Sorting through the financial complexity around the JV transaction, Kelly's third quarter performance reflects good operating leverage on basically flat revenue. We increased our gross profit rate, reduced expenses, and turned in healthy operating earnings and solid returns for our shareholders. Our U.S. Staffing segment showed competitive strength and agility in an uncertain economic environment, and our OCG business delivered year-over-year GP improvement. With the APAC JV now firmly in place, we are operating as a more focused, disciplined company relentlessly committed to profitability."

In conjunction with its third quarter earnings release, Kelly Services has published a financial presentation on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on November 7 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
www.kellyservices.com

Via the Telephone:
U.S. 1 800 288-9626
International 1 651 291-5254
The pass code is Kelly Services

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, the risk our intellectual assets could be infringed upon or compromised, 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 including TS Kelly Asia Pacific, 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 developments or operational circumstances, 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), 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. In 2016, the Company is commemorating 70 years of industry leadership. 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 2015 was $5.5 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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars except per share data)  
                        %   CC %  
    2016     2015     Change       Change   Change  
                                     
Revenue from services   $ 1,247.8     $ 1,351.0     $ (103.2 )     (7.6 )% (7.1 )%
                                     
Cost of services     1,032.7       1,122.8       (90.1 )     (8.0 )    
                                     
Gross profit     215.1       228.2       (13.1 )     (5.8 ) (5.3 )
                                     
Selling, general and administrative expenses     196.3       211.6       (15.3 )     (7.3 ) (6.9 )
                                     
Earnings from operations     18.8       16.6       2.2       13.1      
                                     
Gain on investment in TS Kelly Asia Pacific     87.2       -       87.2       NM      
                                     
Other expense, net     (0.4 )     -       (0.4 )     NM      
                                     
Earnings before taxes     105.6       16.6       89.0       NM      
                                     
Income tax expense     24.7       7.5       17.2       230.6      
                                     
Net earnings   $ 80.9     $ 9.1     $ 71.8       NM %    
                                     
Basic earnings per share   $ 2.08     $ 0.23     $ 1.85       NM %    
Diluted earnings per share   $ 2.06     $ 0.23     $ 1.83       NM %    
                                     
                                     
STATISTICS:                                    
                                     
Gross profit rate     17.2 %     16.9 %     0.3     pts.        
                                     
Selling, general and administrative expenses:                                    
    % of revenue     15.7       15.7       -              
    % of gross profit     91.3       92.7       (1.4 )            
                                     
% Return:                                    
  Earnings from operations     1.5       1.2       0.3              
  Earnings before taxes     8.5       1.2       7.3              
  Net earnings     6.5       0.7       5.8              
                                     
Effective income tax rate     23.4 %     45.2 %     (21.8 )   pts.        
                                     
Average number of shares outstanding (millions):                                    
    Basic     38.1       37.9                      
    Diluted     38.4       37.9                      
                                     
Shares adjusted for nonvested restricted awards (millions):                                    
    Basic     39.0       38.8                      
    Diluted     39.2       38.8                      
                                     
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars except per share data)  
                        %   CC %  
    2016     2015     Change       Change   Change  
                                     
Revenue from services   $ 3,972.4     $ 4,056.6     $ (84.2 )     (2.1 )% (0.7 )%
                                     
Cost of services     3,294.1       3,385.8       (91.7 )     (2.7 )    
                                     
Gross profit     678.3       670.8       7.5       1.1   2.3  
                                     
Selling, general and administrative expenses     634.9       630.6       4.3       0.7   1.8  
                                     
Earnings from operations     43.4       40.2       3.2       7.9      
                                     
Gain on investment in TS Kelly Asia Pacific     87.2       -       87.2       NM      
                                     
Other expense, net     (1.4 )     (3.5 )     2.1       61.2      
                                     
Earnings before taxes     129.2       36.7       92.5       252.3      
                                     
Income tax expense     28.2       17.1       11.1       65.4      
                                     
Net earnings   $ 101.0     $ 19.6     $ 81.4       414.7 %    
                                     
Basic earnings per share   $ 2.59     $ 0.51     $ 2.08       NM %    
Diluted earnings per share   $ 2.58     $ 0.51     $ 2.07       NM %    
                                     
                                     
STATISTICS:                                    
                                     
Gross profit rate     17.1 %     16.5 %     0.6     pts.        
                                     
Selling, general and administrative expenses:                                    
    % of revenue     16.0       15.5       0.5              
    % of gross profit     93.6       94.0       (0.4 )            
                                     
% Return:                                    
  Earnings from operations     1.1       1.0       0.1              
  Earnings before taxes     3.3       0.9       2.4              
  Net earnings     2.5       0.5       2.0              
                                     
Effective income tax rate     21.8 %     46.5 %     (24.7 )   pts.        
                                     
Average number of shares outstanding (millions):                                    
    Basic     38.0       37.8                      
    Diluted     38.3       37.8                      
                                     
Shares adjusted for nonvested restricted awards (millions):                                    
    Basic     39.0       38.8                      
    Diluted     39.2       38.8                      
                                         
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                           
    Third Quarter  
                           
                %       CC %  
    2016     2015     Change       Change  
AMERICAS                              
  Commercial                              
    Revenue from services   $ 603.7     $ 615.5     (1.9 )%     (1.3 )%
    Staffing fee-based income included in revenue from services     4.2       3.8     10.0       10.1  
    Gross profit     94.9       96.6     (1.8 )     (1.3 )
    Gross profit rate     15.7 %     15.7 %   -     pts.    
  PT                              
    Revenue from services   $ 239.6     $ 242.8     (1.3 )%     (1.3 )%
    Staffing fee-based income included in revenue from services     4.4       4.7     (6.9 )     (6.9 )
    Gross profit     41.4       41.0     1.0       1.0  
    Gross profit rate     17.3 %     16.9 %   0.4     pts.    
  Total Americas                              
    Revenue from services   $ 843.3     $ 858.3     (1.8 )%     (1.3 )%
    Staffing fee-based income included in revenue from services     8.6       8.5     0.6       0.7  
    Gross profit     136.3       137.6     (1.0 )     (0.6 )
    Total SG&A expenses     112.2       113.7     (1.4 )     (1.2 )
    Earnings from operations     24.1       23.9     1.0          
                                 
    Gross profit rate     16.2 %     16.0 %   0.2     pts.    
    Expense rates:                              
      % of revenue     13.3       13.2     0.1          
      % of gross profit     82.3       82.7     (0.4 )        
    Return on sales     2.9       2.8     0.1          
                               
EMEA                              
  Commercial                              
    Revenue from services   $ 197.6     $ 199.0     (0.8 )%     1.0 %
    Staffing fee-based income included in revenue from services     3.3       3.2     5.0       6.7  
    Gross profit     26.8       27.7     (3.5 )     (2.5 )
    Gross profit rate     13.6 %     13.9 %   (0.3 )   pts.    
  PT                              
    Revenue from services   $ 41.7     $ 43.6     (4.3 )%     (2.9 )%
    Staffing fee-based income included in revenue from services     2.2       2.6     (16.1 )     (14.4 )
    Gross profit     8.2       9.4     (11.7 )     (10.6 )
    Gross profit rate     19.9 %     21.6 %   (1.7 )   pts.    
  Total EMEA                              
    Revenue from services   $ 239.3     $ 242.6     (1.4 )%     0.3 %
    Staffing fee-based income included in revenue from services     5.5       5.8     (4.6 )     (2.9 )
    Gross profit     35.0       37.1     (5.6 )     (4.6 )
    Total SG&A expenses     30.6       31.8     (3.5 )     (2.0 )
    Earnings from operations     4.4       5.3     (17.8 )        
                               
    Gross profit rate     14.7 %     15.3 %   (0.6 )   pts.    
    Expense rates:                              
      % of revenue     12.8       13.1     (0.3 )        
      % of gross profit     87.3       85.4     1.9          
    Return on sales     1.9       2.2     (0.3 )        
                                   
 
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
                         
    Third Quarter
                         
                %     CC %  
    2016     2015     Change     Change  
OCG                            
  Revenue from services   $ 178.2     $ 171.8     3.7 %   3.9 %
  Gross profit     45.0       41.4     8.5     8.9  
  Total SG&A expenses     37.3       33.2     12.3     12.8  
  Earnings from operations     7.7       8.2     (7.0 )      
                             
  Gross profit rate     25.2 %     24.1 %   1.1   pts.    
  Expense rates:                            
    % of revenue     20.9       19.3     1.6        
    % of gross profit     83.0       80.2     2.8        
  Return on sales     4.3       4.8     (0.5 )      
                             
Corporate                            
  Total SG&A expenses   $ 17.4     $ 22.9     (24.4 )%      
                             
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                           
    September Year to Date  
                           
                %       CC %  
    2016     2015     Change       Change  
AMERICAS                              
  Commercial                              
    Revenue from services   $ 1,887.6     $ 1,908.2     (1.1 )%     0.2 %
    Staffing fee-based income included in revenue from services     11.4       10.8     5.5       6.1  
    Gross profit     295.9       290.3     1.9       2.9  
    Gross profit rate     15.7 %     15.2 %   0.5     pts.    
  PT                              
    Revenue from services   $ 718.3     $ 721.8     (0.5 )%     (0.4 )%
    Staffing fee-based income included in revenue from services     13.7       13.1     4.4       5.2  
    Gross profit     124.3       122.0     1.8       2.0  
    Gross profit rate     17.3 %     16.9 %   0.4     pts.    
  Total Americas                              
    Revenue from services   $ 2,605.9     $ 2,630.0     (0.9 )%     - %
    Staffing fee-based income included in revenue from services     25.1       23.9     4.9       5.6  
    Gross profit     420.2       412.3     1.9       2.7  
    SG&A expenses excluding restructuring charges     340.5       339.8     0.2       0.9  
    Restructuring charges     2.2       -     NM          
    Total SG&A expenses     342.7       339.8     0.8       1.5  
    Earnings from operations     77.5       72.5     7.0          
    Earnings from operations excluding restructuring charges     79.7       72.5     10.0          
                               
    Gross profit rate     16.1 %     15.7 %   0.4     pts.    
    Expense rates (excluding restructuring charges):                              
      % of revenue     13.1       12.9     0.2          
      % of gross profit     81.0       82.4     (1.4 )        
    Return on sales (excluding restructuring charges)     3.1       2.8     0.3          
                               
EMEA                              
  Commercial                              
    Revenue from services   $ 570.2     $ 573.0     (0.5 )%     2.3 %
    Staffing fee-based income included in revenue from services     10.4       9.9     6.0       10.0  
    Gross profit     77.5       79.1     (2.1 )     0.2  
    Gross profit rate     13.6 %     13.8 %   (0.2 )   pts.    
  PT                              
    Revenue from services   $ 126.4     $ 126.8     (0.3 )%     2.1 %
    Staffing fee-based income included in revenue from services     7.3       7.7     (5.8 )     (2.1 )
    Gross profit     25.6       27.2     (5.7 )     (3.2 )
    Gross profit rate     20.3 %     21.5 %   (1.2 )   pts.    
  Total EMEA                              
    Revenue from services   $ 696.6     $ 699.8     (0.5 )%     2.2 %
    Staffing fee-based income included in revenue from services     17.7       17.6     0.8       4.7  
    Gross profit     103.1       106.3     (3.0 )     (0.6 )
    SG&A expenses excluding restructuring charges     92.9       99.5     (6.5 )     (3.8 )
    Restructuring charges     1.2       -     NM          
    Total SG&A expenses     94.1       99.5     (5.3 )     (2.7 )
    Earnings from operations     9.0       6.8     30.5          
    Earnings from operations excluding restructuring charges     10.2       6.8     46.7          
                               
    Gross profit rate     14.8 %     15.2 %   (0.4 )   pts.    
    Expense rates (excluding restructuring charges):                              
      % of revenue     13.4       14.2     (0.8 )        
      % of gross profit     90.1       93.5     (3.4 )        
    Return on sales (excluding restructuring charges)     1.5       1.0     0.5          
                               
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    September Year to Date  
                         
                %     CC %  
    2016     2015     Change     Change  
OCG                            
  Revenue from services   $ 520.3     $ 486.3     7.0 %   7.5 %
  Gross profit     130.1       112.6     15.5     16.3  
  Total SG&A expenses     112.2       98.1     14.4     15.3  
  Earnings from operations     17.9       14.5     22.8        
                             
  Gross profit rate     25.0 %     23.1 %   1.9   pts.    
  Expense rates:                            
    % of revenue     21.6       20.2     1.4        
    % of gross profit     86.3       87.1     (0.8 )      
  Return on sales     3.4       3.0     0.4        
                             
Corporate                            
  Total SG&A expenses   $ 66.6     $ 61.1     8.8 %      
                               
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
                   
    October 2, 2016     Jan. 3, 2016     September 27, 2015  
Current Assets                        
  Cash and equivalents   $ 27.6     $ 42.2     $ 44.9  
  Trade accounts receivable, less allowances of $11.1, $10.5 and $9.7, respectively    
1,125.8
     
1,139.1
     
1,160.3
 
  Prepaid expenses and other current assets     53.0       45.8       49.0  
  Deferred taxes     -       -       35.0  
Total current assets     1,206.4       1,227.1       1,289.2  
                         
Noncurrent Assets                        
  Property and equipment, net     80.5       88.9       88.3  
  Noncurrent deferred taxes     179.8       189.3       140.8  
  Goodwill, net     88.4       90.3       90.3  
  Investment in equity affiliate     113.6       9.4       9.4  
  Other assets     370.6       334.6       331.9  
Total noncurrent assets     832.9       712.5       660.7  
                         
Total Assets   $ 2,039.3     $ 1,939.6     $ 1,949.9  
                         
Current Liabilities                        
  Short-term borrowings   $ 8.7     $ 55.5     $ 76.8  
  Accounts payable and accrued liabilities     408.7       405.5       385.2  
  Accrued payroll and related taxes     276.9       268.1       312.8  
  Accrued insurance     26.8       26.7       25.9  
  Income and other taxes     56.9       60.0       59.5  
Total current liabilities     778.0       815.8       860.2  
                         
Noncurrent Liabilities                        
  Accrued insurance     40.2       40.0       42.2  
  Accrued retirement benefits     153.9       141.0       139.5  
  Other long-term liabilities     50.7       47.4       48.4  
Total noncurrent liabilities     244.8       228.4       230.1  
                         
Stockholders' Equity                        
  Common stock     40.1       40.1       40.1  
  Treasury stock     (39.1 )     (44.3 )     (46.9 )
  Paid-in capital     26.2       25.4       26.7  
  Earnings invested in the business     906.8       813.5       781.3  
  Accumulated other comprehensive income     82.5       60.7       58.4  
Total stockholders' equity     1,016.5       895.4       859.6  
                         
Total Liabilities and Stockholders' Equity   $ 2,039.3     $ 1,939.6     $ 1,949.9  
                         
                         
STATISTICS:                        
  Working Capital   $ 428.4     $ 411.3     $ 429.0  
  Current Ratio     1.6       1.5       1.5  
  Debt-to-capital %     0.9 %     5.8 %     8.2 %
  Global Days Sales Outstanding     56       54       57  
                           
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 39 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars)  
       
    2016     2015  
Cash flows from operating activities:                
  Net earnings   $ 101.0     $ 19.6  
  Noncash adjustments:                
    Depreciation and amortization     16.0       16.6  
    Provision for bad debts     6.1       3.3  
    Stock-based compensation     5.5       4.6  
    Gain on investment in TS Kelly Asia Pacific equity affiliate     (87.2 )     -  
    Other, net     (2.2 )     (0.7 )
  Changes in operating assets and liabilities     (13.1 )     (44.9 )
                 
    Net cash from (used in) operating activities     26.1       (1.5 )
                 
Cash flows from investing activities:                
  Capital expenditures     (7.8 )     (12.3 )
  Net cash proceeds from investment in TS Kelly Asia Pacific equity affiliate     18.8       -  
  Investment in TS Kelly equity affiliate     -       (0.5 )
  Other investing activities     (0.4 )     (0.4 )
                 
    Net cash from (used in) investing activities     10.6       (13.2 )
                 
Cash flows from financing activities:                
  Net change in short-term borrowings     (47.8 )     (13.8 )
  Dividend payments     (7.7 )     (5.7 )
  Other financing activities     0.4       0.2  
                 
    Net cash used in financing activities     (55.1 )     (19.3 )
                 
Effect of exchange rates on cash and equivalents     3.8       (4.2 )
                 
Net change in cash and equivalents     (14.6 )     (38.2 )
Cash and equivalents at beginning of period     42.2       83.1  
                 
                 
Cash and equivalents at end of period   $ 27.6     $ 44.9  
                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    Third Quarter (Commercial, PT and OCG)  
                     
            %     CC %  
    2016   2015   Change     Change  
                         
Americas                        
  United States   $ 900.3   $ 899.8   0.1 %   0.1 %
  Canada     34.9     37.9   (7.8 )   (8.5 )
  Mexico     27.6     31.3   (12.3 )   0.4  
  Puerto Rico     20.9     23.8   (12.2 )   (12.2 )
  Brazil     13.3     10.4   27.9     28.1  
Total Americas     997.0     1,003.2   (0.6 )   (0.3 )
                         
EMEA                        
  France     60.8     63.1   (3.7 )   (4.1 )
  Switzerland     55.0     58.0   (5.2 )   (3.9 )
  Portugal     39.2     33.5   16.9     16.5  
  United Kingdom     19.5     27.7   (29.3 )   (16.4 )
  Russia     18.4     17.0   7.9     11.2  
  Germany     14.2     15.4   (7.7 )   (8.1 )
  Italy     13.6     14.0   (2.8 )   (3.1 )
  Norway     8.4     10.1   (17.3 )   (15.9 )
  Other     17.4     11.5   50.8     50.3  
Total EMEA     246.5     250.3   (1.5 )   0.2  
                         
APAC                        
  Australia     3.6     28.8   (87.5 )   (88.0 )
  Singapore     0.1     32.6   (99.7 )   (99.7 )
  New Zealand     0.1     9.4   (99.1 )   (99.2 )
  Malaysia     0.1     14.0   (99.5 )   (99.5 )
  Other     0.4     12.7   (96.5 )   (96.4 )
Total APAC     4.3     97.5   (95.6 )   (95.7 )
                         
Total Kelly Services, Inc.   $ 1,247.8   $ 1,351.0   (7.6 )%   (7.1 )%
                         
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    September Year to Date (Commercial, PT and OCG)  
                     
            %     CC %  
    2016   2015   Change     Change  
                         
Americas                        
  United States   $ 2,765.8   $ 2,706.4   2.2 %   2.2 %
  Canada     105.2     122.2   (13.9 )   (9.9 )
  Mexico     79.6     95.2   (16.4 )   (1.6 )
  Puerto Rico     65.9     75.2   (12.4 )   (12.4 )
  Brazil     33.5     34.2   (1.8 )   16.7  
Total Americas     3,050.0     3,033.2   0.6     1.4  
                         
EMEA                        
  France     178.6     180.4   (1.0 )   (1.0 )
  Switzerland     156.2     160.7   (2.8 )   (0.1 )
  Portugal     111.6     98.7   13.1     13.0  
  United Kingdom     66.2     78.4   (15.5 )   (7.2 )
  Russia     49.0     57.4   (14.8 )   (2.2 )
  Germany     45.3     43.1   5.0     5.0  
  Italy     42.1     39.5   6.5     6.3  
  Norway     24.4     29.5   (17.2 )   (11.8 )
  Other     45.9     32.8   39.8     40.1  
Total EMEA     719.3     720.5   (0.2 )   2.5  
                         
APAC                        
  Singapore     64.9     96.9   (33.0 )   (31.6 )
  Australia     64.2     92.1   (30.3 )   (26.2 )
  Malaysia     27.8     45.4   (38.9 )   (31.4 )
  New Zealand     19.3     30.2   (36.1 )   (29.8 )
  Other     26.9     38.3   (29.5 )   (24.7 )
Total APAC     203.1     302.9   (32.9 )   (28.9 )
                         
Total Kelly Services, Inc.   $ 3,972.4   $ 4,056.6   (2.1 )%   (0.7 )%
                         
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RECONCILIATION OF NON-GAAP MEASURES  
FOR THE 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars except per share data)  
                             
    2016   2015          
    As Reported   Gain on Investment in Equity Affiliate
(Note 1)
    Adjusted Earnings   Adjusted Earnings   % Change   CC % Change  
                                     
Revenue from services   $ 1,247.8   $ -     $ 1,247.8   $ 1,257.0   (0.7 )% (0.1 )%
                                     
Cost of services     1,032.7     -       1,032.7     1,042.6   (1.0 )    
                                     
Gross profit     215.1     -       215.1     214.4   0.3   0.8  
                                     
SG&A expenses     196.3     -       196.3     199.9   (1.8 ) (1.4 )
                                     
Earnings from operations     18.8     -       18.8     14.5   29.4      
                                     
Gain on investment in TS Kelly Asia Pacific     87.2     (87.2 )     -     -   -      
                                     
Other (expense) income, net     (0.4 )   -       (0.4 )   0.1   NM      
                                     
Earnings before taxes     105.6     (87.2 )     18.4     14.6   26.7      
                                     
Inc. tax expense (benefit)     24.7     (23.5 )     1.2     7.1   (83.1 )    
                                     
Net earnings   $ 80.9   $ (63.7 )   $ 17.2   $ 7.5   130.7 %    
                                     
Earnings per share:                                    
  Basic   $ 2.08   $ (1.63 )   $ 0.44   $ 0.19   131.6 %    
  Diluted   $ 2.06   $ (1.62 )   $ 0.44   $ 0.19   131.6 %    
                                     
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 13 WEEKS ENDED OCTOBER 2, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED)
(In millions of dollars except per share data)
     
    2015
    As Reported   Disposal of APAC Businesses
(Note 2)
    Adjusted Earnings
                     
Revenue from services   $ 1,351.0   $ (94.0 )   $ 1,257.0
                     
Cost of services     1,122.8     (80.2 )     1,042.6
                     
Gross profit     228.2     (13.8 )     214.4
                     
SG&A expenses     211.6     (11.7 )     199.9
                     
Earnings from operations     16.6     (2.1 )     14.5
                     
Other income, net     -     0.1       0.1
                     
Earnings before taxes     16.6     (2.0 )     14.6
                     
Inc. tax expense (benefit)     7.5     (0.4 )     7.1
                     
Net earnings   $ 9.1   $ (1.6 )   $ 7.5
                     
Earnings per share:                    
  Basic   $ 0.23   $ (0.04 )   $ 0.19
  Diluted   $ 0.23   $ (0.04 )   $ 0.19
                     
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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars except per share data)  
                                 
    2016   2015          
    As Reported   Gain on Investment in Equity Affiliate
(Note 1)
    Restructuring Charges
(Note 3)
  Adjusted Earnings   Adjusted Earnings   % Change   CC % Change  
                                           
Revenue from services   $ 3,972.4   $ -     $ -   $ 3,972.4   $ 3,962.6   0.2 % 1.7 %
                                           
Cost of services     3,294.1     -       -     3,294.1     3,305.6   (0.3 )    
                                           
Gross profit     678.3     -       -     678.3     657.0   3.2   4.5  
                                           
SG&A expenses     634.9     -       (3.4 )   631.5     618.9   2.0   3.2  
                                           
Earnings from operations     43.4     -       3.4     46.8     38.1   22.8      
                                           
Gain on investment in TS Kelly Asia Pacific     87.2     (87.2 )     -     -     -   -      
                                           
Other expense, net     (1.4 )   -       -     (1.4 )   (3.4 ) 60.3      
                                           
Earnings before taxes     129.2     (87.2 )     3.4     45.4     34.7   31.1      
                                           
Inc. tax expense (benefit)     28.2     (23.5 )     0.9     5.6     16.7   (66.6 )    
                                           
Net earnings   $ 101.0   $ (63.7 )   $ 2.5   $ 39.8   $ 18.0   121.5 %    
                                           
Earnings per share:                                          
  Basic   $ 2.59   $ (1.63 )   $ 0.07   $ 1.02   $ 0.46   121.7 %    
  Diluted   $ 2.58   $ (1.63 )   $ 0.07   $ 1.02   $ 0.46   121.7 %    
                                           
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 OCTOBER 2, 2016 AND SEPTEMBER 27, 2015  
(UNAUDITED)  
(In millions of dollars except per share data)  
                   
    2015  
    As Reported     Disposal of APAC Businesses
(Note 2)
    Adjusted Earnings  
                         
Revenue from services   $ 4,056.6     $ (94.0 )   $ 3,962.6  
                         
Cost of services     3,385.8       (80.2 )     3,305.6  
                         
Gross profit     670.8       (13.8 )     657.0  
                         
SG&A expenses     630.6       (11.7 )     618.9  
                         
Earnings from operations     40.2       (2.1 )     38.1  
                         
Other (expense) income, net     (3.5 )     0.1       (3.4 )
                         
Earnings before taxes     36.7       (2.0 )     34.7  
                         
Inc. tax expense (benefit)     17.1       (0.4 )     16.7  
                         
Net earnings   $ 19.6     $ (1.6 )   $ 18.0  
                         
Earnings per share:                        
  Basic   $ 0.51     $ (0.04 )   $ 0.46  
  Diluted   $ 0.51     $ (0.04 )   $ 0.46  
                         
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 2016 gain on investment in equity affiliate, 2016 restructuring charges and disposal of APAC businesses is useful to understand the Company's fiscal 2016 financial performance and increases comparability. Specifically, Management believes that removing the impact of 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) Gain on investment in equity affiliate represents the difference between the fair value and book value of amounts contributed by the Company to the investment in TS Kelly Asia Pacific.
   
  (2) Disposal of APAC businesses represents the 2015 operational results of business contributed to TS Kelly Asia Pacific in the third quarter of 2016.
   
  (3) Restructuring charges in 2016 include costs related to actions during the second quarter in the Americas and EMEA designed to increase operational efficiency and align our staffing operations with opportunities for growth within their markets.
   

ANALYST CONTACT:
James Polehna
(248) 244-4586
james_polehna@kellyservices.com

MEDIA CONTACT
:
Jane Stehney
(248) 244-5630
jane_stehney@kellyservices.com

Source: Kelly Services

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