Kelly Services® Reports 1st Quarter Results

May 8, 2013

 

TROY, MI -- (Marketwired) -- 05/08/13 -- Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter of 2013.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2013 totaled $1.3 billion, a 3% decrease compared to the corresponding quarter of 2012.

Earnings from operations for the first quarter of 2013 totaled $7.1 million, compared to $14.7 million reported for the first quarter of 2012.

Diluted earnings per share from continuing operations in the first quarter of 2013 were $0.34 compared to $0.24 per share in the first quarter of 2012.

"The sluggish economic growth we saw throughout 2012 continued into the first quarter of 2013, accompanied by a softening in demand for temporary labor," noted Camden. "Given these tough conditions, we're pleased to report that Kelly's performance exceeded expectations. We delivered an operating profit and controlled our expenses while moving ahead with strategic investments."

Camden acknowledged that the persistently slow pace of this recovery may be a medium-term reality, but remains confident that Kelly is positioned for long-term growth. "Our strategy was designed with the modern labor market in mind. We're winning higher-margin business, expanding key customer relationships, and strengthening our talent supply chain. The growth we're seeing in our professional and technical solutions and in our outsourcing and consulting group confirms that we're on the right track."

Kelly also reported that on May 7, its board of directors declared a dividend of $0.05 per share. The dividend is payable June 4 to shareholders of record as of the close of business on May 20.

In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 8, 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, including our ability to successfully expand into new markets and service lines, material changes in demand from or loss of large corporate customers, impairment charges triggered by adverse industry or market developments, unexpected termination of customer contracts, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, liability for improper disclosure of sensitive or private employee information, unexpected changes in claim trends on workers' compensation and benefit plans, our ability to maintain specified financial covenants in our bank facilities, our ability to access credit markets and continued availability of financing for funding working capital, 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 retain the services of our senior management, local management and field personnel, the impact of changes in laws and regulations (including federal, state and international tax laws), the net financial impact of the Patient Protection and Affordable Care Act on our business, risks associated with conducting business in foreign countries, including foreign currency fluctuations, 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®
Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a leader in providing workforce solutions. Kelly® offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. Serving clients around the globe, Kelly provides employment to more than 560,000 employees annually. Revenue in 2012 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, and Twitter. Download The Talent Project, a free iPad app by Kelly Services.

iPad is a trademark of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.

   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012  
(UNAUDITED)  
(In millions of dollars except per share data)  
                         
    2013     2012     Change     % Change  
                               
Revenue from services   $ 1,314.8     $ 1,354.8     $ (40.0 )   (3.0 )%
                               
Cost of services     1,097.9       1,131.1       (33.2 )   (2.9 )
                               
Gross profit     216.9       223.7       (6.8 )   (3.1 )
                               
Selling, general and administrative expenses     209.8       209.0       0.8     0.4  
                               
                               
Earnings from operations     7.1       14.7       (7.6 )   (51.8 )
                               
Other expense, net     1.0       0.6       0.4     58.9  
                               
Earnings from continuing operations before taxes     6.1       14.1       (8.0 )   (56.6 )
                               
Income tax (benefit) expense     (6.8 )     4.9       (11.7 )   (239.4 )
                               
Earnings from continuing operations     12.9       9.2       3.7     40.0  
                               
Earnings from discontinued operations, net of tax     -       0.4       (0.4 )   (100.0 )
                               
Net earnings   $ 12.9     $ 9.6     $ 3.3     33.8 %
                               
Basic earnings per share on common stock                              
  Earnings from continuing operations   $ 0.34     $ 0.24     $ 0.10     41.7 %
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.34       0.26       0.08     30.8  
                               
Diluted earnings per share on common stock                              
  Earnings from continuing operations   $ 0.34     $ 0.24     $ 0.10     41.7 %
  Earnings from discontinued operations     -       0.01       (0.01 )   (100.0 )
  Net earnings     0.34       0.26       0.08     30.8  
                               
                               
STATISTICS:                              
                               
Gross profit rate     16.5 %     16.5 %     -     pts.  
                               
Selling, general and administrative expenses:                              
  % of revenue     16.0       15.4       0.6        
  % of gross profit     96.7       93.4       3.3        
                               
% Return:                              
  Earnings from operations     0.5       1.1       (0.6 )      
  Earnings from continuing operations before taxes     0.5       1.0       (0.5 )      
  Earnings from continuing operations     1.0       0.7       0.3        
  Net earnings     1.0       0.7       0.3        
                               
Effective income tax rate     (110.9 )%     34.6 %     (145.5 )   pts.  
                               
Average number of shares outstanding (millions):                              
  Basic     37.2       36.9                
  Diluted     37.2       36.9                
                               
Shares adjusted for nonvested restricted awards (millions):                              
  Basic     38.2       37.8                
  Diluted     38.2       37.8                
                                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
                         
    First Quarter  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
AMERICAS                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 638.3     $ 669.3     (4.6 )%   (4.3 )%
    Fee-based income     3.9       3.5     13.3     14.4  
    Gross profit     93.5       98.0     (4.5 )   (4.2 )
                             
    Gross profit rate     14.7 %     14.6 %   0.1 pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 251.0     $ 250.1     0.4 %   0.4 %
    Fee-based income     3.9       3.4     13.4     13.5  
    Gross profit     40.4       40.2     0.4     0.4  
                             
    Gross profit rate     16.1 %     16.1 %   - pts.      
                             
  Total Americas                            
    Revenue from services (including fee-based income)   $ 889.3     $ 919.4     (3.3 )%   (3.0 )%
    Fee-based income     7.8       6.9     13.4     14.0  
    Gross profit     133.9       138.2     (3.1 )   (2.9 )
    Total SG&A expenses     109.2       102.9     6.1     6.3  
    Earnings from operations     24.7       35.3     (30.0 )      
                             
    Gross profit rate     15.1 %     15.0 %   0.1 pts.      
    Expense rates:                            
      % of revenue     12.3       11.2     1.1        
      % of gross profit     81.6       74.5     7.1        
    Operating margin     2.8       3.8     (1.0 )      
                             
EMEA                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 201.0     $ 213.0     (5.6 )%   (5.5 )%
    Fee-based income     5.5       6.1     (9.9 )   (9.8 )
    Gross profit     31.1       33.5     (7.2 )   (7.1 )
                             
    Gross profit rate     15.5 %     15.7 %   (0.2) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 43.5     $ 42.2     3.0 %   3.1 %
    Fee-based income     4.0       4.6     (13.2 )   (13.0 )
    Gross profit     10.7       11.3     (5.4 )   (5.3 )
                             
    Gross profit rate     24.6 %     26.8 %   (2.2) pts.      
                             
  Total EMEA                            
    Revenue from services (including fee-based income)   $ 244.5     $ 255.2     (4.2 )%   (4.1 )%
    Fee-based income     9.5       10.7     (11.3 )   (11.2 )
    Gross profit     41.8       44.8     (6.7 )   (6.6 )
    SG&A expenses excluding restructuring charges     42.2       44.5     (5.2 )      
    Restructuring charges     (0.2 )     -     NM        
    Total SG&A expenses     42.0       44.5     (5.6 )   (5.5 )
    Earnings from operations     (0.2 )     0.3     NM        
    Earnings from operations excluding restructuring charges     (0.4 )     0.3     NM        
                             
    Gross profit rate     17.1 %     17.6 %   (0.5) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     17.2       17.4     (0.2 )      
      % of gross profit     100.8       99.2     1.6        
    Operating margin (excluding restructuring charges)     (0.1 )     0.1     (0.2 )      
                             
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS BY SEGMENT  
(UNAUDITED)  
(In millions of dollars)  
       
    First Quarter  
                      Constant  
                      Currency  
    2013     2012     Change     Change  
APAC                            
  Commercial                            
    Revenue from services (including fee-based income)   $ 81.5     $ 88.3     (7.7 )%   (7.4 )%
    Fee-based income     2.7       3.3     (18.7 )   (17.4 )
    Gross profit     11.6       13.1     (11.5 )   (11.0 )
                             
    Gross profit rate     14.2 %     14.8 %   (0.6 ) pts.      
                             
  PT                            
    Revenue from services (including fee-based income)   $ 10.2     $ 12.8     (20.9 )%   (20.0 )%
    Fee-based income     2.0       4.0     (51.0 )   (50.5 )
    Gross profit     3.3       5.2     (36.6 )   (35.9 )
                             
    Gross profit rate     32.5 %     40.5 %   (8.0 ) pts.      
                             
  Total APAC                            
    Revenue from services (including fee-based income)   $ 91.7     $ 101.1     (9.4 )%   (9.0 )%
    Fee-based income     4.7       7.3     (36.2 )   (35.4 )
    Gross profit     14.9       18.3     (18.7 )   (18.1 )
    SG&A expenses excluding restructuring charges     15.6       19.7     (20.9 )      
    Restructuring charges     0.2       -     NM        
    Total SG&A expenses     15.8       19.7     (19.9 )   (19.3 )
    Earnings from operations     (0.9 )     (1.4 )   35.7        
    Earnings from operations excluding restructuring charges     (0.7 )     (1.4 )   50.1        
                             
    Gross profit rate     16.2 %     18.1 %   (1.9 ) pts.      
    Expense rates (excluding restructuring charges):                            
      % of revenue     17.0       19.4     (2.4 )      
      % of gross profit     104.7       107.6     (2.9 )      
    Operating margin (excluding restructuring charges)     (0.8 )     (1.4 )   0.6        
                             
OCG                            
    Revenue from services (including fee-based income)   $ 99.0     $ 86.7     14.2 %   14.4 %
    Fee-based income     14.6       11.6     25.8     26.3  
    Gross profit     27.1       23.1     17.0     17.3  
    Total SG&A expenses     25.4       22.6     12.2     12.5  
    Earnings from operations     1.7       0.5     233.4        
                             
    Gross profit rate     27.3 %     26.7 %   0.6 pts.      
    Expense rates:                            
      % of revenue     25.6       26.1     (0.5 )      
      % of gross profit     93.8       97.8     (4.0 )      
    Operating margin     1.7       0.6     1.1        
                                 
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
(In millions of dollars)  
                   
    Mar. 31, 2013     Dec. 30, 2012     Apr. 1, 2012  
Current Assets                        
  Cash and equivalents   $ 62.1     $ 76.3     $ 88.3  
  Trade accounts receivable, less allowances of $10.1, $10.4 and $12.9, respectively    
999.8
     
1,013.9
     
977.9
 
  Prepaid expenses and other current assets     56.8       57.5       64.2  
  Deferred taxes     36.3       44.9       34.3  
                         
      Total current assets     1,155.0       1,192.6       1,164.7  
                         
Property and Equipment, Net     87.5       89.9       90.3  
                         
Noncurrent Deferred Taxes     106.6       82.8       96.4  
                         
Goodwill, Net     90.3       89.5       89.8  
                         
Other Assets     208.6       180.9       165.5  
                         
Total Assets   $ 1,648.0     $ 1,635.7     $ 1,606.7  
                         
Current Liabilities                        
  Short-term borrowings   $ 50.2     $ 64.1     $ 94.7  
  Accounts payable and accrued liabilities     311.8       295.6       275.7  
  Accrued payroll and related taxes     250.2       264.5       273.8  
  Accrued insurance     31.4       32.8       30.5  
  Income and other taxes     61.2       65.3       61.1  
                         
      Total current liabilities     704.8       722.3       735.8  
                         
Noncurrent Liabilities                        
  Accrued insurance     41.6       43.5       51.8  
  Accrued retirement benefits     120.2       111.0       101.5  
  Other long-term liabilities     22.9       17.9       24.6  
                         
      Total noncurrent liabilities     184.7       172.4       177.9  
                         
Stockholders' Equity                        
  Common stock     40.1       40.1       40.1  
  Treasury stock     (61.1 )     (61.6 )     (66.6 )
  Paid-in capital     27.8       27.1       29.8  
  Earnings invested in the business     711.0       700.0       665.2  
  Accumulated other comprehensive income     40.7       35.4       24.5  
                         
      Total stockholders' equity     758.5       741.0       693.0  
                         
Total Liabilities and Stockholders' Equity   $ 1,648.0     $ 1,635.7     $ 1,606.7  
                         
                         
STATISTICS:                        
  Working Capital   $ 450.2     $ 470.3     $ 428.9  
  Current Ratio     1.6       1.7       1.6  
  Debt-to-capital %     6.2 %     8.0 %     12.0 %
  Global Days Sales Outstanding     54       53       54  
                           
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE 13 WEEKS ENDED MARCH 31, 2013 AND APRIL 1, 2012  
(UNAUDITED)  
(In millions of dollars)  
             
             
    2013     2012  
                 
Cash flows from operating activities                
  Net earnings   $ 12.9     $ 9.6  
  Noncash adjustments:                
    Depreciation and amortization     5.3       5.7  
    Provision for bad debts     0.4       0.2  
    Stock-based compensation     1.2       1.4  
    Other, net     0.2       -  
  Changes in operating assets and liabilities     (14.1 )     (3.5 )
                 
      Net cash from operating activities     5.9       13.4  
                 
Cash flows from investing activities                
  Capital expenditures     (2.8 )     (4.0 )
  Other investing activities     0.2       (0.4 )
                 
      Net cash used in investing activities     (2.6 )     (4.4 )
                 
Cash flows from financing activities                
  Net change in short-term borrowings     (13.7 )     (2.3 )
  Dividend payments     (1.9 )     (1.9 )
                 
      Net cash used in financing activities     (15.6 )     (4.2 )
                 
Effect of exchange rates on cash and equivalents     (1.9 )     2.5  
                 
Net change in cash and equivalents     (14.2 )     7.3  
Cash and equivalents at beginning of period     76.3       81.0  
                 
                 
Cash and equivalents at end of period   $ 62.1     $ 88.3  
           
   
KELLY SERVICES, INC. AND SUBSIDIARIES  
REVENUE FROM SERVICES  
(UNAUDITED)  
(In millions of dollars)  
                     
    First Quarter (Commercial, PT and OCG)  
            % Change  
                  Constant  
    2013   2012   US$     Currency  
                         
Americas                        
  United States   $ 839.5   $ 858.5   (2.2 )%   (2.2 )%
  Canada     56.0     59.5   (5.9 )   (5.2 )
  Mexico     30.4     25.5   19.6     16.7  
  Puerto Rico     23.1     25.9   (10.7 )   (10.7 )
  Brazil     18.5     18.0   2.4     16.4  
Total Americas     967.5     987.4   (2.0 )   (1.8 )
                         
EMEA                        
  France     57.3     62.8   (8.8 )   (9.3 )
  Switzerland     53.4     53.6   (0.3 )   0.8  
  Russia     34.5     33.6   2.5     3.8  
  United Kingdom     25.8     27.7   (6.7 )   (5.5 )
  Portugal     17.8     18.2   (2.5 )   (2.8 )
  Germany     16.0     18.7   (14.4 )   (14.9 )
  Norway     14.8     16.5   (9.9 )   (12.3 )
  Italy     15.1     16.3   (7.3 )   (7.7 )
  Other     17.4     15.6   11.2     10.2  
Total EMEA     252.1     263.0   (4.2 )   (4.0 )
                         
APAC                        
  Australia     32.7     33.9   (3.3 )   (1.6 )
  Singapore     26.1     24.2   8.1     6.0  
  Malaysia     16.7     17.8   (6.5 )   (5.7 )
  New Zealand     11.5     13.1   (12.7 )   (14.3 )
  Other     8.2     15.4   (46.9 )   (43.8 )
Total APAC     95.2     104.4   (8.8 )   (8.4 )
                         
Total Kelly Services, Inc.   $ 1,314.8   $ 1,354.8   (3.0 )%   (2.7 )%
                         

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, Inc.

 

 

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