TROY, MI--(Marketwire - May 11, 2011) - Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a leader in providing workforce solutions, today announced results for the first quarter.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2011 totaled $1.3 billion, a 19% increase compared to the corresponding quarter in 2010.
Earnings from operations for the first quarter of 2011 totaled $1.6 million, compared to losses from operations of $1.6 million reported for the first quarter of 2010. Included in the results from operations are restructuring charges of $4.0 million in the first quarter of 2011 and $4.4 million in the first quarter of 2010. Excluding restructuring charges, earnings from operations were $5.6 million in the first quarter of 2011 and $2.8 million in the first quarter of 2010.
Diluted earnings per share in the first quarter of 2011 were $0.03 compared to first quarter 2010 losses of $0.06 per share. Excluding restructuring charges, diluted earnings per share were $0.14 in the first quarter of 2011 and $0.05 in the first quarter of 2010.
Commenting on the first quarter results, Camden stated, "We continue to see evidence of a solid, sustainable economic recovery. Kelly's revenue growth for the period certainly confirms that we are on track for a profitable year."
Camden added, "Until full confidence is restored, and employers remain cautious about ramping up too aggressively, this environment seems to favor the staffing industry -- and we intend to capitalize on the opportunities presented.
"Going forward, Kelly is committed to improving our competitive position and enhancing shareholder value by delivering customer-focused workforce solutions -- spanning traditional staffing, professional and technical offerings, and outsourcing and consulting services, and maintaining talent excellence throughout our company."
In conjunction with its first quarter earnings release, Kelly Services, Inc. will host a conference call at 9:00 a.m. (ET) on May 11, 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, 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, further impairment charges initiated 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, 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 recent U.S. healthcare legislation 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 530,000 employees annually. Revenue in 2010 was $5 billion. Visit www.kellyservices.com and connect with us on Facebook®, LinkedIn®, and Twitter®.
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED APRIL 3, 2011 AND APRIL 4, 2010
(UNAUDITED)
(In millions of dollars except per share data)
2011 2010 Change % Change
-------- -------- ------ -------
Revenue from services $1,339.1 $1,130.4 $208.7 18.5%
Cost of services 1,125.4 950.4 175.0 18.4
-------- -------- ------ -------
Gross profit 213.7 180.0 33.7 18.7
Selling, general and administrative
expenses 212.1 181.6 30.5 16.8
-------- -------- ------ -------
Earnings (loss) from operations 1.6 (1.6) 3.2 NM
Other expense, net (0.4) (1.1) 0.7 60.5
-------- -------- ------ -------
Earnings (loss) before taxes 1.2 (2.7) 3.9 NM
Income taxes 0.1 (0.7) 0.8 107.7
-------- -------- ------ -------
Net earnings (loss) $ 1.1 $ (2.0) $ 3.1 NM%
======== ======== ====== =======
Earnings (loss) per share
Basic $ 0.03 $ (0.06) $ 0.09 NM%
Diluted $ 0.03 $ (0.06) $ 0.09 NM%
STATISTICS:
Gross profit rate 16.0% 15.9% 0.1pts.
Selling, general and administrative
expenses:
% of revenue 15.8 16.1 (0.3)
% of gross profit 99.2 100.9 (1.7)
% Return - Earnings (loss) from
operations 0.1 (0.1) 0.2
Earnings (loss)
before taxes 0.1 (0.2) 0.3
Net earnings (loss) 0.1 (0.2) 0.3
Effective income tax rate 4.5% 26.4% (21.9)pts.
Average number of shares outstanding
(millions):
Basic 36.7 35.0
Diluted 36.7 35.0
Shares adjusted for nonvested
restricted awards (millions):
Basic 37.4 N/A
Diluted 37.4 N/A
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
First Quarter
--------------------------------------
Constant
Currency
2011 2010 Change Change
------- ------- ------ --------
Americas Commercial
Revenue from services (including
fee-based income) $ 653.3 $ 547.7 19.3% 18.5%
Fee-based income 2.8 2.1 34.2 32.6
Gross profit 92.5 78.5 17.8 17.1
SG&A expenses excluding
restructuring charges 75.8 65.1 16.6
Restructuring charges - 0.3 (100.0)
Total SG&A expenses 75.8 65.4 16.0 15.4
Earnings from operations 16.7 13.1 26.8
Earnings from operations
excluding restructuring charges 16.7 13.4 23.4
Gross profit rate 14.2% 14.3% (0.1)pts.
Expense rates (excluding
restructuring charges):
% of revenue 11.6 11.9 (0.3)
% of gross profit 82.0 82.8 (0.8)
Operating margin (excluding
restructuring charges) 2.6 2.5 0.1
Americas PT
Revenue from services (including
fee-based income) $ 240.6 $ 205.6 17.0% 16.9%
Fee-based income 2.8 2.3 21.2 21.0
Gross profit 36.1 31.5 14.5 14.4
Total SG&A expenses 27.6 23.0 19.8 19.7
Earnings from operations 8.5 8.5 0.2
Gross profit rate 15.0% 15.3% (0.3)pts.
Expense rates:
% of revenue 11.5 11.2 0.3
% of gross profit 76.4 73.0 3.4
Operating margin 3.5 4.1 (0.6)
EMEA Commercial
Revenue from services (including
fee-based income) $ 231.5 $ 204.9 13.0% 10.1%
Fee-based income 5.8 4.8 19.4 16.1
Gross profit 37.3 32.8 13.7 10.8
SG&A expenses excluding
restructuring charges 35.3 32.4 9.0
Restructuring charges 4.0 2.7 47.9
Total SG&A expenses 39.3 35.1 12.0 8.1
Earnings from operations (2.0) (2.3) 13.1
Earnings from operations
excluding restructuring charges 2.0 0.4 378.2
Gross profit rate 16.1% 16.0% 0.1pts.
Expense rates (excluding
restructuring charges):
% of revenue 15.2 15.8 (0.6)
% of gross profit 94.6 98.7 (4.1)
Operating margin (excluding
restructuring charges) 0.9 0.2 0.7
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
First Quarter
-----------------------------------
Constant
Currency
2011 2010 Change Change
----- ------ ------ --------
EMEA PT
Revenue from services (including
fee-based income) $41.4 $ 34.9 18.6% 16.3%
Fee-based income 4.4 3.7 18.5 15.7
Gross profit 11.0 9.4 16.6 14.4
Total SG&A expenses 10.7 9.5 12.4 9.0
Earnings from operations 0.3 (0.1) NM
Gross profit rate 26.6% 27.1% (0.5)pts.
Expense rates:
% of revenue 25.9 27.3 (1.4)
% of gross profit 97.3 101.0 (3.7)
Operating margin 0.7 (0.3) 1.0
APAC Commercial
Revenue from services (including
fee-based income) $99.7 $ 80.9 23.2% 13.5%
Fee-based income 3.5 2.8 26.6 16.4
Gross profit 13.5 11.4 18.7 8.8
SG&A expenses excluding
restructuring charges 13.3 9.9 35.1
Restructuring charges - 0.5 (100.0)
Total SG&A expenses 13.3 10.4 28.1 17.7
Earnings from operations 0.2 1.0 (82.8)
Earnings from operations excluding
restructuring charges 0.2 1.5 (89.0)
Gross profit rate 13.6% 14.1% (0.5)pts.
Expense rates (excluding
restructuring charges):
% of revenue 13.4 12.2 1.2
% of gross profit 98.8 86.8 12.0
Operating margin (excluding
restructuring charges) 0.2 1.9 (1.7)
APAC PT
Revenue from services (including
fee-based income) $11.5 $ 7.6 50.6% 40.6%
Fee-based income 3.8 1.9 104.0 90.0
Gross profit 5.0 2.8 79.4 66.8
Total SG&A expenses 5.7 3.8 52.9 42.2
Earnings from operations (0.7) (1.0) 25.6
Gross profit rate 43.7% 36.7% 7.0pts.
Expense rates:
% of revenue 49.8 49.1 0.7
% of gross profit 114.0 133.8 (19.8)
Operating margin (6.1) (12.4) 6.3
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
First Quarter
---------------------------------------
Constant
Currency
2011 2010 Change Change
-------- -------- ------ --------
OCG
Revenue from services (including
fee-based income) $ 68.2 $ 55.3 23.4% 22.7%
Fee-based income 8.7 6.1 42.6 39.6
Gross profit 18.9 14.0 35.5 33.9
SG&A expenses excluding
restructuring charges 21.3 18.4 15.4
Restructuring charges - 0.1 (100.0)
Total SG&A expenses 21.3 18.5 14.9 13.0
Earnings from operations (2.4) (4.5) 48.0
Earnings from operations
excluding restructuring charges (2.4) (4.4) 47.1
Gross profit rate 27.7% 25.3% 2.4pts.
Expense rates (excluding
restructuring charges):
% of revenue 31.2 33.4 (2.2)
% of gross profit 112.5 132.1 (19.6)
Operating margin (excluding
restructuring charges) (3.5) (8.1) 4.6
Corporate Expense
SG&A expenses excluding
restructuring charges $ 19.0 $ 15.5 22.0%
Restructuring charges - 0.8 (100.0)
Total SG&A expenses 19.0 16.3 16.3
Consolidated Total (net of
intersegment activity)
Revenue from services (including
fee-based income) $1,339.1 $1,130.4 18.5% 16.7%
Fee-based income 31.8 23.7 34.3 29.9
Gross profit 213.7 180.0 18.7 16.8
SG&A expenses excluding
restructuring charges 208.1 177.2 17.4
Restructuring charges 4.0 4.4 (10.3)
Total SG&A expenses 212.1 181.6 16.8 14.6
Earnings from operations 1.6 (1.6) NM
Earnings from operations
excluding restructuring charges 5.6 2.8 95.7
Gross profit rate 16.0% 15.9% 0.1pts.
Expense rates (excluding
restructuring charges):
% of revenue 15.5 15.7 (0.2)
% of gross profit 97.4 98.4 (1.0)
Operating margin (excluding
restructuring charges) 0.4 0.3 0.1
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
April 3, January 2, April 4,
2011 2011 2010
-------- --------- --------
Current Assets
Cash and equivalents $ 59.8 $ 80.5 $ 55.7
Trade accounts receivable, less allowances
of $13.2, $12.3 and $14.4, respectively 875.8 810.9 727.3
Prepaid expenses and other current assets 68.4 44.8 79.7
Deferred taxes 17.4 22.4 18.4
-------- --------- --------
Total current assets 1,021.4 958.6 881.1
Property and Equipment, Net 99.5 104.0 120.0
Noncurrent Deferred Taxes 83.9 84.0 76.9
Goodwill, Net 67.3 67.3 67.3
Other Assets 154.9 154.5 144.7
-------- --------- --------
Total Assets $1,427.0 $ 1,368.4 $1,290.0
======== ========= ========
Current Liabilities
Short-term borrowings and current portion
of long-term debt $ 65.4 $ 78.8 $ 68.2
Accounts payable and accrued liabilities 207.3 181.6 165.8
Accrued payroll and related taxes 270.9 243.3 218.2
Accrued insurance 31.5 31.3 22.5
Income and other taxes 61.7 56.0 46.5
-------- --------- --------
Total current liabilities 636.8 591.0 521.2
Noncurrent Liabilities
Long-term debt - - 56.1
Accrued insurance 54.1 53.6 53.7
Accrued retirement benefits 90.2 85.4 77.7
Other long-term liabilities 14.2 14.6 15.5
-------- --------- --------
Total noncurrent liabilities 158.5 153.6 203.0
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (70.8) (70.9) (106.7)
Paid-in capital 29.3 28.0 37.4
Earnings invested in the business 598.7 597.6 569.5
Accumulated other comprehensive income 34.4 29.0 25.5
-------- --------- --------
Total stockholders' equity 631.7 623.8 565.8
-------- --------- --------
Total Liabilities and Stockholders' Equity $1,427.0 $ 1,368.4 $1,290.0
======== ========= ========
STATISTICS:
Working Capital $ 384.6 $ 367.6 $ 359.9
Current Ratio 1.6 1.6 1.7
Debt-to-capital % 9.4% 11.2% 18.0%
Global Days Sales Outstanding 52 49 51
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 3, 2011 AND APRIL 4, 2010
(UNAUDITED)
(In millions of dollars)
2011 2010
------- -------
Cash flows from operating activities
Net earnings (loss) $ 1.1 $ (2.0)
Noncash adjustments:
Depreciation and amortization 8.3 9.1
Provision for bad debts 1.2 0.1
Stock-based compensation 1.4 1.1
Other, net (0.1) 0.2
Changes in operating assets and liabilities (16.9) (27.4)
------- -------
Net cash from operating activities (5.0) (18.9)
------- -------
Cash flows from investing activities
Capital expenditures (2.5) (1.4)
Other investing activities - 0.1
------- -------
Net cash from investing activities (2.5) (1.3)
------- -------
Cash flows from financing activities
Net change in short-term borrowings 48.3 (11.2)
Repayment of debt (62.9) -
Other financing activities (1.0) -
------- -------
Net cash from financing activities (15.6) (11.2)
------- -------
Effect of exchange rates on cash and equivalents 2.4 (1.8)
------- -------
Net change in cash and equivalents (20.7) (33.2)
Cash and equivalents at beginning of period 80.5 88.9
------- -------
Cash and equivalents at end of period $ 59.8 $ 55.7
======= =======
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
First Quarter (Commercial, PT and OCG)
--------------------------------------
% Change
Constant
2011 2010 US$ Currency
--------- --------- -------- --------
Americas
United States $ 839.7 $ 710.2 18.2% 18.2%
Canada 59.4 51.6 15.1 9.2
Mexico 25.1 19.0 32.1 25.0
Puerto Rico 22.1 14.7 49.6 49.6
--------- ---------
Total Americas 946.3 795.5 18.9 18.4
EMEA
France 70.0 67.3 4.0 4.9
Switzerland 47.2 31.4 50.6 33.5
Russia 34.2 23.3 46.8 43.6
United Kingdom 31.1 37.6 (17.4) (19.9)
Portugal 20.6 18.4 12.3 12.8
Germany 20.3 16.3 24.7 25.5
Italy 16.6 16.7 (0.8) (0.5)
Norway 15.1 13.9 8.8 6.1
Other 23.2 19.2 20.7 20.3
--------- ---------
Total EMEA 278.3 244.1 14.0 11.3
APAC
Australia 36.4 27.6 31.7 18.4
Singapore 26.1 18.9 38.1 25.6
Malaysia 17.6 14.6 20.7 9.3
India 17.6 13.7 28.5 26.8
Other 16.8 16.0 4.6 (1.0)
--------- ---------
Total APAC 114.5 90.8 26.0 16.3
Total Kelly Services, Inc. $ 1,339.1 $ 1,130.4 18.5% 16.7%
========= =========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
First Quarter
--------------
2011 2010
------- ------
Pretax earnings (loss) from operations $ 1.6 $ (1.6)
Restructuring charges (Note 1) 4.0 4.4
------- ------
Earnings from operations excluding
restructuring charges $ 5.6 $ 2.8
======= ======
First Quarter
------------------------------
2011 2010
-------------- --------------
Per Per
Amount Share Amount Share
------- ------ ------ ------
Net earnings (loss) $ 1.1 $ 0.03 $ (2.0) $(0.06)
Restructuring charges, net of taxes
(Note 1) 4.0 0.11 3.6 0.10
------- ------
Net earnings excluding restructuring
charges, net of taxes $ 5.1 $ 0.14 $ 1.6 $ 0.05
======= ====== ====== ======
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 2011 financial performance and and increases comparability. Specifically, Management believes that excluding this item 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) In 2010, restructuring costs related primarily to severance and lease termination costs for branches in the EMEA and APAC Commercial segments that were in the process of closure at the end of 2009, as well as severance costs related to the corporate headquarters. In 2011, restructuring costs relate primarily to revisions of the estimated lease termination costs for EMEA Commercial branches that closed in prior years.
Contact Information:
ANALYST CONTACT:
James Polehna
(248) 244-4586
james_polehna@kellyservices.com
MEDIA CONTACT:
Jane Stehney
(248) 244-5630
jane_stehney@kellyservices.com