Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB), a world
leader in workforce management services and human resources
solutions, today announced results for the first quarter of 2009.
Carl T. Camden, President and Chief Executive Officer, announced
revenue for the first quarter of 2009 totaled $1.0 billion, a 25%
decrease compared to the corresponding quarter in 2008. On a
constant currency basis, revenue decreased by 19%.
Losses from operations for the first quarter of 2009 totaled
$30.6 million, compared to earnings from operations of $12.9
million reported for the first quarter of 2008. Included in the
results from operations for the first quarter 2009 are $5.4 million
of restructuring costs relating to the Company's UK operations. The
UK restructuring charge is part of a plan to further consolidate
and close branches in the UK during 2009.
Diluted losses per share from continuing operations in the first
quarter of 2009 were $0.46, compared to first quarter 2008 earnings
of $0.23 per share. The UK restructuring charge totaled $0.15 per
share in 2009.
Commenting on the first quarter results, Camden called the
Company's loss disappointing, but not unexpected given the
condition of the global labor market and widespread economic
slowdown.
"In spite of the challenges we're facing, we've made significant
progress in reducing operating costs by 13%, while pursuing our
strategic plan aimed at building long-term value for our
stakeholders.
"Our ability to remain focused on diversifying globally,
expanding our professional and technical staffing, and growing our
outsourcing and consulting services, in this bad economy, is
critical to our future success," said Camden.
In conjunction with its first quarter earnings release, Kelly
Services, Inc. will host a conference call at 9:00 a.m. (ET) on
April 28, 2009 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: competition, changing market and economic
conditions, currency fluctuations, changes in laws and regulations,
including tax laws, and other factors discussed in this release and
in the Company's filings with the Securities and Exchange
Commission. Actual results may differ materially from any forward
looking statements contained herein.
A reconciliation of certain non-GAAP financial measures
discussed in this release is included in the attached financial
information schedules.
About Kelly Services
Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) is a world
leader in workforce management services and human resources
solutions headquartered in Troy, Michigan, offering temporary
staffing services, outsourcing, vendor on-site and full-time
placement to clients on a global basis. Kelly provides employment
to nearly 650,000 employees annually, with skills including office
services, accounting, engineering, information technology, law,
science, marketing, creative services, light industrial, education,
and health care. Revenue in 2008 was $5.5 billion. Visit
www.kellyservices.com.
KELLY SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
(UNAUDITED)
(In millions of dollars except per share data)
2009 2008 Change % Change
--------- ---------- --------- --------
Revenue from services $ 1,042.6 $ 1,388.4 $ (345.8) (24.9)%
Cost of services 867.1 1,138.5 (271.4) (23.8)
--------- ---------- --------- --------
Gross profit 175.5 249.9 (74.4) (29.8)
Selling, general and
administrative expenses 206.1 237.0 (30.9) (13.0)
--------- ---------- --------- --------
(Loss) earnings from operations (30.6) 12.9 (43.5) (336.7)
Other income, net 1.3 - 1.3 NM
--------- ---------- --------- --------
(Loss) earnings from continuing
operations before taxes (29.3) 12.9 (42.2) (327.5)
Income taxes (13.2) 4.9 (18.1) (370.1)
--------- ---------- --------- --------
(Loss) earnings from continuing
operations (16.1) 8.0 (24.1) (301.4)
Earnings from discontinued
operations, net of tax 0.6 0.2 0.4 146.6
--------- ---------- --------- --------
Net (loss) earnings $ (15.5) $ 8.2 $ (23.7) (288.4)%
========= ========== ========= ========
Basic (loss) earnings per share
on common stock
(Loss) earnings from
continuing operations $ (0.46) $ 0.23 $ (0.69) (300.0)%
Earnings from discontinued
operations 0.02 0.01 0.01 100.0
Net (loss) earnings (0.45) 0.23 (0.68) (295.7)
Diluted (loss) earnings per
share on common stock
(Loss) earnings from
continuing operations $ (0.46) $ 0.23 $ (0.69) (300.0)%
Earnings from discontinued
operations 0.02 0.01 0.01 100.0
Net (loss) earnings (0.45) 0.23 (0.68) (295.7)
STATISTICS:
Gross profit rate 16.8% 18.0% (1.2) pts.
Selling, general and
administrative expenses:
% of revenue 19.8 17.1 2.7
% of gross profit 117.5 94.8 22.7
% Return - (Loss) earnings
from operations (2.9) 0.9 (3.8)
(Loss) earnings
from continuing
operations before
taxes (2.8) 0.9 (3.7)
(Loss) earnings
from continuing
operations (1.5) 0.6 (2.1)
Net (loss) earnings (1.5) 0.6 (2.1)
Effective income tax rate 45.1% 38.0% 7.1 pts.
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
First Quarter
-------------------------------------------------
Constant
Currency
2009 2008 Change Change
---------- ---------- ---------- ----------
Americas Commercial
Revenue from services
(including fee-based
income) $ 482.4 $ 642.7 (24.9)% (22.8)%
Fee-based income 1.8 4.2 (57.0) (52.7)
Earnings from
operations 0.5 22.2 (97.8)
Gross profit rate 15.2% 16.3% (1.1) pts.
Expense rates:
% of revenue 15.1 12.9 2.2
% of gross profit 99.3 78.8 20.5
Operating margin 0.1 3.5 (3.4)
Americas PT
Revenue from services
(including fee-based
income) $ 197.4 $ 238.6 (17.3)% (17.0)%
Fee-based income 2.8 5.3 (47.8) (47.7)
Earnings from
operations 5.3 14.1 (62.7)
Gross profit rate 15.9% 17.7% (1.8) pts.
Expense rates:
% of revenue 13.3 11.8 1.5
% of gross profit 83.3 66.7 16.6
Operating margin 2.7 5.9 (3.2)
EMEA Commercial
Revenue from services
(including fee-based
income) $ 216.6 $ 321.9 (32.7)% (17.9)%
Fee-based income 4.7 10.7 (55.2) (44.9)
Earnings from
operations (12.1) (1.6) NM
Earnings from
operations
(excluding
restructuring
charges) (6.7) (1.6) (325.0)
Gross profit rate 15.9% 17.3% (1.4) pts.
Expense rates:
% of revenue 21.5 17.8 3.7
% of gross profit 135.0 102.8 32.2
Operating margin (5.6) (0.5) (5.1)
EMEA PT
Revenue from services
(including fee-based
income) $ 32.8 $ 43.8 (25.0)% (9.7)%
Fee-based income 4.4 6.9 (36.6) (21.2)
Earnings from
operations (0.6) 1.0 (155.6)
Gross profit rate 28.6% 29.8% (1.2) pts.
Expense rates:
% of revenue 30.4 27.4 3.0
% of gross profit 106.1 92.1 14.0
Operating margin (1.7) 2.3 (4.0)
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT (continued)
(UNAUDITED)
(In millions of dollars)
First Quarter
-------------------------------------------------
Constant
Currency
2009 2008 Change Change
----------- ---------- ---------- ----------
APAC Commercial
Revenue from services
(including fee-based
income) $ 64.4 $ 86.7 (25.7)% (11.6)%
Fee-based income 2.2 4.3 (48.2) (40.5)
Earnings from
operations (1.3) - NM
Gross profit rate 14.7% 16.7% (2.0) pts.
Expense rates:
% of revenue 16.8 16.7 0.1
% of gross profit 114.2 99.6 14.6
Operating margin (2.1) 0.1 (2.2)
APAC PT
Revenue from services
(including fee-based
income) $ 6.2 $ 8.5 (26.8)% (16.7)%
Fee-based income 1.0 1.4 (31.5) (21.7)
Earnings from
operations (0.3) (0.2) (17.1)
Gross profit rate 30.8% 30.7% 0.1 pts.
Expense rates:
% of revenue 34.7 33.2 1.5
% of gross profit 112.9 108.1 4.8
Operating margin (4.0) (2.5) (1.5)
OCG
Revenue from services
(including fee-based
income) $ 48.7 $ 51.8 (6.1)% (3.2)%
Fee-based income 6.6 6.1 8.4 16.5
Earnings from
operations (1.2) 1.9 (164.6)
Gross profit rate 32.7% 33.1% (0.4) pts.
Expense rates:
% of revenue 35.2 29.5 5.7
% of gross profit 107.5 89.2 18.3
Operating margin (2.5) 3.6 (6.1)
Corporate Expense $ (20.9) $ (24.5) 14.5 %
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
December
March 29, 28, March 30,
2009 2008 2008
--------- --------- ---------
Current Assets
Cash and equivalents $ 115.4 $ 118.3 $ 87.9
Trade accounts receivable, less
allowances of $17.2, $17.0 and
$18.4, respectively 706.3 815.8 931.4
Prepaid expenses and other current
assets 55.8 62.0 58.3
Deferred taxes 29.2 31.9 27.0
--------- --------- ---------
Total current assets 906.7 1,028.0 1,104.6
Property and Equipment, Net 143.1 151.3 175.6
Noncurrent Deferred Taxes 39.8 40.0 43.2
Goodwill, Net 117.8 117.8 145.1
Other Assets 107.5 120.2 154.3
--------- --------- ---------
Total Assets $ 1,314.9 $ 1,457.3 $ 1,622.8
========= ========= =========
Current Liabilities
Short-term borrowings $ 16.9 $ 35.2 $ 47.8
Accounts payable and accrued liabilities 220.7 244.1 218.3
Accrued payroll and related taxes 209.5 243.2 275.9
Accrued insurance 25.5 26.3 22.6
Income and other taxes 26.3 51.8 60.7
--------- --------- ---------
Total current liabilities 498.9 600.6 625.3
Noncurrent Liabilities
Long-term debt 67.6 80.0 54.9
Accrued insurance 45.4 46.9 57.7
Accrued retirement benefits 59.2 61.6 75.1
Other long-term liabilities 15.2 15.3 16.2
--------- --------- ---------
Total noncurrent liabilities 187.4 203.8 203.9
Stockholders' Equity
Common stock 40.1 40.1 40.1
Treasury stock (110.5) (111.2) (113.4)
Paid-in capital 36.3 35.8 34.5
Earnings invested in the business 660.5 676.0 780.8
Accumulated other comprehensive income 2.2 12.2 51.6
--------- --------- ---------
Total stockholders' equity 628.6 652.9 793.6
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 1,314.9 $ 1,457.3 $ 1,622.8
========= ========= =========
STATISTICS:
Working Capital $ 407.8 $ 427.4 $ 479.3
Current Ratio 1.8 1.7 1.8
Debt-to-capital % 11.9% 15.0% 11.5%
Global Days Sales Outstanding 51 50 52
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED MARCH 29, 2009 AND MARCH 30, 2008
(UNAUDITED)
(In millions of dollars)
2009 2008
------- -------
Cash flows from operating activities
Net (loss) earnings $ (15.5) $ 8.2
Noncash adjustments:
Depreciation and amortization 10.6 11.3
Provision for bad debts 1.5 1.5
Stock-based compensation 1.3 1.0
Other, net (1.9) 1.0
Changes in operating assets and liabilities 47.8 1.4
------- -------
Net cash from operating activities 43.8 24.4
------- -------
Cash flows from investing activities
Capital expenditures (2.0) (7.3)
Acquisition of companies, net of cash received (0.2) (7.5)
Other investing activities - (0.3)
Net cash from investing activities (2.2) (15.1)
------- -------
Cash flows from financing activities
Net change in revolving line of credit (1.0) (4.3)
Repayment of debt (22.9) -
Dividend payments - (4.7)
Purchase of treasury stock - (8.0)
Stock options and other stock sales - -
Other financing activities (18.7) (1.5)
------- -------
Net cash from financing activities (42.6) (18.5)
------- -------
Effect of exchange rates on cash and equivalents (1.9) 4.3
------- -------
Net change in cash and equivalents (2.9) (4.9)
Cash and equivalents at beginning of period 118.3 92.8
------- -------
Cash and equivalents at end of period $ 115.4 $ 87.9
======= =======
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
First Quarter (Commercial, PT and OCG)
-----------------------------------------
% Change
Constant
2009 2008 US$ Currency
---------- ---------- -------- --------
Americas
United States $ 644.8 $ 820.7 (21.4)% (21.4)%
Canada 40.9 61.8 (33.8) (18.2)
Puerto Rico 15.7 18.8 (16.8) (16.8)
Mexico 14.7 17.7 (16.6) 10.8
---------- ----------
Total Americas 716.1 919.0 (22.1) (20.5)
EMEA
United Kingdom 62.6 104.9 (40.4) (17.9)
France 61.7 86.6 (28.8) (18.7)
Switzerland 28.5 42.2 (32.4) (27.6)
Italy 18.9 35.4 (46.5) (38.7)
Germany 15.4 21.4 (27.8) (17.3)
Russia 13.9 20.7 (33.0) (6.3)
Norway 13.1 20.0 (34.6) (15.4)
Portugal 11.7 - NM NM
Other 28.2 40.4 (30.2) (18.1)
---------- ----------
Total EMEA 254.0 371.6 (31.6) (16.8)
APAC
Australia 20.4 35.7 (42.9) (22.3)
Singapore 14.9 17.8 (16.1) (10.1)
Malaysia 12.1 14.8 (18.0) (7.9)
Other 25.1 29.5 (15.1) (2.9)
---------- ----------
Total APAC 72.5 97.8 (25.9) (12.1)
Total Kelly Services, Inc. $ 1,042.6 $ 1,388.4 (24.9)% (18.9)%
========== ==========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(In millions of dollars except per share data)
First Quarter
-------------------------------------------
2009 2008
-------------------- ---------------------
Amount Per Share Amount Per Share
--------- --------- --------- ----------
(Loss) earnings from
continuing operations $ (16.1) $ (0.46) $ 8.0 $ 0.23
U.K. restructuring
charge (Note 1) 5.4 (0.15) - -
--------- ---------
(Loss) earnings from
continuing operations
excluding the U.K.
restructuring charge,
net of taxes $ (10.7) $ (0.31) $ 8.0 $ 0.23
========= =========
First Quarter
-------------------------------------------
2009 2008 % Change
--------- --------- ----------
Selling, general and
administrative expenses $ 206.1 $ 237.0
U.K. restructuring
charge (Note 1) (5.4) -
--------- ---------
Selling, general and
administrative expenses
excluding the U.K.
restructuring charge $ 200.7 $ 237.0 (15.3%)
========= ========= ==========
(Loss) earnings from
operations $ (30.6) $ 12.9
U.K. restructuring
charge (Note 1) 5.4 -
--------- ---------
(Loss) earnings from
operations excluding
the U.K. restructuring
charge $ (25.2) $ 12.9 (295.2%)
========= ========= ==========
EMEA Commercial selling,
general and administrative
expenses $ 46.6 $ 57.2
U.K. restructuring
charge (Note 1) (5.4) -
--------- ---------
EMEA Commercial selling,
general and administrative
expenses excluding the U.K.
restructuring charge $ 41.2 $ 57.2 (27.9%)
========= ========= ==========
EMEA Commercial (loss)
earnings from operations $ (12.1) $ (1.6)
U.K. restructuring
charge (Note 1) 5.4 -
--------- ---------
EMEA Commercial (loss)
earnings from operations
excluding the U.K.
restructuring charge $ (6.7) $ (1.6) (325.0%)
========= ========= ==========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management believes that the non-GAAP (Generally Accepted Accounting
Principles) information excluding the U.K. restructuring charge is useful
to understand the Company's fiscal 2009 financial performance 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) The U.K. restructuring charge is comprised of facility and other exit
costs associated with the disposal or closure of 37 branch locations
related to the restructuring program.
ANALYST CONTACT: James Polehna (248) 244-4586
james_polehna@kellyservices.com MEDIA CONTACT: Judith Clark (248)
244-5362 judith_clark@kellyservices.com
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