Kelly Services (KELYA) Misses Q4 EPS by 10c

Kelly Services (NASDAQ: KELYA) reported Q4 EPS of $0.43, $0.10 worse than the analyst estimate of $0.53. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.36 billion.

Financial Highlights

• Q4 revenue down 5.4%; down 5.2% in constant currency
• Q4 operating earnings of $13.1 million, including a $15.8 million asset impairment charge, compared to $33.1 million last year
• Q4 earnings (loss) per share of $0.43, compared to ($0.62) last year or $0.67 compared to $0.87 on an adjusted basis
• Full year 2019 earnings from operations down 6.5% to $81.8 million

“Q4 continued the underlying dynamics we saw in Q3, including a weaker manufacturing sector, economic headwinds in Europe, and disruption from the 2019 restructuring of our U.S. operations,” noted Quigley. “The efficiencies we’ve gained are already bringing us increased agility and we have delivered good GP rate improvement, however, we have not yet delivered on top-line growth.” Quigley has made returning to growth a top priority since becoming CEO, while also taking other significant steps in his first 120 days: the sale and lease-back of the company’s HQ building to free up capital; the acquisition of Insight to further strengthen Kelly Education’s leading U.S. market position; the appointment of Kelly’s first-ever Chief Growth Officer; deployment of new front-office technology in the U.S. and Europe; and other actions designed to accelerate Kelly’s shift toward a more responsive, tech-enabled delivery model.

Today, Quigley announced three additional changes designed to accelerate growth and intensify Kelly’s specialty focus:

• The company will be managed by specialty: Professional & Industrial (formerly Commercial); Education; STEM (including Science, Engineering, and IT); OCG; and International. Each specialty will be led by a president, reporting directly to Quigley, who will work to accelerate each specialty’s top- and bottom-line results.
• Kelly will accelerate its M&A initiatives as part of an ambitious program to drive financial performance through growth in higher-margin businesses, focusing its capital allocations on investments and acquisitions that align with the company’s specialty solutions strategy.
• Kelly will share growth targets via its growth map, providing regular updates on progress against key financial goals the company intends to achieve.

“There’s no question there are a lot of positive changes underway at Kelly,” stated Quigley. “Although they’re at different stages of progress, they are necessary to address market challenges head-on, modernize our delivery models, leverage more agile operations, open new doors for organic and inorganic growth, and put us on a path to becoming a specialty talent company that delivers results for clients, talent, and shareholders.”

For earnings history and earnings-related data on Kelly Services (KELYA) click here.

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