Kelly Services(R) Reports Fourth Quarter Earnings and Solid 2016 Results
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TROY, MI -- (Marketwired) -- 02/02/17 --
Financial Highlights
- Q4 revenue down 11%; down 4% adjusted for the APAC Joint Venture transaction (flat when further adjusted for the 53rd week in 2015)
- Q4 operating earnings down 19%; down 12% adjusted for the APAC Joint Venture transaction
- Q4 earnings per share of $0.55 versus $0.88 (Adjusted EPS of $0.84)
- Full-year 2016 operating earnings down 3%; (Adjusted earnings up 9%) off of flat revenue growth
Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the fourth quarter and full year of 2016.
Carl T. Camden, President and Chief Executive Officer, announced revenue for the fourth quarter of 2016 totaled $1.3 billion, an 11% decrease (a 10% decrease on a constant currency basis) compared to the corresponding quarter of 2015. Revenue for the full year totaled $5.3 billion, a 4% decrease (a 3% decrease on a constant currency basis) compared to the prior year. Fourth quarter 2015 and fiscal 2015 include 14 and 53 weeks, respectively. Revenue comparisons are unfavorably impacted by both an additional week of revenue in fourth quarter 2015 and the transfer of APAC staffing operations to the TS Kelly Asia Pacific JV at the beginning of third quarter 2016.
Earnings from operations for the fourth quarter of 2016 totaled $21.6 million, compared to $26.5 million reported for the fourth quarter of 2015. Excluding the APAC staffing operations from the fourth quarter of 2015, adjusted earnings from operations were $24.7 million; therefore Kelly's fourth quarter 2016 earnings decreased 12% year-over-year on an adjusted basis.
Earnings from operations for the full year of 2016 totaled $65.0 million compared to $66.7 million in 2015. Excluding restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings from operations increased 9% on an adjusted basis.
Diluted earnings per share in the fourth quarter of 2016 were $0.55 compared to $0.88 per share in the fourth quarter of 2015. Excluding the APAC staffing operations from 2015 fourth quarter results, earnings per share decreased 35% on an adjusted basis. The decline is primarily the result of the timing of the recognition of the Work Opportunity Credit in 2015.
Diluted earnings per share for the full year of 2016 were $3.13 compared to $1.39 per share in 2015. Excluding the gain from the sale of APAC staffing operations and restructuring costs from the 2016 results and the APAC staffing operations from the 2015 results, earnings per share increased 19% on an adjusted basis.
Sifting through the complex results, Camden put Kelly's performance in context, stating "Despite the continued softening market demand in Q4, 2016 was a year of progress for Kelly. For the full year, we improved our GP rate, delivered higher year over year earnings from operations, and improved our conversion rate -- all while adding free cash flow, increasing our quarterly dividend, and ending the year debt-free." Though the APAC JV impacted reported results in the second half of the year, Camden added that "By finalizing the APAC JV transaction in 2016, Kelly is able to move forward in 2017 as an even more focused company committed to profitable growth."
In conjunction with its fourth 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 February 2 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Internet:
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 and disruptions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual property 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 as well as changes in their buying practices, 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, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyber attacks or other breaches of network or information technology security, 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, unemployment compensation, disability and medical benefit plans, 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) (NASDAQ: 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. Kelly® directly employs nearly 500,000 people around the world in addition to having a role in connecting thousands more with work through its global network of talent suppliers and partners. Revenue in 2016 was $5.3 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 JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2016 2015 Change Change Change
-------- -------- ---------- -------- --------
Revenue from services $1,304.4 $1,461.6 $ (157.2) (10.8)% (10.1)%
Cost of services 1,076.4 1,212.1 (135.7) (11.2)
-------- -------- ----------
Gross profit 228.0 249.5 (21.5) (8.6) (8.1)
Selling, general and
administrative expenses 206.4 223.0 (16.6) (7.5) (7.0)
-------- -------- ----------
Earnings from operations 21.6 26.5 (4.9) (18.5)
Other income (expense),
net 0.7 (0.7) 1.4 204.1
-------- -------- ----------
Earnings before taxes
and equity in net
earnings (loss) of
affiliate 22.3 25.8 (3.5) (13.9)
Income tax expense
(benefit) 1.8 (8.4) 10.2 121.4
-------- -------- ----------
Net earnings before
equity in net earnings
(loss) of affiliate 20.5 34.2 (13.7) (40.2)
Equity in net earnings
(loss) of affiliate 1.1 — 1.1 NM
-------- -------- ----------
Net earnings $ 21.6 $ 34.2 $ (12.6) (36.8)%
======== ======== ==========
Basic earnings per share $ 0.56 $ 0.88 $ (0.32) (36.4)%
Diluted earnings per
share $ 0.55 $ 0.88 $ (0.33) (37.5)%
---------------------------------------------------------------------------
STATISTICS:
Gross profit rate 17.5% 17.1% 0.4 pts.
Selling, general and
administrative
expenses:
% of revenue 15.8 15.3 0.5
% of gross profit 90.5 89.4 1.1
% Return:
Earnings from
operations 1.7 1.8 (0.1)
Earnings before taxes
and equity in net
earnings (loss) of
affiliate 1.7 1.8 (0.1)
Net earnings 1.7 2.3 (0.6)
Effective income tax
rate 8.1% (32.4)% 40.5 pts.
Average number of shares
outstanding (millions):
Basic 38.2 38.0
Diluted 38.6 38.0
Shares adjusted for
nonvested restricted
awards (millions):
Basic 38.9 38.9
Diluted 39.2 38.9
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
% CC %
2016 2015 Change Change Change
-------- -------- ---------- -------- --------
Revenue from services $5,276.8 $5,518.2 $ (241.4) (4.4)% (3.2)%
Cost of services 4,370.5 4,597.9 (227.4) (4.9)
-------- -------- ----------
Gross profit 906.3 920.3 (14.0) (1.5) (0.5)
Selling, general and
administrative expenses 841.3 853.6 (12.3) (1.5) (0.5)
-------- -------- ----------
Earnings from operations 65.0 66.7 (1.7) (2.6)
Gain on investment in TS
Kelly Asia Pacific 87.2 — 87.2 NM
Other expense, net (0.7) (3.5) 2.8 80.6
-------- -------- ----------
Earnings before taxes
and equity in net
earnings (loss) of
affiliate 151.5 63.2 88.3 139.6
Income tax expense
(benefit) 30.0 8.7 21.3 245.1
-------- -------- ----------
Net earnings before
equity in net earnings
(loss) of affiliate 121.5 54.5 67.0 122.8
Equity in net earnings
(loss) of affiliate 1.1 (0.7) 1.8 251.9
-------- -------- ----------
Net earnings $ 122.6 $ 53.8 $ 68.8 127.8%
======== ======== ==========
Basic earnings per share $ 3.15 $ 1.39 $ 1.76 126.6%
Diluted earnings per
share $ 3.13 $ 1.39 $ 1.74 125.2%
---------------------------------------------------------------------------
STATISTICS:
Gross profit rate 17.2% 16.7% 0.5 pts.
Selling, general and
administrative
expenses:
% of revenue 15.9 15.5 0.4
% of gross profit 92.8 92.8 —
% Return:
Earnings from
operations 1.2 1.2 —
Earnings before taxes
and equity in net
earnings (loss) of
affiliate 2.9 1.1 1.8
Net earnings 2.3 1.0 1.3
Effective income tax
rate 19.8% 13.7% 6.1 pts.
Average number of shares
outstanding (millions):
Basic 38.1 37.8
Diluted 38.4 37.9
Shares adjusted for
nonvested restricted
awards (millions):
Basic 38.9 38.8
Diluted 39.2 38.9
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Fourth Quarter
----------------------------------------
2016 2015 % CC %
(13 Wks) (14 Wks) Change Change
-------- -------- ---------- --------
AMERICAS
Commercial
Revenue from services $ 660.4 $ 696.1 (5.1)% (4.7)%
Staffing fee-based income
included in revenue from
services 3.3 3.7 (11.6) (11.1)
Gross profit 106.5 110.0 (3.2) (2.8)
Gross profit rate 16.1% 15.8% 0.3 pts.
PT
Revenue from services $ 228.8 $ 250.1 (8.5)% (8.5)%
Staffing fee-based income
included in revenue from
services 4.2 4.5 (6.2) (6.3)
Gross profit 38.4 43.0 (10.6) (10.7)
Gross profit rate 16.8% 17.2% (0.4) pts.
Total Americas
Revenue from services $ 889.2 $ 946.2 (6.0)% (5.7)%
Staffing fee-based income
included in revenue from
services 7.5 8.2 (8.7) (8.5)
Gross profit 144.9 153.0 (5.3) (5.0)
Total SG&A expenses 114.4 116.8 (2.0) (2.1)
Earnings from operations 30.5 36.2 (15.7)
Gross profit rate 16.3% 16.2% 0.1 pts.
Expense rates:
% of revenue 12.9 12.3 0.6
% of gross profit 79.0 76.3 2.7
Return on sales 3.4 3.8 (0.4)
EMEA
Commercial
Revenue from services $ 199.1 $ 200.5 (0.7)% 1.7%
Staffing fee-based income
included in revenue from
services 3.1 3.3 (6.3) (5.2)
Gross profit 26.4 27.5 (4.0) (2.3)
Gross profit rate 13.3% 13.7% (0.4) pts.
PT
Revenue from services $ 42.4 $ 44.7 (5.3)% (3.2)%
Staffing fee-based income
included in revenue from
services 2.4 2.4 1.9 3.6
Gross profit 8.6 9.4 (8.7) (7.1)
Gross profit rate 20.2% 21.0% (0.8) pts.
Total EMEA
Revenue from services $ 241.5 $ 245.2 (1.5)% 0.8%
Staffing fee-based income
included in revenue from
services 5.5 5.7 (2.9) (1.6)
Gross profit 35.0 36.9 (5.2) (3.5)
Total SG&A expenses 30.8 29.7 3.5 6.0
Earnings from operations 4.2 7.2 (41.2)
Gross profit rate 14.5% 15.0% (0.5) pts.
Expense rates:
% of revenue 12.7 12.1 0.6
% of gross profit 88.0 80.6 7.4
Return on sales 1.7 2.9 (1.2)
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
Fourth Quarter
--------------------------------------
2016 2015 % CC %
(13 Wks) (14 Wks) Change Change
-------- -------- -------- --------
OCG
Revenue from services $ 186.1 $ 187.5 (0.7)% (0.4)%
Gross profit 49.2 48.0 2.4 2.9
Total SG&A expenses 38.4 34.0 13.1 13.9
Earnings from operations 10.8 14.0 (23.5)
Gross profit rate 26.4% 25.6% 0.8 pts.
Expense rates:
% of revenue 20.6 18.1 2.5
% of gross profit 78.1 70.7 7.4
Return on sales 5.8 7.5 (1.7)
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
December Year to Date
----------------------------------------
2016 2015 % CC%
(52 Wks) (53 Wks) Change Change
-------- -------- ---------- -------
AMERICAS
Commercial
Revenue from services $2,548.0 $2,604.3 (2.2)% (1.1)%
Staffing fee-based income
included in revenue from
services 14.7 14.5 1.1 1.7
Gross profit 402.4 400.3 0.5 1.3
Gross profit rate 15.8% 15.4% 0.4 pts.
PT
Revenue from services $ 947.1 $ 971.9 (2.6)% (2.5)%
Staffing fee-based income
included in revenue from
services 17.9 17.6 1.7 2.3
Gross profit 162.7 165.0 (1.4) (1.3)
Gross profit rate 17.2% 17.0% 0.2 pts.
Total Americas
Revenue from services $3,495.1 $3,576.2 (2.3)% (1.5)%
Staffing fee-based income
included in revenue from
services 32.6 32.1 1.4 2.0
Gross profit 565.1 565.3 - 0.6
SG&A expenses excluding
restructuring charges 454.9 456.6 (0.4) 0.1
Restructuring charges 2.2 - NM
Total SG&A expenses 457.1 456.6 0.1 0.6
Earnings from operations 108.0 108.7 (0.6)
Earnings from operations
excluding restructuring
charges 110.2 108.7 1.4
Gross profit rate 16.2% 15.8% 0.4 pts.
Expense rates (excluding
restructuring charges):
% of revenue 13.0 12.8 0.2
% of gross profit 80.5 80.8 (0.3)
Return on sales (excluding
restructuring charges) 3.2 3.0 0.2
EMEA
Commercial
Revenue from services $ 769.3 $ 773.5 (0.5)% 2.1%
Staffing fee-based income
included in revenue from
services 13.5 13.2 2.9 6.1
Gross profit 103.9 106.6 (2.6) (0.4)
Gross profit rate 13.5% 13.8% (0.3) pts.
PT
Revenue from services $ 168.8 $ 171.5 (1.6)% 0.7%
Staffing fee-based income
included in revenue from
services 9.7 10.1 (4.0) (0.8)
Gross profit 34.2 36.6 (6.4) (4.2)
Gross profit rate 20.3% 21.3% (1.0) pts.
Total EMEA
Revenue from services $ 938.1 $ 945.0 (0.7)% 1.9%
Staffing fee-based income
included in revenue from
services 23.2 23.3 (0.1) 3.1
Gross profit 138.1 143.2 (3.5) (1.4)
SG&A expenses excluding
restructuring charges 123.7 129.2 (4.2) (1.6)
Restructuring charges 1.2 - NM
Total SG&A expenses 124.9 129.2 (3.3) (0.7)
Earnings from operations 13.2 14.0 (5.9)
Earnings from operations
excluding restructuring
charges 14.4 14.0 2.1
Gross profit rate 14.7% 15.2% (0.5) pts.
Expense rates (excluding
restructuring charges):
% of revenue 13.2 13.7 (0.5)
% of gross profit 89.6 90.2 (0.6)
Return on sales (excluding
restructuring charges) 1.5 1.5 -
KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)
December Year to Date
--------------------------------------
2016 2015 % CC %
(52 Wks) (53 Wks) Change Change
-------- -------- -------- --------
OCG
Revenue from services $ 706.4 $ 673.8 4.8% 5.3%
Gross profit 179.3 160.6 11.6 12.3
Total SG&A expenses 150.6 132.1 14.1 15.0
Earnings from operations 28.7 28.5 -
Gross profit rate 25.4% 23.8% 1.6 pts.
Expense rates:
% of revenue 21.3 19.6 1.7
% of gross profit 84.0 82.2 1.8
Return on sales 4.1 4.2 (0.1)
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)
January 1,
2017 Jan. 3, 2016
-------------- --------------
Current Assets
Cash and equivalents $ 29.6 $ 42.2
Trade accounts receivable, less allowances
of $12.5 and $10.5, respectively 1,139.5 1,139.1
Prepaid expenses and other current assets 46.7 45.8
-------------- --------------
Total current assets 1,215.8 1,227.1
Noncurrent Assets
Property and equipment, net 80.8 88.9
Deferred taxes 180.1 189.3
Goodwill, net 88.3 90.3
Investment in equity affiliate 114.8 9.4
Other assets 349.5 334.6
-------------- --------------
Total noncurrent assets 813.5 712.5
Total Assets $ 2,029.3 $ 1,939.6
============== ==============
Current Liabilities
Short-term borrowings $ - $ 55.5
Accounts payable and accrued liabilities 454.5 405.5
Accrued payroll and related taxes 241.5 268.1
Accrued insurance 23.4 26.7
Income and other taxes 51.1 60.0
-------------- --------------
Total current liabilities 770.5 815.8
Noncurrent Liabilities
Accrued insurance 45.5 40.0
Accrued retirement benefits 157.4 141.0
Other long-term liabilities 42.1 47.4
-------------- --------------
Total noncurrent liabilities 245.0 228.4
Stockholders' Equity
Common stock 40.1 40.1
Treasury stock (39.0) (44.3)
Paid-in capital 28.6 25.4
Earnings invested in the business 925.4 813.5
Accumulated other comprehensive income 58.7 60.7
-------------- --------------
Total stockholders' equity 1,013.8 895.4
-------------- --------------
Total Liabilities and Stockholders' Equity $ 2,029.3 $ 1,939.6
============== ==============
---------------------------------------------------------------------------
STATISTICS:
Working Capital $ 445.3 $ 411.3
Current Ratio 1.6 1.5
Debt-to-capital % -% 5.8%
Global Days Sales Outstanding 54 54
KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars)
2016 2015
----------- -----------
Cash flows from operating activities:
Net earnings $ 122.6 $ 53.8
Noncash adjustments:
Depreciation and amortization 21.3 22.3
Provision for bad debts 8.2 3.7
Stock-based compensation 8.0 6.1
Gain on investment in TS Kelly Asia Pacific
equity affiliate (87.2) -
Other, net (3.9) (4.7)
Changes in operating assets and liabilities (31.0) (57.7)
----------- -----------
Net cash from operating activities 38.0 23.5
----------- -----------
Cash flows from investing activities:
Capital expenditures (12.7) (16.9)
Net cash proceeds from investment in TS Kelly
Asia Pacific equity affiliate 23.3 -
Investment in TS Kelly equity affiliate - (0.5)
Other investing activities (0.3) (0.2)
----------- -----------
Net cash from (used in) investing activities 10.3 (17.6)
----------- -----------
Cash flows from financing activities:
Net change in short-term borrowings (55.9) (34.7)
Dividend payments (10.7) (7.7)
Other financing activities (0.3) 0.2
----------- -----------
Net cash used in financing activities (66.9) (42.2)
----------- -----------
Effect of exchange rates on cash and equivalents 6.0 (4.6)
----------- -----------
Net change in cash and equivalents (12.6) (40.9)
Cash and equivalents at beginning of period 42.2 83.1
----------- -----------
Cash and equivalents at end of period $ 29.6 $ 42.2
=========== ===========
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
Fourth Quarter (Commercial, PT and
OCG)
--------------------------------------
2016 2015 % CC %
(13 Wks) (14 Wks) Change Change
--------- --------- -------- --------
Americas
United States $ 956.7 $ 998.8 (4.2)% (4.2)%
Canada 34.5 38.0 (9.3) (9.7)
Mexico 28.0 35.3 (20.6) (6.1)
Puerto Rico 18.3 24.7 (25.8) (25.8)
Brazil 13.3 8.7 52.2 29.4
--------- ---------
Total Americas 1,050.8 1,105.5 (5.0) (4.7)
EMEA
France 61.1 65.6 (6.8) (5.2)
Switzerland 54.3 55.5 (2.1) (1.0)
Portugal 40.3 33.8 19.0 21.1
Russia 20.9 18.2 15.3 10.1
United Kingdom 18.5 26.7 (31.0) (15.7)
Germany 14.3 16.2 (11.5) (10.0)
Italy 14.2 14.5 (2.1) (0.4)
Norway 8.0 9.7 (17.4) (18.7)
Other 18.0 13.0 38.4 40.5
--------- ---------
Total EMEA 249.6 253.2 (1.4) 1.0
APAC
Australia 3.2 31.1 (89.7) (90.1)
Singapore 0.2 33.0 (99.5) (99.5)
Malaysia 0.1 14.1 (98.6) (98.6)
New Zealand - 11.2 (99.5) (99.6)
Other 0.5 13.5 (96.6) (96.5)
--------- ---------
Total APAC 4.0 102.9 (96.0) (96.1)
Total Kelly Services, Inc. $ 1,304.4 $ 1,461.6 (10.8)% (10.1)%
========= =========
KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)
December Year to Date (Commercial, PT
and OCG)
--------------------------------------
2016 2015 % CC %
(52 Wks) (53 Wks) Change Change
--------- --------- -------- --------
Americas
United States $ 3,722.5 $ 3,705.2 0.5% 0.5%
Canada 139.7 160.2 (12.8) (9.9)
Mexico 107.6 130.5 (17.6) (2.8)
Puerto Rico 84.2 99.9 (15.7) (15.7)
Brazil 46.8 42.9 9.1 19.3
--------- ---------
Total Americas 4,100.8 4,138.7 (0.9) (0.2)
EMEA
France 239.7 246.0 (2.5) (2.1)
Switzerland 210.5 216.2 (2.6) (0.3)
Portugal 151.9 132.5 14.6 15.0
United Kingdom 84.7 105.1 (19.5) (9.3)
Russia 69.9 75.6 (7.6) 0.7
Germany 59.6 59.3 0.5 0.9
Italy 56.3 54.0 4.2 4.5
Norway 32.4 39.2 (17.2) (13.5)
Other 63.9 45.8 39.4 40.2
--------- ---------
Total EMEA 968.9 973.7 (0.5) 2.1
APAC
Australia 67.4 123.2 (45.3) (42.3)
Singapore 65.1 129.9 (49.9) (48.8)
Malaysia 27.9 59.5 (53.1) (47.3)
New Zealand 19.3 41.4 (53.3) (48.8)
Other 27.4 51.8 (46.9) (43.4)
--------- ---------
Total APAC 207.1 405.8 (48.9) (45.9)
Total Kelly Services, Inc. $ 5,276.8 $ 5,518.2 (4.4)% (3.2)%
========= =========
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
2016 2015
--------- --------
As Adjusted CC %
Reported Earnings % Change Change
--------- -------- -------- --------
Revenue from services $ 1,304.4 $1,362.6 (4.3)% (3.6)%
Cost of services 1,076.4 1,126.6 (4.5)
--------- --------
Gross profit 228.0 236.0 (3.4) (2.9)
SG&A expenses 206.4 211.3 (2.3) (1.9)
--------- --------
Earnings from operations 21.6 24.7 (12.4)
Other income (expense), net 0.7 (0.6) 226.9
--------- --------
Earnings before taxes and equity in
net earnings (loss) of affiliate 22.3 24.1 (7.8)
Inc. tax expense (benefit)* 1.8 (8.7) 120.6
--------- --------
Net earnings before equity in net
earnings (loss) of affiliate 20.5 32.8 (37.7)
Equity in net earnings (loss) of
affiliate 1.1 - NM
--------- --------
Net earnings $ 21.6 $ 32.8 (34.2)%
========= ========
Earnings per share:
Basic $ 0.56 $ 0.84 (33.3)%
Diluted $ 0.55 $ 0.84 (34.5)%
* Income tax benefit for the fourth quarter of 2015 includes $13.9 million
related to the retroactive reinstatement of work opportunity credits for the
entire year.
KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FOR THE 13 WEEKS ENDED JANUARY 1, 2017 AND 14 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
2015
-------------------------------------
Disposal of
APAC
Businesses Adjusted
As Reported (Note 2) Earnings
----------- ----------- -----------
Revenue from services $ 1,461.6 $ (99.0) $ 1,362.6
Cost of services 1,212.1 (85.5) 1,126.6
----------- ----------- -----------
Gross profit 249.5 (13.5) 236.0
SG&A expenses 223.0 (11.7) 211.3
----------- ----------- -----------
Earnings from operations 26.5 (1.8) 24.7
Other (expense) income, net (0.7) 0.1 (0.6)
----------- ----------- -----------
Earnings before taxes and equity in
net earnings (loss) of affiliate 25.8 (1.7) 24.1
Inc. tax expense (benefit) (8.4) (0.3) (8.7)
----------- ----------- -----------
Net earnings before equity in net
earnings (loss) of affiliate 34.2 (1.4) 32.8
Equity in net earnings (loss) of
affiliate - - -
----------- ----------- -----------
Net earnings $ 34.2 $ (1.4) $ 32.8
=========== =========== ===========
Earnings per share:
Basic $ 0.88 $ (0.04) $ 0.84
Diluted $ 0.88 $ (0.04) $ 0.84
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 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
2016 2015
--------------------------------------- --------
Gain on
Investme-
nt in
Equity Restruct-
Affiliate uring
As Charges Adjusted Adjusted % CC %
Reported (Note 1) (Note 3) Earnings Earnings Change Change
--------- -------- ---------- -------- -------- ------ ------
Revenue from
services $ 5,276.8 $ - $ - $5,276.8 $5,325.2 (0.9)% 0.3%
Cost of
services 4,370.5 - - 4,370.5 4,432.2 (1.4)
--------- -------- ---------- -------- --------
Gross profit 906.3 - - 906.3 893.0 1.5 2.5
SG&A expenses 841.3 - (3.4) 837.9 830.2 0.9 2.3
--------- -------- ---------- -------- --------
Earnings from
operations 65.0 - 3.4 68.4 62.8 9.0
Gain on
investment
in TS Kelly
Asia Pacific 87.2 (87.2) - - - NM
Other
expense, net (0.7) - - (0.7) (3.3) 79.4
-------- -------- ---------- -------- --------
Earnings
before taxes
and equity
in net
earnings
(loss) of
affiliate 151.5 (87.2) 3.4 67.7 59.5 13.8
Inc. tax
expense
(benefit) 30.0 (23.5) 1.2 7.7 8.0 (3.6)
--------- -------- ---------- -------- --------
Net earnings
before
equity in
net earnings
(loss) of
affiliate 121.5 (63.7) 2.2 60.0 51.5 16.5
Equity in net
earnings
(loss) of
affiliate 1.1 - - 1.1 (0.7) NM
--------- -------- ---------- -------- --------
Net earnings $ 122.6 $ (63.7) $ 2.2 $ 61.1 $ 50.8 20.4%
========= ======== ========== ======== ========
Earnings per
share:
Basic $ 3.15 $ (1.64) $ 0.06 $ 1.57 $ 1.31 19.8%
Diluted $ 3.13 $ (1.62) $ 0.06 $ 1.56 $ 1.31 19.1%
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 52 WEEKS ENDED JANUARY 1, 2017 AND 53 WEEKS ENDED JANUARY 3, 2016
(UNAUDITED)
(In millions of dollars except per share data)
2015
-------------------------------------
Disposal of
APAC
Businesses Adjusted
As Reported (Note 2) Earnings
----------- ----------- -----------
Revenue from services $ 5,518.2 $ (193.0) $ 5,325.2
Cost of services 4,597.9 (165.7) 4,432.2
----------- ----------- -----------
Gross profit 920.3 (27.3) 893.0
SG&A expenses 853.6 (23.4) 830.2
----------- ----------- -----------
Earnings from operations 66.7 (3.9) 62.8
Other (expense) income, net (3.5) 0.2 (3.3)
----------- ----------- -----------
Earnings from operations before taxes
and equity in net earnings (loss) of
affiliate 63.2 (3.7) 59.5
Inc. tax expense (benefit) 8.7 (0.7) 8.0
----------- ----------- -----------
Net earnings before equity in net
earnings (loss) of affiliate 54.5 (3.0) 51.5
Equity in net earnings (loss) of
affiliate (0.7) - (0.7)
----------- ----------- -----------
Net earnings $ 53.8 $ (3.0) $ 50.8
=========== =========== ===========
Earnings per share:
Basic $ 1.39 $ (0.08) $ 1.31
Diluted $ 1.39 $ (0.08) $ 1.31
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 SERIVCES, 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 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. The 2016 year-to-date income tax expense (benefit) was impacted by a $0.3 million benefit for the release of a valuation allowance in Italy in the fourth quarter of 2016.
ANALYST CONTACT: James Polehna (248) [email protected] CONTACT:Jane Stehney(248) [email protected]
Source: Kelly Services
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