Kelly Services® Reports Second Quarter Earnings

Financial Highlights

• Q2 revenue down 1.4%; down 0.2% in constant currency
  
• Q2 operating earnings up 71% from last year, up 10% excluding the gain on sale of assets
  
• Q2 earnings per share of $2.12 compared to a loss of $0.40, or $0.72 compared to $0.54 last year on an adjusted basis
  

TROY, Mich., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Kelly Services KELYA KELYB, a global leader in providing workforce solutions, today announced results for the second quarter of 2019.

George S. Corona, President and Chief Executive Officer, announced revenue for the second quarter of 2019 totaled $1.4 billion, a 1.4% decrease, or 0.2% in constant currency, compared to the corresponding quarter of 2018.  Second quarter 2019 results include the impact of the January 2019 acquisitions of NextGen and Global Technology Associates, providers of specialty engineering talent to the U.S. telecommunications industry.  Excluding the recent acquisitions, adjusted revenue declined 4.2% in the second quarter, or 3.1% in constant currency.
               
Earnings from operations for the second quarter of 2019 totaled $34.8 million, compared to the $20.4 million reported for the second quarter of 2018.  Included in earnings from operations in the second quarter of 2019 is a $12.3 million gain on sale of assets, primarily relating to the sale of unused land, and a $0.6 million benefit from the reversal of a portion of the restructuring charge taken in Q1 related to revitalizing the Americas Staffing delivery model.  Excluding the gain on sale of assets, restructuring charges and recent acquisitions, adjusted earnings from operations totaled $17.7 million, down 14% compared to the same period in 2018.

Diluted earnings per share in the second quarter of 2019 were $2.12 compared to a loss per share of $0.40 in the second quarter of 2018. Included in earnings per share in the second quarter of 2019 is the favorable impact of $1.07 due to the non-cash after-tax gain on our investment in Persol Holdings common stock compared to a loss of $0.94 in the second quarter of 2018. Second quarter 2019 earnings per share also include the benefit of the gain on the sale of assets, net of tax of $0.23.   Adjusted for the net of tax impact of restructuring charges, recent acquisitions, gains and losses on Persol Holdings common stock and the gain on sale of assets, diluted earnings per share for the quarter were $0.72 compared to $0.54 in the corresponding quarter of 2018.

"We're pleased with the growth in gross profit, earnings and the improved free cash flow we delivered during the second quarter," said Kelly President and CEO George Corona. "We continued to effectively manage costs and successfully integrated our two recent acquisitions that are outperforming expectations and making a strong impact on our business," he said. "Our focus for the remainder of the year is on advancing our specialty talent solutions strategy to further accelerate the growth of our business."

Kelly also reported that on August 7, its board of directors declared a dividend of $0.075 per share. The dividend is payable August 30, 2019 to shareholders of record as of the close of business on August 20, 2019.

In conjunction with its second 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 August 7 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Internet:
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 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 PersolKelly Asia Pacific, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with the government or government contractors, risks associated with conducting business in foreign countries, including foreign currency fluctuations, the exposure to potential market and currency exchange risks relating to our investment in Persol Holdings, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, 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 projects, our ability to maintain adequate financial and management processes and controls, risk of potential impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers' compensation, unemployment, disability and medical benefit plans, the impact of changes in laws and regulations (including federal, state and international tax laws), competition law risks, the risk of additional tax or unclaimed property liabilities in excess of our estimates, our ability to realize value from our tax credit and net operating loss carryforwards, 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^®
Kelly Services, Inc. KELYA KELYB))) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We're always thinking about what's next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ more than 500,000 people around the world, and we connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2018 was $5.5 billion. Visit kellyservices.com and let us help with what's next for you.

KLYA-FIN

ANALYST & MEDIA CONTACT:                                          
James Polehna                                                                                         
(248) 244-4586                                                                      
james_polehna@kellyservices.com

KELLY SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)

Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2019 and 2018 gains and losses on the investment in Persol Holdings, the 2019 restructuring charges, the 2019 acquisitions, and the 2019 gain on sale of assets are useful to understand the Company's fiscal 2019 financial performance and increases comparability.  Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods.  Additionally, the Company does not acquire businesses on a predictable cycle and the terms of each acquisition are unique and may vary significantly.  Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.

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 gains on the investment in Persol Holdings represent the change in fair value of the investment during the period presented and the related tax expense.

(2)  Restructuring charges in 2019 represent severance costs primarily related to U.S. branch-based staffing operations.

(3)  NextGen and GTA were acquired on January 2, 2019, and were included in the reported results of operations of Americas Staffing and GTS segments, respectively, from the date of acquisition.

(4) Gain on sale of assets primarily represents the excess of the proceeds over the cost of an unused parcel of land located near the Company headquarters sold during the second quarter of 2019.