Kelly Services Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Kelly Services Inc. has filed its Q1 2024 10-Q report, detailing financial data and stock information.</b>

AI Summary

KELLY SERVICES INC (KELYB) filed a Quarterly Report (10-Q) with the SEC on May 9, 2024. Kelly Services Inc. filed a 10-Q report for the period ending March 31, 2024. The filing includes data related to common stock, treasury stock, and additional paid-in capital. Specific dates mentioned include 2024-01-01, 2024-03-31, 2023-12-31, and 2023-04-02. The company's fiscal year ends on December 29th. Kelly Services Inc. is categorized under Services-Help Supply Services (SIC 7363).

Why It Matters

For investors and stakeholders tracking KELLY SERVICES INC, this filing contains several important signals. This filing provides investors with the latest financial snapshot of Kelly Services Inc. for the first quarter of 2024, crucial for assessing performance and making investment decisions. The detailed breakdown of stock and capital accounts offers insights into the company's equity structure and potential share-related activities.

Risk Assessment

Risk Level: low — KELLY SERVICES INC shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain immediate red flags, indicating a routine disclosure of financial information.

Analyst Insight

Monitor future filings for revenue growth, net income trends, and any changes in debt-to-equity ratios to assess operational performance.

Key Numbers

• 2024-03-31 — Period End Date (Conformed Period of Report)
• 2024-05-09 — Filing Date (Filed as of Date)
• 12-29 — Fiscal Year End (Fiscal Year End)
• 7363 — SIC Code (Standard Industrial Classification)

Key Players & Entities

• KELLY SERVICES INC (company) — Filer name
• 0000055135 (company) — Central Index Key
• 7363 (company) — Standard Industrial Classification
• DE (company) — State of Incorporation
• 2483624444 (company) — Business Phone
• 2024-03-31 (date) — Conformed Period of Report
• 2024-05-09 (date) — Filed as of Date

FAQ

Industry Context

Kelly Services Inc. operates within the Staffing and Outsourcing industry, providing workforce solutions to businesses.

Regulatory Implications

The filing adheres to SEC regulations for quarterly reporting under the Securities Exchange Act of 1934.

What Investors Should Do

1. Review the full 10-Q document for detailed financial statements and management discussion.
2. Compare Q1 2024 results with previous quarters and the same period last year.
3. Analyze any disclosures regarding risks, legal proceedings, or significant business developments.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-09: Filing Date — Date the 10-Q was officially filed with the SEC.

Glossary

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC). (Provides investors with a comprehensive update on the company's financial performance during the quarter.)

SIC Code

Standard Industrial Classification code used to categorize businesses. (Helps in understanding Kelly Services' primary industry focus within the broader economy.)

Year-Over-Year Comparison

This is the initial 10-Q filing for the fiscal quarter ending March 31, 2024, following the previous fiscal year-end reporting.

Key Financial Figures

• $0 — tion adjustments, net of tax benefit of $0.0, and tax expense of $0.0, respectivel
• $0.4 — lity adjustments, net of tax benefit of $0.4 — — Less: Reclassification adjustments
• $8.8 — accounts receivable, less allowances of $8.8 and $8.4 respectively 1,152.9 1,160.6
• $8.4 — receivable, less allowances of $8.8 and $8.4 respectively 1,152.9 1,160.6 Prepaid e
• $1.00 — Stockholders' Equity Capital stock, $1.00 par value Class A common stock, 100.0

Filing Documents

• kelya-20240331.htm (10-Q) — 1069KB
• a20240331-10qxexh311.htm (EX-31.1) — 10KB
• a20240331-10qxexh312.htm (EX-31.2) — 10KB
• a20240331-10qxexh321.htm (EX-32.1) — 5KB
• a20240331-10qxexh322.htm (EX-32.2) — 6KB
• 0000055135-24-000018.txt (&nbsp;) — 6791KB
• kelya-20240331.xsd (EX-101.SCH) — 46KB
• kelya-20240331_cal.xml (EX-101.CAL) — 79KB
• kelya-20240331_def.xml (EX-101.DEF) — 289KB
• kelya-20240331_lab.xml (EX-101.LAB) — 574KB
• kelya-20240331_pre.xml (EX-101.PRE) — 455KB
• kelya-20240331_htm.xml (XML) — 1019KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 4

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) . 4 Consolidated Statements of Earnings 4 Consolidated Statements of Comprehensive Income (Loss) 5 Consolidated Balance Sheets 6 Consolidated Statements of Stockholders' Equity 8 Consolidated Statements of Cash Flows 9

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 11

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . 27

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk . 37

Controls and Procedures

Item 4. Controls and Procedures . 37

OTHER INFORMATION

PART II. OTHER INFORMATION 38

Legal Proceedings

Item 1. Legal Proceedings . 38

Risk Factors

Item 1A. Risk Factors . 38

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds . 39

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities . 39

Mine Safety Disclosures

Item 4. Mine Safety Disclosures . 39

Other Information

Item 5. Other Information . 39

Exhibits

Item 6. Exhibits . 39

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (In millions of dollars except per share data) 13 Weeks Ended March 31, 2024 April 2, 2023 Revenue from services $ 1,045.1 $ 1,268.3 Cost of services 839.4 1,014.2 Gross profit 205.7 254.1 Selling, general and administrative expenses 190.5 243.4 Gain on sale of EMEA staffing operations ( 11.6 ) — Earnings from operations 26.8 10.7 Gain on forward contract 1.2 — Other income (expense), net 1.8 2.0 Earnings before taxes 29.8 12.7 Income tax expense 4.0 1.8 Net earnings $ 25.8 $ 10.9 Basic earnings per share $ 0.71 $ 0.29 Diluted earnings per share $ 0.70 $ 0.29 Average shares outstanding (millions): Basic 35.4 37.1 Diluted 35.8 37.4 See accompanying unaudited Notes to Consolidated Financial Statements. 4 KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In millions of dollars) 13 Weeks Ended March 31, 2024 April 2, 2023 Net earnings $ 25.8 $ 10.9 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, net of tax benefit of $0.0, and tax expense of $0.0, respectively ( 0.5 ) 2.3 Less: Reclassification adjustments included in net earnings ( 0.6 ) — Foreign currency translation adjustments ( 1.1 ) 2.3 Pension liability adjustments, net of tax benefit of $0.4 — — Less: Reclassification adjustments included in net earnings 0.4 — Pension liability adjustments 0.4 — Other comprehensive income (loss) ( 0.7 ) 2.3 Comprehensive income (loss) $ 25.1 $ 13.2 See accompanying unaudited Notes to Consolidated Financial Statements. 5 KELLY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions) March 31, 2024 December 31, 2023 Assets Current Assets Cash and equivalents $ 200.7 $ 125.8 Trade accounts receivable, less allowances of $8.8 and $8.4 respectively 1,152.9 1,160.6 Prepaid

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the "Company," "Kelly," "we" or "us") have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and notes thereto for the fiscal year ended December 31, 2023, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2024 (the 2023 consolidated financial statements). There were no changes in accounting policies as disclosed in the Form 10-K. The Company's first fiscal quarter ended on March 31, 2024 and April 2, 2023, each of which contained 13 weeks. Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year's presentation. Specifically, as discussed in the Segment Disclosures footnote, the Company has made a change to its reportable segments during the first quarter of 2024. We have also reclassified the presentation of our retirement plan assets, which represents our investment in life insurance contracts, and intangibles, net from the other assets line item to separate line items within our consolidated balance sheet. 11 KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) 2. Revenue Revenue Disaggregated by Service Type In 2024, Kelly has four operating segments: Professional & Industrial ("P&I"), Science, Engineering & Technology ("SET"), Education, and Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG"). Prior to 2024, the Company also had an International operating segment (see Segment Disclosures footnote). The 2023 P&I segment information has been recast to conform to the new structure. Other than OCG, each segment delivers talent through staffing services, permanent placement or outcome-based services. Our OCG segment delivers talent solutions including managed service provider ("MSP"), payroll process outsourcing ("PPO"), recruitment process outsourcing ("RPO"), and talent advisory services. The following table presents our segment revenues disaggregated by service type (in millions of dollars): First Quarter 2024 2023 Professional & Industrial Staffing services $ 231.2 $ 268.6 Permanent placement 2.7 4.6 Outcome-based services 124.5 129.4 Total Professional & Industrial 358.4 402.6 Science, Engineering & Technology Staffing services 195.2 202.3 Permanent placement 4.2 5.5 Outcome-based services 89.9 98.6 Total Science, Engineering & Technology 289.3 306.4 Education Staffing services 288.8 247.6 Permanent placement 1.1 1.8 Total Education 289.9 249.4 Outsourcing & Consulting Talent solutions 108.0 114.6 Total Outsourcing & Consulting 108.0 114.6 International Staffing services — 190.2 Permanent placement — 5.6 Total International — 195.8 Total Intersegment ( 0.5 ) ( 0.5 ) Total Revenue from Services $ 1,045.1 $ 1,268.3 12 KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) Revenue Disaggregated by Geography Our operations are subject to different economic and regulatory environments depending on geographic location. Our P&I and Education segments operate in the Americas region, our SET segment operates in the Americas and Europe regions, and OCG operates in the Americas, Europe and Asia-Pacific regions. In 2023, our International segment included our staffing operations in Europe as well as Mexico, which is included in the Americas region. After the sale of the Company's EMEA staffing operations in January 2024 (see Disposition footnote), the Mexico operations, which were previously in our International segment, are now included in our P&I segment. The below table presents our revenues disaggregated by geography (in millions of dollars): First Quarter 2024 2023 Americas United States $ 933.6 $ 959.2 Canada 45.4 44.9 Puerto Rico 24.9 26.9 Mexico 18.9 16.7 Total Americas Region 1,022.8 1,047.7 Europe Switzerland 1.1 52.9 France — 47.8 Portugal — 44.4 Italy — 16.9 Other 9.7 47.7 Total Europe Region 10.8 209.7 Total Asia-Pacific Region 11.5 10.9 Total Kelly Services, Inc. $ 1,045.1 $ 1,268.3 13 KELLY SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) The below table presents revenues from our SET, OCG and former International segment, which previously included our Mexico operations, disaggregated by geographic region, (in millions of dollars): First Quarter 2024 2023 Science, Engineering & Technology Americas $ 286.2 $ 302.1 Europe 3.1 4.3 Total Science, Engineering & Technology $ 289.3 $ 306.4 Outsourcing & Consulting Americas $ 88.8 $ 94.1 Europe 7.7 9.6 Asia-Pacific 11.5 10.9 Total Outsourcing & Consulting $ 108.0 $ 114.6 International Europe $ — $ 195.8 Total International $ — $ 195.8 Deferred Costs Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were $ 2.3 million as of first quarter-end 2024 and $ 3.4 million as of year-end 2023. Amortization expense for the deferred costs in the first quarter of 2024 and 2023 was $ 2.4 million. 3. Credit Losses The rollforward of our allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheet, is as follows (in millions of dollars): First Quarter 2024 2023 Allowance for credit losses: Beginning balance $ 8.0 $ 7.7 Current period provision 0.4 0.8 Currency exchange effects ( 0.1 ) 0.1 Disposition of EMEA staffing operations ( 2.4 ) — Write-offs — ( 0.8 ) Ending balance $ 5.9 $ 7.8 Write-offs are presented net of recoveries, which were not material for first quarter-end 2024 or 2023. As of first quarter-end 2024, the Company has a receivable of $ 26.9 million related to the sale of our EMEA staffing operations (see Disposition footnote). The Company has determined that no credit loss provision is required on this receivable as it is considered collectible. No other allowances related to other receivables were material as of first quarter-end 2024 or 2023. 14 KELLY SERVICES, INC. AND SUBS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) 4. Disposition On January 2, 2024, the Company completed the sale of its EMEA staffing operations ("disposal group"), which was included in the Company's International operating segment, to Gi Group Holdings S.P.A. ("Gi"). Upon closing, the Company received cash proceeds of $ 110.6 million, or $ 77.1 million net of cash disposed, which is included in investing activities in the consolidated statements of cash flows. The total gain on the transaction as of the first quarter-end 2024 is $ 11.6 million, which is recorded in the gain on sale of EMEA staffing operations in the consolidated statements of earnings. The Company expects to receive additional cash proceeds to reflect the cash-free, debt-free transaction basis, as well as working capital and other adjustments. The Company does not expect to receive any proceeds from the contingent consideration opportunity associated with the transaction. Included in the gain as of first-quarter end 2024, the Company has recorded a euro-denominated receivable from Gi of $ 26.9 million representing the adjustments that are determinable and is expected to be received in the third quarter of 2024. The receivable is included in prepaid expenses and other current assets in the consolidated balance sheet. The disposal group did not meet the requirements to be classified as discontinued operations as the sale did not have a material effect on the Company's operations and did not represent a strategic shift in the Company's strategy. Our consolidated earnings from operations for the first quarter of 2023 included a loss of $ 1.3 million from the EMEA staffing operations. The major classes of divested assets and liabilities were as follows (in millions of dollars): Assets divested Cash and equivalents $ 33.5 Trade accounts receivable, net 202.8 Prepaid expenses and other current assets 29.0 Property and equipment, net 4.2 Operating lease right-of-use asse

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) 5. Fair Value Measurements Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes approximate their fair values due to the short-term maturities of these assets and liabilities. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present assets and liabilities measured at fair value on a recurring basis as of first quarter-end 2024 and year-end 2023 in the consolidated balance sheet by fair value hierarchy level, as described below. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. As of First Quarter-End 2024 Description Total Level 1 Level 2 Level 3 (In millions of dollars) Money market funds $ 106.5 $ 106.5 $ — $ — Foreign currency forward contract, net 0.1 — 0.1 — Total assets at fair value $ 106.6 $ 106.5 $ 0.1 $ — Brazil indemnification $ ( 2.9 ) $ — $ — $ ( 2.9 ) EMEA staffing indemnification ( 2.1 ) — — ( 2.1 ) Total liabilities at fair value $ ( 5.0 ) $ — $ — $ ( 5.0 ) As of Year-End 2023 Description Total Level 1 Level 2 Level 3 (In millions of dollars) Money market funds $ 42.5 $ 42.5 $ — $ — Total assets at fair value $ 42.5 $ 42.5 $ — $ — Brazil indemnification $ ( 3.0 ) $ — $ — $ ( 3.0 ) Foreign currency forward contract, net ( 3.6 ) — ( 3.6 ) — Total liabilities at fair value $ ( 6.6 ) $ — $ ( 3.6 ) $ ( 3.0 ) Money market funds Money market funds represent investments in money market funds that hold government securities, of which $ 7.6 million as of first quarter-end 2024 and $ 8.0 million as of year-end 2023 are restricted

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (UNAUDITED) currency exchange rates, and is considered a level 2 liability. The Company recorded an unrealized gain of $ 0.1 million for the first quarter 2024 with a net receivable associated with the forward contract of $ 0.1 million recorded in prepaid expenses and other current assets on the consolidated balance sheet. On November 2, 2023, the Company entered into a foreign currency forward contract with a notional amount of 90.0 million to manage the foreign currency risk associated with the sale of our EMEA staffing operations, which was completed on January 2, 2024. This contract was not designated as a hedging instrument; therefore, it was marked-to-market and the changes in fair value were recognized in earnings. The Company's foreign currency forward contract was valued using observable inputs, such as foreign currency exchange rates, and is considered a level 2 liability. The Company recorded an unrealized loss of $ 3.6 million for the year ended 2023 and had a net liability associated with the forward contract of $ 3.6 million as of year-end 2023. The Company settled the forward contract on January 5, 2024 for $ 2.4 million of cash. Accordingly, the Company recognized a gain of $ 1.2 million in the first quarter of 2024 in gain on forward contract on the consolidated statements of earnings, which partially offsets the $ 3.6 million loss recognized in 2023, for a total loss of $ 2.4 million on the contract. Indemnification liabilities During the first quarter of 2024, the Company recorded an indemnification liability for $ 2.1 million relating to the sale of our EMEA staffing operations in January 2024. The liability is included in other long-term liabilities in the consolidated balance sheet and the expense is included in the gain on sale of EMEA staffing operations in the consolidated statements of earnings. As part of the sale, the Company agreed to indemnify the buyer for losses and costs

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