Kelly Services, Inc. · NASDAQ:KELYA
Kelly Services — Q1 2016 Earnings Presentation
16 slides from Kelly Services's earnings presentation, May 11, 2016
Slide 1: Kelly Services, Inc. First Quarter 2016
May 11, 2016 Kelly Services, Inc. First Quarter 2016
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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, changing market and economic
Slide 3: First Quarter 2016 Highlights (YoY Comparisons)
First Quarter 2016 Highlights (YoY Comparisons) – Earnings from Operations of $14.7 million, up 22% YOY – OCG revenue up 13% – US Branch-based PT revenue up 11% – Earnings per share of $0.29, up 190% 3
Slide 4: First Quarter 2016 Financial Summary
First Quarter 2016 Financial Summary Constant Currency Actual Results Change Change(1) Revenue $1.3B 2.2% 4.6% GP % 17.3% 60 bps Earnings from Operations $14.7M 21.5% 25.2% ROS % 1.1% 20 bps EPS $0.29 $0.19 • First quarter results represent solid revenue growth, coupled with GP rate improvement • EP
Slide 5: First Quarter 2016 Revenue Growth
First Quarter 2016 Revenue Growth Business Mix YoY Growth 15.0% 13.0% 12% 11.0% 9.0% 7% 7.0% 5.0% 48% 16% 3.0% 1.0% -1.0% 18% -3.0% -5.0% Americas Commercial Americas PT Total Americas Americas PT EMEA APAC OCG Commercial EMEA APAC OCG Reported Constant Currency • Overall revenue growth of 4.6% as a
Slide 6: First Quarter 2016 Gross Profit Growth
First Quarter 2016 Gross Profit Growth Business Mix YoY Growth 25.0% 20.0% 18% 15.0% 7% 10.0% 44% 5.0% 14% 0.0% 18% -5.0% Total Americas Americas PT EMEA APAC OCG Commercial Americas Commercial Americas PT Reported Constant Currency EMEA APAC OCG • Americas Commercial and PT staffing, and OCG compri
Slide 7: First Quarter 2016 Gross Profit Rate
First Quarter 2016 Gross Profit Rate • Overall GP rate improvement from improving GP rates in both the Americas staffing and global OCG businesses • Americas GP rate reflects continued management of temporary employee tax and benefit expenses • OCG GP rate improvement due to growth in higher margin
Slide 8: First Quarter 2016 SG&A
First Quarter 2016 SG&A $ in Millions $7 $5 $(4) $4 $(2) • Americas staffing SG&A reflects increased salary and benefits cost • OCG expense growth results from increasing performance-based compensation and servicing costs for existing customer program expansions • Corporate expense reflects one-time
Slide 9: First Quarter 2016 Conversion Rate
First Quarter 2016 Conversion Rate $ in Millions 2016 2015 Gross Earnings Conversion Gross Earnings Conversion Profit from Ops Rate(1) Profit from Ops Rate(1) Change Americas $ 143.7 $ 27.1 18.8% $ 136.7 $ 23.2 17.0% 1.8% EMEA 32.3 2.0 6.2% 33.3 (0.2) -0.5% 6.7% APAC 15.5 4.4 28.7% 15.9 3.8 23.6% 5.
Slide 10: First Quarter 2016 Balance Sheet Data
First Quarter 2016 Balance Sheet Data $ in Millions Accounts Receivable Debt (and DSO) (and Debt to Equity Ratio) $1,180 $90 $80 $1,160 $70 $1,140 $60 $50 $1,120 $40 $1,100 $30 $20 $1,080 $10 $1,060 $0 2015 Q1 2015 2016 Q1 2015 Q1 2015 2016 Q1 Debt to Equity DSO 57 54 55 Ratio 8.8% 5.8% 4.1% • DSO i
Slide 11: 2016 Outlook – Second Quarter
2016 Outlook – Second Quarter – Revenue up 3% to 4% YOY in constant currency – Gross Profit Rate up 70 to 90 basis points YOY – SG&A up 4% to 5% YOY in constant currency 11
Slide 12: 2016 Outlook – Full Year
2016 Outlook – Full Year(1) – Revenue up 3.5% to 4.5% YOY in constant currency – Gross Profit Rate up 30 to 50 basis points YOY – SG&A up 3% to 4% YOY – Annual tax rate in low 20% range, including impact of Work Opportunity Credits ----- (1) Full year outlook does not reflect the impact of the pendi
Slide 13: Appendix: TS Kelly Asia Pacific Joint Venture
APPENDIX: TS KELLY ASIA PACIFIC JOINT VENTURE 13
Slide 14: Highlights – TS Kelly Asia Pacific
Highlights – TS Kelly Asia Pacific – Joint Venture capitalizes on the strong reputation of Kelly Services as a leading talent provider in the region and on Temp Holdings’ regional presence • Provides accelerated growth opportunities, larger workforce solutions presence, and enhanced competitive posi
Slide 15: Highlights – TS Kelly Asia Pacific
Highlights – TS Kelly Asia Pacific – Expands scope from four geographies to twelve, with headquarters in Singapore – Brings together established businesses with approximately $500 million in revenue and 1,600 employees • TS Kelly North Asia – China, Hong Kong, Taiwan, South Korea • Kelly Services –
Slide 16: TS Kelly Asia Pacific – Transaction Details
TS Kelly Asia Pacific – Transaction Details – JV is formed through asset transfers from Kelly and Temp Holdings and an expected cash payment to Kelly – Temp Holdings will own 51% with Kelly owning 49% – Kelly will account for our 49% interest as an Equity Method Investment • APAC results will no lon