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View All NewsKelly’s Q1 revenue falls 4%, but up 3% adjusting for APAC deal
Kelly Services Inc. (NASD: KELYA) revenue fell 4.2% in constant currency in the first quarter and 4.4% as reported. In Kelly’s US operations, revenue rose 2.2%.
Revenue comparisons were unfavorably affected by the transfer of Asia Pacific staffing operations to the TS Kelly Asia Pacific joint venture in July 2016. First-quarter revenue rose 2.9% year over year in constant currency when adjusted for the Asia Pacific joint venture transaction, reflecting the growth in staffing business in the Americas and International, partially offset by a slight decline in global talent solutions revenue.
Results of operations include restructuring charges of $2.4 million.
| (US$ millions) | Q1 2017 | Q1 2016 | % change | % constant currency |
| Revenue | $1,289.7 | $1,349.1 | -4.4% | -4.2% |
| Gross profit | $231.6 | $232.7 | -0.5% | -0.3% |
| Gross margin | 18.0% | 17.2% | ||
| Net earnings | $12.2 | $11.2 | 8.4% |
Kelly last month announced Carl Camden’s retirement as president and CEO effective May 10, immediately prior to the company’s annual meeting of shareholders. Executive VP and COO George Corona took over as president and CEO. The two executives discussed future of the industry, challenges and more in a recent Staffing Industry Review article.
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“It was a strong start to the year, and we’re pleased with Kelly’s performance,” Corona said. “We returned to top-line growth, delivered healthy operating earnings in each of our segments, and provided solid returns for our shareholders.” Commenting on the first quarter restructuring charges, Corona added, “Our operating structures are now fully aligned with how companies are choosing to access talent, and confirm our strategic approach to delivering accelerated growth.”
Revenue by segment
| (US$ millions) | Q1 2017 | Q1 2016 | % change | % constant currency |
| Americas staffing | $573.1 | $554.1 | 3.4% | 3.4% |
| Global talent solutions | $487.3 | $490.9 | -0.7% | -0.8% |
| Internaltional staffing | $233.6 | $309.0 | -24.4% | -23.2% |
Gross margin by segment
| Q1 2017 | Q1 2016 | |
| Americas staffing | 18.4% | 18.2% |
| Global talent solutions | 18.6% | 17.4% |
| International staffing | 15.6% | 15.5% |
Revenue by geography
| (US$ millions) | Q1 2017 | Q1 2016 | % change | % constant currency |
| Americas | ||||
| United States | $955.6 | $934.7 | 2.2% | 2.2% |
| Canada | $34.1 | $34.5 | -1.3% | -4.6% |
| Mexico | $23.8 | $26.6 | -10.3% | 0.7% |
| Puerto Rico | $17.7 | $22.5 | -21.4% | -21.4% |
| Brazil | $13.3 | $10.0 | 33.5% | 8.5% |
| Europe, Middle East and Africa | ||||
| France | $60.8 | $56.5 | 7.6% | 11.6% |
| Switzerland | $48.3 | $46.6 | 3.6% | 4.9% |
| Portugal | $36.3 | $33.7 | 7.8% | 11.9% |
| Russia | $22.8 | $14.0 | 63.0% | 29.2% |
| United Kingdom | $20.2 | $23.6 | -14.4% | -1.2% |
| Italy | $13.7 | $13.4 | 2.1% | 6.1% |
| Germany | $13.2 | $15.4 | -14.8% | -11.6% |
| Ireland | $7.7 | $5.0 | 55.7% | 61.5% |
| Norway | $7.6 | $7.6 | 0.5% | -1.5% |
| Other EMEA | $10.4 | $8.7 | 19.6% | 23.8% |
| Asia Pacific | ||||
| Total APAC | $4.2 | $96.3 | -95.6% | -95.7% |
Guidance
Kelly Services forecasts revenue to be either flat or fall by 1% in full-year 2017. Excluding the impact of the Asia Pacific joint venture in the first half of 2016, the company expects revenue to rise 3.0% to 4.0% in 2017.
Share price and market cap
Shares in Kelly Services rose 6.57% to $23.37 in early afternoon trading. The company had a market cap of $888.75 million.