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View All NewsWorld – Decline in Professional and Industrial, and International revenue limits Kelly growth in Q3 2022
US-based Kelly Services Inc. (NASDAQ: KELYA, KELYB) reported yesterday third-quarter revenue edged up just 0.3% on a constant currency basis to $1.17 billion; gross margin improved.
Kelly noted revenue trends were impacted by foreign currency headwinds and the sale of its Russian operations in July. Year-over-year results also include the recent acquisitions of RocketPower, an RPO firm, and Pediatric Therapeutic Services, a specialty firm providing in-school therapy services.
Kelly recorded a $30.7 million goodwill impairment charge during the quarter related to RocketPower. The charge reflects a sharp decline in hiring in the tech industry in which RocketPower specializes as well as slowing growth for RPO.
“We saw solid revenue growth in our [science, engineering and technology] and education specialties, and all five operating segments delivered GP rate growth in the quarter,” President and CEO Peter Quigley said. “While challenges precipitated the RocketPower goodwill impairment, we remain confident that with diversification and integration this acquisition will bring strategic long-term value to our business.”
Kelly’s MSP, RPO, PPO and consulting operations are included in its “outsourcing and consulting” segment, where revenue rose 5.9% in constant currency to $118.5 million.
While gross profit improved by 7.6% in constant currency, the company reported a net loss of $16.2 million for the third quarter.
| (USD millions) | Q3 2022 | Q3 2021 | % change | % constant currency |
| Revenue | 1,167.9 | 1,195.4 | -2.3% | 0.3% |
| Gross Profit | 240.6 | 228.9 | 5.1% | 7.6% |
| Gross Margin | 20.6% | 19.2% | - | - |
| Net Earnings | -16.2 | 34.8 | - | - |
Revenue by segment
| (USD millions) | Q3 2022 | Q3 2021 | % change | % constant currency |
| Professional and Industrial | 408.6 | 452.6 | -9.7% | -9.4% |
| Science, engineering and technology | 321.3 | 306.2 | 5.0% | 5.2% |
| Education | 104.3 | 66.6 | 56.6% | 56.6% |
| Outsourcing and consulting | 118.5 | 113.4 | 4.5% | 5.9% |
| International | 215.5 | 256.8 | -16.1% | -5.4% |
Revenue by geography
| (USD millions) | Q3 2022 | Q3 2021 | % change | % constant currency |
| Americas | ||||
| United States | 861.0 | 851.7 | 1.1% | 1.1% |
| Canada | 43.3 | 43.3 | 0.1% | 3.8% |
| Puerto Rico | 28.3 | 25.5 | 10.8% | 10.8% |
| Mexico | 10.9 | 14.4 | -24.0% | -23.3% |
| (USD millions) | Q3 2022 | Q3 2021 | % change | % constant currency |
| Europe | ||||
| Switzerland | 55.2 | 54.5 | 1.2% | 6.5% |
| France | 45.8 | 56.3 | -18.7% | -4.8% |
| Portugal | 41.9 | 36.6 | 14.2% | 33.8% |
| Italy | 16.4 | 18.5 | -10.8% | 4.5% |
| UK | 14.2 | 17.2 | -17.1% | -3.1% |
| Russia | 5.0 | 33.0 | -85.0% | -87.9% |
| Other | 35.6 | 33.7 | 6.0% | 25.3% |
| Asia Pacific | 10.3 | 10.7 | -3.8% | 2.9% |
Looking ahead Kelly forecast fourth-quarter revenue would be up 1.0% year over year on a reported basis and up 3.3% to 4.3% on an organic, constant currency basis.
Kelly shares closed yesterday at USD 18.35, up 16.14% on the day and 20.22% below its 52-week high of USD 23.00, set on 29 March 2022. The company has a market cap of USD 696.88 million.