Daily News
View All NewsWorld – Kelly Services Q4 revenue up 0.6%; ‘Challenging talent supply’ in US
Fourth-quarter revenue at Kelly Services (NASD: KELYA) rose 0.6% on a constant currency basis. However, revenue was down 0.5% on a reported basis. The company reported a “challenging talent supply environment” in the US.
Kelly noted Americas staffing revenue reflects continuing growth in Kelly Educational Staffing partially offset by declines in commercial and Professional and Technical (PT) specialties in the face of talent supply challenges in the US. In the company’s global talent solutions segment, higher revenue in outsourced solutions was offset by declines in centrally delivered staffing and payroll process outsourcing. Meanwhile, international staffing revenue declined in Western Europe.
| (USD millions) | Q4 2018 | Q4 2017 | % change | % constant currency |
| Revenue | 1,414.7 | 1,422.3 | -0.5% | 0.6% |
| Gross profit | 254.4 | 263.0 | -3.3% | -2.3% |
| Gross margin | 18.0% | 18.5% | N/A | N/A |
| Net earnings | (23.9) | 17.7 | N/A | N/A |
The company reported a net loss in the fourth quarter, dragged down by a decline in the stock price for Japanese temporary staff company Persol Holdings, in which Kelly has an investment. The two companies formed a joint venture called PersolKelly in 2012 in an effort to boost both companies' presence in Asia. CEO George Corona said on a conference call with investors, "Our equity investment in Persol Holdings, a leading Japanese staffing supplier with whom we've had a long-term business relationship, continues to introduce this volatility into our earnings report each quarter, either positively or negatively depending on Persol stock performance".
Persol’s latest financial results are reported separately in our Daily News today.
Revenue by segment was broken down as follows.
| (USD millions) | Q4 2018 | Q4 2017 | % change | % constant currency |
| Americas staffing | 647.6 | 642.4 | 0.8% | 1.4% |
| Global talent solutions | 503.3 | 503.1 | 0.0% | 0.3% |
| International staffing | 268.1 | 282.2 | -5.0% | -1.4% |
Revenue by geography was broken down as follows.
| (USD millions) | Q4 2018 | Q4 2017 | % change | % constant currency |
| Americas | ||||
| United States | 1,031.6 | 1,027.8 | 0.4% | 0.4% |
| Canada | 34.8 | 34.5 | 1.2% | 5.1% |
| Mexico | 32.3 | 33.8 | -4.4% | -0.1% |
| Puerto Rico | 22.4 | 17.1 | 31.0% | 31.0% |
| Brazil | 8.6 | 10.3 | -16.4% | 1.5% |
| Europe, Middle East and Africa | ||||
| France | 66.2 | 75.0 | -11.8% | -8.9% |
| Switzerland | 56.4 | 55.6 | 1.2% | 2.2% |
| Portugal | 46.4 | 52.0 | -10.7% | -7.8% |
| Russia | 24.7 | 23.9 | 2.9% | 17.2% |
| United Kingdom | 23.2 | 24.4 | -4.9% | -1.9% |
| Italy | 19.4 | 16.6 | 16.6% | 20.4% |
| Germany | 12.1 | 16.6 | -27.3% | -25.0% |
| Ireland | 10.3 | 8.6 | 20.5% | 24.3% |
| Norway | 8.0 | 8.4 | -4.0% | -0.7% |
| Other EMEA | 13.0 | 13.0 | 0.4% | 4.5% |
| Asia Pacific | ||||
| Total APAC | 5.3 | 4.7 | 12.4% | 20.7% |
Permanent fee growth continued, although at a slower pace.
Kelly last month announced that it sold its legal staffing business unit to ‘Trustpoint.One’. Kelly’s legal operations were branded as Kelly Legal Managed Services (formerly known as Kelly Law Registry). The deal includes Kelly’s entire legal staffing division, and the company will no longer provide legal staffing.
In January, the company also made two engineering market acquisitions aimed at bolstering its presence in the 5G technology space: Global Technology Associates LLC, or GTA, and NextGen Global Resources LLC.
“The company delivered a good quarter and a solid year in a challenging labor market,” President and CEO George Corona said. “We are optimistic about 2019, knowing these strategic investments will help us capitalize on the expanding specialty talent solutions markets, where there are abundant opportunities for growth and increased profitability.”
For the full-year 2018, revenue increased 2.2% in constant currency, reflecting growth in Americas staffing and international staffing and flat results in Global Talent Solutions.
| (USD millions) | 2018 | 2017 | % change | % constant currency |
| Revenue | 5,513.9 | 5,374.4 | 2.6% | 2.2% |
| Gross profit | 972.2 | 954.1 | 1.9% | 1.6% |
| Gross margin | 17.6% | 17.8% | N/A | N/A |
| Net earnings | 22.9 | $71.6 | -68.0% | N/A |
The company expects full-year 2019 revenue to be up 3.5% to 5.5% year over year, with inorganic growth from recent acquisitions expected to add from 2% to 3% of revenue growth.
In trading yesterday, Kelly Services shares closed at $24.61, up 3.49% on the day and 28.11% above the 52 week low of $19.21 set on 26 December 2018. Based on its current share price the company has a market value of $918.18 million.