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View All NewsWorld – Kelly Services revenue up marginally in Q1 with acquisitions
First-quarter revenue at Kelly Services Inc. (NASD: KELYA) rose 0.9%. The Troy, Michigan-based staffing giant cited modest growth in its Americas and “global talent solutions” segments amid what it said was a challenging environment in the US. International staffing revenue fell in the first quarter.
Taking out the impact of currency, total revenue rose 2.9%.
Excluding its January 2019 acquisitions of NextGen and Global Technology Associates, Kelly Services reported total revenue fell 1.7% in the first quarter; in constant currency, however, revenue would still be up 0.3% excluding the acquired firms.
| (USD millions) | Q1 2019 | Q1 2018 | % change | % constant currency |
| Revenue | 1,382.6 | 1,369.9 | 0.9% | 2.9% |
| Gross profit | 251.6 | 238.2 | 5.6% | 7.4% |
| Gross margin | 18.2% | 17.4% | - | - |
| Net earnings | 22.1 | 29.1 | -24.1% | - |
Kelly Services also reported $6.3 million in restructuring charges in its Americas operations. The company also posted a non-cash, after-tax gain of 23 cents per share on its investment in Persol Holdings compared to a 42 cents per share gain in the first quarter of last year.
Revenue by segment
| (USD millions) | Q1 2019 | Q1 2018 | % change | % constant currency |
| Americas staffing | 626.5 | 604.3 | 3.7% | 4.1% |
| Global talent solutions | 501.0 | 485.8 | 3.2% | 3.6% |
| International staffing | 258.9 | 284.7 | -9.1% | -1.5% |
Growth in Americas staffing revenue reflects increases in education staffing revenue, partially offset by modest declines in professional and technical specialties as well as office services. International staffing revenue represents declines in Western Europe, partially offset by growth in Eastern Europe.
First-quarter revenue growth in global talent solutions reflects increased revenue in outcome-based services, partially offset by declines in centrally delivered staffing. Global talent solutions revenue includes MSP, RPO, business process outsourcing, payroll process outsourcing and contact center staffing among other services.
Revenue by geography
| (USD millions) | Q1 2019 | Q1 2018 | % change | % constant currency |
| Americas | ||||
| United States | 1,018.9 | 974.7 | 4.5% | 4.5% |
| Canada | 33.0 | 33.6 | -1.7% | 3.4% |
| Mexico | 27.5 | 30.4 | -9.6% | -7.2% |
| Puerto Rico | 19.2 | 19.8 | -3.4% | -3.4% |
| Brazil | 8.5 | 9.5 | -10.3% | 4.4% |
| Europe, Middle East and Africa | ||||
| France | 64.3 | 71.9 | -10.6% | -3.3% |
| Switzerland | 49.5 | 49.7 | -0.3% | 4.8% |
| Portugal | 44.8 | 51.1 | -12.4% | -5.1% |
| United Kingdom | 26.2 | 29.0 | -9.7% | -3.6% |
| Russia | 25.4 | 26.1 | -2.7% | 12.7% |
| Italy | 20.6 | 20.5 | 0.4% | 8.7% |
| Germany | 11.1 | 16.4 | -32.1% | -26.5% |
| Ireland | 10.1 | 11.3 | -10.4% | -3.1% |
| Other EMEA | 18.0 | 20.8 | -13.5% | -5.6% |
| Asia Pacific | ||||
| Total APAC | 5.5 | 5.1 | 8.9% | 18.9% |
Quote
“We started the year strong from both a financial performance perspective and a strategic one,” President and CEO George Corona said. “We delivered on the bottom line and we invested in our future by restructuring our US branch operations and completing the integration of two high-margin acquisitions. … Completing these two strategic priorities placed us in a stronger position for future growth.”
Guidance
Kelly Services forecast second-quarter revenue to be up between 1.5% to 2.5% on a year-over-year basis, including a 100-basis point unfavorable impact because of currency. The increase also includes revenue from acquisitions.
Gross profit is expected to be up between 40 and 60 basis points in the second quarter.
Share price and market cap
In trading today, Kelly Services shares closed at $25.39, up 10.15% on the day and 18.18% below its 52-week high of $31.03, set on 9 May 2018. Based on its current share price the company has a market value of $980.00 million.