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Second-quarter Kelly Services revenue falls 0.2% in constant currency

August 07, 2019

Kelly Services Inc. (NASDAQ: KELYA) reported second-quarter revenue fell 0.2% on constant currency; however, US revenue rose 1.0%.

Results include the acquisitions of NextGen and Global Technology Associates in January. The firms provide engineering staffing to the US telecommunications industry. Excluding the acquisitions, revenue fell 4.2% in the second quarter, or 3.1% in constant currency.

The Troy, Michigan-headquartered company also noted lower volume in light industrial and office services in its Americas markets that was offset by increases in professional/technical specialties.

“We continued to effectively manage costs and successfully integrated our two recent acquisitions that are outperforming expectations and making a strong impact on our business,” President and CEO George Corona said in a statement. “Our focus for the remainder of the year is on advancing our specialty talent solutions strategy to further accelerate the growth of our business.”

Separately, Kelly Services also reported today that Corona will step down from those roles at the end of the September, and Peter Quigley will take over the reins as of Oct. 1.

(US$ millions) Q2 2019 Q2 2018 % change % constant currency
Revenue $1,367.5 $1,386.9 -1.4% -0.2%
Gross profit $244.0 $240.5 1.4% 2.6%
Gross margin 17.8% 17.3%    
Net earnings $83.8 ($15.4) nm  

The company reported the favorable impact of $1.07 per share in the second quarter due to the noncash after-tax gain on its investment in Persol Holdings common stock compared to a loss of 94 cents per share in the year-ago quarter.

Second-quarter 2019 earnings per share also benefitted from the gain on the sale of assets, net of tax of 23 cents per share.

Revenue by segment

(US$ millions) Q2 2019 Q2 2018 % change % constant currency
Americas staffing $597.6 $604.0 -1.0% -0.9%
Global talent solutions $505.9 $500.7 1.0% 1.4%
International staffing $268.1 $286.6 -6.5% -1.8%

Global talent solutions revenue includes RPO, business process outsourcing, talent fulfillment and other services.

Revenue by geography

(US$ millions) Q2 2019 Q2 2018 % change % constant currency
Americas        
United States $991.3 $981.2 1.0% 1.0%
Canada $33.2 $37.0 -10.4% -7.2%
Mexico $29.7 $30.0 -1.2% -2.9%
Puerto Rico $19.6 $26.2 -25.0% -25.0%
Brazil $8.2 $9.0 -9.3% 3.0%
Europe, Middle East and Africa        
France $64.6 $72.0 -10.2% -4.8%
Switzerland $49.9 $52.8 -5.6% -4.0%
Portugal $46.7 $51.2 -8.9% -3.4%
United Kingdom $30.5 $28.5 7.0% 13.3%
Russia $28.8 $25.6 12.8% 17.2%
Italy $20.7 $19.3 7.5% 13.7%
Ireland $10.9 $11.7 -6.8% -1.2%
Germany $9.9 $14.8 -33.7% -29.7%
Other EMEA $16.9 $22.0 -23.0% -17.8%
Asia Pacific        
Total APAC $6.6 $5.6 18.1% 26.3%

Guidance

Kelly Services forecast third-quarter revenue to range from down 0.5% to up 0.5% year over year. And it forecast full-year revenue to range from flat to up 1.0%.

Share price and market cap

Shares in Kelly were down 1.06% to $26.98 as of 11:16 a.m. Eastern time; the company had a market cap of $1.07 billion, according to FT.com.

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