Kelly Services' revenues down over 5% in Q4 2019
Kelly Services has released its results for the fourth quarter and full year of 2019.
Peter Quigley, president and chief executive officer, announced revenue for the fourth quarter of 2019 totalled $1.3 billion, a 5.4% decrease, or 5.2% in constant currency, compared to the corresponding quarter of 2018. Gross profit was down 3.7% to $245.1m.
Earnings from operations for the fourth quarter of 2019 totalled $13.1m, compared to the $33.1m reported for the fourth quarter of 2018. The 2019 fourth quarter results include a $15.8m impairment charge related to a technology development project.
Diluted earnings per share in the fourth quarter of 2019 were $0.43 compared to a loss per share of $0.62 in the fourth quarter of 2018. Included in the earnings per share in the fourth quarter of 2019 was a $0.30 impairment charge, net of tax and a $0.01 gain, net of tax on Persol Holdings common stock. Included in the loss per share in the fourth quarter of 2018 is the unfavourable impact of $1.49 due to the non-cash after-tax loss on Kelly’s investment in Persol Holdings common stock.
Diluted earnings per share for the full year 2019 were $2.84 compared to $0.58 for 2018. Full-year earnings per share for 2019 were unfavourably impacted $0.40 by the after-tax impact of asset impairments and restructuring charges, and were favourably impacted $1.08 by the after-tax gain on Persol common stock, the gain on sale of assets, and the impact of recent acquisitions.
Full-year earnings per share for 2018 were unfavourably impacted by the $1.69 non-cash after-tax loss on Persol Holdings common stock. On an adjusted basis, diluted earnings per share were $2.16 in 2019 compared to $2.27 in 2018. The impacts of these adjustments are more fully described in the included reconciliation of non-GAAP measures.
“Q4 continued the underlying dynamics we saw in Q3, including a weaker manufacturing sector, economic headwinds in Europe, and disruption from the 2019 restructuring of our U.S. operations,” noted Quigley. “The efficiencies we’ve gained are already bringing us increased agility and we have delivered good GP rate improvement, however, we have not yet delivered on top-line growth.” Quigley has made returning to growth a top priority since becoming CEO, while also taking other significant steps in his first 120 days: the sale and lease-back of the company’s HQ building to free up capital; the acquisition of Insight to further strengthen Kelly Education’s leading U.S. market position; the appointment of Kelly’s first-ever Chief Growth Officer; deployment of new front-office technology in the U.S. and Europe; and other actions designed to accelerate Kelly’s shift toward a more responsive, tech-enabled delivery model.
Today, Quigley announced three additional changes designed to accelerate growth and intensify Kelly’s specialty focus:
· The company will be managed by specialty: Professional & industrial (formerly commercial); education; STEM (including science, engineering, and IT); OCG; and international. Each specialty will be led by a president, reporting directly to Quigley, who will work to accelerate each specialty’s top- and bottom-line results.
· Kelly will accelerate its M&A initiatives as part of an ambitious program to drive financial performance through growth in higher-margin businesses, focusing its capital allocations on investments and acquisitions that align with the company’s specialty solutions strategy.
· Kelly will share growth targets via its growth map, providing regular updates on progress against key financial goals the company intends to achieve.
“There’s no question there are a lot of positive changes underway at Kelly,” stated Quigley. “Although they’re at different stages of progress, they are necessary to address market challenges head-on, modernize our delivery models, leverage more agile operations, open new doors for organic and inorganic growth, and put us on a path to becoming a specialty talent company that delivers results for clients, talent, and shareholders.”
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