Kelly Services, Inc. · NASDAQ:KELYA
Kelly Services — Q3 2020 Earnings Presentation
18 slides from Kelly Services's earnings presentation, Nov 5, 2020
Slide 1: Third Quarter 2020
THIRD QUARTER 2020 NOVEMBER 5, 2020
Slide 2: Third Quarter Takeaways
THIRD QUARTER TAKEWAYS COVID-19 pandemic impacts global economy and demand for our services • Q3 revenue down 18.1%, down 18.2% in constant currency(1) ‒ September exit rate up slightly from quarterly trend, reflecting slow and uneven improvement • Demand from Education customers and from small and
Slide 3: Third Quarter 2020 Financial Summary
THIRD QUARTER 2020 FINANCIAL SUMMARY Constant Currency Actual Results Change Change(1) Revenue $1.0B (18.1%) (18.2%) Gross Profit % 18.4% 40 bps Loss from Operations ($2.4M) NM NM Earnings Per Share $0.42 $0.69 • Revenue declined in all segments from decrease in demand related to the COVID-19 pandem
Slide 4: Third Quarter 2020 Financial Summary (Excluding Select Items)
THIRD QUARTER 2020 FINANCIAL SUMMARY (Excluding Gain/loss on investment in Persol Holdings, Customer Dispute Charge, Gain on Sale of Assets and Restructuring) Constant Currency Actual Results Change Change(3) Revenue $1.0B (18.1%) (18.2%) Gross Profit % 18.4% 40 bps Earnings from Operations(1) $7.0M
Slide 5: Third Quarter 2020 EPS Summary
THIRD QUARTER 2020 EPS SUMMARY $ in millions except per share data Third Quarter 2020 2019 Amount Per Share Amount Per Share Net earnings (loss) $16.7 $0.42 ($10.5) ($0.27) (Gain) loss on investment in Persol Holdings, net of taxes(1) (11.6) (0.29) 27.2 0.70 Gain on sale of assets, net of taxes(2) 0
Slide 6: Stepping Up the Pace
STEPPING UP THE PACE Foundational Elements on Which to Build Challenges to Overcome • Recognized thought leader and • Caught between scale and specialty industry innovator • Lagging industry peers’ top-line growth • Strong brand recognition rate and financial return • Scale in commercial, education,
Slide 7: A Model for Growth
A MODEL FOR GROWTH We have redesigned our operating model to drive profitable growth in our chosen specialties. 1 2 3 4 5 Professional Science, Education Outsourcing & International & Industrial Engineering Consulting & Technology Revenue $2.2B $1.1B $0.5B $0.4B $1.2B GP Rate 17.5% 20.0% 15.7% 32.4%
Slide 8: The right model and mindset for growth
The right model and mindset for growth We’ve set a new Our new operating We have stage and pace model aggregates streamlined our for growth. assets to resources to accelerate support growth. specialty growth and profitability. Our aggressive We understand We are investment talent and are accountable
Slide 9: Third Quarter 2020 Revenue Growth
THIRD QUARTER 2020 REVENUE GROWTH REVENUE MIX BY SEGMENT REVENUE GROWTH BY SEGMENT 0% Reported (10%) (7.0%) (7.4%) Constant Professional & Currency Industrial (14.4%) (14.4%) 22% (20%) (17.0%) (17.0%) (18.1%) (18.2%) Science, (20.8%) (21.1%) Engineering & 43% Technology (30%) 8% Education 3% (40%) O
Slide 10: Revenue Trends
Revenue Trends Percent in Constant Currency(1) September 2020 Q3 2020 (Exit Rates) Total (18.2%) (18.0%) Professional & Industrial (17.0%) (16.3%) Science, Engineering & (14.4%) (13.9%) Technology Education (51.8%) (44.8%) Outsourcing & (7.4%) (3.4%) Consulting International (21.1%) (18.8%) (1)Const
Slide 11: Third Quarter 2020 Gross Profit Growth
THIRD QUARTER 2020 GROSS PROFIT GROWTH GROSS PROFIT MIX BY SEGMENT GROSS PROFIT GROWTH BY SEGMENT 0% (1.5%) (2.5%) Reported (10%) Constant Professional & 16% (13.1%) (13.1%) Currency Industrial (20%) (16.1%)(16.3%) (16.1%) (16.0%) Science, 40% (23.9%) Engineering & (30%) 15% (24.5%) Technology Educa
Slide 12: Third Quarter 2020 Gross Profit Rate Growth
THIRD QUARTER 2020 GROSS PROFIT RATE GROWTH 20.0% 19.5% 19.0% 10 bps 18.4% 18.5% 10 bps 20 bps 18.0% 18.0% 17.5% 17.0% 16.5% 16.0% 15.5% 15.0% Q3 2019 GP Rate Professional & Science, Engineering Outsourcing & Q3 2020 GP Rate Industrial & Technology Consulting • Overall GP rate improved due to lower
Slide 13: SG&A
THIRD QUARTER 2020 SG&A $ in millions $230 $220 $211 $210 $200 $10 $193 ($13) $190 ($5) ($2) $1 ($4) $180 ($5) $170 $160 $150 Q3 2019 SG&A Professional & Science, Education Outsourcing & International Corporate Customer Q3 2020 SG&A Industrial Engineering & Consulting Dispute Charge Technology • The
Slide 14: Third Quarter 2020 Balance Sheet Data
THIRD QUARTER 2020 BALANCE SHEET DATA $ in millions ACCOUNTS RECEIVABLE CASH, NET OF SHORT-TERM BORROWINGS $1,500 $300 $248 $1,262 $1,282 $250 $1,300 $1,111 $200 $1,100 $150 $900 $100 $700 $50 $24 $5 $500 $0 Q3 2019 Q4 2019 Q3 2020 Q3 2019 Q4 2019 Q3 2020 • Accounts Receivable reflects DSO of 61 day
Slide 15: Portfolio Progress
PORTFOLIO PROGRESS We are using M&A activity to increase our focus on specialization Kelly and Kelly sells Kelly sells Kelly acquires Kelly acquires Persol form a Kelly Healthcare Kelly Legal Global Insight JV combining Resources to Managed Technology the staffing InGenesis Services to Associates op
Slide 16: Recent Acquisition: Insight
RECENT ACQUISITION: INSIGHT • Education service staffing company with experience in partnering with school districts in Illinois, Massachusetts, New Jersey and Pennsylvania | 16
Slide 17: Non-GAAP Measures
NON-GAAP MEASURES Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 and 2019 gains and losses on the investment in Persol Holdings, the 2020 gain on sale of assets, the 2020 customer dispute and the 2020 and 2019 restructuring accrual adj
Slide 18: Safe Harbor Statement
SAFE HARBOR STATEMENT This release contains statements that are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, the recent novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and tech