Kelly Services, Inc. · NASDAQ:KELYA
Kelly Services — Q4 2020 Earnings Presentation
21 slides from Kelly Services's earnings presentation, Feb 18, 2021
Slide 1: Fourth Quarter & Full Year 2020
FOURTH QUARTER & FULL YEAR 2020 FEBRUARY 18, 2021
Slide 2: Fourth Quarter 2020 Takeaways
FOURTH QUARTER 2020 TAKEWAYS Recovery from the impact of the COVID-19 pandemic on demand for our services continues • Q4 revenue down 7.2% on a reported basis, down 12.1% in constant currency and excluding the impact of additional week(1),(2) ‒ December exit rate down 8.1%(1),(2), reflecting gradual
Slide 3: Fourth Quarter 2020 Financial Summary
FOURTH QUARTER 2020 FINANCIAL SUMMARY Constant Currency Actual Results Change Change(1) Revenue $1.2B (7.2%) (7.8%) Gross Profit % 18.1% (20) bps Earnings from Operations $9.5M (27.2%) (24.4%) Earnings Per Share $0.59 $0.16 • Revenue declined from the decrease in demand related to the COVID-19 pande
Slide 4: Fourth Quarter 2020 Financial Summary (Excluding Items)
FOURTH QUARTER 2020 FINANCIAL SUMMARY (Excluding Gain/Loss on Investment in Persol Holdings, Restructuring and Asset Impairment Charge) Constant Currency Actual Results Change Change(3) Revenue $1.2B (7.2%) (7.8%) Gross Profit % 18.1% (20) bps Earnings from Operations(1) $13.9M (51.7%) (50.4%) Earni
Slide 5: Full Year 2020 Financial Summary
FULL YEAR 2020 FINANCIAL SUMMARY Constant Currency Actual Results Change Change(1) Revenue $4.5B (15.7%) (15.5%) Gross Profit % 18.3% 20 bps Earnings from Operations ($93.6M) NM NM Earnings Per Share ($1.83) ($4.67) • Revenue declined in all segments from decrease in demand related to the COVID-19 p
Slide 6: Full Year 2020 Financial Summary (Excluding Items)
FULL YEAR 2020 FINANCIAL SUMMARY (Excluding Goodwill Impairment, Gain/Loss on Investment in Persol Holdings, Gain on Sale of Assets, Customer Dispute Charge, Restructuring and Asset Impairment Charge) Constant Currency Actual Results Change Change(3) Revenue $4.5B (15.7%) (15.5%) Gross Profit % 18.3
Slide 7: Fourth Quarter 2020 EPS Summary
FOURTH QUARTER 2020 EPS SUMMARY $ in millions except per share data Fourth Quarter 2020 2019 Amount Per Share Amount Per Share Net earnings $23.4 $0.59 $17.0 $0.43 Gain on investment in Persol Holdings, net of taxes(1) (10.3) (0.26) (0.4) (0.01) Restructuring charges, net of taxes(2) 3.4 0.08 - - As
Slide 8: Full Year 2020 EPS Summary
FULL YEAR 2020 EPS SUMMARY $ in millions except per share data Full Year 2020 2019 Amount Per Share Amount Per Share Net earnings (loss) ($72.0) ($1.83) $112.4 $2.84 Goodwill impairment charge, net of taxes(1) $124.7 $3.17 - - (Gain) loss on investment in Persol Holdings, net of taxes(2) 11.5 0.29 (
Slide 9: 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 (P&I) & Technology (OCG) (SET) Revenue $1.9B $1.0B $0.3B(1) $0.4B $1.0B GP Rate 17
Slide 10: 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 11: Fourth Quarter 2020 Revenue Growth
FOURTH QUARTER 2020 REVENUE GROWTH REVENUE MIX BY SEGMENT(1) REVENUE GROWTH BY SEGMENT (1) 10% 7.5% 6.6% Reported 0% Constant Professional & 23% Currency(2) Industrial (3.8%) (6.1%) (6.1%) (5.3%) (5.3%) 41% (10%) (7.2%) (6.1%) Science, (7.8%) Engineering & Technology 8% (20%) Education Outsourcing &
Slide 12: Revenue Trends
REVENUE TRENDS Percent in Constant Currency(1) Adjusted December 2020(2) Q4 2020 Q4 2020(2) (Exit Rates) Total (7.8%) (12.1%) (8.1%) Professional & Industrial (6.1%) (11.0%) (5.5%) Science, Engineering & (5.3%) (10.4%) (8.0%) Technology Education (32.9%) (33.1%) (27.8%) Outsourcing & Consulting 6.6%
Slide 13: Fourth Quarter 2020 Gross Profit Growth
FOURTH QUARTER 2020 GROSS PROFIT GROWTH GROSS PROFIT MIX BY SEGMENT(1) GROSS PROFIT GROWTH BY SEGMENT(1) 10% 3.8% 2.3% Professional & 16% 0% Industrial (1.7%)(1.8%) (10%) Reported (8.5%)(9.1%) (8.0%)(8.1%) Science, (11.7%) Constant Engineering & 40% (20%) (13.8%) 14% Currency(2) Technology (30%) Edu
Slide 14: Fourth Quarter 2020 Gross Profit Rate Growth
FOURTH QUARTER 2020 GROSS PROFIT RATE GROWTH 20.0% 19.5% 19.0% 18.5% 18.3% 20 bps 18.1% 18.0% (10 bps) (10 bps) (10 bps) (10 bps) 17.5% 17.0% 16.5% 16.0% 15.5% 15.0% Q4 2019 GP Professional & Science, Education Outsourcing & International Q4 2020 GP Rate Industrial Engineering & Consulting Rate Tech
Slide 15: Fourth Quarter 2020 SG&A
FOURTH QUARTER 2020 SG&A $ in millions $230 $220 $216 $215 $4 $2 $210 $7 ($10) $200 ($4) $190 $180 $170 $160 $150 Q4 2019 SG&A Operating Corporate Additional Week Restructuring FX Q4 2020 SG&A Segments • Expenses in the Operating Segments and Corporate decline as cost reduction actions, including ac
Slide 16: Fourth Quarter 2020 Balance Sheet Data
FOURTH QUARTER 2020 BALANCE SHEET DATA $ in millions ACCOUNTS RECEIVABLE CASH, NET OF SHORT-TERM BORROWINGS $1,500 $250 $223 $1,282 $1,265 $1,300 $200 $1,100 $150 $900 $100 $700 $50 $24 $500 $0 Q4 2019 Q4 2020 Q4 2019 Q4 2020 • Accounts Receivable reflects DSO of 64 days, up 6 days from a year ago.
Slide 17: Outlook – Full Year 2021
OUTLOOK – FULL YEAR 2021 Revenue • Up 7 % to 11% YOY ‒ Uncertainty of recovery results in wider range ‒ Q1 revenue will reflect YOY decline as the pandemic impact began in mid-March 2020 GP Rate • Margins expected to be consistent with pre-COVID levels at approximately 18% ‒ Favorable impact of grow
Slide 18: Portfolio Progress
PORTFOLIO PROGRESS We are using strategic asset management to increase our focus on specialization Kelly and Kelly sells Kelly sells Kelly acquires Kelly acquires Kelly acquires Persol form a Kelly Healthcare Kelly Legal Global Insight Greenwood/ JV combining Resources to Managed Technology Asher &
Slide 19: Recent Acquisitions
RECENT ACQUISITIONS • Education service staffing company with experience in partnering with school districts in Illinois, Massachusetts, New Jersey and Pennsylvania • An executive search firm specializing primarily in higher education | 19
Slide 20: Non-GAAP Measures
NON-GAAP MEASURES Management believes that the non-GAAP (Generally Accepted Accounting Principles) information excluding the 2020 goodwill impairment charge, the 2020 and 2019 gains and losses on the investment in Persol Holdings, the 2020 and 2019 gains on sale of assets, the 2020 customer dispute,
Slide 21: 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, changing market and economic conditions, the recent novel coronavirus (COVID-19) outbreak, competitive ma