Core Viewpoint - Kelly Services, a global leader in specialty talent solutions, is set to release its third-quarter earnings on November 6, 2025, and will host a live webcast to discuss the results and answer questions [1][2]. Company Overview - Kelly Services, Inc. (Nasdaq: KELYA, KELYB) specializes in recruiting and managing skilled workers, connecting over 400,000 individuals with job opportunities annually [3]. - The company has a rich history, having pioneered the staffing industry in 1946, and operates across various sectors including science, engineering, technology, education, manufacturing, retail, finance, and energy [3]. - In 2024, Kelly Services reported a revenue of $4.3 billion [3]. Earnings Release Details - The third-quarter earnings will be published before market opening on November 6, 2025, accompanied by a financial presentation [1]. - A live webcast of the conference call with financial analysts will take place at 9 a.m. ET on the same day, with a replay available shortly after the event [2].

Core Insights - Staffing and recruiting firm Kelly Services is reducing its corporate workforce by approximately 2%, affecting around 100 employees [1][2] - The layoffs are part of a "targeted reduction" aimed at streamlining the organizational structure to better meet client needs [1][2] - The reductions occur under the new CEO Chris Layden, who started in September, amidst a slowing US labor market [2][3] Company Performance - Kelly Services reported a revenue of $4.3 billion in 2024 and places over 400,000 workers annually across various sectors including science, tech, education, manufacturing, retail, and finance [3] - The company's shares experienced a decline of less than 1% during afternoon trading on the day of the announcement [3] Industry Context - As of September, US employers' hiring plans were at their lowest year-to-date level since 2009, indicating a potential slowdown in the labor market [3] - Despite overall layoffs remaining low, many job seekers are facing challenges in securing corporate roles [2]

Core Insights - KellyOCG + Sevenstep has been recognized as a top provider in HRO Today's 2025 Baker's Dozen Customer Satisfaction Ratings for Recruitment Process Outsourcing (RPO), ranking No. 1 in deal size, No. 2 in healthcare and breadth of service, No. 4 in quality of service, and No. 3 overall out of 58 evaluated providers [1][2] Company Performance - The Baker's Dozen list is based on customer feedback from 335 client companies, providing an objective assessment of RPO providers based on service breadth, deal size, service quality, and overall customer satisfaction [2] - The integrated KellyOCG + Sevenstep brand received its first recognition this year, although its individual RPO solutions have been acknowledged for over a decade [3] Technology and Services - KellyOCG + Sevenstep utilizes agile and AI-enabled solutions for talent acquisition, integrating data and predictive analytics to enhance decision-making and strategy effectiveness [3] - The company offers modular and enterprise RPO services, total talent solutions, and industry-leading consulting services, supported by proprietary technology like SevayoInsights [3][4] Industry Position - The company has expanded its global footprint and resources, making it a compelling choice for global enterprise RPO programs and tailored solutions [4] - KellyOCG + Sevenstep combines extensive industry experience with ongoing technology investments to deliver world-class programs tailored to unique workforce needs [5]

Core Insights - Kelly has been recognized as a Leader and Star Performer in Everest Group's 2025 US Contingent Staffing PEAK Matrix Assessment, highlighting its significant growth in market impact driven by outcome-based managed services and technology investments [1][2][8] Group 1: Recognition and Achievements - This is the first year Kelly has been named a Star Performer and the third consecutive year as a Leader in business professional and industrial contingent talent [2] - Kelly is the first company to achieve both Leader and Star Performer status across all four US Contingent Staffing PEAK Matrix Assessments, including IT and engineering [2] - KellyOCG + Sevenstep was also recognized as a Leader and Star Performer in the Global Recruitment Process Outsourcing PEAK Matrix, showcasing Kelly's strength as a strategic workforce partner [2] Group 2: Strategic Focus and Investments - Kelly is diversifying its growth in resilient industries such as semiconductors, renewable energy, and advanced manufacturing, focusing on upskilling and retention [3][8] - Significant investments have been made to enhance Kelly's technology stack and digital staffing capabilities, including end-to-end automation and real-time dashboards [4] - The company is operationalizing an omnichannel strategy that integrates branch presence, centralized support, and digital access through its proprietary platform, Kelly Now [5] Group 3: Service Offerings and Solutions - Under the leadership of Tammy Browning, Kelly provides agile, outcome-based solutions through managed services like Business Process Outsourcing and contact center solutions [6] - Kelly's Skilled Professional Solutions (SPS) allow clients to engage subject matter experts for specific projects, enhancing talent retention and redeployment opportunities [6] - The focus on resilient segments such as advanced manufacturing and semiconductors is emphasized through the Skilled Professional Solutions offering [8]

Core Viewpoint - The analysis compares Kelly Services (KELYA) and Cross Country Healthcare (CCRN) to determine which stock represents a better value opportunity for investors [1]. Valuation Metrics - KELYA has a forward P/E ratio of 5.78, significantly lower than CCRN's forward P/E of 69.19, indicating KELYA may be undervalued [5]. - KELYA's PEG ratio is 0.44, while CCRN's PEG ratio is 6.92, suggesting KELYA has a more favorable earnings growth outlook relative to its price [5]. - KELYA's P/B ratio is 0.35, compared to CCRN's P/B of 0.92, further supporting KELYA's valuation as more attractive [6]. Zacks Rank and Estimate Revisions - KELYA holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while CCRN has a Zacks Rank of 5 (Strong Sell), suggesting a weaker earnings outlook [3]. - KELYA has experienced stronger estimate revision activity compared to CCRN, reinforcing its position as the superior investment choice for value investors [7]. Value Grades - KELYA has a Value grade of A, while CCRN has a Value grade of C, reflecting KELYA's more favorable valuation metrics [6].

Company Participation in Investor Conferences - Kelly will participate in the Midwest IDEAS Conference in Chicago on August 26, 2025, with management scheduled to present at 8:35 a.m. CT and engage in one-on-one meetings with investors throughout the day [1] - The company will also attend the Gateway Conference in San Francisco on September 3, 2025, with a presentation scheduled for 1:00 p.m. PT and one-on-one meetings with investors [2] - Management will participate in the Barrington Research Fall Virtual Investment Conference on September 16, 2025, focusing on one-on-one meetings with investors [3] - Kelly will take part in the Sidoti Small-Cap Virtual Conference on September 17, 2025, also engaging in one-on-one meetings with investors [4] - The company is scheduled to present at the William Blair Human Capital Services Virtual Conference on September 24, 2025, at 9:30 a.m. CT, followed by one-on-one meetings with investors throughout the afternoon [5] Company Overview - Kelly Services, Inc. is a leading global specialty talent solutions provider, helping companies recruit and manage skilled workers while assisting job seekers in finding employment [6] - The company has a rich history, having invented the staffing industry in 1946, and has become an expert in various industries and markets [6] - Kelly connects over 400,000 people with work annually through its extensive network of suppliers and partners worldwide [6] - The company reported revenue of $4.3 billion in 2024, indicating its significant presence in the talent solutions market [6]

Core Insights - Kelly + Motion Recruitment has been recognized as both an IT Leader and Star Performer in Everest Group's 2025 US Contingent Staffing PEAK Matrix Assessment, reflecting exceptional year-over-year growth in vision, investments, and industry impact [1][11] Company Performance - Following Kelly's acquisition of Motion Recruitment Partners in 2024, the combined business has significantly expanded its services and growth potential across targeted industries [2] - Kelly + Motion Recruitment has made impactful investments in IT managed services and is committed to technological innovation, particularly in AI implementation [2][4] Recognition and Rankings - Kelly is the first company to be named a Leader and Star Performer across all four Everest Group US Contingent Staffing Peak Matrix Assessments, which include IT, engineering, business professional, and industrial talent and strategic solutions [5] - The combined business has risen to rank 11 in Staffing Industry Analysts' list of the largest IT staffing firms in the United States, up from 27 and 15 before the acquisition [6] Strategic Investments - Kelly's strategic investments in IT staffing, consulting, and managed services have strengthened its positioning as a Leader and Star Performer on Everest Group's US IT Contingent Talent and Strategic Solutions PEAK Matrix Assessment 2025 [4] - The acquisition of Motion Recruitment and its sister brands has enhanced Kelly's capabilities, particularly in the public sector and telecommunications industries [4] Industry Impact - Everest Group's PEAK Matrix assesses contingent staffing providers based on vision and strategy, delivery of output-based staffing solutions, learning and upskilling solutions, market impact, technology capabilities, equity and inclusion solutions, and future investments [3]

Core Insights - Kelly Engineering has been recognized as a Star Performer and Leader in Everest Group's 2025 US Contingent Staffing PEAK Matrix Assessment, marking its second consecutive year as a Star Performer and fourth consecutive year as a Leader, indicating significant growth in market impact, vision, and strategic investments [1][2][4] Group 1: Recognition and Achievements - Kelly Engineering achieved high rankings due to its diversification in industry coverage and sourcing capabilities for advanced engineering roles, boasting one of the highest organic revenue growth rates in the industry [2][4] - The company has been acknowledged as the fourth-largest engineering staffing firm in the United States by Staffing Industry Analysts (SIA) in 2025 [5] Group 2: Strategic Focus and Capabilities - Kelly Engineering specializes in recruiting skilled engineers across various industries, including semiconductors, industrial automation, automotive, medical devices, aerospace, energy, and chemical manufacturing [6] - The company offers a comprehensive range of services, including flexible statement of work (SOW) solutions called statementworX™, contract staffing, and direct hire services, aimed at efficiently connecting clients with top talent [6][7] Group 3: Assessment Criteria - Everest Group's PEAK Matrix evaluates contingent staffing providers based on seven categories: vision and strategy, delivery of output-based staffing solutions, learning and upskilling solutions, market impact, technology capabilities, equity and inclusion solutions, and future investments [3][4]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements show a significant increase in quarterly net earnings to $19.0 million, while total assets decreased slightly to $2.51 billion due to debt reduction [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Quarterly revenue grew to $1.10 billion, driving a substantial rise in net earnings to $19.0 million, boosted by a gain on the sale of EMEA staffing operations Quarterly Earnings Comparison | Financial Metric | 13 Weeks Ended June 29, 2025 | 13 Weeks Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue from services** | $1,101.8 M | $1,057.5 M | +4.2% | | **Gross profit** | $225.5 M | $213.7 M | +5.5% | | **Earnings from operations** | $22.2 M | $12.2 M | +82.0% | | **Net earnings** | $19.0 M | $4.6 M | +313.0% | | **Diluted earnings per share** | $0.52 | $0.12 | +333.3% | Year-to-Date Earnings Comparison | Financial Metric | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue from services** | $2,266.7 M | $2,102.6 M | +7.8% | | **Earnings from operations** | $33.0 M | $39.0 M | -15.4% | | **Net earnings** | $24.8 M | $30.4 M | -18.4% | | **Diluted earnings per share** | $0.67 | $0.83 | -19.3% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets stood at $2.51 billion, down from $2.63 billion at year-end, primarily reflecting a significant reduction in long-term debt Key Balance Sheet Items | Balance Sheet Item | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,253.1 M | $1,365.5 M | | **Total Assets** | $2,511.9 M | $2,632.3 M | | **Long-term debt** | $74.3 M | $239.4 M | | **Total current liabilities** | $826.7 M | $826.5 M | | **Total Liabilities** | $1,245.8 M | $1,397.7 M | | **Total stockholders' equity** | $1,266.1 M | $1,234.6 M | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities improved significantly to $119.3 million, while financing activities reflected substantial net payments on long-term debt Year-to-Date Cash Flow Summary | Cash Flow Activity (26 Weeks Ended) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $119.3 M | $32.2 M | | **Net cash from (used in) investing activities** | $24.7 M | $(353.1) M | | **Net cash (used in) from financing activities** | $(172.7) M | $201.6 M | | **Net change in cash** | $(21.1) M | $(122.0) M | - Key investing activities in YTD 2025 included **$21.8 million in proceeds from the sale of EMEA staffing operations** and **$6.4 million from the sale of the PersolKelly investment**, contrasting with a major acquisition outflow in YTD 2024[25](index=25&type=chunk) - Financing activities in YTD 2025 were characterized by **net debt payments**, whereas YTD 2024 saw **net debt proceeds** largely to fund the MRP acquisition[25](index=25&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail a change in reportable segments, the finalization of acquisitions, proceeds from divestitures, and costs from new integration initiatives - In Q1 2025, the company changed its reportable segments to **Enterprise Talent Management (ETM)**, **Science, Engineering & Technology (SET)**, and **Education**[33](index=33&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - The company acquired **Motion Recruitment Partners (MRP)** on May 31, 2024, for **$425.0 million** and **Children's Therapy Center (CTC)** on November 13, 2024, for **$3.3 million**[44](index=44&type=chunk)[45](index=45&type=chunk) - In Q2 2025, the company received final proceeds of **$21.8 million** related to the 2024 sale of its EMEA staffing operations, resulting in a **$4.0 million gain** for the quarter[49](index=49&type=chunk) - The company launched integration and realignment initiatives in 2025, incurring costs of **$16.8 million YTD**, primarily for IT-related charges and severance[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) Revenue grew 4.2% to $1.1 billion driven by the MRP acquisition, while the company strengthened its balance sheet by significantly reducing its debt-to-total capital ratio [Executive Overview](index=33&type=section&id=Executive%20Overview) The company saw continued growth in Education and outcome-based offerings, tempered by demand reductions from large customers, with a key focus on integrating the MRP acquisition - The **Education segment** achieved another quarter of revenue growth with strong fill rates in K-12 staffing[130](index=130&type=chunk) - Results were negatively impacted by **demand reductions from certain large customers** and lower staffing volumes with the U.S. federal government[131](index=131&type=chunk) - The **integration of MRP** is well underway, with realignment of sales and recruiting teams and implementation of modernized front- and back-office systems[132](index=132&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Total revenue increased 4.2% due to the MRP acquisition, which also helped improve the gross profit rate, though organic revenue declined 3.3% Segment Revenue (Q2 2025 vs Q2 2024) | Segment Revenue (Q2 2025 vs Q2 2024) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Enterprise Talent Management (ETM) | $520.2 M | $541.2 M | (3.9)% | | Science, Engineering & Technology (SET) | $317.3 M | $265.7 M | 19.4% | | Education | $265.3 M | $251.1 M | 5.6% | - ETM's organic revenue decreased **5.1%** in Q2 due to lower hours volume at certain large customers[153](index=153&type=chunk) - SET's revenue growth was driven by the MRP acquisition; excluding the acquisition, revenue decreased **8.5%** due to declines in demand related to U.S. federal government contractors[154](index=154&type=chunk) Segment Business Unit Profit (Q2 2025 vs Q2 2024) | Segment Business Unit Profit (Q2 2025 vs Q2 2024) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Enterprise Talent Management (ETM) | $11.1 M | $15.5 M | (28.5)% | | Science, Engineering & Technology (SET) | $19.3 M | $18.9 M | 2.1% | | Education | $13.6 M | $12.7 M | 7.1% | [Financial Condition and Liquidity](index=40&type=section&id=Financial%20Condition%20and%20Liquidity) The company's financial condition strengthened with robust operating cash flow of $119.3 million, enabling significant debt reduction and improved liquidity - Generated **$119.3 million of net cash from operating activities** in the first six months of 2025, compared to $32.2 million in the prior year period[188](index=188&type=chunk) - Global Days Sales Outstanding (DSO) was stable at **59 days** at the end of Q2 2025, consistent with year-end 2024[188](index=188&type=chunk) - The debt-to-total capital ratio decreased to **5.5%** at the end of Q2 2025 from **16.2%** at year-end 2024, reflecting significant debt paydown[192](index=192&type=chunk) Credit Facility Availability (as of Q2 2025) | Credit Facility Availability (as of Q2 2025) | Total Size | Available Capacity | | :--- | :--- | :--- | | Revolving Credit Facility | $150.0 M | $130.0 M | | Securitization Facility | $250.0 M | $153.1 M | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk profile, primarily related to foreign currency and interest rates, has not changed significantly, with mitigation strategies in place - The company is exposed to foreign currency risk from its foreign subsidiaries, but notes that a **natural hedge** exists as revenues and expenses are primarily in the same local currency[208](index=208&type=chunk) - To manage interest rate risk on its Securitization Facility, the company entered into two **$50.0 million interest rate swaps** in July 2024[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Executive management concluded that disclosure controls and procedures were effective, and no material changes were made to internal controls during the quarter - The CEO and CFO have concluded that **disclosure controls and procedures are effective** at a reasonable assurance level[211](index=211&type=chunk) - **No changes occurred** during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[212](index=212&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings that are not expected to have a material adverse effect on its financial condition - The company is engaged in **routine litigation and claims** related to its business operations[214](index=214&type=chunk) - Management does not expect the outcome of current legal proceedings to have a **material adverse effect** on the company[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the public program in Q2 2025, leaving $40.0 million available, though some shares were reacquired for employee tax purposes - A total of **$40.0 million remains available** under the Class A share repurchase program authorized in November 2024, which expires in December 2026[92](index=92&type=chunk)[216](index=216&type=chunk) - In Q2 2025, **9,221 shares were reacquired**, but these were to cover employee tax withholdings on vested restricted stock, not as part of the public repurchase program[216](index=216&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or other non-Rule 10b5-1 trading arrangements during the second quarter - **No directors or executive officers made changes** to their securities trading plans during the second quarter of 2025[217](index=217&type=chunk)

分组1 - Kelly Services reported quarterly earnings of $0.54 per share, matching the Zacks Consensus Estimate, but down from $0.71 per share a year ago [1] - The company posted revenues of $1.1 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.86%, compared to $1.06 billion in the same quarter last year [2] - The stock has underperformed, losing about 12.1% since the beginning of the year, while the S&P 500 gained 7.9% [3] 分组2 - The earnings outlook for Kelly Services is mixed, with the current consensus EPS estimate for the coming quarter at $0.43 on revenues of $1.07 billion, and $2.11 on revenues of $4.54 billion for the current fiscal year [7] - The Zacks Industry Rank indicates that the Staffing Firms industry is in the bottom 21% of over 250 Zacks industries, which may impact stock performance [8] - Korn/Ferry, another company in the same industry, is expected to report quarterly earnings of $1.24 per share, reflecting a year-over-year change of +5.1% [9]