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 [3] - The company has been a pioneer in the staffing industry since its inception in 1946 and has developed expertise across various industries and markets [3] - In 2024, Kelly Services reported a revenue of $4.3 billion, indicating its significant presence in the talent solutions market [3] Upcoming Earnings Release - Kelly Services will release its first-quarter earnings on May 8, 2025, before the market opens [1] - A financial presentation will accompany the earnings release, and a live webcast of a conference call with financial analysts will take place at 9 a.m. ET on the same day [1] - The webcast will be recorded, and a replay will be available within one hour after the event [2]

Core Insights - Illinois schools are experiencing a significant teacher shortage, with 90% of districts struggling to fill vacancies [2][3] - Kelly Education has filled 5.2 million substitute educator positions during the 2023–24 school year, demonstrating its commitment to supporting educational institutions [2] - The company is launching the Kelly Education Learning Pathways™, a tiered professional learning platform aimed at enhancing the skills of substitute teachers [1][3] Company Initiatives - The Learning Pathways platform offers three levels of training: Essential, Enhanced, and Exemplary, designed to prepare substitute educators effectively [1][3] - The curriculum focuses on key areas such as classroom management, instructional strategies, and student engagement practices to ensure a positive learning environment [7][8] - Additional courses and modules will be available for purchase, allowing educators to further develop their skills [4] Benefits for Schools - The platform provides a customizable, outcome-led curriculum that aids in improving recruitment and retention of substitute teachers [8] - School and district leaders can access a dashboard for performance monitoring and training completion, which helps track return on investment [8] - By implementing effective substitute teacher training, districts can achieve significant time and cost savings while enhancing educational quality [4]

Core Insights - Kelly Education is expanding its commitment to substitute teacher development in Virginia with the launch of the Kelly Education Learning Pathways™ platform, which aims to equip substitute educators with essential skills and confidence for classroom success [1][2][3] - The platform offers three levels of training: Essential, Enhanced, and Exemplary, designed to create a more effective substitute teaching workforce [1][2] - During the 2023–24 school year, Kelly Education filled 5.2 million substitute educator positions, showcasing its dedication to supporting schools and students nationwide [2] Training and Curriculum - Virginia law mandates that substitute teachers receive orientation and training, which Kelly Education's Learning Pathways will fulfill, leveraging over 26 years of expertise [3] - The curriculum focuses on key areas such as classroom management, instructional strategies, and student engagement practices to enhance the quality of substitute teaching [7] - Additional courses and modules will be available for purchase, allowing educators to refine their skills further [4] Benefits for School Districts - The Learning Pathways platform provides a customizable curriculum aimed at improving recruitment and retention of substitute teachers, making districts more attractive to educators [8] - School and district leaders can benefit from a data-driven learning platform that includes performance monitoring and reporting to track training completion and return on investment [8] - By enhancing substitute teacher training, districts can achieve significant time and cost savings while improving the overall quality and stability of education [4]

Core Insights - Kelly Education is expanding its commitment to substitute teacher development in Kentucky through the launch of the Kelly Education Learning Pathways™ platform, aimed at enhancing the skills and confidence of substitute educators [1][2][3] Group 1: Program Details - The Learning Pathways platform offers three levels of training for substitute teachers: Essential, Enhanced, and Exemplary, designed to create a more effective substitute teaching workforce [1][2] - The program includes a comprehensive online training curriculum that focuses on educational continuity, connection, and safety, with interactive experiences and up-to-date content [3][4] Group 2: Market Context - In the 2023-2024 school year, 13% of teacher vacancies in Kentucky remained unfilled, highlighting the critical demand for qualified educators [2] - Kelly Education filled 5.2 million substitute educator positions during the same school year, demonstrating its commitment to supporting schools nationwide [2] Group 3: Additional Features - The Learning Pathways platform allows for additional courses and modules to be purchased, enabling educators to refine their skills according to evolving school needs [4][7] - The platform provides school leaders with a customizable curriculum, performance monitoring dashboards, and accredited certificates to track training completion and return on investment [6][7]

Core Viewpoint - Kelly Services, Inc. will participate in the Sidoti Virtual Investor Conference on March 19, 2025, highlighting its role as a leading global specialty talent solutions provider [1][2]. Company Overview - Kelly Services, Inc. has been a pioneer in the staffing industry since 1946, connecting over 400,000 people with work annually through a global network of suppliers and partners [3]. - The company reported a revenue of $4.3 billion in 2024, indicating its significant presence in various industries including science, engineering, technology, education, manufacturing, retail, finance, and energy [3]. Leadership Participation - Key executives including Peter Quigley (CEO), Troy Anderson (CFO), and Scott Thomas (Head of Investor Relations) will engage in one-on-one meetings during the conference [2].

Core Insights - Kelly Education has been approved by the Wisconsin Department of Public Instruction to provide substitute teacher training, addressing the teacher shortage in Wisconsin [1][2] - The training program is designed for individuals without a degree or certification in education, allowing them to obtain a three-year substitute permit [1] - The curriculum includes practical strategies and specialized practices for teaching students with various needs, ensuring substitutes are well-prepared for classroom challenges [2][3] Company Overview - Kelly Education specializes in customized workforce solutions across the education sector, including hiring, recruiting, and professional development [5] - The organization has over 26 years of experience in developing training materials for substitute teachers, integrating best practices for instructional continuity [2] - The company operates under Kelly, a global workforce solutions provider, connecting individuals with opportunities in various fields [5] Training Program Details - The training modules cover a range of topics from basic instructional strategies to specialized practices for children with autism, ADHD, and learning disabilities [3] - The program includes interactive elements and knowledge checks to engage learners effectively [3] - The introductory online training fee is set at $39.99, with a completion window of 90 days for registered applicants [6]

Core Insights - Kelly has formed an integrated permanent hiring solutions business line by combining KellyOCG's global recruitment process outsourcing (RPO) specialty with Motion Recruitment Partners' talent acquisition solutions brand, Sevenstep, creating a top five global talent solutions offering [1] - Amy Bush has been appointed as the leader of the integrated business, overseeing operations in 71 countries with 33 in-country teams and 19 global hub locations, following the acquisition of Motion Recruitment Partners in 2024 [2] - The integration aims to leverage the strengths of both KellyOCG and Sevenstep to enhance service delivery and innovative technology offerings for clients [3] Company Overview - Kelly Services, Inc. has been a leader in staffing since 1946, connecting over 400,000 people with work annually and generating $4.3 billion in revenue in 2024 [4] - The company specializes in various industries including science, engineering, technology, education, manufacturing, retail, finance, and energy, providing outsourcing and consulting services [4] Sevenstep Overview - Sevenstep is recognized as a global leader in talent acquisition solutions, offering permanent hiring, total talent management, predictive analytics, and strategic consulting services [5] - The company is acknowledged as a key player in recruitment process outsourcing (RPO) and managed services provider (MSP) by industry organizations such as HRO Today and Everest Group [5]

Financial Data and Key Metrics Changes - In Q4 2024, organic revenue increased by more than 4% and adjusted EBITDA rose by 34%, reflecting strong profitability with 110 basis points of margin expansion [11][34] - Total revenue for Q4 2024 was $1.19 billion, a decrease of 3.3% year-over-year, but organic revenue was up 4.4% [22][35] - Adjusted EBITDA for the full year was $143.5 million, up 31%, with an adjusted EBITDA margin improvement of 100 basis points to 3.3% [37] Business Line Data and Key Metrics Changes - The education segment saw a 12% year-over-year revenue increase in Q4, driven by improved fill rates and higher bill rates [24] - The SET segment's revenue was up 38% on a reported basis due to the acquisition of Motion Recruitment Partners, but organic revenue was down 4% [24][25] - OCG segment revenue grew by 9%, while the professional industrial segment improved by 4% year-over-year [26][27] Market Data and Key Metrics Changes - The staffing market experienced overall declines, with total staffing industry revenues down in most segments by double digits [16] - The outcome-based solutions in PNI and SET showed positive trends, with PNI's outcome-based specialties up 5.9% [23][28] Company Strategy and Development Direction - The company is focused on integrating Motion Recruitment Partners to enhance its staffing, consulting, and RPO solutions [16][48] - There is a strategic shift towards higher margin, higher growth areas, including outcome-based solutions [54] - The company plans to unify OCG and PNI under common operational management to better address customer preferences for integrated workforce solutions [52][53] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious customer sentiment due to macroeconomic factors, with expectations for modest improvements in market conditions throughout 2025 [39][84] - The company anticipates capturing additional market share and delivering incremental organic revenue growth in 2025 [40] Other Important Information - The company completed the sale of its European Staffing business for over $100 million and the sale of Ayres Group to focus on global RPO and MS solutions [15] - An impairment charge of $72.8 million was recognized related to the Softworld acquisition due to lower than expected performance [31][32] Q&A Session Summary Question: Impact of hurricanes on the education segment - Management indicated that the education segment's performance in Q4 was significantly impacted by two hurricanes, which disrupted school districts [59] Question: Insights on new customer wins and sales pipeline - Management expressed confidence in their ability to continue winning market share due to higher fill rates and better performance [61] Question: M&A market conditions - Management noted that deal flow remains low, with a disconnect between sellers' valuation expectations and performance [66] Question: Demand for staffing and pricing insights - Management highlighted strong demand in the PNI segment, with a seasonal uptick in Q4, while SET faced challenges in the IT market [73][75] Question: Customer sentiment and macroeconomic environment - Management observed a cautious approach from customers due to recent executive orders and pending legislation, impacting their plans and demand [84] Question: Organic growth outlook for 2025 - Management expects modest growth in the first half of 2025, with education continuing to grow but not at double-digit rates [88][90] Question: Integration of OCG and PNI - Management is currently analyzing segment reporting for 2025 and will provide updates on any changes [95]

Revenue and Profitability - Revenue from services decreased by 10.4% to $4,331.8 million in 2024, compared to $4,835.7 million in 2023, primarily due to the sale of EMEA staffing operations[142] - Gross profit declined by 8.2% to $882.6 million, with a gross profit rate of 20.4%, an increase of 0.5 percentage points from the previous year[145] - Consolidated total gross profit decreased by 8.2% from $961.4 million in 2023 to $882.6 million in 2024[166] - The gross profit rate for the Professional & Industrial segment decreased by 20 basis points, primarily due to declines in permanent placement revenue[167] - Science, Engineering & Technology segment gross profit increased due to the acquisition of MRP, with a gross profit rate increase of 120 basis points[168] - Education segment gross profit increased by 8.6% from $128.7 million in 2023 to $139.8 million in 2024, despite a 90 basis point decrease in gross profit rate[169] - Outsourcing & Consulting segment gross profit decreased, with a gross profit rate decline of 480 basis points due to a change in business mix[170] - The company reported a net loss of $0.6 million in 2024, a significant decline from net earnings of $36.4 million in 2023[153] Expenses and Cost Management - Total SG&A expenses decreased by 12.4% to $818.4 million, with restructuring charges significantly reduced from $38.6 million in 2023 to $6.1 million in 2024[146] - Total SG&A expenses decreased by 14.3% from $894.6 million in 2023 to $766.9 million in 2024, primarily due to lower direct salaries[178] - Corporate expenses decreased year-over-year primarily due to lower transformation-related charges, despite higher transaction-related expenses[196] Acquisitions and Sales - The acquisition of Motion Recruitment Partners, LLC on May 31, 2024, is expected to enhance staffing and consulting capabilities across technology and government specialties[135] - The company completed the sale of its European staffing operations on January 2, 2024, and the Ayers Group on June 12, 2024, focusing on a streamlined North American model[134] - The company completed the sale of its EMEA staffing operations for cash proceeds of $110.6 million, net of cash disposed[220] - The company acquired 100% of MRP for a purchase price of $425.0 million, resulting in a cash payment of $440.0 million[221] Cash Flow and Working Capital - Cash, cash equivalents, and restricted cash totaled $45.6 million at year-end 2024, down from $167.6 million at year-end 2023[205] - The company generated $26.9 million of net cash from operating activities in 2024, a decrease from $76.7 million in 2023, primarily due to increased working capital requirements[206] - Trade accounts receivable increased to $1.3 billion at year-end 2024 from $1.2 billion at year-end 2023, with global Days Sales Outstanding (DSO) remaining at 59 days[207] - The company's working capital position was $539.0 million at year-end 2024, down from $606.7 million at year-end 2023, primarily due to lower cash balances[208] Debt and Financing - Financing activities generated $214.8 million in 2024, compared to cash used of $59.6 million in 2023, primarily due to net borrowings of $239.4 million related to the acquisition of MRP[213] - The debt-to-total capital ratio was 16.2% at year-end 2024, with no debt outstanding at year-end 2023[215] - The company repurchased $10.0 million of Class A common stock in fiscal 2024, with $40.0 million remaining under the share repurchase program[226] Goodwill and Impairment - The company recorded a goodwill impairment charge of $72.8 million for the Softworld reporting unit in 2024, with a remaining goodwill balance of $38.5 million[246] - Total goodwill amounted to $304.2 million at year-end 2024, compared to $151.1 million at year-end 2023[252] - The company performed annual impairment tests for all reporting units with goodwill, concluding that the estimated fair value of the Softworld reporting unit no longer exceeded its carrying value[246] Tax and Valuation - The company recorded an $18.4 million tax benefit associated with the goodwill impairment charge for Softworld[246] - The company utilizes third-party valuation specialists to determine the fair value of acquired intangible assets, including trade names and customer relationships[235] - The fair value of trade name intangibles is determined using the relief-from-royalty method, while customer relationship intangibles are assessed using the multi-period excess earnings method[235] - The company evaluates its tax accruals regularly, with current tax accruals presented in income and other taxes on the consolidated balance sheet[238] Foreign Currency and Risk Management - The Company entered into a foreign currency forward contract with a notional amount of €90.0 million to manage foreign currency risk, resulting in an unrealized loss of $3.6 million as of year-end 2023[262] - A total loss of $2.4 million was realized upon settlement of the foreign currency forward contract on January 5, 2024, leading to a gain of $1.2 million recorded in the first quarter of 2024[262] - The Company entered into another foreign currency forward contract with a notional amount of €17.0 million related to expected additional proceeds from the sale of EMEA staffing operations[263] - The Company is exposed to foreign currency risk primarily related to its foreign subsidiaries, which provide a natural hedge against currency risks[261] - Changes in foreign currency rates generally do not impact local cash flows due to the nature of the Company's foreign operations[261] Insurance and Compensation - The Company retains an independent consulting actuary to establish ultimate loss forecasts for its insurance and self-insurance programs[233] - The accrual for workers' compensation was $44.4 million at year-end 2024, up from $43.6 million at year-end 2023[234] - The obligation to pay benefits under the nonqualified deferred compensation plan is influenced by movements in equity and debt markets[266]

Group 1 - Kelly Services reported quarterly earnings of $0.82 per share, exceeding the Zacks Consensus Estimate of $0.44 per share, but down from $0.93 per share a year ago, representing an earnings surprise of 86.36% [1] - The company posted revenues of $1.19 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.64%, compared to year-ago revenues of $1.23 billion [2] - Over the last four quarters, Kelly Services has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2 - The stock has underperformed the market, losing about 4.7% since the beginning of the year, while the S&P 500 has gained 2.9% [3] - The current consensus EPS estimate for the coming quarter is $0.67 on revenues of $1.16 billion, and for the current fiscal year, it is $2.59 on revenues of $4.64 billion [7] - The Zacks Industry Rank indicates that the Staffing Firms industry is currently in the bottom 24% of over 250 Zacks industries, which may impact stock performance [8]