Core Insights - Kelly Services, Inc. reported an earnings per share (EPS) of $0.16, which was below the estimated EPS of $0.43, indicating weaker profitability than expected [2][5] - The company's revenue for the period was approximately $1.05 billion, slightly missing the forecast of $1.06 billion, suggesting challenges in meeting sales targets [3][5] Financial Metrics - The price-to-sales (P/S) ratio is 0.13, indicating that investors are paying 13 cents for every dollar of the company's sales, reflecting cautious market sentiment [3] - The debt-to-equity ratio stands at 0.16, suggesting a relatively low level of debt compared to equity [3] - The current ratio is 1.59, indicating a good level of liquidity to cover short-term liabilities [4] - The enterprise value to operating cash flow (EV/OCF) ratio is 6.25, showing that the company's operating cash flow can cover its enterprise value multiple times, providing financial stability [4]

Revenue and Profitability - Revenue from services in 2025 was $4,250.9 million, a decrease of 1.9% compared to $4,331.8 million in 2024[156]. - Gross profit decreased by 3.4% to $853.0 million, with a gross profit rate of 20.1%, down 30 basis points from 2024[156][162]. - Loss from operations in 2025 totaled $69.8 million, significantly higher than a loss of $15.1 million in 2024, primarily due to increased impairment charges and lower revenue[156][165]. - Consolidated total gross profit decreased to $853.0 million in 2025, down 3.4% from $882.6 million in 2024, and down 8.2% from $961.4 million in 2023[178]. - Enterprise Talent Management gross profit decreased to $392.8 million in 2025, a decline of 11.7% from $444.9 million in 2024, and 4.5% from $465.7 million in 2023[178]. - Science, Engineering & Technology gross profit increased to $313.2 million in 2025, up 5.1% from $297.9 million in 2024, and up 20.7% from $246.9 million in 2023[178]. - Education segment gross profit increased to $147.0 million in 2025, a rise of 5.2% from $139.8 million in 2024, and 8.6% from $128.7 million in 2023[178]. Expenses and Cost Management - Total SG&A expenses increased by 0.9% to $825.9 million, primarily due to the acquisition of MRP, while excluding the acquisition, SG&A expenses decreased by 4.8%[156][163]. - SG&A expenses (excluding depreciation and amortization) totaled $774.9 million in 2025, a slight increase of 1.0% from $766.9 million in 2024, but down 14.3% from $894.6 million in 2023[186]. - Enterprise Talent Management SG&A expenses decreased to $373.0 million in 2025, down 3.3% from $385.9 million in 2024, and down 10.7% from $432.2 million in 2023[186]. - Science, Engineering & Technology SG&A expenses increased to $247.1 million in 2025, up 9.0% from $226.7 million in 2024, and up 22.7% from $184.8 million in 2023[186]. - Corporate expenses decreased to $53.8 million in 2025, down 7.9% from $58.4 million in 2024, and down 7.6% from $63.2 million in 2023[186]. Cash Flow and Financial Position - Cash, cash equivalents, and restricted cash totaled $37.7 million at year-end 2025, down from $45.6 million at year-end 2024[205]. - Net cash generated from operating activities increased to $122.6 million in 2025, compared to $26.9 million in 2024 and $76.7 million in 2023[206]. - The debt-to-total capital ratio improved from 16.2% at year-end 2024 to 9.4% at year-end 2025, indicating a stronger capital structure[216]. - As of year-end 2025, the company had $150.0 million available on its revolving credit facility and $105.5 million on its securitization facility[221]. - The company expects to meet cash requirements through operations, available cash, and credit facilities, with potential additional funding from bank facilities or asset sales[218]. Goodwill and Impairment - The goodwill impairment charge in 2025 was $102.0 million, compared to $72.8 million in 2024, driven by reduced demand and integration costs[156][164]. - As of year-end 2025, total goodwill amounted to $202.1 million, while at year-end 2024, it was $304.2 million[245]. - The company recorded an impairment charge of $72.8 million for Softworld's goodwill in 2024, with a remaining goodwill balance of $38.5 million as of year-end 2024[244]. - The estimated fair value of each reporting unit tested in 2025 exceeded its carrying value by more than 10%, indicating no impairment of goodwill[242]. - The company assessed that an increase in the discount rate of 100 basis points or a decrease of 100 basis points in revenue growth rate assumptions would not result in goodwill impairment[243]. Strategic Initiatives and Leadership - The company is focused on cost optimization initiatives and enhancing operational capabilities to improve profitability as market conditions stabilize[150][151]. - The hiring of Chris Layden as CEO in September 2025 is aimed at strengthening competitive positioning and transforming technology processes[149]. Segment Performance - Revenue from the Enterprise Talent Management segment decreased by 8.7% to $2,005.5 million, while revenue from the Science, Engineering & Technology segment increased by 6.4% to $1,240.4 million[170]. - The Education segment's revenue increased by 3.9% to $1,010.7 million, driven by higher fill rates and bill rates[170][173]. - Excluding the impact of acquisitions, revenue from staffing services decreased by 11.7% and revenue from outcome-based services decreased by 12.1%[171][172]. Legal and Compliance - The company routinely assesses legal proceedings and claims, with potential exposure impacting the required accruals for litigation costs[247]. - The gross accrual for litigation costs was $2.8 million at year-end 2025, up from $1.5 million at year-end 2024[247].

Exhibit 99.1 Kelly Reports Fourth-Quarter and Full-Year 2025 Earnings TROY, Mich. (February 12, 2026) – Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced fourth- quarter and full-year 2025 earnings. Chris Layden, chief executive officer, said, "In the fourth quarter, we capitalized on positive trends in each of our segments and delivered results that reflect our progress on stabilizing Kelly's performance. We also completed the first significant milestone in our te ...

Core Viewpoint - Kelly Services, Inc. has entered into a Letter Agreement with Hunt Equity Opportunities, LLC to amend its stockholder rights plan and facilitate governance changes following Hunt's acquisition of a controlling stake in the company [1][2][3]. Group 1: Stockholder Rights Plan and Governance Changes - The Rights Plan was initially adopted to allow the Board sufficient time to evaluate a Share Purchase Agreement with Hunt [2]. - The Board unanimously approved Amendment No. 1 to the Rights Plan, which exempts Hunt's purchase of shares from triggering events under the Rights Plan and allows the Rights Plan to expire before the transfer [2]. - Hunt acquired 3,039,940 shares of Class B Common Stock from Trust K, resulting in Hunt holding 92.2% of the Class B Common Stock and becoming the controlling stockholder of Kelly [3]. Group 2: Board Composition and Management Support - The Board will now consist of four designees from Hunt and three existing directors, with Chris Hunt serving as the chairman [4]. - The changes in the Board composition are aimed at supporting Kelly's management in accelerating growth and realizing the company's potential [4][5]. - Outgoing Board members have resigned, and the company expresses gratitude for their contributions while welcoming new members [5]. Group 3: Company Overview - Kelly Services, Inc. specializes in talent solutions, connecting over 400,000 people with work annually and generating revenue of $4.3 billion in 2024 [9]. - The company operates in various industries, including science, engineering, technology, education, manufacturing, retail, finance, and energy [9]. Group 4: Hunt Companies Overview - Hunt Companies is a privately held investment platform with over 75 years of experience in real estate, infrastructure, and financial services [10]. - The company focuses on sustainable growth and innovation, aiming to create enduring value for clients and communities [10].

Revenue Performance - Revenue from services in Q3 2025 decreased by 9.9% year-over-year to $935.0 million, with declines in ETM and SET segments, partially offset by growth in the Education segment [149]. - Year-to-date revenue from services increased by 1.9% to $3,201.7 million, driven mainly by the acquisition of MRP [155]. - The ETM segment experienced a revenue decline of 13.1% in Q3 2025, primarily due to a 16.4% decrease in staffing services [164]. - The SET segment's revenue decreased by 9.0% in Q3 2025, driven by lower demand from U.S. federal government contractors [165]. - Education segment revenue increased by 0.9% in Q3 2025, attributed to improved fill rates [166]. Profitability - Gross profit for Q3 2025 was $194.0 million, a decrease of 12.5%, resulting in a gross profit rate of 20.8%, down 60 basis points from the previous year [151]. - Gross profit for the Enterprise Talent Management (ETM) segment decreased by 15.4% to $96.7 million in Q3 2025, compared to $114.4 million in Q3 2024 [172]. - The Science, Engineering & Technology (SET) segment's gross profit decreased by 11.8% to $77.2 million in Q3 2025, influenced by changes in business mix and higher employee-related costs [174]. - The Education segment's gross profit increased by 2.0% to $20.1 million in Q3 2025, driven by higher revenue volume and lower employee-related costs [175]. - Consolidated total gross profit decreased by 12.5% to $194.0 million in Q3 2025, compared to $221.7 million in Q3 2024 [180]. - ETM reported a profit of $9.1 million in Q3 2025, a decrease of 48.9% from $18.0 million in Q3 2024 [186]. Expenses Management - Total SG&A expenses in Q3 2025 decreased by 11.2% to $194.4 million, reflecting effective expense management and integration efforts [152]. - In the first nine months of 2025, SG&A expenses increased by 4.4% to $627.4 million, largely due to the MRP acquisition [157]. - SG&A expenses for ETM decreased by 9.2% to $87.6 million in Q3 2025, attributed to lower employee-related costs [180]. - The SET segment's SG&A expenses decreased by 15.3% to $57.6 million in Q3 2025, also due to lower employee-related costs [181]. - The corporate expenses decreased by 28.3% to $12.1 million in Q3 2025, driven by lower employee-related costs and transaction costs [182]. Financial Position - Cash, cash equivalents, and restricted cash totaled $35.4 million at the end of Q3 2025, down from $45.6 million at year-end 2024 [196]. - The debt-to-total capital ratio was 9.1% at the end of Q3 2025, a decrease from 16.2% at year-end 2024, indicating improved capital structure [201]. - As of the end of Q3 2025, the company had $150.0 million available on its revolving credit facility and $89.0 million available on its securitization facility [207]. - The securitization facility had $118.4 million in long-term borrowings and $42.6 million in standby letters of credit related to workers' compensation [207]. - The company has additional unsecured, uncommitted short-term local credit facilities totaling $3.1 million, with no borrowings as of Q3 2025 [209]. - The company believes its cash flow from operations and available liquidity will be sufficient to meet anticipated cash requirements while maintaining normal operating liquidity [208]. Risk Management - The company entered into a $50.0 million 12-month interest rate swap and a $50.0 million 18-month interest rate swap, locking in fixed rates of 4.772% and 4.468% respectively [218]. - The company has not identified specific plans to repatriate a majority of its international cash balances as of Q3 2025 [206]. - The company continues to provide MSP, RPO, and Functional Service Provider solutions in the EMEA region following the sale of its EMEA staffing operations [206]. - The company monitors the credit ratings of its banking partners regularly, assessing the risk of banks not honoring commitments as insignificant [210]. - There have been no significant changes to the company's exposure management and procedures regarding market risk, foreign currency risk, and interest rate risk during Q3 2025 [216]. - The company is exposed to foreign currency risk primarily related to its foreign subsidiaries, with natural hedges against currency risks in normal operations [217].

Financial Performance - Q3 2025 revenue was $935.0 million, a 9.9% decrease year-over-year, primarily due to lower demand in the ETM and SET segments [4]. - Operating loss for Q3 2025 was $102.1 million, compared to earnings of $2.6 million in Q3 2024, reflecting non-cash goodwill impairment charges of $102.0 million [5]. - Adjusted EBITDA for Q3 2025 was $16.5 million, a decrease of 36.7% year-over-year, with an adjusted EBITDA margin of 1.8%, down 70 basis points [6]. - For the first nine months of 2025, revenue was $3.2 billion, a 1.9% increase compared to the same period in 2024, primarily due to the acquisition of MRP [7]. - The company expects a total year-over-year revenue decline of 12% to 14% for fiscal 2025, with an underlying revenue decline of 4% to 6% [12]. - Adjusted earnings per share for Q3 2025 were $0.18, down from $0.21 in Q3 2024 [7]. - Adjusted EBITDA margin for the first nine months of 2025 was 2.8%, a decrease of 40 basis points compared to the prior year [8]. - The company recorded a goodwill impairment charge of $102.0 million in 2025, with no such charge in 2024 [26]. - For the 39 weeks ended September 28, 2025, net earnings were a loss of $125.3 million compared to a profit of $31.2 million in the same period of 2024 [31]. - In Q3 2025, net earnings were $(150.1) million, compared to $0.8 million in Q3 2024, reflecting a significant decline [42]. - Adjusted net earnings for Q3 2025 were $6.5 million, down from $7.7 million in Q3 2024, indicating a decrease of 15.6% year-over-year [42]. - Adjusted EBITDA for Q3 2025 was $16.5 million, a decrease from $26.2 million in Q3 2024, representing a decline of 37.0% [44]. - The adjusted EBITDA margin for Q3 2025 was 1.8%, down from 2.5% in Q3 2024, showing a contraction in profitability [44]. Cash Flow and Dividends - Year-to-date free cash flow for 2025 was $87.2 million, significantly up from $15.8 million in 2024 [28]. - A quarterly cash dividend of $0.075 per share was declared, payable on December 3, 2025 [9]. - The company generated net cash from operating activities of $94.0 million in 2025, a significant increase from $11.9 million in 2024 [31]. - Free cash flow for the year-to-date 2025 was $87.2 million, significantly higher than $2.8 million in the same period of 2024 [47]. Revenue Segments - Revenue from services for 2025 was $3,201.7 million, an increase of 1.9% from $3,140.7 million in 2024 [19]. - Gross profit for 2025 reached $656.0 million, up 2.3% from $641.1 million in 2024 [19]. - Revenue from the Science, Engineering & Technology segment increased by 13.5% to $944.6 million in 2025, compared to $832.3 million in 2024 [26]. - The Education segment reported a revenue increase of 5.0% to $717.6 million in 2025, up from $683.1 million in 2024 [26]. - Total segment revenue for Enterprise Talent Management in 2025 was $1,542.1 million, down from $1,626.9 million in 2024, reflecting a decrease of approximately 5.2% [37]. - Total revenue from services for the third quarter of 2025 was $935.0 million, a decrease from $1,038.1 million in the third quarter of 2024, representing a decline of approximately 10% [33]. - Year-to-date revenue from services for 2025 was $3,201.7 million, compared to $3,140.7 million in 2024, indicating a growth of about 1.9% [37]. Assets and Liabilities - Total current assets decreased to $1,279.8 million in September 2025 from $1,365.5 million in December 2024 [28]. - Total liabilities decreased to $1,882.0 million in September 2025 from $2,107.7 million in December 2024 [28]. - The company had cash, cash equivalents, and restricted cash of $35.4 million at the end of the period, down from $40.4 million at the end of the previous year [31]. Impairment and Charges - The company incurred a goodwill impairment charge of $102.0 million in Q3 2025, primarily due to reduced demand and integration costs from acquisitions [52]. - Integration and realignment costs in Q3 2025 totaled $3.5 million, reflecting ongoing efforts to consolidate operations and align processes [53]. - The company reported a valuation allowance on deferred tax assets of $69.7 million in Q3 2025, due to cumulative losses in recent years [52]. - Restructuring charges in 2024 include $3.3 million for severance and $3.1 million for transformation execution costs [56]. - A $0.2 million adjustment to restructuring charges was made in Q3 2024 [56]. - The asset impairment charge in Q2 2024 was related to right-of-use assets for the leased headquarters facility [57]. - The sale of Ayers Group occurred in Q2 2024, impacting the gain/loss on sale of assets [57]. Strategic Plans - The company plans to be active with Class A share repurchases in Q4 2025, reflecting confidence in its strategy [6]. - The company is addressing near-term opportunities to enhance execution and agility while positioning for future growth [3]. - The company plans to continue focusing on integrating recent acquisitions and optimizing operational efficiency to improve future performance [49]. - Business unit adjusted EBITDA for the Science, Engineering & Technology segment was $9.1 million in Q3 2025, compared to a loss of $(82.4) million in the same period of 2024 [45].

Revenue and Profitability - Revenue from services in Q2 2025 increased by 4.2% to $1,101.8 million, primarily driven by the acquisition of MRP[140] - Gross profit for Q2 2025 rose by 5.5% to $225.5 million, but decreased by 5.1% when excluding the impact of the acquisition[141] - Net earnings for Q2 2025 were $19.0 million, reflecting a significant increase of 314.7% compared to $4.6 million in Q2 2024[139] - Revenue from the Education segment grew by 5.6% in Q2 2025, reaching $265.3 million, supported by improved fill rates[152] - Revenue from talent solutions increased by 2.3% in Q2 2025, while permanent placement revenue decreased by 8.7%[140] - Revenue from services for the first six months of 2025 increased by 7.8% to $2,266.7 million, driven by the MRP acquisition[145] - Consolidated total gross profit increased by 5.5% to $225.5 million in Q2 2025, with a year-to-date increase of 10.2% to $462.0 million[161] Expenses and Margins - Total SG&A expenses increased by 8.2% to $207.3 million in Q2 2025, with a decrease of 2.2% when excluding the acquisition impact[142] - SG&A expenses increased by 8.8% to $194.8 million in Q2 2025, with a year-to-date increase of 13.4% to $407.7 million[169] - The gross profit rate for the first six months of 2025 increased by 50 basis points to 20.4%, primarily due to the MRP acquisition[146] - The gross profit rate for consolidated total increased by 0.3 percentage points to 20.5% in Q2 2025 compared to the prior year[161] Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled $24.5 million at the end of Q2 2025, down from $45.6 million at year-end 2024[187] - Net cash generated from operating activities was $119.3 million in the first six months of 2025, compared to $32.2 million in the same period of 2024[188] - The company believes its cash flow from operations and available liquidity will be sufficient to meet anticipated cash requirements[201] - The company continues to monitor liquidity and capital resources globally, utilizing cash pooling and intercompany loans to meet funding needs[197] Debt and Financing - The current ratio decreased to 1.5 at the end of Q2 2025 from 1.7 at year-end 2024[189] - The debt-to-total capital ratio improved to 5.5% at the end of Q2 2025 from 16.2% at year-end 2024[192] - The company entered into interest rate swaps locking in variable SOFR rates at fixed rates of 4.772% and 4.468% for portions of long-term borrowings[209] - As of the end of the second quarter of 2025, the company had $130.0 million available on its $150.0 million revolving credit facility and $153.1 million on its $250.0 million securitization facility[200] Acquisitions and Operations - The acquisition of MRP was finalized for a purchase price of $425.0 million, with an adjusted cash payment of $440.0 million due to estimated cash and working capital adjustments[199] - The integration of MRP's portfolio is progressing, with realignment of sales and recruiting teams completed in Q2 2025[132] - SET revenue from services increased due to the acquisition of MRP staffing and outcome-based solutions, while excluding the acquisition, revenue decreased by 7.8%[157] - Education revenue growth was driven by higher fill rates and bill rates, partially offset by weather-related school closures[158] Profitability by Segment - ETM reported a profit decrease of 28.5% to $11.1 million in Q2 2025, while SET profit increased by 2.1% to $19.3 million[176] Other Financial Information - The company has no material unrecorded commitments or guarantees associated with related parties or unconsolidated entities[194] - The company has additional unsecured, uncommitted short-term local credit facilities totaling $3.2 million, with no borrowings as of the second quarter-end 2025[202] - The company expects working capital requirements to increase with rising demand for its services[196] - The company has not identified plans to repatriate a majority of its international cash balances following the sale of its EMEA operations[197]

Q2 2025 Earnings Overview [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Q2 2025 revenue grew 4.2% to **$1.1 billion** (organic decline 3.3%), with operating earnings up significantly and adjusted EBITDA margin contracting - The company's strategy in Q2 focused on driving growth in resilient markets like K-12 staffing (Education), telecom/engineering (SET), and payroll outsourcing (ETM), while managing resources in areas with slower hiring[3](index=3&type=chunk) Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $1.1 billion | $1.06 billion | +4.2% | | Organic Revenue | - | - | -3.3% | | **Operating Earnings** | $22.2 million | $12.2 million | +82.0% | | Adjusted Operating Earnings | $24.6 million | $28.1 million | -12.4% | | **Adjusted EBITDA** | $37.0 million | $40.5 million | -8.7% | | Adjusted EBITDA Margin | 3.4% | 3.8% | -40 bps | | **Diluted EPS** | $0.52 | $0.12 | +333.3% | | Adjusted Diluted EPS | $0.54 | $0.71 | -23.9% | H1 2025 Key Financial Metrics (vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $2.3 billion | $2.1 billion | +7.8% | | Organic Revenue | - | - | -1.6% | | **Operating Earnings** | $33.0 million | $39.0 million | -15.4% | | Adjusted Operating Earnings | $46.7 million | $51.2 million | -8.8% | | **Adjusted EBITDA** | $71.9 million | $73.8 million | -2.6% | | Adjusted EBITDA Margin | 3.2% | 3.5% | -30 bps | | **Diluted EPS** | $0.67 | $0.83 | -19.3% | | Adjusted Diluted EPS | $0.93 | $1.26 | -26.2% | - The company expects a year-over-year revenue decline of **5% to 7%** in Q3, driven by reduced demand from U.S. federal contractors and certain large customers, but anticipates an adjusted EBITDA margin expansion of **80 to 90 bps** in Q3[7](index=7&type=chunk) [Corporate Developments](index=2&type=section&id=Corporate%20Developments) The company declared a quarterly cash dividend of **$0.075 per share** and appointed Nick Zuhlke as the new VP, Controller, and Chief Accounting Officer - The Board of Directors declared a quarterly dividend of **$0.075 per share**, payable on September 3, 2025, to stockholders of record as of August 20, 2025[9](index=9&type=chunk) - Effective August 11, 2025, Nick Zuhlke is appointed as the new Vice President, Controller, and Chief Accounting Officer, succeeding the retiring Laura Lockhart[11](index=11&type=chunk) Consolidated Financial Statements [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Q2 2025 revenue increased 4.2% to **$1.1 billion**, with net earnings surging to **$19.0 million**, while H1 net earnings decreased 18.3% to **$24.8 million** Q2 Statement of Earnings Highlights (in millions) | Account | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue from services | $1,101.8 | $1,057.5 | 4.2% | | Gross profit | $225.5 | $213.7 | 5.5% | | Earnings from operations | $22.2 | $12.2 | 81.0% | | Net earnings | $19.0 | $4.6 | 314.7% | | Diluted EPS | $0.52 | $0.12 | 333.3% | H1 Statement of Earnings Highlights (in millions) | Account | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue from services | $2,266.7 | $2,102.6 | 7.8% | | Gross profit | $462.0 | $419.4 | 10.2% | | Earnings from operations | $33.0 | $39.0 | -15.5% | | Net earnings | $24.8 | $30.4 | -18.3% | | Diluted EPS | $0.67 | $0.83 | -19.3% | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$2.51 billion**, while long-term debt was significantly reduced to **$74.3 million**, improving the debt-to-capital ratio to **5.5%** Balance Sheet Summary (in millions) | Account | June 29, 2025 | Dec 29, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Cash and equivalents | $18.0 | $39.0 | $38.2 | | Total current assets | $1,253.1 | $1,365.5 | $1,310.8 | | **Total Assets** | **$2,511.9** | **$2,632.3** | **$2,628.2** | | Total current liabilities | $826.7 | $826.5 | $812.3 | | Long-term debt | $74.3 | $239.4 | $210.4 | | **Total Liabilities** | **$1,245.8** | **$1,397.7** | **$1,348.3** | | **Total stockholders' equity** | **$1,266.1** | **$1,234.6** | **$1,279.9** | | Working Capital | $426.4 | $539.0 | $498.5 | | Debt-to-capital % | 5.5% | 16.2% | 14.1% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 net cash from operating activities significantly improved to **$119.3 million**, while financing activities used **$172.7 million** primarily for debt repayment H1 2025 Cash Flow Summary (in millions) | Cash Flow Category | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $119.3 | $32.2 | | Net cash from (used in) investing activities | $24.7 | $(353.1) | | Net cash used in (from) financing activities | $(172.7) | $201.6 | | **Net change in cash** | **$(21.1)** | **$(122.0)** | | Cash at end of period | $24.5 | $45.6 | - Year-to-date free cash flow was **$114.8 million**, a substantial increase from **$25.5 million** in the same period of 2024, driven by stronger operating cash flow[28](index=28&type=chunk)[42](index=42&type=chunk) Segment and Revenue Analysis [Segment Performance](index=6&type=section&id=Segment%20Performance) Q2 2025 saw strong revenue growth in SET (**19.4%**) and Education (**5.6%**), driven by acquisitions, while ETM revenue declined by **3.9%** [Enterprise Talent Management (ETM)](index=6&type=section&id=Enterprise%20Talent%20Management%20(ETM)) ETM revenue decreased by **3.9%** in Q2 and **1.0%** in H1 2025, with adjusted business unit profit falling **22.6%** in Q2 due to margin pressure ETM Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $520.2 | $541.2 | -3.9% | $1,054.2 | $1,065.3 | -1.0% | | Adjusted Business Unit Profit | $12.2 | $15.8 | -22.6% | $21.7 | $24.6 | -11.4% | [Science, Engineering & Technology (SET)](index=6&type=section&id=Science%2C%20Engineering%20%26%20Technology%20(SET)) SET revenue grew significantly by **19.4%** in Q2 and **28.6%** in H1 2025, primarily due to the MRP acquisition, with adjusted profit also increasing SET Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $317.3 | $265.7 | 19.4% | $639.7 | $497.3 | 28.6% | | Adjusted Business Unit Profit | $20.2 | $19.2 | 4.9% | $34.7 | $33.4 | 3.6% | [Education](index=6&type=section&id=Education) The Education segment continued steady growth, with revenue up **5.6%** in Q2 and **6.1%** in H1 2025, and adjusted business unit profit also increasing Education Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $265.3 | $251.1 | 5.6% | $574.3 | $541.0 | 6.1% | | Adjusted Business Unit Profit | $13.7 | $12.7 | 7.9% | $33.0 | $30.8 | 7.1% | [Revenue from Services by Service Type](index=11&type=section&id=Revenue%20from%20Services%20by%20Service%20Type) Q2 2025 Staffing Services remained the largest revenue source at **$733.0 million**, while Permanent Placement revenue showed strong growth of **38.3%** Q2 Revenue by Service Type (in millions) | Service Type | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Staffing Services | $733.0 | $705.4 | +3.9% | | Outcome-based Services | $228.1 | $224.0 | +1.8% | | Talent Solutions | $126.9 | $117.9 | +7.6% | | Permanent Placement | $14.8 | $10.7 | +38.3% | H1 Revenue by Service Type (in millions) | Service Type | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Staffing Services | $1,526.5 | $1,420.1 | +7.5% | | Outcome-based Services | $470.7 | $442.2 | +6.4% | | Talent Solutions | $244.7 | $222.6 | +9.9% | | Permanent Placement | $26.3 | $18.7 | +40.6% | Reconciliation of Non-GAAP Measures [Reconciliation of Earnings and EPS](index=13&type=section&id=Reconciliation%20of%20Earnings%20and%20EPS) GAAP net earnings for Q2 2025 of **$19.0 million** were adjusted to **$19.8 million**, with adjusted diluted EPS at **$0.54**, reflecting exclusions for non-core items Q2 Reconciliation of Earnings from Operations (in millions) | Description | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **As reported (GAAP)** | **$22.2** | **$12.2** | | Integration and realignment costs | $6.1 | - | | Transaction costs | $0.1 | $1.6 | | (Gain) loss on sale of EMEA staffing | $(4.0) | $10.0 | | Other adjustments | $0.2 | $15.3 | | **Adjusted earnings from operations** | **$24.6** | **$28.1** | Q2 Reconciliation of Diluted EPS | Description | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **As reported (GAAP)** | **$0.52** | **$0.12** | | Adjustments (net of tax) | $0.02 | $0.59 | | **Adjusted net earnings per share** | **$0.54** | **$0.71** | [Reconciliation of Adjusted EBITDA](index=15&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Q2 2025 Adjusted EBITDA decreased to **$37.0 million** (margin **3.4%**), and H1 Adjusted EBITDA was **$71.9 million**, with reconciliation starting from GAAP net earnings Reconciliation to Adjusted EBITDA (in millions) | Description | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net earnings (GAAP) | $19.0 | $4.6 | $24.8 | $30.4 | | Adjustments (Taxes, D&A, etc.) | $15.7 | $12.2 | $33.4 | $24.6 | | EBITDA | $34.7 | $16.8 | $58.2 | $55.0 | | Other specific adjustments | $2.3 | $23.7 | $13.7 | $18.8 | | **Adjusted EBITDA** | **$37.0** | **$40.5** | **$71.9** | **$73.8** | | **Adjusted EBITDA Margin** | **3.4%** | **3.8%** | **3.2%** | **3.5%** | [Explanation of Non-GAAP Adjustments](index=17&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) Non-GAAP adjustments enhance comparability by excluding non-core items, including 2025 integration and executive transition costs, and 2024 restructuring and asset impairment charges - **Integration and Realignment Costs (2025):** Totaled **$16.8 million** year-to-date, related to integrating MRP and other acquisitions, including IT charges, severance, and other fees[47](index=47&type=chunk) - **Transaction Costs (2024/2025):** Costs related to the sale of EMEA staffing operations and, in 2024, **$7.9 million** related to the MRP acquisition[47](index=47&type=chunk) - **Executive Transition Costs (2025):** Non-recurring expenses associated with the CEO transition[48](index=48&type=chunk) - **Restructuring Charges (2024):** Costs from a transformation initiative started in 2023 to streamline the operating model, including severance and execution costs[51](index=51&type=chunk) - **Asset Impairment Charge (2024):** A charge for right-of-use assets related to the leased headquarters facility due to changes in building utilization[52](index=52&type=chunk)

Revenue and Profitability - Revenue from services in Q1 2025 increased by 11.5% to $1,164.9 million compared to $1,045.1 million in Q1 2024, primarily driven by the acquisition of MRP[131] - Gross profit rose by 15.0% to $236.5 million, with a gross profit rate of 20.3%, an increase of 60 basis points from the previous year[131][133] - Net earnings for Q1 2025 were $5.8 million, a decrease of 77.7% from $25.8 million in Q1 2024[131] - The Science, Engineering & Technology segment saw a revenue increase of 39.2% to $322.4 million, driven by the MRP acquisition[138] - The Education segment's revenue increased by 6.6% to $309.0 million, reflecting improved demand despite weather-related school closures[138][141] Expenses and Costs - Total SG&A expenses increased by 18.5% to $225.7 million, largely due to the MRP acquisition, with integration and realignment costs of $10.7 million included[134] - Cash used for financing activities increased to $39.5 million in Q1 2025 from $4.7 million in Q1 2024, driven by net repayments of $34.8 million on credit facilities[165] Cash Flow and Working Capital - Cash, cash equivalents, and restricted cash totaled $34.5 million at the end of Q1 2025, down from $45.6 million at year-end 2024[161] - Net cash generated from operating activities was $23.9 million in Q1 2025, a significant improvement compared to a cash usage of $25.5 million in Q1 2024[162] - Trade accounts receivable reached $1.3 billion at the end of Q1 2025, with global Days Sales Outstanding (DSO) at 61 days, up from 59 days at year-end 2024[162] - The working capital position was $528.1 million at the end of Q1 2025, reflecting a decrease of $10.9 million from year-end 2024[163] - Cash generated from investing activities was $3.2 million in Q1 2025, a decline from $72.1 million in Q1 2024, primarily due to the sale of EMEA staffing operations in the previous year[164] Strategic Initiatives - The company is focused on integrating MRP's technology stack to modernize operations and enhance efficiency across its segments[123] - Strategic actions taken in Q1 2025 reflect the company's commitment to long-term profitability and resource alignment with customer demand[124] - The company completed the acquisition of MRP for $425.0 million, with an adjusted cash payment of $440.0 million[174] Financial Position and Ratios - The debt-to-total capital ratio improved to 14.2% at the end of Q1 2025, down from 16.2% at year-end 2024[166] - The company expects to meet cash requirements through operations, available cash, and credit facilities, including a $250.0 million accordion feature[170] - As of Q1 2025, the company had $120.0 million available on its $150.0 million revolving credit facility[175] Performance Metrics - EBITDA margin and other non-GAAP measures are used to assess cash flow generation and overall operating performance, with EBITDA being a key focus for the company[127] - Days sales outstanding (DSO) is calculated to reflect the average number of days sales remain unpaid, impacting cash flow management[128]

Revenue Performance - Q1 2025 revenue was $1.16 billion, an increase of 11.5% year-over-year, primarily due to the acquisition of Motion Recruitment Partners, LLC[5] - Organic revenue growth was 0.2%, with a 6.3% increase in the Education segment, while there was a 0.8% decline due to reduced demand for U.S. federal government contractors[6] - Total revenue from services for Q1 2025 was $1,164.9 million, representing an 11.5% increase from $1,045.1 million in Q1 2024[24] - Revenue from the Americas region increased to $1,139.9 million in Q1 2025, up 11.4% from $1,022.8 million in Q1 2024[25] - The Science, Engineering & Technology segment saw a revenue increase of 39.2% to $322.4 million, with a gross profit of $82.3 million[16] - The Education segment reported a revenue increase of 6.6% to $309.0 million, with a gross profit of $46.2 million[16] Earnings and Profitability - Q1 adjusted EBITDA was $34.9 million, up 4.8% year-over-year, with an adjusted EBITDA margin of 3.0%, a decrease of 20 basis points[5] - Q1 operating earnings were $10.8 million, down 59.8% from $26.8 million in Q1 2024; adjusted earnings were $22.1 million compared to $23.1 million in the prior year[6] - Earnings per share for Q1 2025 was $0.16, a decline from $0.70 in Q1 2024; adjusted earnings per share were $0.39 compared to $0.56 in the same quarter last year[6] - Adjusted earnings from operations for Q1 2025 were $22.1 million, slightly down from $23.1 million in Q1 2024[27] - Net earnings for Q1 2025 decreased to $5.8 million from $25.8 million in Q1 2024, a decline of 77.5%[20] - Adjusted net earnings for Q1 2025 were $14.3 million, down 29.6% from $20.3 million in Q1 2024[29] Cash Flow and Liquidity - Cash and equivalents at the end of Q1 2025 were $34.5 million, down from $208.9 million at the end of Q1 2024[20] - The company reported a net cash from operating activities of $23.9 million in Q1 2025, compared to a negative $25.5 million in Q1 2024[32] - The company experienced a net cash used in financing activities of $39.5 million in Q1 2025, compared to $4.7 million in Q1 2024[20] - Free cash flow for Q1 2025 was $21.4 million, a significant improvement from a negative $29.2 million in Q1 2024[32] - The current ratio for Q1 2025 was 1.6, compared to 1.8 in Q1 2024, indicating a decline in liquidity[18] Assets and Capital Structure - Total current assets decreased to $1,351.0 million in Q1 2025 from $1,436.8 million in Q1 2024, a decline of 6.0%[18] - The company reported a working capital of $528.1 million, down from $639.3 million in the previous year, a decrease of 17.4%[18] - Long-term debt increased to $204.6 million in Q1 2025 from $0 in Q1 2024, reflecting a significant change in capital structure[18] Future Outlook - The company expects year-over-year revenue growth of 6.0% to 7.0% in Q2 2025, with anticipated adjusted EBITDA margin decline of 20 to 30 basis points[5] - The company remains focused on efficiency and effectiveness to navigate the evolving macroeconomic environment and capitalize on future demand rebounds[3] Costs and Expenditures - Integration and realignment costs in Q1 2025 totaled $10.7 million, reflecting ongoing initiatives to integrate acquisitions[37] - The company incurred $0.4 million in transaction costs in Q1 2025, compared to $5.6 million in Q1 2024[31] - Capital expenditures in Q1 2025 were $2.5 million, a decrease from $3.7 million in Q1 2024[32]