Kelly Services(KELYA) - 2020 Q3 - Quarterly Report

Revenue Performance - Total revenue from services for Q3 2019 was $1,267.7 million, a decline of 5.6% compared to Q3 2018, and a 4.8% decline on a constant currency basis [154]. - Revenue from Americas Staffing for Q3 2019 was $516.0 million, an 8.1% decrease from $561.8 million in Q3 2018, reflecting an 11% decrease in hours volume [159]. - Revenue from services for the first nine months of 2019 declined by 2.0% to $4,017.8 million compared to $4,099.2 million in 2018 [173]. - Revenue from services in the Americas Staffing segment decreased by 1.7% to $1,740.1 million, impacted by a 7% decrease in hours volume [179]. - International Staffing revenue from services decreased by 8.1% to $779.9 million, primarily due to declines in France and Germany [186]. Profitability Metrics - Gross profit for Q3 2019 was $227.7 million, down 4.8% from $239.1 million in Q3 2018, with a gross profit rate of 18.0%, an increase of 20 basis points year-over-year [155][156]. - The gross profit rate for Americas Staffing decreased to 18.2%, down from 18.9% in the prior year, negatively impacted by higher payroll taxes and lower permanent placement income [160][162]. - Gross profit for the first nine months of 2019 increased by 0.8% to $723.3 million, with a gross profit rate of 18.0%, up from 17.5% in the prior year [173][174]. - The gross profit rate for International Staffing decreased to 13.5%, reflecting unfavorable customer mix and lower permanent placement revenue [188]. Expenses and Cost Management - SG&A expenses decreased by 3.0% to $210.6 million in Q3 2019, primarily due to lower performance-based compensation and cost management efforts [157]. - Total SG&A expenses for the first nine months of 2019 increased by 0.5% to $666.9 million, including restructuring charges of $5.6 million [175]. - Total SG&A expenses in the International Staffing segment decreased by 4.0% due to currency exchange effects, with a 1.0% increase on a constant currency basis [188]. Earnings and Losses - Diluted loss per share for Q3 2019 was $0.27, compared to diluted earnings per share of $0.84 in Q3 2018, impacted by a loss related to the investment in Persol Holdings [158]. - Diluted earnings per share for the first nine months of 2019 were $2.41, a 102.5% increase from $1.19 in the same period of 2018 [177]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash totaled $28.6 million at the end of Q3 2019, down from $40.1 million at year-end 2018 [192]. - Net cash generated from operating activities was $74.2 million in the first nine months of 2019, compared to $33.3 million in the same period of 2018, indicating a significant increase [193]. - Working capital decreased by $37.2 million to $465.8 million at the end of Q3 2019, driven by lower trade accounts receivable due to decreased revenue [194]. - Debt totaled $17.5 million at the end of Q3 2019, up from $2.2 million at year-end 2018, with a debt-to-total capital ratio of 1.4% [196]. - The company generated $3.6 million from financing activities in the first nine months of 2019, a turnaround from a cash usage of $17.0 million in the same period of 2018 [196]. - As of Q3 2019, the company had $150.0 million available on its revolving credit facility and $130.7 million on its securitization facility, indicating strong liquidity [204]. - The company is reviewing its real estate portfolio and other potential liquidity sources to optimize cash management [201]. Strategic Initiatives - The company expects to grow higher-margin specialty and outsourced solutions, integrating investments from recent acquisitions to enhance revenue growth [147][148]. - The NextGen and GTA acquisitions contributed approximately 260 basis points to total revenue growth in Q3 2019 [155]. - Total restructuring charges recorded during the first nine months of 2019 amounted to $5.6 million due to operational restructuring efforts [146]. - The company is making substantial investments in technology to improve efficiency in talent acquisition and enhance the experience for job seekers [145]. Forward-Looking Statements - Forward-looking statements indicate expectations for future financial performance and strategies, subject to various risks and uncertainties [208].