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[141][144] - 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[141][145] - Revenue from the Education segment increased by 15.5% to $972.3 million, driven by new customer wins and increased fill rates[156][159] - The Science, Engineering & Technology segment saw a revenue increase of 19.5% to $1,422.8 million, largely attributed to the acquisition of MRP[156][158] - Permanent placement revenue decreased by 24.2%, reflecting a decline in higher-margin services[144] - Consolidated total gross profit decreased by 8.2% to $882.6 million in 2024 compared to $961.4 million in 2023[166] - The Professional & Industrial segment gross profit decreased by 5.7% to $261.3 million in 2024, with a gross profit rate decline of 20 basis points[167] - Science, Engineering & Technology segment gross profit increased by 23.4% to $335.6 million in 2024, driven by the acquisition of MRP, resulting in a gross profit rate increase of 120 basis points[168] - Education segment gross profit increased by 8.6% to $139.8 million in 2024, although the gross profit rate decreased by 90 basis points[169] - Outsourcing & Consulting segment gross profit decreased by 10.8% to $145.9 million in 2024, with a significant gross profit rate decline of 480 basis points[170] Expenses and Losses - 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[141][146] - The company reported a net loss of $0.6 million in 2024, a significant decline from net earnings of $36.4 million in 2023[141][153] - Total SG&A expenses decreased by 14.3% to $766.9 million in 2024, primarily due to lower direct salaries and cost management[178] - Corporate expenses decreased by 7.5% to $58.4 million in 2024, primarily due to lower transformation-related charges[196] - The International segment reported a loss in 2024 due to the sale of EMEA staffing operations and restructuring impacts[195] 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] - Net cash generated from operating activities was $26.9 million 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 working capital position was $539.0 million at year-end 2024, including the impact of the MRP acquisition, compared to $606.7 million at year-end 2023[208] - The company used $361.6 million for investing activities in 2024, significantly higher than $14.1 million in 2023, primarily due to the acquisition of MRP and CTC[209] - Cash generated from financing activities was $214.8 million in 2024, compared to cash used of $59.6 million in 2023, driven by net borrowings of $239.4 million[213] Acquisitions and Sales - The acquisition of Motion Recruitment Partners, LLC in May 2024 is expected to enhance staffing and consulting capabilities across technology and telecommunications sectors[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 North American staffing and global MSP and RPO solutions[134][135] - The company completed the sale of its EMEA staffing operations for cash proceeds of $110.6 million, netting $77.1 million after cash disposed[220] - The acquisition of MRP was completed for a purchase price of $425.0 million, with the company paying $440.0 million in cash after adjustments[221] Debt and Financial Ratios - 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 and $151.1 million at year-end 2024 and 2023, respectively[252] - The estimated fair value of the MRP reporting unit exceeds its carrying value by less than 10%, indicating potential future impairment risks[247] - The company performed annual impairment tests for all reporting units with goodwill in the fourth quarter for the fiscal years ended 2024 and 2023, concluding no impairment for PTS and Education reporting units in 2023[249] Risk Management - The Company reported that actual results may differ materially from forward-looking statements due to various risk factors, including changing market conditions and legal liabilities[259] - The Company is exposed to foreign currency risk primarily related to its foreign subsidiaries, which provide a natural hedge against currency risks[261] - 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 Q1 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 interest rate swap agreements locked in variable SOFR components at fixed rates of 4.772% and 4.468% for portions of long-term borrowings, effective through July 17, 2025, and January 17, 2026, respectively[265] - A hypothetical fluctuation of 10% in market interest rates would not have had a material impact on 2024 earnings[265] - The obligation under the nonqualified deferred compensation plan is influenced by movements in equity and debt markets, with investments designed to mitigate this risk[266]
Kelly Services(KELYB) - 2024 Q4 - Annual Report