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].
Kelly Services(KELYB) - 2026 Q3 - Quarterly Report