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].
Kelly Services(KELYB) - 2025 Q4 - Annual Report