Kelly Services(US:KELYA)2022-02-17 20:56Revenue and Profitability - Revenue from services for 2021 increased by 8.7% to $4,909.7 million compared to $4,516.0 million in 2020, with a 7.8% increase on a constant currency basis [146]. - Gross profit for 2021 was $919.2 million, reflecting an 11.1% increase from $827.6 million in 2020 [145]. - The acquisition of Softworld contributed approximately 220 basis points to the revenue growth rate in 2021 [146]. - Permanent placement income surged by 89.7% compared to 2020, indicating strong demand for staffing services [146]. - The company reported net earnings of $156.1 million in 2021, a significant recovery from a net loss of $72.0 million in 2020 [145]. - Gross profit increased by 11.1% due to higher revenue volume and an improved gross profit rate, which rose by 40 basis points compared to 2020 [147]. - Consolidated total gross profit increased by 11.1% from $827.6 million in 2020 to $919.2 million in 2021 [184]. - Science, Engineering & Technology revenue increased by 13.5% in 2021, including contributions from the acquisition of Softworld, with organic growth at 3.9% [173]. - Education revenue surged by 45.2% in 2021, reflecting a return to in-school instruction after COVID-19 disruptions [174]. - International revenue increased by 8.0% in 2021, with a 4.9% increase on a constant currency basis, excluding the impact of the sale of staffing operations in Brazil [176]. Expenses and Cost Management - Total SG&A expenses increased by 8.1% year-over-year, with expenses related to the acquisition of Softworld contributing approximately 350 basis points to this increase [148]. - Total SG&A expenses for 2021 included $4.0 million in restructuring charges aimed at improving operational efficiencies [150]. - The gross profit rate for the Professional & Industrial segment decreased by 90 basis points to 16.9% in 2021, attributed to lower revenue volume and increased costs [185]. - SG&A expenses in Science, Engineering & Technology increased by 34.1% to $180.2 million, influenced by higher headcount and performance-based compensation [198]. - Education segment SG&A expenses rose by 21.1% to $62.1 million, primarily due to higher salary and incentives expenses [199]. - International SG&A expenses increased by 2.9% to $138.9 million, driven by higher performance-based compensation and salary-related expenses [201]. - Corporate expenses decreased slightly by $0.1 million to $88.1 million, reflecting lower non-restructuring severance costs [202]. Segment Performance - Professional & Industrial reported earnings of $31.4 million in 2021, a 24.4% decrease from 2020, primarily due to increased service costs and the impact of government wage subsidies received in 2020 [212]. - Science, Engineering & Technology reported earnings of $73.7 million, a 1.7% decrease from 2020, attributed to higher performance-based compensation and salary expenses, partially offset by earnings from the acquisition of Softworld [213]. - Education segment improved to earnings of $3.0 million in 2021 from a loss of $9.0 million in 2020, driven by increased demand for services as schools returned to in-person instruction [214]. - Outsourcing & Consulting saw earnings rise to $18.7 million, a 62.7% increase from 2020, due to higher revenue volumes [215]. - International segment reported earnings of $9.9 million, recovering from a loss of $8.9 million in 2020, mainly due to improved revenue in Europe and favorable comparisons to prior restructuring charges [215]. Cash Flow and Working Capital - Cash, cash equivalents, and restricted cash totaled $119.5 million at year-end 2021, down from $228.1 million at year-end 2020 [226]. - Net cash from operating activities was $85.0 million in 2021, a decrease from $186.0 million in 2020, impacted by the repayment of payroll tax deferrals [227]. - Trade accounts receivable increased to $1.4 billion at year-end 2021 from $1.3 billion at year-end 2020, with global Days Sales Outstanding (DSO) improving to 60 days in 2021 from 64 days in 2020 [228]. - Total working capital position was $493.5 million at year-end 2021, a decrease of $130.5 million from year-end 2020 [229]. - The company expects working capital requirements to increase in the coming quarters, particularly due to a deferred payroll tax balance of $57.6 million due on January 3, 2023 [243]. Debt and Financial Position - At year-end 2021, the company had $200.0 million of available capacity on its revolving credit facility and $97.0 million on its securitization facility, with no short-term borrowings on the latter [241]. - The company has met all debt covenants related to its revolving credit and securitization facilities as of year-end 2021 [241]. - The company recorded a goodwill impairment charge of $147.7 million in the first quarter of 2020 due to a decline in market capitalization [264]. - Total goodwill at year-end 2021 amounted to $114.8 million, significantly up from $3.5 million at year-end 2020 [266]. Risk Factors - The company is exposed to foreign currency risk primarily related to its foreign subsidiaries, impacting the U.S. dollar value of reported earnings and investments [273]. - The company faces risks from competitive market pressures, including pricing and technology disruptions, which could impact future performance [272]. - Actual results may differ materially from forward-looking statements due to various risk factors, including economic conditions and regulatory changes [272].