Revenue and Profitability - Revenue from services for Q2 2022 was $1,267.3 million, a 0.7% increase from $1,258.1 million in Q2 2021, with a 4.0% increase year-to-date [147]. - Gross profit for Q2 2022 was $262.4 million, reflecting a 13.6% increase from $231.0 million in Q2 2021, with a gross profit rate of 20.7% [147]. - Earnings from operations for Q2 2022 were $8.2 million, down 40.6% from $13.7 million in Q2 2021, primarily due to asset impairment [147]. - Net earnings for the period were $2.2 million, a significant decrease from $24.0 million in the second quarter of 2021 [156]. - Revenue from services for the first six months of 2022 increased by 4.0% on a reported basis and 5.8% on a constant currency basis, driven by growth in Education, Science, Engineering & Technology, and Outsourcing & Consulting segments [158]. - Gross profit increased by 17.3% on a reported basis and 19.0% on a constant currency basis, with a gross profit rate increase of 230 basis points attributed to favorable product mix and lower employee-related costs [159]. - Earnings from operations for the first six months of 2022 totaled $31.6 million, compared to $24.3 million in the same period of 2021, primarily due to higher gross profit [162]. Expenses and Costs - Total SG&A expenses increased by 10.6% to $240.1 million in Q2 2022, compared to $217.3 million in Q2 2021 [147]. - Total SG&A expenses rose by 13.4% on a reported basis, with approximately 370 basis points of the increase due to expenses from recent acquisitions [160]. - SG&A expenses for the consolidated total increased by 10.6% to $240.1 million in Q2 2022, compared to $217.3 million in Q2 2021 [199]. Segment Performance - Permanent placement revenue increased by 33.2% year-over-year, contributing to overall revenue growth [149]. - Professional & Industrial revenue from services decreased by 10.9% in the second quarter, largely due to a 14.0% decline in staffing services [174]. - Education revenue from services surged by 46.8%, reflecting increased demand and the impact of the acquisition of PTS, which contributed 680 basis points to year-over-year growth [176]. - International revenue from services decreased by 11.7% on a reported basis, primarily due to revenue declines in Mexico and Europe [178]. - Professional & Industrial segment earnings increased by 68.6% to $10.4 million in Q2 2022, driven by improved gross profit and lower SG&A expenses [214]. - Science, Engineering & Technology segment earnings rose by 3.8% to $20.4 million in Q2 2022, supported by revenue increases across specialties [215]. - Education segment earnings surged by 278.6% to $5.6 million in Q2 2022, attributed to increased demand for services and effective cost management [216]. - Outsourcing & Consulting segment earnings increased by 34.5% to $6.4 million in Q2 2022, primarily due to higher revenue volumes [217]. - International segment earnings decreased by 16.3% to $2.6 million in Q2 2022, mainly due to the transition of Russian operations [218]. Cash Flow and Financial Position - Cash, cash equivalents, and restricted cash totaled $154.0 million at the end of Q2 2022, up from $119.5 million at year-end 2021 [230]. - The company used $107.3 million of net cash for operating activities in the first six months of 2022, compared to generating $47.6 million in the same period of 2021 [231]. - Working capital position increased by $82.5 million to $576.0 million at the end of Q2 2022, with a current ratio of 1.5 [233]. - Generated $175.6 million of cash from investing activities in the first six months of 2022, compared to using $201.7 million in the same period of 2021 [234]. - The company expects to meet ongoing cash requirements through operations, available cash, and credit facilities, with $200.0 million available on its revolving credit facility [243]. Market Risks and Investments - The company is exposed to market risk due to obligations under its nonqualified deferred compensation plan [255]. - The obligation to employees fluctuates based on movements in equity and debt markets [255]. - Investments in mutual funds are part of the company-owned variable universal life insurance policies [255]. - The design of these investments aims to mitigate market risk but does not eliminate it [255]. - Offsetting gains and losses are expected from the investments in company-owned variable universal life insurance policies [255]. Acquisitions and Strategic Moves - The company completed the acquisition of RocketPower in March 2022 and PTS in May 2022, enhancing its presence in high-growth, high-margin specialties [138]. - The company completed a transaction to transfer its business in Russia to a local firm, with expected unfavorable impacts on revenues and earnings in the International segment starting in the third quarter of 2022 [157]. - The transition of the Russian operations has resulted in an impairment loss recognized in Q2 2022 [152].
Kelly Services(KELYB) - 2023 Q2 - Quarterly Report