Kelly Reports Fourth-Quarter and Full-Year 2025 Earnings

Core Viewpoint - Kelly Services reported a decline in revenue and operating performance for the fourth quarter and full year of 2025, but the company is optimistic about future growth and efficiency improvements in 2026 [2][9]. Financial Performance - Fourth-quarter revenue was $1.1 billion, an 11.9% decrease from the same quarter in 2024, primarily due to lower demand in the ETM and SET segments, partially offset by a 1.3% growth in the Education segment [3][19]. - The operating loss for the fourth quarter was $0.7 million, a significant improvement from a loss of $56.7 million in Q4 2024 [4][19]. - Adjusted earnings for Q4 2025 were $8.3 million, down from $29.2 million in Q4 2024, with adjusted EBITDA of $21.0 million, a 51.7% decline year-over-year [4][20]. - For the full year 2025, revenue totaled $4.3 billion, a 1.9% decrease compared to 2024, with an organic decline of 6.2% when excluding the impact of acquisitions [7][9]. Tax and Earnings - The income tax expense for Q4 2025 was $126.2 million, compared to a tax benefit of $23.8 million in Q4 2024, reflecting a valuation allowance increase due to cumulative losses [5][10]. - Loss per share for Q4 2025 was $3.69, compared to a loss of $0.90 in Q4 2024, while adjusted earnings per share were $0.16, down from $0.79 [6][11]. Cash Flow and Shareholder Returns - The company generated a full-year free cash flow of $114 million, a sixfold increase from the previous year, and completed $10 million in Class A share repurchases during Q4 2025 [9][12]. - A quarterly cash dividend of $0.075 per share was declared, payable on March 11, 2026 [12]. Future Outlook - The company expects Q1 2026 to see a revenue decline of 11% to 13% year-over-year, with an adjusted EBITDA margin of approximately 1.5% [15]. - For the second half of 2026, Kelly anticipates a return to organic revenue growth and adjusted EBITDA margin expansion, assuming no new material impacts [9][15].