On November 9, 2023, Kelly Services Inc (KELYA, Financial), a global leader in specialty talent solutions, disclosed its financial results for the third quarter of 2023. The company reported a revenue of $1.1 billion, marking a 4.3% decrease, or a 5.8% decrease in constant currency, compared to the same quarter in the previous year. This decline was attributed to a cautious hiring approach by customers due to macroeconomic uncertainties, although partially offset by favorable currency impacts.
Financial Performance Overview
Kelly Services Inc (KELYA, Financial) achieved break-even operating earnings in Q3 2023, a significant improvement from the $21.4 million loss reported in Q3 2022. Adjusted for transformation-related charges, the company's earnings from operations were $15.5 million, a 60% increase from the adjusted earnings of $9.5 million in the prior year. This improvement primarily resulted from lower operating expenses due to ongoing transformation initiatives. Earnings per share for Q3 2023 were $0.18, compared to a loss per share of $0.43 in Q3 2022. On an adjusted basis, earnings per share doubled to $0.50 from $0.25 year-over-year.
Business Transformation and Future Outlook
President and CEO Peter Quigley provided insights into the company's business transformation initiative. He noted that despite the challenging market conditions, the company is making significant progress in executing its transformation initiatives, which are reflected in the operating results. Kelly Services Inc (KELYA, Financial) is focusing on structural improvements and growth initiatives that are expected to accelerate profitable growth over the long term.
For the fourth quarter of 2023, Kelly Services Inc (KELYA, Financial) anticipates an adjusted EBITDA margin in the range of 2.8% to 3.0%. With a full year of transformation-related savings and the sale of its European staffing business, the company expects to reach a normalized adjusted EBITDA margin of 3.3% to 3.5%.
Dividend Declaration and Conference Call
The company's board of directors declared a dividend of $0.075 per share, payable on December 6, 2023, to shareholders of record as of November 22, 2023. Additionally, Kelly Services Inc (KELYA, Financial) hosted a conference call to review the results and answer questions.
Segment Performance
The Professional & Industrial segment saw a 10.8% decrease in revenue, while the Science, Engineering & Technology segment experienced an 8.0% decline. The Education segment, however, reported a 22.9% increase in revenue. The Outsourcing & Consulting segment's revenue decreased by 3.8%, and the International segment's revenue increased by 2.4% in reported currency but decreased by 6.2% in constant currency.
Balance Sheet and Cash Flow
As of October 1, 2023, Kelly Services Inc (KELYA, Financial) had cash and equivalents of $117.2 million and total assets of $2.55 billion. The company's year-to-date free cash flow stood at $21.0 million, indicating an improvement in cash balances from operating activities.
In conclusion, Kelly Services Inc (KELYA, Financial) is navigating a challenging economic landscape with a strategic focus on business transformation and cost management. The company's improved adjusted EBITDA margin and return to profitability on an adjusted basis demonstrate the effectiveness of these initiatives. Investors and stakeholders can look forward to the potential benefits of the European staffing operations sale and growth initiatives on the company's future financial performance.
For more detailed information, please visit the Investor Relations page on kellyservices.com.
Explore the complete 8-K earnings release (here) from Kelly Services Inc for further details.
