Kelly Services Inc (KELYA) Q2 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $1.06 billion for Q2 2024, down 13.1% from 2023.

  • Organic Revenue Growth: Improved 0.6% year-over-year.

  • Education Segment Revenue Growth: Up 22% year-over-year.

  • SET Segment Revenue: Up 10% reported, down 3% organic.

  • OCG Segment Revenue Growth: Improved 3% year-over-year.

  • Professional and Industrial Segment Revenue: Declined 9% year-over-year.

  • Gross Profit Rate: 20.2%, up from 19.8% in the prior year.

  • SG&A Expenses: Down 17% year-over-year on a reported basis.

  • Adjusted Earnings from Operations: $28.1 million, nearly doubled from the previous year.

  • Adjusted EBITDA Margin: Improved 180 basis points to 3.8%.

  • Reported EPS: $0.12 per share, compared to $0.20 in 2023.

  • Adjusted EPS: $0.71, nearly doubling from $0.36 in Q2 2023.

  • Free Cash Flow: $55 million, compared to $32 million in the prior year period.

  • Debt to Capital Ratio: 14.1% as of quarter end.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kelly Services Inc (NASDAQ:KELYA) achieved an adjusted EBITDA margin of 3.4% in the first half of 2024, meeting their initial expectations.

  • The company's education segment experienced strong growth, with revenue increasing by 22% year over year.

  • Kelly Services Inc (NASDAQ:KELYA) improved its position among the top 20 staffing firms in the US, according to staffing industry analysts.

  • The acquisition of Motion Recruitment Partners (MRP) is expected to enhance Kelly's revenue growth potential and drive continued EBITDA margin expansion.

  • Kelly Services Inc (NASDAQ:KELYA) generated $55 million of free cash flow in the quarter, compared to $32 million in the prior year period.

Negative Points

  • Revenue for the second quarter of 2024 decreased by 13.1% compared to 2023, primarily due to the sale of the European staffing business.

  • The professional and industrial segment saw a 9% decline in revenue year over year.

  • Permanent placement fees declined by 20% year over year.

  • The gross profit rate on an organic basis declined by 100 basis points in Q2.

  • The company's reported earnings per share for the second quarter was $0.12, down from $0.20 in 2023.

Q & A Highlights

Q: Can you provide an update on the Motion Recruitment Partners (MRP) business and its performance trends? A: Olivier Thirot, CFO, noted that MRP's revenue for the first half of 2024 was about $260 million, with expectations for slight improvement in the second half. Compared to the previous year, the first half was down 8%, but the second half is expected to be flat to slightly down. Peter Quigley, CEO, expressed optimism about MRP's long-term potential and the complementary nature of its business with Kelly Services.

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