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Jul 02, 2023
Kelly Services Q2 2023 Earnings Report
Kelly Services' Q2 2023 results reflected a revenue decrease of 3.9% and operating earnings of $6.2 million, impacted by transformation-related charges, while focusing on resilient markets and higher-margin solutions.
Key Takeaways
Kelly Services reported a 3.9% decrease in revenue to $1.2 billion for Q2 2023, with operating earnings at $6.2 million, which included $8.0 million in transformation-related charges. Adjusted earnings per share were $0.36, a 20% decrease year-over-year. The company is focused on business transformation to improve EBITDA margin.
Q2 revenue decreased by 3.9%, or 4.5% in constant currency, with organic revenue down 2.2% in constant currency.
Gross profit decreased by 8.3%, with the gross profit rate at 19.8%, down 90 bps year-over-year.
Operating earnings were $6.2 million, including $8.0 million in transformation-related restructuring and impairment charges; adjusted operating earnings totaled $14.2 million.
The business transformation program is expected to drive meaningful improvement in EBITDA margin starting in the second half of 2023.
Revenue by Segment
Forward Guidance
Kelly Services expects an adjusted EBITDA margin of approximately 3% exiting 2023, and a normalized, adjusted EBITDA margin in the range of 3.3% to 3.5% assuming a full year of transformation-related savings and no change in current top-line expectations.
Positive Outlook
- Efficiency actions implemented to date will deliver an immediate, meaningful improvement to the company's EBITDA margin.
- Transformation is creating a strong foundation for further EBITDA margin expansion going forward.
- Actions unlocking additional resources to invest in the company's future.
- Company is quickly shifting focus to the growth phase of its transformation.
- Company aims to realize the full potential of its specialty strategy.
Challenges Ahead
- Ongoing macroeconomic uncertainty became more noticeable in certain parts of the company's portfolio.
- Lower demand for temporary and permanent placement services impacted results in the P&I and SET segments.
- Adjusted earnings declined year-over-year primarily as a result of lower revenues.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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