Kelly Services Inc (NASDAQ:KELYA) Q3 2018 Earnings Conference Call - Final Transcript

Nov 07, 2018 • 09:00 am ET


Kelly Services Inc (NASDAQ:KELYA) Q3 2018 Earnings Conference Call - Final Transcript


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Good morning, and welcome to Kelly Services Third Quarter Earnings Conference Call. [Operator Instructions]

I would like to turn the meeting over to your host, Mr. George Corona, President and CEO. Sir, you may begin.

George Corona

Thank you, Paul, and good morning. Welcome to Kelly Services 2018 third quarter conference call. With me on today's call is Olivier Thirot, our CFO. Before we begin, I would like to recognize the passing of Kelly's long-term Chairman and CEO, Terry Adderley on October 9th. Following in the footsteps of his father, William Russell Kelly, who founded the temporary staffing industry, Terry guided Kelly Services through decades of significant achievement and growth. Under Terry's leadership, Kelly became a global leader in the workforce solutions industry he helped to create.

As Kelly employees we are proud to work for a Company whose values were Terry's own integrity, quality and service excellence, and I am certain that Terry's spirit will continue to guide us, as we build upon the legacy that he and Russ created. Terry Adderley served Kelly Services with tremendous honor and distinction during his 60-year career here, and he will be greatly missed.

Thank you and we will now continue with our call.

Let me remind you that any comments made during this call, including the Q&A, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments, and we have no obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the Company's actual future performance.

As we walk through our results this morning, let me point out that my year-over-year comparisons are represented in nominal currency, with the exception of our international segment, which is in constant currency. Also, I'd like to remind you once again that the 2018 adoption of a required accounting standard related to equity investments has introduced volatility into the reported net earnings of many companies including our own. In his remarks, Olivier will highlight the area in which our investment in PERSOL creates this volatility for Kelly.

Now turning to Kelly's third quarter results. Revenue was $1.3 billion, up 1% compared to the third quarter of last year. Earnings from operations were $21.9 million compared with 2017 earnings of $18.2 million, and diluted earnings per share were $0.84 compared to $0.58 in 2017. Approximately $0.28 of the 2018 EPS number is related to a non-cash gain on our PERSOL common stock net of tax. Excluding this impact on the PERSOL stock fluctuations net of tax, our Q3 EPS was $0.56. We are pleased to have delivered a good quarter in a challenging business environment.

As I did last quarter, I'd like to share with you a few additional insights about the current labor market. Labor demand dynamics continue to be strong in the U.S., making already tight labor markets even tighter. The tight labor markets affects all business lines and it's particularly