Kelly Services Inc (NASDAQ:KELYA) Q4 2018 Earnings Conference Call - Final Transcript

Feb 13, 2019 • 09:00 am ET


Kelly Services Inc (NASDAQ:KELYA) Q4 2018 Earnings Conference Call - Final Transcript


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Good morning, and welcome to Kelly Services Fourth Quarter Earnings Conference call. All parties will be on listen-only until the question-and-answer portion of the presentation. Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time.

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

George S. Corona

Thank you, John, and good morning. Welcome to Kelly Services 2018 fourth quarter conference call. With me on today's call is Olivier Thirot, our CFO.

And 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 Staffing 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.

Our equity investment in Persol Holdings, a leading Japanese staffing supplier with whom we've had a long-term business relationship continues to introduce this volatility into our earnings report each quarter, either positively or negatively depending on Persol stock performance. We value our relationship with Persol and the business connections we have built together and Persol continues to be an excellent investment for us. In his remarks, Olivier will provide more detail regarding our Persol investment and its impact on our reporting.

Now turning to Kelly's fourth quarter results. Revenue was $1.4 billion down slightly compared to the fourth quarter of last year. Earnings from operations were $33.1 million in the fourth quarter compared with 2017 earnings of $28.4 million, an increase of 17%. Diluted losses per share in the fourth quarter were $0.62 compared to earnings per share of $0.45 in the fourth quarter of 2017 or earnings per share of $0.87 compared to earnings per share of $0.80 in the fourth quarter of 2017 on an adjusted basis. Diluted earnings per share for the full year 2018 were $0.58 compared to $1.81 for 2017. On an adjusted basis, diluted earnings per share were $2.27 in 2018 compared to the $2.20 in 2017. We are pleased to have delivered a good quarter in a tight labor market.

Now, let's look at how Kelly's three operating segments performed in the fourth quarter, starting with Americas Staffing. Americas Staffing revenue increased 1% in the fourth quarter compared to the same period last year. Commercial Staffing revenue was down 1% from the prior year. Kelly Educational Staffing delivered revenue growth of 9%