Kelly Services Inc (NASDAQ:KELYB) Q1 2019 Earnings Conference Call - Final Transcript

Good morning and welcome to Kelly Services First 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 will now turn the meeting over to your host, Mr. George Corona, President and CEO. Sir, you may begin.

Thank you, John, and good morning. Welcome to Kelly Services 2019 first quarter conference call. With me on today's call is Olivier Thirot, our CFO. 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 the call. Please refer to our SEC filings for a description of the risk factors that could influence the Company's actual future performance. And in addition during the call, certain data will be discussed on a reported and on an adjusted basis. Discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations.

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. Our equity investment in Persol Holdings continues to introduce this volatility into our earnings report each quarter either positively or negatively depending on Persol's 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 this quarter.

Now turning to Kelly's first quarter results. Revenue was $1.4 billion, up 0.9% compared to the first quarter of last year. In his remarks, Olivier will discuss the impact of foreign exchange and acquisitions and divestitures on our Q1 results. Earnings from operations were $16.8 million in the first quarter compared with 2018 earnings of $12 million. These earnings include the results of our recent acquisitions and a $6.3 million restructuring charge related to our US business. Excluding these, adjusted earnings from operations were $20.8 million, an increase of 74% from a year ago. For a reconciliation of our adjusted results, please review this morning's press release. Diluted earnings per share for the quarter of 2019 totaled $0.56 per share compared to $0.74 in 2018. On a like-for-like basis, adjusted earnings per share were $0.40 in 2019 compared to $0.32 last year. We are pleased with our solid execution in the first quarter.

Now let's look at how Kelley's three operating segments