Kelly Services Inc (NASDAQ:KELYA) Q4 2019 Earnings Conference Call - Final Transcript
Feb 13, 2020 • 09:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Kelly Services Fourth Quarter 2019 Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Peter Quigley. Please go ahead.
Thank you, Cynthia, and good morning [Technical Issues] as well as some commentary from me as Kelly's new CEO regarding our current and future states. How we'll approach this is that I'm going to share some Q4 headlines, then Olivier will walk us through Kelly's quarterly and full year performance and provide some details on our balance sheet and cash flow. I'll then share some significant some of the significant actions we have taken in my first 120 days to address near-term priorities, primarily around growth. Olivier will follow up with our short-term financial outlook. And finally, I'll turn to what's next, including longer-term initiatives that position Kelly for its future, including bold plans to accelerate our organic and, importantly, our inorganic growth through M&A. These plans, some of which depart from how we've approached things in the past, chart an ambitious course to sustainable, profitable growth as a specialty talent solutions provider. I will also share some ideas about how we can create more clarity regarding our expectations for tracking the financial outcomes of that growth as these plans are underway.
Before we dive in, Olivier will take a moment to cover the safe harbor language.
Good morning, everyone. 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. 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.
And finally, please note that year-over-year comparisons are represented in nominal currency, except our International Staffing segment, which is in constant currency. We have also provided more information on our performance in the fourth quarter slide deck, which is available on our website.
Thanks, Olivier. So when I look at Q4 at a high level, we saw a continuation of many of the dynamics evident in Q3. We continued to effectively manage costs. And we saw better-than-expected improvements in our gross profit rate due to ongoing structural shifts in our product mix, particularly in our GTS segment. These positives were outweighed by declines in our staffing business, most notably in our U.S. commercial operations. Like Q3, these declines were the result of disruption from our Q1 restructuring, continued weakness in the U.S. manufacturing sector, historically tight labor markets and some planned exits from several high-volume, low-value accounts. And in our international operations, economic headwinds in Europe