Q4 2021 Kelly Services Inc Earnings Call

Okay.

Speaker 1: Good morning and welcome to Kelly Services fourth quarter and full year 2021 earnings conference call. All parties will be on listen only until the question and answer portion of the presentation.

Good morning, and welcome to Kelly services fourth quarter and full year 2021 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.

Speaker 1: Today's call is being recorded at the request of Kelly Services.

Speaker 1: If anyone has any objections, you may disconnect at this time.

Speaker 1: A fourth quarter webcast presentation is also available on Kelly's website for this morning's call. I will now turn the meeting over to your host, Mr. Peter Quigley, President and CEO . Please go ahead.

Our fourth quarter webcast presentation is also available on Kelly's website for this morning's call.

I'd now like to turn the meeting over to your host Mr. Peter Quigley President and CEO . Please go ahead.

Speaker 2: Thank you, John . Hello, everyone, and welcome to Kelly Services' fourth quarter conference call. With me today is Olivier Thierault, our chief financial officer, who will walk you through our Safe Harbor language, which can be found in our presentation materials. Thank you, Peter, and 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.

Thank you John Hello, everyone and welcome to Kelly Services fourth quarter Conference call with me today is Olivier T. Rowe, our Chief Financial Officer, who will walk you through our safe Harbor language, which can be found in our presentation materials. Thank you Peter and 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.

Speaker 3: Actual results could differ materially from those suggested by our comment.

Actual results could differ materially from those suggested by our comments.

Speaker 3: and we have no obligation to update the statements made on this call.

And we have no obligation to update the statements made on this call. Please.

Speaker 3: Please refer to our ACC findings for a description of the risk factors that could influence the company's actual future performance.

Please refer to our SEC filings for a description of the risk factors that could influence the company's actual future performance.

Speaker 3: In addition, during the call, certain data will be discussed on the reported and on an adjusted basis.

During the call Selman that will be discussed on a reported and.

On an adjusted basis.

Speaker 3: of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operation.

<unk> of items on an adjusted basis, our non-GAAP financial measures designed to give insight into certain trends in our operations.

Speaker 3: References to organic growth in our discussion today exclude the results of our Q2 2021 acquisition of software.

References to organic growth in our discussion today excludes the results of our Q2 2021 acquisition of so what.

Speaker 3: We have also provided the slide deck that we are using on today's call on our website.

We have also provided a slide deck that we're using on today's call on our website now back to you Peter.

Speaker 3: Now back to you Peter. Thanks Olivier.

Thanks Olivier.

Speaker 2: Before we turn to Kelly's fourth quarter performance, I'd like to address this morning's announcement regarding a significant and bold step in our transformation as a specialty talent solutions provider.

Before we turn to Kelly's fourth quarter performance.

To address this morning's announcement regarding a significant and bold step in our transformation as a specialty talent solutions provider.

Today, we announced transactions that unlock more than $250 million after tax dollars that we can strategically redeploy to accelerate our growth in high margin high growth specialties.

Speaker 2: Today we announced transactions that unlock more than 250 million after tax dollars that we can strategically redeploy to accelerate our growth in high margin, high growth specialty.

Speaker 2: We're accomplishing this through an agreement with our valued partner Persol to unwind our cross-ownership and reduce our ownership interest in our APAC joint venture Persol Kelly.

We're accomplishing this through an agreement with our valued partner personal to unwind, our cross ownership and reduce our ownership interest in our APAC joint venture Pearsall Kelly.

Speaker 2: As we've noted in prior calls and in investor materials, neither our shareholding in PERSAL nor ownership in the JV contribute any EBITDA to our financial results.

As we've noted in prior calls and in Investor materials, Neither our shareholding in Pearsall Nord ownership in the JV contribute any EBIT da to our financial results.

Speaker 2: Monetizing our investments in Persol and Persol Kelly provides us with an unprecedented amount of capital to invest in our specialty growth strategy.

Monetizing our investments in personnel and personnel Kelly provides us with an unprecedented amount of capital to invest in our specialty growth strategy to give you a sense of the scope of these actions between cash from the APAC transactions and our existing borrowing capacity.

Speaker 2: to give you a sense of the scope of these actions between cash from the APAC transactions and our existing borrowing capacity.

Speaker 2: We now have more than a half billion dollars of available capital.

We now have more than $5 billion of available capital.

Speaker 2: These are the kind of resources we need to pursue high-margin, high-growth businesses that drive quantitative and qualitative improvement in our results, at the same time, while continuing to make long-term structural improvements in our existing businesses, improvements that are demonstrably contributing to our multi-year GP rate improvement.

These are the kind of resources, we need to pursue high margin high growth businesses that drive quantitative and qualitative improvement in our results at the same time, while continuing to make long term structural improvements in our existing businesses and improvements that are demonstrably contributing to our multiyear.

Our GP rate improvement.

Speaker 2: While we are unwinding our interest in Persol and Persol Kelly, we remain unequivocally committed to our OCG practice in APAC. Our OCG business in APAC has enjoyed exceptional, profitable growth in the last several years, and we will continue to relentlessly support our regional and global customers in the APAC region that require best-in-class, MST, RPO, and other leading talent solutions.

While we are unwinding, our interest in personnel and personnel Kelly, we remain unequivocally committed to our OCG practice in APAC, our OCG business in APAC has enjoyed exceptional profitable growth in the last several years and we will continue to relentlessly support.

Our regional and global customers in the APAC region that require best in class MSP RP O and other leading talent solutions. The Pearsall Kelly JV has enjoyed its own considerable success since its formation and it will continue to partner with Kelly OCG as the premier staffing supplier occur.

Speaker 2: The Persaw Kelly JB has enjoyed its own considerable success since its formation, and it will continue to partner with Kelly OCG as a premier staffing supplier across the region.

<unk> the region.

Speaker 2: and its parent company, Persol, will continue to be a valued partner to Kelly, and Persol's and Kelly's senior leaders, including myself, will continue to meet regularly as part of this enduring business relationship.

And its parent company for so we will continue to be a valued partner to Kelly and Pearsall and Kelly senior leaders, including myself will continue to meet regularly as part of this enduring business relationship.

Speaker 2: Our transformative decisions to monetize non-core assets in APEC follow a year of solid progress in Kelly's overall growth journey.

Our transformative decisions to monetize noncore assets in APAC follow a year of solid progress in Kelly's overall growth journey.

Speaker 2: It's well known that 2021 had its share of headwinds, including supply chain disruptions and ongoing pressures on talent supply. Yet, despite these challenges,

It's well known that 2021 had its share of headwinds, including supply chain disruptions and ongoing pressures on talent supply.

Despite these challenges we made our largest acquisition ever with the purchase of soft world, We increased our GP rate through structural improvements in our businesses, our P&I and education segments, but the worst of the pandemic behind them.

Speaker 2: We made our largest acquisition ever with the purchase of Softworld. We increased our GP rate through structural improvements in our businesses. Our P&I and education segments put the worst of the pandemic behind them.

Speaker 2: Our set business drove double-digit growth in outcome-based business, science, and soft world with noticeable acceleration in technology and telecom. Our international segment continued its recovery by focusing on scaling local and regional specialties, and OCG delivered double-digit growth again and proved its ability to leverage.

Our set business drove double digit growth in outcome based business science and soft world with noticeable acceleration in technology and telecom our international segment continued its recovery by focus focusing on scaling local and regional specialties and OCG delivered double digit growth.

Again improved its ability to leverage.

Speaker 2: We're pleased that we made continued strategic progress in 2021. We ended the year better than we began it. And now, with tremendous capital at our disposal after the APAC transactions, we are well positioned to create shareholder value in the years ahead.

We're pleased that we made continued strategic progress in 2021, we ended the year better than we began it and now with tremendous capital at our disposal. After the APAC transactions, we are well positioned to create shareholder value in the years ahead I'll turn it over to Olivier Olivier now for more details on <unk>.

Speaker 2: I'll turn it over to Olivier now for more details on Kelly's Q4 results. Thank you, Peter. So you know, I will review our most recent results, but I will come back to our APAC transactions in more detail just after the 2022 output.

<unk> Q4 results. Thank you Peter So you know I will review our most recent results, but I will come back to our APAC transactions in more detail just after the 2020 outlook.

Speaker 3: Before I review the current period results, one important point related to the prior year.

Before I review the current value of the results one important point related to the prior year two.

Speaker 3: 2022 was a 53-week fiscal year for Kelly and our Q4 2020 results include an extra week of operating activity.

2020, due was a 53 week fiscal year for Kate and.

And our Q4 2020 results include an XY week of operating activity.

Speaker 3: where the impact is material to understand the underlying business trend, I will provide the impact of the additional week in 2020 in our year-over-year comparison.

Where the impact is material to understand the underlying business trends I will provide the impact of the edge that we can in 2020 in our year over year comparisons.

Speaker 3: Now looking at the fourth quarter of 2021, revenue total $1.3 billion, up 0.7% from the prior year, including 40 base points of unfavorable currency impacts.

Now looking at the fourth quarter of 2021 revenue totaled $1 3 billion of <unk>, 7% from the prior year, including 40 basis points of unfavorable currency impact.

Speaker 3: excluding the impact of the extra week, revenues were up 6% on a constant currency basis as the impact of the extra week unfavorably impacts the comparison by about 500 basis.

Excluding the impact of the extra week.

Revenues were up 6% on a constant currency basis as the impact of the extra week unfavorably impacts the comparison by about 500 basis points.

Speaker 3: Included in that increase are 290 basis points of favourable impact from our acquisition of Softworld, as well as the 210 basis points unfavourable impact resulting from the changes in the Mexican staffing market legislation.

Included in that increase our 290 basis points of favorable impact from our acquisition of <unk> as well as a 210 basis points unfavorable impact, resulting from the changes in the Mexican staffing markets legislation.

Speaker 3: We also monitor our revenue recovery rate, which compares current period results to the corresponding pre-COVID-19 period on a constant currency basis.

We also monitor our revenue recovery rate, which compares <unk> reserves to the corresponding pre Covid 2019.

On a constant currency basis.

Speaker 3: Our Q4 organic revenue recovery rate is 91% consistent.

Our Q4 organic revenue recovery rate is 91% consistent with Q3.

Speaker 3: For the fourth quarter, our education segment continues to report the highest year-over-year growth rate of 44 percent as the comparable 2020 period was impacted by significant school closures.

For the fourth quarter, our education segment continues to rebuild the highest yield of the <unk> growth year over year growth rate of 44% as a comparable 2020 period was impacted by significant school closures for.

Speaker 3: For the quarter, education's recovery rate was 97%, which was lower than the Q3 rate. Although we have strong demand from the return to in-person learning, high levels of full-time teacher vacancy

For the quarter education, so recovery rate was 97%, which was lower than the Q3 rate. Although we have strong demand from the return to in person learning high levels of full time teacher, vacancies and new customer wins, our growth has been constrained by a more challenging than in <unk>.

Speaker 3: and new customer wins, our growth has been constrained by a more challenging than anticipated talent market.

<unk> talent market.

Speaker 3: especially in school districts, with strict vaccine mandates for instructors.

Especially in school districts, which sweep vaccine mandates for these hotels.

Speaker 3: Our education business continues to work to ensure that we secure the supply of talent needed to meet our customers' increasing demand, although it's likely this headwind will continue into early 2022.

Our education business continues to work to ensure that we secure supply of talent needed to meet our customers increasing demand.

So it's likely these headwinds will continue into early 2022.

And as we have seen with the recent micron films schools may modify that unfortunate delivery.

Speaker 3: And as we have seen with the recent Omicron surge, schools may modify their instructional delivery in response to changing local conditions. And volatility in demand in the near term is still possible.

Sponsor in response to changing local conditions and volatility in demand in the near term is still possible.

Speaker 3: Our OCG segment continues to perform well and delivered another quarter of year-over-year revenue growth, with revenue up 9% over last year and up 16%, excluding the extra week in 2020.

Our OCG segment continues to perform well and delivered another quarter of year over year revenue growth with revenue up 9% over last year.

16%, excluding the extra week in 2020.

Speaker 3: OCG revenue has exceeded pre-COVID levels for the past five quarters and is now up 17% in Q4, versus the same period in 2019. OCG delivered year-over-year growth in all products.

OCG revenue as exceeded pre COVID-19 levels for the past five quarters and is now up 17% in Q4 versus same period in 2019.

OCG delivered year over year growth in all products.

Speaker 3: with notable growth in RPO as demand for this product reflects our customer's adjustment to the impact of a challenging talent market.

With notable growth in <unk> demand for this product reflects our customers' adjustment to the impact of a challenging market.

Speaker 3: revenue in our professional and industrial segment declined 12% in the quarter or approximately 7% when accounting for the impact from the extra week in 2020.

Revenue in our professional and industrial segment declined 12% in the quarter.

Ultimately, 7% when accounting for the impact from the XY weakened in 2020.

Speaker 3: Our results in this segment continue to reflect the impact of supply chain disruptions and the Omicron variant which have resulted in uncertainty across a broad portion of manufacturing and the challenges to fulfill customer demand in the current talent environment.

Our results in this segment continue to reflect the impact of supply chain disruptions and Youre microenvironment, which have resulted in uncertainty.

A broad portion of manufacturing and the challenges to fulfill customer demand and the current talent environment.

Speaker 3: As a result, we have experienced lower hours volume in our staffing product, which has been partially offset by higher bill rates, as customers understand the upward pressure on wages in the current talent market.

As a result, we have expense.

Our volume in our <unk> product, which has been partially offset by higher bill rates as customers understand the upward pressure on wages in the current tenant market.

Speaker 3: The net impact of this dynamic was an 11% year-over-year decrease in staffing revenue in the quarter.

The net impact of this dynamic was an 11% year over year decrease in staffing revenue in the quarter.

Speaker 3: and after performing well and delivering revenue growth earlier in the COVID-19 crisis.

And after performing well and delivering revenue growth earlier in the COVID-19 crisis, our outcome based business expands and 18% year over year decline in revenue in the quarter as contraction in demand from our call center business more than offset growth in other specialties.

Speaker 3: Our outcome-based business experienced an 18% year-over-year decline in revenue in the quarter as contraction in demand from our call center business more than offset growth in other specialties.

Speaker 3: Revenue declined 5.4% on a constant currency basis in our international segment.

Revenue declined five 4% on a constant currency basis in our international segment.

Speaker 3: The year-over-year revenue growth trend was negatively impacted by the additional week in the comparable 2020 period as well as by results in Mexico due to the impact of legislation enacted earlier this year, which placed restrictions on the staffing industry.

Year over year revenue growth trend was negatively impacted by the additional week in the comparable 2020 failures as.

As well as by results in Mexico due to the impact of legislation enacted earlier this year, which placed restrictions on the staffing industry.

Speaker 3: Revenue growth in the EMEA region was positive, up 4.2% in constant currency and up 8.8% when excluding the extra week in the comparable 2020 period.

Revenue growth in the EMEA region was positive of.

Four 2% in constant currency and up.

Eight 8% when excluding the XY week in the comparable 2020 valued.

Speaker 3: and the region delivered a recovery rate of 99% in the fourth quarter.

And the region delivered the recovery rate of 99% in the fourth quarter.

Speaker 3: And finally, the third segment, where the results from our acquisition of Southwold is reported, revenue was up 15.5% on a reported basis, 2.3% on an organic basis, and 8.1% on an organic basis when excluding the impact of the additional week in 2020.

And finally as of Sept segment, where the results from our acquisition of Sofa. These reported revenue was up 15, 5% on a reported basis to 3% on an organic basis and eight 1% on an organic basis when excluding the impact of the additional week in 2000.

Twin.

Speaker 3: Organic revenue trend continued to track with the customer serve. Recovering demand in telecommunications continued and demand for outcome-based solutions remained strong.

Organic revenue trends continue to track with the customer so we covering demand in telecommunications continued and demand for outcome based solutions remained strong.

Speaker 3: Across all segments, we are well-prepared for meeting clients' changing talent needs, as permanent placement fees were up 95% year-over-year and up 7% sequentially.

Across all segments, we are well prepared for meeting clients' changing needs as permanent placement fees were up 95% year over year and up 7% sequentially.

Speaker 3: We continue to see significant increase in activity in P&I set and education, which includes our recent acquisition of Greenwood Ash.

We continue to see significant increase in activity P&I set in education, which includes our recent acquisition of Greenwood Asher.

Speaker 3: Fees in the international segment were also up over the pandemic-impacted prior year, but were down sequentially, reflecting the more cautious environment in Europe .

She is in the international segment were also up over the pandemic impacted prior year, but were down sequentially, reflecting a more cautious environment in Europe .

Speaker 3: Overall, placement fees for the quarter now exceed pre-COVID levels at up 58% compared to the same period in 2019.

Overall placement fees for the quarter now exceed pre COVID-19 levels at up 58% compared to the same period in 2019.

Overall gross profit was up nine 8% our gross profit rate was 19, 7% compared to 18, 1% in the fourth quarter of the prior year.

Speaker 3: Our gross profit rate was 19.7% compared to 18.1% in the fourth quarter of the prior year.

Speaker 3: Our year-over-year GP rating improvement of 160 basis points was driven by a combination of higher PERM fees, which contributed 80 basis points, and from an additional 50 basis points as a result of the acquisition of Softworld, which generates higher margins.

Our year over year GP rate improvement of 160 basis points was driven by <unk> of higher film fees, which contributed 80 basis point and from an additional 50 basis points. As a result of the addition of surf world, which generates higher margins.

Speaker 3: factors were coupled with favorable business mix and lower employee relations.

Factors were coupled with favorable business mix and lower employee related costs.

Speaker 3: While these factors impacted our segments in varying degrees, every segment improved GP rate in the fourth quarter.

Why does this factor of impacted our segments in varying degrees every segment improved GP rate in the fourth quarter.

Speaker 3: SG&E expenses were up 7.5% year-over-year on a reported basis.

SG&A expenses were up seven 5% year over year on a reported basis expense.

Speaker 3: Expenses in both years include approximately $4 million in restructuring charges.

<unk> expenses in both years include the approximately $4 million in restructuring charges.

Speaker 3: Expenses for the fourth quarter of 2021 include intangible amortization and other operating expenses of Softworld, which added 460 basis points to our year-over-year expense growth rate.

Expenses for the fourth quarter of 2021 include intangible amortization and other operating expenses of self world, which added 460 basis points to our year over year expense growth rate.

Speaker 3: The expense growth trend is also impacted by the additional week in the fourth quarter of 2020.

The expense growth trend is also impacted by the additional week in the fourth quarter of 2020 on.

Speaker 3: On an adjusted basis, fourth quarter 2021 organic expenses.

On an adjusted basis fourth quarter 2021, organic expenses grew by 666% year over year.

Speaker 3: grew by 6.6% year-over-year. The increase in expenses reflects higher performance based incentive conversation expenses and continued investment in organic growth initiatives.

The increase in expenses reflects higher performance based incentive compensation expenses and continued investments in organic growth initiatives.

Speaker 3: As I mentioned, our Q4 2021 results include the resurgent charges of $4.1 million, primarily recorded as a corporate expense.

As I mentioned, our Q4 2021 results include the restructuring charges of $4 1 million primary recorded as corporate expense.

Speaker 3: It was within the range we had expected when we delivered our Q3 earnings report, and the savings will exceed our previous expectation of $10 million on an annual basis beginning in 2022.

Was within the range, we had expected when we delivered our Q3 earnings report and the savings will exceed our previous expectation of $10 million on an annual basis beginning in 2022.

Speaker 3: Our reported earnings from operations for the fourth quarter were $15.3 million, compared to $9.5 million in Q4 2020. Included in each period is approximately $4 million of restructuring charges. So on an adjusted basis, Q4 2021 earnings from operations improved 40% year-over-year.

Our reported earnings from operations for the fourth quarter were $15 3 million compared to $9 5 million in Q4 2020.

Included in each failure is approximately $4 million of restructuring charges. So on an adjusted basis Q4, 2021 earnings from operations improved 40% year over year.

Speaker 3: Included in our reported Q4 results are the operating earnings of Softworld of $2.2 million, inclusive of intangible asset amortization.

Included in our reported Q4 results of the operating earnings of <unk> of $2 2 million inclusive of intangible asset amortization.

Speaker 3: And also to quickly comment on our results for the full year. For the year 2021, earnings from operations, as reported, were $48.6 million, compared to a loss of $93.6 million in 2020. On a lag-for-lag basis, excluding restructuring charges in 2021, and a goodwill impairment charge, a charge related to a customer dispute, restructuring charges, and a gain on sale of assets in 2020,

And also to quickly comment on our results for the full year.

For the year 2021 earnings from operations as reported were $48 6 million compared to a loss of $993 6 million in 2020 on.

On the like for like basis, excluding restructuring charges in 2021, and a goodwill impairment charge the charge related to a customer dispute restructuring charges and a gain on sale of assets in 2020.

Speaker 3: Adjusted earnings from operations in 2021 were $52.6 million, compared to $44.3 million in 2020, an improvement of 19%.

Adjusted earnings from operations in 2021 were $52 6 million compound to $44 3 million in 2020, an improvement of 19% the improvement reflects the impact of a recovering demand.

Speaker 3: The improvement reflects the impact of a recovery in demand as the economy improved from crisis-driven lows and the challenge of fulfilling customer demand in the current tenant market.

Can it be improved from crisis, driven lows and the challenge of fulfilling customer demand in the current tenant market.

Speaker 3: Now turning back to Q4, Kelly's earnings before tax also include the unrealized gains and losses on our equity investment in Persol Holdings.

Now turning back to Q4 Kt's earnings before tax also include the unrealized gains and losses on our equity investment and vessel holding four.

Speaker 3: For the quarter, we recognized a $50 million pre-tax gain on our personal common stock compared to a $14.8 million pre-tax gain in the prior year. These non-cash gains, related to changes in the fair value of the investment, are recognized below earnings from operations as a separate line item.

For the quarter, we recognize a $50 million pre tax gain on our vessel common stock compared to $14 8 million pre tax gain in the prior year.

These non cash gains related to changes in the fair value of the investments are recognized below earnings from operations as a separate line item.

Speaker 3: Also reported below earnings from operations in the fourth quarter of 2021, we have realized a 19 million one-time gain related to cash proceeds received from a settlement of a claim on a representation and warranty insurance policy purchased by Kelly in connection with the acquisition of software.

Also reported below earnings from operations in the fourth quarter of 2021, we have realized a $19 million one time gain related to cash proceeds received from the settlement of a claim on our representation and warranty insurance policy purchase vacate in connection with the acquisition of so forth.

Speaker 3: income tax expense for the fourth quarter was $16.1 million, compared with our 2020 income tax expense of $2.5 million. Our effective tax rate for the quarter was 19%.

Income tax expense for the fourth quarter was $16 1 million compared with our 2020 income tax expense of $2 5 million.

Our effective tax rate for the quarter was 19%.

Speaker 3: And finally, reported earnings per share for the fourth quarter of 2021 was $1.80 per share compared to $0.59 per share in 2020.

And finally reported earnings per share for the fourth quarter of 2021 was $1 80 per share compared to <unk> 59 per share in 2020 the.

Speaker 3: The increase in earnings per share resulted primarily from higher gains on personal shares and the gain on insurance settlement net of tax. Adjusting for the personal gains, the gain on insurance settlement and refreshing charges in both periods, Q4 2021 EPS was $0.65 compared to $0.41 per share in Q4 2020, up 59%. Now moving to the

The increase in earnings per share resulted primarily from higher gains on vessel shell and the gain on insurance settlement net of tax adjusting for the peso gains the gain on insurance settlement and lower friction charges in both periods Q4, 2021, EPS was <unk> 65.

Compared to <unk> 41 per share in Q4, 2020 up 59%.

Now moving to the balance sheet at the end of the year.

Speaker 3: Cash totaled 112.7 million compared to 223 million a year ago. We had no debt, consistent with debt at nearly zero at year-end 2020. The reduction in our cash balance reflects the 213 million cash paid net of cash received that was used to fund the acquisition of Softworld, partially offset by free cash flow generated.

Cash totaled $112 7 million compared to $223 million a year ago, we had no debt consistent with debt at nearly zero at year end 2020, the addiction in our cash balance reflects the $230 million cash paid net of cash received that was used to fund the acquisition of <unk>.

Partially offset by free cash flow generation.

Speaker 3: Accounts receivable was $1.4 billion and increased 12% year-over-year, reflecting our year-over-year increase in revenue as well as billings to MSP customers reported on an advasive.

Accounts receivable was $1 4 billion and increased 12% year over year, reflecting our year over year increase in revenue as well as billings to MSP customers reported on a net basis.

Global DSO was 60 days.

Speaker 3: Pre-cash flows in 2021 include approximately $30 million of cash outflows used to repay federal payroll tax balances, which we deferred in 2020 under the CARES Act.

<unk> Creek.

Free cash flows in 2021 includes approximately $70 million of cash outflows used to repay federal payroll tax balances, which were deferred in 2020 under the cares Act.

Speaker 3: In 2020, we generated $171 million of free cash flows, primarily due to the ability to defer certain payroll tax payments under the CARES Act, partially offset by the impact of higher-day sales outstands.

In 2020, we generated $171 million of free cash flows primarily due to the ability to defer certain payroll tax payments under the cares act, partially offset by the impact of higher days sales outstanding.

Speaker 3: And to clarify, in late December of 2021, there was a change in the regulations related to the repayment timing of the deferred payroll taxes, which allows companies to defer payments to January 3, 2022, and January 3, 2023.

And to clarify in late December of 2021.

A change in the regulations related to the repayment timing of the deferred payroll taxes, which allows companies to defer payments to January <unk> 2022, and January <unk> 2020 suite.

Speaker 3: We paid approximately $30 million ahead of the required January 3, 2022 deadline, which is reflected in our 2021 cash flow.

We paid approximately $30 million ahead of the required January uses third 2022 deadline, which is reflected in our 2021 cash flows.

Speaker 3: We have paid $29 million on January the 3rd, 2022, and expect to pay the remaining balance on January the 3rd, 2023. And now, back to you, Peter. Thanks for those details, Olivier. As we enter 2022, we're encouraged by increased demand for our services, reflected in our healthy sales pipelines, and new customer wins across all five of our segments.

Yesterday, <unk> net $29 million in January to serve 2022, and we expect to pay the remaining balance on January <unk> 2023, and now back to you Peter.

Thanks for those details Olivier as we enter 2022, we're encouraged by increased demand for our services reflected in our healthy sales pipeline and new customer wins across all five of our segments.

Speaker 2: While talent shortages may continue to challenge this growing demand, we expect talent shortages to subside over time, and we are encouraged by recent improvements in the labor force participation rate and the relaxation of COVID-induced restrictions that constrain the availability of talent.

<unk> talent shortages may continue to challenge this growing demand, we expect talent shortages to subside over time and we are encouraged by recent improvements in the labor force participation rate and the relaxation of COVID-19 induced restrictions that constrained the availability of talent.

Speaker 2: In the year ahead, we expect each of our specialty business units to deliver strategic contributions to our performance. Our P&I segment will focus on growing higher margin, outcome-based specialties in 2022, and we will adopt new and updated technologies to create greater efficiencies in staffing, an approach that should lead to improving productivity and higher gross margin.

In the year ahead, we expect each of our specialty business units to deliver strategic contributions to our performance. Our P&I segment will focus on growing higher margin outcome based specialties in 2022, and we will adopt new and updated technologies to create greater efficiencies and staffing and approach that should.

Lead to improving productivity and higher gross margin.

Speaker 2: We expect SET to deliver meaningful returns on our 2021 inorganic and organic investments, and Softworld should continue to deliver double-digit growth in the segment.

We expect <unk> to deliver meaningful returns on our 2021 inorganic and organic investments and software all should continue to deliver.

Double digit growth in this segment.

Speaker 2: Education will continue to capture K-12 growth in 2022 and further expand its adjacencies, balancing investments in future growth with a need to effectively manage the segment's cost base. In OCG, we expect to see continued double-digit growth and strong leverage as the segment continues to deliver cutting-edge market insights, tech-enabled solutions, and workforce strategies that guide clients through the recovery.

<unk> will continue to capture K 12 growth in 2022, and further expand its adjacencies balancing investments in future growth with the need to effectively manage this segment's cost base in OCG, we expect to see continued double digit growth and strong leverage as this segment continues to deliver.

Cutting edge market insights tech enabled solutions and workforce strategies that guide clients through the recovery.

Speaker 2: In addition to robust MSP growth, we intend to invest in our fast-growing RPO business.

In addition to robust MSP growth, we intend to invest in our fast growing <unk> business.

Speaker 2: And in our international segment, we expect continued growth in regional and local specialties as our teams leverage Kelly's infrastructure to drive increased efficiency.

And in our International segment, we expect continued growth in regional and local specialties as our teams leverage Kelly's infrastructure to drive increased efficiency.

Speaker 2: The growth strategies in our five-business segment, enabled by our focused operating model, together with our aggressive and smart use of capital, are designed to drive organic and inorganic growth for Kelly in 2022 and beyond, delivering results that we expect will create new shareholder value. To share more about what we expect from the year ahead, I'll now welcome back Olivier.

The growth strategies, and our five business segments enabled by our focused operating model together with our aggressive and smart use of capital are designed to drive organic and inorganic growth for Kelly in 2022 and beyond delivering results that we expect will create new shareholder value.

To share more about what we expect from the year ahead I'll now welcome back Olivier.

Speaker 3: Thank you Peter. As we reflect on the 2021 results and look ahead, we expect a continuation of the current trend of steady increases in demand, as well as continuation of the current level of talent mismatch, putting some pressure on fulfillment . We also believe that recent trends in inflation and the upward pressure on wages at all skill levels will continue into 2022.

Thank you Peter as we reflect on the 2021 results and look ahead, we expect a continuation of the current trend of steady increases in demand as well as continuation of the current level of tenant mismatch, putting some pressure on fulfillment.

We also believe that recent trends in inflation and the airport pressure on wages at all skill levels will continue into 2022.

Speaker 3: For the full year, we expect revenue to be up 4.5% to 5.5% in nominal currency.

For the full year, we expect revenue to be up four 5% to five 5% in nominal currency.

Speaker 3: Our expectations reflect that there are no material changes in business or governmental restrictions related to COVID-19, demand continues to improve, and that the steps we are taking to address the current talent mismatch will expand the supply of talent available to us.

Our expectations reflect that there are no material changes in business or governmental restrictions related to COVID-19 demand continues to improve and that the steps. We are taking to address the current tenant mismatch will expand the supply of talent available to us.

Speaker 3: Even with those efforts, education will continue to be challenged in early 2022 as talent supply remains constrained and international revenue growth rate will be negatively impacted by the Mexico legislation change until we anniversary impact in the second half of the year.

Even with those efforts education will continue to be challenged in early 2022 as tenant supply remains constrained and international revenue growth rate will be negatively impacted by the Mexico legislation change until we anniversary impact into the second half of the year.

Speaker 3: In addition, we expect that changes in the workflow strategies of a few large customers could potentially create some headwinds in P&I insights.

In addition, we expect that changes in the workforce strategies.

Few large customers could potentially create some headwinds in <unk>.

Speaker 3: And finally, we expect that our targeted growth initiatives will begin to provide measurable acceleration of organic revenue growth.

Finally, we expect that our targeted growth initiatives will begin to provide measurable acceleration of organic revenue growth.

We expect our GP rate to be about 19, 4%.

Speaker 3: We expect our GP rate to be about 19.4%.

Speaker 3: Our continued structural improvements in CP rate expectations reflect continued growth in our fee-based business, continued shifts in mix to higher margin specialization.

Our continued structural improvement in GP rate expectations.

<unk> continued growth in our fee based business.

Continued shift in mix to higher margin Fisher.

Speaker 3: and a more gradual pace of growth in our lower-margin species.

In a more gradual pace of growth.

Lower margin specialties.

Speaker 3: We continue to take steps to drive meaningful cost savings and provide additional leverage. Our restructuring initiative in Q4 2021 is a continuation of those efforts.

We continued to take steps to drive meaningful cost savings and provide additional leverage our restructuring initiative. In Q4 2021 is a continuation of the CFO now.

Speaker 3: In addition, we'll continue to focus on productivity improvements in each business unit as we move into 2020.

Addition will continue to focus on productivity improvements in each business unit as we move into 2022.

Speaker 3: We will continue to make targeted investments in organic growth initiatives to accelerate our top-line growth and to deliver against our digital roadmap and technology strategy.

As discussed in the past, we will continue to make targeted investments in organic growth initiatives to accelerate our topline growth and to deliver against our roadmap and technology strategy.

Speaker 3: So all in, we expect SG&E expense to be up 4.5% to 5.5% on an adjusted basis.

So all in we expect SG&A expense to be up 12, 5% to five 5% on an adjusted basis.

Speaker 3: As we execute on our organic and inorganic strategy, we are utilizing adjusted EBTA and adjusted EBTA margins as additional measures of our progress in delivering profitable growth.

As we execute on our organic and inorganic strategy, we are utilizing adjusted EBITDA and adjusted EBITDA margin as additional measures of our progress in delivering profitable growth.

Speaker 3: Based on our outlook for 2021, we expect adjusted organic EBD margin to improve 50 to 70 basis points from the 1.7% adjusted EBD margin delivered in 2021.

Based on our outlook for 2021, we expect adjusted organic EBITDA margin to improve 50 to 70 basis points from the $1 seven question.

It is the amount you delivered in 2021.

Speaker 3: Finally, we expect an effective income tax rate in the high teens, which includes the impact of the Work Opportunity Tax Credit, which has been extended through 2025.

And finally, we expect a difficult.

Actually in the high teens, which includes the impact of the work opportunity tax credit, which has been extended through 2025.

Speaker 3: As we have discussed, our board's approval of the transactions to monetize investment in the Asia-Pacific region will have a significant impact on our balance sheet and cash flows in Q1 of 2022 and beyond.

As we have discussed our board's approval of the transactions to monetize investment in the Asia Pacific region, We will have a significant impact on our balance sheet and cash flows in Q1 of 2022 and beyond by.

Speaker 3: By acting now, we lock in substantial market appreciation on the personal common share.

By acting now with locking substantial market appreciation on the Basel common shares and selling most of our stake in the Pearsall JV alone.

Speaker 3: And selling most of our stake in the Persol Kelly JV allows us to realize the significant value that we have created with the formation of the GenVenture and has continued to build with the JV expansion in the region.

To realize the significant value that we have created with the formation of the joint venture and has continued to build with the JV expansion in the region and SPD noted, we'll continue to focus on growing our approachable OTG vis SG&A back.

Speaker 3: And as Peter noted, we'll continue to focus on growing our profitable OTG business in AIPAC.

Speaker 3: We expect that the sale of most of our investments in the Persol-Kelly-John Venture, representing a 46.5% interest in the JV, will generate cash proceeds of $114 million, net of taxes payable.

We expect that the sale of most of our investment in the vessel Kelly joint venture representing a 46, 5% interest in the JV will generate cash proceeds of $114 million.

Net of taxes payable.

Speaker 3: Based on recent market prices, the sale of our investment in the common share of personal holdings is expected to generate approximately $169 million in cash, a net of expected transaction costs, and income taxes due.

Based on recent market prices the sale of our investment in the common shelf personal holdings is expected to generate approximately 169 million in cash net of expected transaction costs and income taxes.

Speaker 3: And to complete the unwinding of our cross-shareholding arrangement, we'll pay $27 million to repurchase the Class A and Class B common shares owned by Persol Holdings. All in, this transaction, which we expect to complete this month, I expect it to generate approximately $255 million of cash on a net basis.

And to complete the unwinding of our cross shareholding arrangement will pay two 7 million to repurchase the cliff.

As B common shares owned by peso reported.

All in this transaction, which we expect to complete this months I expect it to generate.

Ultimately $265 million of cash on a net basis with no debt and nearly 300 million of available borrowing capacity, we have more than $500 million of available capital, which combined with our proven ability to generate free cash flow positions us to accelerate our kashi transforming.

Speaker 3: With no debt, and nearly 300 million of available borrowing capacity, we'll have more than 500 million of available capital, which combined with our proven ability to generate free cash flow, positions us to accelerate our tragic transformation and build additional shareholder value moving forward. Now, back to you.

<unk> and build additional shareholder value moving forward now.

Now back to you Peter.

Thank you Olivier.

Speaker 2: With the worst of the pandemic behind us and a sustainable recovery ahead, we're heralding 2022 as a year of transformative progress. As companies and talent lean into new growth opportunities, they're turning to Kelly for what's next.

With the worst of the pandemic behind us and a sustainable recovery ahead, we're heralding 2022, as a year of transformative progress as companies and talent lean into new growth opportunities. They are turning to Kelly for what's next sustained fee growth points towards our customers.

Speaker 2: sustained fee growth points toward our customers' investment in their future workforces, and increased demand in our staffing and outsourcing businesses reflects a market eager for the specialty solutions we provide.

It's in their future Workforces and increased demand in our staffing and outsourcing businesses reflects a market eager for the specialty solutions we provide.

Speaker 2: The recovery may not have followed the path we predicted two years ago, but we continue to make real progress on the path we do control, Kelly's specialty growth strategy. We announced this strategy two years ago and have continued to make good on its promises.

The recovery May not have followed the path we predicted two years ago, but we continue to make real progress on the path. We do control Kelly's specialty growth strategy, we announced this strategy two years ago and have continued to make good on its promises.

Speaker 2: We said we would increase Kelly's focus, and we have since launched an operating model with five clearly defined specialties led by experienced and committed business unit leaders laser focused on driving growth within their specialties.

We said, we would increase Kelly's focus and we have since launched an operating model with five clearly defined specialties led by experienced and committed business unit leaders laser focused on driving growth within their specialty.

Speaker 2: We said we would more aggressively pursue inorganic growth, and we have since made two acquisitions in our education specialty and the company's largest ever acquisition with a purchase of Softworld in our high margin set specialty.

We said, we would more aggressively pursue inorganic growth and we have since made two acquisitions in our education specialty and the company's largest ever acquisition with the purchase of soft world and our high margin set specialty we said, we would drive organic growth and we have since launched innovative new.

Speaker 2: We said we would drive organic growth, and we have since launched innovative new products such as K-12 tutoring, skilled professional solutions, and Helix UX, while continuing to provide exceptional support of our customers and talent during an unprecedented global crisis.

<unk>, such as K 12, tutoring skilled professional solutions and helix UX, while continuing to provide exceptional support of our customers and talent during an unprecedented global crisis.

Speaker 2: We said we would take steps to unlock capital, and we have since sold and leased back our headquarters properties and sold our Brazil staffing operation.

We said, we would take steps to unlock capital and we have since sold and leased back our headquarters properties and sold our Brazil staffing operations and with today's announcement regarding personnel and the personnel Kelly JV Kelly proves its gearing up for even more meaningful change in 2022 and beyond.

Speaker 2: And with today's announcement regarding Persol and the Persol Kelly JB, Kelly proves it's gearing up for even more meaningful change in 2022 and beyond, unlocking significant capital to invest in our chosen specialties, drive growth where we know we can win and create additional value for our shareholders.

Unlocking significant capital to invest in our chosen specialties drive growth, where we know we can win and create additional value for our shareholders.

Speaker 2: We believe this will be an extraordinary year for all the right reasons, a year where the world emerges from the pandemic's grip and Kelly enters a bold new era of growth.

We believe this will be an extraordinary year for all the right reasons, a year, where the world emerging emerges from the pandemic script and Kelly enters a bold new era of growth. It's an exciting journey that we're honored to share with all of our stakeholders, we're thankful to our employees for their agility and commitment to.

Speaker 2: It's an exciting journey that we're honored to share with all of our stakeholders. We're thankful to our employees for their agility and commitment to fulfilling our noble purpose every day, to our talent for entrusting us with the next steps in their careers, to our clients and suppliers for their partnership and collaboration, to our board of directors for their support of our aggressive growth strategy, and to our shareholders for their confidence that Kelly's best days lie ahead. John , you can now...

Filling our noble purpose every day to our talent for entrusting us with the next steps in their careers to our clients and suppliers for their partnership and collaboration to our board of directors for their support of our aggressive growth strategy and to our shareholders for their confidence that Kelly's best days lie.

Head John .

John you can now open the call to questions.

Speaker 1: Certainly. And ladies and gentlemen, if you wish to ask a question, please press one, then zero on your telephone keypad, you may withdraw your question at any time by repeating the one zero command. And we ask if you're using a speaker phone, please pick up the handset before pressing the numbers. Once again, if you have a question, we press one, then zero at this time.

Certainly and ladies and gentlemen, if you wish to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the ones <unk> command and we ask if you're using a speakerphone. Please pick up the handset before pressing the numbers.

Once again, if you have a question you May press, one then zero at this time.

Speaker 1: And first, we'll have a line of John Healy with North Coast Research. Please go ahead.

And first of all the line of John Healy with Northcoast Research. Please go ahead.

Speaker 4: I thank you and congrats on the close of the year and the milestone of

Thank you and congrats on the close of the year.

Milestone.

Speaker 4: getting closer to monetizing these unique assets you have. Just wanted to spend a minute on that transaction. I know you've talked about the $255 million of incremental cash or capital to fund a

Getting closer to monetizing. These unique assets you have just wanted to spend a minute on that transaction I know you've talked.

About the $255 million of incremental cash or capital.

Okay.

Speaker 4: kind of the transformation. I just want to make sure that is net of also reducing the share count by call it a million and a half shares.

Kind of the transformation I, just want to make sure that as net.

Also reducing the share count by call it 1 million and a half shares and that would be incremental capital relative to the $113 million or so that you had on your balance sheet at year end.

Speaker 4: And that would be incremental capital relative to the $113 million or so that you had on your balance sheet at year end.

Speaker 4: Additionally, you can talk about the transformation, but given where the stock price is, are you contemplating potentially maybe returning some of that capital in terms of share shrinkage as we look at 2022?

Additionally.

And talk about the transformation, but.

Given where the stock price is.

Are you contemplating potentially maybe returning some of that capital in terms of that.

They're shrinking as we look at 2002.

Speaker 3: Good morning, John . It's Olivier. So I'm going to start and Peter is going to follow up. If you think about the two, I mean, the approximately $255 million, it is a net of tax, sorry, number one, and number two, net of the $27 million of buyback that I was explaining during the call.

Good morning journey 30 years, so I am going to start and Peter is going to follow up.

If you are seeing about the tube in the approximately $255 million.

It is net of cash net of tax three number one and number two net of the $27 million of buyback that.

I was explaining during the call.

Speaker 3: So it's really basically the addition of the 46.5% of the JV, which is about $140 million net of tax.

It's really basically the addition of the 46, 5% of the JV, which is about 140 million net of.

Tags and estimate of estimation of $169 million.

Speaker 3: An estimation of 169 million net proceeds coming from the block trade that we are initiating now to sell, you know, our personal shares. And then deducted from those two numbers is the 27 million buyback that I was referring to.

Net proceeds coming from.

The block trade that we have initiated now to sell.

Our pearsall shales.

And then <unk>.

Got it from those two numbers is the $27 million buyback that I was referring to.

Speaker 3: Do you want to add something? MR. BOUTROUSSIS Good morning, John . And thank you for the comments. So with – MS.

Peter do you want to add some to the morning Jon.

Thank you for the comments.

So.

Speaker 2: Discussions with our board of directors obviously we spend a lot of time talking about capital allocation We are as part of this transaction buying back twenty seven point two million dollars of stock that won't affect the liquidity of

With.

Discussions with our board of directors, obviously, we spend a lot of time talking about capital allocation.

We are as part of this transaction buying back $27 $2 million of.

Stock.

That won't affect the liquidity of the.

Speaker 2: shares due to the fact that it was owned by Persol. But as I said two years ago on this call we believe I believe that.

The shares due to the fact that there was some buy pearsall.

But.

As I said two years ago on this call we believe I believe that.

Speaker 2: best use of our capital is to add to our organic growth strategy with inorganic growth through

Best use of our capital is too.

To add to our organic growth strategy with inorganic growth.

Through.

Speaker 2: finding high quality, attractive.

Finding high quality.

Tractive tar.

Speaker 2: targets like soft world that we don't overpay for, but that add substantially to our margin profile and to our growth profile. And that's what we intend to do, subject to ongoing discussions with our board around capital allocation.

Targets like soft world that we.

Don't overpay for but that add substantially to our.

Margin profile and to our growth profile and.

That's what we <unk>.

Intend to do subject to ongoing discussions with our board around capital allocation.

Speaker 3: And we are going to continue, as we shared, to be, you know...

And we are going to continue as we shared to be.

<unk>.

Speaker 3: extremely mindful on, of course, the strategic seat, but also making sure that, you know, we pay the right price. You know that.

Extremely mindful of course is strategic fit.

But also making sure that we pay the right price you know that.

Speaker 3: We are using, amongst those things, one KPI, which is internal rate of return. The bar we have set, as you know, at 25%, is pretty high to ensure that, of course, there is a very nice and good strategic fit, but also we are mindful about paying the right price. And I think, John , we have a unique opportunity between this $250 million plus of cash.

We are using amongst those things one <unk>, which is an internal rate of return.

We have set as you know at 25% is pretty high to ensure that of course, there is a very nice and good strategic fit but also.

We are mindful about paying the right price and I think John we have a unique opportunity between these 250 million pairs of cash combined with you know.

Speaker 3: combined with, you know, possible balance sheet leverage up to, I would say, 2.2 times HDA, so about another $250 million, to put something like half a billion on the table to really accelerate our inorganic strategy.

Placebo added balance sheet leverage up to I would say to two two times EBITDA. So about another $250 million to put somebody like healthily in the table to really accelerate.

Our inorganic strategy.

Great.

Wanted to ask just.

Speaker 4: About the solutions business and what you're seeing there, I mean, clearly there's some traction and some success happening there. Any sort of categories or areas within kind of that elevated HR services you provide that are doing exceptionally well right now, or you feel like that as we emerge post-pandemic that there's maybe a more structural case to the growth potential?

About the about the solutions business and in high and what Youre seeing there I mean, clearly there is some traction and some success happening there.

He sort of categories or areas within kind of that elevated HR services, you provide that or.

Doing exceptionally well right now or do you feel like that is we've emerged post pandemic that theres, maybe a more structural case.

The growth potential.

Speaker 2: I think it's more broad based, John . I think that companies coming out of the pandemic recognize the benefit of flexibility and also the outsourcing of non core operations.

I think it's more broad base, John I think that companies coming out of the pandemic recognize the benefit of flexibility and also the outsourcing of non core operations.

Speaker 2: uh... and that's what we're seeing in terms of the demand uh... we're also seeing customers adopt our skilled professional solution which we launched last year in our professional and industrial segment uh... which basically allows them the opportunity to uh... address the talent shortage in a less conventional way uh... by uh... using a outcome-based uh... business model and we're seeing uh...

And that's what we're seeing in terms of the demand.

We're also seeing customers adopt our skilled professional solution, which we launched last year in our professional and industrial segment, which basically allows them the opportunity to.

Address the talent shortage in a less conventional way.

Bye.

Using a outcome based business model and we are seeing.

Speaker 2: excellent uptake of that solution and we have, as I mentioned in my remarks, we have expectations for that business to continue to see growth in 2022. Great, thank you so much.

Excellent uptake of that solution and we have as I mentioned in my remarks, we have extra.

Expectations for that business to continue to see growth in 2022.

Great. Thank you so much.

Thanks, John Thanks, John .

Speaker 1: Our next question is from Joe Gomes with Noble Capital, please go ahead.

Our next question is from Joe <unk> with Noble capital. Please go ahead.

Speaker 5: Good morning, and let me add my congratulations also for the transaction at the end of the year. Thanks, Joe. Good morning.

Good morning, and let me add my congratulations also for the transaction at the end of the year.

Thanks, Joe.

Good morning.

Just.

Speaker 5: You know, you have a goal of growing revenue at nine and a half to ten and a half for the full year. You came in a little bit short of that. Is that kind of a reflection on, you know, the research in COVID, you know?

You have a.

The goal of growing revenue with nine and a half a turn and a half for the full year.

You came in a little bit.

Short of that.

It's kind of a reflection on the research and Covid.

Speaker 5: going in late into the fourth quarter, or was there something else behind that? And, you know, you did a much better job in restraining SG&A expenses versus what you were...

Going in the late into the fourth quarter or was there something else behind that.

Did it much.

Better job.

And restraining SG&A expenses versus what you were believing it should be up on your guidance I'm. Just wondering what was behind that also that all have to do with the restructuring.

Speaker 5: believing should be up on your guide is just wondering what was behind that all so that all have to do with the restructuring benefits that we saw

Benefits that we saw.

Speaker 2: Yeah, Joe, I'll let Olivia comment on the SG&A. I think the top line was particularly constrained as a result of Omicron in the fourth quarter.

Yes, Joe I'll, let Olivia comment on the SG&A I think.

The topline was.

Particularly constrained as a result of one micron in the fourth quarter.

Speaker 2: You know, even starting in late third quarter, but in particular in the fourth quarter, in both our P&I and our education segment, and the absences and other implications for the availability of talent, as well as vaccine mandates and ongoing supply chain disruptions created some headwinds in the fourth quarter.

Even starting in late third quarter, but in particular in the fourth quarter in both our P&I and our education segment and.

The the absence is another.

Implications for the availability of talent as well as.

Vaccine mandates.

And ongoing supply chain disruptions created some headwinds in the fourth quarter that we think in 2022 are the worst.

Speaker 2: we think in 2022 are the worst is going to be behind us. So, that's what I would attribute in terms of top line. Olivier, comment on the SGNA. Yeah. So, and back to, you know, Q4, I would also mention again the impact of the 53rd week.

Going to be behind us so.

That's what I would attribute in terms of topline Olivier comment on the SG&A, yes.

And back to Q4.

We also mentioned again the impact of the 50 <unk> week, so you need to seeing about <unk>.

Speaker 3: So you need to think about, I mean, exiting 2021 at a revenue growth of about 6%, as I did mention, which is really putting apart, you know, this one-time event every four years.

<unk> 2021 at a revenue growth of about 6% as I did mention which is really putting about this onetime event every four years.

Speaker 3: or so that we have to deal with an additional week. So think about more like 6%, including, of course, soft world. But without soft world, we are, I would say, at about 3 and 1 1?2. So we know that we need some acceleration. But I would say, otherwise, I think it was a

So that we have to deal with you know an additional week, so seeing about more like 6% including of course of world, but we don't so fall. We are I would say is about three and a half.

So we know that we need some acceleration, but I would say otherwise I think it was.

Speaker 3: a pretty OK run rate revenue-wise at the far end of 2021. On the SG&A, yes, you are right. I mean, when you look at...

Okay run rate revenue wise in the final end of.

2021 on the SG&A, Yes, you are right I mean, when you look at we like to use incremental conversion rate, which is basically saying well if we deliver 100.

Speaker 3: You know, we like to use incremental conversion rate, which is basically saying, well, if we deliver, you know, $100 more of GP, how much we push to the bottom line. That has been challenging, I would say.

There are more of GP, how much we push to the bottom line.

That has been challenging I would say.

Speaker 3: up to Q3 of last year, we have started to show meaningful leverage in Q4. Our so-called ICR incremental conversion rate was about 24-25%. We think we can do better, especially again in 2022.

Up to Q3 of last year, we have started to show me.

Meaningful leverage in Q4, our so called the ICR and can tell conversion rate was about 24, 25%. We think we can do better, especially again in 2022.

Speaker 3: One of the reasons is basically improvement in, I would say, our cost management, which is a little bit challenging in the recovery phase.

One of the reason the he's basically.

Improvement in I would say our cost management, which is a little bit challenging in the recovery phase. The second thing is more 2022, where we expect to benefit from this Q4 2021 action.

Speaker 3: The second thing is more on 2022, where we expect to benefit from this Q4 2021 action. The outcome would be...

The outcome would be.

Speaker 3: savings starting in 2022 in excess of 10 million, and that combined with really focusing on productivity improvements and efficiency in each business unit should continue to provide, you know, meaningful improvement in what we call leverage or incremental conversion rate as we move into 2022.

Savings starting in 2022 in excess of $10 million and that combined with.

Really focusing on productivity improvements and efficiency in each business unit should continue to provide meaningful improvement in what we can leverage all incremental conversion rate as we move into 2022.

Okay. Thank you for that.

Speaker 5: Okay, thank you for that. And you talk about, you know.

And.

You talked about.

Yeah.

The challenges.

Speaker 5: talent acquisition, and I was just thinking, you know, if you look at, you know, the markets that you're in and the specialty skill set, do you find yourself having a stronger candidate pool relative to your peers in any of these markets?

Talent acquisition and I was just thinking.

If you look at the markets that you're in and the specialty skill set.

Do you find yourself, having a stronger candidate pool relative to your peers and any of these markets.

Speaker 2: Well, I think in education, notwithstanding the challenges, we believe we're best in class in terms of attracting talent in the education space. In the lower wage, it is a challenge, and we believe that as health care concerns abate with putting Omicron behind us.

Well I think in education and education, notwithstanding the challenges of.

We believe we're best in class in terms of attracting talent in the education space and the lower.

Lower wage it is a challenge.

We.

I believe that.

As health care health care concerns abate with the putting omicron behind us.

Speaker 2: schools gaining additional stabilization so parents can come back to work, wages continue to increase and they begin to look more attractive to people that may have stayed on the sidelines. We think there is opportunity to increase the talent pool.

<unk> gaining additional stabilization. So parents can come back to work wages continue to increase and they begin to look at.

A more attractive to people that may have stayed on the sidelines.

We think there is opportunity to increase the talent pool.

The sale.

Speaker 2: fill the demand that, as we've indicated for the last few quarters, continues to experience strong growth across all of our five segments.

Sale of the demand that as we've indicated for the last few quarters and it continues to experience strong growth across all of our five segments.

Speaker 5: Okay, I'll throw in one more if I may.

Okay I'll throw in one more if I may on <unk>.

Speaker 5: We're looking at the monetization investments here.

And we're looking at the monetization investments here.

Speaker 5: You know, how does that acquisition pipeline look today? What are we talking in terms of seeing in valuations? Is it more attractive or has it kind of gotten less attractive over the past, you know, six or nine months?

How does that acquisition pipeline look today, what are we talking in terms of.

Seeing in valuations.

Is it more.

Practice or is it kind of gotten less attractive over the past.

Six or nine months.

Speaker 2: The pipeline remains, I would say, robust. Joe, there was in 2021 probably a spike in properties on the market due to issues around potential tax changes, but the

The pipeline remains I would say robust.

Joe.

There was in 2021, probably a spike in properties on the market due to issues around potential tax changes.

But the.

The market.

Speaker 2: is solid for identifying attractive properties. As Olivier mentioned earlier, we're not going to overpay. We will walk away from deals if the valuations are beyond what we think is.

Is solid for <unk>.

Identifying attractive properties as Olivier mentioned earlier, we're not going to overpay.

We will walk away from deals if the valuations are beyond what we think is.

Speaker 2: reasonable, but the areas that we're particularly interested in would be in our science engineering technology and telecom as reflected in our acquisition of Softworld.

Reasonable.

But the areas that were particularly.

Im interested in or it would be in our science engineering technology and telecom as reflected in our acquisition of soft world.

Speaker 2: in the education space, particularly in adjacencies to our K-12 practice, and also opportunities in our OCG. Our OCG business has demonstrated an ability to leverage, and we think if there are properties that we can use to enhance our MSP or RPO practices, we'll do that.

In the education space, particularly in Adjacencies to our K 12 practice and also opportunities in our OCG, our OCG businesses demonstrated an ability to leverage and we think if there are properties that we can use to enhance our MSP or rps practices.

Speaker 2: Again, assuming the valuation is appropriate, we would be interested in that area as well.

Again, assuming the valuation is appropriate we would be interested in that area as well.

Speaker 3: I would just add, knowing the capital we have available now...

I'd just add knowing the caps that we have available now.

Speaker 3: combine you know balance sheet leverage and cash.

She combined balance sheet leverage and cash received by collection, we have half a billion dollars of capital available. So as Peter was mentioning during his prepared remark.

Speaker 3: We have half a billion of capital available. So as Peter was mentioning during his prepared remarks,

Speaker 3: remarks. We have an opportunity to go bigger, bolder. So we are looking at, you know, properties at the level of software, if not more, because we have the capital now to really go bigger, bolder, and accelerate, you know, our transformation, especially around, you know,

<unk>, we have an opportunity to go bigger bolder.

So we are looking at properties.

At the level of so called if not more because we have the capital now to go bigger bolder and accelerate our transformation, especially around inorganic.

Speaker 5: I really look forward to seeing how that all unfolds. I appreciate you guys taking the questions. Thank you. Thanks, Joe.

Great.

Look forward to seeing how that all unfolds.

I appreciate you guys, taking the questions. Thank you.

Thanks, Joe Thank you Joe.

Speaker 1: Next, we'll go to the line of Kevin Stanky with Barrington Research. Please go ahead.

Next we'll go to the line of Kevin Steinke with Barrington Research. Please go ahead.

Speaker 2: Good morning, Kevin, morning.

Yeah.

Good morning good.

Morning, Kevin just wanted money.

Speaker 2: Good morning. I just want to ask a little bit more about the top line growth outlook for 2022.

Good morning.

I just wanted to ask a little bit more about.

Yeah.

Top line growth outlook for 2022.

Speaker 2: Should we think of Mexico having a meaningful impact on that outlook for 2022? And also, is there any impact from currency that you're building into that growth guidance?

Should we think of <unk>.

Mexico, having a meaningful impact.

And then outlook for 2022 and also is there.

Any impact from currency that youre building into the growth guidance.

Yes, I mean.

Speaker 3: I would comment, of course, usually we give our guidance, especially on revenue in nominal currency.

I would comment of course, usually we give our guidance, especially on revenue in nominal currency.

Speaker 3: When you look at Q4, the unfavorable impact was about 40 base points.

When you look at Q4 the.

And unfavorable impact was about 40 basis points. So I wouldn't I would not see that as a major item in 2022, unless you know things are changing.

Speaker 3: So I wouldn't, I would not see that as a major item in 2022 unless, you know, things are changing.

Speaker 3: Back to your point about Mexico, if you think about Q4 of 2021 where we have started for the first time the full impact

Back to your point about Mexico, you should think about Q4.

Of 2021, where we are.

For the first time, the full impact of this new legislation it did impact us by about 210 basis points.

Speaker 3: of this new legislation, it did impact us by about 210 base points on our top line, as mentioned, so it's going to be something that is going to impact us in the quarters to come until we anniversary this change we did occur in September of 2021. Having said that,

On our top line as mentioned.

So it is going to be something that is going to impact us in the quarters to come until we anniversary. This change we did <unk> in September of 2021.

I'd say that.

Speaker 3: When you look at BEYOND's impact on revenue, it is a positive on our margin.

When you look at beyond the impact on revenue. It is a positive on the op margin it is back.

Speaker 3: Partly why we have seen some GPR8 improvement, especially in Q4 in our international

Partly why we have seen some GP rate improvement, especially in Q4 in our international business. So the impact on the on the gross profit dollar is much less than what we see in the revenue because of course, it's an opportunity for <unk> and this is what we do now to churn.

Speaker 3: So the impact on the gross profit dollar is much less than what we see in the revenue because

Speaker 3: Of course, it's an opportunity for Kelly, and this is what we do now, to change basically the...

Basically the.

Speaker 3: value proposition we offer to our customers in Mexico and move to higher margin type of solutions which is what we start to see and our GP rate over there is moving up.

The value proposition, we offer to our customers in Mexico and move to higher margin.

Both solutions.

Solutions, which is what we start to see in our GP rate over there is moving up the last thing is that of course knowing.

Speaker 3: The last thing is that, of course, knowing the reduction in revenue in Mexico, which is about 70 percent, down in Q4, we have also adjusted our cost base to really reflect on the new business model we see now emerging.

The reduction in revenue in Mexico, which is about 70% down in in Q4. We have also adjusted our cost base to really reflect on the new business model, we see in our MLG. So I would say significant impact on the revenue much less of.

Speaker 3: So I would say significant impact on the revenue, much less of an impact on GP dollar, and I would call it limited impact on the bottom line overall. But yes, on the revenue, I mean, we are going to continue to see that until we anniversary this change in September .

And in fact on GP dollar and I would call. It limited impact on the bottom line overall, but yes on the revenue I mean, we are going to continue to see that until we anniversary. This change in September .

Speaker 2: Okay, thanks. And so that was helpful to related to the strategy in Mexico. It sounds like it still makes sense to be in that market for you and just, you know, move up market to some higher margin solutions. Is that correct? Yeah. Okay.

Okay. Thanks that was helpful to related to the strategy in Mexico, It sounds like it still.

Makes sense to be in that market for you in this.

Move upmarket.

Some higher margin solutions is that correct.

Yes, yes.

Okay.

And also.

Speaker 2: about the 2022 outlook. You mentioned.

Thinking about the 2022 outlook.

Mentioned I think Olivier.

Speaker 2: factoring in some potential Customer changes to their workforce strategies within PNI and set I don't know if you could expand on that at all

Factor in some potential.

Customer changes to their workforce strategies within P&I and sets.

I don't know if you could expand on that at all.

Speaker 6: Yeah, Kevin, I'll let Olivia comment as well. But essentially, in this challenging talent market,

Yes, Kevin.

Ill, let Olivia comment as well, but essentially in this challenging talent market.

Speaker 6: companies are modifying their historical use of contingent labor.

Companies are modifying their historical use of contingent labor for example, not across the board, but there are customers that for example are.

Speaker 6: For example, not across the board, but there are customers that, for example, are moving earlier to permanent placement of employees as opposed to using contingent labor because they're

Moving earlier to permanent placement of employees as opposed to using contingent labor because they're concerned about being able to attract and retain talent given their own turnover.

Speaker 6: concerned about being able to attract and retain talent, given their own turnover. Some companies are moving towards converting our employees at a much higher rate than historical practices would be. And those are the kinds of concerns.

Some companies are.

Moving towards <unk>.

Converting our employees at a much higher rate than historical.

Practices would be and those are the kinds of.

Speaker 6: changes due to the existing macro environment that could have an impact on, in particular, top line revenue if companies are taking that approach. So those are the kinds of changes in business models that

The change is due to the existing macro environment that could have an impact on.

In particular top line revenue if companies are taking that approach. So those are the kinds of changes in business models that.

Speaker 6: we're seeing in some instances, we don't think it's...

We're seeing in some instances, we don't think it's a permanent change we think it's just a reflection of the <unk>.

Speaker 6: a permanent change. We think it's just a reflection of the existing

Existing.

Speaker 6: constrains talent market. And when things get more relaxed, we expect that companies will probably revert back to a more normal practice in terms of use of contingent labor. OK, yeah, that's helpful. And with that, I'll let you go.

Constraints talent market.

And when things get more relaxed, we expect the companies will probably revert back to a more.

Normal practice in terms of use of contingent labor.

Okay, that's helpful and with that.

More aggressive stance by some customers on.

Speaker 2: permanent hiring, I guess, how much does that factor into your your gross margin outlook? You called out continued growth and permanent placement helping out gross margin and maybe just kind of what are you expecting? Or how are you thinking about permanent placement growth in 2022?

Permanent hiring I guess, how much does that factor.

Factor into your your gross margin outlook you called out.

Continued growth.

Permanent placement, helping our gross margin and maybe just kind of what are you expecting or how are you thinking about permanent placement growth in 2022.

Speaker 3: Yeah, basically, when you think about the outlook, we project a GP rate of 19.4%, which is about 70 base point up versus 2021. Just for you to know, 21 versus 2020, we are up about 40 base points.

Yes.

Basically when you think about the outlook, we project a GP rate of 19, 4%, which is which is about 70 basis points up versus 20.

2021.

Just for you to note 21.

<unk> 2020 will up about 40 basis point, but you might remember that in 2020.

Speaker 3: you might remember that in 2020 our GP rate was favorably impacted by about 20 base point coming from wage subsidies so on the kind of flag for like basis I would say the 40 base point would be more like 60 base point so something very similar that we see for 2022. Of course we don't expect the fees to continue to grow at the type of level we have seen now you know.

Our GP rate was favorably impacted by about 20 basis points coming from wage subsidies. So on a kind of like for like basis, I would say the 40 basis point would be more like 60 basis points. So something very similar that we see for 2022.

Of course, we don't expect the fees to continue to grow at that type of level, we are seeing now.

Yes.

I was.

Speaker 7: sharing today that in Q4 our fee business is up 95% versus 2020.

Sharing today that in Q4, our fee business is up 95%.

2020.

Speaker 3: in Q4 of 2021 and more than 50% up versus 2019. So we know that with the talent shortage we are going to continue to get good traction in the fee business, but we believe that, you know, this dynamic

In Q4 of 2021 and.

More than 50% versus 2019, so we know that talent shortage, we are going to continue to get good traction in the <unk> business, but we believe that.

These dynamic.

Speaker 3: He's going to continue, but certainly at a lower pace.

He is going to continue but certainly at a lower pace than what we have seen in <unk>.

Speaker 3: than what we have seen in 2021. So yes, we plan and we expect some seed business to continue to trend well, but not with the impact we have seen in 2021.

2021, so yes, we plan and we expect some fee business to continue to trend well, but not with the impact we have seen in 2021.

Speaker 2: Okay, that's helpful. And just a couple more here for me.

Okay. That's helpful and just a couple more here for me.

Speaker 2: You know, I think you also mentioned in your prepared comments about.

I think you also mentioned in your prepared comments about.

Speaker 2: assuming continued impact of talent supply on the.

Assuming continued impact.

<unk> supply on the <unk>.

Speaker 2: the revenue growth outlook for 2022, is there any way to frame that up in terms of the amount of impact you'd expect on growth and is that something, it sounded like, you know, you're kind of assuming that that would persist throughout the year.

Revenue growth outlook for 2022.

Is there any way to frame that up in terms of the.

Out of impact you'd expect on growth and is that something that it sounded like you're kind of assuming that that would persist throughout the year.

Speaker 6: Well, Kevin, I don't know if persist throughout the year. I mean, we're not, we're not, uh.

Well, Kevin I don't know persist throughout the year I mean, we're not we're not.

Speaker 6: projecting that it's going to end immediately. As I mentioned earlier, we believe that the worst is behind us. We believe that as health care concerns with Omicron are in the rearview mirror, with schools being stabilized and open again on a more regular basis, with wages increasing, we think the.

Projecting that it's going to end immediately as I mentioned earlier, we believe that the worst is behind US we believe that as health care concerns with omicron are in the rearview mirror with.

Schools being stabilized and open again on a more regular basis with wages increasing.

We think the.

Speaker 6: The labor force participation rate is likely to continue to progress in the right direction, and that's good news for us because the demand we have

Labor force participation rate rate is likely to continue to.

Progressing in the right direction and that's good news for us because the demand we have.

Speaker 6: uh... you know the issue is is being able to fill all of the demand and the more people that are uh... coming back to work uh... the better so i i don't necessarily foresee that it's gonna persists through the the year uh... i think we're going to continue to see gradual improvement throughout the year

The issue is being able to fill all of the demand and the more people that are.

Coming back to work the better so I don't necessarily foresee that it's going to persist through the year.

I think we're going to continue to see gradual improvement throughout the year.

Speaker 3: Yeah, but probably, and we did mention it today, it's going to be a little bit challenging.

Probably and we did mention today is going to be a little bit challenging.

Speaker 3: Especially for education, at the early start of 2022, I think overall the good news is wage inflation. In Q4, we have seen wage inflation at about 11% in P&I as well as in education.

Especially for education.

At the early start of 2022 I think overall the good news is wage inflation in Q4, you have seen wage inflation at about 11% in P&I as well as an education that is very helpful for us to be able to attract talents each one of the outcome.

Speaker 8: That's very helpful for us to be able to attract talent.

Speaker 3: That's one of the outcomes of the discussions we have with some customers to help them to realize the new market environment, especially in terms of supply. And interestingly, in P&I, we have seen also wage inflation at shy of 8% in Q4. So all that is good for us because inflation is good for us, but also because it's good because it's really helpful to attract talent.

The discussions we have with some customers to help them realize the new market environment, especially in terms of supply and interestingly in P&I, we have seen also.

Wage inflation.

At shy of 8% in Q4, so all of that is good for us because inflation is good for us because it is good because it's really helpful to attract talents.

Speaker 1: Right. Okay, that makes sense. And just lastly, the

Right, Okay that makes sense and just lastly.

The.

Speaker 1: four and a half to five and a half percent growth in SGA.

Four five to five 5% growth in SG&A, you're expecting what's the base that we should roll that off of the 2021 basis at the adjusted number excluding.

Speaker 9: You're expecting what what's the base that we should throw that off of the 2021 basis at the adjusted number excluding.

Speaker 2: restructuring charges? Yeah I would say that that's exactly what we we are referring to usually it's really you know excluding or structuring so if you get there that would be probably the best way to apply the range we have of four and a half to five and a half.

Restructuring charges, Yeah, I would say that that's exactly what we are.

Referring to usually it's excluding all structuring.

So you should get there.

That would be probably the best base to apply the range, we have four and a half to five and a half.

Great. Thank you.

Speaker 2: Congratulations on your APAC modernization and looking forward to continued improvement in 2022. Thanks.

Congratulations on.

Your APAC monetization in.

Looking forward to.

Continued improvement in 2022.

Thanks, Kevin Thank you Kevin.

Speaker 4: Next we'll go to Josh Vogel with Sidoti, please go ahead.

Next we'll go to Josh Vogel with Sidoti. Please go ahead.

Speaker 4: Hey, good morning, Peter and Olivier, and yes, congratulations. Certainly exciting news there with monetizing those APAC investments. And thanks for the helpful slide at the end of the deck, just covering that in more detail.

Hey, good morning, gentlemen, Olivier.

Yes, congratulations certainly exciting news there with monetizing those APAC investments in.

Thanks for the helpful. Slide at the end of the deck, just covering that in more detail.

Speaker 4: So you covered a lot of what like a lot of the questions I had, and maybe I just want to build off some of the other questions that we just heard. But, you know, maybe going a little bit deeper into Q4, when I'm looking at the gross profit bridge.

So you covered a lot of.

Like a lot of the questions I had and maybe I just want to build off some of the other.

Questions that we just heard but.

Maybe going a little bit deeper.

Into Q4, when I'm looking at the gross profit bridge.

Speaker 4: you know, obviously a big tailwind from PERM. I'm just curious, you know, how much was that above forecast when you issued the guidance coming out of Q3? You know, basically just like how much was baked into that guidance number? Yeah, I would say

Ridge.

We see a big tailwind from Perm I was just curious how much was that above forecast when you issued the guidance coming out of Q3.

Can you just say how much is baked into that guidance number.

Yes, I would say.

Yes.

Speaker 10: We were expecting a nice improvement year over year.

We were expecting a nice improvement year over year.

Speaker 3: but a little bit below than what we have seen.

But a little bit below than what we have seen.

Speaker 3: Software, you have seen, is, of course, part of it, 50 base points.

So Paul do you have seen is is of course better.

After each 50 basis points. This one was fully anticipated.

Speaker 11: This one was fully anticipated. Basically, software did push our margin by about 50 base points since acquisition, so Q2, Q3, Q4.

Basically self will push our margin by about 50 basis points since acquisition. So Q2 Q3 Q4.

Speaker 12: I would say permanent placement, 80 base points, we are usually cautious on that because, you know, we have some visibility on perm placement, but especially at the end of each year, you know, when you start to be close to year-end, some companies are, you know, sometimes putting a little bit of temporary stop on their recruitment, so usually it's a little bit difficult to do that. So, yeah. Yeah.

I would say permanent placement 80 basis points, we are usually cautious on that because we have some visibility on perm placement, but especially at the end of each year. When you start to be close to year end.

Some companies are sometimes putting a little bit of.

Temporary staff on their recruitment, so usually it's a little bit difficult to.

<unk>.

Speaker 3: forecast, you know, Q4, especially the far end of Q4. We have seen traction better than anticipated, especially at the far end of the year, which I think is good news in terms, you know, how, you know, we can bridge perm placement from the far end of 2021 to 2022. The rest I would say...

Forecast <unk>.

Q4, especially at the end of Q4, we have seen traction barrels anticipated, especially at the front end of the year. When testing is good news in terms of you know how.

We can bridge Perm placement from the far end of 2021% to 2022.

The rest I would say.

Speaker 3: We have always a little bit of movement in what is called employee-related costs.

We are always a little bit of movement in what is called employee related cost it was a little bit more favorable than expected in Q4, but.

Speaker 3: It was a little bit more favorable than dissipated in Q4.

Speaker 3: But, you know, these are kind of things where usually you can have like quarterly fluctuation, but overall we know, you know, on a more like couple of quarters, usually we anticipate well. Sometimes it's a little bit more difficult to look at just one specific quarter for employee-related costs. So overall, slightly better than anticipated, but I would say not massively different than what we're anticipating.

The kinds of things we're usually.

You can have like quarter quarterly fluctuation, but overall we know.

On a more like couple of quarters, usually we anticipate well, sometimes it's a little bit more digital to look at just one specific quarter.

Unemployed related costs, so overall slightly better than anticipated, but I would say not massively different than what we're anticipating.

Speaker 4: That's helpful and I certainly a tailwind from the employee related cost side of it, but you do mention that it was higher in set and I'm just curious that so that's just kind of like a one off there.

That's helpful.

Certainly <unk>.

And from the employee related cost side of it but you do mention that it was higher.

In set and I was just curious that so that's just kind of like a one off there.

Okay.

Speaker 3: It's difficult to know because, you know, we have several items, you know, including health care and payroll tax, workers' comp. I would say, yeah, probably some of it is more temporary than anything else. But there are a lot of things at play, so, yeah, I would say the majority of it is probably temporary, although we shall see.

It's difficult to know because we have several items, including healthcare and payroll tax workers comp.

I would say probably some of it is more temporary than anything else.

But there are a lot of things at play so.

Yes, I would say the majority of it is probably temporary.

You'll see.

Speaker 4: OK, and you had some comments about wage inflation at P&I and education. So I think you said it was 8% at P&I, 11% in education. Does that mean your bill rates were up by those metrics, or were they even better?

Okay, and you had some comments about wage inflation.

<unk>.

<unk>. So I think you said was 8% at P&I, 11% education does that mean your bill rates were up by those metrics already even better.

Speaker 13: I would say when you look at our spread in education and PNI basically it's the same meaning we have

I would say.

When you look at our spread in education and P&I basically its the same meaning we have done a good job in pushing this.

Speaker 3: done a good job on pushing this 11% plus wage inflation to our below rate.

11% plus wage inflation to our bill rate Interestingly when you look at.

Speaker 3: Interestingly, when you look at SET, in SET we have done better, meaning our spread did improve in Q4, meaning our bill rate went up at a faster pace than the roughly 8% wage inflation I was mentioning. And that's basically a good outcome because, as you know, organically in SET...

Set.

Instead, we have done there, meaning our spread did improve in Q4.

Meaning our BT rate went up at a faster pace than the.

Roughly 8%.

Wage inflation that was mentioning and that's basically a good outcome because as you know organically and said we are really trying to get.

Speaker 3: We are really trying to get our bill rate moving up.

<unk> got.

Speaker 3: And that's a very strong sign that you can see in Q4 where our spread is really moving up in a very interesting way, which is basically further boosting the 8% wage inflation we have seen in Q4, as we said.

And that's a very strong sign that you can see.

In Q4, where our spread is already moving up.

And very interesting way, which is basically further boosting.

The 8% wage inflation.

We have seen in Q4, we set.

Speaker 4: All right, great, and I know there's a lot of questions already on the revenue guidance outlook you gave and understanding Mexico will be a little bit of a headwind, but you're just looking at the other moving parts, what.

Alright, great and I know Theres a lot of questions already on.

The revenue guidance outlook, you gave an understanding Mexico will be a little bit of a headwind, but just looking at the other moving parts.

Why.

Speaker 4: know, how much of soft oil, because there's an extra quarter of soft oil, how much does that add? And then also, you know, what are your expectations about wage inflation and bill rate improvement that's built into that full year outlook?

How much of software because there's an extra quarter of software or how much does that add.

And then also what are your expectations about wage inflation and bill rate improvement, that's built into that into that full year outlook.

Speaker 14: Yeah, so on software, you have seen that.

Yes.

So on so forth you have seen that.

Speaker 15: Basically, if you look at Q4, software did provide a boost of about 290 base point of growth.

Basically.

If you look at Q4.

So Paul did provide about booster.

290 basis points of growth. So we are going to see that again in Q1 'twenty.

Speaker 3: So we are going to see that again in Q1 2022 until we anniversary the acquisition of South World on April the 5th. So I would say if you think about the impact, I mean, roughly speaking.

2022.

We anniversaried the acquisition of <unk> on April six so I would say if you are seeing about the impact I mean, roughly speaking very high level, you can take 290 basis points divided by four.

Speaker 3: Very high level, you can take 290 base points divided by 4, because you're going to be, you know, sorry, divided by.

<unk> going to be.

Sorry.

Bye.

Speaker 3: No, it should be, sorry, I'm making the math as we speak, 290 base points for Q1, but it's going to be only Q1 in 2022.

No it should be sorry.

Im making the math as we speak 290 basis points for Q1, but it is going to be only Q1 in 2022 of course.

Speaker 3: Sorry for the mixed up. For inflation...

So if all that mixed up.

On the inflation.

Speaker 16: We usually are more careful than what we see, meaning we, to be clear, we have not forecasted the type of wage inflation I was sharing with you today, like 11% in education, 11% in P&I. We believe that it's going to slow down because of the current environment, the improvement of the supply and demand balance.

We usually are more careful than what we see.

To be clear, we have not forecasted.

The type of wage inflation that we're sharing with you today.

Like 11% and mitigation need of in person P&I, we believe that youre going to slow down because of.

The current environment the improvement.

The supply.

And demand balance.

Speaker 3: And also because we believe inflation, also now at 7.5% in January , is going to ease. So usually we are pretty cautious.

And also because we believe inflation.

Also now at seven and a half percentage and we're just going to ease so usually we are pretty cautious.

Speaker 3: So, I would say we are far below the 11% we are mentioning today. And that may be a surprise, a positive surprise on revenue, especially at the beginning of 2022. But, again, usually, Josh, we are cautious on not betting too much on, you know, very, very high type of double-digit wage inflation.

So I would say we are far below the 11%, we havent mentioned today and Thats may be a surprise.

You surprise on revenue.

Especially at the beginning of 2022, but again, usually Josh we are cautious.

Betting too much on very very high type of double digit.

Wage inflation.

Speaker 17: No, understood. Thank you. And just last one, kind of more housekeeping and for the benefit of those of us building, building out the models here with the, the class A and B repurchase, what, what share count.

No understood. Thank you and just last one kind of more housekeeping for the benefit of those of US building building up the models here.

With the class a and b repurchase.

What what's share count.

Speaker 18: should we would they lose your country be used on the income statement what did that do to the uh... the equity section on the balance

Diluted share count should we be using on the income statement and what does that do to the equity section on the balance sheet.

Speaker 3: The, uh, I mean, the, the, the, uh, so it's, it's basically roughly 1.6 million shares. I mean, to be precise, I think it's, uh, mainly a shares and the B shares from like 1,470 something, so.

Yes.

So it's basically roughly one 6 million shares to.

To be precise I see.

Mainly a shales in the V shows something like 1470, something so.

Speaker 3: negligible. So the majority is 1.6 million Israeli A-shares. It's about 4% of our outstanding shares. So it's going to have an impact on EPS, but I wouldn't call it a major impact when you look at EPS in the future.

Negligible.

So the majority is $1 6 million in Israel.

A shares it's about 4%.

Our outstanding shares so he's going to have an impact on the EPS, but I wouldn't call. It material impact when you look at EPS in the future.

Okay great.

Speaker 19: Great. Well, thank you again and congrats on the AIPAC related news. Thank you.

Well, thank you again and congrats on the APAC related news.

Thanks, Josh I appreciate it thank you Josh.

Speaker 20: And Mr. Quigle, we have no further questions in queue at this time.

And Mr. Quigley, we have no further questions in queue at this time.

Speaker 6: Okay, John , thank you very much. Appreciate your support, and I think we can end the call. Thank you, John . Thank you all.

Okay. John Thank you very much I appreciate your support and I think we can end the call. Thank you John Thank you.

Speaker 4: Yeah, you're very welcome. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.

Yes, Youre very welcome ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.

Speaker 21: We're sorry. Your conference is ending now. Please hang up.

We're sorry your conferences ending now please hang up.

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Speaker 22: P.