Q4 2023 Kelly Services Inc Earnings Call

February 15, 2024

Kelly services, if anyone has any objections you may disconnect at this time, our fourth quarter webcast presentation is also available on Kelly's website for this mornings call I would now like to turn the meeting over to your host Mr. Peter Quigley President and CEO. Please go ahead.

Thank you Julie Hello, everyone and welcome to Kelly's fourth quarter Conference call.

Before we begin I'll walk you through our safe Harbor language, which can be found in our presentation materials.

As a reminder, any comments made during this call, including the Q&A may include forward looking statements about our expectations for future performance.

Actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call.

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

Operator: HealySQ.com Good morning, and welcome to the Kelly Services fourth quarter earnings conference call. All parties will be on a listen only until the question and answer portion of the presentation.

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

Good morning, and welcome to Kelly services fourth quarter earnings Conference call. All parties will be on a 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, our fourth quarter webcast presentation.

Discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations.

Operator: Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. A fourth quarter webcast presentation is also available on Kelly's website for this morning's call. I would now like to turn the meeting over to your host, Mr. Peter Quigley, president and CEO. Please go ahead. Thank you, Keely.

Finally, the slide deck that we're using on today's call is available on our website.

Also available on Kelly's website for this mornings call I would now like to turn the meeting over to your host Mr. Peter Quigley President and CEO. Please go ahead.

With that let's get started.

In a moment ill invite our chief financial officer Olivier to row to share our results for the fourth quarter.

Thank you Kelly Hello, everyone and welcome to Kelly's fourth quarter Conference call.

Peter Quigley: Hello, everyone, and welcome to Kelly's fourth quarter conference call. Before we begin, I'll walk you through our Safe Harbor language, which can be found in our presentation materials. As a reminder, any comments made during this call, including the Q&A, may include forward-looking statements about our expectations for future performance. However, actual results could differ materially from those suggested by our comments, and we have no obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the company's actual future performance. In addition, during the call, certain data will be discussed on a reported and an adjusted basis. Discussion of items on an adjusted basis is a non-GAAP financial measure designed to give insight into certain trends in our operations. Finally, the slide deck that we're using on today's call is available on our website. With that said, let's get started.

I'll then share my reflections on what has been a transformative year defined by decisive action and rapid progress on our growth and efficiency objectives.

Before we begin I'll walk you through our safe Harbor language, which can be found in our presentation materials.

Finally, we will provide our preliminary expectations for 2024 before taking your questions with that I'll turn the call over to Olivier.

As a reminder, any comments made during this call, including the Q&A may include forward looking statements about our expectations for future performance.

Thank you Peter and good morning, everybody.

Before I provide multi dates on our Q4 results.

Results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call.

Brief comments on our full year performance first.

Full year revenue was down two 6% as we posted a three 2% on a constant currency basis.

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

This reflects the challenging staffing market conditions, we see.

In addition, during the call certain data will be discussed on a reported and on an adjusted basis discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations.

So across a wide range of specialties and geographies.

Meet those challenges our education business demonstrated resilience and delivered another year of excellent revenue growth up 32% in 2023, achieving over $840 million in revenue.

Finally, the slide deck that we're using on today's call is available on our website.

With that let's get started.

Most doubling the level of revenue from the pre Covid 2019 period.

Peter Quigley: In a moment, I'll invite our Chief Financial Officer, Olivier Toureau, to share our results for the fourth quarter. I will then share my reflections on what has been a transformative year defined by decisive action and rapid progress on our growth and efficiency objectives. Finally, we'll provide our preliminary expectations for 2024 before taking your questions. With that, I'll turn the call over to Olivier.

In a moment I'll invite our chief financial officer Olivier to row to share our results for the fourth quarter.

Overall gross profit rate for 2020, <unk> was 19, 9%.

I'll then share my reflections on what has been a transformative year defined by decisive action and rapid progress on our growth and efficiency objectives.

A 50 basis point decline from the prior year, driven primarily by lower permanent placement fees.

Finally, we will provide our preliminary expectations for 2024 before taking your questions with that I'll turn the call over to Olivier.

Our 2023 results also reflect the significant efforts made as part of our transformation initiatives to lower our cost base and position us to benefit from our improved efficiency moving forward.

Olivier Toureau: Thank you, Peter, and good morning, everybody. Before I provide more details on our Q4 results, I will make some brief comments on our full year performance first. Full-year revenue was down 2.6% as reported, or 3.2% on a constant currency basis. This reflects the challenging staffing market conditions we saw across a wide range of specialties and geographies. Amid those challenges, our education business demonstrated resilience and delivered another year of excellent revenue growth, up 32% in 2023, achieving over $840 million in revenue, almost doubling the level of revenue from the pre-COVID-19 period. Overall, the gross profit rate for 2023 was 19.9%. This is a 50-basic point decline from the prior year, driven primarily by lower permanent placement.

Thank you Peter and good morning, everybody.

Before I provide more details on our Q4 results. Some brief comments on our full year performance first.

On an adjusted basis, we lowered our SG&A expenses by five 4%.

Full year revenue was down two 6% as we bolted on three 2% on a constant currency basis.

That allowed us to deliver adjusted earnings from operations of $69 1 million.

This reflects the challenging staffing market conditions, we saw across a wide range of specialties and geographies.

<unk> with 2022 in spite of difficult market conditions, and finally, our full year 2023, adjusted EBITDA margin rate improved by 20 basis points.

To meet those challenges our education business demonstrated resilience and delivered another year of excellent revenue growth up 32% in <unk>.

Now looking at the fourth quarter of 2023, and multi to aid revenue totaled $1 2 billion essentially flat with the prior year increase.

2023, achieving over 840 million in revenue.

Almost doubling the level of revenue from the pre Covid 2019 period.

Including 120 basis points of favorable currency impact so revenues were down one 3% on a constant currency basis.

Overall gross profit rate for 2020, Sui was 19, 9%.

He's a 50 basis point decline from the prior year over year, driven primarily by lower permanent placement fees.

As we now look at revenue in the fourth quarter by segment.

As noted in my fully remarks, our education segments revenue growth continues to be strong up 27% year over year.

Olivier Toureau: Our 2023 results also reflect the significant efforts made as part of our transformation initiative to lower our cost base and position us to benefit from our improved efficiency moving forward. On an adjusted basis, we lowered our SG&E expenses by 5.4%, that in spite of difficult market conditions. And finally, our full year 2023 adjusted ABDA margin rate improved by 20 basis points. Now looking at the fourth quarter of 2023 in more detail, revenue totaled $1.2 billion, essentially flat with the prior year, including 120 base points of favorable currency impact, so revenues were down 1.3% on a constant currency basis. As we now look at revenue in the fourth quarter by segment, As noted in my full year remarks, our education segment's revenue growth continues to be strong, up 27% year-over-year. The continued double-digit growth reflects both strong fill rates and demand from existing customers as well as net customer wins. Overall, the education business delivered more than $50 million of year-over-year revenue growth in the quarter. However, in the third segment, revenue was down 5%.

Our 2023 results also reflect the significant efforts made thus far to fall transformation initiatives to lower our cost base and position us to benefit from our improved efficiency moving forward.

The continued double digit growth reflect both strong fee rate and demand from existing customers as well as net customer wins.

Overall, the education business delivered more than $50 million of year over year revenue growth in the quarter.

On adjusted basis, we lowered our SG&A expenses by 5.4%.

In the <unk> segment revenue was down 5%.

That allowed us to deliver adjusted earnings from operations of $69 1 million.

During the fourth quarter, we continued to see the impact of challenging market conditions with year over year revenue down 6% in our staffing specialties as well as lower revenue trends in our outcome based business, which were flat year over year.

<unk> 2022 in spite of difficult market conditions and find that in our full year 2023, adjusted EBITDA margin rate improved by 20 basis points.

Permanent placement fees in set continued to be impacted by lower market demand and declined by 41%.

Now looking at the fourth quarter of 2023 multi to aid revenue totaled $1 2 billion essentially flat with a pio or your.

In our OCG segment revenue declined 3% year over year declines in our fuel continued due to slower hiring in certain market sectors.

Including 120 basis points of favorable currency impact so revenues were down one 3% on a constant currency basis.

Year over year MSP revenues also declined while PTU year over year revenues improved.

As we now look at revenue in the fourth quarter by segment.

As noted in my fully remarks, our education segments revenue growth continues to be strong up 27% year over year.

Revenue in our professional and industrial segment declined 11, 5% year over year in the quarter.

The continued double digit growth reflect bus Tong hsing weight and demand from existing customers as well as net customer wins.

Revenue from our staffing products declined 15%, reflecting continues challenging market conditions.

The segment's outcome base revenue was flat year over year in the quarter.

Overall, the education business delivered more than $50 million of year over year revenue growth in the quarter.

Growth across most of our outcome based specialties was offset by contraction in the year over year demand from our call Center specialty.

In the <unk> segment revenue was down 5%.

Olivier Toureau: During the fourth quarter, we continued to see the impact of challenging market conditions, with year-over-year revenue down 6% in our staffing specialty, as well as lower revenue trends in our outcome-based business, which was flat year-over-year. Permanent placement fees in SET continue to be impacted by lower market demand and declined by 41%. In our OCG segment, revenue declined by 3%, year-over-year declines in RPO continued due to slower hiring in certain market sectors, year-over-year MSP revenues also declined, while PPO year-over-year revenues improved. Revenue in our professional and industrial segments declined 11.5% year-over-year in the quarter.

We ended the fourth quarter, we continued to see the impact of challenging market conditions with year over year revenue down 6% in our staffing specialties as well as lower revenue trends in our outcome based business, which were flat year over year.

And finally revenue in our international segment improved 5% on a reported basis and was down 2% on a constant currency basis.

Overall gross profit was down four 7% as reported or five 7% on a constant currency basis.

Permanent placement fees in said continued to be impacted by lower market demand and declined by 41%.

Our gross profit rate was 19, 3% compounded.

In our OCG segment revenue declined 3% year over year declines in our view of continued due to slower hiring in certain market sectors.

223% in the fourth quarter of the prior year.

Lower Perm fees continued to unfavorably impact our GP rate by 60 basis points in Q4.

Year over year MSP revenues also declined while Pete deal year over year revenues improved.

For the quarter, our GP rate was also impacted by unfavorable business mix by about 60 basis points.

Revenue in our professional and then just for your segment declined 11, 5% year over year in the quarter.

This reflects growth in specialties with lower GP rates, including education, and CPU and lower GP rates set education, and the national due to product customer and country mix respectively.

Olivier Toureau: Revenue from our staffing product declined 15%, reflecting continuous challenging market conditions. The segment's outcome-based revenue was flat year-over-year in the quarter; growth across most of our outcome-based specialties was offset by a contraction in year-over-year demand for our call center specialties. And finally, revenue in our international segment improved 5% on a reported basis but was down 2% on a constant currency basis. Overall gross profit was down 4.7% as reported or 5.7% on a constant currency basis.

Revenue from our staffing products declined 15%, reflecting continues challenging market conditions.

The segment's outcome base revenue was flat year over year in the quarter.

Partially offsetting those impacts were 20 basis points of lower employee related costs.

Growth across most of our outcome based specialties was offset by a contraction in the year over year demand from our call Center specialty.

SG&A expenses were down two 2% year over year on a reported basis.

And finally revenue in our international segment improved 5% on a reported basis and was down 2% on a constant currency basis.

Expenses for the fourth quarter of 2023 include $7 9 million of charges related to our ongoing transformation efforts as well as $6 9 million related to activities associated with the Q1 2020 for sale or for Europe, and the staffing operations.

Overall gross profit was down four 7% as reported or five 7% on a constant currency basis.

Olivier Toureau: Our gross profit rate was 19.3%, compared to 20.3% in the fourth quarter of the Priory. Lower PERM fees continue to unfathomably impact our GB rate by 60 basis points in Q4. And for the quarter, our GP rate was also impacted by unfavorable business by about 60 days. This reflects growth in specialties with lower GP rates, including education and PPO, and lower GP rates in SET, education, and international due to product, customer, and country mix respectively, partially offsetting those impacts where 20 basis points of lower employee related. SG&E expenses were down 2.2% year-over-year on a reported basis. However, expenses for the fourth quarter of 2023 include $7.9 million of charges related to our ongoing transformation efforts The reduction reflects the positive impact of our transformation efforts, which are designed to reduce costs on a structural basis.

Our gross profit rate was 19, 3% compared to 23% in the fourth quarter of the pie over here.

So on an adjusted basis constant currency basis expenses declined by nine 5% similar to Q3.

Lower Perm fees continued to unfavorably impact our GP rate by 60 basis points in Q4.

The reduction reflects the positive impact of our transformation efforts, which are designed to reduce cost on a structural basis.

And for the quarter, our GP rate was also impacted by unfavorable business mix by about 60 basis points.

Our reported earnings from operations in the fourth quarter was $7 3 million compared to $4 6 million in Q4 of 2022.

This reflects growth in specialties with lower GP rates, including education, and CPU and lower GP rates set education, and the national huge product customer and country mix respectively.

As noted our 2023 results include $7 9 million of charges related to our transformation activities and $6 9 million of charges related to the sale of our European staffing operations.

Partially offsetting those impacts were 20 basis points of lower employee related costs.

Our fourth quarter 2022 included $10 3 million goodwill impairment charge.

SG&A expenses were down two 2% year over year on a reported basis.

<unk>.

On an adjusted basis Q4, 2023 earnings from operations were $22 1, million% to 59% improvement over the prior year.

And adjusted EBITDA margin also improved 60 basis points to two 6%.

Income taxes for the fourth quarter were $86 5 million benefit.

Third with our 2020 to income tax expense of $5 2 million.

So on an adjusted basis constant currency basis expenses declined by nine 5% similar to Q3.

Income taxes in 2023, including impact of non taxable gains on the cash surrender value of company owned life insurance and the benefits of work opportunity tax credits, which are recurring.

The reduction reflects the positive impact of old House formation efforts, which are designed to reduce cost on a structural basis.

Olivier Toureau: Our reported earnings from operations in the fourth quarter was $7.3 million compared to $4.6 million in Q4 of 2022. As noted, our 2023 results include 7.9 million of charges related to our transformation activities, and 6.9 million charges related to the sale of our European staffing operations. Our 4th quarter 2022 included the 10.3 million Goodwill Impairment Chart. So on an adjusted basis, Q4 2023 earnings for operations were $22.1 million, a 59% improvement over the prior year, and adjusted EBDA margin also improved 60 basis points to 2.6%, income taxes for the fourth quarter were a 6.5 million benefit compared with our 2022 income tax expense of 5.2 million, income taxes in 2023 include the impact of non-taxable gains on the cash surrender value of company-owned life insurance and the benefits of Work Opportunity Tax Credit, which are recurrent.

Our reported earnings from operations in the fourth quarter was $7 3 million compared to $4 6 million in Q4 of 2022.

In addition, we recognized deferred tax valuation allowance adjustments the tax benefit from outside basis differences on the held for sale assets and other tax impact from the legal entity restructuring of our European subsidiaries and anticipate in anticipation of the Q1 2024.

As noted our 2023 results include $7 9 million of charges related to our transformation activities and $6 9 million of charges related to the sale of our European staffing operations.

Completion of the European staffing collection.

Our fourth quarter 2022 included the $10 3 million goodwill impairment charge.

And finally reported earnings per share for the fourth quarter of 2023 with 31 per share compared to a loss per share of <unk> in 2022.

Sure.

On an adjusted basis Q4, 2023 earnings from operations were $22 1, million% to 59% improvement over the prior year.

Earnings per share in 2023 include 46 cents of unfavorable tax adjustment.

And then adjusted EBITDA margin also improved 60 basis points to two 6%.

<unk> costs.

And an unrealized loss on forward contracts, all net of tax and all related to the sale of our European staffing operations and 16.

Income taxes for the fourth quarter were $86 5 million benefit.

Paired with our 2020 to income tax expense of $5 2 million.

Related to restructuring charges net of tax.

Income taxes in 2023 include the impact of non taxable gains on the cash surrender value of company owned life insurance and the benefits of walk up walking excavator.

Loss per share in 2022 included the impact of goodwill impairment charge net of tax partially offset by a gain on sale of real property net of tax. So on an adjusted basis Q4, 2023, EPS was <unk> 93.

Which are recurring.

Olivier Toureau: In addition, we recognize different tax valuation elements that just. The tax benefits from outside basis differences on health for sale assets and other tax impacts from the legal entity restructuring of our European subsidiaries in anticipation of the Q1 2024 completion of the European staffing transaction, and finally, reported earnings per share for the fourth quarter of 2023 were $0.31 per share compared to a loss per share of $0.02 in 2022. Earnings per share in 2023 include $0.46 of unfavorable tax adjustment, and 16 cents related The losses per share in 2022 included the impact of a goodwill impairment charge, net of tax, partially offset by a gain on the sale of real property, net of tax.

In addition, we recognized a deferred tax valuation allowance adjustments the tax benefit from outside basis differences on the held for sale assets and other tax impact from the legal entity restructuring of our European subsidiaries.

Compared to 18 cents per share in Q4 of 2022.

This significant improvement is driven by year over year change in income taxes as well as business performance.

Nancy patient of the Q1 2020 for completion of the European staffing collection.

Now moving to the balance sheet.

As of yearend 2023 hour European staffing operations are now classified as held for sale and those assets and liabilities.

And finally reported earnings per share for the fourth quarter of 2023 with 31 cents per share compared to a loss per share of <unk> in 2022.

Included on separate line items on our balance sheet.

At year end cash totaled $126 million and we have no debt outstanding of course discuss.

Earnings per share in 2023 include 46 cents of unfavorable tax adjustments.

Cash position doesn't include the more than 100 million of proceeds from the sale of our European staffing operations received early in 2024 or additional proceeds expected under the terms of the sales agreement in the third quarter of 2024.

Action calls and.

And unrealized loss on forward contracts, all net of tax and all related to the sale of our European staffing operations and 16 cents related to restructuring charges net of tax.

So when combining our strong balance sheet with our existing borrowing capacity will continue to have a humble capital available to fund, our organic and inorganic strategy and navigate an uncertain market environment.

Loss per share in 2022 included the impact of goodwill impairment charge net of tax partially offset by a gain on sale of real property net of tax so on an adjusted basis.

Olivier Toureau: So, on an adjusted basis, Q4 2023 EPS was 93 cents, compared to $0.18 per share in Q4 of 2020. The significant improvement is driven by year-over-year changes in income taxes, as well as business performance. Now moving to the bench.

At year end accounts receivable as reported totaled $1 2 billion and represents accounts receivable generated from our north American staffing and outcome based businesses as well as our global MSP and <unk> practices.

For 2023, EPS was <unk> 93 cents compared to 18 cents per share in Q4 of 2022.

The significant improvement is driven by year over year change in income taxes as well as business performance.

Receivables from our European setting operations are now included in assets held for sale.

Now moving to the balance sheet.

Olivier Toureau: As of January 2023, our European staffing operations are now classified as health care, and those assets and liabilities are now included on separate line items on our balance sheet, with the sale of our European staffing operations received early in 2024 or additional proceeds expected under the terms of the sales agreement in the third quarter of 2024. So, combining our strong balance sheet with our existing borrowing capacity... we continue to have ample capital available to fund our organic and inorganic strategies and navigate an uncertain market environment. At Iran, accounts receivable reported a total of 1.2 billion and represents accounts receivable generated from our North American staffing and outcome-based business, as well as our global MSP and RPO practice. Accounts receivable from our European staffing operations are now included in assets held for sale. Our global DSO, which includes all receivables, including those generated by our European staffing operations, was 59 days.

As of yearend 2023 hour European staffing operations are now classified as held for sale and those assets and liabilities are now included on separate line items on our balance sheet.

Our global DSO, which include all receivable, including those generated by our European staffing operations was 59 days.

This is down two days over year end 2022, and reflects continued efforts to manage our working capital investment and customer accounts receivable primarily in the U S.

At yearend cashless tell whenever and $26 million and we had no debt outstanding of course discuss cash position doesn't include the more than 100 million of proceeds from the sale of our European setting operations received early in 2024 or additional proceeds expected under that.

For the year, we generated $61 million of free cash flow compared to using $88 million in free cash flows in 2022.

The one time items in the 2022 <unk>, including the final repayment of approximately $87 million of federal payroll tax balances, which were deferred in 2020 under the cares Act and also $48 million of income taxes due in Japan. Following the sale of our investment in <unk>.

<unk> of the sales agreement in the third quarter of 2024.

Total common stock comparisons from year over year of challenging but on a like for like basis free cash flow did improve from careful management of working capital and now I'll turn it back over to Peter for additional comments. Thanks for those insights Olivier.

Receivables from all European setting operation are now included in assets held for sale.

When we began 2023, we did so with a clear vision for the company's future.

Our global DSO, which include all receivable, including those generated by our European staffing operations was 59 days.

Future defined by significantly improved profitability sustainable growth and greater value creation for all our shareholders stakeholders.

Peter Quigley: This is down two days over year-end 2022 and reflects continued efforts to manage our working capital investment in customer accounts receivable, primarily in the U.S. For the year, we generated $61 million of free cash flow compared to using $88 million in free cash flows in 2022. Even the one-time items in the 2022 period, including the final repayment of approximately 87 million in federal payroll tax balances, which we deferred in 2020 under the CARES Act, and also 48 million in income tax. You are here today. But on a like-for-like basis, free cash flow did improve from careful management of working capital, and now I'll turn it back over to Peter for additional. Thanks for those insights, Olivier. When we began 2023, we did so with a clear vision for the company's future, a future defined by significantly improved profitability, sustainable growth, and greater value creation for all our shareholders and stakeholders. As the year progressed, macroeconomic uncertainty persisted, fueled by inflation, higher interest rates, and geopolitical volatility. In general, employers continue to proceed cautiously with hiring both full-time and temporary workers while taking a measured approach to workforce reduction.

This is down two days over year end 2022, and reflects continued efforts to manage our working capital investment and customer accounts receivable primarily in the U S.

As the year progressed macroeconomic uncertainty persisted fueled by inflation higher interest rates and geopolitical volatility in general employers continue to proceed cautiously with hiring both full time and temporary workers, while taking a measured approach to work force reductions.

For the year, we generated 61 million of free cash flow compared to using $88 million in free cash flows in 2022.

The one time items in the 2000 22 billion, including the final repayment of approximately 87 million of federal payroll tax balances, which were deferred in 2020 under the cares Act and also $48 million of income taxes due in Japan. Following the sale of our investment in <unk>.

While some signs of cooling emerged the labor market remained relatively relatively resilient in the supply of talent for open roles continue to be constrained.

Diverging from the trend our industry has typically experienced during periods of uncertainty.

Notwithstanding these unique dynamics, we focused on what we can control and executed on our vision with urgency and agility.

Common stock comparisons from year over year challenging, but on a like for like basis free cash flow did improve from careful management of working capital and now I'll turn it back over to Peter for additional comments. Thanks for those insights Olivier.

We set out to align our cost base with our strategic priorities operating environment and performance and we have swiftly implementing efficiency actions across the enterprise that have delivered and sustained a structural reduction to SG&A expenses.

When we began 2023, we did so with a clear vision for the company's future.

Future defined by significantly improved profitability sustainable growth and greater value creation for all our shareholders stakeholders.

We said, we would significantly improve our net margin to create greater financial flexibility to invest in Kelly's future and we have delivering 60 basis points of adjusted net margin expansion in the second half of the year.

We are committed to finding new avenues of growth and we have refreshing our go to market strategy with innovative offerings to meet the evolving needs of both customers and talent.

This includes a comprehensive approach to delivering the full suite of Kelly solutions to our large enterprise customers to capture a greater share of wallet.

Peter Quigley: While some signs of cooling emerged, the labor market remained relatively resilient, and the supply of talent for open roles continued to be constrained, diverging from the trend our industry has typically experienced during periods of uncertainty. Notwithstanding these unique dynamics, we focused on what we could control and executed on our vision with urgency and agility. We set out to align our cost base with our strategic priorities, operating environment, and performance, and we have, swiftly implementing efficiency actions across the enterprise that have delivered and sustained a structural reduction in SG&A expenses.

While some signs of cooling emerged the labor market remained relatively relatively resilient in the supply of talent for open roles continued to be constrained.

As of January we are now executing on this strategy with an initial set of focus accounts that represent a meaningful portion of kellys revenue base.

Diverging from the trend our industry has typically experienced during periods of uncertainty.

Of course, we remain committed to providing the highest quality of service to all our customers regardless of spend or size.

Notwithstanding these unique dynamics, we focused on what we can control and executed on our vision with urgency and agility.

In our P&I segment, our enhanced localized delivery model continues to generate positive momentum with both clients and talent benefiting further from our Kelly now mobile App. The App is now live nationwide and actively serving up Taylor job opportunities in commercial enlightened us real <unk>.

Peter Quigley: He said we would significantly improve our net margin to create greater financial flexibility to invest in Kelly's future. And we have, delivering 60 basis points of adjusted net margin expansion in the second half of the year. We committed to finding new avenues of growth. And we have.

<unk> of highly qualified candidates.

With an I trained on the future, we continue to drive growth and value in the near term as well.

We remain focused on capturing demand and more resilient markets, including higher margin higher growth outcome based business as well as in education, which as Olivier mentioned continues to be a high performing growth engine within our portfolio.

We are committed to finding new avenues of growth and we have refreshing our go to market strategy with innovative offerings to meet the evolving needs of both customers and talent.

Peter Quigley: Refreshing our go-to-market strategy with innovative offerings to meet the evolving needs of both customers and talent. This includes a comprehensive approach to delivering the full suite of Kelly solutions to our large enterprise customers to capture a greater share of wallet. As of January, we are now executing on this strategy with an initial set of focus accounts that represent a meaningful portion of Kelly's revenue base. Of course, we remain committed to providing the highest quality of service to all our customers regardless of spend or size. In our P&I segment, our enhanced localized delivery model continues to generate positive momentum with both clients and talent, benefiting further from our KellyNow mobile app. The app is now live nationwide and actively serving up tailored job opportunities in commercial and light industrial to thousands of highly qualified candidates. With an eye trained on the future, we continue to drive growth and value in the near term as well.

This includes a comprehensive approach to delivering the full suite of Kelly solutions to our large enterprise customers to capture a greater share of wallet.

We unlocked additional value, creating opportunities entering an agreement to sell our European staffing business and unlocking more than a $100 million in capital to redeploy in pursuit of organic and inorganic growth.

As of January we are now executing on this strategy with an initial set of focus accounts that represent a meaningful portion of kellys revenue base.

And we successfully completed a $50 million share repurchase program in the third quarter returning value directly to Kelly shareholders.

Of course, we remain committed to providing the highest quality of service to all our customers regardless of spend or size.

Taken together these accomplishments form a strong foundation upon which we will continue to build we entered 2020 for a more efficient profitable and focused enterprise and with further streamlined operating model now comprising four business units with market leading positions in North America staffing.

<unk> and global MSP and <unk> solutions.

<unk> of highly qualified candidates.

We will continue to realize more of the benefits from these changes throughout the year.

With an I trained on the future, we continued to drive growth and value in the near term as well.

For more details on our expectations for 2024, I'll turn the call back over to Olivier. Thank you Peter as Peter mentioned, the staffing market in the underlying economic trends.

We remain focused on capturing demand in more resilient markets, including higher margin higher growth outcome based business as well as in education, which as Olivier mentioned continues to be a high performing growth engine within our portfolio.

It moved in the same patterns, we have seen in other economic cycles and that has made it more difficult to know how quickly the staffing market will improve as we move into 2024.

We unlocked additional value, creating opportunities entering an agreement to sell our European staffing business and unlocking more than $100 million in capital to redeploy in pursuit of organic and inorganic growth.

Peter Quigley: We remain focused on capturing demand in more resilient markets, including higher margin, higher growth, outcome-based business, as well as in education, which, as Olivier mentioned, continues to be a high-performing growth engine within our portfolio. We unlocked additional value-creating opportunities, entering an agreement to sell our European staffing business and unlocking more than $100 million in capital to redeploy in pursuit of organic and inorganic growth. Additionally, we successfully completed a $50 million share repurchase program in the third quarter, returning value directly to Kelly's shareholders. Taken together, these accomplishments form a strong foundation upon which we will continue to build.

As a result, we'll share our outlook for the first half of 2024 only.

Areas, where we believe that Stephanie market conditions will remain relatively consistent with what we have experienced over the past several quarters.

And we successfully completed a $50 million share repurchase program in the third quarter returning value directly to Kelly shareholders.

But before I dive into 2024, I will give you some color on the impact of the sale of our European staffing operations.

Taken together these accomplishments form a strong foundation upon which we will continue to build we enter 2020 for a more efficient profitable and focused enterprise and with further streamlined operating model now comprising four business units with market leading positions in North America.

Our historical results.

For clarity, we have retained our Mexico operations, which were included.

In our international rebuilt the reportable segment through 2023.

Revenue for Mexico has been reported separately in the revenue tables of our earnings release is so you can get more information, including quarterly revenue impact from our historical filings.

Staffing and global MSP and <unk> solutions.

We will continue to realize more of the benefits from these changes throughout the year for a more detailed.

Sales on our expectations for 2024, I'll turn the call back over to Olivier. Thank you Peter as Peter mentioned, the staffing market in the underlying economic trends.

For the full year of 2023, our European staffing operations generated approximately $810 million of revenue.

Peter Quigley: We enter 2024 as a more efficient, profitable, and focused enterprise, and with a further streamlined operating model now comprising four business units with market-leading positions in North America staffing and global MSP and RPO solutions, will continue to realize more of the benefits from these changes throughout the year. For more details on our expectations for 2024, I'll turn the call back over to Olivier. Thank you, Peter.

Moving in the same patterns, we have seen in other economic cycles and that has made it more difficult to know how quickly the staffing market will improve as we move into 2024.

$120 million in gross profit and add $119 million.

G&A expenses.

So reported revenue should be approximately 17% lower as we move into 2024 on a like for like Macy's GP rate should improve by 100 basis points and our EBITDA margin should improve by 40 basis points.

As a result, we'll share our outlook for the first half of 2024 only.

Their yield where we believe that Stephanie market conditions will remain relatively consistent with what we have experienced over the past several quarters.

A result of the same.

Olivier Toureau: As Peter mentioned, the staffing market and underlying economic trends have not moved in the same patterns we have seen in other economic cycles, and that has made it more difficult to know how quickly the staffing market will improve as we move into 2024. As a result, we will share our outlook for the first half of 2024 only, a period during which we believe that staffing market conditions will remain relatively consistent with what we have experienced over the past several quarters. But before I dive into 2024, I will give you some color on the impact of the sale of our European staffing operation on our historical weather. And for clarity, we have retained our Mexico operations, which were included in our international reportable segment, through 2023. Revenue for Mexico has been reported separately in the revenue tables of our earnings releases, so you can get more information, including quarterly revenue impacts, from our historical filings.

The remainder of my comments on our outlook for 2024 will exclude the European staffing operations from the 2023 base.

But before I dive into 2024, I will give you some color on the impact of the sale of our European staffing operations.

Our historical results.

For clarity, we have retained our Mexico operations, which were included in our international rebuilt the reportable segment through 2023.

For the first half of 2024 on the like for like basis, we expect non <unk> net revenue to be flat to up <unk>, 5% with no significant FX impact impact.

Revenue for Mexico has been reported separately in the revenue tables of our earnings release. So you can get more information, including quarterly revenue impact from our historical filings.

Resulting in a midpoint revenue expectation of $2 9 billion.

Our outlook reflects an expectation that Q1 revenue trends will be consistent with Q4 of 2023 and then the transformation related growth initiatives that Peter has mentioned start to gain traction as we moved into Q2.

For the full year of 2023, our European staffing operations generated approximately $810 million of revenue.

$120 million in gross profit and add $119 million in SG&A expenses.

We expect our GP rate to be 25% to 27% on a like for like basis. These are 30 basis point decline in the midpoint of our range, reflecting the change in our business mix, primarily because of our education.

So reported revenue should be approximately 17% lower as we move into 2024 on the like for like Macy's GP rate should improve by 100 basis points and our EBITDA margin should improve by 40 basis points.

Business is expected to continue to deliver significant revenue growth.

Of the same.

The remainder of my comments on our outlook for 2024.

Also we expect to see a continued improvement in efficiency as the impact of our transformation related actions continue.

We will exclude the European staffing operations from the 2023 base.

On a like for like basis, we expect adjusted SG&A expenses to be down 5% to 6% for the first half of 2024.

For the first half of 2024 on a like for like basis, we expect net revenue to be flat to up <unk>, 5% with no significant FX impact impact.

At the midpoint of our outlook, that's unexpected run rate of about $190 million per quarter for the first time for the year.

Olivier Toureau: For the full year of 2023, our European staffing operation generated approximately $810 million of revenue, $120 million in gross profit, and added $119 million in ASEAN expenses. So reported revenue should be approximately 17% lower as we move into 2024 on a like-for-like basis. GP rates should improve by 100 basis points, and our APD margin should improve by 40 basis points as a result of the sale. The reminder of my comments on our outlook for 2024 will exclude European staffing operations from the 2023 base.

Resulting in a midpoint revenue expectation.

Overall, we expect adjusted EBITDA margin in the range of $3 three to three 5%.

<unk> two 9 billion.

In addition to the 60 basis point improvement, we made in our cost structure in the second half of 2023.

And the 40 basis point favorable impact from the sale of our European staffing operations. We expect an additional 30 to 50 basis points of net margin improvement in the first half of 2024.

We expect our GP rate to be 25% to 27% on a like for like basis. These are 30 basis point decline in the midpoint of our range, reflecting a change in our business mix, primarily because of our education.

And we believe that one of the staffing market recovers.

We'll be well positioned to take further advantage of our improved efficiency.

Finally, as we move into 2024, beginning with our first quarter results. We'll report the operating results of our segments utilizing revised segment earnings from operations and EBITDA margin measures will allocate a greater share of the costs. We have previously reported.

This is expected to continue to deliver significant revenue growth.

Also we expect to see a continued improvement in efficiency.

The impact of our transformation related actions continue.

On a like for like basis, we expect adjusted SG&A expenses to be down 5% to 6% for the first half of 2024.

Olivier Toureau: For the first half of 2024, on a like-for-like basis, we expect nominal revenue to be flat to up 0.5%, with no significant effects impact, resulting in a midpoint revenue expectation of 2.09 billion. Our outlook reflects an expectation that Q1 revenue trends will be consistent with Q4 of 2023 and then the transformation-related growth initiatives that Peter has mentioned start to gain traction as we move into Q2. We expect our GP rate to be 20.5% to 20.7% on a like for like basis.

Corporate cost.

Our business units.

At the midpoint of our outlook, that's unexpected run rate of about $190 million per quarter for the first time for the year.

This aligns with feedback from investors and others that they would value greater transparency on the financial results each business unique generates and how does it contribute to <unk> overall performance.

Overall, we expect adjusted EBITDA margin in the range of $3 three to three 5%.

And now back to you Peter.

Olivier.

The decisive action and rapid progress our team delivered in 2023, we have laid the groundwork for 2024 to be an inflection point and Kelly 77 year history.

In addition to the 60 basis point improvement, we made in our cost structure in the second half of 2023.

And the 40 basis point favorable impact from the sale of our European staffing operations. We expect an additional 30 to 50 basis points of net margin improvement in the first half of 2024.

Our efficiency measures are delivering sustained results our growth initiatives are now in the implementation phase and we entered the year with an adjusted EBITDA margin of 3%.

And we believe that went to the staffing market recovers.

Step change from our historical net margin average of around 2%.

We'll be well positioned to take further advantage of our improved efficiency.

As Olivier shared the stage is set for the company to achieve our previously disclosed expectation for net margin of three three to three 5%.

Olivier Toureau: This is a 30 base point decline at the midpoint of our run, reflecting the change in our business, primary because of our education. However, business is expected to continue to deliver significant revenue growth. Also, we expect to see a continued improvement in efficiency as the impact of our transformation-related actions continues. On a like-for-like basis, we expect adjusted SDN expenses to be down 5 to 6% for the first half of 2024. At the midpoint of our outlook, that's an expected run rate of about $190 million per quarter for the first half of the year. Overall, we expect an adjusted EBDM margin in the range of 3.3 to 3.5%.

With these structural improvements in place I'm confident that Kelly is well positioned to capture increased customer demand when the macroeconomic environment improves and convert a greater share of topline gains to the bottom line growth.

Corporate cost.

Our business units.

I am very proud of the way our team has kept their sights set on dual horizons definitely steering Kelly through a challenging external environment and delivering results in the near term all while embracing the change that's necessary to position the company for the future.

And now back to you Peter Thanks Olivier.

Finally, I am grateful to our customers talent and shareholders, who have been with US on this journey, placing their trust and Kelly to deliver on our commitments and create value over the long term. While there is work to be done I'm confident that 2024 is a start of a new era of growth for Kelly a year in which we'll begin to reap the.

The decisive action and rapid progress our team delivered in 2023, we have laid the groundwork for 2024 to be an inflection point and Kelly 77 year history.

Our efficiency measures are delivering sustained results our growth initiatives are now in the implementation phase and we entered the year with an adjusted EBITDA margin of 3% a step change from our historical net margin average of around 2%.

Peter Quigley: In addition to the 60 basis point improvement we made in our cost structure in the second half of 2023 and the 40 basis point favourable impact from the sale of our European staffing operation, we expect an additional 30 to 50 basis points of net margin improvement in the first half of 2021, and we believe that when the staffing market recovers, we'll be well positioned to take further advantage of our improved efficiency. Finally, as we move into 2024, beginning with our first quarter results, we'll report the operating results of our segment, utilizing revised segment earnings from operations and EBDA margin measures, and allocate a greater share of the costs we have previously reported as corporate costs to our business unit. This aligns with feedback from investors and others that they would value greater transparency on the financial results each business unit generates and how they contribute to Kelly's overall performance. Now, back to you, Peter. Thanks, Olivier.

<unk> benefits of the work we've done to transform this company and reward all of our stakeholders Gili you can now open the call to questions.

Thank you and ladies and gentlemen, if you wish to ask a question. Please press one and then zero on your Touchtone phone you will hear an acknowledgment that you've been placed into queue and you may remove yourself from queue at any time by repeating the ones. They are all command.

As Olivier shared the stage is set for the company to achieve our previously disclosed expectation for net margin of three three to three 5%.

If you are on a speakerphone. Please pick up your handset before pressing the numbers once again for questions. Please press one and then zero at this time.

Yeah.

Our first question will come from the line of Joe Gomes with noble capital.

I'm very proud of the way our team has kept their sights set on dual horizon definitely steering Kelly through a challenging external environment and delivering results in the near term all while embracing the change that's necessary to position the company for the future.

Good morning, Joe Good morning, Good morning, Good morning, Thanks for taking my questions.

So Peter just kind of wanted to start off.

You guys are doing everything you can.

What else can we do to try and attract more candidates in order to be able to fill whatever opportunities. There are I mean, what is there any more levers there that you can pull.

While there is work to be done I'm confident that 2024 is a start of a new era of growth for Kelly a year in which we'll begin to reap the full benefits of the work we've done to transform this company and reward all of our stakeholders Gili you can now open the call to questions.

Peter Quigley: With the decisive action and rapid progress our team delivered in 2023, we have laid the groundwork for 2024 to be an inflection point in Kelly's 77-year history. Our efficiency measures are delivering sustained results. Our growth initiatives are now in the implementation phase, and we enter the year with an adjusted EBITDA margin of 3%, a step change from our historical net margin average of around 2%. As Olivier shared, the stage is set for the company to achieve our previously disclosed expectation for net margin of 3.3 to 3.5 percent. With these structural improvements in place, I'm confident that Kelly is well positioned to capture increased customer demand when the macroeconomic environment improves and convert a greater share of top-line gains to bottom-line growth.

Yes, Joe we are continuously.

Finding new ways to reach talent.

Social media is obviously, a key component of that but not the only one.

Thank you.

Sure.

Revised geo structure that we've announced for our P&I segment is designed to establish a greater personal connection for those individuals that want to <unk>.

Ladies and gentlemen, if you wish to ask a question. Please press one and then zero on your Touchtone phone you will hear an acknowledgment that you've been placed into queue and you may remove yourself from queue at any time by repeating the onesie <unk> demand.

Contact with a person in our Kelly now App is designed to connect with more people over a broader geographic area for those people that prefer to do something electronically so well.

You are on a speakerphone, please pick up your handset before pressing the numbers once again for questions. Please press one and then zero at this time.

We are continuously exploring new ways in all of our businesses.

Our first question will come from the line of Joe Gomes with noble capital.

<unk>.

The improvement in fill rates in our education segment is a great example of how we've been successful.

Good morning, Joe Good morning, Good morning, Good morning, Thanks for taking my questions.

So.

Okay. Thank you for that.

Peter just kind of wanted to start off.

You guys are doing everything it can.

Just.

Quick technical question here Olivier.

What else can we do to try and attract more candidates in order to be able to fill whatever opportunities. There are I mean, what is there any more levers there that you can pull.

So yep.

Peter Quigley: I'm very proud of the way our team has kept their sights set on dual horizons, deftly steering Kelly through a challenging external environment and delivering results in the near term, all while embracing the change that's necessary to position the company for the future. Finally, I'm grateful to our customers, talent, and shareholders who have been with us on this journey, placing their trust in Kelly to deliver on our commitments and create value over the long term. While there is work to be done, I'm confident that 2024 is the start of a new era of growth for Kelly, a year in which we'll begin to reap the full benefits of the work we've done to transform this company and reward all our stakeholders. Healy, you can now open the call to questions. Thank you. And, ladies and gentlemen, if you wish to ask a question, please press one and then zero on your touchtone phone. You will hear an acknowledgement that you've been placed in queue, and you may remove yourself from queue at any time by repeating the one zero command.

Looking at the balance sheet, you've got assets held for sale at year end of $291 million you.

You sold the international got let's call. It 100 plus million for that what else is included in that assets.

Yes, Joe we are continuously.

Finding new ways to reach talent.

Help for sale.

Social media is obviously, a key component of that but not the only one.

Or is there something else there on the accounting side that suggest maybe we're going to see a write down and at some point this year.

Sure.

Revised geo structure that we've announced for our P&I segment is designed to establish a greater personal connection for those individuals that want to.

No I think when you look at the held for sale you have about $290 million of.

Assets $170 million of liabilities with a net book value is about 2020.

Contact with a person in our Kelly now App is designed to connect with more people over a broader geographic area for those people that prefer to do something electronically. So.

Of course as you know.

We did receive the proceeds.

At least the first tranche of about.

It's $110 6 million on January 3rd.

We are continuously exploring new ways in all of our businesses and I think.

Of this year.

But they are still pending points that.

The improvement in fill rates in our education segment is a great example of how we've been successful.

I would like to mention.

Collection should be cash free debt free.

Okay. Thank you for that.

With a normalized level of working capital and there is also an earn out so all of that is under review.

Just.

Quick technical question here Olivier.

Yep glancing at the balance sheet, you've got assets held for sale at year end of $291 million.

And we expect to get.

Additional proceeds likely from all these items.

You sold the international got let's call. It 100 plus million for that what else is included in that assets.

In the course of probably late Q2 or early Q3.

And that is going to be in addition to basically the $110 6 million.

Operator: If you are on a speakerphone, please pick up your handset before pressing the numbers. Once again, for questions, please press 1 and then 0 at this time. Our first question will come from the line of Joe Gomez with Noble Capital. Morning, Joe. Good morning. Good more. Good morning.

Held for sale.

Our equivalent we did receive at the time of the signings or early January.

Or is there something else there on the accounting side that suggest maybe we're going to see a write down and at some point this year.

Okay, great. Thanks, Thanks for clarity.

More if I may.

No I think when you look at the held for sale you have about $290 million of.

Kind of more big picture here Peter.

Joe Gomez: Thanks for taking my questions. So, Peter, just kind of wanted to start off, you guys are doing everything you can. What, what else can we do to try and attract more candidates in order to be able to fill whatever opportunities there are? I mean, are there any more levers there that you can pull?

So you've been CEO since our.

Assets $170 million of liabilities was a net book value is about 120.

October 2019, I believe kind of dealt tough hand, we have to deal with Covid, and then recession and inflation.

Of course as you know.

We did receive the proceeds.

At least the first tranche of about.

Certain economic environment, but you.

$110 6 million on January the third.

In that timeframe, you monetize that asset.

Done M&A, the transformation and restructuring efforts.

Of this year.

Peter Quigley: Yeah, Joe, we're continuously finding new ways to reach talent. Social media is obviously a key component of that, but not the only one. Our revised geostructure that we've announced for our P&I segment is designed to establish a greater personal connection for those individuals that want to contact a person. And our Kelly Now app is designed to connect with more people over a broader geographic area for those people that prefer to do something electronically. So we're continuously exploring new ways in all of our businesses, and I think the improvement in fill rates in our education segment is a great example of how we've been successful. Thank you for that. Just a quick kind of technical question here, Olivier.

But they are still pending points that.

And yet the stock really as below from when you took over.

I would like to mention.

Collections should be cash free debt free.

And just trying to get an idea of what else do you see can you either can you do that would attract investors and to help drive the stock higher.

With a normalized level of working capital and there is also an earn out so all of that is under review.

And we expect to get.

Additional proceeds likely from all of these items in.

<unk> is the fact that we have to share class just an impediment.

In the course of probably late Q2 early Q3.

<unk> more investors and more eyeball.

That is going to be in addition to basically a 110 6 million.

The <unk> story.

Yes, Joe so.

That equivalent we did receive at the time of the signings or early January.

Think in prior conversations I have avoided trying to get into the head of perspective.

Okay, great. Thanks, Thanks for clarity.

<unk> so.

But what I would say is I think based on our conversations with investors and potential investors. The improvements that we made last year.

If I may.

Kind of more big picture here Peter.

So you've been CEO.

Since October 2019, I believe kind of dealt tough hand immediately having to deal with Covid and then.

Are going to be a wakeup call that were on a different trajectory.

Olivier Toureau: So, glancing at the balance sheet, you've got assets held for sale at year-end of two hundred ninety one million. You sold the international and got, let's call it, a hundred plus million for that. What else is included in that asset? held for sale, or is there, you know, something else there on the accounting side that suggests maybe we're going to see a write-down at some point this year? No, I think when you look at the health care for sale, you have about $290 million of assets, $170 million of liabilities, so the net book value is about $120 million. Of course, as you know, we did receive the proceeds, at least the first tranche, of about $110.6 million on January 3rd of this year. But there are still pending points that I would like to mention. The transaction should be cash-free and debt-free, with a normalized level of working capital.

Then we have been for the past 20 years, obviously, we have to deliver those results, but entering the year to 3%.

Sachin and inflation.

This uncertain economic environment, but you.

Net margin versus our past 20 year average of about 2% I think is the.

In that timeframe, you monetize that asset.

Done M&A, the transformation and restructuring efforts.

A major step in that direction.

I think our focus on growth are.

And yet the stock really as below from when you took over.

Growth in the past.

Several years, even longer than that has been relatively flat. So it's a combination of net margin improvement and topline.

And just trying to get an idea of what else do you see can you either can you do that would attract investors and to help drive the stock higher.

Growth that is behind the transformation that we initiated last year.

Or is the fact that we have to share class just an impediment.

And I think that the fact that we're now a more disciplined focused company given the portfolio.

<unk> more investors and more eyeball.

The <unk> story.

The revisions that we've made will be will be a simpler to understand business for many investors.

Yes, Joe so.

In prior conversations I have avoided trying to get into the head of perspective.

And I think as.

Investors so.

As we deliver the financial results, we will begin to attract more attention and engage more.

But what I would say is I think based on our conversations with investors and potential investors. The improvements that we made last year.

Potential shareholders in interest in being along on our journey.

Olivier Toureau: And there is also an earn-out, so all that is under review. And we expect to get additional proceeds, likely, from all these items in the course of probably late Q2 or early Q3, and that's going to be in addition to basically the $110.6 million equivalent we did receive at the time of the signing, so early January. Great. Thanks.

Going to be a wakeup call that were on a different trajectory.

I would add probably inorganic.

It's a big focus and Peter discuss about it several times you know that both.

And then we have been for the past 20 years, obviously, we have to deliver those results, but entering the year to 3%.

EMEA staffing collection.

We are going to have.

Net margin versus our past 20 year average of about 2% I think is a major step in that direction.

Cash in excess of $200 million, probably more in the 25% to 30, we have $300 million of available capacities.

Joe Gomez: Thanks for that clarification. And one more, if I may, kind of the bigger picture here, Peter. So you've been CEO, you know, since October of 2019, I believe you kind of dealt a tough hand immediately having to deal with COVID and then recession and inflation, you know, this uncertain economic environment, but you've, in that timeframe, monetized assets, done M&A, the transformation, the restructuring efforts, and yet the stock really is below when you took over. And just trying to get an idea of what else do you see, can you? What else can you do that would attract investors to help drive the stock higher, or is the fact that we have the two share class just an impediment to attracting more investors and more eyeballs to the Kelly story?

I think our focus on growth are.

With a very strong balance sheet.

Growth in the past.

And we are continuing to actively looking at properties.

Several years, even longer than that has been relatively flat.

As we lead in the past.

So it's a combination of net margin improvement and topline.

But I think in demo capabilities now financial capabilities, we can basically.

Growth that is behind the transformation that we initiated last year.

Look at properties that probably were not affordable for us even a couple of years ago.

And I think that the fact that we're now a more disciplined focused company given the portfolio.

Great.

The math is I appreciate that and really look forward to seeing how 2024 unfolds. Thanks for taking the questions.

Revisions that we've made will be will be a simpler to understand business for many investors.

Thank you. Thank you Joe.

And I think as.

We'll go next to the line of Kevin Steinke with Barrington Research.

As we deliver the financial results, we will begin to attract more attention and engage more.

Morning, Kevin Good morning.

Good morning, Peter and Olivier Thanks for taking the question so.

Potential shareholders in interest in being along on our journey.

I would add probably inorganic.

Just wanted to circle back on the gross margin outlook you discussed for the first half of 2024.

It's a big focus and Peter discuss about it several times you know that both.

Joe Gomez: Yeah, Joe, so in prior conversations, I've avoided trying to get into the head of potential investors. But what I would say is, based on our conversations with investors and potential investors, the improvements that we made last year are going to be a wake-up call that we're on a different trajectory than what we have been for the past 20 years. Obviously, we have to deliver those results, but entering the year at a 3% net margin versus our past 20-year average of about 2%, I think is a major step in that direction. I think our focus on growth, our growth in the past several years, even longer than that, has been relatively flat.

EMEA Stephan transaction.

And Olivier you talked about the mix shift to education, there and the expected impact but.

We are going to have.

Cash in excess of $200 million, probably more in the 25 to 30, we have 300 million of available capacities.

What are you thinking.

Factoring in in terms of the Perm placement outlook or is that.

With a very strong balance sheet.

A meaningful part.

As you think about how gross margin will trend in the first half.

And we are continuing to actively looking at properties.

As we did in the past but.

So given the first thing you need to think about disease mechanical improvement of 101 hundred basis points right. So when.

But I think in terms of capabilities and our financial capabilities, we can basically.

Look at properties that probably were not affordable for us even a couple of years ago.

We guided 25 to two.

<unk> 27.

Basically each.

But kind of like for like pro forma comparison right. The second thing is if you think about our expectations for fee business.

Great.

The math is I appreciate that and really look forward to seeing how 2024 unfolds. Thanks for taking the questions.

Thank you Joe.

I would say the first half of this.

We'll go next to the line of Kevin Steinke with Barrington Research.

It's what I would call a stabilization so more of an improvement.

Good morning, Kevin Good morning.

A link to a lower base of Comparables.

Good morning, Peter and Olivier.

Thanks for taking the question so.

Peter Quigley: So, it's a combination of net margin improvement and top-line growth that is behind the transformation that we initiated last year. And I think that the fact that we are now a more disciplined, focused company, given the portfolio revisions that we've made, will be a simpler business for many investors. And I think, you know, as we deliver the financial results, we'll begin to attract more attention and engage more potential shareholders in interest in being along on our journey. I would add probably inorganic.

So something that I would say is kind of neutral.

Just wanted to circle back on the gross margin outlook you discussed for the first half of 2024.

The main factor we really.

Deep compute ease.

And Olivier you talked about the mix shift to education, there and the expected impact but.

Mix that I was referring to especially related to the growth we have in education.

What are you thinking.

And basically the type of.

Factoring in in terms of the Perm placement outlook or is that even meaningful part.

Overall pressure that it's putting on our GP rate not on our GP dollar growth. So.

As you think about how gross margin will trend in the first half.

I would say no trial for fees mix.

Would be the biggest.

So given the first thing you need to think about disease mechanical improvement of 101 hundred basis points right. So when we.

<unk>.

Seeing that compresses, our margin, especially driven by education.

Olivier Toureau: You know, it's a big focus, and Peter did discuss it with me several times. You know that post the EMEA staffing transaction, we are going to have cash in excess of 200 million, probably more in the 25 to 30. We have 300 million of available capacity with a very strong balance sheet, and we are continuing to actively look at properties as we did in the past, but I think, in terms of capabilities, now financial capabilities, we can basically look at properties that probably were not affordable for us even a couple of years ago. Great. Those are awesome answers,

We guide 25 to.

That's our assumption for the moment, which is what we have seen also in Q4 also in Q4, you know that we are also 60 basis points coming from the fee business, but now with the comps are much lower so I don't see that is going to have the impact we have seen all over 2023.

27.

Basically each.

Kind of like for like pro forma comparison right. The second thing is if you think about our expectations for fee business.

I would say the first half of this.

It's what I would call new stabilization, so more of an improvement.

Okay, Great that's helpful.

Okay.

A link to a lower base of Comparables.

Obviously education continues to be.

So something that I would say is kind of neutral.

Strong performer and really impressive growth there.

The main factor, we really are.

Maybe just talk about the continued runway of opportunity you see there.

Did compute ease.

Mix that I was referring to especially related to the growth we have in education.

For new customers penetration of existing customers et cetera.

Joe Gomez: I appreciate that and really look forward to seeing how 2024 unfolds. Thanks for taking the question. Thank you. Thank you, Joe. We'll go next to the line for Kevin Stanky with Barrington Research. Morning, Kevin. Good morning.

And basically the type of.

How.

Overall pressure that it's putting on our GP rate not on our GP dollar growth. So.

Sustainable the runway.

Is that you see there in terms of the growth outlook.

So I would say no trial for fees mix.

Well clearly as Olivier was talking about comps the comps get more and more difficult for education, which has had a very good a very good run but the.

Would be the biggest.

<unk>.

Seeing that compresses, our margin, especially driven by education.

The business is operating extremely well.

Kevin Stanky: Good morning, Peter and Olivier. Thanks for taking the time to answer my question. So, I just wanted to circle back on the gross margin outlook you discussed for the first half of 2024. Olivier, you talked about the mixed shift to education there and the expected impact. But what are you thinking or factoring in in terms of the perm placement outlook? Or is that even a meaningful part as you think about how gross margin will trend in the first half? So Kevin, the first thing you need to think about is this mechanical improvement of 100 basis points, right? So when we guide 20.5 to 20.7, basically, it's a kind of like-for-like pro-forma comparison, right?

<unk>.

That's our assumption for the moment, which is what we have seen also in Q4 also in Q4, you know that we are also 60 basis point of the coming from the fee business, but now with the comps are much lower so I don't see that is going to have the impact we have seen all over 2023.

Both with existing customers as well as generating interest from new school districts.

Both large and small.

The we've seen a steady improvement in fill rates.

In.

In many of the school districts, which is very positive we've seen.

Improvements in pay rates those last two items, the fill rates and pay rates do have a sort of a natural ceiling, but other than that the.

Okay, Great that's helpful.

Okay.

Obviously education continues to be.

Strong performer and really impressive growth there.

Fact is the business is.

Responding to.

Maybe just talk about the continued runway of opportunities you see there.

A dynamic in the market or theres not enough instructors in classrooms and.

We have demonstrated that we are the best in the business and filling those.

For new customers penetration of existing customers et cetera.

Instructor positions. So we think the future is very bright for education.

How.

Sustainable the runway.

Is that you see there in terms of the growth outlook.

Okay great.

Also on education.

Well clearly as Olivier was talking about comps the comps get more and more difficult for education, which has had a very good a very good run but the.

Fourth quarter.

Gross margin was a bit lower than we had seen historically over the last.

Olivier Toureau: The second thing is, if you think about our expectations for fee business, I would say in the first half of this year, it's what I would call a stabilization, so more an improvement linked to a lower base of comparables. So something that I would say is kind of neutral.

Several quarters I don't know if you have anything to call out there.

The business is operating extremely well.

In terms of mix or something like that but just curious.

<unk>.

Both with existing customers as well as generating interest from new school districts.

Yes, probably hue hue things to call out.

<unk>.

Olivier Toureau: The main factor we really did compute is this mix that I was referring to, especially related to the growth we have in education and basically the type of overall pressure that it's putting on our GP rate, not on our GP dollar growth. So I would say the neutral for fees mix would be the biggest pressure that would compress our margin, especially driven by education. That's our assumption for the moment, which is what we have seen also in Q4. Also, in Q4, you know that we also had 60 base points of revenue coming from the fee business, but now the comps are much lower. So I don't think that it's gonna have the impact we have seen all over 2026. Okay, great. That's helpful.

Both large and small.

I would say.

The we've seen a steady improvement in fill rates.

It was a little bit of a challenging quarter, but not more.

In.

I mean more for <unk>.

In many of the school districts, which is very positive we have seen.

Phasing reasons on our fee business.

But we don't see that as.

Improvements in pay rates those last two items, the fill rates and pay rates do have a sort of a natural ceiling, but other than that the.

A deceleration it's more that our business in education.

Like any business going up going down we don't see that as a <unk>.

The fact is the business is responding to.

Like what we have seen in the <unk> business unit set top P&I.

A dynamic in the market or theres not enough instructors in classrooms and.

The second factor is a little bit of mix.

We have demonstrated that we are the best in the business that are drilling those instructor positions. So we think the future is very bright for education.

We don't see it moving down there is a little bit of pressure, but it's more the mix, especially because very recently.

Okay great.

We have welcomed pretty big customers new wins.

Peter Quigley: Obviously, education continues to be a strong performer and, you know, really impressive growth there. Maybe just talk about the continued runway or opportunity you see there for new customers, penetration of existing customers, etc., you know, how, how, uh, sustainable the runway is that you see there in terms of the growth outlook. Well, clearly, as Olivier was talking about comps, the comps get more and more difficult for education, which has had a very good, a very good run. But the business is operating extremely well, both with existing customers as well as generating interest from new school districts, both large and small. We've seen a steady improvement in fill rates. In many school districts, which is very positive, we've seen improvements in pay rates.

Also on education.

And the mix is a little bit more challenging, but I don't see that as a kind of long term issue. So honestly looking at Q4, I see that more whether it's on the fee side on the mix side as <unk>.

Fourth quarter.

Gross margin was a bit lower than we had.

Historically over the last.

Several quarters I don't know if you have anything to call out there.

In terms of mix or something like that but just curious.

Something that is more temporary and the normal fluctuation, we see quarter over quarter.

Yes, probably issue.

Few things to call out.

Alright understood. That's helpful. Maybe just a couple more here.

I would say.

The little bit of a challenging quarter, but not.

So you talked about the <unk>.

Revenue outlook for the first half of 2024 and first quarter.

More for <unk>.

Saving reasons on our fee business.

Expected to be pretty consistent with the trend you saw in the fourth quarter, but then.

But we don't see that as a.

Deceleration, it's more that our shoe business in education.

You mentioned.

You're looking for an improvement.

You'd like energy business going up going down we don't see that as a as a pattern like what we have seen in the <unk> set top P&I.

Revenue trends in the second quarter and you linked that to your.

Transformational growth initiatives, so maybe just give us an update on.

The traction you expect there in the various initiatives that.

The second factor is a little bit of mix.

<unk>.

That you see contributing to that.

Peter Quigley: Those last two items, the fill rates and pay rates, do have a sort of a natural ceiling. But other than that, the fact is the business is responding to... the St. Louis Army. Okay, great. Just also on education. The fourth quarter gross margin was, you know, a bit lower than we had seen historically over the last, you know, several quarters. I don't know if there's anything to call out there in terms of mix or something like that, but I'm just curious about the rules.

We don't see of US moving down there is a little bit of pressure, but it's more the mix, especially because very recently we.

Traction in the second quarter.

Well as as we've discussed Kevin.

We are well come pretty big customers new wins.

In 2023, we delivered significant improvements in our SG&A through.

And the mix is a little bit more challenging, but I don't see that as the as the kind of long term issue. So honestly looking at Q4, I see that more whether it's on the fee side on the <unk>.

Through efficiency gains and <unk>.

Pivoted.

To focus on growth later in 2023.

The <unk>.

<unk> side as something that is more temporary and the normal fluctuation, we see quarter over quarter.

Time, it takes for those to materialize and show up as a little bit longer than the SG&A.

Olivier Toureau: Yeah, probably a few things to call out. I would say, It was a little bit of a challenging quarter, but not, I mean, more for saving reasons in our fee business. It was a little bit of a challenging quarter, but not, I mean, more for saving reasons than what we have seen in the fee business in SET or P&I. The second factor is a little bit of mixing.

Benefits that we saw.

Alright understood. That's helpful. Maybe just a couple more here.

We're.

We.

Painting that sometime in the second quarter the.

You talked about the revenue outlook for the first half of 2024 and first quarter expected to be pretty consistent with the trend you saw in the fourth quarter, but then.

<unk>.

The steps that we've taken to grow our market share within our large enterprise customers will begin to.

Olivier Toureau: We don't see our spread moving down. There is a little bit of pressure, but it's more the mix, especially because, very recently, we have welcomed pretty big customers, new wins. And the mix is a little bit more challenging, but I don't see that as a kind of long-term issue.

Take hold and.

You mentioned.

We're approaching a very significant portion of our revenue through that program and.

You're looking for an improvement.

Revenue trends in the second quarter and you linked that to your.

We think theres opportunity for revenue growth again, starting sometime in the second quarter.

Transformational growth initiatives, so maybe just give us an update on.

The traction you expect there in the various initiatives that.

Kevin Stanky: So honestly, looking at Q4, I see that more, whether it's on the fee side or on the mix side, as something that is more temporary and the normal fluctuation we see quarter over quarter. All right, understood that's helpful. Maybe just a couple more here.

Okay.

Right.

And lastly on the.

That you see contributing to that.

The M&A front, you talked about you're actively.

<unk> in the second quarter.

Well as as we've discussed.

Continuing to look at.

Kevin.

In 2023, we delivered significant improvements in our SG&A through.

Properties and.

Peter Quigley: So you talked about the revenue outlook for the first half of 2024 and the first quarter. Spector, it was pretty consistent with the trend you saw in the fourth quarter, but then you mentioned you're looking for an improvement and you know, the traction you expect there and the various initiatives that you see contributing to that traction in the second quarter. Well, as we've discussed, Kevin, you know, in 2023, we delivered significant improvements in our SG&A through efficiency gains and pivoted to focus on growth later in 2023. However, the time it takes for those to materialize and show up is a little bit longer than the SG&A benefits that we saw.

Olivier you mentioned with the additional capital you now have from the European staffing sale, maybe being able to afford some properties that you might not have before you're just talking about in terms of.

Through efficiency gains and <unk>.

Pivoted.

To focus on growth later in 2023.

The <unk>.

Time, it takes for those to materialize and show up as a little bit longer than the SG&A.

Targets of a larger size or.

Maybe paying a little more on the valuation side, maybe you could just delve into the.

Benefits that we saw.

So that comment in the overall pipeline youre seeing.

We're.

We.

Painting that sometime in the second quarter the.

Yes, I think it's more the former than the latter we're not going to we're going to continue to be very disciplined in terms of what we pay for properties and we're going to be looking for the kinds of high quality high growth properties that we have.

<unk>.

The steps that we've taken to grow our market share within our large enterprise customers will begin to.

Take hold and.

We're approaching a very significant portion of our revenue through that program and.

Demonstrated that we've found in the past and so.

So that's where we're going to.

We think theres opportunity for revenue growth again, starting sometime in the second quarter.

Spend our money the.

Pipeline is still not what it was in the.

Peter Quigley: But we're anticipating that sometime in the second quarter, the steps that we've taken to grow our market share within our large enterprise customers will begin to take hold, and we're approaching a very significant portion of our revenue through that program. And we think there's opportunity for revenue growth again, starting sometime in the second quarter. OK, well, that's great, and Leslie, on the M&A front, you talked about you're actively continuing to look at property. Yes, to that comment and the overall pipeline you're seeing. Yeah, I think it's more of the former than the latter.

Okay, well that's great.

Post pandemic period.

Lastly on the.

There is deal flow, but the quality is still not.

On the M&A front, you talked about you're actively.

As good as we.

Like it to be.

Continuing to look at.

But we're not we're not just relying on.

Properties and <unk>.

Active sale.

Sales were proactively.

Olivier you mentioned with the additional capital you now have on the European staffing sale, maybe being able to afford some properties that you might not at before you're just talking about in terms of.

<unk>.

Evaluating and engaging companies that we think would be a.

Positive addition to the to the Kelly portfolio.

And we still have you might remember, we're disclosing and discussing the fact that in terms of valuation and so on we have we use amongst other things internal rate of return we are still in the 25%.

Targets of a larger size or.

Maybe paying a little more on the valuation side, maybe you could just delve into the.

So that comment in the overall pipeline youre seeing.

Yes, I think it's more the former than the latter we're not going to we're going to continue to be very disciplined in terms of.

I was referring to sometimes ago. So that's the approach we have internal evaluation.

Peter Quigley: We're not going to, we're going to continue to be very disciplined in terms of what we pay for properties, and we're going to be looking for the kinds of high quality, high growth properties that we've, you know, demonstrated that we've found in the past. And so that's where we're going to spend our money. The pipeline is still not what it was in the post-pandemic period.

What we pay for properties and we're going to be looking for the kinds of high quality high growth properties that we have.

Okay that all makes sense I appreciate all the commentary I'll turn it over.

Demonstrated that we've found in the past and so that's where we're going to.

Thank you Kevin.

Okay.

Thank you we'll go next to the line of Kartik Mehta with Northcoast research.

Spend our money the.

Pipeline is still not what it was in the.

Good morning.

Good morning, Peter Good morning.

Post pandemic period.

I was hoping to maybe get your thoughts a little bit about what youre seeing in January I realize I'm sure the guidance reflects.

Olivier Toureau: There's deal flow, but the quality is still not as good as we'd like it to be. But we're not just relying on active sales; we're proactively evaluating and engaging companies that we think would be a positive addition to the Kelly portfolio. And we still have, you might remember, we're disclosing and discussing the fact that, in terms of valuation and so on, we use, amongst other things, the internal rate of return. We are still at the 25 percent I was referring to some time ago. So that's still, you know, the approach we have in terms of valuation. Okay, that all makes sense. I appreciate all the commentary. I'll turn it over.

There is deal flow, but the quality is still not.

As good as we are.

What you've seen but.

Like it to be.

Any changes youre seeing outside of seasonality in January or early parts of February.

But we're not we're not just relying on.

Active sale.

Sales were proactively.

Compared to.

What you saw in the fourth quarter or December.

<unk>.

Evaluating and engaging companies that we think would be a.

So two things on that.

One one is when you look at revenue exit rate.

Positive addition to the to Kelly portfolio.

<unk>.

End of Q4 of 2023.

Overall, we were at minus 0.1 saw equally flat on a constant currency basis. So that's that's where we ended up.

At the front end of 2023, when I look at the first.

I was referring to sometimes sogou. So that's clearly the you know the approach we have internal evaluation.

Weeks of January what we have seen so far in <unk>.

Okay that all makes sense I appreciate all the commentary I'll turn it over.

Herb that also.

From many sources, but we have seen it.

Very light stocking manufacturing at least for the first couple of weeks of January and then some ramp up we have started to see a little bit later.

Thank you Kevin.

Kevin Stanky: Thank you, Kevin. Thank you. We'll go next to the line for Cardiff Meta with North Coast. Good morning. I was hoping to maybe get your thoughts a little bit about what you're seeing in January. I realize I'm sure the guidance reflects what you've seen, but any changes you're seeing outside of seasonality in January or early parts of February compared to what you saw in the fourth quarter or December? So two things on that, Olivier.

Thank you we'll go next to the line of Kartik Mehta with Northcoast research.

Good morning.

The rest of the business.

Good morning, Peter Good morning.

I was hoping to maybe get your thoughts a little bit about what youre seeing in January I realize I'm sure the guidance reflects.

Education, as Peter was saying still still on the high growth mode.

And I would say four.

What you've seen but.

OCG.

Any changes youre seeing outside of seasonality in January or early parts of February.

And set.

Stabilization.

Virtues.

Compared to.

A little bit similar to what we have Fernando.

What you saw in the fourth quarter or December.

Fernando 2024.

The 2023, sorry.

So two things on that.

Olivier Toureau: One is, when you look at the revenue exit rate at the end of Q4 of 2023. Overall, we were at minus 0.1. So I call it flat on the constant currency basis. So that's where we ended up, you know, at the far end of 2023. When I look at the first weeks of January, what we have seen so far, and I've heard that also from many sources, but we have seen a very light start in manufacturing, at least for the first couple of weeks of January, and then some ramp-up we have started to see a little bit later. For the rest of the business, education, as Peter was saying, still in high growth mode. And I would say for OCD and SET, stabilization versus a little bit similar to what we have seen at the far end of 2020 and 2023. And then, as you look at, I think, Peter, you said deal flow, maybe the quality isn't as good as you would like. Is it just quality or is it quantity?

And then.

One one is when you look at revenue exit rate.

As you look at I think.

Peter you said deal flow maybe to quality.

End of Q4 of 2023.

As good as you would like.

Is it just.

Overall, we were at minus 0.1 saw equally flat on a constant currency basis. So that's that's where we ended up at.

Quality or is it maybe number of opportunities.

Considering the environment we're in.

Are you getting to see enough opportunities where.

At the front end of 2023, when I look at the first.

You can make a good decision or do you think that will come a little bit later.

Weeks of January what we have seen so far in <unk>.

Maybe as people get a better feel for what the economy is going to eventually do this year.

I've heard that also.

From many sources, but we have seen it.

I think the big damper right now is continues to be interest rate environment and.

Very light stocking manufacturing at least for the first couple of weeks of January and then some more ramp up we have started to see a little bit later.

The participation of <unk>.

Certain and Investor communities.

I think as that.

For the rest of the business.

Either stabilizes or we actually get into a rate reduction environment.

Education as Peter was saying still are still on the high growth mode.

That money is going to come off the sidelines and companies that.

And I would say four.

Might be.

OCG.

The part of their cycle that they want to.

And set.

Stabilization.

Enter into an exit transaction.

Best use.

A little bit similar to what we have.

We'll see we'll see greater deal flow based on the folks we've talked to.

End of 2024.

The 2023, sorry.

We're not in a permanent state of.

And then.

As you look at I think Peter you said deal flow, maybe the quality is as good as you would like.

Low quality M&A properties, it's just that the current environment.

<unk> for the past year or so has been.

Is it just.

Not conducive to.

Peter Quigley: Or is it maybe the number of opportunities? Considering the environment we're in, are you getting to see enough opportunities where you can make a good decision? Or do you think they'll come a little bit later?

<unk> or is it maybe number of opportunities.

Lot of companies coming on the market.

Considering the environment we're in.

And just one last question Olivier when you report.

And are you getting to see enough opportunities where.

First quarter results right now you have the Americas and Europe.

You can make a good decision where do you think that will come a little bit later.

And AP and obviously, the EMEA business was about $864 million for the year of 2023.

Peter Quigley: Maybe as people get a better feel for what the economy is going to do this year. Yeah, I think the big damper right now is the interest rate environment and the participation of, you know, certain investor communities. But I think as that either stabilizes or we actually get into a rate reduction environment, that money is going to come off the sidelines, and companies that might be in a part of their cycle where they want to enter into an exit transaction, we'll see greater deal flow based on the folks we talk to. We're not in a permanent state of low-quality M&A properties; it's just that the current environment for the past year or so has not been... not conducive to a lot of companies coming on the market.

As people get a better feel for what the economy is going to eventually do this year.

Will you still keep that European region segment or will that whats the remainder are left.

Yes, I think the big damper right now is continues to be interest rate environment and.

The participation of certain and investor communities.

Move somewhere else.

As I mentioned during our prepared remarks so.

I think as that.

Perimeter of what we have sold.

Either stabilizes or we actually get into a rate reduction environment.

Is Europe. So it is excluding.

That money is going to come off the sidelines and companies that.

Mexico from from the.

Might be in there.

From the perimeter.

Part of their cycle that they want to.

<unk>.

And basically the Mexican business, he is going to be under the leadership of P&I.

Enter into an exit transaction we.

We will see we will see greater deal flow based on the folks we've talked to.

Just to make sure. It was it your question there were some scenes Tony I may have missed something.

We're not in a permanent state of.

No I was just making sure I think Europe reported $864 million, you talked about $810 million.

Low quality M&A properties, it's just that the <unk>.

Current environment for the past year or so has been.

Kind of as a comparison.

Not conducive to a lot of companies coming on the market.

Yes, so the 810 million was to make sure.

Peter Quigley: And just one last question, Olivier, when you report the first quarter results, you know, right now you have Americas in Europe and AP, and obviously, the EMEA business was about $864 million for the year of 2023. Will you still keep that European region segment, or will what's remained or left move somewhere else? As I mentioned during our prepared remarks, the perimeter of what we have sold is Europe, so it is excluding Mexico from the market. No, I was just making sure.

And just one last question Olivier when you report.

Externally.

You can capture the data.

First quarter results right now you have the Americas and Europe.

Peter right, it's lower than the total revenue of the segment internationally. The main difference is because basically our Mexican business is not part of the deal with.

AP and obviously the EMEA business was about $864 million for the year of 2023.

Will will you still keep that European region segment or will that whats the remainder are left.

That we're referring to and our OCG business is going to continue to operate in.

Globally, yes.

Move somewhere else.

And globally.

As I mentioned during our prepared remarks, so the perimeter of what we have sold.

Right. So that OCG business will then be just reflected in your international segment right. So in OCG and OCG. It is already known right.

Is Europe. So it is excluding.

We keep the footprint in Europe, a little bit similar than the one we have in Asia.

Mexico from from the.

From the perimeter.

In Asia Pacific through our OCG business, namely MSP.

And basically the Mexican business he is going to be under the leadership of P&I, but just to make sure. It was it. Your question there were some scenes Tony I may.

And to some extent FSP.

Olivier Toureau: I think Europe reported $864 million. You talked about $810 million, kind of as a comparison. Oh, yeah.

Btu when relevant.

Perfect. Thank you so much.

Miss something.

No I was just.

Thank you.

Making sure I think Europe reported $864 million, you talked about $810 million.

And we will go next to the line of Marc Riddick with Sidoti.

Olivier Toureau: So the $810 million was to make sure externally you can capture the perimeter, right? It's lower than the total revenue of the international segment. The main difference is that, basically, our Mexican business is not part of the deal that we are referring to.

As a comparison.

Hey, good morning, everyone.

Yes, so the.

Good morning, So a lot of my questions have been answered and I want to thank you for.

810 million was to make sure.

Providing greater clarification on that breakdown that that's super helpful. I wanted to circle back around to your thoughts around the acquisition.

Externally.

And you can capture the meter right, it's lower than the total revenue of this segment international the main difference is because basically our Mexican business is not part of the deal with.

Pipeline and potential targets and the like are you getting the sense that.

While it may not be quite where you'd like it to be are you getting the sense that there are any particular pockets that may sort of.

That we're referring to and our OCG business is going to continue to operate in.

Olivier Toureau: And our OCG business is going to continue to operate globally. Yeah, and globally. Right, so that OCG business will then be just reflected in your international segment, right? No, in OCG.

Globally, yes.

Emerge or or B.

And globally.

Relatively actionable sooner rather than later, whether it be regionally or by industry vertical.

Alright, so that OCG business will then be just reflected in your international segment right. So <unk>.

Olivier Toureau: It is already in OCG. So we keep a footprint in Europe a little bit similar to the one we have in Asia, in Asia-Pacific through our OCG business, namely MSP, RPO, and to some extent FSP or BPO when relevant. Perfect. Thank you so much.

In OCG diesel renewable energy.

Well, we're focusing as I've said previously in.

We keep the footprint in Europe, a little bit similar than the one we have in Asia.

Science Engineering technology, and telecom and our education practice, others would be opportunistic.

Asia Pacific through our OCG business, namely MSP.

And.

After you and to some extent FSP.

We think that the because of the size of the technology staffing market in the U S and North America that Thats.

Btu when relevant.

Perfect. Thank you so much.

Cardiff Meta: Thank you. And we'll go next to the line for Mark Riddick with Sidoti. Good morning, everyone.

Thank you.

A very fertile area to continue to pursue.

And we will go next to the line of Marc Riddick with Sidoti.

We think it will.

Hey, good morning, everyone.

<unk> an excellent complement to the acquisition we made in software world.

Mark Riddick: So, a lot of my questions have been answered, and I want to thank you for providing greater clarification on that breakdown; that's super helpful. I wanted to circle back around to your thoughts around the acquisition pipeline and potential targets and the like. Are you getting the sense that, you know, while it may not be quite where you'd like it to be, are you getting the sense that there are any particular pockets that may sort of have............ emerge or be relatively actionable sooner rather than later, whether it be regionally or by industry? Well, we're focusing, as I've said previously, on science, engineering, technology, and telecom and our education practice. Others would be opportunistic.

Good morning.

Lot of my questions have been answered and I want to thank you for providing greater clarification on that breakdown. That's super helpful. I wanted to circle back around to you.

So that we will continue to focus on science engineering technology, and telecom and think that there is.

Historically been enough deal flow that.

Your thoughts around the acquisition pipeline and potential targets and the like are you getting the sense that.

When things ease up a little bit.

We will begin to see the kinds of high quality.

While it may not be quite where you'd like it to be are you getting the sense that there are any particular pockets that may sort of.

Assets that we'd be looking for.

Excellent and then shifting gears I was wondering with everything thats going on with the client demand environment, and we're sort of navigating through I was wondering if you could.

Emerge or or B.

Relatively actionable sooner rather than later, whether it be regionally or by industry vertical.

Sure on your thoughts as to.

If you see any.

Well, we're focusing as I've said previously in sight.

Changes or any particular go to market strategies or approaches.

Science Engineering technology, and telecom and our education practice, others would be opportunistic.

Or sort of how you feel about the general pricing environment. If there are any sort of.

Weeks or adjustments that we that you are looking at engaging and as we begin the year.

And we think that the because of the size of the technology staffing market in the U S and North America that Thats.

Peter Quigley: And we think that because of the size of the technology staffing market in the US and North America, that it's a very fertile area to continue to pursue. We think it would be an excellent complement to the acquisition we made in Softworld. So we will continue to focus on science, engineering, technology, and telecom and think that there has historically been enough deal flow that when things ease up a little bit, we will begin to see the kinds of high quality. Assets that we'd be looking for, Excellent. And then, shifting gears, I was wondering with everything that's going on with the client-demand environment and what we're sort of navigating through, I was wondering if you could share any thoughts as to whether you see any potential changes for any particular go-to-market strategies or approaches, or how you feel about the general pricing environment, if there are any sort of, you know, tweaks or I don't think there is anything of consequence that I would point to, Mark.

I don't think anything of consequence that.

Would point to a mark I think there are pockets where there are.

Sure.

Fertile area to continue to pursue.

Pricing challenges due to due to the competitive land escape and the decline in demand in certain areas, but.

We think it would be.

An excellent complement to the acquisition we made in software.

So that we will continue to focus on science engineering technology, and telecom and think that there is.

I think historically have demonstrated that we're able to navigate through that and.

Historically been enough deal flow that.

And also take.

When things ease up a little bit.

Get price where the environment.

We will begin to see the kinds of high quality.

Calls for it and the labor market continues to be tight so well.

Assets that we'd be looking for.

Demand hasn't necessarily we havent seen it show up in demand yet.

Excellent and then shifting gears I was wondering with everything thats going on with the client demand environment, and we're sort of navigating through I was wondering if you could.

As the macroeconomic conditions improve.

Large and small enterprises are going to continue to struggle finding people in that.

Sure on your thoughts as to.

If you see any.

It's something that they will often turn to Kelly to help them with yes, I mean, when you look at the spreads and it's something we look at to make sure that we understand where.

Uh huh.

Potential changes or any particular go to market strategies or approaches.

And or sort of how you feel about the general pricing environment. If there are any sort of tweak.

Our margin are spreading.

Spreading in P&I and set are pretty much stable and even up a little bit. So we have not seen anything in terms of pricing pressure that will translate into.

Tweaks or adjustments that we did.

Youre looking at engaging and as we begin the year.

I don't think anything of consequence that.

Basically some erosion in our spreads.

I would point to a mark I think there are pockets where there are.

Peter Quigley: I think there are pockets where there are pricing challenges due to the competitive landscape and the decline in demand in certain areas, but we, I think, historically have demonstrated that we're able to navigate through that. And also take, you know, get prices where the environment calls for it, and the labor market continues to be tight, so while demand hasn't necessarily, we haven't seen it show up in demand yet, as macroeconomic conditions improve, large and small enterprises are going to continue to struggle finding people, and that is something that they'll often turn to Kelly to help them with. Yeah, I mean, when you look at the spread, and this is something we look at to make sure that we understand where our margins are, our spread in PNI and SET is pretty much stable and even up a little bit, so we have not seen anything in terms of pricing pressure that would translate into basically some erosion in our spread.

Great and then I would be remiss if I didn't.

Pricing challenges due to due to the competitive land.

Bringing the top pick ups, but I was wondering if you could talk a little bit about if you've heard any.

<unk>.

The decline in demand in certain areas, but.

Relatively speaking any any changes or updates acquainted thoughts around.

I think historically have demonstrated that we're able to navigate through that and.

AI, driven revenue opportunities and demand opportunities or.

And also take.

If there is any update you can provide there that would be great. Thank you.

Get price where the.

Yes.

<unk>.

We're spending a lot of time talking with customers about AI I would say there is activity, but it's still very early early innings in that.

Cold storage in the labor market continues to be tight so well.

Demand hasn't necessarily we havent seen it show up in demand yet.

As the macroeconomic conditions improve.

In that game, but we're not we're not waiting so we're we're using AI in a lot of our operations.

Large and small enterprises are going to continue to struggle finding people in that.

It's something that they will often turn to Kelly to help them with.

Particularly to improve the productivity of our recruiters and salespeople.

When you look at the spreads on these something we look at to make sure that we understand where.

And we have.

Used AI and other <unk>.

Our margin are spreading.

Parts of our operations as well as.

Spreading in P&I and set are pretty much stable and even up a little bit. So we have not seen anything in terms of pricing pressure that will translate into.

In <unk>.

<unk> technology that we have that customers face off with in use like our helix.

Basically some erosion in our spreads.

Analytics.

Olivier Toureau: Great, and then I would be remiss if I didn't bring the topic up, but I was wondering if you could talk a little bit about any, you know, relatively speaking, any changes or updates in client thoughts around AI driven revenue opportunities and demand opportunities, or if there's any update you can provide there, that would be great. Yeah, well, we're spending a lot of time talking with customers about AI. I would say there is activity, but it's still very early, early innings in that game. But we're not; we're not waiting.

Portola.

<unk> and our OCG practice.

Great and then I would be remiss if I didn't.

But it's still Kelly operator, it's not a customer.

Bringing the top pick ups, but I was wondering if you could talk a little bit about if you've heard any.

Relatively speaking any any changes or updates acquainted thoughts around.

<unk> driven activity right now, but there are a lot of conversations a lot of interest.

AI, driven revenue opportunities and demand opportunities or.

We are.

Launched a program to connect.

If there's any update you can provide there that would be great. Thank you.

Customers, who have demand for <unk>.

Yes.

We're spending a lot of time talking with customers about AI I would say there is activity, but it's still very early early innings in that.

Experts in the AI space Kelly arc.

Program.

Our platform and.

We've got customers, who are on that platform because they're looking for talent that can help them with their own internal AI.

In that game, but we're not we're not waiting so we're we're using AI in a lot of our operations.

Peter Quigley: So we're using AI in a lot of our operations, particularly to improve the productivity of our recruiters and salespeople. And we have AI in other parts of our operations, as well as in technology that we have that customers face off with and use, like our Helix Analytics portal and Helix UX in our OCG practice. But it's still Kelly operated.

All of this is still relatively small in early.

Particularly to improve the productivity of our recruiters and salespeople.

Relative to other technologies and solutions.

And we have.

Used AI and other <unk>.

<unk> solutions.

Parts of our operations as well as.

Thank you very much.

Thanks, Mark Thank you.

In <unk>.

Thank you once again for questions. Please press one zero at this time.

<unk> technology that we have that customers face off with in use like our helix.

Yes.

Analytics.

Portola.

And presenters there are no further questions in queue from the phones at this time.

Helix UX and our OCG practice.

But it's still Kelly operator, it's not a customer.

Okay. Kelly. Thank you very much thank you and terminate the call.

Peter Quigley: It's not a customer-driven activity right now, but there are a lot of conversations, and a lot of interest. We have launched a program to connect customers who have demand for experts in the AI space, a Kelly Arc program or platform. And we've got customers who are on that platform because

Thank you and ladies and gentlemen, this conference is available for replay beginning at 11 30 eastern time today and running through March 13th at Midnight, you May access the AT&T replay system by dialing 806, 2071041 and entering the access code of 5856971 international parties.

<unk> driven activity right now, but there are a lot of conversations a lot of interest.

We are.

Launched a program to connect.

Customers, who have demand for <unk>.

Experts in the AI space Kelly arc.

Since may dial four zero to 90 700 847, those numbers again are one 806 2071041 or four zero to 9700847 with the access code of 5856971 that does conclude our conference for today.

Program.

Our platform and.

We've got customers, who are on that platform because they're looking for talent that can help them with their own internal AI.

All of this is still relatively small in early.

Thank you for your participation and thank you for using AT&T I think conferencing you may now disconnect.

Relative to other technologies.

Solutions.

Thank you very much.

Thanks, Mark Thank you.

Thank you once again for questions. Please press one zero at this time.

And presenters there are no further questions in queue from the phones at this time.

Okay Kelly. Thank you very much thank you terminate the call.

Participants may dial four zero to 90 700847, those numbers again are one 806 2071041 or four zero to 9700847 with the access code of 5856971 that does conclude our conference for.

Today. Thank you for your participation and thank you for using AT&T conferencing, you may now disconnect.

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

[music].

The presentation.

This call is being recorded at the request of Kelly services. If anyone has any objections you may disconnect. At this time, our fourth quarter webcast presentation is also available on Kelly's website for this mornings call I would now like to turn the meeting over to your host Mr. Peter Quigley President and CEO. Please go ahead.

Thank you Kellie Hello, everyone and welcome to Kelly's fourth quarter Conference call.

Before we begin I'll walk you through our safe Harbor language, which can be found in our presentation materials.

As a reminder, any comments made during this call, including the Q&A may include forward looking statements about our expectations for future performance.

Actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call.

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

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

Discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations.

Finally, the slide deck that we're using on today's call is available on our website.

With that let's get started.

In a moment I'll invite our chief financial officer Olivier to row to share our results for the fourth quarter.

I'll then share my reflections on what has been a transformative year defined by decisive action and rapid progress on our growth and efficiency objectives.

Finally, we will provide our preliminary expectations for 2024 before taking your questions with that I'll turn the call over to Olivier.

Thank you Peter and good morning, everybody.

Before I provide more details on our Q4 results. Some brief comments on our full year performance first.

Full year revenue was down two 6% as we bolted on three 2% on a constant currency basis.

This reflects the challenging staffing market conditions, we saw across a wide range of specialties and geographies.

Meet those challenges our education business demonstrated resilience and delivered another year of excellent revenue growth.

32% in 2023, achieving over $840 million in revenue.

Most doubling the level of revenue from the pre Covid 2019 period.

Overall gross profit rate for 2020, Sui was 19, 9%.

This is a 50 basis point decline from the prior year over year, driven primarily by lower permanent placement fees.

Our 2023 results also reflect the significant efforts made as part of our transformation initiatives to lower our cost base and position us to benefit from our improved efficiency moving forward.

On an adjusted basis, we lowered our SG&A expenses by five 4%.

That allowed us to deliver adjusted earnings from operations of $69 1 million.

<unk> with 2022 in spite of difficult market conditions, and finally, our full year 2023, adjusted EBITDA margin rate improved by 20 basis points.

Now looking at the fourth quarter of 2023, and multi to aid revenue totaled $1 2 billion essentially flat with the prior year increase.

Including 120 basis points of favorable currency impact so revenues were down one 3% on a constant currency basis.

As we now look at revenue in the fourth quarter by segment.

As noted in nicely remarks, our education segments revenue growth continues to be strong up 27% year over year.

The continued double digit growth reflect both strong rate and demand from existing customers as well as net customer wins.

Overall, the education business delivered more than $50 million of year over year revenue growth in the quarter.

In the <unk> segment revenue was down 5%.

In the fourth quarter, we continued to see the impact of challenging market conditions with year over year revenue down 6% in our staffing specialties as well as lower revenue trends in our outcome based business, which were flat year over year.

Permanent placement fees in set continued to be impacted by lower market demand and declined by 41%.

In our OCG segment revenue declined 3% year over year declines in our fuel continued due to slower hiring in certain market sectors.

Year over year MSP revenues also declined while PTU year over year revenues improved.

Revenue in our professional and then just real segment declined 11, 5% year over year in the quarter.

Revenue from our staffing products declined 15%, reflecting continues challenging market conditions.

The segment's outcome base revenue was flat year over year in the quarter.

Growth across most of our outcome based specialties was offset by contraction in the year over year demand from our call Center specialty.

And finally revenue in our international segment improved 5% on a reported basis and was down 2% on a constant currency basis.

Overall gross profit was down four 7% as reported or five 7% on a constant currency basis.

Our gross profit rate was 19, 3% compared to 23% in the fourth quarter of the prior year.