Q3 2025 Kelly Services Inc Earnings Call

November 6, 2025

Operator: The question-and-answer portion of the presentation. Today's call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. I would now like to turn the meeting over to your host, Mr. Scott Thomas, Kelly's Head of Investor Relations. Please go ahead.

Today's call is being recorded at the request of Kelly services. If anyone has any objections you may disconnect. At this time I would now like to turn the meeting over to your host Mr. Scott Taverns Kelly's head of Investor Relations. Please go ahead.

Good morning, and welcome to Kellys third quarter conference call with.

Scott Thomas: Good morning, welcome to Kelly's Q3 conference call. With me today are Kelly's Chief Executive Officer, Chris Layden, and our Chief Financial Officer, Troy Anderson. Before we begin, I'll remind you that the comments made during today's call, including the Q&A session, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. We do not assume any 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. We'll discuss certain data 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.

With me today are <unk>, Chief Executive Officer, Chris <unk>, and our Chief Financial Officer, Troy Anderson.

Before we begin I'll remind you that the comments made during today's call, including the Q&A session may include forward looking statements about our expectations for future performance.

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

We do not assume any 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, we'll discuss certain data 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.

For more information regarding non-GAAP measures and other required disclosures. Please refer to our earnings press release presentation and once filed Form 10-Q, all of which can be accessed through our investor relations website at IR Dot Kelly services Dot com.

Scott Thomas: For more information regarding non-GAAP measures and other required disclosures, please refer to our earnings press release, presentation, and once filed, Form 10-Q, all of which can be accessed through our investor relations website at ir.kellyservices.com. With that, I'll turn the call over to Kelly's Chief Executive Officer, Chris Layden.

With that I'll turn the call over to <unk>, Chief Executive Officer, Chris later.

Thank you Scott and good morning, everyone, it's great to be with all of you let.

Chris Layden: Thank you, Scott. Good morning, everyone. It's great to be with all of you. Let me start by saying what a privilege it is to serve as ceo of Kelly, the sixth in our storied history and the first to be selected from outside the company. Having spent my entire career in this industry, I've known and admired Kelly for many years. Our brand is iconic, synonymous with the industry we created when we were founded by William Russell Kelly in 1946. Since then, Kelly has connected millions of people to work, improving families, communities, economies, and the world. This is also a company I've competed with. Throughout my career leading commercial organizations and customer pursuits, I've experienced up close Kelly's ability to win in the market.

Let me start by saying what a privilege it is to serve as CEO of Kelly the sixth in our storied history and the first to be selected from outside the company.

Having spent my entire career in this industry I have known and admired Kelly for many years our brand is iconic synonymous with the industry. We created when we were founded by William Russell, Kelly and $19 46.

Since then Kelly is connected millions of people to work improving families communities economies in the world.

This is also a company I've competed with throughout my career, leading commercial organizations and customer pursuits, I've experienced up-close Kelly's ability to win in the market.

Our diverse portfolio of businesses has significant scale in attractive specialties and differentiated global capabilities that are widely recognized as leading the industry.

Chris Layden: Our diverse portfolio of businesses has significant scale in attractive specialties and differentiated global capabilities that are widely recognized as leading the industry. With our education business, Kelly has proven the ability to drive rapid organic growth in emerging markets, having established a dominant position in K-12 staffing and tripling the revenue of the business since 2020. This is among the best examples in our industry of what's possible when a team combines clear vision, sound strategy, and consistent execution. Instead, I've watched a business that has acquired scale in higher margin, higher growth specialties like technology and telecom, moving up the value chain as a consultative partner to employers seeking differentiated technical solutions.

With our education business Kelly has proven the ability to drive rapid organic growth in emerging markets, having established a dominant position in K 12, staffing and tripling the revenue of the business since 2020.

And this is among the best examples in our industry of what's possible when a team combines clearer vision sound strategy and consistent execution.

Instead I have watched a business that is required scale in higher margin higher growth specialties like technology and telecom moving up the value chain is the consultative partner to employers seeking differentiated technical solutions.

At the same time that has continued to win and retain market share in our established life Sciences, and engineering specialties, where four years Kelly has led the market as the second and fourth largest staffing provider respectively.

Chris Layden: At the same time, SETT has continued to win and retain market share in our established life sciences and engineering specialties, where for years, Kelly has led the market as the second and fourth largest staffing provider respectively. In ETM, Kelly brings enterprise customers unmatched global workforce capabilities and insights through our technology-enabled and AI-powered offerings delivered at scale. This includes talent solutions, business process outsourcing, and staffing services, which Everest Group just recently recognized as leading the market. I've seen firsthand the competitive advantage that this breadth and depth of capabilities creates as employers increasingly seek partners who can meet their total talent management needs. Because of these assets, Kelly's track record of driving value for customers, including many of the largest employers in the world, is as strong as any company in this space.

And ATM Kelly brings enterprise customers unmatched global workforce capabilities and insights through our technology enabled and AI powered offerings delivered at scale.

This includes talent solutions business process outsourcing and staffing services, which Everest just recently recognized as leading the market.

I've seen firsthand the competitive advantage that this breadth and depth of capabilities creates as employers increasingly seek partners, who can meet their total talent management needs.

Because of these assets Kelly's track record of driving value for customers, including many of the largest employers in the world.

Is as strong as any company in this space.

Never have our core strengths and ability to enhance flexibility and agility in an employer is workforce been more important than they are today.

Chris Layden: Never have our core strengths and ability to enhance flexibility and agility in an employer's workforce been more important than they are today. As I step into this role, the operating environment is evolving, driven by a dynamic macroeconomic landscape, a sluggish labor market, global and domestic policy shifts, and the AI boom. The impact of these trends on our industry is significant, and Kelly is not immune. These dynamics were more visible in our results in Q3. Despite continuing to capture growth in more resilient markets, our performance as a company fell short of expectations. Our team and I know that we can achieve more, having proven as much in the organic growth and margin expansion that Kelly has delivered in recent years.

As I stepped into this role the operating environment is evolving driven by a dynamic macroeconomic landscape of sluggish labor market global and domestic policy shifts and the AI boom.

The impact of these trends on our industry is significant.

And Kelly is not immune.

These dynamics were more visible in our results in the third quarter.

Despite continuing to capture growth and more resilient markets our performance as a company fell short of expectations.

Our team and I know that we can achieve more having proven as much in the organic growth and margin expansion that Kelly has delivered in recent years.

But to consistently win in the market and unlock Kelly's full potential. It is critical that we maximize our core strengths and address head on opportunities to improve our strategy and execution.

Chris Layden: To consistently win in the market and unlock Kelly's full potential, it's critical that we maximize our core strengths and address head-on opportunities to improve our strategy and execution. To better understand where these opportunities exist, I'm spending much of my time in the field meeting with and listening to our employees and customers. Through my conversations with our team, it's clear that we have a highly engaged group of workforce experts who are passionate about winning in the market and serving our clients and talent. The expertise and high level of service they provide are among our key differentiators that drive employers to choose Kelly to meet their workforce needs. In meeting with many of our top customers, I've heard how Kelly's tailored solutions and unique insights are helping our clients maintain a competitive edge in their industries.

To better understand where these opportunities exist I'm spending much of my time in the field meeting with and listening to our employees and customers through my conversations with our team. It is clear that we have a highly engaged group of workforce experts who are passionate about winning in the market and serving our clients and talent.

The expertise and high level of service. They provide are among our key differentiators that drive employers to choose Kelly to meet their workforce needs.

In meeting with many of our top customers I've heard how Kelly's tailored solutions and unique insights are helping our clients maintain a competitive edge in their industries.

I've also had the pleasure of connecting with the investment community, who have shared with me their growing interest in the value creation opportunity we have here at Kelly <unk>.

Chris Layden: I've also had the pleasure of connecting with the investment community, who have shared with me their growing interest in the value creation opportunity we have here at Kelly. During my time in the field, a few common themes have emerged. First, it's fundamentally important to customers that it be easy to do business with Kelly. We must ensure our structure and processes are designed with customers in mind, and they must be straightforward and intuitive to navigate. Next, the scale Kelly has acquired in higher margin, higher growth specialties is a tremendous asset that has repositioned the company in the market. This has created inroads with employers in attractive end markets who are eager to know how our expanded capabilities can meet their evolving needs. Completing the integration of these investments is critical to our ability to realize their full value and capitalize on these growth opportunities.

During my time in the field a few common themes have emerged.

First it's fundamentally important to customers that would be easy to do business with Kelly.

We must ensure our structure and processes are designed with customers in mind, and they must be straightforward and intuitive to navigate.

Next the scale Kelly has acquired at a higher margin higher growth specialties is a tremendous asset that has repositioned the company in the market.

This has created inroads with employers in attractive end markets, who are eager to know how our expanded capabilities can meet their evolving needs.

Completing the integration of these investments is critical to our ability to realize their full value and capitalize on these growth opportunities.

And finally much work has been done by our team to reduce complexity and improve efficiency. This work continues today with the efforts underway to consolidate disparate front middle and back office systems.

Chris Layden: Finally, much work has been done by our team to reduce complexity and improve efficiency. This work continues today with the efforts underway to consolidate disparate front, middle, and back office systems, leveraging the leading technology stack we obtained when we acquired MRP. We must continue to assess our resources, from technology platforms to our workforce mix, to ensure they're optimized to drive profitable growth. These early observations are helping inform how we move forward on the next leg of Kelly's strategic journey. I'll share more in a moment about our short-term priorities and long-term focus. First, I'll turn it over to our CFO, Troy Anderson, to provide more details on our results in the quarter.

Leveraging the leading technology stack, we obtained when we acquired MRP.

We must continue to assess our resources from technology platforms to our workforce mix to ensure they are optimized to drive profitable growth.

These early observations are helping inform how we move forward on the next leg of Kelly's strategic journey I'll share more in a moment about our short term priorities and long term focus first I will turn it over to our CFO Troy Anderson to provide more details on our results in the quarter.

Thank you, Chris and good morning, everybody.

You know, how our expanded capabilities can meet their evolving needs complete.

Troy Anderson: Thank you, Chris, and good morning, everybody. Before I walk through our results, as a reminder, beginning in Q3, the Motion Recruitment Partners acquisition we completed in Q2 2024 is fully in our year-over-year comparable results. Thus, I will only speak to reported and adjusted results for the current quarter. Revenue for Q3 2025 totaled $935 million, a decrease of 9.9% versus Q3 of last year. This was lower than our expectations, most notably due to lower than expected growth in the ETM staffing specialty, education, and select other specialties. As we discussed last quarter, we had discrete impacts from reduced demand from the federal government and three of our top customers.

Before I walk through our results as a reminder, beginning in the third quarter. The motion recruitment partners acquisition, we completed in the second quarter of 2024 is fully in our year over year comparable results. Thus I will only speak to reported and adjusted results for the current quarter.

Completing the integration of these investments is critical to our ability to realize their full value and capitalize on these growth opportunities.

Revenue for the third quarter of 2025 totaled $935 million, a decrease of nine 9% versus Q3 of last year.

Scott Thomas: Good morning and welcome to Kelly Services' third quarter conference call. With me today are Kelly Services' Chief Executive Officer, Chris Layden, and our Chief Financial Officer, Troy Anderson. Before we begin, I'll remind you that the comments made during today's call, including the Q&A session, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. We do not assume any 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, we'll discuss certain data 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.

This was lower than our expectations, most notably due to lower than expected growth in the ETF staffing specialty education and select other specialties.

Leveraging the leading technology stack, we obtained when we acquired MRP.

We must continue to assess our resources from technology platforms to our workforce mix to ensure they are optimized to drive profitable growth.

As we discussed last quarter, we had discrete impacts from reduced demand from the federal government and three of our top customers.

Combined these impacts drove approximately 8% of year over year revenue decline consistent with our expectations, leaving us with an underlying decline of 2%. Excluding these impacts which is in line with industry performance.

Troy Anderson: Combined, these impacts drove approximately 8% of year-over-year revenue decline, consistent with our expectations, leaving us with an underlying decline of 2% excluding these impacts, which is in line with industry performance. Kelly's underlying performance reflects positive trends in each business area that reinforces our confidence in our strategy. Kelly Education continued its long-running streak of quarterly growth and achieved a 90% fill rate overall in the quarter for the first time. Within SETT, the telecom specialty achieved double-digit growth in the quarter after strong growth in Q2, while the engineering specialty has grown each quarter this year. SETT's underlying performance was consistent with Q2 and continues to outperform the market. Within ETM, staffing underlying revenue has been consistent across the quarters despite the macro variability.

Kelly's underlying performance reflects positive trends in each business area that reinforces our confidence in our strategy.

Thank you, Chris and good morning, everybody.

<unk> continued its long running streak of quarterly growth and achieved a 90% fill rate overall in the quarter for the first time.

Scott Thomas: For more information regarding non-GAAP measures and other required disclosures, please refer to our earnings press release, presentation, and, once filed, Form 10-Q, all of which can be accessed through our investor relations website at ir.kellyservices.com. With that, I'll turn the call over to Kelly's Chief Executive Officer, Chris Layden.

Within set the telecom specialty achieved double digit growth in the quarter after strong growth in the second quarter, while the engineering specialty has grown each quarter this year.

Revenue for the third quarter of 2025 totaled $935 million, a decrease of nine 9% versus Q3 of last year.

Sets underlying performance was consistent with the second quarter and continues to outperform the market.

And within ATM staffing underlying revenue has been consistent across the quarters. Despite the macro variability.

Chris Layden: Thank you, Scott, and good morning, everyone. It's great to be with all of you. Let me start by saying what a privilege it is to serve as CEO of Kelly, the sixth in our storied history, and the first to be selected from outside the company. Having spent my entire career in this industry, I've known and admired Kelly for many years. Our brand is iconic, synonymous with the industry we created when we were founded by William Russell Kelly in 1946. Since then, Kelly has connected millions of people to work, improving families, communities, economies, and the world. This is also a company I've competed with. Throughout my career leading commercial organizations and customer pursuits, I've experienced up close Kelly's ability to win in the market.

This was lower than our expectations, most notably due to lower than expected growth in the ETF staffing specialty education and select other specialties.

Outcome based solutions, excluding contact center and payroll process outsourcing or PPO, both continued to grow in the quarter and have shown growth all year.

Troy Anderson: Outcome-based solutions, excluding contact center and payroll process outsourcing, or PPO, both continued to grow in the quarter and have shown growth all year. Finally, our managed service provider, or MSP specialty, showed modest growth in the quarter for the first time this year, reflecting the new customer wins we have referenced in prior quarters. For Q3 revenue by service type, staffing services reflects modest growth in our education business and pressure from government, large customer, and macro environment impacts in SETT and ETM. Our outcome-based offerings, excluding contact center solutions, were down year over year, reflecting timing of both project demand and new business within SETT and ETM. Talent solutions was down modestly year over year in the quarter, reflecting a mix of performance across the individual specialties. Perm fees represented approximately 1% of revenue, which was consistent with the prior year.

As we discussed last quarter, we had discrete impacts from reduced demand from the federal government and three of our top customers.

Finally, our managed service provider or MSP specialty showed modest growth in the quarter for the first time this year, reflecting the new customer wins, we have referenced in prior quarters.

For Q3 revenue by service type staffing services reflects modest growth in our education business and pressure from government large customer and macro environment impacts and set an ETF.

Kelly's underlying performance reflects positive trends in each business area that reinforces our confidence in our strategy.

Our outcome based offerings, excluding contact center solutions were down year over year, reflecting timing of both project demand and new business within set an ETF.

Education continued its long running streak of quarterly growth and achieved a 90% fill rate overall in the quarter for the first time.

Within set the telecom specialty achieved double digit growth in the quarter after strong growth in the second quarter, while the engineering specialty has grown each quarter this year.

Talent solutions was down modestly year over year in the quarter, reflecting a mix of performance across the individual specialities.

Chris Layden: Our diverse portfolio of businesses has significant scale in attractive specialties, and differentiated global capabilities that are widely recognized as leading the industry. With our education business, Kelly has proven the ability to drive rapid organic growth in emerging markets, having established a dominant position in K-12 staffing and tripling the revenue of the business since 2020. This is among the best examples in our industry of what's possible when a team combines clear vision, sound strategy, and consistent execution. Instead, I've watched a business that has acquired scale in higher margin, higher growth specialties like technology and telecom, moving up the value chain as a consultant partner to employers seeking differentiated technical solutions.

Perm fees represented approximately 1% of revenue, which was consistent with the prior year.

Sets underlying performance was consistent with the second quarter continues to outperform the market.

Drilling down into revenue by segment education grew 9% year over year in the quarter, driven primarily by ongoing fill rate improvement.

And within ATM staffing underlying revenue has been consistent across the quarters. Despite the macro variability.

Troy Anderson: Drilling down into revenue by segment, Education grew 0.9% year-over-year in the quarter, driven primarily by ongoing fill rate improvement. While we believe we won our fair share of the new business opportunities for the school year, we saw a number of decision delays in light of the broader macro environment, and the fill rate improvement benefit was lower year-over-year given our maturing customer portfolio, thus the relatively lower growth in the quarter. As a reminder, Education volumes and revenues are reduced significantly in Q3 due to the summer break. In the SETT segment, revenue was down 9% in the quarter or 3.5% excluding the federal government impact. Our telecom and engineering specialties continue to be growth areas within SETT, while life sciences and technology saw year-over-year declines consistent with Q2.

Outcome based solutions, excluding contact center and payroll process outsourcing or PPO, both continued to grow in the quarter and have shown growth all year.

While we believe we won our fair share of the new business opportunities for the school year, we saw a number of decision delays in light of the broader macro environment and the fill rate improvement benefit was lower year over year, given our maturing customer portfolio.

Finally, our managed service provider, where MSP specialty showed modest growth in the quarter for the first time this year, reflecting the new customer wins, we have referenced in prior quarters.

Thus the relatively lower growth in the quarter.

As a reminder, education volumes and revenues are reduced significantly in the third quarter due to the summer break.

For Q3 revenue by service type staffing services reflects modest growth in our education business and pressure from government large customer and macro environment impacts and set an ETF.

And the <unk> segment revenue was down 9% in the quarter were three 5%, excluding the federal government impact.

Our outcome based offerings, excluding contact center solutions were down year over year, reflecting timing of both project demand and new business within set of Etfs.

Our telecom and engineering specialties continue to be growth areas within set while life Sciences and technology saw year over year declines consistent with the second quarter.

Chris Layden: At the same time, SET has continued to win and retain market share in our established life sciences and engineering specialties, where for years, Kelly has led the market as the second and fourth largest staffing provider, respectively. In an ETM, Kelly brings enterprise customers unmatched global workforce capabilities and insights through our technology-enabled and AI-powered offerings delivered at scale. This includes talent solutions, business process outsourcing, and staffing services, which Everest just recently recognized as leading the market. I've seen firsthand the competitive advantage that this breadth and depth of capabilities creates as employers increasingly seek partners who can meet their total talent management needs. Because of these assets, Kelly's track record of driving value for customers, including many of the largest employers in the world, is as strong as any company in this space.

Talent solutions was down modestly year over year in the quarter, reflecting a mix of performance across the individual specialities.

And the ATM segment revenue declined 13, 1% year over year or an underlying decline of one 9% staffing services revenues declined 16, 4% drill.

Troy Anderson: In the ETM segment, revenue declined 13.1% year over year or an underlying decline of 1.9%. Staffing services revenues declined 16.4%, driven primarily by the large customer and federal contract demand reductions, along with lower hours volume across other clients. Outcome-based revenues decreased by 17.2%, reflecting demand pressure from the large contact center customer that has fully run off as of the end of the quarter. Excluding contact center, ETM outcome-based solutions grew modestly. Talent solutions revenue decreased 1.4% overall, reflecting growth in PPO, MSP new customer wins, and reduced customer volumes in recruitment process outsourcing. Reported gross profit was $194 million, down 12.5% versus the prior year quarter, primarily from reduced revenue.

Perm fees represented approximately 1% of revenue, which was consistent with the prior year.

Driven primarily by the large customer and federal contract demand reductions along with lower hours volume across other clients.

Drilling down into revenue by segment education grew 9% year over year in the quarter, driven primarily by ongoing fill rate improvement.

Outcome based revenues decreased by 17, 2%, reflecting demand pressure from the large contact center customer that is fully run off as of the end of the quarter.

Excluding contact center <unk> outcome based solutions grew modestly.

Talent solutions revenue decreased one, 4% overall, reflecting growth in PPO, MSP, new customer wins and reduced customer volumes and recruitment process outsourcing.

Thus the relatively lower growth in the quarter.

As a reminder, education volumes and revenues are reduced significantly in the third quarter due to the summer break.

Reported gross profit was $194 million down 12, 5% versus the prior year quarter, primarily from reduced revenue the.

And the <unk> segment revenue was down 9% in the quarter were three 5%, excluding the federal government impact.

The gross profit rate was 28% a decrease of 60 basis points compared to the prior year quarter, and a 30 basis point sequential increase.

Our telecom and engineering specialties continue to be growth areas within set while life Sciences and technology saw year over year declines consistent with the second quarter.

Troy Anderson: The gross profit rate was 20.8%, a decrease of 60 basis points compared to the prior year quarter and a 30 basis point sequential increase. The sequential lift, which is typical with the seasonality of our business, was more muted than we expected given the revenue dynamics, along with elevated employee-related costs in the quarter. Kelly Education's GP rate increased 20 basis points while SETT declined 80 basis points and ETM declined 60 basis points. We made significant progress improving our SG&A expense profile in the quarter with reported SG&A expenses of $194.4 million, a decrease of $24.6 million or 11.2%. On an adjusted basis, SG&A expenses decreased 9.7% year over year, reflecting the momentum we are gaining on structural and volume-related cost optimization efforts.

Chris Layden: Never have our core strengths and ability to enhance flexibility and agility in an employer's workforce been more important than they are today. As I step into this role, the operating environment is evolving, driven by a dynamic macroeconomic landscape, a sluggish labor market, global and domestic policy shifts, and the AI boom. The impact of these trends on our industry is significant, and Kelly is not immune. These dynamics were more visible in our results in the third quarter. Despite continuing to capture growth in more resilient markets, our performance as a company fell short of expectations. Our team and I know that we can achieve more, having proven as much in the organic growth and margin expansion that Kelly has delivered in recent years.

Sequential lift which is typical with the seasonality of our business was more muted than we expected given the revenue dynamics.

And the ATM segment revenue declined 13, 1% year over year or an underlying decline of one 9% staffing services revenues declined 16, 4% drip.

Along with elevated employee related costs in the quarter.

Education is GP rate increased 20 basis points, while set declined 80 basis points and ATM declined 60 basis points.

Driven primarily by the large customer and federal contract demand reductions along with lower hours volume across other clients.

We made significant progress improving our SG&A expense profile in the quarter with reported SG&A expenses of $194 4 million, a decrease of $24 6 million or 11, 2%.

Outcome based revenues decreased by 17, 2%, reflecting demand pressure from the large contact center customer that has fully run off as of the end of the quarter.

Excluding contact center <unk> outcome based solutions grew modestly.

On an adjusted basis SG&A expenses decreased nine 7% year over year, reflecting the momentum we are gaining on structural and volume related cost optimization efforts.

Talent solutions revenue decreased one 4% overall, reflecting growth in PPO.

New customer wins and reduced customer volumes and recruitment process outsourcing.

Expenses increased in our education segment in support of the revenue growth while expenses decreased across the rest of the company with.

Troy Anderson: Expenses increased in our Education segment in support of the revenue growth, while expenses decreased across the rest of the company. With the increased revenue pressure, we're enhancing our efforts to drive durable and sustainable efficiencies in our operating model through technology enhancements, including leveraging AI, process efficiencies, and multiple other levers. Existing initiatives like the formation of the ETM segment and integration of MRP and other acquisitions within SET are progressing well and will drive both go-to-market and cost efficiencies going forward. In connection with our various efforts, we recognized $4.7 million of charges in the quarter, down from $6.4 million in Q2. These included costs associated with improving technology and processes across the enterprise, as well as severance expenses and executive transition costs.

Reported gross profit was $194 million down 12, 5% versus the prior year quarter, primarily from reduced revenue the.

With the increased revenue pressure, we're enhancing our efforts to drive durable and sustainable efficiencies in our operating model through technology enhancements, including leveraging AI process efficiencies and multiple other levers.

The gross profit rate was 28% a decrease of 60 basis points compared to the prior year quarter, and a 30 basis point sequential increase.

Existing initiatives like the formation of the ETF segment and integration of MRP and other acquisitions within set are progressing well and will drive both go to market and cost efficiencies going forward.

The sequential lift which is typical with the seasonality of our business was more muted than we expected given the revenue dynamics, along with elevated employee related cost in the quarter.

Education's GP rate increased 20 basis points, while set declined 80 basis points and ATM declined 60 basis points.

In connection with our various efforts, we recognized $4 7 million of charges in the quarter down from $6 4 million in the second quarter. These.

We made significant progress improving our SG&A expense profile in the quarter with reported SG&A expenses of $194 4 million, a decrease of $24 6 million or 11, 2%.

These included costs associated with improving technology and processes across the enterprise as well as severance expenses and executive transition costs.

We expect to see these expenses increase in the fourth quarter as we made continued progress and expand upon our various optimization efforts.

Troy Anderson: We expect to see these expenses increase in Q4 as we make continued progress and expand upon our various optimization efforts. Related to the realignment of SETT and acquisition integration, during the quarter, we assessed the current goodwill reporting units and determined it was appropriate to combine them into a single SETT segment reporting unit. As a result of the assessment, along with declines in the current and projected business performance driven by macroeconomic and industry conditions, we concluded that there was a triggering event for a non-cash goodwill impairment totaling $102 million in the quarter. We are excluding the impairment from our adjusted results. Additionally, with the impairment activity, we were also required to reassess the recoverability of our deferred tax assets.

On an adjusted basis SG&A expenses decreased nine 7% year over year, reflecting the momentum we are gaining on structural and volume related cost optimization efforts.

Chris Layden: I've also had the pleasure of connecting with the investment community, who have shared with me their growing interest in the value creation opportunity we have here at Kelly. During my time in the field, a few common themes have emerged. First, it's fundamentally important to customers that it be easy to do business with Kelly. We must ensure our structure and processes are designed with customers in mind, and they must be straightforward, and intuitive to navigate. Next, the skill Kelly has acquired in higher margin, higher growth specialties is a tremendous asset that has repositioned the company in the market. This has created inroads with employers in attractive end markets, who are eager to know how our expanded capabilities can meet their evolving needs. Completing the integration of these investments is critical to our ability to realize their full value, and capitalize on these growth opportunities.

Related to the realignment of set and acquisition integration.

During the quarter, we assess the current goodwill reporting units and determined it was appropriate to combine them into a single set segment reporting unit.

Expenses increased in our education segment in support of the revenue growth while expenses decreased across the rest of the company.

As a result of the assessment along with declines in the current and projected business performance driven by macroeconomic and industry conditions. We concluded that there was a triggering event for a noncash goodwill impairment totaling $102 million in the quarter.

We are excluding the impairment from our adjusted results.

Additionally, with the impairment activity. We were also required to reassess the recoverability of our deferred tax assets.

In connection with our various efforts, we recognized $4 7 million of charges in the quarter down from $6 4 million in the second quarter. These.

While we have confidence in our business over the future Recoverability time period.

Troy Anderson: While we have confidence in our business over the future recoverability time period, with a three-year cumulative loss position in our near-term actual and expected financial performance, it was necessary to record a valuation allowance of $70 million, which is also non-cash and excluded from our adjusted results. As a result of the goodwill impairment and tax valuation allowance, our reported loss per share was $4.26 for the quarter. On an adjusted basis, earnings per share was $0.18 compared to $0.21 in the prior year, with the decline over the prior year primarily due to lower profitability and discrete tax items.

With a three year cumulative loss position and our near term actual and expected financial performance.

These included costs associated with improving technology and processes across the enterprise as well as severance expenses and executive transition costs.

It was necessary to record a valuation allowance of $70 million, which is also non cash and excluded from our adjusted results.

We expect to see these expenses increase in the fourth quarter as we made continued progress and expand upon our various optimization efforts.

Chris Layden: Much work has been done by our team to reduce complexity and improve efficiency. This work continues today with the efforts underway to consolidate disparate front, middle, and back office systems, leveraging the leading technology stack we obtained when we acquired MRP. We must continue to assess our resources, from technology platforms to our workforce mix, to ensure they're optimized to drive profitable growth. These early observations are helping inform how we move forward on the next leg of Kelly's strategic journey. I'll share more in a moment about our short-term priorities and long-term focus. First, I'll turn it over to our CFO, Troy Anderson, to provide more details on our results in the quarter.

As a result of the goodwill impairment and tax valuation allowance our reported loss per share was $4 26 for the quarter.

Related to the realignment of set and acquisition integration.

On an adjusted basis earnings per share was <unk> 18.

During the quarter, we assess the current goodwill reporting units and determined it was appropriate to combine them into a single set segment reporting unit.

Compared to 21 in the prior year with the decline over the prior year, primarily due to lower profitability and discrete tax items.

Adjusted EBITDA was $16 5 million a decrease of 36, 7% versus the prior year period.

Troy Anderson: Adjusted EBITDA was $16.5 million, a decrease of 36.7% versus the prior year period, while adjusted EBITDA margin declined to 1.8%, both of which were below our expectations, reflecting the revenue and gross profit declines I previously noted. SETT expanded margins by 60 basis points year over year despite the lower gross profit due to their expense optimization efforts. ETM saw margin pressure due to the elevated revenue and gross profit declines despite substantial progress on their SG&A. Education experienced margin compression due to the seasonality of that business. Moving to the balance sheet and cash flow, we are generating strong operating cash flow this year with $94 million through Q3, up significantly versus the prior year.

While adjusted EBITDA margin declined to one 8% both of which were below our expectations, reflecting the revenue and gross profit declines I previously noted.

We are excluding the impairment from our adjusted results.

<unk> expanded margins by 60 basis points year over year, despite the lower gross profit due to their expense optimization efforts.

Additionally, with the impairment activity. We were also required to reassess the recoverability of our deferred tax assets.

Etfs saw margin pressure due to the elevated revenue and gross profit declines despite substantial progress on their SG&A.

While we have confidence in our business over the future Recoverability time period.

Troy Anderson: Thank you, Chris, and good morning, everybody. Before I walk through our results, as a reminder, beginning in the third quarter, the Motion Recruitment Partners acquisition we completed in the second quarter of 2024 is fully in our year-over-year comparable results. Thus, I will only speak to reported and adjusted results for the current quarter. Revenue for the third quarter of 2025 totaled $935 million, a decrease of 9.9% versus Q3 of last year. This was lower than our expectations, most notably due to lower-than-expected growth in the ETM staffing specialty, education, and select other specialties. As we discussed last quarter, we had discrete impacts from reduced demand from the federal government and three of our top customers. Combined, these impacts drove approximately 8% of year-over-year revenue decline, consistent with our expectations, leaving us with an underlying decline of 2% excluding these impacts, which is in line with industry performance.

With a three year cumulative loss position and our near term actual and expected financial performance.

Education experienced margin compression due to the seasonality of that business.

It was necessary to record a valuation allowance of $70 million, which is also non cash and excluded from our adjusted results.

Moving to the balance sheet and cash flow, we are generating strong operating cash flow this year with $94 million through the third quarter up significantly versus the prior year.

As a result of the goodwill impairment and tax valuation allowance our reported loss per share was $4 26 for the quarter.

Total available liquidity as of the end of the quarter was 269 million comprising $30 million in cash and $239 million of available liquidity on our credit facilities, leaving us ample capital allocation flexibility.

Troy Anderson: Total available liquidity as of the end of the quarter was $269 million, comprising $30 million in cash and $239 million of available liquidity on our credit facilities, leaving us ample capital allocation flexibility. Total borrowing of $118 million increased versus the prior quarter due to our normal working capital seasonality. Our debt to EBITDA leverage ratio was less than 1 at the end of the quarter. We don't expect a material change in our net debt position over the remainder of the year from normal operations. We ended the quarter with $40 million remaining on our current Class A share repurchase authorization. We continue to believe the data demonstrates that the company is measurably undervalued by the market. With that backdrop and our capital allocation flexibility, we anticipate being active in our repurchase program during the remainder of the year.

On an adjusted basis earnings per share was <unk> 18.

Compared to 21 in the prior year with the decline over the prior year, primarily due to lower profitability and discrete tax items.

Total borrowing of $118 million increase versus the prior quarter due to our normal working capital seasonality.

Adjusted EBITDA was $16 5 million a decrease of 36, 7% versus the prior year period.

Our debt to EBITDA leverage ratio was less than one at the end of the quarter.

While adjusted EBITDA margin declined to one 8%.

We don't expect a material change in our net debt position over the remainder of the year from normal operations.

Both of which were below our expectations, reflecting the revenue and gross profit declines I previously noted.

We ended the quarter with $40 million remaining on our current class a share repurchase authorization.

<unk> expanded margins by 60 basis points year over year, despite the lower gross profit due to their expense optimization efforts.

We continue to believe the data demonstrates that the company is measurably undervalued by the market.

Troy Anderson: Kelly's underlying performance reflects positive trends in each business area that reinforces our confidence in our strategy. Education continued its long-running streak of quarterly growth and achieved a 90% fill rate overall in the quarter for the first time. Within SET, the telecom specialty achieved double-digit growth in the quarter after strong growth in the second quarter, while the engineering specialty has grown each quarter this year. SET's underlying performance was consistent with the second quarter and continues to outperform the market. Within ETM, staffing underlying revenue has been consistent across the quarters despite the macro variability. Outcome-based solutions, excluding contact center and payroll process outsourcing, or PPO, both continue to grow in the quarter and have shown growth all year.

<unk> margin pressure due to the elevated revenue and gross profit declines despite substantial progress on their SG&A.

With that backdrop, and our capital allocation flexibility, we anticipate being active in our repurchase program during the remainder of the year.

Education experienced margin compression due to the seasonality of that business.

We also maintained our quarterly dividend of $7 five per share.

Moving to the balance sheet and cash flow, we are generating strong operating cash flow this year with $94 million through the third quarter up significantly versus the prior year.

Troy Anderson: We also maintained our quarterly dividend of $0.075 per share. These actions reflect our confidence in Kelly's strategy and our commitment to opportunistically deploying capital in pursuit of attractive returns for shareholders. As we look at Q4, we are assuming no material change in the macroeconomic or industry dynamics and a positive resolution to the federal government shutdown during the quarter. For revenue, we expect a decline of 12% to 14% in the quarter, which includes 8% of negative impact associated with reduced demand from discrete large customers and for federal contractors, consistent with the Q3 impact. Excluding these items, our underlying revenue decline would be 4% to 6%.

These actions reflect our confidence in Kelly's strategy and our commitment to opportunistically deploying capital in pursuit of attractive returns for shareholders.

As we look at the fourth quarter, we are assuming no material change in the macroeconomic or industry dynamics and a positive resolution to the federal government shutdown during the quarter.

For revenue, we expect a decline of 12% to 14% in the quarter, which includes 8% a negative impact associated with reduced demand from discrete large customers and for federal contractors consistent with the third quarter impact.

Total borrowing of $118 million increase versus the prior quarter due to our normal working capital seasonality.

Troy Anderson: Finally, our managed service provider, or MSP specialty, showed modest growth in the quarter for the first time this year, reflecting the new customer wins we have referenced in prior quarters. For Q3 revenue by service type, staffing services reflects modest growth in our education business, and pressure from government, large customer, and macro environment impacts in SET and ETM. Our outcome-based offerings, excluding contact center solutions, were down year-over-year, reflecting timing of both project demand and new business within SET and ETM. Talent solutions was down modestly year-over-year in the quarter, reflecting a mix of performance across the individual specialties. Perm fees represented approximately 1% of revenue, which was consistent with the prior year. Drilling down into revenue by segment, education grew 0.9% year-over-year in the quarter, driven primarily by ongoing fill rate improvement.

Our debt to EBITDA leverage ratio was less than one at the end of the quarter.

Excluding these items, our underlying revenue decline would be 4% to 6%.

We don't expect a material change in our net debt position over the remainder of the year from normal operations.

The incremental revenue decline relative to the third quarter is primarily due to the strong growth we saw in the fourth quarter of last year and.

We ended the quarter with $40 million remaining on our current class a share repurchase authorization.

Troy Anderson: The incremental revenue decline relative to the Q3 is primarily due to the strong growth we saw in the Q4 of last year and includes a modest impact related to the government shutdown. For adjusted EBITDA, we expect margin of approximately 3% in the quarter. This represents a sequential increase of 120 basis points consistent with the prior year change despite the incremental revenue pressure. A decrease of approximately 70 basis points year over year in the quarter, consistent with what we experienced in the Q3.

We continue to believe the data demonstrates that the company is measurably undervalued by the market.

It includes a modest impact related to the government shutdown.

For adjusted EBITDA, we expect margin of approximately 3% in the quarter.

With that backdrop, and our capital allocation flexibility, we anticipate being active in our repurchase program during the remainder of the year.

This represents a sequential increase of 120 basis points consistent with the prior year change despite the incremental revenue pressure.

We also maintained our quarterly dividend of $7 five per share.

These actions reflect our confidence in Kelly's strategy and our commitment to opportunistically deploying capital in pursuit of attractive returns for shareholders.

And a decrease of approximately 70 basis points year over year in the quarter consistent with what we experienced in the third quarter.

While we're not providing specific guidance beyond the fourth quarter.

As we look at the fourth quarter, we are assuming no material change in the macroeconomic or industry dynamics and a positive resolution to the federal government shutdown during the quarter.

Troy Anderson: While we're not providing specific guidance beyond Q4, as we look out over the next few quarters and the anticipated residual year-over-year impacts from the reduced demand for federal contractors and from the 3 large customers in ETM, it's likely we'll see continued revenue and margin pressure at least through H1 of 2026. As Chris said, across Kelly, we're addressing head-on opportunities to continue to improve our execution. This includes in the finance organization, where we're well underway with implementing measures that will enhance our agility, efficiency, and business impact in this evolving operating environment. I'm grateful to all of the Kelly team members for their unwavering commitment and resilience as we position the company for growth and enhanced profitability over the long term. I'll now turn the call back to Chris for his closing remarks.

As we look out over the next few quarters and the anticipated residual year over year impacts from the reduced demand for federal contractors and from the three large customers in ETF. It's.

For revenue, we expect a decline of 12% to 14% in the quarter, which includes 8% of negative impact associated with reduced demand from discrete large customers and for federal contractors consistent with the third quarter impact.

Troy Anderson: While we believe we want our fair share of the new business opportunities for the school year, we saw a number of decision delays in light of the broader macro environment, and the fill rate improvement benefit was lower year-over-year given our maturing customer portfolio, thus the relatively lower growth in the quarter. As a reminder, education volumes and revenues are reduced significantly in the third quarter due to the summer break. In the SET segment, revenue was down 9% in the quarter, or 3.5% excluding the federal government impact. Our telecom and engineering specialties continue to be growth areas within SET, while life sciences and technology saw year-over-year declines consistent with the second quarter. In the ETM segment, revenue declined 13.1% year-over-year, or an underlying decline of 1.9%. Staffing services revenues declined 16.4%.

It is likely we will see continued revenue and margin pressure at least through the first half of 2026.

As Chris said across Kelly, we're addressing head on opportunities to continue to improve our execution. This.

This includes in the finance organization, where we're well underway with implementing measures that will enhance our agility efficiency and business impact in this evolving operating environment.

Excluding these items, our underlying revenue decline would be 4% to 6%.

The incremental revenue declined relative to the third quarter is primarily due to the strong growth we saw in the fourth quarter of last year.

I'm grateful to all of the Kelly team members for their unwavering commitment and resilience as we position the company for growth and enhance profitability over the long term.

It includes a modest impact related to the government shutdown.

For adjusted EBITDA, we expect margin of approximately 3% in the quarter.

Now I'll turn the call back to Chris for his closing remarks.

This represents a sequential increase of 120 basis points consistent with the prior year change despite the incremental revenue pressure.

Thank you Troy.

As we move forward our immediate focus is on stabilizing kellys performance and actions to this end are underway.

Chris Layden: Thank you, Troy. As we move forward, our immediate focus is on stabilizing Kelly's performance, and actions to this end are underway. We're moving swiftly to align resources with current demand trends while continuing to drive structural efficiencies across the enterprise. As part of this effort, we made the difficult but necessary decision last month to implement strategic restructuring actions that resulted in a targeted workforce reduction. These actions address excess capacity while further streamlining our organizational structure following the consolidation of the OCG and P&I businesses into the single ETM segment. We're also continuing, and where possible, accelerating our technology modernization initiative within SETT and ultimately across the enterprise. This initiative will unlock substantial growth and efficiency opportunities, making it easier for our employees to serve our customers and talent, reducing expenses associated with managing disparate and outdated systems, and enabling more rapid innovation and integration of AI.

And a decrease of approximately 70 basis points year over year in the quarter consistent with what we experienced in the third quarter.

We're moving swiftly to align resources with current demand trends, while continuing to drive structural efficiencies across the enterprise as part of this effort, we made the difficult but necessary decision last month to implement strategic restructuring actions that resulted in a targeted workforce reduction.

While we're not providing specific guidance beyond the fourth quarter.

Troy Anderson: Driven primarily by the large customer and federal contract demand reductions, along with lower hours volume across other clients. Outcome-based revenues decreased by 17.2%, reflecting demand pressure from the large contact center customer that has fully run off as of the end of the quarter. Excluding contact center, ETM outcome-based solutions grew modestly. Talent solutions revenue decreased 1.4% overall, reflecting growth in PPO, MSP new customer wins, and reduced customer volumes and recruitment process outsourcing. Reported gross profit was $194 million, down 12.5% versus the prior year quarter, primarily from reduced revenue. The gross profit rate was 20.8%, a decrease of 60 basis points compared to the prior year quarter, and a 30 basis point sequential increase. The sequential lift, which is typical with the seasonality of our business, was more muted than we expected given the revenue dynamics, along with elevated employee-related costs in the quarter.

As we look out over the next few quarters and the anticipated residual year over year impacts from the reduced demand for federal contractors and from the three large customers in ECM. It's.

It is likely we will see continued revenue and margin pressure at least through the first half of 2026.

Actions address excess capacity, while further streamlining our organizational structure following the consolidation of the OCG and P&I businesses into the single Etfs segment.

As Chris said across Kelly, we're addressing head on opportunities to continue to improve our execution. This.

This includes in the finance organization, where we're well underway with implementing measures that will enhance our agility efficiency and business impact in this evolving operating environment.

We're also continuing and where possible accelerating our technology modernization initiative within set and ultimately across the enterprise.

I'm grateful to all of the Kelly team members for their unwavering commitment and resilience as we position the company for growth and enhance profitability over the long term.

This initiative will unlock substantial growth and efficiency opportunities.

Making it easier for our employees to serve our customers and talent, reducing expenses associated with managing disparate and outdated systems and enabling more rapid innovation and integration of AI.

Now I'll turn the call back to Chris for his closing remarks.

Thank you Troy.

As we move forward our immediate focus is on stabilizing kellys performance and actions to this end are underway.

While executing our near term priorities. We're also keeping our sight set on the future as I conclude my initial assessment of the business. Our team is aligned where we must focus longer term to accelerate progress on Kelly's strategic journey.

Chris Layden: While executing our near-term priorities, we're also keeping our sights set on the future. As I conclude my initial assessment of the business, our team is aligned where we must focus longer term to accelerate progress on Kelly's strategic journey. First and foremost is growth. Growth is the single most important value creation lever at this stage in Kelly's journey. To drive organic growth, we'll continue to enhance how we go to market, especially with our large enterprise customers, to bring to bear the full strength of Kelly's portfolio and win more market share. We'll also continue to drive inorganic growth by pursuing targeted investments that add scale and capabilities in higher margin specialties. We'll focus on evolving our product mix as well to address changing buyer preferences, such as the shift towards statement of work solutions, and to capitalize on the AI boom.

Troy Anderson: Education's GP rate increased 20 basis points, while SET declined 80 basis points, and ETM declined 60 basis points. We made significant progress improving our SG&A expense profile in the quarter, with reported SG&A expenses of $194.4 million, a decrease of $24.6 million, or 11.2%. On an adjusted basis, SG&A expenses decreased 9.7% year-over-year, reflecting the momentum we are gaining on structural and volume-related cost optimization efforts. Expenses increased in our education segment in support of the revenue growth, while expenses decreased across the rest of the company. With the increased revenue pressure, we're enhancing our efforts to drive durable and sustainable efficiencies in our operating model through technology enhancements, including leveraging AI, process efficiencies, and multiple other levers. Existing initiatives like the formation of the ETM segment and integration of MRP and other acquisitions within SET are progressing well and will drive both go-to-market and cost efficiencies going forward.

First and foremost is growth growth is the single most important value creation lever at this stage in Kelly's journey to drive organic growth will continue to enhance how we go to market, especially with our large enterprise customers to bring to bear the full strength of kellys portfolio and win more mark.

Actions address excess capacity, while further streamlining our organizational structure following the consolidation of the OCG and P&I businesses into the single Etfs segment.

We're also continuing and where possible accelerating our technology modernization initiative within set and ultimately across the enterprise.

Sure.

We will also continue to drive inorganic growth by pursuing targeted investments that add scale and capabilities in higher margin specialties, we will focus on evolving our product mix as well to address changing buyer preferences, such as the shift towards statement of work solutions and capitalize on the AI boom.

This initiative will unlock substantial growth and efficiency opportunities.

Our widely recognized global rework report found nearly half of executive surveyed are struggling to find the talent with the right operational and technical skills in AI.

Chris Layden: Our widely recognized Global Re:work Report found nearly half of executives surveyed are struggling to find the talent with the right operational and technical skills in AI. This unmet demand represents a significant opportunity to position Kelly as the partner of choice for employers navigating the transition to an AI-enabled workforce. We'll continue to focus on efficiency. This means continuing to align resources with demand while re-engineering our cost base to drive further structural efficiencies. That includes our initiatives to modernize our technology stack and integrate legacy acquisitions. Finally, culture is fundamental to how we'll achieve our ambitions and win in the market. We're committed to building on the strong culture that exists here at Kelly, doubling down on customer centricity, visibility, and accountability. I look forward to sharing with you more about these areas of focus and our progress as we move forward.

This unmet demand represents a significant opportunity to position Kelly is the partner of choice for employers navigating the transition to an AI enabled workforce.

Troy Anderson: In connection with our various efforts, we recognized $4.7 million of charges in the quarter, down from $6.4 million in the second quarter. These included costs associated with improving technology and processes across the enterprise, as well as severance expenses, and executive transition costs. We expect to see these expenses increase in the fourth quarter as we make continued progress and expand upon our various optimization efforts. Related to the realignment of SET and acquisition integration, during the quarter, we assessed the current Goodwill Reporting Unit and determined it was appropriate to combine them into a single SET segment reporting unit. As a result of the assessment, along with declines in the current and projected business performance driven by macroeconomic and industry conditions, we concluded that there was a triggering event for a non-cash Goodwill Impairment totaling $102 million in the quarter.

Next we will continue to focus on efficiency.

This means continuing to align resources with demand, while reengineering, our cost base to drive further structural efficiencies.

That includes our initiatives to modernize our technology stack and integrate legacy acquisitions.

And finally culture culture is fundamental to how we will achieve our ambitions and win in the market. We're committed to building on our strong culture that exists here at Kelly doubling down on customer centricity visibility and accountability.

Sure.

I look forward to sharing with you more about these areas of focus in our progress as we move forward.

Our widely recognized global rework report found nearly half of executive surveyed are struggling to find the talent with the right operational and technical skills in AI.

We're navigating a complex moment for our industry and our company.

Chris Layden: We're navigating a complex moment for our industry and our company. These circumstances call for decisive action to address near-term dynamics while positioning the company to realize the significant value creation opportunity before us. There's much work to be done, but I'm excited and energized to meet this moment together with our team and contribute my operational experience to accelerate our progress. Our core strengths, an iconic brand, a differentiated portfolio, and an engaged team, give me the confidence that we'll emerge more agile, resilient, and primed for growth. I'm grateful to the board of directors for placing their trust in me to lead Kelly at this moment on the company's journey. I also want to extend my appreciation to Peter Quigley for his support as I've stepped into this role and for his distinguished service to the company over the last 23 years.

These circumstances call for decisive action to address near term dynamics, while positioning the company to realize the significant value creation opportunity before us.

Troy Anderson: We are excluding the impairment from our adjusted results. Additionally, with the impairment activity, we were also required to reassess the recoverability of our deferred tax assets. While we have confidence in our business over the future recoverability time period, with a three-year cumulative loss position in our near-term actual and expected financial performance, it was necessary to record a valuation allowance of $70 million, which is also non-cash and excluded from our adjusted results. As a result of the Goodwill impairment and tax valuation allowance, our reported loss per share was $4.26 for the quarter. On an adjusted basis, earnings per share was $0.18 compared to $0.21 in the prior year, with the decline over the prior year primarily due to lower profitability and discrete tax items.

This unmet demand represents a significant opportunity to position Kelly is the partner of choice for employers navigating the transition to an AI enabled workforce.

There is much work to be done, but I am excited and energized to meet this moment together with our team and contribute my operational experience to accelerate our progress.

Next we will continue to focus on efficiency.

This means continuing to align resources with demand, while reengineering, our cost base to drive further structural efficiencies.

Our core strengths and iconic brand a differentiated portfolio and an engaged team gives me the confidence that we will emerge more agile resilient and prime for growth.

That includes our initiatives to modernize our technology stack and integrate legacy acquisitions.

I am grateful to the board of directors for placing their trust in me to lead Kelly at this moment on the company's journey.

And finally culture culture is fundamental to how we will achieve our ambitions and win in the market. We're committed to building on the strong culture that exists here at Kelly doubling down on customer centricity visibility and accountability.

I also wanted to extend my appreciation to Peter Quigley for his support as I stepped into this role and for his distinguished service to the company over the last 23 years.

Troy Anderson: Adjusted EBITDA was $16.5 million, a decrease of 36.7% versus the prior year period, while adjusted EBITDA margin declined to 1.8%, both of which were below our expectations, reflecting the revenue and gross profit declines I previously noted. SET expanded margins by 60 basis points year-over-year, despite the lower gross profit due to their expense optimization efforts. ETM saw margin pressure due to the elevated revenue and gross profit declines, despite substantial progress on their SG&A. Education experienced margin compression due to the seasonality of that business. Moving to the balance sheet and cash flow, we are generating strong operating cash flow this year with $94 million through the third quarter, up significantly versus the prior year.

I look forward to sharing with you more about these areas of focus in our progress as we move forward.

And to our team. Thank you for welcoming me with openness and enthusiasm I look forward to working alongside you to realize our collective ambitions and create long term value for all of our stakeholders.

Chris Layden: To our team, thank you for welcoming me with openness and enthusiasm. I look forward to working alongside you to realize our collective ambitions and create long-term value for all of our stakeholders. Operator, you can now open the call to questions.

We're navigating a complex moment for our industry and our company.

These circumstances call for decisive action to address near term dynamics, while positioning the company to realize the significant value creation opportunity before us.

Operator, you can now open the call to questions.

There is much work to be done, but I am excited and energized to meet this moment together with our team and contribute my operational experience to accelerate our progress.

Thank you, ladies and gentlemen, if you wish to ask a question. Please press star one one on your telephone keypad you may withdraw your question at any time by repeating the star one one command.

Operator: For our first question, we'll go to Joe Gomes from Noble Capital. Joe, your line is now open.

Our core strengths and iconic brand a differentiated portfolio and an engaged team gives me the confidence that we will emerge more agile resilient and prime for growth.

If youre using a speakerphone, please pick up the handset before pressing the numbers.

Once again, if you have a question you May press Star one at this time for our first question will go to Joe comments from local capital. Your line is now open.

Troy Anderson: Total available liquidity as of the end of the quarter was $269 million, comprising $30 million in cash and $239 million of available liquidity on our credit facilities, leaving us ample capital allocation flexibility. Total borrowing of $118 million increased versus the prior quarter due to our normal working capital seasonality. Our debt-to-EBITDA leverage ratio was less than 1 at the end of the quarter. We don't expect a material change in our net debt position over the remainder of the year from normal operations. We ended the quarter with $40 million remaining on our current Class A share repurchase authorization. We continue to believe the data demonstrates that the company is measurably undervalued by the market. With that backdrop, and our capital allocation flexibility, we anticipate being active in our repurchase program during the remainder of the year. We also maintained our quarterly dividend of $0.075 per share.

I am grateful to the board of directors for placing their trust in me to lead Kelly at this moment on the company's journey.

Good morning, Thanks for taking my questions.

I also wanted to extend my appreciation to Peter Quigley for his support as I stepped into this role and for his distinguished service to the company over the last 23 years.

Joe Gomes: Good morning. Thanks for taking my questions.

Good morning, John and Joe.

Wanted to start out.

Troy Anderson: Morning, Joe.

Troy I don't know you can kind of break out.

Joe Gomes: I wanted to start out, Troy, I don't know if you can kind of break out these discrete, you know, between the federal government and the large customer impacts. I know in total it was, I think you'd said roughly 8%, I don't know if you can break that down, what was for the federal government and what was for the large customers.

These discrete.

Between the federal government and a large customer impacts in total it was roughly 8%.

I know if you can break that down what was for the federal government and what was for the large customers.

Operator, you can now open the call to questions.

Yes, Joe Thanks for the question, they're roughly equal so it's roughly two points, each plus or minus a little bit, but I'd say generally speaking they're roughly equal.

Yeah.

Troy Anderson: Yeah, Joe, thanks for the question. They're roughly equal. It's roughly 2 points each, plus minus a little bit. I'd say generally speaking, they're roughly equal.

Thank you, ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone keypad you may withdraw your question at any time by repeating the star one one command.

Okay.

Thanks for that.

Joe Gomes: Okay. Thanks for that. I know, Chris, you just talked about, you know, some of this go-to-market here, you know, optimizing large enterprise customer share wallet. You know, when I see that, and I understand that goal, I also see, hey, 3 customers had a significant impact on revenue this quarter. You know, how are you kind of like squaring that circle and making sure that, you know, if we get even more concentrated in some big customers, the same things don't happen, you know, down the road?

I know, Chris you just talked about some of this go to market here.

If youre using a speakerphone, please pick up the handset before pressing the numbers.

Troy Anderson: These actions reflect our confidence in Kelly's strategy and our commitment to opportunistically deploying capital in pursuit of attractive returns for shareholders. As we look at the fourth quarter, we are assuming no material change in the macroeconomic or industry dynamics, and a positive resolution to the federal government shutdown during the quarter. For revenue, we expect a decline of 12% to 14% in the quarter, which includes 8% of negative impact associated with reduced demand from discrete large customers and for federal contractors, consistent with the third-quarter impact. Excluding these items, our underlying revenue decline would be 4% to 6%. The incremental revenue decline relative to the third quarter is primarily due to the strong growth we saw in the fourth quarter of last year, and includes a modest impact related to the government shutdown. For adjusted EBITDA, we expect margin of approximately 3% in the quarter.

Optimizing large enterprise customers share of wallet.

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

And when you.

You see that and I understand that goal, but then household.

Our first question will go to Joe Gomes from Noble capital. Your line is now open.

Right.

Three customers had a significant impact on revenue this quarter.

Good morning, Thanks for taking my questions.

How are you kind of square that circle, and making sure that.

Good morning, John and Joe.

Even more concentrated in some big customers the same things don't happen down the road.

I wanted to start out.

Troy I don't know you can kind of break out.

Yes. Thanks, Joe This is Chris and it's a good question and let me just start by reiterating that.

These discrete.

Between the federal government and a large customer impacts I know in total it was I think roughly 8% I don't know if you can break that down what was for the federal government and what was for the large customers.

Chris Layden: Yeah. Thanks, Joe. This is Chris. It's a good question. Let me just start by reiterating that we know Kelly can achieve more. We saw the headwinds and we know there's also execution gaps that we're gonna continue to address head-on. You know, one of the things that you heard me talk about is the breadth and depth of our portfolio. As we've gone and acquired really significant scale over the last few years, that's also built on a foundation where we have had incredible strength, right? Number one in education, number two in science, number four in engineering, just outside the top 10 in our technology business. You know, Everest recognized specialization and strength in our MSP, BPO, and staffing services.

We know Kelly can achieve more.

We saw the headwinds and and we know there's also execution gaps that we're going to continue due to.

Yes, Joe Thanks for the question, they're roughly equal so it's roughly two points, each plus or minus a little bit, but I'd say generally speaking they're roughly equal.

To address head on.

One of the things that you heard me talk about is the breadth and depth of our portfolio and as we've gone and acquired really significant scale over the last few years.

Okay. Thanks for that.

Troy Anderson: This represents a sequential increase of 120 basis points, consistent with the prior year change, despite the incremental revenue pressure, and a decrease of approximately 70 basis points year-over-year in the quarter, consistent with what we experienced in the third quarter. While we're not providing specific guidance beyond the fourth quarter, as we look out over the next few quarters and the anticipated residual year-over-year impacts from the reduced demand for federal contractors and from the three large customers in ETM, it's likely we'll see continued revenue and margin pressure, at least through the first half of 2026. As Chris said, across Kelly, we're addressing head-on opportunities to continue to improve our execution. This includes in the finance organization, where we're well underway with implementing measures that will enhance our agility, efficiency, and business impact in this evolving operating environment.

I know, Chris you just talked about some of this go to market here.

That is also built on a foundation, where we've had incredible strength right number one in education number two in science number for an engineering just outside the top 10 and.

Optimizing large enterprise customers share of wallet.

And when.

You see that and I understand that goal, but then also see hey.

In our technology business.

Everest recognized.

Three customers had a significant impact on revenue this quarter.

Specialization and strain.

In our MSP, bto and staffing services and so as I'm talking to customers not only.

How are you kind of squaring that circle and making sure that we.

Even more concentrated in some big customers the same things don't happen down the road.

Chris Layden: As I'm talking to customers, not only, you know, the three impacted, but also the thousands of customers we're working with from around the globe, they wanna be doing more with Kelly. They wanna make sure that it's easy to work with us, that we're bringing all of our capability to them. One of the things I have been impressed with is I, and I saw this from the outside before I got here, and I've been even more impressed as I've joined, is the depth of these relationships, the length of time we've been working with customers around the world.

The three impacted but also the thousands of customers, we're working with from around the globe.

Yes. Thanks, Joe This is Chris and it's a good question and let me just start by reiterating.

Want to be doing more with Kelly.

Want to make sure that it's easy to work with us that we are bringing all of our capability to them.

We know Kelly can achieve more.

And one of the things I have been impressed with his eye and I saw this from the outside before I got here and I've been even more impressed as I joined is the depth of these relationships the length of time, we've been working with customers around the world.

We saw the headwinds and <unk> and we know there is also execution gaps that we're going to continue due to.

Troy Anderson: I'm grateful to all of the Kelly team members for their unwavering commitment and resilience as we position the company for growth and enhanced profitability over the long term. I'll now turn the call back to Chris for his closing remarks. Thank you, Troy. As we move forward, our immediate focus is on stabilizing Kelly's performance, and actions to this end are underway. We're moving swiftly to align resources with current demand trends, while continuing to drive structural efficiencies across the enterprise. As part of this effort, we made the difficult but necessary decision last month to implement strategic restructuring actions that resulted in a targeted workforce reduction. These actions addressed excess capacity, while further streamlining our organizational structure following the consolidation of the OCG and P&I businesses into the single ETM segment.

To address head on.

One of the things that you heard me talk about is the breadth and depth of our portfolio and as we've gone and acquired really significant scale over the last few years.

And we know we will continue to partner with them in new ways as we continue to make sure that we're showing up.

Chris Layden: We know we'll continue to partner with them in new ways as we continue to make sure that we're showing up and that we're easy to work with, and we're showing up with all of our capabilities. We, we do have opportunity as we move forward around some of that execution, but that's what we're taking head-on. Again, I have some confidence as I've been engaging with customers over the last 60 days.

That is also built on a foundation, where we have had incredible strength ranked number one in education number two in science number for.

We're easy to work with and we're showing up with all of our capabilities. So we do have opportunity.

As we move forward around some of that execution, but that's what we're taking head on and again I have some confidence as I have been engaging with customers over the last 60 days.

In engineering, just outside the top 10.

And our technology business.

Everest recognized specialization and strain in our MSP, BDO and staffing services and so as I'm talking to customers not only.

Yes, Joe This is Troy I would just add.

That again. These these four discrete items are somewhat unique and completely unrelated.

Troy Anderson: Yeah, Joe, this is Troy. I would just add that again, these four discrete items are somewhat unique and completely unrelated. Just happened to all be around the same time. It's the macro environment affected each of them in varying ways, policy decisions affected them in varying ways, and their industry challenges are also affecting them in varying ways. It's less about customer concentration, and it's more about, you know, stickier services and just growing. We have relationships, by the way, with all those customers still, and still very significant for at least one or two of them.

The three impacted but also the thousands of customers, we're working with from around the globe.

It just happened to all be around the same time, but it's the macro environment affected each of them in varying ways policy decisions affected them in varying ways in and they're in.

They want to be doing more with Kelly.

They wanted to make sure that it's easy to work with us that we're bringing all of our capability to them and one of the things I have been impressed with his eye.

Troy Anderson: We're also continuing and, where possible, accelerating our technology modernization initiative within SET and ultimately across the enterprise. This initiative will unlock substantial growth and efficiency opportunities, making it easier for our employees to serve our customers and talent, reducing expenses associated with managing disparate and outdated systems, and enabling more rapid innovation and integration of AI. While executing our near-term priorities, we're also keeping our sights set on the future. As I conclude my initial assessment of the business, our team is aligned where we must focus longer term to accelerate progress on Kelly's strategic journey. First and foremost is growth. Growth is the single most important value creation lever at this stage in Kelly's journey.

There are industry challenges are also affecting them in varying ways. So.

Saw this from the outside before I got here and I've been even more impressed as I joined is.

It's less about.

Customer concentration.

It's more about stickier services and and just growing we have relationships by the way with all of those customers still and still very significant.

Is the depth of these relationships the length of time, we've been working with customers around the world.

And we know we will continue to partner with them in new ways as we continue to make sure that we're showing up.

Or at least one or two of them.

Anyway, just wanted to ask just remind the since we didn't really get into the details of what they were but remind everybody of that.

Troy Anderson: Anyway, just wanted to just remind the, since we didn't really get into the details of what they were, remind everybody of that.

We're easy to work with and we're showing up with all of our capabilities. So we do have opportunity as we move forward around some of that execution, but that's what we're taking head on and again I have some confidence as I have been engaging with customers over the last 60 days.

I appreciate that and then one more from me if I may.

Joe Gomes: Appreciate that. Then one more from me, if I may. You know, Troy, you got a slide here in the deck, you know, about the revenue trends, and, you know, you kind of break out excluding discrete impacts. You know, if I take a quick glance at those that, you know, Q1, Q2, Q3, they're, you know, pretty much trending the wrong way. Just trying to get an idea, you know, I understand the Federal Government shutdown. You know, what else needs to occur in the macro environment that you think we can start to see these revenue trends reverse and start becoming positive, or, you know, as opposed to negative and/or, you know, start growing again as opposed to trending downward?

You got to.

Slide here in the deck about the revenue trends and you kind of break out excluding discrete impacts.

Yes, Joe This is Troy I would just add.

Taking a quick glance at those that quarter.

That again. These these four discrete items are somewhat unique and completely unrelated.

Quarter, one quarter two quarter free there.

Pretty much trending the wrong way.

Troy Anderson: To drive organic growth, we'll continue to enhance how we go to market, especially with our large enterprise customers, to bring to bear the full strength of Kelly's portfolio and win more market share. We'll also continue to drive inorganic growth by pursuing targeted investments that add scale and capabilities in higher margin specialties. We'll focus on evolving our product mix as well to address changing buyer preferences, such as the shift toward statement-of-work solutions, and to capitalize on the AI boom. Our widely recognized Global Rework report found nearly half of executives surveyed are struggling to find the talent with the right operational and technical skills in AI. This unmet demand represents a significant opportunity to position Kelly as the partner of choice for employers navigating the transition to an AI-enabled workforce. Next, we'll continue to focus on efficiency.

It just happened to all be around the same time, but it's the macro environment affected each of them in varying ways policy decisions affected them in varying ways in and Theyre in.

And just trying to get an idea.

I understand the federal government shutdown.

What else needs to occur in the macro environment.

There are industry challenges are also affecting them in varying ways. So.

That you think we can start to see these revenue trends reverse and start becoming positive.

It's less about.

Customer concentration.

It's more about stickier services and and just growing we have relationships by the way with all of those customers still and still very significant.

Our.

As opposed to negative and or start growing again as opposed to trending downward.

Yes, it's a fair question again, I would say that set and again theres somewhat unique across the three.

Or at least one or two of them.

So anyway I just wanted to ask just remind the since we didn't really get into the details of what they were but remind everybody of that.

Troy Anderson: Yeah, it's a fair question. Again, I would say that, you know, SETT, and again, they're somewhat unique across the three segments. SETT is fairly consistent across the quarters. We had great strength in telecom, double-digit growth there this quarter after nearly double-digit last quarter. Engineering's been growing all year, and consistent rate of decline in technology and life sciences. We did expect a little bit more out of SETT this quarter, but we're still pleased that we, despite the broader environment around us that we saw at least consistent performance and some strength there in those two areas. Education, again, somewhat of a unique dynamic there. Market, some decision delays.

Segments set is fairly consistent across the quarters.

I appreciate that and then one more for me if I may.

We had.

Great strength in telecom double digit growth there this quarter after a nearly double digit last quarter engineering has been growing all year.

You got to.

Slide here in the deck about the revenue trends and you kind of break out excluding discrete impacts.

And consistent rate of decline in technology and life Sciences.

Taking a quick glance at those.

Quarter, one quarter to quarter three there.

So.

Troy Anderson: This means continuing to align resources with demand while re-engineering our cost base to drive further structural efficiencies. That includes our initiatives to modernize our technology staff and integrate legacy acquisitions. Finally, culture. Culture is fundamental to how we'll achieve our ambitions and win in the market. We're committed to building on the strong culture that exists here at Kelly, doubling down on customer centricity, visibility, and accountability. I look forward to sharing with you more about these areas of focus and our progress as we move forward. We're navigating a complex moment for our industry and our company. These circumstances call for decisive action to address near-term dynamics while positioning the company to realize the significant value creation opportunity before us.

We did expect a little bit more out of set this quarter, but we're still pleased that we did.

Yes.

Pretty much trending the wrong way.

Despite the broader environment around us that that we saw at least consistent performance and some strength there. There's two areas education again somewhat of a unique dynamic there.

And just trying to get an idea.

I understand the federal government shutdown.

But.

What else needs to occur in the macro environment.

Market. Some decision delays those are decisions, we still expect to win.

You think we can start to see these revenue trends reverse and start becoming positive.

Troy Anderson: Those are decisions we still expect to win at a future date, but there was some hesitancy in the market just given some of the policy changes and dynamics around the broader macro environment. We expect Education to continue to grow and us win our fair share, if not more. We've been taking share in a growing market there. On ETM, again, the underlying still low single digit. We think we're, you know, we're competitive in the market. As Chris said, highly ranked by the industry experts. We saw growth at MSP, so we're starting to realize the benefits of some of the new logo wins there.

At a future date, but.

There was some hesitancy in the market just given some of the policy changes in.

Or.

As opposed to negative and or start growing again as opposed to trending downward.

The dynamics around the broader macro environment. So.

We expect education to continue to grow and at US win our fair share if not more we've been taking share in a growing market there.

Yes, it's a fair question again, I would I would say that set together somewhat unique across the three.

Segments set is fairly consistent across the quarters.

And then on ATM again, the underlying still low single digit.

<unk>.

Great strength in telecom double digit growth there this quarter after a nearly double digit last quarter engineering has been growing all year.

We're competitive in the market as Chris said.

Troy Anderson: There's much work to be done, but I'm excited and energized to meet this moment together with our team and contribute my operational experience to accelerate our progress. Our core strengths, an iconic brand, a differentiated portfolio, and an engaged team, give me the confidence that we'll emerge more agile, resilient, and primed for growth. I'm grateful to the board of directors for placing their trust in me to lead Kelly at this moment on the company's journey. I also want to extend my appreciation to Peter Quigley for his support as I've stepped into this role and for his distinguished service to the company over the last 23 years. To our team, thank you for welcoming me with openness and enthusiasm. I look forward to working alongside you to realize our collective ambitions and create long-term value for all of our stakeholders.

Highly ranked by the industry.

Experts and we saw growth in MSP, So we're starting to realize.

And consistent rate of decline in technology and life Sciences.

The benefits of some of the new logo wins, there staffing has been consistent across the year.

No.

We did expect a little bit more out of set this quarter, but but we are still pleased that we.

Troy Anderson: Staffing has been consistent across the year, despite the macro headwinds, the underlying staffing. Really that decline there was just less growth in PPO, and a bit of a downturn in RPO, the recruitment process outsourcing. There's different dynamics in each, and there's significant opportunity in each, as Chris outlined in his prior response. I think it's just a matter of moving us forward with some of the initiatives, and getting through some of the softness that we see in more in the macro dynamics around us.

Despite the macro headwinds the underlying staffing.

The broader environment.

Environment around us that that we saw at least consistent performance and some strength there. There's two areas education get somewhat of a unique dynamic there.

And really that that decline there was just less growth in PPO.

And a bit of a downturn in RPM recruitment process outsourcing.

Market. Some decision delays those are decisions, we still expect to win.

So there's different dynamics in each in there and there is significant opportunity in aegis as Chris outlined in his prior response so.

At a future date, but.

There was some hesitancy in the market just given some of the policy changes in.

So I think it's just a matter of.

Moving us forward with some of the initiatives.

Dynamics around the broader macro environment. So.

And getting through some of the softness that we see more in the macro dynamics around us.

We expect education to continue to grow and in US win our fair share if not more we've been taking share in a growing market there.

Okay, great. Thanks, I'll get back in queue.

Joe Gomes: Okay, great. Thanks. I'll get back in queue.

And then on Etfs again, the underlying still low single digit.

Troy Anderson: Operator, you can now open the call to questions.

Thank you. Our next question comes from the line of Kevin. Thank you from Barrington Research Associates, Kevin Your line is now open.

We're competitive in the market as Chris said.

Operator: Thank you. Our next question comes from the line of Kevin Steinke from Barrington Research Associates. Kevin, your line is now open.

Highly ranked by the industry.

Scott Thomas: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star 11 on your telephone keypad. You may withdraw your question at any time by repeating the star 11 command. If you're using your speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, you may press star 11 at this time. For our first question, we'll go to Joe Gomez from Noble Capital. Joe, your line is now open.

Experts and we saw growth in MSP, So we're starting to realize.

Great. Thank you.

Kevin Steinke: Great. Thank you. Wanted to start out by asking about, you know, the various factors in the operating environment that you noted in your earnings release are currently impacting your results, you know, largely the macroeconomic landscape and sluggish labor market. On top of that, you know, specifically added in the AI boom. I'm just kinda wondering what you're seeing in terms of the impact of AI on demand for your business currently. On the flip side, you also mentioned that could be an opportunity, you know, over the longer term as, you know, as your customers look to find AI talent. Maybe, if you could walk through the dynamics you're seeing with AI currently.

So wanted to start out by asking about.

The benefits of some of the new logo wins, there staffing has been consistent across the year.

There are various factors in the operating environment that you noted in your earnings release are currently impacting your results.

<unk> the macro headwinds the underlying staffing.

And really that that decline there was just less growth in PPO.

The macroeconomic landscape.

A bit of a downturn in RPM recruitment process outsourcing.

Hello, Krish labor market, but.

Top of that you specifically added in the.

So there's different dynamics in each in there and there is significant opportunity in each as Chris outlined in his prior response.

Chris Layden: Good morning. Thanks for taking my questions.

The AI boom and so I'm, just kind of wondering what youre seeing in <unk>.

Troy Anderson: Good morning, Joe.

Chris Layden: Morning, Joe.

So I think it's just a matter of.

Troy Anderson: I wanted to start out. Troy, I don't know if you can kind of break out these discrete, between the federal government and a large customer impact. I know in total it was, I think you'd say, roughly 8%, but I don't know if you can break that down. What was for the federal government and what was for the large customers?

Terms of the.

Moving us forward with some of the initiatives.

The impact of AI.

Demand for your business currently.

And getting through some of the softness that we see in more on the macro dynamics around us.

And on the flip side, you also mentioned there could be an opportunity.

Over the longer term.

Okay, great. Thanks, I'll get back in queue.

Sure.

As your customers look to find talent so maybe.

If you could walk through the dynamics Youre seeing with AIG currently.

Thank you. Our next question comes from the line of Kevin. Thank you from Barrington Research Associates, Kevin Your line is now open.

Chris Layden: Yeah, Joe, thanks for the question. They're roughly equal. It's roughly two points each, ± a little bit, but I'd say, generally speaking, they're roughly equal.

Yes, Kevin Thanks, This is Chris.

Troy Anderson: Kevin, thanks. This is Chris. We really see there to be an opportunity to continue to capture new AI growth opportunities. You know, from our standpoint, really not just in the SETT business, but in ETM and in Kelly Education, we've got a unique opportunity in the market based on our capability to bring employers a flexible, more scalable solution as they're bridging into a more AI-enabled workforce. We think that's gonna unlock a lot of value in a way that will combine the power of people and technology. We have that opportunity as we move up the value chain in our SETT business with a lot of the work we're doing in things like data modernization and other digital work. That's solutions-based business.

We really see.

Great. Thank you.

<unk> to be an opportunity to continue to capture new.

Troy Anderson: Okay, thanks for that. I know, Chris, you just talked about some of this go-to-market here, optimizing large enterprise customer share wallet. You see that, and I understand that goal, but then I also see, hey, three customers had a significant impact on revenue this quarter. How are you kind of squaring that circle and making sure that if we get even more concentrated in some big customers, the same things don't happen down the road?

So wanted to start out by asking about.

AI growth.

Opportunities and from our standpoint really not just in the set business, but in ETF and in education.

The various <unk>.

Factors in the operating environment that you noted in your earnings release are currently impacting your results.

We've got a unique opportunity in the market based on our capability.

Largely the macroeconomic landscape.

To bring employers a flexible more scalable solution.

Hello, Krish labor market, but.

On top of that you specifically added in the.

As there bridging into a more AI enabled workforce we.

The AI boom and so I'm, just kind of wondering what you're seeing in <unk>.

We think that's going to unlock.

Lot of value in a way that will combine.

Terms of the.

The power of people and technology, and we have that opportunity as we move up the value chain.

The impact of AI.

Demand for your business currently.

Joe Gomez: Yeah, thanks, Joe. This is Chris, and it's a good question. Let me just start by reiterating that we know Kelly can achieve more. We saw the headwinds, and we know there's also execution gaps that we're going to continue to address head-on. One of the things that you heard me talk about is the breadth and depth of our portfolio. As we've gone and acquired really significant scale over the last few years, that's also built on a foundation where we have had incredible strength, right? Number one in education, number two in science, number four in engineering, just outside the top 10 in our technology business. Everest-recognized specialization and strength in our MSP, BPO, and staffing services. As I'm talking to customers, not only.

And on the flip side, you also mentioned there could be an opportunity.

Our set business with a lot of the work we're doing in things like data modernization and other digital work that.

Over the longer term.

Sure.

As your customers look to find talent so maybe.

<unk> solutions based business and again Thats.

If you could walk through the dynamics Youre seeing with AIG currently.

And growing demand.

Troy Anderson: Again, that's in growing demand. As we indicated in our prepared remarks, more broadly across employers, in our research, 50% told us that they are struggling to find the right operational and technical skills to help them navigate this transition into the AI-enabled workforce. We see it as a real opportunity for us on the go-to-market side. Now, internally, you heard Troy and I both talk about how we are gonna continue to accelerate the modernization of our technology stack, the technology stack that we acquired when we acquired MRP.

And as.

As we indicated in our prepared remarks.

Yes, Kevin Thanks, This is Chris.

More broadly across employers.

We really see.

Our research.

<unk> to be an opportunity to continue to capture new.

50% told us that they are struggling to find.

AI growth.

The right operational and technical skills.

Opportunities and from our standpoint really not just in the set business, but in ECM and in education.

To help them navigate this transition into the new AI enabled workforce.

We've got a unique opportunity in the market based on our capability.

We see it as a real opportunity for us on the go to market side now internally you heard Troy and I will talk about how we're going to continue to accelerate the modernization of our technology stack.

To bring employers a flexible more scalable solution.

As there bridging into a more AI enabled workforce we.

We think that's going to unlock.

Technology stack that we acquired when we acquired MRP.

Lot of value in a way that will combine.

Joe Gomez: The three impacted, but also the thousands of customers we're working with from around the globe, want to be doing more with Kelly. They want to make sure that it's easy to work with us, that we're bringing all of our capability to them. One of the things I have been impressed with, and I saw this from the outside before I got here, and I've been even more impressed as I joined, is the depth of these relationships, the length of time we've been working with customers around the world. We know we'll continue to partner with them in new ways as we continue to make sure that we're showing up, that we're easy to work with, and we're showing up with all of our capabilities.

The power of people and technology, and we have that opportunity as we move up the value chain.

That continues to be a <unk>.

Troy Anderson: That continues to be a priority as we think about ways to improve both processing and efficiency across our teams and bring our teams new tools. A lot of that is underway, the integration of those AI-based tools in our recruiting process, in our client portals. We're gonna continue to see that add value and drive opportunities for efficiency and productivity over the next couple of quarters.

Priority as we think about ways to improve both processing inefficiency across.

Our set business with a lot of the work we're doing in things like data modernization and other digital work that.

Our.

Our teams.

And bring our teams new tools.

<unk> solutions based business and again Thats in.

And a lot of that is underway the integration of those AI based tools in our recruiting process.

And growing demand.

And as.

As we indicated in our prepared remarks.

In our client portals, and we're going to continue to see that add value and drive opportunities for efficiency and productivity.

More broadly across employers.

Our research.

50% told us that they are struggling to find.

Over the next couple of quarters.

The right operational and technical skills.

Okay, great. So it sounds like.

To help them navigate this transition into the new AI enabled workforce.

Joe Gomez: We do have opportunity as we move forward around some of that execution, but that's what we're taking head-on. Again, I have some confidence as I've been engaging with customers over the last 60 days.

Kevin Steinke: Okay, great. You know, it sounds like AI offers a nice longer term growth opportunity for you. I was just curious if in the shorter term, you know, perhaps are some customers, you know, kinda holding off or delaying hiring decisions as they assess the impact of AI on their businesses and, you know, as they assess whether they need to add as many people in the past, you know, given that AI will bring them greater productivity. I'm just wondering if that's, you know, having any short-term impact on demand for your services.

AI offers a nice longer term.

We see it as a real opportunity for us on the go to market side now internally you heard Troy and I will talk about how we are going to continue to accelerate the modernization of our technology stack.

The growth opportunity for you I was just curious if in the.

Shorter term.

Perhaps are some customers kind of holding off or or delaying hiring decisions as they are.

Chris Layden: Yeah, Joe, this is Troy. I would just add that, again, these four discrete items are somewhat unique and completely unrelated. They just happened to all be around the same time, but the macro environment affected each of them in varying ways. Policy decisions affected them in varying ways, and their industry challenges are also affecting them in varying ways. It's less about customer concentration, and it's more about stickier services and just growing. We have relationships, by the way, with all those customers still, and still very significant for at least one or two of them. Anyway, just wanted to remind, since we didn't really get into the details of what they were, but remind everybody of that.

Assess the impact of AI on their businesses.

Technology stack that we acquired when we acquired MRP.

As they assess whether they need to.

As many people in the past given that we'll bring them greater productivity I'm just wondering if thats.

And that continues to be.

Priority as we think about ways to improve both process and efficiency across.

Having any short term impact on.

Our.

Our teams.

On demand for your services.

And bring our teams new tools.

Well, let me, let me start and I'll have Troy.

And a lot of that is underway the integration of those AI based tools in our recruiting process in.

Chris Layden: Well, let me let me start, and I'll have Troy build on it. You know, first, I think we just need to step back in the broader context of what we've been seeing, a pretty sluggish labor market. You know, many of the, you know, many of the businesses that would support some of the disruption maybe you've seen and the lack of job growth that we've seen really pretty consistently across every month this year, is a bit embedded already in the workforce dynamics. So we see and have been seeing that sluggish impact all year. Now, outside of that, we continue to see companies invest in bridging themselves into a more AI-enabled workforce.

Build on it.

First I think we just need to step back in the broader context of what we've been seeing a pretty sluggish labor market and.

In our client portals, and we're going to continue to see that add value and drive opportunities for efficiency and productivity.

Many of the.

Over the next couple of quarters.

Many of the businesses that would support some of the disc.

Okay, great. So it sounds like.

Disruption, maybe you have seen in the.

AI offers a nice longer term.

Lack of job growth that we've seen really pretty consistently across.

Troy Anderson: Appreciate that. One more for me, if I may. Troy, you got a slide here in the deck about the revenue trends, and you kind of break out excluding discrete impacts. If I take a quick glance at those, Q1, Q2, Q3, they're pretty much trending the wrong way. Just trying to get an idea. I understand the federal government shut down. What else needs to occur in the macro environment that you think we can start to see these revenue trends reverse and start becoming positive, as opposed to negative, and/or start growing again as opposed to trending downward?

Growth opportunity for you I was just curious if in the.

Every month this year is a bit embedded already in the workforce dynamics and so we see and have been seeing that sluggish impact all year.

Shorter term.

Perhaps are some customers kind of holding off or or delaying hiring decisions as they assess the impact of AI on their businesses.

Now outside of that we continue to see companies invest in.

As they assess whether they need to.

Reaching themselves into a more AI enabled workforce and we believe there could actually be opportunities not only on the solution side of how we can help companies navigate that but it also could be an indication at some points on the staffing part of our business that companies use flexible labor as a bridge into that.

And as many people in the past given that we'll bring them greater productivity I'm just wondering if thats.

Chris Layden: We believe there could actually be opportunities, not only on the solution side of how we can help companies navigate that, but it also could be an indication at some point on the staffing part of our business that companies use flexible labor as a bridge into that, as they're navigating more certainty around the demand for their products and services. We'll continue to be navigating those indicators that will impact both parts of our business, our staffing and our solutions.

Having any short term impact on.

Demand for your services.

Well, let me, let me start and I'll have Troy.

At as they're navigating more certainty around the demand for their products and services and so we will continue to be navigating those indicators.

Build on it.

First I think we just need to step back in the broader context of what we've been seeing a pretty sluggish labor market and.

That will impact both parts of our business, our staffing and our solutions.

Many of the.

Chris Layden: Yeah, it's a fair question. Again, I would say that SET, and again, they're somewhat unique across the three segments. SET is fairly consistent across the quarters. We had great strength in telecom, double-digit growth there this quarter after nearly double-digit last quarter. Engineering's been growing all year, and consistent rate of decline in technology and life sciences. We did expect a little bit more out of SET this quarter, but we're still pleased that, despite the broader environment around us, we saw at least consistent performance and some strength there in those two areas. Education, again, somewhat of a unique dynamic there. Market, some decision delays. Those are decisions we still expect to win at a future date, but there was some hesitancy in the market just given some of the policy changes and dynamics around the broader macro environment.

Yeah, Kevin I would just add this is Troy.

Many of the businesses that would support some of the.

I wouldn't say, there's been a change this quarter versus last quarter or two quarters ago in terms of any impact of that AI may have had in terms of our positions type of positions, we staff or the types of opportunities we pursue.

Troy Anderson: Yeah, Kevin, I would just add, this is Troy, I wouldn't say there's been a change this quarter versus last quarter or 2 quarters ago in terms of any impact that AI may have had in terms of our positions, the type of positions we staff or the type of opportunities we pursue. What we are seeing an uptick in our ability to leverage AI in terms of providing support to our customers, be it with our platforms from a workforce management perspective in the ETM space, be it some of the solutions that we're bringing to bear in SETT, not just in the technology vertical, but also in telecom and engineering and life sciences.

Disruption, maybe you've seen in the.

Lack of job growth that we've seen really pretty consistently across.

Every month this year is a bit embedded already in the workforce dynamics and so we see and have been seeing that sluggish impact all year.

But what we are seeing an uptick in our ability to leverage AI in terms of providing support to our customers be it with our platforms from a workforce management perspective in the ETF space be it some of the solutions that we're bringing to bear.

Now outside of that we continue to see companies invest in.

Set.

Not just in the technology.

Vertical, but also in telecom and engineering and life Sciences, So there as.

We're starting to be able to now move upstream into.

Troy Anderson: I mean, there's a. We're starting to be able to now move upstream into bumping into some of the major consulting players with some of the our nimbleness and the capability that we bring, trying to fill that gap that Chris highlighted about work, companies not being able to find the right skills and the right workers. Yeah, so no real change in what we've seen. If anything, it's creating more opportunity for us to bring our solutions to bear.

Bumping into some of the major consulting players.

That is they are navigating more certainty.

With with some of the our nimbleness and the capability that we bring trying to fill that gap that Chris highlighted.

T around the demand for their products and services and so we will continue to be navigating those indicators.

Our company is not being able to define the right skills and the right worker. So.

That will impact both parts of our business our staffing in our solutions.

Chris Layden: We expect education to continue to grow and us win our fair share, if not more. We've been taking share in a growing market there. On ETM, again, the underlying still low single digit. We think we're competitive in the market, as Chris said. Highly ranked by the industry experts, and we saw growth in MSP, so we're starting to realize the benefits of some of the new logo wins there. Staffing has been consistent across the year. Despite the macro headwinds, the underlying staffing, and really that decline there was just less growth in PPO and a bit of a downturn in RPO, the recruitment process outsourcing. There's different dynamics in each, and there's significant opportunity in each, as Chris outlined in his prior response. I think it's just a matter of moving us forward with some of the initiatives.

Yeah, Kevin I would just add this is Troy.

Yes, so no real change in what we've seen and if anything it's creating more.

More opportunity for us to bring our solutions to bear.

Okay, Great alright, good to hear.

Kevin Steinke: Great. All right, good to hear. I just wanted to get a little more insight on education. You mentioned just some delayed decision-making there due to macro factors. I'm just kinda trying to relate the macro environment to, you know, the K-12 space and perhaps why customers have been, you know, holding off on decisions there.

So I just wanted to get a little more.

Insight on education.

You mentioned.

Some just some delayed decision making there.

Due to macro factors.

Kind of trying to relate the macro environment.

Environment too.

The case in 12 space and.

Set.

Not just in the technology.

Perhaps why customers have been.

Vertical, but also in telecom and engineering and life Sciences. So we're starting to be able to now move upstream into bump.

Holding off on decisions there.

Yes sure.

And destroy the <unk>.

Troy Anderson: Yeah, sure. This is Troy. I guess two things. One, again, I wanna highlight, across our portfolio, a $1 billion business now, largely in the K-12 substitute teacher, we achieved a 90% fill rate in the quarter, for the first time ever. That is a tremendous value that we deliver to our clients. Some of our largest customers are closer to 100% even. We have tremendous offering there in value that for our customers. The new business there are really new opportunities for outsourcing. It's less about us and competitors taking each other's customers, and it's more about us competing with in-house offerings.

So I guess two things one again I want to highlight across our portfolio of $1 billion business now largely in the K 12 substitute teacher, we achieved a 90% fill rate in the quarter for the first time ever so that has tremendous value that we deliver to our clients and we have.

Bumping into some of the major consulting players.

With with some of the our nimbleness and the capability that we bring trying to fill that gap that Chris highlighted about work of companies not being able to define the right skills and the right worker. So.

Chris Layden: Getting through some of the softness that we see more in the macro dynamics around us.

Yes, so no real change in what we've seen and if anything it is creating.

Troy Anderson: Okay, great. Thanks. I'll get back in queue.

Some of our largest customers are closer to 100% even.

More opportunity for us to bring our solutions to bear.

So we have tremendous.

Okay, Great alright, good to hear.

Scott Thomas: Thank you. Our next question comes from the line of Kevin Stankey from Barrington Research Associates. Kevin, your line is now open.

<unk>, there and value for our customers.

Yeah.

I just wanted to get a little more insight on education.

The new business, there are really new opportunities for outsourcing it's less about.

Kevin Stankey: Great, thank you. I wanted to start out by asking about the various factors in the operating environment that you noted in your earnings release are currently impacting your results, largely the macroeconomic landscape and sluggish labor market. On top of that, you specifically added in the AI boom. I'm just kind of wondering what you're seeing in terms of the impact of AI on demand for your business currently. On the flip side, you also mentioned that could be an opportunity over the longer term as your customers look to find AI talent. Maybe if you could walk through the dynamics you're seeing with AI currently.

You mentioned.

Some just some delayed decision making there.

US and competitors, taking each other's customers and it's more about us competing with in house offerings, even when we.

Due to macro factors.

Kind of trying to relate the macro.

Lose a client here or there it's usually they bring it back in house that it stabilized and they now feel confident they can they can run it in house. They may have implemented a technology solution that enables them to do that.

Environment two.

Troy Anderson: Even when we lose a client here or there, it's usually they bring it back in-house, that it's stabilized, and they now feel confident they can run it in-house. They may have implemented a technology solution that enables them to do that. That, again, doesn't happen very often. What we saw with the two things really, the fill rate, we are maturing that portfolio. We've had tremendous growth there over the last number of years. Chris highlighted in his comments, we've tripled that business over the last 5 years. As those clients mature, I mean, you can only get to 100%. You can't get above that.

The case in 12 space and.

Perhaps why customers have been.

<unk> off on decisions there.

But that again it doesn't happen very often what.

Yes sure.

And destroy the <unk>.

What we saw with the.

So I guess two things one again I want to highlight across our portfolio of $1 billion business now largely the K through 12 substitute teacher, we achieved a 90% fill rate in the quarter for the first time ever so that is tremendous.

So two things really the fill rate we are maturing that portfolio. We've had tremendous growth there over the last number of years, Chris highlighted in his comments, we've tripled that business over the last five years.

So as those clients mature.

Can only get to a 100% you can't get can't get above that.

<unk> that we deliver to our clients and we have some of our largest customers are closer to 100% even.

So.

As all of those relationships mature and we're operating in that 90 plus percent range, we're just not going to get as much fill rate lift.

Troy Anderson: As all those relationships mature and we are operating in that 90%-plus range, we are just not going to get as much fill rate lift across the portfolio that we have seen over the last few years. That has been supplementing the new business wins. We will continue seeing some benefit there. A little bit less benefit there than we have seen in prior years. The decision delays is really just around. Keep in mind back in the summer, there was a $6 billion grant from the U.S. Department of Education that was withheld and put under review right around the time where certain decisions might have been made. Typically, these awards are done in the spring, late spring, and early summer and then implemented for the new school year.

So we have tremendous <unk>.

Across the portfolio that we've seen over the last few years that has been supplementing the new business wins.

<unk>, there and value for our customers.

Joe Gomez: Yeah, Kevin, thanks. This is Chris. We really see there to be an opportunity to continue to capture new AI growth opportunities. From our standpoint, really, not just in the SET business, but in ETM and in education. We've got a unique opportunity in the market based on our capability to bring employers a flexible, more scalable solution as they're bridging into a more AI-enabled workforce. We think that's going to unlock a lot of value in a way that will combine the power of people and technology. We have that opportunity as we move up the value chain in our SET business with a lot of the work we're doing and things like data modernization and other digital work. That's solutions-based business, and again, that's in growing demand. As we indicated in our prepared remarks, more broadly across employers in our research.

But we will continue seeing some some benefit there so a little bit less benefit there.

The new business, there are really new opportunities for outsourcing it's less about.

Than we've seen in prior years and then the <unk>.

US and competitors, taking each other's customers and it's more about us competing with in house offerings, even when we.

Decision delays is really just around keep in mind back in the summer there was a $6 billion grant from the department of Education that was withheld and put under review.

Lose a client here or there it's usually they bring it back in house that it's stabilized and they now feel confident they can they can run it in house. They may have implemented a technology solution that enables them to do that but.

Right around the time, where certain decisions might've been made typically these these awards are done in the spring late spring and early summer and then implemented for the New school year. So there was the future of the department of Education.

But that again it doesn't happen very often what.

What we saw with <unk>.

Troy Anderson: There was just a lot of noise in the system. For a school district to venture into this new space of outsourcing their substitute teacher delivery, you know, some felt like that was not a step they were ready to take. The work has been done, the relationships have been built, the value proposition has been sold. Now it's just, it's more of a when than an if on those. We have confidence that we'll get again, more than our fair share of those as they come back to market.

A lot of noise in the system and for a school district.

Venture into this.

New space of outsourcing their substitute teacher.

So as those clients mature I mean, you can only get to a 100% you can't get to it.

Delivery.

Some felt like that was not a step they were ready to take the work has been done and the relationships. They built the value proposition has been sold.

Get above that.

So as all of those relationships mature and we're operating in that 90 plus percent range, we're just not going to get as much fill rate lift.

So now it's just it's more of a when and if.

Across the portfolio that we've seen over the last few years, that's been supplementing the new business wins.

So we have confidence that we will we'll get.

Again more than our fair share of those as they come back to market.

But we'll continue seeing some some benefit there so a little bit less benefit there.

Okay got it alright thats helpful.

Then we have seen in prior years and then.

Joe Gomez: 50% told us that they are struggling to find the right operational and technical skills to help them navigate this transition into the AI-enabled workforce. We see it as a real opportunity for us on the go-to-market side. Internally, you heard Troy and I both talk about how we are going to continue to accelerate the modernization of our technology stack, the technology stack that we acquired when we acquired MRP. That continues to be a priority as we think about ways to improve both processing and efficiency across our teams and bring our teams new tools. A lot of that is underway, the integration of those AI-based tools in our recruiting process, in our client portals, and we're going to continue to see that add value and drive opportunities for efficiency and productivity over the next couple of quarters.

Kevin Steinke: Okay, got it. All right, that's helpful. Can you just talk a little bit more about the timeline on the integration work going on in the SETT segment? Chris, I believe you said you're looking to even accelerate, you know, that a bit and just tie that to, you know, the completion of the process I think you said would be also beneficial with, you know, taking that SETT offering to the market in an integrated way and, you know, driving greater growth out of that offering.

And.

The decision delays is really just around keep in mind back in the summer there was a $6 billion grant from the department of Education that was withheld and put under review.

Can you just talk a little bit more about the.

Timeline on the integration work going on in the.

Such segment, Chris I believe you.

Right around the time, where certain decisions might have been made.

Youre looking to even accelerate.

Typically these these awards are done in the spring late spring and early summer and then implemented for the New school year. So there was the future of the department of Education.

That a bit.

Tie that.

The completion of the process I think you said would be also beneficial with.

Just a lot of noise in the system and for a school district.

Taking that set offerings.

The market in an integrated way and.

Venture into this.

This new space of outsourcing their substitute teacher.

Driving greater growth on that offering.

Delivery.

Yes exactly.

Some felt like that was not a step they were ready to take the work has been done the relationships have been built the value proposition has been sold.

Chris Layden: Yes, exactly. As I mentioned a little earlier, we have significant scale. We've deployed about $900 million of capital, mostly in the SETT business. Our customers, as we're talking to them, continue to want to leverage those capabilities, not just in technology, but technology and telecom, technology and life sciences. What we're doing is accelerating the modernization of that tech stack. When we acquired MRP, they had a leading tech stack. We were in the process of looking at various ways to integrate our disparate front, middle, and back office.

I mentioned, a little earlier, we have significant scale.

And we've deployed about $900 million of capital, mostly in the set business and.

So now it's just it's more of a when and if.

So we have confidence that will we will get.

Customers as we're talking to them continue to want to leverage those capabilities not just in technology, but technology and telecom technology and life Sciences, and so what we're doing is.

Again, not more than our fair share of those as they come back to market.

Okay got it alright thats helpful.

And.

Can you just talk a little bit more about the.

Accelerating the modernization of that Tech stack, we acquired when we acquired MRP. They had a leading tech stack. We were in the process of looking at various ways to integrate our disparate front middle and back office, we have selected the tech stack that we acquire.

Kevin Stankey: Okay, great. It sounds like AI offers a nice longer-term growth opportunity for you. I was just curious if, in the shorter term, perhaps some customers are kind of holding off or delaying hiring decisions as they assess the impact of AI on their businesses and as they assess whether they need to add as many people as in the past, given that AI will bring them greater productivity. I'm just wondering if that's having any short-term impact on demand for your services.

Timeline on the.

<unk> work going on in the.

Segment, Chris I believe you.

You are looking to even accelerate.

They are a bit and.

Just tie that.

No.

The completion of the process I think you said would be also beneficial with.

Chris Layden: We have selected the tech stack that we acquired when we bought MRP and are in the process now of migrating the rest of the organization to that tech stack. We're starting with the integration now of our SETT business. We really know that that will give us an unlock as we go to market, making sure that it's easy for our internal teams to be collaborating, winning new business, helping go to market faster, leveraging that tech stack. As we get SETT integrated and the legacy SETT acquisitions integrated into that technology stack, we will also be bringing through our Kelly Education and ETM segments. That is all underway and all of it is on schedule.

<unk> when we bought MRP and are in the process now of migrating the rest of the organization to that Tech stack, we're starting with the integration now of our set business and so we really we know that that will give us an unlock.

Taking that set offering to them.

The market in an integrated way and.

Driving greater growth out of that offering.

Yes exactly.

We go to market, making sure that it's easy for our internal teams.

I mentioned, a little earlier, we have significant scale.

To be collaborating winning new business, helping go to market faster leveraging that tech stack and then as we get set integrated and the legacy set acquisitions integrated into.

And we've deployed about $900 million of capital, mostly in the set business and.

Joe Gomez: Well, let me start, and I'll have Troy build on it. First, I think we just need to step back in the broader context of what we've been seeing, a pretty sluggish labor market. Many of the businesses that would support some of the disruption maybe you've seen and the lack of job growth that we've seen really pretty consistently across every month this year is a bit embedded already in the workforce dynamics. We see and have been seeing that sluggish impact all year. Now, outside of that, we continue to see companies invest in bridging themselves into a more AI-enabled workforce. We believe there could actually be opportunities not only on the solution side of how we can help companies navigate that, but it also could be an indication at some point.

Our customers as we're talking to them continue to want to leverage those capabilities not just in technology, but technology and telecom technology and life Sciences and so.

That technology stack, we will also be.

Bringing through our education and Etfs segments.

So that that is all underway.

What we're doing is is.

Accelerating the modernization of that tech stack.

And all of it is is on schedule.

Yes, Kevin I might just add destroy the.

Acquired when we acquired MRP they had a leading tech stack we were in the process of looking at various ways to integrate our disparate front middle and back office. We have selected the tech stack that we acquired when we bought MRP and are in the process now of migrating the <unk>.

Troy Anderson: Yeah, Kevin, I might just add. This is Troy. We have a big cut over here at the end of the year with the legacy acquisitions being integrated into the MRP tech stack, and then in 2026, the rest of SET. We'll start making, as Chris just indicated, we'll start moving some of the enterprise capabilities likely leading with the human capital management component along with the rest of SET, and then quickly follow that with education and ETM beyond 2026. Those are some of the key near-term milestones around that. The go-to-market side of SET has been integrated, the management teams, and the sales teams and the like.

<unk>.

The we have a big cut over here at the end of the year with the legacy acquisitions being integrated into.

The MRP text.

Tech stack and then in 2006.

The rest are set and we will start making as Christian.

Indicated we will start moving some of the enterprise capabilities.

Of the organization to that Tech stack, we're starting with the integration now of our set business and so we really we know that that will give us an unlock as we go to market, making sure that it's easy for our internal teams.

Likely leading with the.

The human capital management.

Ponant.

Along with the rest of set and then and then quickly follow that with education and ATM beyond 'twenty six.

Joe Gomez: On the staffing part of our business, companies use flexible labor as a bridge into that as they're navigating more certainty around the demand for their products and services. We'll continue to be navigating those indicators. That will impact both parts of our business, our staffing, and our solutions.

To be collaborating winning new business, helping go to market faster leveraging that tech stack and then as we get set integrated and the legacy set acquisitions integrated into.

So those are some of the key near term milestones around that the go to market side of set has been integrated the management teams.

That technology stack, we will also be.

And the sales teams and the like there, but they are on separate systems as Chris said, and so that creates some inefficiencies and some challenges with.

Bringing through our education and Etfs segments.

Troy Anderson: They're on separate systems, as Chris said, that creates some inefficiencies and some challenges with some of the collaboration. We'll get through that here pretty quickly. Again, first big cut over into the year then through 2026.

Chris Layden: Yeah, Kevin, I would just add, this is Troy. I wouldn't say there's been a change this quarter versus last quarter or two quarters ago in terms of any impact that AI may have had in terms of our positions, the type of positions we staff, or the type of opportunities we pursue. What we are seeing is an uptick in our ability to leverage AI in terms of providing support to our customers, be it with our platforms from a workforce management perspective in the ETM space, be it some of the solutions that we're bringing to bear in SET, not just in the technology vertical, but also in telecom, engineering, and life sciences. We're starting to be able to now move upstream into bumping into some of the major consulting players.

So that that is all underway.

And all of it is on schedule.

Some of the collaboration but.

Yes, Kevin I might just add destroy the.

But we'll get through that here pretty quickly.

<unk>.

Again first big cutover into the year and then through through 'twenty six.

The we have a big cut over here at the end of the year with the legacy acquisitions being integrated into.

Okay, Great that's helpful and just lastly.

The MRP techs.

Kevin Steinke: Okay, great. Yeah, that's helpful. Just lastly, you talked about the Q4 outlook, assuming a positive resolution to the government shutdown. I mean, it sounds like the impact on you has been pretty modest, but kinda what's the swing factor there in terms of, you know, if this shutdown dragged on even longer than we expect?

Tech stack and then in 2006.

You talked about the fourth quarter outlook.

The rest of set and we will start making as Chris just indicated we will start moving some of the enterprise capabilities.

<unk>.

Positive resolution to the government shutdown.

It sounds like the impact.

Likely leading with the.

This year has been pretty modest but kind of what.

The human capital management.

What's the swing factor there in terms of.

<unk>.

Along with the rest of set and then and then quickly followed that with education and ATM beyond 'twenty six.

Shutdown dragged.

EBIT longer than we expect.

Yes, so that we.

We can measure the direct impact right, we know what our government business is.

So those are some of the key near term milestones around that the go to market side of set has been integrated the management teams.

Troy Anderson: Yeah. We can measure the direct impact, right? We were fortunate that there was a larger percentage of the positions that we have that were deemed essential. That was a pleasant surprise if there's such a thing in the dynamic. Less than 1 point. If it goes all the way through the quarter, you know, maybe closer to 1 point of revenue impact. We tried to capture that in the 12 to 14 expectation. Give us some room there. What we can't measure really is the indirect impact.

We were fortunate that.

Chris Layden: With some of our nimbleness and the capability that we bring, trying to fill that gap that Chris highlighted about companies not being able to find the right skills and the right workers. Yeah, no real change in what we've seen. If anything, it's creating more opportunity for us to bring our solutions to bear.

There was a larger percentage of the positions that we have that were deemed essential.

And the sales teams and the like there, but they are on separate systems as Chris said, and so that creates some inefficiencies and some challenges with.

And so that was a pleasant surprise if there is such a thing in the dynamic but.

So less than a point if it goes all the way through the quarter, maybe closer to a point of revenue impact.

Some of the collaboration but.

But we'll get through that here pretty quickly.

And we tried to capture that in the 12% to 14.

Kevin Stankey: Okay, great. All right. Good to hear. I just wanted to get a little more insight on education. You mentioned just some delayed decision-making there due to macro factors. I'm just kind of trying to relate the macro environment to the K-12 space and perhaps why customers have been holding off on decisions there.

Again first day cutover into the year and then through 'twenty six.

Expectation give us some room there what we can't measure it really is the indirect impact. So just just yesterday right 10% of of flights across 50 major.

Okay, Great that's helpful and just lastly.

Troy Anderson: Just yesterday, right, 10% of flights across 50 major airports, being reduced 10%, that, you know, that's going to have a ripple effect. There could be other ripple effects in other industries, the longer this goes on. That's the a bit of a wild card that we don't know. Really all we know right now is what we can directly see. I think the longer this goes on, it's not going to help anybody.

You talked about the fourth quarter outlook.

Airports of being reduced 10%.

<unk>.

Is that a resolution to the government shutdown.

And have a ripple effect there.

There could be other ripple effects in other industries.

It sounds like the impact is on your has been pretty modest.

The longer this goes on so that's a bit of a wildcard.

The swing factor there in terms of.

That we don't know so really all we all we know right now is what we can directly see and I think the longer. This goes on it's not going to help anybody.

Shutdown dragged.

EBIT longer than than we expect.

Chris Layden: Yeah, sure. In this, Troy. I guess two things. One, again, I want to highlight across our portfolio. A billion-dollar business now, largely in the K-12 substitute teacher, we achieved a 90% fill rate in the quarter for the first time ever. That is a tremendous value that we deliver to our clients. We have some of our largest customers closer to 100% even. We have tremendous offering there in value for our customers. The new business there are really new opportunities for outsourcing. It's less about us and competitors taking each other's customers, and it's more about us competing with in-house offerings. Even when we lose a client here or there, it's usually they bring it back in-house, it's stabilized, and they now feel confident they can run it in-house.

Yes, so that.

We can measure the direct impact right, we know what our government business is.

Yes, okay.

Right understood. Thanks for taking the questions I'll turn it back over.

Kevin Steinke: Yeah. Okay. All right. Understood. Well, thanks for taking the questions. I'll turn it back over.

We were fortunate that.

There was a larger percentage of the positions that we have that were deemed essential.

Thanks, Kevin.

Troy Anderson: Thanks, Kevin.

Thank you. Our next question comes from the line of Marc Riddick from Sidoti Mark. Your line is now open.

So that was a pleasant surprise, if there is such a thing in the dynamic but.

Operator: Thank you. Our next question comes from the line of Mark Riddick from Sidoti. Mark, your line is now open.

Hey, good morning.

So less than a point if it goes all the way through the quarter, maybe closer to a point of revenue impact.

Good morning, Mark.

Mark Riddick: Hey, good morning.

So I was wondering if you could talk a little bit on cash usage and prioritization, maybe we can just start with what we're looking at for Capex for this year and then how the technology.

Troy Anderson: Morning, Mark.

And we tried to capture that in the 12 months 2014.

Chris Layden: Morning, Mark.

Mark Riddick: I was wondering if we could talk a little bit on cash usage and prioritization. Maybe we can start with what we're looking at for CapEx for this year and then how the technology plays into what how that might skew 2026. I have a follow-up after that.

Expectation give us some room there what we can't measure it really is the indirect impact. So just just yesterday right 10% of of flights across 50 major.

Plays into how that might.

Airports of being reduced 10%.

SKU 'twenty six and then I'll follow up after that.

That's going to have a ripple effect.

There could be other ripple effects in other industries.

Yes, sure Mark destroy the.

The longer this goes on so that's a bit of a wildcard.

The capex year to date is.

Troy Anderson: Yeah, sure, Mark. This is Troy. The CapEx year to date is about $7 million. Probably be $10 million-ish on a full year basis. You know, plus or minus a little bit. Some of that spend on the technology deployment is, you know, cloud-based implementation work, so it doesn't show up as CapEx, but it still gets capitalized. Third-party labor and some of the software costs, et cetera. It's up in the operating section of the cash flow statement. Overall, again, strong cash flow for the year.

That that we don't know.

About $7 million.

Chris Layden: They may have implemented a technology solution that enables them to do that. That, again, does not happen very often. What we saw with the—two things, really. The fill rate, we are maturing that portfolio. We have had tremendous growth there over the last number of years. Chris highlighted in his comments, we have tripled that business over the last five years. As those clients mature, I mean, you can only get to 100%. You cannot get above that. As all those relationships mature and we are operating in that 90-plus percent range, we are just not going to get as much fill rate lift across the portfolio that we have seen over the last few years that has been supplementing the new business wins. We will continue seeing some benefit there, so a little bit less benefit there than we have seen in prior years. And then.

So really all we know right now is what we can directly see and I think the longer. This goes on it's not going to help anybody.

<unk>, probably be 10 ish.

On a full year basis, plus or minus a little bit.

Some of that spend on the technology deployment is.

Yes, Okay, alright understood. Thanks for taking the questions I'll turn it back over.

Cloud based.

Thanks, Kevin.

Implementation work so it doesn't show up as Capex, but it still gets capitalized.

Thank you. Our next question comes from the line of Marc Riddick from Sidoti Mark. Your line is now open.

Third party labor and some of the software cost et cetera. So it's up in the up in the operating section of the cash flow statement.

Hey, good morning.

Good morning, Mark.

But overall.

Again strong cash flow for the year.

So I was wondering if you could talk a little bit on cash usage and prioritization, maybe we can start with what we're looking at for Capex for this year.

And with that.

Troy Anderson: With that, we're seeing the opportunity to, with some of the debt paydown that we've done this year, we're seeing the opportunity to, in Q4 here, given the share price and just the undervaluation of the stock also, engage in some repurchase activity. I think net-net, as I said in my prepared remarks, no material change in our net debt position relative to Q3 here, which is about $90 million or so. You know, $118 in debt and $30 million in cash. You know, the wild card could be if perhaps there's a small tuck-in acquisition or something like that we're able to get over the goal line before the end of the year.

We're seeing the opportunity to with some of the debt Paydown that we've done this year, we're seeing the opportunity to in the fourth quarter here given the.

Then how the technology.

Share price and just the undervaluation of the stock also engaging some repurchase activity. So.

Plays into how that might.

Chris Layden: The decision delays is really just around keep in mind back in the summer, there was a $6 billion grant from the Department of Education that was withheld and put under review. Right around the time where certain decisions might have been made. Typically, these awards are done in the spring, late spring, and early summer, and then implemented for the new school year. There was the future of the Department of Education. There was just a lot of noise in the system. For a school district to venture into this new space of outsourcing their substitute teacher delivery, some felt like that was not a step they were ready to take. The work has been done, the relationships have been built, the value proposition has been sold, and now it's more of a win than an if on those.

SKU 'twenty six and then I have a follow up after that.

I think net net as I said in my prepared remarks, no no material change in the net debt position relative to the third quarter here, which is which is about <unk>.

Yes, sure Mark destroy the.

The capex year to date is.

About $7 million.

<unk> probably be.

<unk> $90 million or so.

10 ish.

100, 118 in debt and $30 million in cash.

On a full year basis, plus or minus a little bit.

<unk>.

The wildcard could be if perhaps there was a small tuck in acquisition or something like that that we're able to get over the goal line before the end of the year, but.

Some of that spend on the technology deployment is.

Cloud based.

Implementation work so it doesn't show up as Capex, but it still gets capitalized.

Otherwise thats what were expecting.

Troy Anderson: Otherwise, that's what we're expecting.

Okay, and then you kind of let let yourself into where I was going next which is acquisition.

Third party labor and some of the software cost et cetera. So it's up in the up in the operating section of the cash flow statement.

Mark Riddick: Okay. I mean, you kind of led yourself into where I was going next, which is acquisition. What you're seeing with the pipeline currently, maybe valuation-wise, and are you seeing, you know, how many opportunities out there vis-a-vis maybe six months ago or so? There seems to be a little bit of a pickup in activity there overall. I was sort of wondering what your appetite is at the present time and/or should we, you know, as far as larger acquisitions, you know, are we sitting sort of on the sidelines for larger acquisitions now? How are you feeling about that?

What youre seeing with the pipeline currently maybe valuation wise are you seeing.

But overall.

Again strong cash flow for the year.

How many opportunities out there vis vis maybe six months ago, or so that seems to be a little bit of a pickup in activity there.

And with that.

Chris Layden: We have confidence that we'll get, again, more than our fair share of those as they come back to market.

We're seeing the opportunity to with some of the debt Paydown that we've done this year, we're seeing the opportunity to in the fourth quarter here given the <unk>.

Overall, so I'll sort of wondering what your what your appetite is.

Kevin Stankey: Okay, got it. All right. That's helpful. Can you just talk a little bit more about the timeline on the integration work going on in the SET segment? Chris, I believe you said you're looking to even accelerate that a bit. Just tie that to the completion of the process. I think you said it would be also beneficial with taking that SET offering to the market in an integrated way and driving greater growth out of that offering.

At the present time.

Share price and just the undervaluation of the stock also engaged in some repurchase activity. So.

Or should we.

As far as larger acquisitions.

I think net net as I said in my prepared remarks, no no material change in our net debt position relative to the third quarter here.

Are we.

So on the sidelines for larger acquisitions, now or how youre feeling about that.

Yes, it's a fair question.

Which is which is about <unk>.

I mean, we're active we have an active corporate development team there they are constantly evaluating pipeline.

Troy Anderson: Yeah, it's a fair question. I mean, we're active. We have an active corporate development team. They're constantly evaluating pipeline. We've been expanding our network of sources for opportunities. We have seen some certain assets that are fairly richly valued, and that we've passed on or that we've thrown in an inquiry, but quickly decided that was going a direction we didn't want to go. We continue to be active. We're looking at across primarily in the SETT and education areas, type of opportunities, therapy add-ons, some of the other add-ons that we can do in the SETT verticals, be it technology, be it engineering, or life sciences.

<unk> $90 million or so.

101, 18 in debt and $30 million in cash and.

We've been expanding our network of sources.

The wildcard could be if perhaps there was a small tuck in acquisition or something like that that we're able to get over the goal line before the end of the year, but otherwise thats what were expecting.

For opportunities.

We have seen some.

Certain assets that are fairly richly valued.

Okay.

That we passed on or that we've thrown in and maybe an inquiry but.

Let let yourself into where I was going next which is acquisition.

Joe Gomez: Yeah, that's exactly. As I mentioned a little earlier, we have significant scale. We've deployed about $900 million of capital, mostly in the SET business. Our customers, as we're talking to them, continue to want to leverage those capabilities, not just in technology, but technology and telecom, technology and life sciences. What we're doing is accelerating the modernization of that tech stack. When we acquired MRP, they had a leading tech stack. We were in the process of looking at various ways to integrate our disparate front, middle, and back office. We have selected the tech stack that we acquired when we bought MRP and are in the process now of migrating the rest of the organization to that tech stack. We're starting with the integration, though, of our SET business.

What youre seeing with the pipeline currently maybe valuation wise and are you seeing.

Quickly decided that was going in a direction, we didn't want to go but we continue to be active we're looking at.

How many opportunities out there vis vis maybe six months ago, or so that seems to be a little bit of a pickup in activity there.

Across primarily in the set and education areas type of opportunities therapy add on some of the other add ons that we can do and in the in the set verticals be it technology be it be.

Overall, so I'll sort of wondering what your what your appetite is.

<unk> engineering, our life Sciences.

At the present time.

But.

Or should we.

Troy Anderson: But, you know, as we sit here today, unlikely that there's a large acquisition in the near term, but we never say never. Certainly we're gonna continue looking at building upon the scale that we've achieved. We're gonna continue looking at adding capabilities. We believe we have a great foundation to be building upon, both for organic growth and inorganic growth. That's, we've got strong cash flow, and we expect to continue to be able to deploy capital opportunistically across the various options, as I mentioned earlier.

As far as larger acquisitions.

As we sit here today unlikely that there is a large acquisition in the near term.

Are we.

So on the sidelines for larger acquisitions, now or how youre feeling about that.

We never say never.

But certainly we're going to continue looking at building upon the scale that we've achieved we're going to continue looking at adding capabilities.

Yes, it's a fair question.

I mean, we're active we have an active corporate development team there they are constantly evaluating pipeline.

<unk>.

We believe we have.

We've been expanding our network of sources.

Have a great foundation to be building upon.

Both organic growth and inorganic growth and so thats.

For opportunities.

We have seen some.

And we've got strong cash flow and we expect to continue to be able to deploy capital opportunistically across the various options as I mentioned earlier.

Certain assets that are fairly richly valued.

Joe Gomez: We know that that will give us an unlock as we go to market, making sure that it's easy for our internal teams to be collaborating, winning new business, helping go to market faster, leveraging that tech stack. As we get SET integrated and the legacy SET acquisitions integrated into that technology stack, we will also be bringing through our education and ETM segments. That is all underway, and all of it is on schedule.

And.

That we passed on or that we have.

<unk> thrown in and maybe an inquiry but.

Great. Thank you very much.

Quickly decided that was going in a direction, we didn't want to go but we continue to be active we're looking at.

Thank you.

Mark Riddick: Great. Thank you very much.

Troy Anderson: Thank you.

Thank you. Our next question comes from the line of Jessica loose from Northcoast Research Jessica Your line is now open.

Across primarily in the set and education areas type of opportunities therapy add on some of the other add ons that we can do and in the set verticals via technology be it.

Operator: Thank you. Our next question comes from the line of Jessica Luz from Northcoast Research. Jessica, your line is now open.

Yeah.

Hi, Chris Thanks, Ryan. Thank you for taking my questions first of all I was already touched on but I have a brief question and then a follow up.

Jessica Luz: Hi, Chris. Hi, Troy. Thank you for taking my questions. First of all, I don't know if it was already touched on, but I have a brief question and then a follow-up. First, in terms of the current macro environment having a impact on the quarter, just to go a bit deeper, how would you characterize the sales cycle for the business overall?

Be it engineering, our life Sciences.

But.

First in terms of the current macro environment, having an impact on the quarter just to go a bit deeper how would you characterize the sales cycle for the business overall.

As we sit here today unlikely that there is a large acquisition in the near term.

Chris Layden: Yeah, Kevin, I might just add this, Troy. We have a big cutover here at the end of the year with the legacy acquisitions being integrated into the MRP tech stack. Then in 2026, the rest of SET, and we'll start making, as Chris just indicated, we'll start moving some of the enterprise capabilities, likely leading with the human capital management component, along with the rest of SET, and then quickly follow that with education and ETM beyond 2026. Those are some of the key near-term milestones around that. The go-to-market side of SET has been integrated, the management teams, and the sales teams and the like there, but they're on separate systems, as Chris said. That creates some inefficiencies and some challenges with some of the collaboration. We'll get through that here pretty quickly.

But we never say never.

But certainly we're going to continue looking at building upon the scale that we've achieved we're going to continue looking at adding capabilities.

The sales cycle is still really robust and.

Chris Layden: The sales cycle is still really robust and, you know, we're continuing in some of the work I shared in my prepared remarks. Our focus on growth is at the core of what we're doing right now. Making sure that we are in front of our customers, helping them understand all of the ways that we can add value. We're gonna continue to make sure that all of Kelly is coming to our largest enterprise customers. We've also seen in our SETT business a really strong retail pickup this year, which has been driving some of the stability in the SETT business and some of the growth in engineering and in telecom.

We're continuing and some of the the work I shared in my and.

We believe we have.

My prepared remarks, our focus on growth.

Have a great foundation to be building upon.

Both organic growth and inorganic growth and so that's.

Is that the core of what we're doing right now making sure that.

And we've got strong cash flow and we expect to continue to be able to deploy capital opportunistically across the various options as I mentioned earlier.

We are in front of our customers, helping them understand all of the ways that we can add value.

And we're going to continue to make sure that all of Kelly is coming to our largest enterprise customers. We have also seen in our set.

Great. Thank you very much.

Thank you.

Business.

Thank you. Our next question comes from the line of Jessica lose from Northcoast Research Jessica Your line is now open.

A really strong retail pickup this year, which has been driven driven driving some of the.

Yeah.

Stability in the set business and some of the growth in engineering and in Telecom and then finally.

Hi, Chris Hi, Troy. Thank you for taking my questions first of all I was already touched on but I have a brief question and then a follow up.

In the education space as Troy indicated earlier, we're number one in the market on the heels of a 90% fill rate in the quarter.

Troy Anderson: Finally, you know, in the education space, as Troy indicated earlier, you know, we're number one in the market, on the heels of a 90% fill rate in the quarter. It is maybe as exciting of a time as any to go and sell with that track record of success. We are everywhere in the market talking to districts that are insourcing their model and helping them understand how we could add value as their partner. We're gonna continue to have that be a priority as we drive growth into the future.

First in terms of the current macro environment, having an impact on the quarter just to go a bit deeper how would you characterize the sales cycle for the business overall.

It is maybe is exciting of a time as any to go and sell with that track record of success and we are everywhere in the market talking to districts that are in sourcing their model and helping them understand how we could add value.

Chris Layden: Again, first big cutover into the year, and then through 2026.

The sales cycle is still really robust and.

We're continuing and some of the the work I shared in my.

Kevin Stankey: Okay, great. Yeah, that's helpful. Just lastly, you talked about the fourth quarter outlook, assuming a positive resolution to the government shutdown. I mean, it sounds like the impact on you has been pretty modest, but kind of what's the swing factor there in terms of if this shutdown dragged on even longer than we expect?

In my prepared remarks, our focus on growth.

Is that the core of what we're doing right now making sure that.

As their partner so.

We're going to continue to have that be a priority as we drive growth.

We are in front of our customers, helping them understand all of the ways that we can add value.

Into the future.

And we're going to continue to make sure that all of Kelly is coming to our largest enterprise customers. We've also seen in <unk>.

Alright. Thank you and then just for the follow up again.

Jessica Luz: All right. Thank you. Then just for the brief follow-up again, if it was touched on or not, in terms of the pricing environment for the three segments, do you see any specific pressures within any of the segments?

Touched on or not.

In terms of the pricing environment for the three segments do you see any specific pressures within any of the segments.

Chris Layden: Yeah. We can measure the direct impact, right? We know what our government business is. We were fortunate that there was a larger percentage of the positions that we have that were deemed essential, and that was a pleasant surprise if there's such a thing in the dynamic. Less than a point. If it goes all the way through the quarter, maybe closer to a point of revenue impact. We tried to capture that in the 12% to 14% expectation, give us some room there. What we can't measure really is the indirect impact. Just yesterday, 10% of flights across 50 major airports being reduced 10%. That's going to have a ripple effect. There could be other ripple effects in other industries the longer this goes on. That's a bit of a wild card that we don't know.

That business.

A really strong retail pickup this year, which has been driven driven driving some of the.

Yes.

He started in Troy you feel free to weigh in.

Chris Layden: Yeah, you know, I'll maybe start, Troy, you feel free to weigh in. You know, we're gonna continue, I would say overall, just to kinda set the stage, to be disciplined in how we're gonna approach new opportunities in the market. We're not gonna go buy business. We continue to see rationality in terms of, you know, where we play. We've got a huge opportunity to continue to move up the value chain in the statement of work, solutions-based business, particularly in SETT, that continues to be a priority. We're gonna continue to monitor that over the next couple of quarters. I don't know, Troy, if there's anything else you wanna add.

Stability in the set business and some of the growth in engineering and in Telecom and then finally.

We're going to continue I would say overall.

Just to kind of set the stage to be disciplined in how we're going to approach new opportunities in the market. We're not going to go by business. We continue to see rationality in terms of where we play.

In the education space as Troy indicated earlier, we're number one in the market on the heels of a 90% fill rate in the quarter.

Got a huge opportunity.

To continue to move up the value chain in the statement of work solutions based business, particularly in set.

And that continues to be a priority.

And we're going to continue to monitor that over the next couple of quarters.

Is there a partner so.

Towards anything else you want to add I think as we look across the three segments.

We're going to continue to have that be a priority as we drive growth.

Troy Anderson: Yeah. I think as we look across the three segments, education and SETT are, I'd say, stable. The spreads there are stable to actually improving, as again, we move up the value chain, in with both current and prospective clients on new opportunities. I would say it's a little more mixed in ETM, as some of the large enterprise, as they come up for renewals, of course, we're trying to work with them on their cost structure, so there could be a little bit of concession here or there. Generally speaking, I'd say, you know, maybe we see a little bit in ETM and actually more positive momentum than the other two.

Education and set our.

The future.

Say stable the spreads there are stable to actually improving.

Alright. Thank you and then just for the follow up again.

Chris Layden: All we know right now is what we can directly see. I think the longer this goes on, it's not going to help anybody.

As again, we move up the value chain.

John or not.

In terms of the pricing environment for the three segments do you see any specific pressures within any other segments.

And with.

Current and prospective clients.

Kevin Stankey: Yeah. Okay. All right. Understood. Thanks for taking the questions. I'll turn it back over.

On new opportunities and then.

Yeah, I'll, maybe start and Troy you feel free to weigh in.

I would say, it's a little more mixed in ATM.

Chris Layden: Thanks, Kevin.

As we some of the large enterprise as they come up for renewals of course, we're trying to work with them.

We're going to continue I would say overall.

Operator: Thank you. Our next question comes from the line of Mark Riddick from Sidoti & Co. Mark, your line is now open.

Just to kind of set the stage to be disciplined in how we're going to approach new opportunities in the market. We're not going to go by business. We continue to see rationality in terms of.

On their cost structure, and so there could be a little bit of concession here or there.

Mark Riddick: Hey, good morning.

Kevin Stankey: Morning, Mark.

Mark Riddick: Morning, Mark.

But but generally speaking I would say.

Kevin Stankey: I was wondering if we could talk a little bit on cash usage and prioritization. Maybe we can start with what we're looking at for CapEx for this year, and then how the technology plays into how that might skew 2026. I have a follow-up after that.

Where we play.

We've got a huge opportunity.

Maybe we see a little bit in <unk>.

To continue to move up the value chain in the statement of work solutions based business, particularly in <unk>.

An ATM.

Actually more positive momentum in the other two.

And it's not really translating our gross profit was.

And and that continues to be a priority.

Troy Anderson: It's not really translating. Our gross profit was, I commented, not as strong as we were expecting, down 60 basis points year over year. It was really more a function of the business mix, and some elevated cost of service in the quarter, versus really spread or pricing pressure.

Commented not is not as strong as we were expecting down 60 basis points year over year, but.

And we're going to continue to monitor that over the next couple of quarters.

No choice and anything else you want to add I think as we look across the three segments.

But it was really more a function of the business mix.

Chris Layden: Yeah, sure, Mark. This is Troy. CapEx year to date is about $7 million. Probably be $10 million-ish on a full-year basis, ± a little bit. Some of that spend on the technology deployment is cloud-based implementation work, so it does not show up as CapEx, but it still gets capitalized—third-party labor and some of the software costs, etc. So it is up in the operating section of the cash flow statement. Overall, again, strong cash flow for the year. With that, we are seeing the opportunity to, with some of the debt paydown that we have done this year, we are seeing the opportunity to, in the fourth quarter here, given the share price and just the undervaluation of the stock, also engage in some repurchase activity.

Some elevated cost of service in the quarter.

Education and set our.

Say stable the spreads there are stable to actually improving.

Versus really spread or pricing pressure.

Perfect. Thank you guys. So much thank you.

As again, we move up the value chain.

Jessica Luz: Okay. Perfect. Thank you guys so much.

<unk>.

And with.

Troy Anderson: Thank you.

Current and prospective clients.

Thank you.

This concludes the question and answer session I would now like to turn it back to Chris <unk> for closing remarks.

On new opportunities and then.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Chris Layden for closing remarks.

I would say, it's a little more mixed in ATM.

Some of the large enterprise as they come up for renewals of course, we're trying to work with them.

Thank you all for joining today that concludes we will see you next quarter.

Chris Layden: Thank you all for joining today. That concludes. We'll see you next quarter.

On their cost structure, and so there could be a little bit of concession here or there.

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

Operator: Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

But but generally speaking I would say.

Maybe we see a little bit in.

An ATM and.

Actually more positive momentum in the other two.

And it's not really translating our gross profit was.

I commented not is not as strong as we were expecting down 60 basis points year over year, but.

Chris Layden: I think net net, as I said in my prepared remarks, no material change in our net debt position relative to the third quarter here, which is about $90 million or so. $118 million in debt and $30 million in cash. The wild card could be if perhaps there's a small tuck-in acquisition or something like that that we're able to get over the goal line before the end of the year. Otherwise, that's what we're expecting.

But it was really more a function of the business mix.

And some elevated cost of service in the quarter.

Versus really spread or pricing pressure.

Do you think perfect. Thank you guys so much.

Thank you.

This concludes the question and answer session I would now like to turn it back to Chris <unk> for closing remarks.

Thank you all for joining today that concludes we will see you next quarter.

Mark Riddick: Okay. You kind of led yourself into where I was going next, which is acquisition. What you're seeing with the pipeline currently, maybe valuation-wise, and are you seeing how many opportunities out there vis-à-vis maybe six months ago or so? There seems to be a little bit of a pickup in activity there overall. I'm sort of wondering what your appetite is at the present time. Should we, as far as larger acquisitions, are we staying sort of on the sidelines for larger acquisitions now, or how are you feeling about that?

Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

Yeah.

Okay.

Yes.

Chris Layden: Yeah, it's a fair question. I mean, we're active. We have an active corporate development team. They're constantly evaluating pipeline. We've been expanding our network of sources for opportunities. We have seen some certain assets that are fairly richly valued and that we've passed on or that we've thrown in maybe an inquiry, but quickly decided that was going a direction we didn't want to go. We continue to be active. We're looking at, across primarily in the SET and education areas, type of opportunities, therapy add-ons, some of the other add-ons that we can do in the SET verticals, be it technology, be it engineering, or life sciences. As we sit here today, unlikely that there's a large acquisition in the near term, but we never say never. Certainly, we're going to continue looking at building upon the scale that we've achieved.

Chris Layden: We're going to continue looking at adding capabilities. We believe we have a great foundation to be building upon, both for organic growth and inorganic growth. We've got strong cash flow, and we expect to continue to be able to deploy capital opportunistically across the various options, as I mentioned earlier.

Mark Riddick: Great, thank you very much.

Chris Layden: Thank you.

Operator: Thank you. Our next question comes from the line of Jessica Luz from Northcoast Research. Jessica, your line is now open.

Jessica Luz: Hi, Chris. Hi, Troy. Thank you for taking my questions. First of all, I don't know if it was already touched on, but I have a brief question and then a follow-up. First, in terms of the current macro environment having an impact on the quarter, just to go a bit deeper, how would you characterize the sales cycle for the business overall?

Chris Layden: The sales cycle is still really robust. We're continuing in some of the work I shared in my prepared remarks. Our focus on growth is at the core of what we're doing right now, making sure that we are in front of our customers, helping them understand all of the ways that we can add value. We're going to continue to make sure that all of Kelly is coming to our largest enterprise customers. We've also seen in our SET business a really strong retail pickup this year, which has been driving some of the stability in the SET business and some of the growth in engineering and in telecom. Finally, in the education space, as Troy indicated earlier, we're number one in the market on the heels of a 90% fill rate in the quarter.

Chris Layden: It is maybe as exciting of a time as any to go and sell with that track record of success. We are everywhere in the market talking to districts that are insourcing their model and helping them understand how we could add value as their partner. We're going to continue to have that be a priority as we drive growth into the future.

Jessica Luz: All right. Thank you. Just for the brief follow-up again, if it was touched on or not, in terms of the pricing environment for the three segments, do you see any specific pressures within any of the segments?

Chris Layden: Yeah. I'll maybe start, and Troy, you feel free to weigh in. We're going to continue, I would say, overall, just to kind of set the stage to be disciplined in how we're going to approach new opportunities in the market. We're not going to go by business. We continue to see rationality in terms of where we play. We've got a huge opportunity to continue to move up the value chain in the statement-of-work, solutions-based business, particularly in SET. That continues to be a priority, and we're going to continue to monitor that over the next couple of quarters. I don't know, Troy, if there's anything else you want to add. Yeah. I think as we look across the three segments, education and SET are, I'd say, stable. The spreads there are stable to actually improving, as, again, we move up the value chain.

Chris Layden: With both current and prospective clients on new opportunities. I would say it's a little more mixed in ETM, as some of the large enterprises, as they come up for renewals, of course, we're trying to work with them on their cost structure, and so there could be a little bit of concession here or there. Generally speaking, I'd say maybe we see a little bit in ETM and actually more positive momentum than the other two. It's not really translating. Our gross profit was, I commented, not as strong as we were expecting, down 60 basis points year over year, but it was really more a function of the business mix and some elevated cost of service in the quarter versus really spread or pricing pressure.

Jessica Luz: Okay. Perfect. Thank you guys so much.

Chris Layden: Thank you.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Chris Layden for closing remarks.

Chris Layden: Thank you all for joining today. That concludes. We'll see you next quarter.

Operator: Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

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