Post Earnings Coverage as Kelly Services Outperformed Top- and Bottom-line Expectations

Upcoming AWS Coverage on 51job Post-Earnings Results

LONDON, UK / ACCESSWIRE / June 1, 2017 / Active Wall St. announces its post-earnings coverage on Kelly Services, Inc. (NASDAQ: KELYA). The Company released its first quarter fiscal 2017 financial results on May 11, 2017. The staffing Company reported a 4% decline in sales while its earnings grew 7%. Register with us now for your free membership at:

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One of Kelly Services’ competitors within the Staffing & Outsourcing Services space, 51job, Inc. (NASDAQ: JOBS), announced on May 04, 2017, its unaudited financial results for Q1 2017 which ended on March 31, 2017. AWS will be initiating a research report on 51job in the coming days.

Today, AWS is promoting its earnings coverage on KELYA; touching on JOBS. Get our free coverage by signing up to:

http://www.activewallst.com/register/

Earnings Reviewed

For the thirteen weeks concluded April 02, 2017, Kelly Services revenue totaled $1.29 billion, down 4.4% compared to the corresponding quarter of 2016 revenue of $1.35 billion. Revenue comparisons were unfavorably impacted by the transfer of APAC staffing operations to the TS Kelly Asia Pacific Joint Venture at the beginning of Q3 2016. The Company’s revenue numbers surpassed analysts’ consensus of $1.28 billion.

For Q1 2017, Kelly Services gross profit totaled $231.6 million compared to $232.7 million in Q1 2016. Excluding the APAC staffing results, the Company’s gross profit was up $15 million, or 7%, on a y-o-y basis. Kelly Services’ gross profit rate was 18% for the reported quarter, up 70 basis points on a y-o-y basis.

Kelly Services’ SG&A expenses were down 1.3% on a y-o-y basis. Excluding the impact of the APAC staffing business, SG&A expenses were up 4.3%. Included in SG&A expenses for the reported quarter were $2.4 million of restructuring cost related primarily to optimizing its GTS service delivery models, which the Company expects to deliver cost savings in 2017. Excluding the restructuring costs and APAC staffing business, expenses were up 3.2%. The Company noted that approximately half of that increase was related to the timing of performance-based incentive expenses that are a component of corporate expenses.

During Q1 2017, Kelly Services’ earnings from operations were $16.4 million compared with Q1 2016 earnings of $14.7 million. Excluding the restructuring charges and the APAC staffing results, adjusted earnings from operations were $18.8 million compared to $10.2 million in the prior year’s same quarter and grew by more than 80% versus last year. On an adjusted basis, these results reflect the conversion rate or return on gross profit of 8.1% for Q1 2017 compared to 4.7% for Q1 2016.

Kelly Services reported net income for Q1 2017 of $12.20 million, or $0.31 per share, compared to income of $11.20 million, or $0.29 per share, for Q1 2016. Excluding restructuring charges, earnings per share were $0.35 in the reported quarter, outperforming Wall Street’s expectations for earnings of $0.21 per share.

Cash Matters

Kelly also reported that on May 10, 2017, its board of directors declared a dividend of $0.075 per share. The dividend is payable June 07, 2017, to shareholders of record as of the close of business on May 23, 2017.

Kelly Services reported that at the end of Q1 2017 cash totaled $46 million compared to $30 million at year-end 2016. Accounts receivable totaled $1.2 billion and increase 2% compared to year-end 2016. The Company’s Global DSO were 55 days, flat with the same quarter last year, but up 2 days from Q4 2016 as a result of seasonal fluctuations.

In its cash flow year-to-date, the Company generated $22 million of free cash flow compared to generating $19 million of free cash flow last year.

Stock Performance

On Wednesday, May 31, 2017, the stock closed the trading session at $23.23, climbing 1.13% from its previous closing price of $22.97. A total volume of 222.06 thousand shares have exchanged hands, which was higher than the 3-month average volume of 140.33 thousand shares. Kelly Services’ stock price surged 6.17% in the last three months, 13.65% in the past six months, and 17.20% in the previous twelve months. Moreover, the stock gained 1.35% since the start of the year. The stock is trading at a PE ratio of 7.49 and has a dividend yield of 1.29%. At Wednesday’s closing price, the stock’s net capitalization stands at $895.52 million.

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