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November 10, 2022
Kelly Services Inc. (NASDAQ: KELYA, KELYB) reported third-quarter revenue edged up just 0.3% on a constant currency basis to $1.17 billion; gross margin improved. The Troy, Michigan-based staffing giant reported US revenue rose 1.1% year over year in the third quarter while Canadian revenue was up 3.8% as measured in constant currency.
Kelly noted revenue trends were impacted by foreign currency headwinds and the sale of its Russian operations in July. Year-over-year results also include the recent acquisitions of RocketPower, an RPO firm, and Pediatric Therapeutic Services, a specialty firm providing in-school therapy services.
“We saw solid revenue growth in our [science, engineering and technology] and education specialties, and all five operating segments delivered GP rate growth in the quarter,” President and CEO Peter Quigley said. “While challenges precipitated the RocketPower goodwill impairment, we remain confident that with diversification and integration this acquisition will bring strategic long-term value to our business.”
Kelly’s MSP, RPO, PPO and consulting operations are included in its “outsourcing and consulting” segment, where revenue rose 5.9% in constant currency to $118.5 million.
Kelly recorded a $30.7 million goodwill impairment charge during the quarter related to RocketPower. The charge reflects a sharp decline in hiring in the tech industry in which RocketPower specializes as well as slowing growth for RPO.
On the bottom line, the company reported a net loss of $16.2 million for the third quarter.
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Guidance
Kelly forecast fourth-quarter revenue would be up 1.0% year over year on a reported basis and up 3.3% to 4.3% on an organic, constant currency basis.
Share price and market cap
Shares in KELYA were up 16.77 to $18.45 as of 1:42 Eastern time; they were 19.78% above their 52-week high, according to FT.com. The company had a market cap of $600.9 million.
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