Kelly Services (KELYA) 17th Annual Midwest IDEAS Conference summary

Strategic transformation and leadership changes

• Recent years saw significant transformation through acquisitions, divestitures, and a refreshed management team, including a new CEO and key leadership roles, to drive value creation and operational efficiency.

• The board was reconstituted after a controlling shareholder transaction, with new members joining in early 2025, enhancing governance and oversight.

• The company shifted from a decentralized business unit model to a 'One Kelly' client-centric approach, aiming to maximize wallet share and cross-sell solutions across enterprise accounts.

• Leadership now emphasizes direct C-suite engagement with major clients, improving retention and relationship depth after a significant client loss in 2024.

• Culture initiatives focus on accountability, visibility, and energizing teams to drive collective success.

Business segments and market positioning

• Operates in three main segments: Enterprise Talent Management (ETM), Science, Engineering & Technology (SET), and Education, each with distinct profiles and margin structures.

• SET segment delivers higher margins due to specialized, higher-value roles and outcome-based solutions, while Education is the largest provider of substitute teacher outsourcing in the U.S.

• Education segment has grown significantly, now representing about 24% of the portfolio, with further growth potential as only 30% of the market is currently outsourced.

• The company holds leading market positions, including #2 staffing firm in the U.S. and #1 in total workforce solutions, with substantial industry recognition.

• International low-margin staffing was divested to focus on higher-margin, scalable offerings while maintaining a global managed services footprint.

Financial performance and capital allocation

• Gross margin improved from 18% to 20% over recent years, with EBITDA margin expanding 100–150 basis points due to portfolio remix and SG&A reductions.

• Despite industry contraction post-COVID, revenue was largely maintained through transformation, with organic growth expected in the second half of 2025 and beyond.

• Guidance for 2025 includes 10–20 basis points of margin expansion and gross profit growth across all segments.

• Capital allocation remains disciplined, with debt reduced from $240 million to $100 million post-acquisition, consistent dividends, and targeted share buybacks.

• No acquisitions in 2025 or 2026 to date, with future M&A considered as a supplement to organic growth.