Kelly Services (KELYA) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue was $1.2B, down 3.3% year-over-year due to divestitures, but up 4.4% organically; full-year revenue was $4.3B, down 10.4% as reported, up 0.5% organically.

• Adjusted EBITDA for Q4 was $43.5M, up 34% year-over-year; full-year adjusted EBITDA was $143.5M, up 31% year-over-year.

• CEO Peter Quigley announced his planned retirement by year-end 2025, with a succession plan underway.

• Strategic focus on specialty growth, including the acquisition of Motion Recruitment Partners (MRP) and Children's Therapy Center (CTC), and the sale of the European staffing business.

• Over $100M in capital unlocked through streamlining and redeployed for the MRP acquisition.

Financial highlights

• Q4 adjusted EBITDA margin rose 110 bps to 3.7%; full-year adjusted EBITDA margin increased 100 bps to 3.3%.

• Q4 loss per share was $0.90 due to non-cash impairment charges; adjusted EPS was $0.82.

• Gross profit rate for Q4 improved to 20.3% from 19.3%; full-year gross profit rate was 20.4%, up from 19.9%.

• Permanent placement income in Q4 rose 13.3% year-over-year; full-year declined 23.6%.

• Year-end liquidity was over $150M, with $39M in cash and $115M in credit facilities.

Outlook and guidance

• Market conditions expected to remain stable in early 2025, with modest improvements later in the year.

• First half 2025 revenue growth expected at ~10% (including MRP), with modest organic growth.

• Gross profit rate expected to improve by 80 bps in H1 2025, mainly from MRP integration.

• Adjusted EBITDA margin projected to improve by 10 bps to 3.6% in H1 2025.

• Effective tax rate expected in the high teens.