KELLY SERVICES INC Q4 FY2024 earnings call

• Leadership: Peter Quigley to retire as CEO by end of 2024, board initiating CEO search. - Performance: Fourth quarter saw organic revenue up >4% and adjusted EBITDA up 34%, with 110 basis points of margin expansion. Full year organic revenue grew 0.5% despite industry declines. - Acquisitions/Disposals: Completed acquisition of MRP, sale of European Staffing and Ayres Group. - 2025 Priorities: Integrate MRP, optimize operating model by unifying OCG and PNI, drive EBITDA margin expansion through efficiency and business mix shifts.

Education: Delivered double-digit revenue growth in Q4, with 12% year-over-year increase. Accelerated expansion of higher margin therapy business via acquisition of Children's Therapy Center. SET: Reported revenue up 38% year-over-year driven by acquisition of MRP; organic revenue down 4%, but outcome-based solutions like StatementWorks trended up. OCG: Revenue grew 9%, driven by strong PPO specialty; MSP and RPO offerings have higher margins but PPO growth pressured gross margins. PNI: Revenue improved 4% year-over-year, staffing up 3.7% year-over-year, outcome-based solutions up 5.9% due to demand in semiconductors, logistics, etc.

• 2025 expects modest market improvement, aims to capture market share and deliver incremental organic revenue growth. - First half revenue growth ~10% due to MRP acquisition and modest organic growth; GP rate expected to improve ~80 basis points. - Adjusted EBITDA margin expected to improve ~10 basis points in first half; CapEx and software development spending to increase for MRP integration and tech initiatives.

• Non-cash impairment charges: $8M for right-of-use assets and $72.8M goodwill impairment for Softworld. - Market challenges: Continued staffing industry headwinds, disconnect between M&A valuation expectations and performance.

Q: How did hurricanes impact the education segment in Q4?

A: The two back-to-back hurricanes in late September/early October significantly disrupted school districts, contributing to the education segment's performance in Q4.

Q: What's the outlook for staffing revenue trend in Q4?

A: PNI saw strong staffing demand with 3.7% year-over-year growth, driven by omnichannel strategy and large account efforts; SET staffing was down but outcome-based solutions helped pull back from Q3 decline.

Q: What's the customer sentiment outlook for 2025 first half?

A: Customers are cautious due to post-election executive orders and pending legislation, with market conditions expected to continue similar to prior quarters.

Q: Details on Children's Therapy Center acquisition and share repurchase?

A: Children's Therapy Center is a ~$3M acquisition complementing education's therapy business; $10M share repurchase completed in Q4, with focus on investing in growth and considering return to shareholders.