Kelly (NASDAQ: KELYA, KELYB), the eighth-largest staffing firm in the world, reported fourth-quarter revenue rose 1.1% in constant currency; the increase was 0.7% on a reported basis. The Troy, Michigan-based staffing giant said the economic recovery continued but the impact of Covid variants and the talent supply challenges remained. Kelly also announced it is reducing its stake in PersolKelly Pte. Ltd. — which serves markets in Asia Pacific — and will end cross-shareholding with Japan-based staffing firm Persol Holdings Co. Ltd., its partner in PersolKelly.
“Our fourth-quarter results reflect that the economic recovery continues,” Kelly President and CEO Peter Quigley said. “While our revenue growth in the quarter was affected by talent supply, we are pleased with our ability to leverage growth into solid gross profit and earnings improvements.”
US fourth-quarter revenue rose 2.0%.
| (US$ millions) | Q4 2021 | Q4 2020 | % change | % constant currency |
| Revenue | $1,250.3 | $1,241.4 | 0.7% | 1.1% |
| Gross profit | $246.0 | $224.1 | 9.8% | 10.1% |
| Gross margin | 19.7% | 18.1% | ||
| Net earnings | $71.7 | $23.4 | 207.1% |
Kelly said the fourth quarter of 2020 had an extra week when compared to the fourth quarter of 2021 and that impacted revenue. Adjusted for the additional week in 2020, fourth quarter 2021 revenue rose 6.0%.
The company also noted its April 2021 acquisition of Softworld Inc. had a favorable impact on growth of 290 basis points, while legislative changes in Mexico had a negative impact of 210 basis points.
The 2021 fourth quarter also includes $4.1 million in restructuring charges while the 2020 fourth quarter includes $4.4 million in restructuring charges.
Revenue by segment
| (US$ millions) | Q4 2021 | Q4 2020 | % change | % constant currency |
| Professional & industrial | $450.7 | $511.7 | -11.9% | -12.1% |
| Science, engineering and technology | $297.7 | $257.6 | 15.5% | 15.5% |
| Education | $132.4 | $91.8 | 44.3% | 44.3% |
| Outsourcing & consulting | $112.1 | $102.5 | 9.3% | 9.4% |
| International | $257.7 | $278.0 | -7.2% | -5.4% |
Revenue by geography
| (US$ millions) | Q4 2021 | Q4 2020 | % change | % constant currency |
| Americas | ||||
| United States | $908.6 | $891.0 | 2.0% | 2.0% |
| Canada | $38.1 | $33.8 | 12.6% | 8.6% |
| Puerto Rico | $25.5 | $20.9 | 21.6% | 21.6% |
| Mexico | $10.6 | $35.8 | -70.5% | -70.1% |
| Europe | ||||
| Switzerland | $61.0 | $59.2 | 3.1% | 4.9% |
| France | $55.0 | $57.0 | -3.5% | 0.5% |
| Portugal | $37.3 | $42.6 | -12.4% | 8.6% |
| Russia | $32.9 | $29.9 | 9.8% | 4.9% |
| Italy | $18.2 | $15.7 | 15.8% | 20.7% |
| UK | $16.4 | $17.2 | -4.5% | -6.7% |
| Germany | $9.4 | $8.0 | 17.4% | 22.3% |
| Ireland | $8.0 | $5.9 | 36.9% | 42.4% |
| Other Europe | $18.1 | $15.9 | 13.5% | 17.4% |
| Asia Pacific | ||||
| Total APAC | $11.2 | $8.5 | 33.3% | 34.5% |
Full-year results
| (US$ millions) | FY 2021 | FY 2020 | % change | % constant currency |
| Revenue | $4,909.7 | $4,516.0 | 8.7% | 7.8% |
| Gross profit | $919.2 | $827.6 | 11.1% | 10.1% |
| Gross margin | 18.7% | 18.3% | ||
| Net earnings | $156.1 | ($72.0) | nm |
PersolKelly
In addition, Kelly announced today that it is selling 106,465,173 shares in PersolKelly Pte., its joint venture with Persol, for a purchase price of $119.5 million.
Following the sale, Kelly will own 2.5% of PersolKelly while Persol will own 97.5%.
Plans call for the companies’ staffing business not to compete in Asia Pacific, but KellyOCG — which provides MSP, RPO and other services — will continue to operate in the region.
Francis Koh will continue to lead PersolKelly as CEO and Pete Hamilton will continue to lead KellyOCG in the region.
In addition, Kelly and Persol will discontinue their cross ownership in one another. Kelly will sell its 9,106,800 shares in Persol and will buy back Kelly shares that Persol owns.
“Kelly is already building on our momentum from 2021, which included Softworld, our largest acquisition to date, the creation of a strong, diverse leadership team, and the introduction of new solutions and products in our specialty businesses,” Quigley said. “With the additional transactions announced today, Kelly will free up significant capital to invest in our specialty strategy, positioning us to elevate growth and profitability in 2022 and beyond.”
Guidance
Kelly forecast full-year 2022 revenue to be up between 4.5% and 5.5%. Gross margin is expected to be 19.4%.
Share price and market cap
Shares in Kelly were up 19.62% to $20.64 as of 12:45 p.m. Eastern time; they were 29.90% above their 52-week low, according to FT.com. The company had a market cap of $682.8 million.