Covid-19 continued dampening customer demand in the third quarter, Kelly Services Inc. (NASDAQ: KELYA, KELYB) reported. The Troy, Michigan-based staffing giant reported revenue fell 18.1%.
Kelly’s education staffing segment was hit particularly hard as third-quarter revenue fell 51.8%. The company said demand from small and midsize businesses was also impacted by the pandemic.
Total US revenue at Kelly fell 18.0%.
“As a gradual recovery from the pandemic continued into the third quarter, revenue trends in all of Kelly’s segments showed some sequential improvement,” President and CEO Peter Quigley said in a statement. “Our higher-margin specialties, such as outsourcing and consulting, science, and virtual call center, proved to be particularly resilient.”
| (US$ millions) | Q3 2020 | Q3 2019 | % change | % constant currency |
| Revenue | $1,038.2 | $1,267.7 | -18.1% | -18.2% |
| Gross profit | $191.0 | $227.7 | -16.1% | -16.3% |
| Gross margin | 18.4% | 18.0% | ||
| Net earnings | $16.7 | ($10.5) | nm | nm |
Kelly Services also announced a change in reporting in that it will now report financial results by five specialty business segments: Science, engineering and technology; education; professional and industrial; outsourcing and consulting; and international.
Revenue by segment
| (US$ millions) | Q3 2020 | Q3 2019 | % change | % constant currency |
| Professional & industrial | $446.5 | $538.0 | -17.0% | -17.0% |
| Science, engineering and technology | $244.0 | $285.2 | -14.4% | -14.4% |
| Education | $27.5 | $57.1 | -51.8% | -51.8% |
| Outsourcing & consulting | $87.9 | $94.4 | -7.0% | -7.4% |
| International | $232.4 | $293.4 | -20.8% | -21.1% |
Kelly said its outsourcing and consulting revenue was negatively affected by reduced demand from oil and gas customers, but demand from life sciences customers held up better.
Looking at revenue by geography, the company’s Brazilian operations saw the biggest decrease during the third quarter. However, revenue was down across all geographies except for Russia, which posted an increase in constant currency.
Revenue by geography
| (US$ millions) | Q3 2020 | Q3 2019 | % change | % constant currency |
| Americas | ||||
| United States | $740.6 | $903.2 | -18.0% | -18.0% |
| Canada | $30.3 | $34.6 | -12.5% | -11.7% |
| Mexico | $27.4 | $32.4 | -15.7% | -4.2% |
| Puerto Rico | $18.4 | $18.8 | -2.4% | -2.4% |
| Brazil | $1.8 | $8.4 | -78.3% | -71.0% |
| Europe, Middle East and Africa | ||||
| Switzerland | $49.6 | $50.6 | -2.0% | -8.5% |
| France | $48.8 | $59.7 | -18.2% | -22.0% |
| Portugal | $31.7 | $44.0 | -28.0% | -31.6% |
| Russia | $27.2 | $29.9 | -8.8% | 3.7% |
| United Kingdom | $16.4 | $24.9 | -34.1% | -37.1% |
| Italy | $14.5 | $18.5 | -21.8% | -25.5% |
| Germany | $7.0 | $11.5 | -39.7% | -42.6% |
| Ireland | $4.9 | $7.1 | -31.6% | -35.0% |
| Other Europe | $12.0 | $16.6 | -27.6% | -28.9% |
| Asia Pacific | ||||
| Total APAC | $7.6 | $7.5 | 1.0% | -0.9% |
The company reported a $9.5 million non-cash charge related to a dispute with a former customer in Mexico. Kelly Services also reported restructuring charges.
Share price and market cap
Shares in Kelly were up 3.17% to $18.89 as of noon Eastern time, but they were still 24.71% below their 52-week high. The company had a market cap of $740.7 million.