Kelly Reports First-Quarter 2026 Earnings
Rhea-AI Summary
Kelly (Nasdaq: KELYA, KELYB) reported Q1 2026 revenue of $1.0 billion, down 10.7% year-over-year, with an underlying decline of approximately 3.3% after discrete customer impacts. Q1 operating loss was $5.1 million; adjusted EBITDA was $15.8 million (margin 1.5%), down 54.7% year-over-year. The company affirmed unchanged 2026 guidance, expects Q2 revenue decline of 7–9% and at least 2.5% adjusted EBITDA margin, and anticipates return to organic revenue growth and margin expansion in H2 2026. A quarterly dividend of $0.075 per share was declared.
Positive
- Underlying revenue decline narrowed to approximately 3.3%
- Adjusted EBITDA margin improved sequentially to 1.5%
- Company affirms guidance with Q2 adjusted EBITDA margin target of at least 2.5%
- Declared quarterly cash dividend of $0.075 per share
Negative
- Total revenue declined 10.7% YoY to $1.0 billion
- Adjusted EBITDA fell 54.7% YoY to $15.8 million
- Q1 operating loss of $5.1 million
- Adjusted EPS dropped to $0.03 from $0.39 prior year
Key Figures
Market Reality Check
Peers on Argus
Peers show mixed moves: KELYB up 3.56%, KFRC down 3.27%, BBSI down 3.41%, MAN down 1.78%. Momentum scanner flags ATLN down 6.67%, while BBSI and NSP are up, suggesting stock-specific drivers rather than a uniform sector trend.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| May 04 | Provider awards | Positive | +1.0% | Recognition of pediatric therapy providers with cash awards and school donations. |
| May 04 | Educator awards | Positive | +1.0% | Substitute Educators of the Year program with cash prizes and school grants. |
| Apr 23 | Earnings call notice | Neutral | -1.1% | Scheduling and access details for the Q1 2026 earnings webcast. |
| Mar 10 | Leadership change | Positive | +0.0% | Appointment of a new president for the Science, Engineering, Technology & Telecom unit. |
| Mar 06 | Investor conferences | Neutral | -1.4% | Planned participation in two virtual investor conferences with leadership meetings. |
Recent news has mostly produced small price reactions, with leadership and conference updates seeing limited impact.
Over the last few months, Kelly issued several operational and investor-relations updates, including educator and therapy provider recognition on May 4, 2026, a first‑quarter 2026 conference call announcement on April 23, 2026, and new SETT leadership on March 10, 2026. Additional investor conference participation was flagged on March 6, 2026. These items generated modest single‑day moves, providing context for how operational and governance news has recently aligned with market responses.
Market Pulse Summary
This announcement details Q1 2026 results with revenue of $1.0B, a 10.7% year‑over‑year decline, and adjusted EBITDA of $15.8M with a 1.5% margin. Management highlights continued SG&A reductions and affirms expectations for improving revenue trends and margin expansion later in 2026. Investors may track execution on cost optimization, segment demand shifts, and delivery against the unchanged full‑year outlook and quarterly dividend commitments.
Key Terms
adjusted sg&a financial
adjusted ebitda financial
basis points financial
non-gaap financial
income tax expense financial
income tax benefit financial
AI-generated analysis. Not financial advice.
TROY, Mich., May 07, 2026 (GLOBE NEWSWIRE) -- Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced results for the first quarter of 2026.
- Q1 revenue of
$1.0 billion , reflects notable improvement in the year-over-year performance versus the prior quarter driven by strength in the ETM segment, down10.7% year-over-year; underlying revenue excluding previously disclosed discrete items down approximately3.3% year-over-year, which improved 60 basis points versus the prior quarter - Q1 adjusted SG&A decline of
10.3% reflects the third straight quarter of year-over-year reduction of approximately10% or more and continued momentum on structural and demand-driven expense optimization initiatives - Q1 operating loss of
$5.1 million ;$4.1 million of operating earnings on an adjusted basis - Q1 adjusted EBITDA of
$15.8 million and adjusted EBITDA margin of1.5% reflects a 20 basis point improvement in the year-over-year decline relative to the prior quarter - Company affirms expectation of improved year-over-year performance for revenue and adjusted EBITDA margin each successive quarter in 2026, and return to organic revenue growth and adjusted EBITDA margin expansion in the second half of 2026
Chris Layden, chief executive officer, said, “In the first quarter, Kelly’s disciplined execution against our growth and efficiency priorities continued to stabilize the business. Revenue exceeded our expectations and adjusted EBITDA was in line with our outlook, driven by sequential improvement in ETM and pockets of growth in SET. With our technology modernization and go-to-market initiatives on track and our pipeline continuing to gain momentum, we remain confident in our ability to deliver revenue growth and margin expansion in the second half of the year.”
Financial Results for the thirteen-week period ended March 29, 2026:
Revenue of
Operating loss of
Income tax benefit of
Loss per share was
1 Adjusted measures represent non-GAAP financial measures. Refer to our reconciliation of non-GAAP financial measures to the most closely related GAAP measure included in this document.
Financial Outlook For Fiscal 2026:
The Company's 2026 financial outlook remains unchanged from the initial view previously disclosed, assumes no material change in the macroeconomic or industry dynamics relative to current trends, and is as follows:
- Second Quarter of 2026 – Expect year-over-year improvement relative to first quarter, with overall revenue decline of
7% to9% , which includes at least 100 bps of improvement on an underlying basis excluding discrete customer impacts. Adjusted EBITDA margin of at least2.5% , representing approximately 100 bps improvement relative to first quarter and significant reduction in year-over-year decline relative to the past two quarters.
- Second Half of the Year – Assuming no new material impacts, expect relative improvement in year-over-year performance each successive quarter for both revenue and adjusted EBITDA margin resulting in modest year-over-year revenue growth and measurable adjusted EBITDA margin expansion in the second half of the year.
Quarterly Cash Dividend:
Kelly also reported that on May 5, its board of directors declared a dividend of
In conjunction with its earnings release, Kelly has published a financial presentation and will host a live webcast of a conference call at 9 a.m. ET on May 7 to review the financial and operation results from the quarter. The presentation and a link to the live webcast will be accessible through the Company’s public website on the Investor Relations page under Events & Presentations. The webcast will be recorded, and a replay will be available within one hour of completion of the event through the same link as the live webcast.
Forward-Looking Statements:
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, competitive pressures and pricing, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependence on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect approximately 375,000 people with work every year. Our suite of outsourcing and consulting services and solutions ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2025 was
KLYA-FIN
| ANALYST & MEDIA CONTACT: | |||
| Scott Thomas | |||
| (248) 251-7264 | |||
| scott.thomas@kellyservices.com |
| KELLY SERVICES, INC. |
| CONSOLIDATED STATEMENTS OF EARNINGS |
| FOR THE 13 WEEKS ENDED MARCH 29, 2026 AND MARCH 30, 2025 |
| (UNAUDITED) |
| (in millions, except per share data) |
| 2026 | 2025 | Change | % Change(1) | |||||||
| Revenue from services | $ | 1,040.7 | $ | 1,164.9 | $ | (124.2 | ) | (10.7)% | ||
| Cost of services | 844.3 | 928.4 | (84.1 | ) | (9.1) | |||||
| Gross profit | 196.4 | 236.5 | (40.1 | ) | (17.0) | |||||
| Selling, general and administrative expenses | 199.3 | 225.7 | (26.4 | ) | (11.7) | |||||
| Asset impairment charge | 2.2 | — | 2.2 | NM | ||||||
| Earnings (loss) from operations | (5.1 | ) | 10.8 | (15.9 | ) | NM | ||||
| Other income (expense), net | (1.6 | ) | (3.2 | ) | 1.6 | 50.0 | ||||
| Earnings (loss) before taxes | (6.7 | ) | 7.6 | (14.3 | ) | NM | ||||
| Income tax expense (benefit) | (0.8 | ) | 1.8 | (2.6 | ) | (144.4) | ||||
| Net earnings (loss) | $ | (5.9 | ) | $ | 5.8 | (11.7 | ) | NM | ||
| Basic earnings (loss) per share | $ | (0.17 | ) | $ | 0.16 | $ | (0.33 | ) | NM | |
| Diluted earnings (loss) per share | $ | (0.17 | ) | $ | 0.16 | $ | (0.33 | ) | NM | |
| STATISTICS: | ||||||||||
| Permanent placement income (included in revenue from services) | $ | 10.9 | $ | 11.5 | $ | (0.6 | ) | (5.2)% | ||
| Gross profit rate | 18.9 | % | 20.3 | % | (1.4) pts. | |||||
| Adjusted EBITDA | $ | 15.8 | $ | 34.9 | $ | (19.1 | ) | (54.7)% | ||
| Adjusted EBITDA margin | 1.5 | % | 3.0 | % | (1.5)pts. | |||||
| Effective income tax rate | 11.6 | % | 24.0 | % | (12.4) pts. | |||||
| Average shares outstanding: | ||||||||||
| Basic | 34.4 | 35.0 | ||||||||
| Diluted | 34.4 | 35.5 | ||||||||
(1) Reported percentage changes are computed based on millions. Prior year percent changes were computed based on actual amounts in thousands.
| KELLY SERVICES, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (UNAUDITED) |
| (in millions) |
| March 29, 2026 | December 28, 2025 | March 30, 2025 | |||||||
| Current Assets | |||||||||
| Cash and equivalents | $ | 25.6 | $ | 33.0 | $ | 28.2 | |||
| Trade accounts receivable, less allowances of | 1,216.0 | 1,188.7 | 1,250.9 | ||||||
| Prepaid expenses and other current assets | 57.2 | 46.6 | 71.9 | ||||||
| Total current assets | 1,298.8 | 1,268.3 | 1,351.0 | ||||||
| Noncurrent Assets | |||||||||
| Property and equipment, net | 18.8 | 20.5 | 23.7 | ||||||
| Operating lease right-of-use assets | 37.6 | 42.9 | 45.9 | ||||||
| Deferred taxes | 158.2 | 163.2 | 331.1 | ||||||
| Retirement plan assets | 283.0 | 289.7 | 253.8 | ||||||
| Goodwill, net | 202.1 | 202.1 | 304.1 | ||||||
| Intangibles, net | 218.8 | 226.2 | 248.4 | ||||||
| Other assets | 37.7 | 37.7 | 36.9 | ||||||
| Total noncurrent assets | 956.2 | 982.3 | 1,243.9 | ||||||
| Total Assets | $ | 2,255.0 | $ | 2,250.6 | $ | 2,594.9 | |||
| Current Liabilities | |||||||||
| Accounts payable and accrued liabilities | $ | 621.6 | $ | 631.4 | $ | 597.0 | |||
| Operating lease liabilities | 11.4 | 12.3 | 12.2 | ||||||
| Accrued payroll and related taxes | 147.2 | 140.9 | 178.7 | ||||||
| Accrued workers' compensation and other claims | 21.3 | 20.9 | 18.0 | ||||||
| Income and other taxes | 17.1 | 16.3 | 17.0 | ||||||
| Total current liabilities | 818.6 | 821.8 | 822.9 | ||||||
| Noncurrent Liabilities | |||||||||
| Long-term debt | 130.5 | 101.9 | 204.6 | ||||||
| Operating lease liabilities | 42.0 | 44.9 | 49.3 | ||||||
| Accrued workers' compensation and other claims | 34.7 | 34.2 | 32.0 | ||||||
| Accrued retirement benefits | 253.6 | 263.7 | 236.4 | ||||||
| Other long-term liabilities | 7.1 | 7.6 | 9.2 | ||||||
| Total noncurrent liabilities | 467.9 | 452.3 | 531.5 | ||||||
| Commitments and contingencies (see Contingencies footnote) | |||||||||
| Stockholders' Equity | |||||||||
| Common Stock | 38.5 | 38.5 | 38.5 | ||||||
| Treasury Stock | (56.7 | ) | (63.7 | ) | (56.1 | ) | |||
| Paid-in capital | 31.1 | 36.3 | 30.5 | ||||||
| Earnings invested in the business | 956.5 | 965.1 | 1,233.2 | ||||||
| Accumulated other comprehensive income (loss) | (0.9 | ) | 0.3 | (5.6 | ) | ||||
| Total stockholders' equity | 968.5 | 976.5 | 1,240.5 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 2,255.0 | $ | 2,250.6 | $ | 2,594.9 | |||
| STATISTICS: | |||||||||
| Working Capital | $ | 480.2 | $ | 446.5 | $ | 528.1 | |||
| Current Ratio | 1.6 | 1.5 | 1.6 | ||||||
| Debt-to-capital % | 11.9 | % | 9.4 | % | 14.2 | % | |||
| Global Days Sales Outstanding | 64 | 61 | 61 | ||||||
| Year-to-Date Free Cash Flow | $ | (26.5 | ) | $ | 114.1 | $ | 21.4 | ||
| KELLY SERVICES, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| FOR THE 13 WEEKS ENDED MARCH 29, 2026 AND MARCH 30, 2025 |
| (UNAUDITED) |
| (in millions) |
| 2026 | 2025 | |||||
| Cash flows from operating activities: | ||||||
| Net earnings (loss) | $ | (5.9 | ) | $ | 5.8 | |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||||||
| Asset impairment charge | 2.2 | — | ||||
| Deferred income taxes | 5.0 | (0.8 | ) | |||
| Depreciation and amortization | 9.9 | 11.0 | ||||
| Operating lease asset amortization | 2.6 | 2.6 | ||||
| Provision for credit losses and sales allowances | 1.2 | 3.0 | ||||
| Stock-based compensation | 3.4 | 3.7 | ||||
| Other, net | 0.3 | (0.3 | ) | |||
| Changes in operating assets and liabilities | ||||||
| Accounts receivable | (26.3 | ) | 10.5 | |||
| Other assets | (4.5 | ) | 0.6 | |||
| Accounts payable | (7.3 | ) | (24.2 | ) | ||
| Other liabilities | (6.0 | ) | 12.0 | |||
| Net cash (used in) from operating activities | (25.4 | ) | 23.9 | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (1.1 | ) | (2.5 | ) | ||
| Proceeds from sale of PersolKelly investment | — | 6.4 | ||||
| Other investing activities | (0.1 | ) | (0.7 | ) | ||
| Net cash (used in) from investing activities | (1.2 | ) | 3.2 | |||
| Cash flows from financing activities: | ||||||
| Proceeds from long-term debt | 389.5 | 412.3 | ||||
| Payments on long-term debt | (360.9 | ) | (447.1 | ) | ||
| Dividend payments | (2.7 | ) | (2.8 | ) | ||
| Payments of tax withholding for stock awards | (1.4 | ) | (1.8 | ) | ||
| Other financing activities | (0.3 | ) | (0.1 | ) | ||
| Net cash from (used in) financing activities | 24.2 | (39.5 | ) | |||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (5.8 | ) | 1.3 | |||
| Net change in cash, cash equivalents and restricted cash | (8.2 | ) | (11.1 | ) | ||
| Cash, cash equivalents and restricted cash at beginning of period | 37.7 | 45.6 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 29.5 | $ | 34.5 | ||
| KELLY SERVICES, INC. | |||||||
| SEGMENT INFORMATION | |||||||
| (UNAUDITED) | |||||||
| (in millions) | |||||||
| We utilize business unit profit (loss) to evaluate the performance of our segments. Business unit profit (loss) and SG&A expenses as presented in the segment information table below do not include depreciation and amortization expenses. | |||||||
| First Quarter | |||||||
| 2026 | 2025 | % Change | |||||
| Enterprise Talent Management | |||||||
| Revenue from services | $ | 459.2 | $ | 529.1 | (13.2)% | ||
| Gross profit | 85.6 | 107.3 | (20.2) | ||||
| Adjusted SG&A expenses | 86.9 | 98.3 | (11.6) | ||||
| Integration, realignment and restructuring charges(2) | — | 2.7 | NM | ||||
| Total SG&A expenses | 86.9 | 101.0 | (14.0) | ||||
| Business unit profit (loss) | (1.3 | ) | 6.3 | NM | |||
| Adjusted business unit profit (loss) | (1.3 | ) | 9.0 | NM | |||
| Gross profit rate | 18.6 | % | 20.3 | % | (1.7) pts. | ||
| Science, Engineering & Technology | |||||||
| Revenue from services | $ | 289.2 | $ | 327.3 | (11.6)% | ||
| Gross profit | 71.8 | 83.0 | (13.5) | ||||
| Adjusted SG&A expenses | 57.3 | 68.0 | (15.7) | ||||
| Integration, realignment and restructuring charges(2) | 0.3 | 1.1 | (72.7) | ||||
| Total SG&A expenses | 57.6 | 69.1 | (16.6) | ||||
| Asset impairment charge(5) | 2.2 | — | NM | ||||
| Business unit profit (loss) | 12.0 | 13.9 | (13.7) | ||||
| Adjusted business unit profit (loss) | 14.5 | 15.0 | (3.3) | ||||
| Gross profit rate | 24.8 | % | 25.4 | % | (0.6) pts. | ||
| Education | |||||||
| Revenue from services | $ | 294.1 | $ | 309.0 | (4.8)% | ||
| Gross profit | 39.0 | 46.2 | (15.6) | ||||
| Adjusted SG&A expenses | 26.6 | 26.9 | (1.1) | ||||
| Integration, realignment and restructuring charges(2) | 0.1 | — | NM | ||||
| Total SG&A expenses | 26.7 | 26.9 | (0.7) | ||||
| Business unit profit (loss) | 12.3 | 19.3 | (36.3) | ||||
| Adjusted business unit profit (loss) | 12.4 | 19.3 | (35.8) | ||||
| Gross profit rate | 13.3 | % | 15.0 | % | (1.7) pts. | ||
| KELLY SERVICES, INC. | |||||||||||
| REVENUE FROM SERVICES BY SERVICE TYPE | |||||||||||
| (UNAUDITED) | |||||||||||
| (in millions) | |||||||||||
| First Quarter 2026 | |||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||
| Enterprise Talent Management | $ | 229.3 | $ | 106.8 | $ | 121.3 | $ | 1.8 | $ | 459.2 | |
| Science, Engineering & Technology | 168.6 | 112.2 | — | 8.4 | 289.2 | ||||||
| Education | 293.4 | — | — | 0.7 | 294.1 | ||||||
| Total Segment Revenue | $ | 691.3 | $ | 219.0 | $ | 121.3 | $ | 10.9 | $ | 1,042.5 | |
| Intersegment | (1.8 | ) | |||||||||
| Total Revenue from Services | $ | 1,040.7 | |||||||||
| First Quarter 2025 | |||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||
| Enterprise Talent Management | $ | 275.8 | $ | 133.2 | $ | 117.8 | $ | 2.3 | $ | 529.1 | |
| Science, Engineering & Technology | 209.8 | 109.4 | — | 8.1 | 327.3 | ||||||
| Education | 307.9 | — | — | 1.1 | 309.0 | ||||||
| Total Segment Revenue | $ | 793.5 | $ | 242.6 | $ | 117.8 | $ | 11.5 | $ | 1,165.4 | |
| Intersegment | (0.5 | ) | |||||||||
| Total Revenue from Services | $ | 1,164.9 | |||||||||
| KELLY SERVICES, INC. | ||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||
| (UNAUDITED) | ||||||
| (in millions, except per share data) | ||||||
| First Quarter | ||||||
| Adjusted SG&A Expenses: | 2026 | 2025 | ||||
| As reported | $ | 199.3 | $ | 225.7 | ||
| Integration, realignment and restructuring charges(2) | (4.7 | ) | (10.7 | ) | ||
| Transaction costs(3) | (0.8 | ) | (0.3 | ) | ||
| Executive transition costs(4) | (1.5 | ) | (0.3 | ) | ||
| Adjusted SG&A expenses | $ | 192.3 | $ | 214.4 | ||
| First Quarter | |||||
| Adjusted earnings (loss) from operations: | 2026 | 2025 | |||
| As reported | $ | (5.1 | ) | $ | 10.8 |
| Integration, realignment and restructuring charges(2) | 4.7 | 10.7 | |||
| Transaction costs(3) | 0.8 | 0.3 | |||
| Executive transition costs(4) | 1.5 | 0.3 | |||
| Asset impairment charge(5) | 2.2 | — | |||
| Adjusted earnings from operations | $ | 4.1 | $ | 22.1 | |
| First Quarter | |||||
| Adjusted income tax expense (benefit): | 2026 | 2025 | |||
| Income tax expense (benefit) | $ | (0.8 | ) | $ | 1.8 |
| Taxes on integration, realignment and restructuring charges(2) | 1.2 | 2.7 | |||
| Taxes on transaction costs(3) | 0.2 | 0.1 | |||
| Taxes on executive transition costs(4) | 0.4 | 0.1 | |||
| Taxes on asset impairment charge(5) | 0.5 | — | |||
| Adjusted income tax expense (benefit) | $ | 1.5 | $ | 4.7 | |
| First Quarter | |||||
| Adjusted net earnings and earnings per share: | 2026 | 2025 | |||
| Net earnings (loss) | $ | (5.9 | ) | $ | 5.8 |
| Integration, realignment and restructuring charges, net of taxes(2) | 3.5 | 8.0 | |||
| Transaction costs, net of taxes(3) | 0.6 | 0.3 | |||
| Executive transition costs, net of taxes(4) | 1.1 | 0.2 | |||
| Asset impairment charge, net of taxes(5) | 1.7 | — | |||
| Adjusted net earnings | $ | 1.0 | $ | 14.3 | |
| Diluted earnings (loss) per share | $ | (0.17 | ) | $ | 0.16 |
| Adjusted diluted earnings per share | $ | 0.03 | $ | 0.39 | |
Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year. Adjusted diluted earnings per share reflects the impact of potentially dilutive securities.
| KELLY SERVICES, INC. | ||||||
| RECONCILIATION OF NON-GAAP MEASURES | ||||||
| (UNAUDITED) | ||||||
| (in millions) | ||||||
| First Quarter | ||||||
| Total Adjusted EBITDA: | 2026 | 2025 | ||||
| Net earnings (loss) | $ | (5.9 | ) | $ | 5.8 | |
| Other (income) expense, net | 1.6 | 3.1 | ||||
| Income tax expense (benefit) | (0.8 | ) | 1.8 | |||
| Depreciation and amortization(1) | 11.7 | 12.8 | ||||
| EBITDA | 6.6 | 23.5 | ||||
| Integration, realignment and restructuring charges(2) | 4.7 | 10.7 | ||||
| Transaction costs(3) | 0.8 | 0.4 | ||||
| Executive transition costs(4) | 1.5 | 0.3 | ||||
| Asset impairment charge(5) | 2.2 | — | ||||
| Adjusted EBITDA | $ | 15.8 | $ | 34.9 | ||
| Adjusted EBITDA margin | 1.5 | % | 3.0 | % | ||
| First Quarter 2026 | |||||||||
| Business Unit Adjusted EBITDA: | Enterprise Talent Management | Science, Engineering & Technology | Education | ||||||
| Business unit profit (loss) | $ | (1.3 | ) | $ | 12.0 | $ | 12.3 | ||
| Integration, realignment and restructuring charges(2) | — | 0.3 | 0.1 | ||||||
| Asset impairment charge(5) | — | 2.2 | — | ||||||
| Adjusted EBITDA | $ | (1.3 | ) | $ | 14.5 | $ | 12.4 | ||
| Adjusted EBITDA margin | (0.3)% | 5.0 | % | 4.2 | % | ||||
| First Quarter 2025 | |||||||||
| Enterprise Talent Management | Science, Engineering & Technology | Education | |||||||
| Business unit profit (loss) | $ | 6.3 | $ | 13.9 | $ | 19.3 | |||
| Integration, realignment and restructuring charges(2) | 2.7 | 1.1 | — | ||||||
| Adjusted EBITDA | $ | 9.0 | $ | 15.0 | $ | 19.3 | |||
| Adjusted EBITDA margin | 1.7 | % | 4.6 | % | 6.2 | % | |||
| First Quarter | ||||||
| Free cash flows: | 2026 | 2025 | ||||
| Net cash (used in) from operating activities | $ | (25.4 | ) | $ | 23.9 | |
| Capital expenditures | (1.1 | ) | (2.5 | ) | ||
| Free Cash Flow | $ | (26.5 | ) | $ | 21.4 | |
KELLY SERVICES, INC.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Management uses adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and adjusted EBITDA Margin (percent of total GAAP revenue) which Management believes is useful to compare operating performance compared to prior periods and uses it in conjunction with GAAP measures to assess performance. Our calculation of adjusted EBITDA may not be consistent with similarly titled measures of other companies and should be used in conjunction with GAAP measurements. Management also uses year-to-date free cash flow (operating cash flows less capital expenditures) to indicate the change in cash balances arising from operating activities, net of working capital needs and expenditures on fixed assets.
Management believes that the non-GAAP (U.S. Generally Accepted Accounting Principles) information excluding items such as integration, realignment and restructuring charges, transaction costs, executive transition costs and asset impairment charges are useful to understand the Company's fiscal 2026 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.
These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
(1) Represents total company depreciation and amortization of intangibles, including the amortization of hosted software.
(2) Integration, realignment and restructuring charges in the first quarter 2026 and 2025 reflect various initiatives aimed at integrating MRP and other prior acquisitions and further aligning processes and technology across the Company. The costs incurred associated with these initiatives are summarized in the table below:
| First Quarter | ||||
| 2026 | 2025 | |||
| IT-related charges | $ | 3.5 | $ | 5.3 |
| Severance | 0.3 | 4.4 | ||
| Fees and other costs | 0.9 | 1.0 | ||
| Total integration and realignment costs | $ | 4.7 | $ | 10.7 |
(3) Transaction costs in 2026 primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Transaction costs in 2025 include costs incurred directly related to the sale of the EMEA staffing operations, which includes employee termination costs and transition costs.
(4) Executive transition costs in 2026 represent non-recurring expenses primarily associated with our segment leader changes in 2025 and 2026. Executive transition costs in 2025 represent expenses associated with our CEO transition in 2025.
(5) Asset impairment charge in 2026 relates to certain right-of-use assets and reflects the Company’s ongoing realignment of our lease portfolio.
