Kelly Services (NASDAQ: KELYA) posts lower Q2 2026 revenue and earnings
Kelly Services, Inc. reported weaker results for the quarter and first half of 2026 amid softer demand in key staffing markets and Education. Second‑quarter revenue from services was $1,038.2 million, down 5.8% year over year, with declines across Enterprise Talent Management (ETM), Science, Engineering & Technology (SET), and Education. Net earnings for the quarter were $11.4 million versus $19.0 million a year earlier, and diluted EPS was $0.31 compared with $0.52.
For the first six months of 2026, revenue fell to $2,078.9 million and net earnings dropped to $5.5 million from $24.8 million, as gross profit declined 11.6% and the gross margin compressed by 80 basis points. Management reduced total SG&A expenses by 8.7%, including a sharp cut in integration and realignment costs, but earnings from operations still fell to $11.0 million.
Operating cash flow was $23.8 million year‑to‑date, down from $119.3 million. Long‑term debt stood at $78.1 million under the $250.0 million securitization facility, while the $150.0 million revolving credit facility remained undrawn, leaving substantial committed liquidity and a debt‑to‑total‑capital ratio of 7.4%.
Positive
- None.
Negative
- Profitability deteriorated sharply: June year-to-date net earnings fell 77.8% to $5.5 million on revenue down 8.3%, with operating income dropping to $11.0 million.
- Cash generation weakened: net cash from operating activities declined to $23.8 million for the first half of 2026 from $119.3 million in the prior-year period.
Filing Explained
The June 22 amendment extends receivables financing to June 2028; $129.3 million of facility capacity remained available at June 28.
A Form 10-Q is an unaudited quarterly report; this filing covers the quarter ended
At quarter-end, the securitization facility had
The filing estimates
During the quarter, Kelly reacquired 7,505 shares solely for employee tax withholding rather than under its repurchase program, leaving
Key Figures
Q2 2026 Revenue from services: $1,038.2 million
Q2 2026 Net earnings: $11.4 million
June YTD 2026 Revenue from services: $2,078.9 million
+5 more
8 metrics
Q2 2026 Revenue from services
$1,038.2 million
Second quarter 2026 revenue from services; down 5.8% year over year
Q2 2026 Net earnings
$11.4 million
Second quarter 2026 net earnings; down 40.0% from Q2 2025
June YTD 2026 Revenue from services
$2,078.9 million
Revenue for the 26 weeks ended June 28, 2026; down 8.3% year over year
June YTD 2026 Net earnings
$5.5 million
Net earnings for the first half of 2026; 77.8% below prior-year period
Net cash from operating activities
$23.8 million
Cash provided by operating activities for the first six months of 2026
Long-term debt
$78.1 million
Borrowings outstanding under the $250.0 million securitization facility at June 28, 2026
Available revolving credit capacity
$150.0 million
Undrawn five-year revolving credit facility capacity at June 28, 2026
Debt-to-total capital ratio
7.4%
Leverage ratio at the end of the second quarter of 2026
Key Terms
Days sales outstanding, securitization facility, Business unit profit, integration and realignment costs, +1 more
5 terms
Days sales outstanding financial
"Days sales outstanding (“DSO”) represents the number of days that sales remain unpaid"
Days Sales Outstanding (DSO) measures the average number of days a company takes to collect payment after making a sale. It tells investors how quickly sales are turning into cash—shorter DSO means the company gets paid faster and has more cash on hand, while longer DSO suggests cash is tied up with customers and increases the risk of late or lost payments; think of it like how long a borrower takes to repay a loan.
securitization facility financial
"amended the Receivables Purchase Agreement related to its $250.0 million, securitization facility"
A securitization facility is a financing arrangement that lets a company package loans or other receivables into tradable securities and sell them to investors, often with a backstop line or support to smooth timing and credit shortfalls. Think of it as a factory that bundles small loans into saleable blocks while a lender provides a safety net; for investors it matters because it affects the liquidity, credit profile and predictability of payments tied to those bundled assets.
Business unit profit financial
"Business unit profit | $ | 10.8 | $ | 18.2 | $ | 10.7"
integration and realignment costs financial
"integration and realignment costs of $2.9 million and $7.6 million for the second quarter"
EBITDA margin financial
"contingent upon the achievement of a specific EBITDA margin performance goal"
EBITDA margin is the share of each dollar of sales that a company keeps as operating cash profit before interest, taxes, and accounting for equipment wear and long-term investments. Think of it like the cash a store has left from every sale after paying day-to-day running costs but before paying rent, loan interest or replacing old machinery. Investors use it to compare core profitability and operational efficiency across companies by removing financing and accounting differences.
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FAQ
How did Kelly Services (KELYA) perform financially in Q2 2026?
Kelly Services reported Q2 2026 revenue of $1,038.2 million, down 5.8% year over year, and net earnings of $11.4 million, compared with $19.0 million in Q2 2025, as softer staffing demand pressured results.
What were Kelly Services (KELYA) results for the first half of 2026?
For the first six months of 2026, Kelly generated revenue of $2,078.9 million and net earnings of $5.5 million, versus $2,266.7 million and $24.8 million, respectively, in the prior-year period, reflecting lower volumes and margin compression.
How did each segment of Kelly Services (KELYA) perform in Q2 2026?
In Q2 2026, ETM revenue was $485.5 million (down 6.0%), SET $301.6 million (down 6.1%), and Education $253.5 million (down 4.4%), mainly due to reduced staffing volumes, a large contact-center exit, and lower school demand.
What was Kelly Services (KELYA) operating cash flow and debt position in H1 2026?
Kelly generated $23.8 million of net cash from operating activities in the first half of 2026 and had $78.1 million of long-term borrowings under its $250.0 million securitization facility, with the $150.0 million revolver fully available.
How has Kelly Services (KELYA) managed SG&A and restructuring costs in 2026?
Total SG&A fell 8.7% year-to-date to $395.2 million, and integration and realignment charges decreased to $7.6 million from $16.8 million, as the company continued structural efficiency initiatives and limited new restructuring activity.
What dividends did Kelly Services (KELYA) pay and declare in 2026?
Kelly paid $0.075 per share in each of the first two quarters of 2026 and, on August 4, 2026, its board declared another $0.075 per share dividend payable September 2, 2026 to stockholders of record on August 19, 2026.
Did Kelly Services (KELYA) repurchase any shares in Q2 2026?
During Q2 2026, Kelly reacquired 7,505 shares of common stock at an average price of $9.51 per share solely to cover employee tax withholdings; no shares were repurchased under the board-authorized $50.0 million buyback program.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 2026
OR
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-1088
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(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
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(Address of principal executive offices) (Zip Code)
(248 ) 362-4444
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(Registrant’s telephone number, including area code)
No Change
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(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
At July 27, 2026, 31,435,902 shares of Class A and 3,296,041 shares of Class B common stock of the Registrant were outstanding.
2
KELLY SERVICES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION | 4 | ||||
Item 1. Financial Statements (unaudited). | 4 | ||||
Consolidated Statements of Earnings | 4 | ||||
Consolidated Statements of Comprehensive Income (Loss) | 5 | ||||
Consolidated Balance Sheets | 6 | ||||
Consolidated Statements of Stockholders' Equity | 7 | ||||
Consolidated Statements of Cash Flows | 8 | ||||
Notes to Consolidated Financial Statements | 10 | ||||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. | 24 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 34 | ||||
Item 4. Controls and Procedures. | 34 | ||||
PART II. OTHER INFORMATION | 34 | ||||
Item 1. Legal Proceedings. | 34 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 35 | ||||
Item 5. Other Information. | 35 | ||||
Item 6. Exhibits. | 36 | ||||
SIGNATURES | 37 | ||||
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(in millions, except per share data)
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||
| June 28, 2026 | June 29, 2025 | June 28, 2026 | June 29, 2025 | |||||||||||
| Revenue from services | $ | $ | $ | $ | ||||||||||
| Cost of services | ||||||||||||||
| Gross profit | ||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||
| Asset impairment charge | ||||||||||||||
| Gain on sale of EMEA staffing operations | ( | ( | ||||||||||||
| Earnings from operations | ||||||||||||||
| Other income (expense), net | ( | ( | ( | ( | ||||||||||
| Earnings before taxes | ||||||||||||||
| Income tax expense | ||||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||
| Average shares outstanding: | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
See accompanying unaudited Notes to Consolidated Financial Statements.
4
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||
| June 28, 2026 | June 29, 2025 | June 28, 2026 | June 29, 2025 | |||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||
Foreign currency translation adjustments, net of tax expense of $ | ( | |||||||||||||
| Less: Reclassification adjustments included in net earnings | ||||||||||||||
| Foreign currency translation adjustments | ( | |||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||
See accompanying unaudited Notes to Consolidated Financial Statements.
5
KELLY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions)
| June 28, 2026 | December 28, 2025 | |||||||
| Current Assets | ||||||||
| Cash and equivalents | $ | $ | ||||||
Trade accounts receivable, less allowances of $ | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent Assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred taxes | ||||||||
| Retirement plan assets | ||||||||
| Goodwill | ||||||||
| Intangibles, net | ||||||||
| Other assets | ||||||||
| Total noncurrent assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Accrued payroll and related taxes | ||||||||
| Accrued workers' compensation and other claims | ||||||||
| Income and other taxes | ||||||||
| Total current liabilities | ||||||||
| Noncurrent Liabilities | ||||||||
| Long-term debt | ||||||||
| Operating lease liabilities | ||||||||
| Accrued workers' compensation and other claims | ||||||||
| Accrued retirement benefits | ||||||||
| Other long-term liabilities | ||||||||
| Total noncurrent liabilities | ||||||||
| Commitments and contingencies (see Contingencies footnote) | ||||||||
| Stockholders' Equity | ||||||||
Capital stock, $ | ||||||||
Class A common stock, | ||||||||
Class B common stock, | ||||||||
| Treasury stock, at cost | ||||||||
Class A common stock, | ( | ( | ||||||
| Class B common stock | ( | ( | ||||||
| Paid-in capital | ||||||||
| Earnings invested in the business | ||||||||
| Accumulated other comprehensive income (loss) | ( | |||||||
| Total stockholders' equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See accompanying unaudited Notes to Consolidated Financial Statements.
6
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in millions)
| Earnings Invested in the Business | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in Capital | ||||||||||||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||||||||||||
| Balance at December 28, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||
| Net issuance of stock awards | — | — | — | ( | — | — | ||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
| Balance at March 29, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Net issuance of stock awards | — | — | — | — | — | |||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||
| Balance at June 28, 2026 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Earnings Invested in the Business | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in Capital | ||||||||||||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||||||||||||
| Balance at December 29, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Net issuance of stock awards | — | — | — | ( | — | — | ||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||
| Balance at March 30, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Net issuance of stock awards | — | — | — | — | — | |||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ||||||||||||||||||||
| Dividends | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | ||||||||||||||||||||
| Balance at June 29, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
See accompanying unaudited Notes to Consolidated Financial Statements.
7
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
| 26 Weeks Ended | ||||||||
| June 28, 2026 | June 29, 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings | $ | $ | ||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | ||||||||
| Asset impairment charge | ||||||||
| Deferred income taxes | ( | ( | ||||||
| Depreciation and amortization | ||||||||
| Operating lease asset amortization | ||||||||
| Provision for credit losses and sales allowances | ||||||||
| Stock-based compensation | ||||||||
| Gain on sale of EMEA staffing operations | ( | |||||||
| Other, net | ( | |||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | |||||||
| Other assets | ( | |||||||
| Accounts payable | ( | |||||||
| Other liabilities | ( | ( | ||||||
| Net cash from operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ( | ||||||
| Proceeds from sale of EMEA staffing operations, net of cash disposed | ||||||||
| Proceeds from sale of PersolKelly investment | ||||||||
| Proceeds from company-owned life insurance | ||||||||
| Other investing activities | ( | |||||||
| Net cash from investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term debt | ||||||||
| Payments on long-term debt | ( | ( | ||||||
| Dividend payments | ( | ( | ||||||
| Payments of tax withholding for stock awards | ( | ( | ||||||
| Other financing activities | ( | ( | ||||||
| Net cash used in financing activities | ( | ( | ||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | ( | |||||||
| Net change in cash, cash equivalents and restricted cash | ( | ( | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
Cash, cash equivalents and restricted cash at end of period (1) | $ | $ | ||||||
8
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
(in millions)
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported in the Company's consolidated balance sheets:
| 26 Weeks Ended | ||||||||
| June 28, 2026 | June 29, 2025 | |||||||
| Reconciliation of cash, cash equivalents and restricted cash: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash included in prepaid expenses and other current assets | ||||||||
| Noncurrent assets: | ||||||||
| Restricted cash included in other assets | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
See accompanying unaudited Notes to Consolidated Financial Statements.
9
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In millions, except share and per share data)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the “Company,” “Kelly,” “we” or “us”) have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 28, 2025, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2026 (the 2025 consolidated financial statements). There were no changes in accounting policies from those disclosed in the Form 10-K. The Company’s second fiscal quarter ended on June 28, 2026 and June 29, 2025, each of which contained 13 weeks (“second quarter”). The corresponding June year-to-date periods for 2026 and 2025 each contained 26 weeks (“June year-to-date”).
Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year's presentation, as discussed in the Revenue and Segment Disclosures footnotes. All amounts are reported in millions except for share and per share data.
2. Revenue
Revenue Disaggregated by Service Type
Kelly has three operating segments: Enterprise Talent Management (“ETM”), Science, Engineering & Technology (“SET”), and Education. In the first quarter of 2026, the Company aligned government customers from the ETM segment to the SET segment to better position the services within the Company’s segment structure (see Segment Disclosures footnote). The Company's segments deliver talent through staffing services, permanent placement or outcome-based services. The Company's ETM segment also delivers talent solutions including managed service provider (“MSP”), payroll process outsourcing (“PPO”), and recruitment process outsourcing (“RPO”). The 2025 ETM and SET segment information has been recast to conform to the new alignment.
The following tables present the Company's segment revenues disaggregated by service type:
| Second Quarter 2026 | |||||||||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | $ | ||||||||||||
| Science, Engineering & Technology | |||||||||||||||||
| Education | |||||||||||||||||
| Total Segment Revenue | $ | $ | $ | $ | $ | ||||||||||||
| Intersegment | ( | ||||||||||||||||
| Total Revenue from Services | $ | ||||||||||||||||
10
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
| Second Quarter 2025 | |||||||||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | $ | ||||||||||||
| Science, Engineering & Technology | |||||||||||||||||
| Education | |||||||||||||||||
| Total Segment Revenue | $ | $ | $ | $ | $ | ||||||||||||
| Intersegment | ( | ||||||||||||||||
| Total Revenue from Services | $ | ||||||||||||||||
| June Year-to-Date 2026 | |||||||||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | $ | ||||||||||||
| Science, Engineering & Technology | |||||||||||||||||
| Education | |||||||||||||||||
| Total Segment Revenue | $ | $ | $ | $ | $ | ||||||||||||
| Intersegment | ( | ||||||||||||||||
| Total Revenue from Services | $ | ||||||||||||||||
| June Year-to-Date 2025 | |||||||||||||||||
| Staffing Services | Outcome-based Services | Talent Solutions | Permanent Placement | Total | |||||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | $ | ||||||||||||
| Science, Engineering & Technology | |||||||||||||||||
| Education | |||||||||||||||||
| Total Segment Revenue | $ | $ | $ | $ | $ | ||||||||||||
| Intersegment | ( | ||||||||||||||||
| Total Revenue from Services | $ | ||||||||||||||||
11
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Revenue Disaggregated by Geography
The Company's operations are subject to different economic and regulatory environments depending on geographic location. The Company's Education segment operates in the Americas region, the SET segment operates in the Americas and Europe regions, and the ETM segment operates in the Americas, Europe and Asia-Pacific regions.
The table below presents the Company's revenues disaggregated by geography:
| Second Quarter | June Year-to-Date | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Americas | ||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||
| Other | ||||||||||||||
| Total Americas Region | ||||||||||||||
| Total Europe Region | ||||||||||||||
| Total Asia-Pacific Region | ||||||||||||||
| Total Kelly Services, Inc. | $ | $ | $ | $ | ||||||||||
3. Credit Losses
The rollforward of the Company's allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheets, is as follows:
| June Year-to-Date | ||||||||
| 2026 | 2025 | |||||||
| Allowance for credit losses: | ||||||||
| Beginning balance | $ | $ | ||||||
| Current period provision | ||||||||
| Currency exchange effects | ||||||||
| Write-offs | ( | ( | ||||||
| Ending balance | $ | $ | ||||||
Write-offs are presented net of recoveries, which were not material for second quarter-end 2026 or 2025. No
12
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
4. Fair Value Measurements
Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes approximate their fair values due to the short-term maturities of these assets and liabilities. Long-term debt is related to revolving credit agreements, and their carrying values approximate fair value as the interest rates are variable and reflect current market rates.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present assets and liabilities measured at fair value on a recurring basis as of second quarter-end 2026 and year-end 2025 in the consolidated balance sheets by fair value hierarchy level, as described below.
Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. There were no transfers between Level 1, Level 2, and Level 3 assets or liabilities in the second quarter of 2026 or 2025.
| As of Second Quarter-End 2026 | ||||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||
| EMEA staffing indemnification | $ | ( | $ | $ | $ | ( | ||||||||
| Brazil indemnification | ( | ( | ||||||||||||
| Total liabilities at fair value | $ | ( | $ | $ | $ | ( | ||||||||
| As of Year-End 2025 | ||||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||
| EMEA staffing indemnification | $ | ( | $ | $ | $ | ( | ||||||||
| Brazil indemnification | ( | ( | ||||||||||||
| Total liabilities at fair value | $ | ( | $ | $ | $ | ( | ||||||||
Money Market Funds
Money market funds represent investments in money market funds that hold government securities, all of which are restricted as of second quarter-end 2026 and year-end 2025, and are included in other assets in the consolidated balance sheets. These restricted funds represent cash balances that are required to be maintained to fund disability claims in California. The valuations of money market funds are based on quoted market prices of those accounts as of the respective period end.
Indemnification Liabilities
As of second quarter-end 2026, the Company’s indemnification liabilities totaled $2.3 million, consisting of $1.4 million related to the January 2024 sale of the EMEA staffing operations, with $0.1 million in accounts payable and accrued liabilities and $1.3 million in other long-term liabilities, and $0.9 million related to the 2020 sale of the Brazil operations included in other long-term liabilities in the consolidated balance sheets. These balances are unchanged from year-end 2025. No payments were made under either indemnification agreement during June year-to-date 2026, and the impact of remeasurement adjustments and foreign currency exchange rate fluctuations was not significant. These liabilities are classified as Level 3 and remeasured on a recurring basis using discounted probability-weighted cash flows, with changes recognized in earnings.
13
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Equity Investment Without Readily Determinable Fair Value
As of second quarter-end 2026, the Company holds an equity investment without a readily determinable fair value, measured under the measurement alternative, with a carrying value of $3.5 million included in other assets in the consolidated balance sheets. No impairment indicators were identified and no observable price changes occurred during the second quarter of 2026.
5. Integration, Realignment and Restructuring
2026 Actions
As a continuation of the efforts announced in 2025, the Company incurred integration and realignment costs of $2.9 million and $7.6 million for the second quarter and June year-to-date 2026, respectively. For the second quarter of 2026, integration and realignment costs consisted of $1.6 million of IT-related charges, $0.2 million of severance and $1.1 million of fees and other costs to execute the initiatives. For June year-to-date 2026, integration and realignment costs consisted of $5.1 million of IT-related charges, $0.5 million of severance and $2.0 million of fees and other costs to execute the initiatives. The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits. The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the tables below.
| Second Quarter 2026 | ||||||||||||||
| IT-related Charges | Severance | Fees and Other | Total | |||||||||||
| Science, Engineering & Technology | $ | $ | $ | $ | ||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
| June Year-to-Date 2026 | ||||||||||||||
| IT-related Charges | Severance | Fees and Other | Total | |||||||||||
| Science, Engineering & Technology | $ | $ | $ | $ | ||||||||||
| Education | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
Additionally, in the first quarter of 2026, the Company recognized an impairment charge of $2.2 million for certain right-of-use assets related to the Company’s ongoing realignment of its lease portfolio and was recorded in the asset impairment charge in the consolidated statements of earnings.
2025 Actions
In the first quarter of 2025, the Company launched various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments, and further aligning processes and technology across the Company. The costs incurred related to these integration and realignment initiatives totaled $6.1 million and $16.8 million during the second quarter and June year-to-date 2025, respectively. For the second quarter of 2025, integration and realignment costs consisted of $1.7 million of IT-related charges, $2.1 million of severance and $2.3 million of fees and other costs to execute the initiatives. For June year-to-date 2025, integration and realignment costs consisted of $7.0 million of IT-related charges, $6.5 million of severance and $3.3 million of fees and other costs to execute the initiatives. The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits. The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the tables below.
14
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
| Second Quarter 2025 | ||||||||||||||
| IT-related Charges | Severance | Fees and Other | Total | |||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | ||||||||||
| Science, Engineering & Technology | ||||||||||||||
| Education | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
| June Year-to-Date 2025 | ||||||||||||||
| IT-related Charges | Severance | Fees and Other | Total | |||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | ||||||||||
| Science, Engineering & Technology | ||||||||||||||
| Education | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
6. Intangibles
During the second quarter of 2026, as part of ongoing integration and realignment efforts, the Company reassessed and reduced the remaining useful life of certain finite-lived intangible assets, resulting in accelerated amortization expense accounted for prospectively over the revised estimated remaining useful life. Accelerated amortization was immaterial for the second quarter of 2026. Accelerated amortization expense of $6.8 million is estimated to be recognized during the remainder of 2026, resulting in total amortization expense of $36.2 million for 2026. The revised annual intangible amortization expense is expected to be $33.9 million in 2027, $32.3 million in 2028, $28.8 million in 2029, and $25.4 million in 2030.
7. Debt
Revolving Credit Facility
The Company has a $150.0 million, five-year revolving credit facility (the “Facility”), with a termination date of May 29, 2029. The Facility is available to be used to fund working capital, acquisitions and general corporate needs. The Facility is secured by certain assets of the Company, excluding U.S. trade accounts receivable.
At the end of the second quarter of 2026 and at year-end 2025, there were no 150.0 20.0 basis points at the end of the second quarter of 2026 and 15.0 basis points at year-end 2025. The Facility’s financial covenants and restrictions are described below, all of which were met at the end of the second quarter of 2026:
•The Company must maintain a certain minimum interest coverage ratio of earnings before interest, taxes, depreciation, amortization (“EBITDA”) and certain cash and non-cash charges that are non-recurring in nature to interest expense as of the end of any fiscal quarter.
•The Company must maintain a certain maximum ratio of total indebtedness to the sum of net worth and total indebtedness at all times.
•Dividends, stock buybacks and similar transactions are limited to certain maximum amounts.
•The Company must adhere to other operating restrictions relating to the conduct of business, such as certain limitations on asset sales and the type and scope of investments.
15
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Securitization Facility
On June 22, 2026, the Company and Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company (the “Receivables Entity”), amended the Receivables Purchase Agreement related to its $250.0 million, securitization facility (the “Securitization Facility”). The amendment (i) extended the maturity date to June 22, 2028, and (ii) changed certain of the terms and conditions.
Under the Securitization Facility, the Company will sell certain trade receivables and related rights (“Receivables”), on a revolving basis, to the Receivables Entity. The Receivables Entity may from time to time sell an undivided variable percentage ownership interest in the Receivables. The Securitization Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, also allows for the issuance of standby letters of credit (“SBLC”) and contains certain restrictions based on the performance of the Receivables.
At the end of the second quarter of 2026, the Securitization Facility had $78.1 million of long-term borrowings, SBLCs of $42.6 million related to workers’ compensation and a remaining borrowing capacity of $129.3 million. The rate for these borrowings includes the adjusted daily SOFR and a 1.10 % utilization rate on the amount of the Company's borrowings. The rate for the SBLCs of 1.10 % represents a utilization rate on the outstanding balance. In addition, the Company pays a commitment fee on the unused capacity of 35.0 basis points when usage is greater than 50 % of the purchase limit or 40.0 basis points when usage is equal to or less than 50 % of the purchase limit. At year-end 2025, the Securitization Facility had $101.9 million of long-term borrowings, SBLCs of $42.6 million related to workers’ compensation and a remaining borrowing capacity of $105.5 million. The rate for these borrowings also included an additional 0.10 % SOFR margin. The Company paid a commitment fee of 40.0 basis points on the unused capacity in 2025.
The Receivables Entity’s sole business consists of the purchase or acceptance through capital contributions of trade accounts receivable and related rights from the Company. As described above, the Receivables Entity may retransfer these receivables or grant a security interest in those receivables under the terms and conditions of the Receivables Purchase Agreement. The Receivables Entity is a separate legal entity with its own creditors who would be entitled, if it were ever liquidated, to be satisfied out of its assets prior to any assets or value in the Receivables Entity becoming available to its equity holders, the Company. The assets of the Receivables Entity are not available to pay creditors of the Company or any of its other subsidiaries, until the creditors of the Receivables Entity have been satisfied. The assets and liabilities of the Receivables Entity are included in the consolidated financial statements of the Company.
Local Credit Facilities
The Company had total unsecured, uncommitted short-term local credit facilities of $3.1 million at the end of the second quarter of 2026. The Company had no
8. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) by component, net of tax, for the second quarter and June year-to-date of 2026 and 2025 are included in the table below.
| Second Quarter | June Year-to-Date | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Foreign currency translation adjustments: | ||||||||||||||
| Beginning balance | $ | ( | $ | ( | $ | $ | ( | |||||||
| Other comprehensive income (loss) before reclassifications | ( | |||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||||
| Net current-period other comprehensive income (loss) | ( | |||||||||||||
| Ending balance | ( | ( | ( | ( | ||||||||||
| Total accumulated other comprehensive income (loss) | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
16
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
9. Earnings Per Share
The reconciliation of basic and diluted earnings per share on common stock for the second quarter and June year-to-date 2026 and 2025 is as follows:
| Second Quarter | June Year-to-Date | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||
| Less: earnings allocated to participating securities | ( | ( | ( | ( | ||||||||||
| Net earnings available to common shareholders | $ | $ | $ | $ | ||||||||||
| Average common shares outstanding (millions): | ||||||||||||||
| Basic | ||||||||||||||
| Dilutive share awards | ||||||||||||||
| Diluted | ||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||
Dilutive share awards are related to deferred common stock related to the non-employee directors deferred compensation plan and performance shares for the second quarter and June year-to-date 2026 and 2025 (see Stock-Based Compensation footnote for a description of performance shares). Dividends paid per share for Class A and Class B common stock were $0.075 0.15
In November 2024, the Company's board of directors authorized a $50.0 million Class A share repurchase program that expires on December 2, 2026. During the second quarter and June year-to-date 2026 and 2025, the Company did not 30.0 million remained available under the share repurchase program as of second quarter-end 2026.
10. Stock-Based Compensation
For the second quarter of 2026, the Company recognized stock compensation expense of $3.4 million and a related tax benefit of $0.4 million. For the second quarter of 2025, the Company recognized stock compensation expense of $3.5 million and a related tax benefit of $0.6 million. For June year-to-date 2026, the Company recognized stock compensation expense of $6.8 million and a related tax benefit of $0.5 million. For June year-to-date 2025, the Company recognized stock compensation expense of $7.2 million and a related tax benefit of $0.9 million.
Restricted Stock
A summary of the status of nonvested restricted stock as of second quarter-end 2026 and the year-to-date changes is presented as follows below (in thousands of shares except per share data).
| Restricted Stock | ||||||||
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Nonvested at year-end 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | |||||||
| Forfeited | ( | |||||||
| Nonvested at second quarter-end 2026 | $ | |||||||
17
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Performance Shares
2026 Grant
During June year-to-date 2026, the Company granted performance share awards associated with the Company’s Class A common stock to certain senior officers. The payment of performance share awards is contingent upon the achievement of a specific EBITDA margin performance goal with a relative revenue growth modifier over a stated period of time. The maximum number of performance shares that may be earned is 200 % of the target shares originally granted. These awards have three one-year performance periods: 2026, 2027 and 2028, with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods. Earned shares during each performance period will cliff vest in February 2029 after approval of the financial results by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares.
A summary of the status of all nonvested performance shares at target as of second quarter-end 2026 and the year-to-date changes is presented as follows below (in thousands of shares except per share data). The vesting adjustment in the table below represents a portion of the 2023 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.
| Performance Shares | ||||||||||||||||||||
| Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||
| Nonvested at year-end 2025 | $ | |||||||||||||||||||
| Granted | ||||||||||||||||||||
| Vested | ( | |||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||
| Vesting adjustment | ( | |||||||||||||||||||
| Nonvested at second quarter-end 2026 | $ | |||||||||||||||||||
11. Other Income (Expense), Net
Included in other income (expense), net are the following:
| Second Quarter | June Year-to-Date | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Interest income | $ | $ | $ | $ | ||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||
| Other | ( | ( | ||||||||||||
| Other income (expense), net | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
18
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
12. Income Taxes
Income tax expense was $3.0 million for the second quarter of 2026 and income tax expense was $0.9 million for the second quarter of 2025. Income tax expense was $2.2 million for June year-to-date 2026 and income tax expense was $2.7 million for June year-to-date 2025. The variance was driven by changes in pretax income and partially offset by the benefit of work opportunity tax credits in the first half of 2025.
As of year-end 2025, the Company has recorded valuation allowances against its U.S. general business credit carryforwards, foreign tax credit carryforwards, certain loss carryforwards, and certain future deductible items. The Company will continue to evaluate the need for valuation allowances against deferred tax assets on a quarterly basis and may adjust the allowance as circumstances change.
The work opportunity credit program is a temporary provision in the U.S. tax law and has expired for employees hired after 2025. While the work opportunity credit has routinely been extended, it is uncertain whether it will again be extended. In the event the program is not renewed, the Company will continue to receive credits for qualified employees hired prior to 2026.
13. Contingencies
The Company is continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of its business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes, and tax-related matters, which could result in a material adverse outcome.
The Company records accruals for loss contingencies when the Company believes it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet. At second quarter-end 2026 and year-end 2025, the gross accrual for litigation costs amounted to $1.6 million and $2.8 million, respectively.
The Company maintains insurance coverage which may cover certain losses. When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet. At second quarter-end 2026 and year-end 2025, there were no
The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is zero to $1.1 million as of second quarter-end 2026. This range includes matters where a liability has been accrued but it is reasonably possible that the ultimate loss may exceed the amount accrued and for matters where a loss is believed to be reasonably possible, but a liability has not been accrued. The aggregate range only represents matters in which the Company is currently able to estimate a range of loss and does not represent the maximum loss exposure. The estimated range is subject to significant judgment and a variety of assumptions and only based upon currently available information. For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss.
While the ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of any such proceedings will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.
14. Segment Disclosures
The Company’s operating segments, which also represent its reportable segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker (“CODM”, the Company’s CEO) to determine resource allocation and assess performance. The Company’s three reportable segments: (1) ETM, (2) SET and (3) Education, reflect the specialty services the Company provides to customers and represent how the business is
19
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
organized internally. Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.
In the first quarter of 2026, the Company aligned government customers from the ETM segment to the SET segment to better position the services within the Company’s segment structure. The 2025 ETM and SET segment information has been recast to conform to the new alignment.
The following tables present information about the reported revenue from services of the Company by reportable segment, along with a reconciliation to earnings before taxes, for the second quarter and June year-to-date 2026 and 2025. Asset information by reportable segment is not presented since the Company does not produce such information internally nor does it use such information to manage its business.
| Second Quarter 2026 | |||||||||||||||||
| ETM | SET | Education | Inter-Segment | Total | |||||||||||||
| Revenue from services | $ | $ | $ | $ | ( | $ | |||||||||||
Cost of services(1) | ( | ||||||||||||||||
| Gross profit | |||||||||||||||||
Direct salaries(2) | |||||||||||||||||
Other segment expenses(3) | |||||||||||||||||
| SG&A expenses | |||||||||||||||||
| Business unit profit | $ | $ | $ | $ | $ | ||||||||||||
| Corporate SG&A | ( | ||||||||||||||||
Depreciation and amortization(4) | ( | ||||||||||||||||
| Consolidated earnings from operations | |||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Earnings before taxes | $ | ||||||||||||||||
| June Year-to-Date 2026 | |||||||||||||||||
| ETM | SET | Education | Inter-Segment | Total | |||||||||||||
| Revenue from services | $ | $ | $ | $ | ( | $ | |||||||||||
Cost of services(1) | ( | ||||||||||||||||
| Gross profit | |||||||||||||||||
Direct salaries(2) | |||||||||||||||||
Other segment expenses(3) | |||||||||||||||||
| SG&A expenses | |||||||||||||||||
| Asset impairment charge | |||||||||||||||||
| Business unit profit | $ | $ | $ | $ | $ | ||||||||||||
| Corporate SG&A | ( | ||||||||||||||||
Depreciation and amortization(4) | ( | ||||||||||||||||
| Consolidated earnings from operations | |||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Earnings before taxes | $ | ||||||||||||||||
20
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
| Second Quarter 2025 | |||||||||||||||||
| ETM | SET | Education | Inter-Segment | Total | |||||||||||||
| Revenue from services | $ | $ | $ | $ | ( | $ | |||||||||||
Cost of services(1) | ( | ||||||||||||||||
| Gross profit | |||||||||||||||||
Direct salaries(2) | |||||||||||||||||
Other segment expenses(3) | |||||||||||||||||
| SG&A expenses | |||||||||||||||||
| Business unit profit | $ | $ | $ | $ | $ | ||||||||||||
| Corporate SG&A | ( | ||||||||||||||||
| Gain on sale of EMEA staffing operations | |||||||||||||||||
Depreciation and amortization(4) | ( | ||||||||||||||||
| Consolidated earnings from operations | |||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Earnings before taxes | $ | ||||||||||||||||
| June Year-to-Date 2025 | |||||||||||||||||
| ETM | SET | Education | Inter-Segment | Total | |||||||||||||
| Revenue from services | $ | $ | $ | $ | ( | $ | |||||||||||
Cost of services(1) | ( | ||||||||||||||||
| Gross profit | |||||||||||||||||
Direct salaries(2) | |||||||||||||||||
Other segment expenses(3) | |||||||||||||||||
| SG&A expenses | |||||||||||||||||
| Business unit profit | $ | $ | $ | $ | $ | ||||||||||||
| Corporate SG&A | ( | ||||||||||||||||
| Gain on sale of EMEA staffing operations | |||||||||||||||||
Depreciation and amortization(4) | ( | ||||||||||||||||
| Consolidated earnings from operations | |||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Earnings before taxes | $ | ||||||||||||||||
(1) Cost of services represent those costs directly associated with the earning of revenue. The primary examples of these types of costs are temporary employee wages, along with other employee-related costs, including associated payroll taxes, temporary employee benefits, such as service bonus, holiday pay, health insurance and workers’ compensation costs. These costs differ fundamentally from SG&A expenses in that they arise specifically from the action of providing the Company's services to customers whereas SG&A costs are incurred regardless of whether or not the Company places temporary employees with the Company's customers.
(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery. These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees.
(3) Other segment expenses includes shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs and operational software licenses.
21
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
(4) Represents total company depreciation and amortization of intangibles, including the amortization of hosted software.
Depreciation and amortization expense is included in SG&A expenses in the consolidated statements of earnings. Depreciation and amortization expense amounts below include amortization of implementation costs for hosted software, which are excluded in the presentation of depreciation and amortization in the consolidated statements of cash flows. The depreciation and amortization amounts by segment are as follows:
| Second Quarter | June Year-to-Date | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Depreciation and amortization: | ||||||||||||||
| Enterprise Talent Management | $ | $ | $ | $ | ||||||||||
| Science, Engineering & Technology | ||||||||||||||
| Education | ||||||||||||||
15. New Accounting Pronouncements
Recently Adopted
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU allows for a practical expedient to be used when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606. The new guidance was effective for annual periods beginning after December 15, 2025, with early adoption permitted. This ASU applies to trade accounts receivable and could impact the calculation of the allowance for uncollectible accounts receivable. The Company adopted this guidance in the first quarter of 2026 and the adoption did not have a material impact to the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued ASU 2025-11, Interim Reporting, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendment specifies when an entity is subject to ASC 270, and addresses the form and content of financial statements and interim disclosure requirements. The ASU clarifies that an entity must disclose events since the end of the last annual reporting period that have a material impact. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company does not expect this update to have a material impact to the Company's consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other - Internal-Use Software (Subtopic 350-40). This ASU simplifies and modernizes guidance for internal-use software by clarifying capitalization thresholds, improving comparability and reducing judgment diversity across all software development methodologies. This ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires additional information about certain expense categories in the notes to the financial statements. The new guidance will be effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and related disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies several disclosure and presentation requirements in the FASB Accounting Standard Codification to align them with SEC regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with
22
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
early adoption permitted by June 30, 2027. For any amendments in which the SEC has not yet removed the applicable requirement from its regulations by June 30, 2027, the pending content of the related amendment in the FASB codification will not be effective. The Company does not expect this update to have a material impact to the Company’s consolidated financial statements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact to the Company's consolidated financial statements and related disclosures.
16. Related Party Transactions
Hunt Equity Opportunities, LLC (“Hunt Equity”) controls approximately 92.2 % of the outstanding shares of Kelly Class B common stock as of May 19, 2026. There were no material transactions between the Company and Hunt Equity during the second quarter of 2026.
17. Subsequent Event
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Executive Overview
In the second quarter, we delivered sequential improvement in each business across Kelly. The discrete impact of demand reductions among three large ETM customers and the U.S. federal government, which we initially disclosed in the second quarter of 2025, is lessening but remains visible in our results. Trends among these customers who continue to do business with Kelly remained stable on a sequential basis.
In ETM, staffing revenue excluding the discrete impacts returned to positive year-over-year growth driven by broad-based demand across customers and verticals, Business Process Outsourcing excluding contact center solutions also pivoted to growth in the quarter and Talent Solutions delivered another quarter of revenue growth as new customer wins came online and demand continued to increase. In SET, trends in each specialty vertical improved compared to the first quarter, with the Telecom specialty delivering another quarter of year-over-year growth. In Education, results improved modestly on a sequential basis while we continued to experience pressure from prior year delayed contract decisions and enrollment declines. In each business, we continued to align resources with demand and maintained a disciplined approach to expense management overall as part of our ongoing focus on efficiency.
Our ability to deliver sequential improvement across the enterprise while driving progress on our strategic initiatives in the second quarter reflects our enhanced focus on execution and operational discipline. Our progress will position us to capitalize on improving demand trends, and driving profitable growth and long-term value creation.
Financial Measures
Reported percentage changes are computed based on millions. Prior year percentage changes were computed based on actual amounts in thousands. Prior year percentage changes have been recast to conform to the new presentation, which is calculated based on millions. All dollar amounts are presented in millions, except for per share data.
Days sales outstanding (“DSO”) represents the number of days that sales remain unpaid for the period being reported. DSO is calculated by dividing average net sales per day (based on a rolling three-month period) into trade accounts receivable, net of allowances at period end. Where secondary supplier revenues are recorded on a net basis (net of secondary supplier expense), secondary supplier revenue is included in the daily sales calculation in order to properly reflect the gross revenue amounts billed to the customer.
NM (not meaningful) in the following tables is used in place of percentage changes where: the change is in excess of 500%, the change involves a comparison between earnings and loss amounts, or the comparison amount is zero.
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Results of Operations
Total Company
(in millions)
| Second Quarter | June Year-to-Date | |||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||
| Revenue from services | $ | 1,038.2 | $ | 1,101.8 | (5.8)% | $ | 2,078.9 | $ | 2,266.7 | (8.3)% | ||||||||||
| Gross profit | 212.0 | 225.5 | (6.0) | 408.4 | 462.0 | (11.6) | ||||||||||||||
| SG&A expenses excluding integration, realignment, restructuring charges, and depreciation and amortization | 181.2 | 188.8 | (4.0) | 364.1 | 391.0 | (6.9) | ||||||||||||||
| Integration, realignment and restructuring charges | 2.9 | 6.0 | (51.7) | 7.6 | 16.7 | (54.5) | ||||||||||||||
| Total SG&A expenses excluding depreciation and amortization | 184.1 | 194.8 | (5.5) | 371.7 | 407.7 | (8.8) | ||||||||||||||
| Depreciation and amortization | 11.8 | 12.5 | (5.6) | 23.5 | 25.3 | (7.1) | ||||||||||||||
| Total SG&A expenses | 195.9 | 207.3 | (5.5) | 395.2 | 433.0 | (8.7) | ||||||||||||||
| Gain on sale of EMEA staffing operations | — | (4.0) | NM | — | (4.0) | NM | ||||||||||||||
| Asset impairment charge | — | — | NM | 2.2 | — | NM | ||||||||||||||
| Earnings from operations | 16.1 | 22.2 | (27.5) | 11.0 | 33.0 | (66.7) | ||||||||||||||
| Other income (expense), net | (1.7) | (2.3) | 26.1 | (3.3) | (5.5) | 40.0 | ||||||||||||||
| Earnings before taxes | 14.4 | 19.9 | (27.6) | 7.7 | 27.5 | (72.0) | ||||||||||||||
| Income tax expense | 3.0 | 0.9 | 233.3 | 2.2 | 2.7 | (18.5) | ||||||||||||||
| Net earnings | $ | 11.4 | $ | 19.0 | (40.0)% | $ | 5.5 | $ | 24.8 | (77.8)% | ||||||||||
| Gross profit rate | 20.4 | % | 20.5 | % | (0.1) | pts. | 19.6 | % | 20.4 | % | (0.8) | pts. | ||||||||
Second Quarter Results
Revenue from services in the second quarter decreased 5.8% year-over-year with decreases in the ETM, SET, and Education segments. Compared to the second quarter of 2025, the decrease is primarily due to declines in revenue from staffing services of 9.5%, partially offset by increases in revenue from talent solutions of 6.3% from the prior year.
Gross profit decreased 6.0% year-over-year, primarily driven by lower revenue volume. The gross profit rate decreased 10 basis points (“bps”) to 20.4%, primarily due to changes in business mix, partially offset by lower employee-related costs. The gross profit rate decreased in the SET and Education segments and increased in the ETM segment.
Total SG&A expenses decreased 5.5% year-over-year, primarily due to expense management actions to reduce volume-related costs, and reflects the benefits of the ongoing structural actions including integration and realignment efforts. SG&A expenses in the second quarter of 2026 include $2.9 million of integration and realignment costs related to continuation of ongoing initiatives and $0.3 million of executive transition charges. Included in SG&A expenses in the second quarter of 2025 were $6.0 million of integration and realignment costs related to initiatives to integrate MRP and align our processes, $0.2 million of executive transition charges, and $0.1 million of transaction-related costs arising from the sale of our EMEA staffing operations. Excluding integration and realignment, transaction, executive transition charges, and depreciation and amortization, SG&A expenses decreased 4.0% from the prior year.
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the second quarter of 2025, we recognized a gain of $4.0 million upon the settlement of working capital and other adjustments.
Income tax expense was $3.0 million for the second quarter of 2026 compared to income tax expense of $0.9 million for the second quarter of 2025, driven by changes in pretax income and the benefit of work opportunity tax credits in the second quarter of 2025.
June Year-to-Date Results
Revenue from services June year-to-date 2026 decreased 8.3% year-over-year with decreases in the ETM, SET, and Education segments. Compared to the June year-to-date 2025, the decrease is primarily due to declines in revenue from staffing services
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and outcome-based services of 11.2% and 5.0%, respectively, partially offset by growth in revenue from talent solutions of 4.7%.
Gross profit decreased 11.6%, largely driven by lower revenue volume. The gross profit rate decreased 80 bps to 19.6%, primarily due to higher employee-related costs in the beginning part of the year.
Total SG&A expenses decreased 8.7%, primarily due to expense management actions to reduce volume-related costs and reflects the benefits of the ongoing structural actions including integration and realignment efforts. SG&A expenses in the first six months of 2026 include $7.6 million of integration and realignment costs related to continuation of ongoing initiatives, $1.8 million of executive transition charges and $0.8 million of transaction costs primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Included in SG&A expenses in the first six months of 2025 were $16.7 million of integration costs related to initiatives to integrate MRP and align our processes, $0.5 million of executive transition charges and $0.4 million of transaction costs related to the sale of our EMEA staffing operations.
The asset impairment charge of $2.2 million in the first quarter of 2026 relates to certain right-of-use assets and reflects our ongoing realignment of our lease portfolio.
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the first six months of 2025, we recognized a gain of $4.0 million upon the settlement of working capital and other adjustments.
Income tax expense was $2.2 million for the first six months of 2026 compared to income tax expense of $2.7 million for the first six months of 2025, with the change primarily driven by changes in pretax income and the benefit of work opportunity tax credits in the first six months of 2025.
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Operating Results By Segment
(in millions)
| Second Quarter | June Year-to-Date | |||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||
| Revenue from Services: | ||||||||||||||||||||
| Enterprise Talent Management | $ | 485.5 | $ | 516.4 | (6.0)% | $ | 944.7 | $ | 1,045.5 | (9.6)% | ||||||||||
| Science, Engineering & Technology | 301.6 | 321.1 | (6.1) | 590.8 | 648.4 | (8.9) | ||||||||||||||
| Education | 253.5 | 265.3 | (4.4) | 547.6 | 574.3 | (4.6) | ||||||||||||||
| Less: Intersegment revenue | (2.4) | (1.0) | 140.0 | (4.2) | (1.5) | 180.0 | ||||||||||||||
| Consolidated Total | $ | 1,038.2 | $ | 1,101.8 | (5.8)% | $ | 2,078.9 | $ | 2,266.7 | (8.3)% | ||||||||||
Second Quarter Results
The decrease in ETM revenue from services of 6.0% was primarily driven by a decrease of 10.0% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 9.3% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025. Permanent placement fees decreased 41.4%, reflecting lower market demand. These decreases were partially offset by an increase of 6.3% in talent solutions driven by new customer wins and volume increases.
The decrease in SET revenue from services of 6.1% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to U.S. federal government contractors and IT services, partially offset by an increase in permanent placement fees.
The decrease in Education revenue from services of 4.4% was driven primarily by a reduction in demand in key markets due to declines in student enrollment.
June Year-to-Date Results
The decrease in ETM revenue from services of 9.6% was primarily driven by a decrease of 13.5% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 14.8% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025. Permanent placement fees decreased 32.7%, reflecting lower market demand. These decreases were partially offset by an increase of 4.7% in talent solutions driven by new customer wins and volume increases.
The decrease in SET revenue from services of 8.9% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to U.S. federal government contractors and IT services, partially offset by an increase in permanent placement fees.
The decrease in Education revenue from services of 4.6% was driven primarily by the impact of prior year delayed contract decisions, weather-related school closures and a reduction in demand in key markets due to declines in student enrollment.
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Operating Results By Segment (continued)
(in millions)
| Second Quarter | June Year-to-Date | |||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||
| Gross Profit: | ||||||||||||||||||||
| Enterprise Talent Management | $ | 99.5 | $ | 103.4 | (3.8)% | $ | 185.1 | $ | 210.7 | (12.1)% | ||||||||||
| Science, Engineering & Technology | 76.5 | 83.0 | (7.8) | 148.3 | 166.0 | (10.7) | ||||||||||||||
| Education | 36.0 | 39.1 | (7.9) | 75.0 | 85.3 | (12.1) | ||||||||||||||
| Consolidated Total | $ | 212.0 | $ | 225.5 | (6.0)% | $ | 408.4 | $ | 462.0 | (11.6)% | ||||||||||
| Gross Profit Rate: | ||||||||||||||||||||
| Enterprise Talent Management | 20.5 | % | 20.0 | % | 0.5 | pts. | 19.6 | % | 20.1 | % | (0.5) | pts. | ||||||||
| Science, Engineering & Technology | 25.4 | 25.8 | (0.4) | 25.1 | 25.6 | (0.5) | ||||||||||||||
| Education | 14.2 | 14.7 | (0.5) | 13.7 | 14.9 | (1.2) | ||||||||||||||
| Consolidated Total | 20.4 | % | 20.5 | % | (0.1) | pts. | 19.6 | % | 20.4 | % | (0.8) | pts. | ||||||||
Second Quarter Results
Gross profit for ETM decreased on lower revenue volume. The gross profit rate increased by 50 bps primarily due to lower employee-related costs, partially offset by lower permanent placement fees.
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 40 bps primarily due to changes in business mix, partially offset by lower employee-related costs and higher permanent placement fees.
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 50 bps, primarily due to higher employee-related costs and lower permanent placement fees.
June Year-to-Date Results
Gross profit for the ETM segment decreased on lower revenue volume. The gross profit rate decreased by 50 bps primarily due to higher employee-related costs.
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 50 bps primarily due to changes in business mix and higher employee-related costs, partially offset by higher permanent placement fees.
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 120 bps primarily due to higher employee-related costs and lower permanent placement fees.
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Operating Results By Segment (continued)
(in millions)
| Second Quarter | June Year-to-Date | |||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||
| SG&A Expenses (excluding depreciation and amortization): | ||||||||||||||||||||
| Enterprise Talent Management | $ | 88.7 | $ | 92.8 | (4.4)% | $ | 175.6 | $ | 193.8 | (9.4)% | ||||||||||
| Science, Engineering & Technology | 58.3 | 63.2 | (7.8) | 115.9 | 132.3 | (12.4) | ||||||||||||||
| Education | 25.3 | 25.5 | (0.8) | 52.0 | 52.4 | (0.8) | ||||||||||||||
| Corporate expenses | 11.8 | 13.3 | (11.3) | 28.2 | 29.2 | (3.4) | ||||||||||||||
| Consolidated Total | $ | 184.1 | $ | 194.8 | (5.5)% | $ | 371.7 | $ | 407.7 | (8.8)% | ||||||||||
Second Quarter Results
The 4.4% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
The 7.8% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
The 0.8% decrease in Education SG&A expenses excluding depreciation and amortization primarily related to lower performance-based incentive compensation.
The 11.3% decrease in Corporate expenses was primarily driven by lower integration, realignment, and restructuring charges in the second quarter of 2026 as compared to the prior year.
June Year-to-Date Results
The 9.4% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and lower shared service costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
The 12.4% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
The 0.8% decrease in Education SG&A expenses excluding depreciation and amortization primarily related to lower performance-based incentive compensation.
The 3.4% decrease in Corporate expenses was primarily driven by lower integration, realignment, and restructuring charges, partially offset by investment in the Growth Office and other corporate initiatives in the first six months of 2026 as compared to the prior year.
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Operating Results By Segment (continued)
(in millions)
| Second Quarter | June Year-to-Date | |||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||
| Business Unit Profit | ||||||||||||||||||||
| Enterprise Talent Management | $ | 10.8 | $ | 10.6 | 1.9% | $ | 9.5 | $ | 16.9 | (43.8)% | ||||||||||
| Science, Engineering & Technology | 18.2 | 19.8 | (8.1) | 30.2 | 33.7 | (10.4) | ||||||||||||||
| Education | 10.7 | 13.6 | (21.3) | 23.0 | 32.9 | (30.1) | ||||||||||||||
| Business unit profit | 39.7 | 44.0 | (9.8) | 62.7 | 83.5 | (24.9) | ||||||||||||||
| Corporate | (11.8) | (13.3) | (11.3) | (28.2) | (29.2) | (3.4) | ||||||||||||||
| Gain on sale of EMEA staffing operations | — | 4.0 | NM | — | 4.0 | NM | ||||||||||||||
| Depreciation and amortization | (11.8) | (12.5) | (5.6) | (23.5) | (25.3) | (7.1) | ||||||||||||||
| Consolidated total earnings from operations | $ | 16.1 | $ | 22.2 | (27.5)% | $ | 11.0 | $ | 33.0 | (66.7)% | ||||||||||
Second Quarter Results
ETM business unit profit increased compared to the prior year due to lower SG&A expenses. SET and Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses.
June Year-to-Date Results
ETM, SET, and Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses.
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Financial Condition
Historically, we have financed our operations through cash generated by operating activities and access to credit markets. Our working capital requirements are primarily generated from temporary employee payroll, which is generally paid weekly, and customer accounts receivable, which is generally outstanding for longer periods. Since receipts from customers lag payroll to temporary employees, working capital requirements increase substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease. This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period. We also experience material seasonal fluctuations in working capital in our Education segment due to schools being mostly out of session during the summer.
As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash, cash equivalents and restricted cash, operating activities, investing activities and financing activities.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash totaled $28.0 million at the end of the second quarter of 2026 and $37.7 million at year-end 2025. As further described below, we generated $23.8 million of cash from operating activities, generated $0.2 million of cash from investing activities and used $31.2 million of cash for financing activities.
Operating Activities
In the first six months of 2026, we generated $23.8 million of net cash from operating activities, as compared to generating $119.3 million in the first six months of 2025. The decrease was primarily due to higher working capital requirements as compared to the same period of the prior year.
Trade accounts receivable totaled $1.2 billion at the end of the second quarter of 2026. Global DSO was 61 days at both second quarter-end 2026 and year-end 2025.
Our working capital position (total current assets less total current liabilities) was $429.9 million at the end of the second quarter of 2026, a decrease of $16.6 million from year-end 2025. The current ratio (total current assets divided by total current liabilities) was 1.5 at the end of the second quarter of 2026 and 1.5 at year-end 2025.
Investing Activities
In the first six months of 2026, we generated $0.2 million of cash from investing activities, as compared to generating $24.7 million in the first six months of 2025. Cash generated by investing activities in the first six months of 2026 is primarily driven by $2.7 million of proceeds from company-owned life insurance, partially offset by $2.6 million of capital expenditures. Included in the cash generated by investing activities in the first six months of 2025 is $21.8 million of proceeds from the sale of our EMEA staffing operations, $6.4 million of cash from the sale of the PersolKelly investment and $1.6 million of proceeds from company-owned life insurance, partially offset by $4.5 million of cash used for capital expenditures.
Financing Activities
We used $31.2 million of cash for financing activities in the first six months of 2026, as compared to using $172.7 million in the first six months of 2025. The change in cash used from financing activities was primarily driven by lower net repayments of $23.8 million on our credit facilities in 2026 compared to net repayments of $165.1 million on our credit facilities in 2025. Dividends paid per common share were $0.075 in each of the first two quarters of 2026 and 2025.
Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 7.4% at the end of the second quarter of 2026 and 9.4% at year-end 2025.
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Critical Accounting Estimates
For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.
Contractual Obligations and Commercial Commitments
There were no significant changes to our contractual obligations and commercial commitments from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K. We have no material unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities.
Liquidity
We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents and our credit facilities. Additional funding sources could include additional bank facilities or sale of non-core assets. To meet significant cash requirements related to our nonqualified retirement plan, we may utilize proceeds from Company-owned life insurance policies.
We have historically managed our cash and debt closely to optimize our capital structure. As our cash balances build, we tend to pay down debt as appropriate, unless it is needed for organic or inorganic investments that align with our overall growth strategy. Conversely, when working capital needs grow, we tend to use corporate cash and cash available in the global cash pooling arrangement (the “Cash Pool”) first, and then access our borrowing facilities. We expect our working capital requirements to increase if demand for our services increases.
We assess and monitor our liquidity and capital resources globally. We use the Cash Pool, intercompany loans, dividends, capital contributions, and local lines of credit to meet funding needs and allocate our capital resources among our various subsidiaries. We periodically review our foreign subsidiaries’ cash balances and projected cash needs. As part of those reviews, we may identify cash that we feel should be repatriated to optimize our overall capital structure. We expect our international cash will be needed to fund working capital growth in our local operations as working capital needs, primarily trade accounts receivable, increase during periods of growth.
As of second quarter-end 2026, we had $150.0 million of available capacity on our $150.0 million revolving credit facility and $129.3 million of available capacity on our $250.0 million securitization facility. The revolving credit facility carried no long-term borrowings on the floating or term benchmark lines of credit. The securitization facility carried $78.1 million of long-term borrowings and $42.6 million of standby letters of credit related to workers’ compensation. The credit facilities also include provisions that would allow for expansion of our combined borrowing capacity by $250.0 million.
Together, the revolving credit and securitization facilities provide us with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions. We believe our cash flow from operations, the availability of liquidity under our credit facilities, including the expansion provisions which allows us to increase our borrowing capacity and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements, while maintaining sufficient liquidity for normal operating purposes. As of second quarter-end 2026, we met the debt covenants related to our revolving credit facility and securitization facility.
As of second quarter-end of 2026, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.1 million, under which we had no borrowings. Details of our debt facilities are contained in the Debt footnote in the notes to our consolidated financial statements.
We monitor the credit ratings of our banking partners on a regular basis and have regular discussions with them. Based on our reviews and communications, we believe the risk of one or more of our banks not being able to honor commitments is insignificant. We also review the ratings and holdings of our money market funds and other investment vehicles regularly to ensure high credit quality and access to our invested cash.
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Forward-Looking Statements
Certain statements contained in this report and in our investor conference call related to these results are “forward-looking” statements within the meaning of the applicable securities laws and regulations. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or variations or negatives thereof or by similar or comparable words or phrases. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions by us that may be provided by management, including oral statements or other written materials released to the public, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about our Company and economic and market factors in the countries in which we do business, among other things. These statements are not guarantees of future performance, and we undertake no obligation to update them, except as required by law.
Actual events and results may differ materially from those expressed or implied by forward-looking statements due to a number of factors. The principal risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements 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 report and in our other filings with the Securities and Exchange Commission, including those discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 28, 2025. Actual results may differ materially from any forward-looking statements contained herein, 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes to our exposure to market risk, foreign currency risk, or interest rate risk, or to our related risk management procedures, during the second quarter of 2026 as compared to the respective risk exposures and procedures disclosed in Quantitative and Qualitative Disclosures About Market Risk, set forth in Part II Item 7A, of our Annual Report on Form 10-K for the year ended December 28, 2025, other than factors discussed below.
Foreign Currency
We are exposed to foreign currency risk primarily related to our foreign subsidiaries. Exchange rates impact the U.S. dollar value of our reported earnings, our investments in and held by subsidiaries, local currency denominated borrowings and intercompany transactions with and between subsidiaries. Our foreign subsidiaries primarily derive revenues and incur expenses within a single country and currency which, as a result, provide a natural hedge against currency risks in connection with normal business operations. Accordingly, changes in foreign currency rates vs. the U.S. dollar and euro generally do not impact local cash flows. Intercompany transactions which create foreign currency risk include services, royalties, loans, contributions and distributions.
Interest Rates
We are exposed to interest rate risk through our use of our credit facilities and other local borrowings, when applicable. A hypothetical fluctuation of 10% of market interest rates would not have had a material impact on our operating results or cash flows.
We are exposed to market risk as a result of our obligation to pay benefits under our nonqualified deferred compensation plan and our related investments in company-owned variable universal life insurance policies. The obligation to employees increases and decreases based on movements in the equity and debt markets. The investments in mutual funds, as part of the Company-owned variable universal life insurance policies, are designed to mitigate, but not eliminate, this risk with offsetting gains and losses.
Item 4. Controls and Procedures.
Based on their evaluation as of the end of the period covered by this Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective at a reasonable assurance level.
There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of our business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes, and tax-related matters, which could result in a material adverse outcome. We record accruals for loss contingencies when we believe it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet. We maintain insurance coverage which may cover certain claims. When claims exceed the applicable policy deductible and realization of recovery of the claim from existing insurance policies is deemed probable, we record receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet.
While the outcome of these matters currently pending cannot be predicted with certainty, we believe that the resolution of any such proceedings will not have a material adverse effect on our financial condition, results of operations or cash flows.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) Issuer Repurchases of Equity Securities
During the second quarter of 2026, we reacquired shares of our common stock as follows:
| Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||
| March 30, 2026 through May 3, 2026 | 3,014 | $ | 9.32 | — | $ | 30.0 | ||||||||
| May 4, 2026 through May 31, 2026 | 4,393 | 9.60 | — | $ | 30.0 | |||||||||
| June 1, 2026 through June 28, 2026 | 98 | 11.62 | — | $ | 30.0 | |||||||||
| Total | 7,505 | $ | 9.51 | — | ||||||||||
On November 26, 2024, our board of directors approved a share repurchase program for us to repurchase shares covering up to an aggregate of $50.0 million of our Class A common stock. The share repurchase authorization expires on December 2, 2026. We may also reacquire shares sold by employees to cover employee tax withholdings due upon the vesting of restricted stock. During the second quarter of 2026, 7,505 shares were reacquired solely to cover employee tax withholdings and not pursuant to the repurchase program.
Item 5. Other Information.
Securities Trading Plans of Directors and Executive Officers
During the second quarter of 2026, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement
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Item 6. Exhibits.
| Exhibit No. | Description | ||||||||||
3.1 | Amended and Restated Certificate of Incorporation, effective May 13, 2026 (Reference is made to Exhibit 3.1 to the Form 8-K filed with the Commission on May 13, 2026, which is incorporated herein by reference). | ||||||||||
3.2 | Amended and Restated Bylaws, effective May 7, 2026 (Reference is made to Exhibit 3.2 to the Form 8-K filed with the Commission on May 13, 2026, which is incorporated herein by reference). | ||||||||||
10.1 | First Amended and Restated Receivables Purchase Agreement Amendment No. 6, dated as of June 22, 2026, among Kelly Receivables Funding, LLC, as Seller, Kelly Services, Inc., as Servicer, and PNC Bank, National Association, as Administrator for each Purchaser Group, as Purchaser Agent for the PNC Purchaser Group, as a Related Committed Purchaser, as LC Bank, and as an LC Participant. | ||||||||||
31.1 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | ||||||||||
31.2 | Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended. | ||||||||||
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| KELLY SERVICES, INC. | |||||
| Date: August 6, 2026 | |||||
| /s/ Troy R. Anderson | |||||
| Troy R. Anderson | |||||
| Executive Vice President and | |||||
| Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
| Date: August 6, 2026 | |||||
| /s/ Nicholas A. Zuhlke | |||||
| Nicholas A. Zuhlke | |||||
| Vice President, Corporate Controller | |||||
| and Chief Accounting Officer | |||||
| (Principal Accounting Officer) | |||||
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