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What changed in KELLY SERVICES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of KELLY SERVICES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+357 added−276 removedSource: 10-K (2025-02-13) vs 10-K (2023-02-16)

Top changes in KELLY SERVICES INC's 2024 10-K

357 paragraphs added · 276 removed · 190 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSince receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows may decrease substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease and operating cash flows increase. Such increases dissipate over time if the economic downturn continues for an extended period.
Biggest changeConversely, when economic activity slows, working capital requirements may substantially decrease and operating cash flows increase. Such increases dissipate over time if the economic downturn continues for an extended period. Customers Kelly’s client portfolio spans employers of all sizes and sectors, including local and mid-sized businesses, to Fortune 500 enterprises, government agencies, and education institutions.
Access to Company Information We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.
Access to Company Information We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission ("SEC"). The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.
In the United States, we compete with other firms that operate nationally and offer a breadth of service similar to ours, and with thousands of smaller regional or specialized companies that compete in varying degrees. Outside the United States, we face similar competition. In 2022, our largest competitors were Randstad, Adecco Group, ManpowerGroup Inc. and Allegis Group.
In the United States, we compete with other firms that operate nationally and offer a breadth of service similar to ours, and with thousands of smaller regional or specialized companies that compete to varying degrees. Outside the United States, we face similar competition. In 2024, our largest competitors were Randstad, Adecco Group, ManpowerGroup Inc. and Allegis Group.
We are focused on fostering a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together. Kelly promotes employee development and internal career mobility to enable our team to achieve their full potential and to ensure we have the evolving workforce capabilities that the future demands. Community Involvement .
We focus on fostering a culture of belonging, where everyone feels welcomed and respected and can thrive as we work together. Kelly promotes employee development and internal career mobility to enable our team to achieve their full potential and to ensure we have the evolving workforce capabilities that the future demands. Community Involvement .
We make available, free of charge, through our website, and by responding to requests addressed to our senior vice president of investor relations, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all 6 amendments to those reports.
We make available, free of charge, through our website, and by responding to requests addressed to our investor relations office, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.
We’re also using our position in the middle of the talent supply and demand equation to challenge outdated barriers that hold back far too many people from attaining meaningful work, supporting their families and contributing to the economy. Our Equity@Work initiative seeks to upend systemic barriers to employment and make the labor market more equitable and accessible for more people.
We’re also using our position in the middle of the talent supply and demand equation to challenge outdated barriers that hold back far too many people from attaining meaningful work, supporting their families and contributing to the economy. Our Equity@Work initiative seeks to remove barriers to employment and create a labor market that is accessible for more people.
Kelly remains the employer of record for our employees working at our customer locations. This means that we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employers’ share of applicable payroll taxes as well as the administration of the employee's share of these taxes.
When Kelly remains the employer of record for our employees working at our customer locations, we retain responsibility for all assignments (including ensuring appropriate health and safety protocols in conjunction with our customers), wages, benefits, workers’ compensation insurance, and the employer's share of applicable payroll taxes as well as the administration of the employees' share of these taxes.
We believe an inclusive environment with diverse teams creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services, and presents Kelly as a workplace leader, aiding our ability to attract and retain high-performing talent.
We believe that our talent pool creates a workplace that is conducive to producing more creative solutions, results in better, more innovative products and services, and presents Kelly as a workplace leader, aiding our ability to attract and retain high-performing talent.
In addition to cash and equity compensation, we offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits and defined contribution retirement plans. We review our compensation and benefits programs annually and respond to changes in market practice.
Our programs provide fair and competitive opportunities that align employee and stockholder interests. In addition to cash and equity compensation, we offer employees competitive benefits such as life and health (medical, dental and vision) insurance, paid time off, wellness benefits and defined contribution retirement plans. We review our compensation and benefits programs annually and respond to changes in market practice.
We continuously monitor legislation and regulatory changes for their potential effect on our business. We invest in technology and process improvements to implement required changes while minimizing the impact on our operating efficiency and effectiveness. Regulatory cost increases are passed through to our clients to the fullest extent possible.
We invest in technology and process improvements to implement required changes while minimizing the impact on our operating efficiency and effectiveness. Regulatory cost increases are passed through to our clients to the fullest extent possible.
Internal Employees As of January 1, 2023, we employed approximately 4,800 staff members in the United States and an additional 2,700 in our international locations. Kelly retention rates for high performing and high potential employees align with our comparable benchmark. Compensation and Benefits. Kelly is committed to providing competitive, equitable and fiscally responsible total rewards programs to our employees.
Internal Employees As of December 29, 2024, we employed approximately 4,200 staff members in the United States and an additional 1,370 in our international locations. Kelly retention rates for high performing and high potential employees align with our comparable benchmark. Compensation and Benefits. Kelly is committed to providing competitive, fair and fiscally responsible total rewards programs to our employees.
Our largest single customer accounted for approximately seven percent of total revenue in 2022. 4 Government Contracts Although we conduct business under various federal, state and local government contracts, no one contract represents more than three percent of total company revenue in 2022. Competition The worldwide workforce solutions industry is competitive and highly fragmented.
Government Contracts Although we conduct business under various federal, state and local government contracts, no one contract represents more than three percent of total company revenue in 2024. Competition The worldwide workforce solutions industry is competitive and highly fragmented.
As part of these efforts, we strive to offer competitive total rewards programs, promote employee development, foster an inclusive and diverse environment and allow employees to give back to their communities and make a social impact. We are committed to the health, safety and wellness of our employees and talent.
As part of these efforts, we strive to offer competitive total rewards programs, promote employee development, support a workforce that represents the demographics of communities we serve, and allow employees to give back to their communities and make a social impact. We are committed to the health, safety and wellness of our employees and talent.
Companies may seek a single supplier to manage all of their demand for contingent talent. To provide the breadth of service required, clients may need us to manage staffing suppliers and independent workers on their behalf. Kelly seeks to address this requirement for our clients, enabling us to deliver talent wherever and whenever they need it around the world.
To provide the breadth of service required, clients may need us to manage staffing suppliers and independent workers on their behalf. Kelly seeks to address this requirement for our clients, enabling us to deliver talent wherever and whenever they need it around the world. Corporate Sustainability Kelly is committed to the highest standards of corporate citizenship.
Geographic Breadth of Services Headquartered in the United States, Kelly provides workforce solutions to a diverse group of local, regional and global clients in the Americas, Europe and the Asia-Pacific region across a variety of industries. In 2022, we assigned more than 300,000 temporary employees to a variety of customers around the globe.
Business Operations Geographic Breadth of Services Headquartered in the United States, Kelly provides workforce solutions to a diverse group of local, regional and global clients in the Americas, Europe and the Asia-Pacific region across a variety of industries. In 2024, together with our supplier partners, we placed more than 400,000 workers with a variety of customers around the globe.
Working Capital Our working capital requirements are primarily generated from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods, with days sales outstanding ("DSO") of 61 days as of January 1, 2023.
Working Capital Our working capital requirements are primarily generated from our staffing businesses resulting from employee payroll which is generally paid weekly or monthly and customer accounts receivable which is generally outstanding for longer periods.
Conversely, our revenue from services decreases when the economy declines and customer demand for our services also declines. Our business also experiences seasonal fluctuations, particularly in our Education operating segment. Revenue in Education is generally lowest in the third quarter in line with schools’ summer break.
Our business also experiences seasonal fluctuations each year, particularly in our Education operating segment. Revenue in Education is generally lowest in the third quarter, in line with schools’ summer break.
We provide employees with competitive compensation opportunities, with strong pay-for-performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards. Our programs provide fair and competitive opportunities that align employee and stockholder interests.
Our compensation programs are designed to attract, retain and reward talented individuals with the skills necessary to achieve our strategic goals and create long-term value for our shareholders. We provide employees with competitive compensation opportunities, with strong pay-for-performance linkages that include a mix of base salary, short-term incentives and, in the case of our more senior employees, long-term equity awards.
As a service business, we are not materially impacted by federal, state or local laws that regulate the discharge of materials into the environment. Human Capital We are a talent solutions company dedicated to connecting people to work in ways that enrich their lives, and our employees are critical to achieving this noble purpose.
As a service business, we are not materially impacted by federal, state or local laws that regulate the discharge of materials into the environment. 5 Human Capital We are a talent solutions company and our employees are critical to our success. We must attract and retain experienced internal employees, as well as talent we put to work for our customers.
We must balance competitive pricing pressures, which may intensify during an economic downturn, with the need to attract and retain a qualified workforce. Price competition in the staffing industry is intense, particularly for education, office clerical and light industrial personnel and pricing pressure from customers and competitors continues to be significant.
We must balance competitive pricing pressures, which may intensify during an economic downturn, with the need to attract and retain a qualified workforce. Price competition is greater in certain markets in which we serve clients and talent, including education, office clerical and light industrial. Companies may seek a single supplier to manage all of their demand for contingent talent.
Since 1947, our founder fought to increase women's access to work, and we’ve long been an outspoken advocate for the value temporary and independent workers bring to the workplace. We are committed to fostering an inclusive and diverse workforce. For example, most of Kelly's U.S. workforce is female, including a majority of director and above roles.
Since 1947, our founder fought to increase women's access to work, and we’ve continued to be an outspoken advocate for the value temporary and independent workers bring to the workplace. We are committed to promoting exceptional talent from all walks of life.
ITEM 1. BUSINESS. History and Development of Business Founded by William Russell Kelly in 1946, Kelly Services ® pioneered an industry that connects people to work in ways that enrich their lives. Our inception helped usher in and embolden a workforce of women, opening doors and creating completely new opportunities.
ITEM 1. BUSINESS. History and Development of Business William Russell Kelly pioneered the staffing industry when he founded Kelly ® in 1946, and we’ve been reinventing it ever since. Our inception helped usher in and embolden a workforce of women who kept the economy moving forward during World War II, opening doors and creating completely new opportunities.
For more information on our diversity and inclusion and community involvement initiatives, please see our Sustainability Report - Growing with Purpose , which is available at kellyservices.com. Talent In addition to our internal employees, Kelly recruits talent on behalf of our customers globally. In 2022, we placed more than 300,000 individuals in positions with our customers.
Talent In addition to our internal employees, Kelly recruits talent on behalf of our customers globally. In 2024, we placed more than 400,000 individuals in positions with our customers.
We continue to advocate on behalf of the global workforce, improve our workplaces, contribute to the communities we serve and ensure our actions are socially, ethically and environmentally responsible. Regulation Our services are subject to a variety of complex federal and state laws and regulations in the countries where we operate.
Given the worldwide reach of our workers, clients, suppliers and partners, we recognize the global impact of our business practices and the importance of public accountability. We continue to advocate on behalf of the global workforce, improve our workplaces, contribute to the communities we serve and ensure our actions are socially, ethically and environmentally responsible.
While systemic change takes time, we continue to make progress with additional outreach, new alliances and partnerships and continued executive commitment. Business Operations Service Marks We own numerous service marks that are registered with the United States Patent and Trademark Office, the European Union Intellectual Property Office and numerous individual country trademark offices.
While universal change takes time, we continue to make progress with additional outreach, new alliances and partnerships, and continued executive commitment.
For example, recent enhancements to our U.S. benefits program include additional time off for significant life events, a financial advisor program, support programs for certain chronic health conditions and introduction of a well-being app globally. In addition, pay and benefits programs for our international employees align with competitive local practices. Inclusion and Diversity .
For example, recent enhancements to our U.S. benefits program include the addition of a virtual physical therapy program to our medical plans and automatic contribution-escalation in one of our 401(k) Plans. In addition, pay and benefits programs for our international employees align with competitive local practices. Culture .
In 2022, we achieved over 7,800 hours of volunteering (for the U.S. and Canada), engaging over 1,000 employees. Through our Equity@Work efforts, we are living our commitment to ensure equitable access to work and growth by creating alliances with like-minded companies, policy groups and institutions to positively impact how companies hire, advance and help more people thrive.
Through our Equity@Work efforts, we are demonstrating our commitment to ensuring access to meaningful work and growth by creating alliances with like-minded companies, policy groups, and institutions.
Seasonality and Economic Cycles Our operating results have historically been affected by the cyclical response to both economic downturns and upswings. Customers tend to use our services to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase. As a consequence, our revenue from services tends to increase when the economy grows.
Customers use our services to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase. In addition, we generate a portion of our revenue through permanent placement fees, which typically have a higher gross margin than our staffing services.
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Over the next 76 years, as work evolved, Kelly equipped people with skills to master new technologies as they emerged: launching the first-of-its-kind online learning center for scientists; creating testing and training packages for breakthrough office programs; and launching skill builders that aligned with new light industrial protocols.
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Over the next 78 years, as work evolved, Kelly continued to equip people with the skills to master new technologies as they emerged and the opportunity to put them to work in ways that enriched their lives. As the world of work has evolved, so have our offerings to reflect the changing needs of employers and talent.
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With each advance, Kelly met the needs of the marketplace; empowering our people to reach their personal goals and enabling our clients to access skilled talent to move their organizations forward. As work has evolved so has Kelly's range of solutions, growing over the years to reflect the changing needs of employers and the desires and lifestyles of talent.
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In 1996, Kelly established the industry’s first Managed Service Provider ("MSP") program. Three years later, the Company launched specialized offerings in engineering, IT and education. After successfully establishing industry-leading positions in each of these attractive markets, Kelly initiated a strategic plan to drive greater value creation by refocusing its portfolio on specialties.
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We have progressed from a traditional office staffing business to a creative, insightful and agile talent company delivering expertise in a portfolio of specialty services. In line with market demand, we are increasingly delivering a variety of outcome-based services in which we provide specialized talent and operational management of functions and departments on behalf of our clients.
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In 2020, Kelly launched a new operating model comprising five specialty business units: Kelly Professional & Industrial ("P&I"); Kelly Science, Engineering & Technology ("SET"); Kelly Education; KellyOCG ("Outsourcing & Consulting" or "OCG"); and Kelly International.
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We rank as one of the world’s largest scientific and clinical research staffing providers and place talent at various levels in engineering, IT and telecommunications specialties. We are also a leading education staffing provider in the U.S., placing talent across the full education spectrum from early childhood education to higher education.
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This model optimized Kelly’s structure and capabilities based on market opportunity and the unique needs of employers and talent in each specialty to enable organic growth. To enhance specialization in higher margin, higher growth specialties, Kelly also pursued an aggressive approach to driving inorganic growth in SET, Education, and OCG.
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These services complement our expertise in professional office services, contact center and light industrial staffing. As work has evolved and talent management has become more complex, we have also developed innovative solutions to help many of the world’s largest employers plan for and manage their workforce through recruitment outsourcing, payroll processing, talent advisory, career transition and supplier management services.
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By monetizing non-core assets and redeploying available capital, Kelly completed several strategic acquisitions over the years, including Teachers On Call; Global Technology Associates ("GTA"); NextGen; Greenwood/Asher & Associates; Softworld; RocketPower; Pediatric Therapeutic Services ("PTS"); Motion Recruitment Partners ("MRP"); and Children’s Therapy Center ("CTC").
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Description of Business Segments Kelly is a talent solutions company organized into five specialty businesses, which are also our reportable segments, serving clients of all sizes across a variety of industries.
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Building on a significant shift in Kelly’s business mix driven by its specialty strategy, the Company took steps to further optimize its operating model and accelerate profitable growth. Beginning in 2023, Kelly implemented a comprehensive business transformation initiative that delivered structural efficiency improvements across the enterprise and significantly improved profitability.
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This structure enables us to focus on specialties with robust demand, promising growth opportunities and areas in which we excel at attracting and placing talent. • Professional & Industrial – delivers staffing, outcome-based and permanent placement services focused on office, professional, light industrial and contact center specialties in the U.S. and Canada, including our KellyConnect and Skilled Professional Solutions products • Science, Engineering & Technology ("SET") – delivers staffing, outcome-based and permanent placement services focused on science and clinical research, engineering, technology and telecommunications specialties predominantly in the U.S. and Canada and includes our Softworld, NextGen and Global Technology Associates subsidiaries • Education – delivers staffing, permanent placement and executive search services across the full education spectrum from early childhood to higher education in the U.S. and includes Teachers On Call, Insight Workforce Solutions, Greenwood/Asher and Pediatric Therapeutic Services ("PTS") 3 • Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG") – delivers Managed Service Provider ("MSP"), Recruitment Process Outsourcing ("RPO"), Payroll Process Outsourcing ("PPO") and Talent Advisory Services to customers on a global basis and includes RocketPower • International – delivers staffing, RPO and permanent placement services in 14 countries in Europe, as well as services in Mexico delivered in accordance with changes in labor market regulations Financial information regarding our reportable segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report.
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In 2024, Kelly completed the sale of its European staffing operations within the Company’s International business unit, further sharpening its focus on specialty outcome-based and staffing services in North America, while maintaining global recruitment process outsourcing ("RPO") and MSP capabilities.
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Business Objectives By connecting our clients with qualified talent in an ever-evolving world of work, Kelly has a positive impact on the people, clients and communities we serve. As a destination for top talent and a strategic business partner for our clients, we continue to adopt innovative business practices and forward-looking technologies that drive success in a dynamic market.
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Today, Kelly remains one of the largest providers of temporary and permanent staffing services, outcome-based solutions, RPO, MSP, and payroll process outsourcing ("PPO"). The Company delivers these differentiated offerings through four specialty business units, each a leader in the respective markets on which they are focused: Kelly Education; Kelly Professional & Industrial; Kelly Science, Engineering & Technology; and KellyOCG.
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With more than one-third of the world’s workforce now participating as independent workers, we help companies adopt strategies that recognize and utilize contingent labor, consultants and project-based work as enablers of their ongoing success.
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Business Objectives We strive to empower organizations and talent to access limitless opportunities by enabling employers to recruit and manage skilled workers and help job seekers find great work. As experts in hiring experts, we ensure our customers have the people they need when and where they’re needed most.
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Customers Kelly’s client portfolio spans employers of all sizes, ranging from local and mid-sized businesses to the Fortune 500. In 2022, an estimated 54% of total company revenue was attributed to our largest 100 customers.
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We believe that delivering on these objectives will result in successful outcomes for customers and talent, and drive profitable growth for Kelly. 3 Description of Business Segments and Services Kelly is a global specialty talent solutions company operating in four specialized business units, which are also our reportable segments.
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Corporate Sustainability Kelly is committed to the highest standards of corporate citizenship. Given the worldwide reach of our workers, clients, suppliers and partners, we recognize the global impact of our business practices and the importance of public accountability.
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This structure enables us to serve the specialized needs of both talent and customers while building deep industry expertise and connections. • Professional & Industrial – delivers temporary staffing, outcome-based and permanent placement services. P&I is focused on industrial, contact center, and office and clerical specialties in North America.
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To succeed in our highly competitive and rapidly evolving market, we must attract and retain experienced internal employees, as well as talent we put to work for our customers.
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Its offerings include our KellyConnect and Skilled Professional Solutions offerings. • Science, Engineering & Technology – provides highly specialized skills to a variety of industries through temporary staffing, outcome-based, and permanent placement services. SET is focused on science and clinical research, engineering, technology, and telecommunications specialties predominantly in North America.
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Our compensation programs are designed to attract, retain and reward talented individuals 5 with the skills necessary to achieve our strategic goals and create long-term value for our shareholders.
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It includes the MRP, Softworld, NextGen, and GTA brands, as well as our statementworX offering. • Education – delivers high quality education and therapy services talent through temporary staffing, permanent placement and executive search services to Pre-K-12 school districts and education organizations across the U.S.
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Additionally, for a fifth consecutive year, we’ve achieved a 100% rating from the Human Rights Campaign Foundation’s Corporate Equality Index for LGBTQ+ equality in the workplace.
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It includes the CTC, PTS, Greenwood/Asher, and Teachers On Call brands. • Outsourcing & Consulting Group – provides global talent supply chain and workforce solutions, including MSP, RPO, and PPO solutions to customers on a global basis. It includes our RocketPower brand as well as our proprietary technology platform, Kelly Helix.
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We consider sustainability a guiding principle in strengthening the relationship with our global workforce, suppliers and customers. Through our programs and initiatives, we seek to improve the quality of life of our employees, their families and the communities in which they live and serve.
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Financial information regarding our reportable segments is included in the Segment Disclosures footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report.
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Designed on the concept of social investment and nurturing shared values, our approach ensures the creation of future development capacities instead of aiding on isolated occasions. We support initiatives where our employees can actively engage in the causes they believe in that are also connected to our sustainability strategy.
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Service Marks We own numerous service marks registered with the United States Patent and Trademark Office, the European Union Intellectual Property Office and numerous individual country trademark offices. Seasonality and Economic Cycles Our operating results have historically been affected by the cyclical response to both economic downturns and upswings.
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Consequently, we may see improved demand for our services and generate larger increases in our revenue and gross profit from services when the economy grows. During periods of increasing demand, we are generally able to improve our profitability and generate operating leverage.
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Conversely, our revenue from services and gross profit may see larger decreases when economic activity declines and customer demand for our services decreases. When demand decreases, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling and administrative expense base, which may not decline at the same pace as revenue.
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When 4 we operate as a managed service provider, our payment terms to suppliers are generally in line with payment terms from customers, which does not result in a significant use of working capital.
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Based on the nature of our business, accounts receivable is our most significant asset with days sales outstanding ("DSO") of 59 days as of December 29, 2024. Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows may decrease substantially in periods of growth.
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In 2024, an estimated 58% of total company revenue was attributed to our largest 100 customers and 29% was attributed to our largest 10 customers. Our largest single customer accounted for approximately six percent of total revenue in 2024.
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In 2023, an estimated 55% of total company revenue was attributed to our largest 100 customers and 27% was attributed to our largest 10 customers. Our largest single customer accounted for approximately six percent of total revenue in 2023.
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More information about our corporate sustainability initiatives is available in our C orporate Sustainability and ESG Report - Growing with Purpose report on www.kellyservices.com Regulation Our services are subject to a variety of complex federal and state laws and regulations in the countries where we operate. We continuously monitor legislation and regulatory changes for their potential effect on our business.
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Kelly’s purpose is to connect people to work in ways that enrich their lives, while creating opportunities for all people to realize their full potential. We are dedicated to removing barriers to employment, ensuring that anyone who is qualified has access to meaningful employment. Kelly creates pathways allowing talent to thrive.
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We help our clients find the people they need to succeed, while championing fair and all-encompassing hiring practices. Our commitment is reflected in initiatives like Equity@Work, designed to remove obstacles, open doors, and expand opportunities for all talent. Kelly’s impact doesn’t stop there.
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We are devoted to growing and developing a varied ecosystem of supplier partners, empowering them to make a difference in the industry and the marketplace. We support the success of our clients and contribute to a more vibrant ecosystem by nurturing relationships.
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Through our efforts, Kelly aims to shape a future where work is accessible to everyone, organizations drive innovation with a holistic talent mindset, and our collective progress is fueled by perspectives of people from all backgrounds.
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Sustainability is at the core of our relationships with our global workforce, suppliers, customers, and other stakeholders. Our programs and initiatives are dedicated to enhancing the well-being of our employees, their families and the communities they call home. By focusing on social investment and nurturing shared values, we support sustainable development for the future rather than providing isolated aid.
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Utilizing a technology platform to capture corporate volunteering, we empower our employees with volunteering and giving initiatives while increasing collaboration on social impact opportunities. This allows our employees to actively participate in causes they are passionate about and align with our sustainability strategy.
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These partnerships aim to positively impact how companies hire, advance and help more people thrive. 6 For more information about our corporate strategy of connecting people to meaningful work while contributing to a better society, please see our Corporate Sustainability and ESG Report - Growing with Purpose , which is available at www.kellyservices.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA failure to maintain the privacy of information entrusted to us could have significant adverse consequences. In the normal course of business we control, process, or have access to personal information regarding our own employees or employment candidates, as well as that of many of our customers or managed suppliers.
Biggest changeIn the normal course of business we control, process, or have access to personal data regarding candidates and persons employed or engaged by us, our customers, certain customer employees, and managed suppliers. Information concerning these individuals may also reside in systems controlled by third parties for purposes such as employee benefits, assignment information, and payroll administration.
Since receipts from customers generally lag payroll to temporary employees, the bankruptcy of a major customer could have a material adverse impact on our ability to meet our working capital requirements. The expansion of payment terms may extend our working capital requirements and reduce available capital for 10 investment.
Since receipts from customers generally lag payroll to temporary employees, the bankruptcy of a major customer could have a material adverse impact on our ability to meet our 10 working capital requirements. The expansion of payment terms may extend our working capital requirements and reduce available capital for investment.
The risks of these activities include possible claims relating to: • discrimination and harassment; • wrongful termination or retaliation; • violations of employment rights related to employment screening or privacy issues; • apportionment between us and our customer of legal obligations as an employer of temporary employees; • classification of workers as employees or independent contractors; • employment of unauthorized workers; • violations of wage and hour requirements; • entitlement to employee benefits, including health insurance and retroactive benefits; • failure to comply with leave policy and other labor requirements; and • errors and omissions by our temporary employees, particularly for the actions of professionals such as engineers, therapists, accountants, teachers and scientists.
The risks of these activities include possible claims relating to: • discrimination and harassment; • wrongful termination or retaliation; • violations of employment rights related to employment screening or privacy issues; • apportionment between us and our customer of legal obligations as an employer of temporary employees; • classification of workers as employees or independent contractors; • employment of unauthorized workers; • violations of wage and hour requirements; • entitlement to employee benefits, including health insurance and retroactive benefits; • failure to comply with leave policy and other labor requirements; and • errors and omissions by our temporary employees, particularly for the actions of professionals such as engineers, therapists, accountants, doctors, teachers and scientists.
Our operations outside the United States are subject to risks inherent in international business activities, including: • fluctuations in currency exchange rates; • restrictions or limitations on the transfer of funds; • government intrusions including asset seizures, expropriations or de facto control; • varying economic and geopolitical conditions; • differences in cultures and business practices; • differences in employment and tax laws and regulations; • differences in accounting and reporting requirements; • differences in labor and market conditions; • compliance with trade sanctions; • changing and, in some cases, complex or ambiguous laws and regulations; and • litigation, investigations and claims.
Our operations outside the United States are subject to risks inherent in international business activities, including: • fluctuations in currency exchange rates; • restrictions or limitations on the transfer of funds; 12 • government intrusions including asset seizures, expropriations or de facto control; • varying economic and geopolitical conditions; • differences in cultures and business practices; • differences in employment and tax laws and regulations; • differences in accounting and reporting requirements; • differences in labor and market conditions; • compliance with trade sanctions; • changing and, in some cases, complex or ambiguous laws and regulations; and • litigation, investigations and claims.
In addition, Section 203 of the Delaware General Corporation Law limits mergers and other business combination transactions involving 15 percent or greater stockholders of Delaware corporations unless certain board or stockholder approval requirements are satisfied. These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation.
In addition, Section 203 of the Delaware General Corporation Law limits mergers and other business combination transactions involving 15 percent or greater stockholders of Delaware corporations unless certain board 16 or stockholder approval requirements are satisfied. These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation.
Any failure to abide by these regulations or to protect such personal information from inappropriate access or disclosure, whether through social engineering or by accident or other cause, could have severe consequences including fines, litigation, regulatory sanctions, reputational damage, and loss of customers or employees.
Any failure to abide by these regulations or to protect such personal information or PHI from inappropriate access or disclosure, whether through social engineering or by accident or other cause, could have severe consequences including fines, litigation, regulatory sanctions, reputational damage, and loss of customers or employees.
Provisions in our certificate of incorporation and bylaws and Delaware law may delay or prevent an acquisition of our Company. Our restated certificate of incorporation and bylaws contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors.
Provisions in our certificate of incorporation and bylaws and Delaware law may delay or prevent an acquisition of our Company. Our certificate of incorporation and bylaws contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors.
An event involving the destruction, modification, accidental or unauthorized release, or theft of sensitive information from systems related to our business, or an attack that results in damage to or unavailability of our key technology 14 systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely affect our operations or financial condition.
An event involving the destruction, modification, accidental or unauthorized release, or theft of sensitive information from systems related to our business, or an attack that results in damage to or unavailability of our key technology systems or those of critical vendors (e.g., ransomware), could result in damage to our reputation, fines, regulatory sanctions or interventions, contractual or financial liabilities, additional compliance and remediation costs, loss of employees or customers, loss of payment card network privileges, operational disruptions and other forms of costs, losses or reimbursements, any of which could materially adversely 15 affect our operations or financial condition.
If our suppliers fail to meet our standards and expectations or are unfavorably regarded by our customers, our ability to discontinue the relationship may be limited and could result in reputational damage, customer loss, and adversely affect our results of operations.
If our suppliers fail to meet our standards and expectations, or are unfavorably regarded by our customers, our ability to discontinue the relationship may be limited, which could result in reputational damage, customer loss, and adversely affect our results of operations.
In addition, such laws and regulations are arising 13 with increasing frequency at the state and local level in the U.S. and the resulting inconsistency in such laws and regulations results in additional complexity.
In addition, such laws and regulations are arising with increasing frequency at the state and local level in the U.S. and the resulting inconsistency in such laws and regulations results in additional complexity.
If we are unable to contract with third parties having the specialized skills needed to support our growth strategies or integrate their products and services with our business, or if they fail to meet our performance requirements, the results of operations could be adversely impacted. We also rely on supplier partnerships to deliver our services to customers in certain territories.
If we are unable to contract with third parties having the specialized skills needed to support our growth strategies or integrate their products and services with our business, or if they fail to meet our performance requirements, the results of operations could be adversely impacted. We also rely on supplier partnerships to deliver certain services to customers.
Risks Related to Our Capital Structure Our controlling stockholder exercises voting control over our company and has the ability to elect or remove from office all of our directors. The Terence E. Adderley Revocable Trust K (“Trust K”) which became irrevocable upon the death of Terence E. Adderley on October 9, 2018, is our controlling stockholder.
Risks Related to Our Capital Structure Our controlling stockholder exercises voting control over our company and has the ability to elect or remove from office all of our directors. The Terence E. Adderley Revocable Trust K ("Trust K"), which became irrevocable upon the death of Terence E. Adderley on October 9, 2018, is our controlling stockholder.
Risks Related to Operating a Global Enterprise We conduct a significant portion of our operations outside of the United States and we are subject to risks relating to our international business activities, including fluctuations in currency exchange rates and numerous legal and regulatory requirements. We conduct our business in major staffing markets throughout the world.
Risks Related to Operating a Global Enterprise We conduct a portion of our operations outside of the United States and we are subject to risks relating to our international business activities, including fluctuations in currency exchange rates and numerous legal and regulatory requirements. We conduct our business in major markets throughout the world.
If we fail to accurately anticipate and meet our customers’ needs through the development of new service offerings or do not successfully deliver new service offerings, our competitive position could weaken, causing a material adverse effect on our results of operations and financial condition.
If we fail to accurately anticipate and meet our customers’ needs through the development of new or improved service offerings or do not successfully deliver these service offerings, our competitive position could weaken, causing a material adverse effect on our results of operations and financial condition.
ITEM 1A. RISK FACTORS. Risks Related to Macroeconomic Conditions Our business is significantly affected by fluctuations in general economic conditions. Demand for staffing services is significantly affected by the general level of economic activity and employment in the United States and the other countries in which we operate.
ITEM 1A. RISK FACTORS. Risks Related to Macroeconomic Conditions Our business is significantly affected by fluctuations in general economic conditions. Historically, the general level of economic activity and employment in the United States and the other countries in which we operate has significantly affected the demand for staffing services.
If we fail to successfully develop new service offerings, we may be unable to retain and acquire customers, resulting in a decline in revenues. The Company’s successful execution of our growth strategy requires that we match evolving customer expectations with evolving service offerings.
If we fail to successfully improve or develop new service offerings, we may be unable to retain and acquire customers, resulting in a decline in revenues. The Company’s successful execution of our growth strategy requires that we match evolving customer expectations with evolving service offerings.
We rely upon multiple information technology systems and networks, some of which are web-based or managed by third parties, to process, transmit, and store electronic information and to manage or support a variety of critical business processes and activities.
We rely upon multiple information technology systems and networks, some of which are web-based or managed by third parties or open source, to process, transmit, and store electronic information and to manage or support a variety of critical business processes and activities.
During 2022, we met all of the covenant requirements. Our ability to continue to meet these financial covenants, particularly with respect to interest coverage (see Debt footnote in the notes to our consolidated financial statements), cannot be assured.
During 2024, we met all of the covenant requirements. Our ability to continue to meet these financial covenants, particularly with respect to interest coverage (see Debt footnote in the notes to our consolidated financial statements), cannot be assured.
Although we have a program designed to preserve the privacy rights of the personal data that we control or process, as well as personal data that we entrust to third parties, there can be no assurance that our program will meet all current and future regulatory requirements, anticipate all potential methods of unauthorized access, or prevent all inappropriate disclosures.
Although we have a privacy compliance program designed to preserve the privacy and rights of the individuals whose personal data we control or process, as well as personal data that we entrust to third parties, there can be no assurance that our program will meet all current and future regulatory requirements, anticipate all potential methods of unauthorized access, or prevent all inappropriate disclosures.
If we are unsuccessful in executing our strategy, we may not achieve either our stated goal of revenue growth or the intended productivity improvements, which could negatively impact profitability. Even if effectively executed, our strategy may be insufficient considering changes in market conditions, technology, competitive pressures or other external factors.
If we are unsuccessful in executing our strategy, we may not achieve either our stated goal of revenue growth or the intended productivity improvements, which could negatively impact profitability. Even if effectively executed, our strategy may be insufficient considering changes in market conditions, technology, changes in customer buying behavior, competitive pressures or other external factors.
Additionally, should we have a material inability to produce records as a consequence of litigation or a government investigation, the cost or consequences of such matters could become much greater. Risks Related to Cyber Security and Data Privacy Damage to our key data centers could affect our ability to sustain critical business applications.
Additionally, should we have a material inability to produce records as a consequence of litigation or a government investigation, the cost or consequences of such matters could become much greater. Risks Related to Cyber Security and Data Privacy Damage to our data facilities could affect our ability to sustain critical business applications.
Moreover, our temporary employees may be exposed to, or have access to, similar information in the course of their customer assignments. We routinely experience cyberattacks, which may include the use or attempted use of malware, ransomware, computer viruses, phishing, social engineering schemes and other means of attempted disruption or unauthorized access.
Moreover, our workers may be exposed to, or have access to, similar information in the course of their customer assignments. We routinely experience cyberattacks, which may include the use or attempted use of malware, ransomware, computer viruses, phishing, social engineering schemes and other means of attempted disruption or unauthorized access.
We are subject to a multitude of federal, state, local, and foreign taxes in the jurisdictions in which we operate. Our tax expense could be materially impacted by changes in tax laws in these jurisdictions, changes in the valuation of deferred tax assets and liabilities or changes in the mix of income by country.
We are subject to multiple federal, state, local, and foreign taxes in the jurisdictions in which we operate. Our tax expense could be materially impacted by changes in tax laws in these jurisdictions, changes in the valuation of deferred tax assets and liabilities or changes in the mix of income by country.
We also face the risk that our current or prospective customers may decide to provide similar services internally. As a result, there can be no assurance that we will not encounter increased competition in the future. Technological advances may significantly disrupt the labor market and weaken demand for human capital.
We also face the risk that our current or prospective customers may decide to 8 provide similar services internally. As a result, there can be no assurance that we will not encounter increased competition in the future. Technological advances, including advances in artificial intelligence, may significantly disrupt the labor market and weaken demand for human capital.
In accordance with the provisions of Trust K, William U. Parfet, David M. Hempstead and Andrew H. Curoe were appointed as successor trustees of the trust. Mr. Parfet is the brother of Donald R. Parfet, the Chairman of the board of directors of the Company.
In accordance with the provisions of Trust K, William U. Parfet, David M. Hempstead and Andrew H. Curoe were appointed as successor trustees of the trust. Mr. Parfet is the brother of Donald R. Parfet, a member of the board of directors of the Company.
Exchange rates for currencies of these countries may fluctuate in relation to the U.S. dollar and these fluctuations may have an adverse or favorable effect on our operating results when translating foreign currencies into U.S. dollars. 12 Our international operations subject us to potential liability under anti-corruption, trade protection, and other laws and regulations.
Exchange rates for currencies of these countries may fluctuate in relation to the U.S. dollar and these fluctuations may have an adverse or favorable effect on our operating results when translating foreign currencies into U.S. dollars. Our international operations subject us to potential liability under anti-bribery, anti-corruption, anti-trafficking, supply chain, trade protection, and other laws and regulations.
Many business processes critical to our continued operation are hosted in outsourced facilities in America, Europe and Asia. Certain other processes are hosted at our corporate headquarters complex or occur in cloud-based computer environments. These critical processes include, but are not limited to, payroll, customer reporting, and order management.
Many business processes critical to our continued operation are hosted in outsourced facilities in America, Europe and Asia, hosted at our corporate headquarters or, increasingly, occur in cloud-based computer environments. These critical processes include, but are not limited to, payroll, customer reporting, and order management.
A change in labor strategy or the deterioration of the financial condition or business prospects of these customers could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from these customers.
A change in labor strategy or labor disruptions, including work stoppages or the deterioration of the financial condition or business prospects of these customers could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from these customers.
As we increasingly offer services outside the realm of traditional staffing, including business process outsourcing and services intended to connect talent to independent work, we are exposed to additional risks which could have a material adverse effect on our business.
As we increasingly offer services outside the realm of traditional staffing, including outcome-based services, business process outsourcing, vendor and supplier management, and services intended to connect independent talent to independent work, we are exposed to additional risks which could have a material adverse effect on our business.
Additionally, the emergence of online staffing platforms or other forms of disintermediation may pose a 8 competitive threat to our services, which operate under a more traditional staffing business model. Price competition in the staffing industry is intense, particularly for the provision of office clerical, light industrial and education personnel.
Additionally, the emergence of online staffing platforms, talent sourcing models, or other forms of disintermediation may pose a competitive threat to our services that operate under a more traditional staffing business model. Price competition in the staffing industry is intense, particularly for the provision of office clerical, light industrial and education personnel.
We rely on third parties to support critical functions within our operations, including portions of our technology infrastructure, vendor management, customer relationship management, and applicant tracking systems.
We rely on third parties to support critical functions within our operations, including portions of our technology infrastructure, vendor management, customer relationship management, applicant tracking systems and in-country staffing services.
In the event that we determine that there is an impairment, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.
In the event of an impairment determination, we may be required to record a significant non-cash charge to earnings that could adversely affect our results of operations.
The development of new service offerings requires accurate anticipation of customer needs and emerging technology and workforce trends. We must make long-term investments in our information technology infrastructure and commit resources to development efforts before knowing whether these investments will result in service offerings that achieve customer acceptance and generate the revenues required to provide desired returns.
The development of new or improved service offerings requires accurate anticipation of customer needs and emerging technology and workforce trends. We must make long-term investments in our information technology infrastructure and commit resources to development efforts without certainty that these investments will result in service offerings that achieve customer acceptance and generate the revenues required to provide desired returns.
In addition, the stock market in general, and the NASDAQ Global Market in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.
In addition, the stock market in general, and the Nasdaq Global Market in particular, often experiences significant price and volume fluctuations that frequently are unrelated or disproportionate to the operating performance of listed companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.
Our business is subject to extensive government regulation, which may restrict the types of employment services we are permitted to offer or result in additional or increased taxes, including payroll taxes or other costs that reduce our revenues and earnings. The temporary employment industry is heavily regulated in many of the countries in which we operate.
Our business is subject to extensive government regulation, which may restrict the types of services we are permitted to offer or result in additional tax or licensing requirements, or other costs that reduce our revenues and earnings. The temporary employment industry is heavily regulated in many of the countries in which we operate.
The trustees, acting by majority vote, have sole investment and voting power over the shares of Class B common stock held by Trust K, which represent approximately 93.5% of the outstanding Class B shares.
The trustees, acting by majority vote, have sole investment and voting power over the shares of our Class B common stock held by Trust K, which represent approximately 95.3% of the outstanding Class B shares.
In such event, the price of our common stock may decline. Risks Related to our Industry Segment We operate in a highly competitive industry with low barriers to entry and may be unable to compete successfully against existing or new competitors. The worldwide staffing services market is highly competitive with limited barriers to entry.
Risks Related to our Industry Segment We operate in a highly competitive industry with low barriers to entry and may be unable to compete successfully against existing or new competitors. The worldwide staffing services market is highly competitive with limited barriers to entry.
Because we assign employees to work under the direction and supervision of our customer at work locations not under Kelly’s control, we are at risk of our employees engaging in unauthorized conduct that could harm our reputation. Our Education segment is particularly susceptible to this exposure.
Our success depends, in part, on the value associated with our brands. Because we assign employees to work under the direction and supervision of our customer at work locations not under Kelly’s control, we are at risk of our employees engaging in unauthorized conduct that could harm our reputation. Our Education segment is particularly susceptible to this exposure.
While we maintain insurance in types and amounts we believe are appropriate for the contemplated risks, there is no assurance that such insurance coverage will remain available on reasonable terms or be sufficient in amount or scope. We are increasingly dependent on third parties for the execution of critical functions.
While we maintain insurance in types and amounts we believe are appropriate for the contemplated risks, there is no assurance that such insurance coverage will remain available on reasonable terms or be sufficient in amount or scope. 11 We are increasingly dependent on third parties for the execution of critical functions and could be liable for their inability to perform or adhere to global compliance standards.
The European Union’s General Data Protection Regulation, the California Consumer Privacy Act and similar laws impose additional compliance requirements related to the collection, use, processing, transfer, disclosure, and retention of personal information, which can increase operating costs and resources to accomplish.
The European Union’s General Data Protection Regulation, the California Consumer Privacy Act, the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and similar laws impose additional compliance requirements related to the collection, use, processing, transfer, disclosure, security, and retention of personal or protected health information ("PHI"), which can increase operating costs and resources to accomplish.
We compete in global, national, regional and local markets with full-service and specialized temporary staffing and consulting companies. Randstad, Adecco Group, ManpowerGroup Inc. and Allegis Group are considerably larger than we are and have more substantial marketing and financial resources.
We compete in global, national, regional and local markets with full-service and specialized temporary staffing and consulting companies. Some competitors are considerably larger than we are and have more substantial marketing and financial resources.
The acquirer would also be required to provide advance notice of its proposal to replace directors at any annual meeting and would not be able to cumulate votes at a meeting, which would require the acquirer to hold more shares to gain representation on the board of directors than if cumulative voting were permitted. 15 Our board of directors also has the ability to issue additional shares of common stock which could significantly dilute the ownership of a hostile acquirer.
The acquirer would also be required to provide advance notice of its proposal to replace directors at any annual meeting and would not be able to cumulate votes at a meeting, which would require the acquirer to hold more shares to gain representation on the board of directors than if cumulative voting were permitted.
Changes in laws or government regulations may result in prohibition or restriction of certain types of employment services we are permitted to offer or the imposition of new or additional benefit, licensing or tax requirements that could reduce our revenues and earnings.
Changes in laws or government regulations may result in prohibition or restriction of certain types of services we can offer, increased delivery and operating complexity costs, or the imposition of new or additional pay, benefit, licensing or tax requirements that could reduce our revenues and earnings.
The actions we take to reduce the risk of impairments to our operations or systems and breaches of confidential or proprietary data may not be sufficient to prevent or repel future cyber events or other impairments of our networks or information technologies.
The actions we take to reduce the risk of impairments to our operations or systems and breaches of confidential or proprietary data may not be sufficient to prevent or repel future cyber events or other impairments of our networks or information technologies, especially as cyberattacks become more sophisticated with advances in artificial intelligence.
As the nature of work changes, we deliver services that connect talent to independent work with our customers and expose the Company to risks of misclassifying workers, which could result in regulatory audits and penalties.
This could expose us to certain risks unique to that business, including civil liability, product liability, or product recalls. As the nature of work changes, we deliver services that connect independent talent to independent work with our customers which could expose the Company to risks of misclassifying workers, which could result in regulatory audits and penalties.
Any future changes in laws or government regulations, or interpretations thereof, including additional laws and regulations enacted at a local level may make it more difficult or expensive for us to provide staffing services and could have a material adverse effect on our business, financial condition and results of operations. 9 Unexpected changes in claim trends on our workers’ compensation, unemployment, disability and medical benefit plans may negatively impact our financial condition.
Any future changes in laws or government regulations, or interpretations or enforcement thereof, including additional laws and regulations enacted at a state or local level may make it more difficult or expensive for us to provide services and could have a material adverse effect on our business, financial condition and results of operations.
When economic activity increases, temporary employees are often added before full-time employees are hired. As economic activity slows, however, many companies reduce their use of temporary employees before laying off full-time employees. Customer responses to real or perceived economic conditions, including perceptions related to market conditions, labor supply and inflation, could negatively impact customer behavior.
In periods of economic growth, employers often add temporary employees before hiring full-time employees. However, when economic activity declines, many employers reduce their use of temporary employees before laying off full-time employees. Customer responses to real or perceived economic conditions, including perceptions related to market conditions, labor supply and inflation, could negatively impact customer behavior.
Significant swings in economic activity historically have had a disproportionate impact on staffing industry volumes. We may not fully benefit from times of increased economic activity should we experience shortages in the supply of temporary employees. We may also experience more competitive pricing pressure and slower customer payments during periods of economic downturn.
Historically, significant changes in economic activity have disproportionately impacted staffing industry volumes. We may not fully benefit from times of increased economic activity should we experience shortages in the supply of workers. We may also experience more competitive pricing pressure and slower customer payments during periods of economic decline.
If our vendors are unable to provide these services, or fail to meet our standards and expectations, we could experience business interruptions or data loss which could have a material adverse effect on our business, financial condition and results of operations. Past and future acquisitions may not be successful.
Some of the initiatives are dependent on the products and services of third-party vendors. If our vendors are unable to provide these services, or fail to meet our standards and expectations, we could experience business interruptions or data loss which could have a material adverse effect on our business, financial condition and results of operations.
As a part of our growth strategy, we continue to monitor the market for acquisition targets to bolster our inorganic growth aspirations.
Past and future acquisitions may not be successful. As a part of our growth strategy, we continue to monitor the market for acquisition targets to bolster our inorganic growth aspirations.
Although we have taken steps to protect all such instances by establishing robust data backup and disaster recovery capabilities, the loss of these data centers or access to the cloud-based environments could create a substantial risk of business interruption which could have a material adverse effect on our business, financial condition and results of operations.
Although we have taken steps to protect such instances by establishing data backup and disaster recovery capabilities, the loss or inability to access of this data or cloud environment could create a substantial risk of business interruption which could have a material adverse effect on our business, financial condition and results of operations. 14 A failure to maintain the privacy of personal data entrusted to us could have significant adverse consequences.
Our success is directly dependent on our customers’ demands for talent. As technology continues to evolve, more tasks currently performed by people may be replaced by automation, robotics, machine learning, artificial intelligence, and other technological advances outside of our control.
Our success is directly dependent on our customers’ demand for talent. As technology continues to evolve, an increasing number of tasks currently performed by people may be replaced by automation, robotics, machine learning, artificial intelligence, and other technology advances outside of our control. These changes could result in a decreased demand for human labor.
We believe that many factors, including several which are beyond our control, have a significant effect on the market price of our common stock.
Our stock price may be subject to significant volatility and could suffer a decline in value. The market price of our common stock may be subject to significant volatility. We believe that many factors, including several which are beyond our control, have a significant effect on the market price of our common stock.
We do not use a single enterprise resource planning system, which limits our ability to react to evolving technology and customer expectations and increases the amount of investment and effort necessary to provide global service integration to our customers. Although the technology strategy is intended to increase productivity and operating efficiencies, these initiatives may not yield their intended results.
We do not currently use a single enterprise resource planning ("ERP") system, which limits our ability to react to evolving technology and customer expectations and increases the amount of investment and effort necessary to provide global service integration to our customers.
Even in instances where we are not a target of a malicious actor, we could be exposed to risk due to our relationships and business processes with these third parties.
Our relationships with third parties, including suppliers we manage, customers, and vendors, create potential avenues for malicious actors to initiate a supply chain attack. Even in instances where we are not a target of a malicious actor, we could be exposed to risk due to our relationships and business processes with these third parties.
The failure or inability to perform on the part of one or more of these critical suppliers or partners could cause significant disruptions and increased costs. Our information technology strategy may not yield its intended results.
The failure or inability to adequately perform on the part of one or more of these critical vendors, suppliers, or partners could cause significant disruptions and increased costs.
Although we have safeguards in place to comply with competition laws, there can be no guarantee that such safeguards will be successful. Any government regulatory actions may result in fines and penalties or hamper our ability to provide the cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them.
Any government regulatory actions may result in fines and penalties or hamper our ability to provide cost-effective benefits to consumers and businesses, reducing the attractiveness of our services and the revenues that come from them. New competition law actions could be initiated.
In the past, securities class action litigation has often been instituted following periods of volatility in the market price of a company’s securities. A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of our management’s attention and resources. Further, our operating results may be below the expectations of securities analysts or investors.
A securities class action suit against us arising out of stock volatility or other investor claims, could result in substantial costs, potential liabilities and the diversion of our management’s attention and resources. Further, our operating results may be below the expectations of securities analysts or investors. In such event, the price of our common stock may decline.
As we aim to expand the number of clients utilizing our higher margin specialty solutions in support of our growth strategy, we are highly reliant on individuals who possess specialized knowledge and skills to lead related specialty solutions and operations. Social, political and financial conditions can negatively impact the availability of qualified personnel.
Risks Related to Human Capital We depend on our ability to attract, develop and retain qualified permanent full-time employees. As we aim to expand the number of clients utilizing our higher margin specialty solutions in support of our growth strategy, we are highly reliant on individuals who possess specialized knowledge and skills to lead related specialty solutions and operations.
While Kelly has sought to address this trend, including providing MSP services within our OCG segment, we may not be selected or retained as the MSP by our large customers. This may result in a material decrease in the revenue we derive from providing staffing services to such customers.
While Kelly has sought to address this trend, including providing supplier and vendor management services as a customer’s MSP within our OCG segment, we may not be selected or retained as the MSP by our large customers, or if we are the MSP, we may not be one of the underlying staffing providers.
The Foreign Corrupt Practices Act and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors, or agents. While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors, or agents may violate our policies.
While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments and ensure compliance with human rights standards, our employees, directors, officers, vendors, or agents may violate our policies.
Our insurance coverage may not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms. Cyberattacks or other breaches of network or information technology security could have an adverse effect on our systems, services, reputation and financial results.
Our insurance coverage may not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms.
In particular, we are subject to state unemployment taxes in the U.S., which typically increase during periods of increased levels of unemployment. We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire and may not be reinstated.
We also receive benefits, such as the work opportunity income tax credit in the U.S., that regularly expire and may not be reinstated.
Competition for individuals with proven specialized knowledge and skills is intense, and demand for these individuals is expected to remain strong in the foreseeable future. Our success is dependent on our ability to attract, develop and retain these employees. We depend on our ability to attract and retain qualified temporary personnel (employed directly by us or through third-party suppliers).
Social, political and financial conditions can negatively impact the availability of qualified personnel. Competition for 13 individuals with proven specialized knowledge and skills is intense, and demand for these individuals is expected to remain strong in the foreseeable future. Our success is dependent on our ability to attract, develop and retain these employees.
We may be exposed to employment-related claims and losses, including class action lawsuits and collective actions, which could have a material adverse effect on our business. We employ and assign personnel in the workplaces of other businesses.
There can be no assurance that qualified personnel will continue to be available in sufficient numbers and on terms of employment acceptable to us and our customers. We may be exposed to employment-related claims and losses, including class action lawsuits and collective actions, which could have a material adverse effect on our business.
Our business strategy focuses on driving profitable growth in key specialty areas, including through business process outsourcing arrangements, where we provide operational management of our customers’ non-core functions or departments. This could expose us to certain risks unique to that business, including product liability or product recalls.
Our business strategy focuses on driving profitable growth in key specialty areas, including through business process outsourcing arrangements, where we provide operational management of our customers’ non-core functions or departments. We also plan to expand the outcome-based services we provide, which increases our risk associated with product delivery.
In addition, revenues may be materially impacted from our decision to exit customers due to pricing pressure or other business factors. Our business with the federal government and government contractors presents additional risk considerations. We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts.
This may result in a material decrease in the revenue we derive from providing staffing services to such customers. In addition, revenues may be materially impacted if we decide to exit customers due to pricing pressure or other business factors. Our business with the federal government and government contractors presents additional risk considerations.
Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation. Operations outside the U.S. may be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment.
Our failure to comply with Anti-Corruption Laws or Human Rights and Supply Chain Laws could result in significant fines and penalties, criminal sanctions against us, our directors, officers, employees, agents, or our vendors, prohibitions on the conduct of our business, and damage to our reputation.
Any delays in completing, or an inability to successfully complete, these technology initiatives or an inability to achieve the anticipated efficiencies could adversely affect our operations, liquidity and financial condition. Some of the initiatives are dependent on the products and services of third party vendors.
Although the technology strategy is intended to increase productivity and operating efficiencies, these initiatives may not yield their intended results. Any delays in completing, or an inability to successfully complete, these technology initiatives, or an inability to achieve the anticipated efficiencies, could adversely affect our operations, liquidity and financial condition.
Such change could occur due to factors in our customers' control but also could occur due to economic, social, climate, or political factors outside of our customers' control.
Such change could occur due to economic, social, climate, or political factors outside of our customers' control. Inability to meet customer demands in response to these factors could result in the decline in use of our service or outright loss of customers.
Information concerning these individuals may also reside in systems controlled by third parties for purposes such as employee benefits and payroll administration. The legal and regulatory environment concerning data privacy is becoming more complex and challenging, and the potential consequences of non-compliance have become more severe.
The legal and regulatory environment concerning data privacy is becoming more complex and challenging, and the potential consequences of non-compliance have become more severe.
Failure to meet these obligations could result in civil penalties, fines, suspension of payments, reputational damage, disqualification from doing business with government agencies and other sanctions or adverse consequences. Government procurement practices may change in ways that impose additional costs or risks upon us or pose a competitive disadvantage.
We must comply with laws and regulations relating to the formation, administration and performance of federal government contracts. Failure to meet these obligations could result in civil penalties, fines, suspension of payments, reputational damage, disqualification from doing business with government agencies and other sanctions or adverse consequences.
Additionally, the rapid pace of change in information security and cyber security threats could result in a heightened threat level for us or companies in our industry with little notice. Our relationships with third parties, including suppliers we manage, customers, and vendors creates potential avenues for malicious actors to initiate a supply chain attack.
Additionally, the rapid pace of change in information security and cyber security threats could result in a heightened threat level for us or companies in our industry without notice. The potential risk increases as we expand and publicize new services.
This trend poses a risk to the staffing industry, particularly in lower-skill job categories that may be more susceptible to such replacement. If we are unsuccessful in responding to this potential shift in customer demand due to advancing technology it could have a material adverse effect on our results of operations and financial condition.
If we are unsuccessful in responding to this potential shift in customer demand due to advancing technology, it could have a material adverse effect on our results of operations and financial condition. Competition rules arising from government legislation, litigation or regulatory activity may limit how we structure and market our services.
Competition rules arising from government legislation, litigation or regulatory activity may limit how we structure and market our services. As a leading staffing and recruiting company, we are closely scrutinized by government agencies under U.S. and foreign competition laws. An increasing number of governments are regulating competition law activities, leading to increased scrutiny.
As a leading staffing and recruiting company, we are closely scrutinized by government agencies under U.S. and foreign competition laws. An increasing number of governments are enforcing competition laws and regulations, leading to increased scrutiny. Some jurisdictions also allow competitors or consumers to assert claims of anti-competitive conduct.
Our employees may be unable to obtain or retain the security clearances necessary to conduct business under certain contracts, or we could lose or be unable to secure or retain a necessary facility clearance. Government agencies may temporarily or permanently lose funding for awarded contracts, or there could be delays in the start-up of projects already awarded and funded.
Government procurement practices may change in ways that impose additional costs or risks upon us or pose a competitive disadvantage. Our employees may be unable to obtain or retain the security clearances necessary to conduct business under certain contracts, or we could lose, or be unable to secure or retain, a necessary facility clearance.
Competition for individuals with proven professional skills is intense, and demand for these individuals is expected to remain strong for the foreseeable future. Low unemployment, as well as social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the staffing requirements of our customers.
Rapid evolution of technology may widen the skills gap, where the demand for expertise outpaces the availability of suitably skilled professionals. Low unemployment, as well as social, political and financial conditions can negatively impact the amount of qualified personnel available to meet the talent requirements of our customers.
Some jurisdictions also allow competitors or consumers to assert claims of anti-competitive conduct. The European Commission and its various competition authorities have targeted industry trade associations in which we participate, resulting in the assessment of fines against our business in the past.
The European Commission and its various competition authorities have targeted industry trade associations in which we participate, which could result in the assessment of fines against our business. Although we have safeguards in place to comply with competition laws, there can be no guarantee that such safeguards will be successful.
We depend on our ability to attract qualified temporary personnel who possess the skills and experience necessary to meet the staffing requirements of our customers. We must continually evaluate our base of available qualified personnel to keep pace with changing customer needs.
We depend on the ability of Kelly and third-party talent suppliers to attract and retain qualified personnel to provide our services. We depend on our and our suppliers' ability to attract qualified personnel who possess the skills and experience necessary to meet the workforce demands of our customers.
Our information technology strategy includes improvements to our applicant onboarding and tracking systems, order management, and improvements to financial processes such as billing and accounts payable through system consolidation and 11 upgrades.
Our information technology strategy may not yield its intended results. Our information technology strategy focuses on improvements to our technology stack across the company, including synergies in our applicant onboarding and tracking systems, order management system, and improvements to financial processes.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our headquarters is a leased facility located in Troy, Michigan and is available to our corporate, subsidiary and divisional employees. We also conduct business operations in both the U.S. and international locations in additional leased facilities. Since 2020, the majority of our internal employees have also conducted business remotely as part of our flexible work policy. 16
Biggest changeITEM 2. PROPERTIES. Our headquarters is a leased facility located in Troy, Michigan and is available to our corporate, subsidiary and divisional employees. We also conduct business operations in both the U.S. and international locations in additional leased facilities. Since 2020, the majority of our internal employees have also conducted business remotely as part of our flexible work policy.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur apportioned secondary liability as a member company is approximately $300,000. The matter is still pending. Certain member companies exercised their right to challenge the decision, which could impact the apportionment. The Company does not believe that resolution of this matter will have a material adverse effect upon the Company’s competitive position, results of operations, cash flows or financial position.
Biggest change("Gi") in January 2024, we have agreed to indemnify Gi for any liability resulting from this matter. The Company does not believe that resolution of this matter will have a material adverse effect upon the Company’s competitive position, results of operations, cash flows or financial position.
In January 2018, the Hungarian Competition Authority initiated proceedings against a local industry trade association and its members, due to alleged infringement of national competition regulations. The Authority announced its decision on December 18, 2020, levying a fine against the trade association with joint and several secondary liability placed on the 20 member companies.
In January 2018, the Hungarian Competition Authority (the "Authority") initiated proceedings against a local industry trade association and its members, due to alleged infringement of national competition regulations. The Authority announced its decision on December 18, 2020, levying a fine against the trade association with joint and several secondary liability placed on the 20 member companies.
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The Authority apportioned secondary liability against us as a member company to be approximately $300,000. Certain member companies exercised their right to challenge the decision in Court.
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On or about October 3, 2023, the Court issued its decision which repealed the Authority's decision and ordered a repeated procedure to determine the amount of the imposed fine as well as the allocation between the parties. Although Kelly's staffing operations in Hungary were sold to Gi Group Holdings S.P.A.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities None. 18 Issuer Purchases of Equity Securities During the fourth quarter of 2022, we reacquired shares of our Class A 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 of dollars) October 3, 2022 through November 6, 2022 143 $ 14.53 — $ — November 7, 2022 through December 4, 2022 68,238 16.90 68,114 48.8 December 5, 2022 through January 1, 2023 408,607 16.41 406,530 42.2 Total 476,988 $ 16.48 474,644 On November 9, 2022, the Company's board of directors approved a plan for the Company to repurchase shares of its Class A common stock with a market value not to exceed $50.0 million through transactions executed in the open market within one year.
Biggest changeRecent Sales of Unregistered Securities None. 20 Issuer Purchases of Equity Securities During the fourth quarter of 2024, we reacquired shares of our Class A 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 of dollars) September 30, 2024 through November 3, 2024 8,888 $ 20.32 — $ — November 4, 2024 through December 1, 2024 323 14.39 — $ — December 2, 2024 through December 29, 2024 744,544 13.50 742,163 $ 40.0 Total 753,755 $ 13.58 742,163 On November 26, 2024, the Company's board of directors approved a share repurchase program for the Company to repurchase shares covering up to an aggregate of $50.0 million of the Company's Class A common stock.
The graph assumes an investment of $100 on December 31, 2017 and that all dividends were reinvested.
The graph assumes an investment of $100 on December 31, 2019 and that all dividends were reinvested.
Accordingly, 2,344 shares were reacquired in transactions outside the repurchase program during the Company’s fourth quarter. 19 Performance Graph The following graph compares the cumulative total return of our Class A common stock with that of the S&P SmallCap 600 Index and the S&P 1500 Human Resources and Employment Services Index for the five years ended December 31, 2022.
Accordingly, 11,592 shares were reacquired in transactions outside the repurchase program during the Company’s fourth quarter. 21 Performance Graph The following graph compares the cumulative total return of our Class A common stock with that of the S&P SmallCap 600 Index and the S&P 1500 Human Resources and Employment Services Index for the five years ended December 31, 2024.
We may also reacquire shares outside the program in connection with shares sold to cover employee tax withholdings due upon the vesting of restricted stock held by employees.
The share repurchase authorization expires on December 2, 2026. We may also reacquire shares outside of the program in connection with shares sold to cover employee tax withholdings due upon the vesting of restricted stock held by employees.
Per share amounts (in dollars) First Quarter Second Quarter Third Quarter Fourth Quarter Year 2022 Class A common High $ 23.00 $ 21.69 $ 22.56 $ 18.78 $ 23.00 Low 16.22 16.73 13.41 13.64 13.41 Class B common High 22.30 21.77 26.64 18.63 26.64 Low 16.74 17.01 13.64 14.04 13.64 Dividends 0.05 0.075 0.075 0.075 0.275 2021 Class A common High $ 23.90 $ 26.98 $ 25.00 $ 20.87 $ 26.98 Low 19.13 22.51 18.58 15.88 15.88 Class B common High 57.46 60.00 24.70 21.27 60.00 Low 18.00 22.15 17.95 16.63 16.63 Dividends — — 0.05 0.05 0.10 Holders The number of holders of record of our Class A and Class B common stock were approximately 10,500 and 700, respectively, as of January 30, 2023.
Per share amounts (in dollars) First Quarter Second Quarter Third Quarter Fourth Quarter Year 2024 Class A common High $ 25.27 $ 25.02 $ 23.80 $ 22.44 $ 25.27 Low 19.74 20.84 19.00 12.68 12.68 Class B common High 25.00 24.53 22.98 21.22 25.00 Low 19.80 21.30 19.70 14.00 14.00 Dividends 0.075 0.075 0.075 0.075 0.30 2023 Class A common High $ 19.01 $ 19.43 $ 19.29 $ 22.11 $ 22.11 Low 15.23 15.53 16.80 17.40 15.23 Class B common High 18.62 18.36 18.95 21.65 21.65 Low 15.28 14.86 17.23 18.17 14.86 Dividends 0.075 0.075 0.075 0.075 0.30 Holders The number of holders of record of our Class A and Class B common stock were approximately 14,300 and 600, respectively, as of January 31, 2025.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 December 31, 2017 – December 31, 2022 2017 2018 2019 2020 2021 2022 Kelly Services, Inc. $ 100.00 $ 76.01 $ 84.84 $ 77.59 $ 63.59 $ 65.03 S&P SmallCap 600 Index $ 100.00 $ 91.52 $ 112.37 $ 125.05 $ 158.59 $ 133.06 S&P 1500 Human Resources and Employment Services Index $ 100.00 $ 83.73 $ 102.81 $ 103.69 $ 156.71 $ 117.07
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Assumes Initial Investment of $100 December 31, 2019 – December 31, 2024 2019 2020 2021 2022 2023 2024 Kelly Services, Inc. $ 100.00 $ 91.45 $ 74.94 $ 76.65 $ 99.65 $ 65.24 S&P SmallCap 600 Index $ 100.00 $ 111.29 $ 141.13 $ 118.41 $ 137.42 $ 149.37 S&P 1500 Human Resources and Employment Services Index $ 100.00 $ 100.85 $ 152.43 $ 113.87 $ 121.22 $ 143.93

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe principal important 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, changing market and economic conditions, the impact of the novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brands, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, exposure to risks associated with certain equity investments, including with strategic partners, risks associated with conducting business in foreign countries, including foreign currency fluctuations, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, our ability to sustain critical business applications through our key data centers, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyberattacks or other breaches of network or information technology security, our ability to realize value from our tax credit and net operating loss carryforwards, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this report and in our other filings with the Securities and Exchange Commission.
Biggest changeThe principal important 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, 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) dependency 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.
We may first use a qualitative assessment ("step zero test") for the annual impairment test if we have determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value.
We may first use a qualitative assessment ("step zero") for the annual impairment test if we have determined that it is more likely than not that the fair value for one or more reporting units is greater than their carrying value.
If we elect to forgo the qualitative assessment for a reporting unit, goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value ("step one test").
If we elect to forgo the qualitative assessment for a reporting unit, goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value ("step one").
There is a measurement period of up to one year in which to finalize the fair value determinations and preliminary fair value estimates may be revised if new information is obtained during this period. 32 Income Taxes Income tax expense is based on expected income and statutory tax rates in the various jurisdictions in which we operate.
There is a measurement period of up to one year in which to finalize the fair value determinations and preliminary fair value estimates may be revised if new information is obtained during this period. 38 Income Taxes Income tax expense is based on expected income and statutory tax rates in the various jurisdictions in which we operate.
NEW ACCOUNTING PRONOUNCEMENTS See New Accounting Pronouncements footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report for a description of new accounting pronouncements. 35 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained herein and in our investor conference call related to these results are “forward-looking” statements within the meaning of the applicable securities laws and regulations.
NEW ACCOUNTING PRONOUNCEMENTS See New Accounting Pronouncements footnote in the notes to our consolidated financial statements presented in Part II, Item 8 of this report for a description of new accounting pronouncements. 41 CAUTIONARY NOTE REGARDING 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.
The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about projected revenue growth rates, customer attrition rates, profit margins and discount rates. Determining the useful lives of intangible assets also requires judgment and are inherently uncertain.
The fair value of customer relationship intangibles is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about expected future revenue growth rates, customer attrition rates, profit margins and discount rates. Determining the useful lives of intangible assets also requires judgment and are inherently uncertain.
We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2022. We performed a step one quantitative test for the Softworld and PTS reporting units.
We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2023. We performed a step one quantitative test for the Softworld and PTS reporting units.
We utilize third-party valuation specialists to assist us in the determination of the fair value of the intangibles. The fair value of trade name intangibles is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about projected revenue growth rates, royalty rates and discount rates.
We utilize third-party valuation specialists to assist us in the determination of the fair value of the intangibles. The fair value of trade name intangibles is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about expected future revenue growth rates, royalty rates and discount rates.
During 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower's services, and on-going economic uncertainty has more broadly impacted the growth in demand for RPO in the near-term.
During the second half of 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower’s services, and on-going economic uncertainty had more broadly impacted the growth in demand for RPO in the near-term.
Our tax expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of tax exempt investments in life insurance policies.
Our tax benefit or expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of non-taxable investments in life insurance policies.
For segments with a goodwill balance, we have determined that our reporting units are the same as our operating and reportable segments based on our organizational structure or one level below our operating segments (the component level).
For segments with a goodwill balance, we determine if our reporting units are the same as our operating and reportable segments based on our organizational structure or one level below our operating segments (the component level).
At year-end 2022 and 2021, total goodwill amounted to $151.1 million and $114.8 million, respectively. See the Goodwill and Intangible Assets footnote in the notes to our consolidated financial statements for more information. 34 Litigation Kelly is subject to legal proceedings, investigations and claims arising out of the normal course of business.
At year-end 2024 and 2023, total goodwill amounted to $304.2 million and $151.1 million, respectively. See the Goodwill and Intangible Assets footnote in the notes to our consolidated financial statements for more information. Litigation Kelly is subject to legal proceedings, investigations and claims arising out of the normal course of business.
Dividends paid per common share were $0.275 in 2022, $0.10 in 2021 and $0.075 in 2020. Payments of dividends are restricted by the financial covenants contained in our debt facilities. Details of this restriction are contained in the Debt footnote in the notes to our consolidated financial statements.
Dividends paid per common share were $0.30 in 2024 and 2023 and $0.275 in 2022. Payments of dividends are restricted by the financial covenants contained in our debt facilities. Details of this restriction are contained in the Debt footnote in the notes to our consolidated financial statements.
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 0.1% at year-end 2022 and 0.0% at year-end 2021.
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 16.2% at year-end 2024.
Our working capital requirements are primarily generated from temporary employee payroll, which is generally paid weekly or monthly, and customer accounts receivable, which is generally outstanding for longer periods. Since receipts from customers lag payroll paid to temporary employees, working capital requirements increase substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease.
Our working capital requirements are primarily generated from temporary employee payroll, which is generally paid weekly or monthly, and customer accounts receivable, which is generally outstanding for longer periods. Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows may decrease substantially in periods of growth.
As a measure of sensitivity of the fair value for the Softworld and PTS reporting units, while holding all other assumptions constant, an increase in the discount rate of 100 basis points or a decrease of 100 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of both reporting units would not result in an impairment of goodwill.
As a measure of sensitivity of the fair value for the MRP reporting unit, while holding all other assumptions constant, an increase in the discount rate of 75 basis points or a decrease of 75 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.
The accrual for workers’ compensation, net of related receivables which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet, was $43.3 million and $48.4 million at year-end 2022 and 2021, respectively.
The accrual for workers’ compensation, net of related receivables which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet, was $44.4 million and $43.6 million at year-end 2024 and 2023, respectively.
Our analysis used significant assumptions by reporting unit, including: expected future revenue growth rates, profit margins and discount rate. 33 The goodwill resulting from the acquisition of RocketPower during the first quarter of 2022 was allocated to the OCG reportable segment and RocketPower was deemed to be a separate reporting unit.
Our analysis used significant assumptions by reporting unit, including: expected future revenue growth rates, profit margins and discount rates. 39 The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit.
EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA margin (EBITDA divided by revenue from services) are measures used for understanding the Company's ability to generate cash flow and for judging overall operating performance.
EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA margin (EBITDA divided by revenue from services) are measures used for understanding the Company's ability to generate cash flow and for judging overall operating performance. EBITDA measures are non-GAAP (Generally Accepted Accounting Principles) measures and are used to supplement measures in accordance with GAAP.
At year-end 2022 and 2021, the gross accrual for litigation costs amounted to $2.3 million and $1.4 million, respectively, which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.
At year-end 2024 and 2023, the gross accrual for litigation costs amounted to $1.5 million and $6.4 million, of which $1.5 million was held for sale, respectively, which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.
This was partially offset by $58.3 million of cash used for the acquisition of RocketPower in March 2022, net of cash received, $84.8 million of cash used for the acquisition of PTS in May 2022, net of cash received, and $6.0 million of cash disposed from the sale of our operations in Russia in July 2022, net of proceeds.
This was partially offset by $58.3 million of cash used for the acquisition of RocketPower in March 2022, net of cash received, $84.8 million of cash used for the acquisition of PTS in May 2022, net of cash received, $12.0 million of cash used for capital expenditures, and $6.0 million of cash disposed from the sale of our operations in Russia in July 2022, net of proceeds. 33 Capital expenditures in 2024, 2023 and 2022 primarily related to the Company's IT infrastructure and technology programs.
Different assumptions of the anticipated future results and growth from our business could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet. The estimated fair value of the Softworld and PTS reporting units exceeds the carrying value by more than 10%.
Different assumptions of the anticipated future results and growth from our business could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet.
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 $162.4 million at year-end 2022, compared to $119.5 million at year-end 2021.
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.
Our analysis used significant assumptions, including: expected future revenue growth rates, profit margins and discount rate. Although we believe the assumptions and estimates we have made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.
The remaining goodwill balance for the Softworld reporting unit was $38.5 million as of year-end 2024. Our quantitative analyses used significant assumptions, including: expected future revenue growth rates, profit margins and discount rate. Although we believe the assumptions and estimates we have made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.
Additionally, we performed a step zero qualitative analysis for the Education reporting unit to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary. As a result of the quantitative and qualitative assessments, the Company determined goodwill was not impaired as of year-end 2021.
As a result of the quantitative assessment, we determined that the estimated fair value of the Softworld and PTS reporting units was more than its carrying value. Additionally, we performed a step zero qualitative analysis for the Education reporting unit to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary.
CC measures are non-GAAP measures and are used to supplement measures in accordance with GAAP (Generally Accepted Accounting Principles). Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Days sales outstanding ("DSO") represents the number of days that sales remain unpaid for the period being reported.
As further described below, during 2022, we used $76.3 million of cash for operating activities, generated $167.5 million of cash from investing activities and used $50.6 million of cash for financing activities. Operating Activities In 2022, we used $76.3 million of net cash for operating activities, as compared to generating $85.0 million in 2021 and generating $186.0 million in 2020.
As further described below, during 2024, we generated $26.9 million of cash from operating activities, used $361.6 million of cash for investing activities and generated $214.8 million of cash from financing activities. Operating Activities In 2024, we generated $26.9 million of net cash from operating activities, as compared to generating $76.7 million in 2023 and using $76.3 million in 2022.
Excluding the increase in cash, working capital increased $51.9 million from year-end 2021. The current ratio (total current assets divided by total current liabilities) was 1.5 at year-end 2022 and 2021. Investing Activities In 2022, we generated $167.5 million of net cash from investing activities, compared to using $180.7 million in 2021 and generating $9.8 million in 2020.
Working capital decreased from 2023 primarily due to lower cash balances. The current ratio (total current assets divided by total current liabilities) was 1.7 at year-end 2024 and 1.6 at year-end 2023. Investing Activities In 2024, we used $361.6 million of net cash for investing activities, compared to using $14.1 million in 2023 and generating $167.5 million in 2022.
It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, the tax effects of stock compensation and, prior to February 2022, changes in the fair value of the Company’s investment in Persol Holdings which were treated as discrete since they could not be estimated.
It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes or changes in judgment regarding the realizability of deferred tax assets.
We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2021. We performed a step one quantitative test for the Softworld reporting unit. As a result of the quantitative assessment, we determined that the estimated fair value of the Softworld reporting unit was more than its carrying value.
For the Softworld and MRP reporting units, our annual goodwill impairment testing included step one quantitative tests. As a result of the quantitative assessment, we determined that the estimated fair value of the MRP reporting unit was more than its carrying value and that the estimated fair value of the Softworld reporting unit no longer exceeded the carrying value.
Education revenue from services increased 52.7%. The revenue increase includes the impact of the acquisition of PTS in May 2022. On an organic basis, revenue increased 45.9% reflecting increased demand from existing customers, new customer wins and the impact of higher bill rates.
The increase in Education revenue from services includes the impact of the acquisition of PTS in May 2022. Excluding the acquisition, revenue increased 29.8% reflecting an increased fill rate and an increased demand for our services from existing customers and from net new customer wins.
The gross profit rate increased 360 basis points, primarily due to a change in product mix within this segment. Growth in RPO, including the acquisition of RocketPower, and MSP with higher margins, was coupled with decreased revenues in our PPO product, which generates lower profit margins.
The gross profit rate decreased 480 basis points primarily due to a change in business mix within this segment as a result of strong growth in PPO. The unfavorable business mix was primarily driven by declines in revenue in RPO and MSP, which generate higher margins and improving PPO revenue which generates lower margins.
Science, Engineering & Technology 23.5 21.9 1.6 Education 15.8 15.6 0.2 Outsourcing & Consulting 36.3 32.7 3.6 International 15.3 13.9 1.4 Consolidated Total 20.4 % 18.7 % 1.7 pts. 2022 vs. 2021 Gross profit for the Professional & Industrial segment decreased due to lower revenue volume, partially offset by an increase in the gross profit rate.
Science, Engineering & Technology 23.6 22.8 0.8 23.5 (0.7) Education 14.4 15.3 (0.9) 15.8 (0.5) Outsourcing & Consulting 31.2 36.0 (4.8) 36.3 (0.3) International 0.0 14.8 (14.8) 14.9 (0.1) Consolidated Total 20.4 % 19.9 % 0.5 pts. 20.4 % (0.5) pts. 2024 vs. 2023 Gross profit for the P&I segment decreased on lower revenue volume.
We utilize intercompany loans, dividends, capital contributions and redemptions to effectively manage our cash on a global basis. 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 the Company’s overall capital structure.
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 the Company’s overall capital structure. As of year-end 2024, these reviews have not resulted in specific plans to repatriate a majority of our international cash balances.
We have no material, unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities. 30 Liquidity We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities.
We had no debt outstanding at year-end 2023. 34 Liquidity We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities.
We have historically managed our cash and debt very closely to optimize our capital structure. As our cash balances build, we tend to pay down debt as appropriate. Conversely, when working capital needs grow, we tend to use corporate cash and cash available in the Cash Pool first, and then access our borrowing facilities.
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.
The gross profit rate increased 160 basis points due to improved specialty mix, including the acquisition of Softworld which generates higher gross profit margins, and increased permanent placement income, partially offset by higher employee-related costs. Gross profit for the Education segment increased on higher revenue volume and an increase in the gross profit rate.
This decrease reflects lower permanent placement income and higher employee-related costs, partially offset by favorable business mix. SET gross profit decreased on lower revenue volume. The gross profit rate decreased 70 basis points due to lower permanent placement revenues, partially offset by favorable business mix. 27 Gross profit for the Education segment increased on higher revenue volume.
Excluding the impact of the PTS acquisition, SG&A expenses increased 24.0%, due primarily to higher salary-related expenses as headcount has increased as revenues have grown. Total SG&A expenses in Outsourcing & Consulting increased 22.1%, and includes the impact of the acquisition of RocketPower in March 2022.
Excluding the impact of the PTS acquisition, SG&A expenses increased 11.9% from 2022, due primarily to higher direct salaries, which includes performance-based incentive compensation expenses, as headcount has increased as revenues have grown. The increase in total SG&A expenses in OCG includes the impact of restructuring charges and the first quarter impact of the acquisition of RocketPower in March 2022.
The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit. See the Acquisitions and Dispositions footnote in the notes to our consolidated financial statements for more information.
The goodwill resulting from the acquisition of MRP in the second quarter of 2024 was allocated to the SET reportable segment and was deemed to be a separate reporting unit. The goodwill resulting from the acquisition of CTC in the fourth quarter of 2024 was allocated to the Education reportable segment.
The increase in organic SG&A expenses is due primarily to higher performance-based incentive compensation expense and higher salary-related costs from increasing headcount. Total SG&A expenses in Education increased 31.7%, and includes the impact of the acquisition of PTS in May 2022.
The decrease in total SG&A expenses in SET is primarily due to lower direct salaries as a result of lower performance-based incentive compensation expenses. 29 The increase in total SG&A expenses in Education includes the first quarter impact of the acquisition of PTS in May 2022.
Based on the result of our interim goodwill impairment test, we recorded a goodwill impairment charge of $30.7 million in the third quarter of 2022 and we recorded an additional goodwill impairment charge of $10.3 million to write off the remaining balance of RocketPower’s goodwill in the fourth quarter of 2022, for a total goodwill impairment charge of $41.0 million as of year-end 2022.
We performed interim step one quantitative tests for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value. Based on the result of our interim goodwill impairment tests, we recorded a total goodwill impairment charge of $41.0 million as of year-end 2022 to write-off all of RocketPower's goodwill balance.
The change in cash used for financing activities was primarily related to the buyback of the Company's common shares held by Persol Holdings for $27.2 million in February 2022, $7.8 million in share repurchases of the Company's Class A common stock in the fourth quarter of 2022 and the year-over-year change in dividend payments.
In 2024, the buyback of $10.0 million represents repurchases of the Company's Class A common stock compared to $42.2 million in shares repurchased in 2023 and $7.8 million in 2022. In addition, the $27.2 million buyback of common shares in 2022 represents the buyback of the Company's common shares held by Persol Holdings in February 2022.
In addition, in 2022 we paid $48.4 million of income taxes related to the sale of Persol Holdings common stock. The change from 2021 to 2022 was primarily due to the impact of payments related to the payroll tax deferral, income tax payments related to the sale of Persol Holdings common stock and increased working capital requirements.
The decrease from prior year is primarily due to increased working capital requirements. Ne t cash used for operating activities in 2022 included $86.8 million of cash outflows related to the repayment of U.S. payroll taxes originally deferred in 2020. In addition, in 2022 we paid $48.4 million of income taxes related to the sale of Persol Holdings common stock.
In comparison to the prior year, the gross profit rate increased 130 basis points. This increase reflects improved business mix, higher permanent placement income, including conversion fees related to a large customer and lower employee-related costs. Science, Engineering & Technology gross profit increased on higher revenue volume, combined with an increase in the gross profit rate.
Gross profit for the Education segment increased on higher revenue volume. The gross profit rate decreased 90 basis points due primarily to customer mix, lower permanent placement fees and higher employee-related costs. OCG gross profit decreased with a decrease in the gross profit rate.
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.
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.
The securitization facility carried no short-term borrowings and $49.5 million of standby letters of credit related to workers’ compensation. Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.
See the Fair Value Measurements footnote and the Debt footnote in the notes to our consolidated financial statements for more details. 35 Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.
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.
A total of $40.0 million remains available under the share repurchase program as of year-end 2024. 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.
Revenue in Europe decreased 9.2% on a reported basis and decreased 0.3% in constant currency, with the impact of the sale of our Russian operations nearly offset by growth in most geographies. 25 Operating Results By Segment (continued) (Dollars in millions) 2022 2021 Change Gross Profit: Professional & Industrial $ 302.5 $ 310.0 (2.4) % Science, Engineering & Technology 297.0 253.9 17.0 Education 100.3 65.1 54.0 Outsourcing & Consulting 169.6 141.4 20.0 International 142.4 148.8 (4.3) Consolidated Total $ 1,011.8 $ 919.2 10.1 % Gross Profit Rate: Professional & Industrial 18.2 % 16.9 % 1.3 pts.
The decrease in International revenue from services was primarily the result of the sale of our Russian operations in July 2022 and lower volume in several geographies, partially offset by favorable foreign currency fluctuations. 26 Operating Results By Segment (continued) (Dollars in millions) 2024 2023 2024 vs. 2023 Change 2022 2023 vs. 2022 Change Gross Profit: Professional & Industrial $ 261.3 $ 277.1 (5.7) % $ 313.1 (11.5) % Science, Engineering & Technology 335.6 272.0 23.4 297.0 (8.4) Education 139.8 128.7 8.6 100.3 28.4 Outsourcing & Consulting 145.9 163.5 (10.8) 169.6 (3.7) International — 120.1 (100.0) 131.8 (8.8) Consolidated Total $ 882.6 $ 961.4 (8.2) % $ 1,011.8 (5.0) % Gross Profit Rate: Professional & Industrial 17.8 % 18.0 % (0.2) pts. 18.3 % (0.3) pts.
Permanent placement revenue, which is included in revenue from services and has very low direct costs of services, has a disproportionate impact on gross profit rates. Total SG&A expenses increased 8.4% on a reported basis and 10.0% on a constant currency basis.
Permanent placement revenue has higher gross profit due to very low direct costs of services and thus has a disproportionate impact on gross profit rates.
This allows countries with excess cash to invest and countries with cash needs to utilize the excess cash. At year-end 2022, we had $200.0 million of available capacity on our $200.0 million revolving credit facility and $100.5 million of available capacity on our $150.0 million securitization facility.
At year-end 2024, we had $110.0 million of available capacity on our $150.0 million revolving credit facility and $4.5 million of available capacity on our $250.0 million securitization facility. The revolving credit facility carried $40.0 million of long-term borrowings on the term benchmark line of credit.
For a discussion of 2021 results compared to 2020, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 2, 2022, filed on February 17, 2022. 2022 vs. 2021 Revenue from services increased 1.1% on a reported basis and 3.2% on a constant currency basis, and reflects revenue increases in Education, Science, Engineering & Technology, and Outsourcing & Consulting operating segments, partially offset by declines in Professional & Industrial and International segments.
For a discussion of total company 2023 results compared to 2022, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on February 20, 2024.
At year-end 2022, we also had additional unsecured, uncommitted short-term credit facilities totaling $5.9 million, under which we had $0.7 million of borrowings. Details of our debt facilities as of the 2022 year end are contained in the Debt footnote in the notes to our consolidated financial statements.
Throughout 2024 and as of the 2024 year end, we met the debt covenants related to our revolving credit facility and securitization facility. At year-end 2024, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.1 million, under which we had no borrowings.
The decline in earnings due to the sale of operations in Russia was nearly offset by growth in most geographies. 28 Results of Operations Financial Condition Historically, we have financed our operations through cash generated by operating activities and access to credit markets.
Corporate expenses increased in 2023 from 2022 primarily due to restructuring and transformation charges of $23.0 million and transaction costs of $3.8 million. 32 Results of Operations Financial Condition Historically, we have financed our operations through cash generated by operating activities and access to credit markets.
Conversion rate 1.5 5.3 (3.8) The discussion that follows focuses on 2022 results compared to 2021.
The total company discussion that follows focuses on 2024 results compared to 2023.
Revenue from outcome-based services declined 0.3% due to lower demand for our call center specialty, partially offset by growth in other specialties. Science, Engineering & Technology revenue from services increased 9.4% on a reported basis, which includes revenue from the acquisition of Softworld in the second quarter of 2021.
Revenue from outcome-based services decreased 1.4% due to lower demand for our call-center solutions, partially offset by higher revenue from other specialties. The increase in SET revenue from services was driven by the acquisition of MRP in May 2024.
Corporate expenses increased 6.6%, primarily due to higher performance-based incentive compensation expense. 27 Operating Results By Segment (continued) (Dollars in millions) 2022 2021 % Change Earnings (Loss) from Operations: Professional & Industrial $ 32.0 $ 31.4 1.8 % Science, Engineering & Technology 82.1 73.7 11.4 Education 18.5 3.0 NM Outsourcing & Consulting (21.2) 18.7 NM International 9.9 9.9 (0.5) Corporate (94.0) (88.1) (6.6) Loss on disposal (18.7) — NM Gain on sale of assets 6.2 — NM Consolidated Total $ 14.8 $ 48.6 (69.7) % 2022 vs. 2021 Professional & Industrial reported earnings of $32.0 million, a 1.8% increase from 2021.
The increase excluding these charges is primarily due to higher legal settlement expenses. 30 Operating Results By Segment (continued) (Dollars in millions) 2024 2023 2024 vs. 2023 % Change 2022 2023 vs. 2022 % Change Business Unit Profit (Loss) Professional & Industrial $ 34.7 $ 16.0 116.1 % $ 19.6 (17.9) % Science, Engineering & Technology 17.0 75.0 (77.4) 79.0 (5.0) Education 43.9 36.3 21.3 18.8 93.1 Outsourcing & Consulting 5.7 2.2 152.4 (26.0) NM International — (1.9) (100.0) 5.3 NM Business Unit Profit (Loss) 101.3 127.6 (20.7) 96.7 32.0 Corporate (58.4) (63.2) (7.5) (32.3) 95.5 Asset impairment charge (13.5) — NM — NM Gain on sale of EMEA staffing operations 1.6 — NM — NM Loss on disposal — — NM (18.7) NM Gain (loss) on sale of assets 5.4 — NM 6.2 NM Depreciation and amortization (51.5) (40.1) 28.2 (37.1) 8.1 Consolidated Total Earnings from Operations $ (15.1) $ 24.3 NM % $ 14.8 65.0 % 2024 vs. 2023 P&I reported profit increased versus the prior year due primarily to lower SG&A expenses, partially offset by lower revenue and gross profit.
Capital expenditures in 2020 primarily related to the Company's headquarters leasehold improvements, IT infrastructure and technology programs. Financing Activities In 2022, we used $50.6 million of cash for financing activities, as compared to using $8.1 million in both 2021 and 2020.
Financing Activities In 2024, we generated $214.8 million of cash for financing activities, as compared to using $59.6 million in 2023 and using $50.6 million in 2022.
The gross profit rate increased 170 basis points due primarily to favorable product mix, lower employee-related costs, higher permanent placement income and the impact of the acquisitions of Softworld, RocketPower and PTS, which generate higher gross profit rates. The gross profit rate increased in all operating segments.
The gross profit rate increased 120 basis points due to the acquisition of MRP which generates higher gross profit rates. This impact was partially offset by a 40 basis point decrease in the gross profit rate in other components of SET reflecting business mix and lower permanent placement fees, partially offset by lower employee-related costs.
The decline is due primarily to the goodwill impairment charge and the loss on disposal, partially offset by higher gross profit, net of increased SG&A expenses and gain on sale of assets.
The decrease is primarily related to the goodwill impairment charge, higher asset impairment charges and the impact of lower revenue compared to the prior year, partially offset by the impact of lower SG&A compared to the prior year, the gain on sale of Ayers Group and the gain on sale of our EMEA staffing operations.
The increase in constant currency was primarily due to higher salary-related expenses driven by an increase in headcount, reflecting improving revenue in Europe, partially offset by the impact of the sale of our Russian operations in July 2022.
The decrease in total SG&A expenses in International was primarily due to the impact of the sale of our Russian operations in July 2022, partially offset by employee termination costs in 2023 related to the sale of the EMEA staffing operations in the first quarter of 2024 and favorable foreign currency fluctuations.
Outsourcing & Consulting reported a loss of $21.2 million in 2022, compared to earnings of $18.7 million in 2021, due primarily to a charge of $41.0 million related to the impairment of goodwill of RocketPower in 2022. International reported earnings of $9.9 million in both 2022 and 2021.
The change was primarily due to the impact of the 2022 $41.0 million charge related to the impairment of goodwill of RocketPower, the impact of a $2.0 million ROU asset impairment charge in the second quarter of 2023, the impact of restructuring charges and the impact of lower revenue and gross profit.
These changes in market conditions therefore caused a triggering event requiring an interim impairment test for goodwill as of the third quarter of 2022.
These changes in market conditions therefore caused triggering events requiring interim impairment tests for both long-lived assets and goodwill as of the third and fourth quarters of 2022. We performed a long-lived asset recoverability tests for RocketPower and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable.
The decrease was due primarily to a 12.4% decline in staffing services resulting from lower hours volume, partially offset by higher bill rates. Included in the decline in hours was the impact from a shift of a large staffing customer to a permanent placement model which resulted in lower staffing volume.
The P&I segment information for 2023 has been recast to conform to the new structure. 2023 vs. 2022 The decrease in P&I revenue from services was due primarily to a 17.5% decline in staffing services resulting from lower hours volume, partially offset by higher bill rates. Revenue from outcome-based services increased 13.6% due to the expansion of existing customers.
Excluding the impact of the addition of Softworld revenue in the first quarter of 2022, the revenue growth was 6.1%, which was driven by increases in our outcome-based services as well as an increase in revenue in our staffing business coming from increases in bill rates and permanent placement income, partially offset by a decline in hours.
The decrease in SET revenue from services was driven by a decline in staffing services resulting from declines in hours volume in our staffing specialties, partially offset by higher bill rates. Revenues from outcome-based services increased 3.7% and permanent placement fees were down 40.2%.
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. 31 Critical Accounting Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.
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. 36 Contractual Obligations and Commercial Commitments In addition to our discussion of liquidity and capital resources, consideration should also be given to the following contractual obligations: • Long-term debt - The Company maintains a revolving credit facility and securitization facility as discussed above in Liquidity.
This change was due to the Persol Holdings investment, including the first quarter 2022 sale and related impacts, the goodwill impairment charge, the loss on disposal related to the sale of our Russian operations, partially offset by improved gross profit in 2022 and the gain on sale of under-utilized real property in the United States. 24 Operating Results By Segment (Dollars in millions) 2022 2021 % Change Revenue From Services: Professional & Industrial $ 1,666.2 $ 1,837.4 (9.3) % Science, Engineering & Technology 1,265.4 1,156.8 9.4 Education 636.2 416.5 52.7 Outsourcing & Consulting 468.0 432.1 8.3 International 932.2 1,067.8 (12.7) Less: Intersegment revenue (2.6) (0.9) 182.8 Consolidated Total $ 4,965.4 $ 4,909.7 1.1 % 2022 vs. 2021 Professional & Industrial revenue from services decreased 9.3%.
The net loss for 2024 was $0.6 million, compared to net earnings of $36.4 million in 2023. 25 Operating Results By Segment (Dollars in millions) 2024 2023 2024 vs. 2023 % Change 2022 2023 vs. 2022 % Change Revenue From Services: Professional & Industrial $ 1,470.7 $ 1,539.5 (4.5) % $ 1,709.9 (10.0) % Science, Engineering & Technology 1,422.8 1,190.8 19.5 1,265.4 (5.9) Education 972.3 841.9 15.5 636.2 32.3 Outsourcing & Consulting 468.3 454.7 3.0 468.0 (2.8) International — 812.1 (100.0) 887.0 (8.4) Less: Intersegment revenue (2.3) (3.3) (27.5) (1.1) 182.2 Consolidated Total $ 4,331.8 $ 4,835.7 (10.4) % $ 4,965.4 (2.6) % 2024 vs. 2023 The decrease in P&I revenue from services was due primarily to a 5.6% decline in staffing services resulting from lower hours volume, partially offset by higher bill rates.
Although 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. 22 Results of Operations Total Company (Dollars in millions) 2022 2021 Change Revenue from services $ 4,965.4 $ 4,909.7 1.1 % Gross profit 1,011.8 919.2 10.1 SG&A expenses excluding restructuring charges 943.5 866.6 8.9 Restructuring charges — 4.0 NM Total SG&A expenses 943.5 870.6 8.4 Goodwill impairment charge (41.0) — NM Loss on disposal (18.7) — NM Gain on sale of assets 6.2 — NM Earnings (loss) from operations 14.8 48.6 (69.7) Gain (loss) on investment in Persol Holdings (67.2) 121.8 NM Loss on currency translation from liquidation of subsidiary (20.4) — NM Gain on insurance settlement — 19.0 NM Other income (expense), net 1.6 (3.6) 146.4 Earnings (loss) before taxes and equity in net earnings (loss) of affiliate (71.2) 185.8 NM Income tax expense (benefit) (7.9) 35.1 (122.6) Equity in net earnings (loss) of affiliate 0.8 5.4 (85.9) Net earnings (loss) $ (62.5) $ 156.1 NM % Gross profit rate 20.4 % 18.7 % 1.7 pts.
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. 23 Results of Operations Total Company (Dollars in millions) 2024 2023 % Change Revenue from services $ 4,331.8 $ 4,835.7 (10.4) % Gross profit 882.6 961.4 (8.2) SG&A expenses excluding restructuring, depreciation, and amortization 760.8 856.0 (11.1) Restructuring charges 6.1 38.6 (84.2) Total SG&A expenses excluding depreciation and amortization 766.9 894.6 (14.3) Depreciation and amortization 51.5 40.1 28.2 Total SG&A expenses 818.4 934.7 (12.4) Goodwill impairment charge 72.8 — NM Asset impairment charge 13.5 2.4 451.8 Gain on sale of assets (5.4) — NM Gain on sale of EMEA staffing operations (1.6) — NM Earnings (loss) from operations (15.1) 24.3 NM Other income (expense), net (6.8) 0.6 NM Earnings (loss) before taxes (21.9) 24.9 NM Income tax benefit (21.3) (11.5) (84.1) Net earnings (loss) $ (0.6) $ 36.4 NM % Gross profit rate 20.4 % 19.9 % 0.5 pts.
Included in cash used for investing activities in 2021 is $213.0 million of cash used for the acquisition of Softworld in April 2021, net of cash received and including working capital adjustments.
Included in cash used for investing activities in 2024 is $431.9 million of cash used for the acquisition of MRP in June 2024 and CTC in November 2024, net of cash received, $11.1 million of cash used for capital expenditures, partially offset by $77.1 million of proceeds from the sale of the EMEA staffing operations, net of cash disposed.
The gross profit rate increased 20 basis points, due primarily to the acquisition of PTS which generates higher margins, and higher permanent placement income at Greenwood/Asher. Outsourcing & Consulting gross profit increased on higher revenue volume, combined with an increase in the gross profit rate.
The gross profit rate decreased 50 basis points due primarily to lower permanent placement fees and unfavorable customer mix, partially offset by lower employee-related costs. OCG gross profit decreased on lower revenue volume, combined with a decrease in the gross profit rate.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Executive Overview In 2022, Kelly moved forward on its strategic growth journey amid a dynamic macroeconomic environment in the first half of the year.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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As the year progressed, a mixed pattern of revenue growth and deceleration emerged and persisted through the balance of 2022 driven by rising inflation, increasing interest rates and heightened economic uncertainty.
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Executive Overview While the challenging staffing market dynamics that developed in 2023 continued into 2024, we have remained focused on capturing a greater share of growth where it exists and converting a greater share of our revenue to bottom-line growth by continuing to enhance efficiency and focus across the Company.
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Consequently, a growing number of employers scaled back or paused hiring – and in some cases reduced the size of their workforces – to align their costs with declining growth. Notwithstanding these dynamics, the labor market remained tight.
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We continue to build on the goals of our transformation activities and the aggressive actions we took in 2023 to improve Kelly’s profitability and accelerate growth over the long term. Our business unit and enterprise function teams, together with the Transformation Management Office, continue to make progress on multiple initiatives to drive organizational efficiency and effectiveness.
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The economy continued to add jobs – albeit at a slightly slower pace to end the year – and unemployment remained at historically low levels, which contributed to ongoing challenges with sourcing talent.
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We are also committed to finding new avenues of growth. This includes a refreshed go-to-market strategy with a comprehensive approach to delivering the full suite of Kelly solutions to our large enterprise customers that is intended to capture a greater share of wallet as we move through 2025.
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By executing our strategy in a disciplined manner and focusing on factors within our control, we managed through these ongoing headwinds and achieved solid growth over the prior year. • We increased total company revenue driven by top-line growth in our Education, SET and OCG business units. • Our more profitable outcome-based solutions demonstrated resilience amid macroeconomic headwinds and generated solid revenue and gross profit growth. • Each of our five business units expanded its gross profit rate, reflecting our ongoing drive to shift toward a higher-margin, higher-value business mix. • Excluding the impact of goodwill impairment charges and a loss on the disposal of our Russian operations, we improved earnings from operations, demonstrating our ability to effectively translate gross margin expansion to earnings growth. 2022 was also a year in which we accelerated our transformation and streamlined our portfolio. • We ended the cross-ownership arrangement between Kelly and Persol Holdings – selling our investment in the common shares of Persol Holdings and repurchasing our Class A and B common shares held by Persol Holdings – and reduced our ownership interest in our PersolKelly joint venture, unlocking $235 million of liquidity. • We redeployed a portion of the net proceeds from these transactions to advance our inorganic growth strategy, while preserving the remaining capital to pursue additional high-margin, high-growth acquisitions in the future. • We monetized non-core real estate holdings, unlocking more capital to invest in growth initiatives. • We acted decisively to transfer ownership of our Russian operations to a Russian company. • We increased our dividend to its pre-pandemic level and authorized a $50 million repurchase of outstanding Class A common shares.
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We also remain committed to delivering the highest quality of service to all customers regardless of spend or size. In our P&I segment, for example, we have enhanced our local delivery model and rolled out our Kelly Now mobile application across the U.S. to meet the needs of both our clients and our talent.
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Together, these achievements and actions demonstrate our commitment to our specialty growth strategy and create long-term value for all our stakeholders. As the macroeconomic situation unfolds in 2023, we will stay the course in our pursuit of profitable growth while proactively controlling costs to manage through this economic cycle.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe 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.
Biggest changeA hypothetical fluctuation of 10% of market interest rates would not have had a material impact on 2024 earnings. 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.
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, euro or Swiss franc generally do not impact local cash flows.
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.
The investments in mutual funds, as part of the 36 company-owned variable universal life insurance policies, are designed to mitigate, but not eliminate, this risk with offsetting gains and losses.
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 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.
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.
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Intercompany transactions which create transactional foreign currency risk include services, royalties, loans, contributions and distributions. In addition, we are exposed to interest rate risks through our use of the multi-currency line of credit and other borrowings. A hypothetical fluctuation of 10% of market interest rates would not have had a material impact on 2022 earnings.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. In the normal course of business, we are exposed to foreign currency exchange rate and interest rate risks that could impact our financial position and results of operations. Foreign Currency We are exposed to foreign currency risk primarily related to our foreign subsidiaries.
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Intercompany transactions which create foreign currency risk include services, royalties, loans, contributions and distributions. On November 2, 2023, the Company entered into a foreign currency forward contract with a notional amount of €90.0 million to manage the foreign currency risk associated with the sale of our EMEA staffing operations, which was completed on January 2, 2024.
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This contract was not designated as a hedging instrument; therefore, it was marked-to-market and the changes in fair value were recognized in earnings. An unrealized loss of $3.6 million associated with the forward contract was recorded as of year-end 2023.
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A total loss of $2.4 million was realized upon settlement on January 5, 2024; therefore, the Company recorded a gain of $1.2 million in the first quarter of 2024 (see Fair Value Measurements footnote in the notes to our consolidated financial statements for more details).
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On February 8, 2024, the Company entered into a foreign currency forward contract with a notional amount of €17.0 million to manage the foreign currency risk associated with the expected additional proceeds related to the sale of our EMEA staffing operations (see Acquisitions and Dispositions footnote in the notes to our consolidated financial statements).
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The expected proceeds are recorded as a euro-denominated receivable which is remeasured each period. The forward contract was designated as a fair value hedge, with the mark-to-market changes of the forward contract offsetting the mark-to-market changes of the receivable in the gain on sale of EMEA staffing operations in the consolidated statement of earnings.
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In the fourth quarter of 42 2024, the Company settled the contract with a $0.4 million cash payment and recognized a corresponding loss of $0.4 million on the contract. As of year-end 2024, there is no asset or liability related to the forward contract (see Fair Value Measurements footnote in the notes to our consolidated financial statements for more details).
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Interest Rates We are exposed to interest rate risks through our use of our credit facilities and other local borrowings, when applicable. Following our acquisition of MRP, the Company has long-term borrowings on our credit facilities.
Added
On July 17, 2024, we entered into a $50.0 million 12-month interest rate swap and a $50.0 million 18-month interest rate swap that effectively locked in the variable SOFR component of our interest rate for a portion of the long-term borrowings on the Securitization Facility at a fixed rate of 4.772% and 4.468% from the effective date through July 17, 2025 and January 17, 2026, respectively.

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