Company: KELYB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000055135-25-000016
Chunk: 80

Company: KELLY SERVICES INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 80
---
.6)Income tax expense1.8 4.0 (54.7)Net earnings$5.8 $25.8 (77.7)%Gross profit rate20.3 %19.7 %0.6 pts.

First Quarter Results

Revenue from services in the first quarter increased 11.5%, which is primarily driven by the acquisition of MRP in May 2024.  Excluding the impact from the acquisition, revenue from services was flat year-over-year with increases in the Education segment mostly offset by decreases in the SET segment.  Compared to the first quarter of 2024 and excluding the impact from the acquisition, revenue from staffing services and outcome-based services were flat to the prior year.  Revenue from talent solutions increased 3.0% and permanent placement revenue decreased 31.4% from the prior year, excluding the impact from the acquisition.

Gross profit increased 15.0% largely driven by the acquisition of MRP.  Excluding the impact from the acquisition, gross profit decreased 1.1%.  The gross profit rate increased 60 basis points to 20.3% primarily due to a 90 basis point increase due to the acquisition of MRP, partially offset by a 20 basis point decrease related to lower permanent placement fees and a 10 basis point decrease related to business mix and other.  Permanent placement revenue has very low direct costs of services and has a disproportionate impact on gross profit rates.  The gross profit rate decreased in the ETM and SET segments excluding the acquisition and increased in the Education segment.

Total SG&A expenses increased 18.5%, primarily due to the acquisition of MRP.  Excluding the impact of the acquisition, SG&A expenses increased 1.0%.  SG&A expenses in the first quarter of 2025 include $10.7 million of integration and realignment costs related to initiatives to integrate MRP and other prior acquisitions, consolidating operating segments, and further aligning processes and technology across the Company, $0.3 million of transaction costs related to the sale of our EMEA staffing operations, and $0.3 million of executive transition charges.  Included in SG&A expenses in the first quarter of 2024 were $5.6 million of transaction costs related to the sale of our EMEA staffing operations and $2.3 million of transformation and restructuring charges relating to 2023 initiatives.  Excluding the impact from the acquisition, as well as integration and