Kelly Services(R) Reports Earnings and Revenue Gains in

TROY, MI--(Marketwired - May 11, 2016) -

First Quarter Highlights

Earnings from operations $14.7 million, up 22% year-over-year
Earnings per share of $0.29 versus $0.10, a 190% increase
Total Company revenue up 5% in constant currency
GP up 60 basis points to 17.3%

Kelly Services (NASDAQ: KELYA) (NASDAQ: KELYB), a global leader in providing workforce solutions, today announced results for the first quarter of 2016.

Carl T. Camden, President and Chief Executive Officer, announced revenue for the first quarter of 2016 totaled $1.3 billion, a 2.2% increase (a 4.6% increase on a constant currency basis) compared to the corresponding quarter of 2015.

Earnings from operations for the first quarter of 2016 totaled $14.7 million, compared to $12.1 million reported for the first quarter of 2015.

Diluted earnings per share in the first quarter of 2016 were $0.29 compared to $0.10 per share in the first quarter of 2015. Included in diluted earnings per share for the first quarter of 2016 is a $0.07 improvement related to reinstatement of the Work Opportunity Credit. Excluding this item, diluted earnings per share for the first quarter of 2016 were $0.22 per share.

Commenting on the first quarter, Camden stated, "We are pleased with Kelly's ability to deliver solid increases in revenue, GP, and earnings in the first quarter, as we operated with improved efficiency and a heightened focus on profitability. Our investments in PT and OCG continue to yield results as we expand Kelly's role as a trusted talent advisor to our clients worldwide."

Kelly also reported that on May 10, its board of directors declared a dividend of $0.075 per share. The dividend is payable June 7 to shareholders of record as of the close of business on May 23, and represents a 50% increase. "We are very pleased that our strong, sustained operating results in 2015 gave us the ability to deliver this increase and to enhance shareholder value," said Camden, "and with 2016 off to a solid start, we move forward with confidence."

In conjunction with its first quarter earnings release, Kelly Services has published a financial presentation on the Investor Relations page of our public website and will host a conference call at 9:00 a.m. (ET) on May 11 to review the results and answer questions. The call may be accessed in one of the following ways:

Via the Telephone:
U.S. 1 800 288-9626
International 1 651 291-5254
The pass code is Kelly Services

Via the Internet:

The call is also available via the internet through the Kelly Services website: www.kellyservices.com

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, competitive market pressures including pricing and technology introductions, changing market and economic conditions, our ability to achieve our business strategy, the risk of damage to our brand, the risk our intellectual assets could be infringed upon or compromised, our ability to successfully develop new service offerings, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, our increasing dependency on third parties for the execution of critical functions, the risks associated with past and future acquisitions, exposure to risks associated with investments in equity affiliates, material changes in demand from or loss of large corporate customers, risks associated with conducting business in foreign countries, including foreign currency fluctuations, availability of full-time employees to lead complex talent supply chain sales and operations, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, the risk of cyber attacks or other breaches of network or information technology security as well as risks associated with compliance on data privacy, our ability to sustain critical business applications through our key data centers, our ability to effectively implement and manage our information technology programs, our ability to maintain adequate financial and management processes and controls, impairment charges triggered by adverse industry developments or operational circumstances, unexpected changes in claim trends on workers' compensation, disability and medical benefit plans, the impact of the Patient Protection and Affordable Care Act on our business, the impact of changes in laws and regulations (including federal, state and international tax laws ), the risk of additional tax or unclaimed property liabilities in excess of our estimates, 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 release and in the Company's filings with the Securities and Exchange Commission. Actual results may differ materially from any forward looking statements contained herein, and we have no intention to update these statements.

About Kelly Services ^®

As a global leader in providing workforce solutions, Kelly Services, Inc. (NASDAQ: KELYA) (NASDAQ: KELYB) and its subsidiaries, offer a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire, and direct-hire basis. In 2016, the Company is commemorating 70 years of industry leadership. Kelly® has a role in managing employment opportunities for more than one million workers around the globe by employing 550,000 of these individuals directly with the remaining workers engaged through its talent supply chain network of supplier partners. Revenue in 2015 was $5.5 billion. Visit kellyservices.com and connect with us on Facebook, LinkedIn, & Twitter.

KLYA-FIN



KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE 13 WEEKS ENDED APRIL 3, 2016 AND MARCH 29, 2015
(UNAUDITED)
(In millions of dollars except per share data)

												%		CC %
		2016			2015			Change				Change		Change

Revenue from services		$	1,349.1		$	1,320.6		$	28.5			2.2		4.6	%

Cost of services			1,116.4			1,100.3			16.1			1.5

Gross profit			232.7			220.3			12.4			5.6		7.7

Selling, general and administrative expenses			218.0			208.2			9.8			4.7		6.7

Earnings from operations			14.7			12.1			2.6			21.5

Other expense, net			0.8			2.5			(1.7	)		(69.4	)

Earnings before taxes			13.9			9.6			4.3			45.3

Income tax expense			2.7			5.9			(3.2	)		(53.8	)

Net earnings		$	11.2		$	3.7		$	7.5			200.9

Basic earnings per share		$	0.29		$	0.10		$	0.19			190.0
Diluted earnings per share		$	0.29		$	0.10		$	0.19			190.0


STATISTICS:

Gross profit rate			17.3	%		16.7	%		0.6		pts.

Selling, general and administrative expenses:
	% of revenue		16.2			15.8			0.4
	% of gross profit		93.7			94.5			(0.8	)

% Return:
Earnings from operations			1.1			0.9			0.2
Earnings before taxes			1.0			0.7			0.3
Net earnings			0.8			0.3			0.5

Effective income tax rate			19.4	%		61.1	%		(41.7	)	pts.

Average number of shares outstanding (millions):
	Basic		38.0			37.7
	Diluted		38.2			37.8

Shares adjusted for nonvested restricted awards (millions):
	Basic		38.9			38.8
	Diluted		39.1			38.8




KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				First Quarter

										%		CC %
				2016			2015			Change		Change
AMERICAS
	Commercial
		Revenue from services		$	648.6		$	641.4		1.1	%	3.1	%
		Staffing fee-based income included in revenue from services			3.6			3.5		3.1		4.3
		Gross profit			102.1			97.8		4.4		5.9
		Gross profit rate			15.7	%		15.3	%	0.4	pts.
	PT
		Revenue from services		$	237.1		$	232.8		1.8	%	2.1	%
		Staffing fee-based income included in revenue from services			5.0			3.5		40.8		43.3
		Gross profit			41.6			38.9		6.9		7.3
		Gross profit rate			17.6	%		16.7	%	0.9	pts.
	Total Americas
		Revenue from services		$	885.7		$	874.2		1.3	%	2.9	%
		Staffing fee-based income included in revenue from services			8.6			7.0		22.1		23.9
		Gross profit			143.7			136.7		5.1		6.3
		Total SG&A expenses			116.6			113.5		2.7		3.9
		Earnings from operations			27.1			23.2		16.8

		Gross profit rate			16.2	%		15.6	%	0.6	pts.
		Expense rates:
			% of revenue		13.2			13.0		0.2
			% of gross profit		81.2			83.0		(1.8	)
		Return on sales			3.1			2.7		0.4

EMEA
	Commercial
		Revenue from services		$	175.5		$	178.3		(1.6	)%	2.9	%
		Staffing fee-based income included in revenue from services			3.4			3.5		(2.8	)	2.4
		Gross profit			23.6			24.6		(4.3	)	-
		Gross profit rate			13.4	%		13.8	%	(0.4	) pts.
	PT
		Revenue from services		$	41.6		$	40.3		3.1	%	7.3	%
		Staffing fee-based income included in revenue from services			2.6			2.6		3.4		9.5
		Gross profit			8.7			8.7		0.8		5.4
		Gross profit rate			21.0	%		21.5	%	(0.5	) pts.
	Total EMEA
		Revenue from services		$	217.1		$	218.6		(0.7	)%	3.7	%
		Staffing fee-based income included in revenue from services			6.0			6.1		(0.2	)	5.4
		Gross profit			32.3			33.3		(3.0	)	1.4
		Total SG&A expenses			30.3			33.5		(9.4	)	(5.4	)
		Earnings from operations			2.0			(0.2	)	NM

		Gross profit rate			14.9	%		15.2	%	(0.3	) pts.
		Expense rates:
			% of revenue		14.0			15.3		(1.3	)
			% of gross profit		93.8			100.5		(6.7	)
		Return on sales			0.9			(0.1	)	1.0




KELLY SERVICES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
(In millions of dollars)

				First Quarter

										%		CC %
				2016			2015			Change		Change
APAC
	Commercial
		Revenue from services		$	82.8		$	85.6		(3.3	)%	4.8	%
		Staffing fee-based income included in revenue from services			1.2			1.5		(17.9	)	(11.4	)
		Gross profit			13.0			13.0		0.5		6.3
		Gross profit rate			15.8	%		15.2	%	0.6	pts.
	PT
		Revenue from services		$	9.1		$	10.5		(12.9	)%	(6.1	)%
		Staffing fee-based income included in revenue from services			1.4			1.6		(13.1	)	(5.3	)
		Gross profit			2.5			2.9		(13.4	)	(6.2	)
		Gross profit rate			27.4	%		27.5	%	(0.1	) pts.
	Total APAC
		Revenue from services		$	91.9		$	96.1		(4.4	)%	3.6	%
		Staffing fee-based income included in revenue from services			2.6			3.1		(15.4	)	(8.2	)
		Gross profit			15.5			15.9		(2.0	)	4.0
		Total SG&A expenses			11.1			12.1		(8.6	)	(1.4	)
		Earnings from operations			4.4			3.8		19.2

		Gross profit rate			16.9	%		16.5	%	0.4	pts.
		Expense rates:
			% of revenue		12.1			12.6		(0.5	)
			% of gross profit		71.3			76.4		(5.1	)
		Return on sales			4.9			3.9		1.0

OCG
		Revenue from services		$	168.2		$	149.5		12.5	%	13.4	%
		Gross profit			42.3			35.5		19.1		20.3
		Total SG&A expenses			36.9			32.7		12.9		14.4
		Earnings from operations			5.4			2.8		89.6

		Gross profit rate			25.1	%		23.8	%	1.3	pts.
		Expense rates:
			% of revenue		21.9			21.9		—
			% of gross profit		87.2			92.0		(4.8	)
		Return on sales			3.2			1.9		1.3

KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars)

		April 3, 2016			Jan. 3, 2016			March 29, 2015
Current Assets
	Cash and equivalents	$	46.4		$	42.2		$	49.4
	Trade accounts receivable, less allowances of $11.6, $10.5 and $11.5, respectively		1,168.8			1,139.1			1,099.3
	Prepaid expenses and other current assets		53.0			45.8			52.0
	Deferred taxes		—			—			32.4
Total current assets			1,268.2			1,227.1			1,233.1

Property and Equipment, Net			85.7			88.9			89.8

Noncurrent Deferred Taxes			193.6			189.3			147.9

Goodwill, Net			90.3			90.3			90.3

Other Assets			340.6			344.0			305.2

Total Assets		$	1,978.4		$	1,939.6		$	1,866.3

Current Liabilities
	Short-term borrowings	$	39.3		$	55.5		$	80.6
	Accounts payable and accrued liabilities		437.4			405.5			344.4
	Accrued payroll and related taxes		277.6			268.1			292.8
	Accrued insurance		27.0			26.7			26.7
	Income and other taxes		57.8			60.0			64.6

Total current liabilities			839.1			815.8			809.1

Noncurrent Liabilities
	Accrued insurance		40.5			40.0			43.5
	Accrued retirement benefits		145.2			141.0			144.9
	Other long-term liabilities		42.8			47.4			37.7

Total noncurrent liabilities			228.5			228.4			226.1

Stockholders' Equity
	Common stock		40.1			40.1			40.1
	Treasury stock		(43.7	)		(44.3	)		(49.7	)
	Paid-in capital		27.4			25.4			25.9
	Earnings invested in the business		822.8			813.5			769.2
	Accumulated other comprehensive income		64.2			60.7			45.6

Total stockholders' equity			910.8			895.4			831.1

Total Liabilities and Stockholders' Equity		$	1,978.4		$	1,939.6		$	1,866.3


STATISTICS:
	Working Capital	$	429.1		$	411.3		$	424.0
	Current Ratio		1.5			1.5			1.5
	Debt-to-capital%		4.1	%		5.8	%		8.8	%
	Global Days Sales Outstanding		55			54			57




KELLY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 3, 2016 AND MARCH 29, 2015
(UNAUDITED)
(In millions of dollars)

			2016			2015
Cash flows from operating activities:
	Net earnings		$	11.2		$	3.7
	Noncash adjustments:
		Depreciation and amortization		5.6			5.5
		Provision for bad debts		1.7			1.2
		Stock-based compensation		2.7			1.2
		Other, net		(0.1	)		(0.6	)
	Changes in operating assets and liabilities			(0.9	)		(27.4	)

		Net cash from (used in) operating activities		20.2			(16.4	)

Cash flows from investing activities:
	Capital expenditures			(1.5	)		(2.6	)
	Other investing activities			(0.3	)		(0.2	)

		Net cash used in investing activities		(1.8	)		(2.8	)

Cash flows from financing activities:
	Net change in short-term borrowings			(16.4	)		(11.0	)
	Dividend payments			(1.9	)		(1.9	)

		Net cash used in financing activities		(18.3	)		(12.9	)

Effect of exchange rates on cash and equivalents				4.1			(1.6	)

Net change in cash and equivalents				4.2			(33.7	)
Cash and equivalents at beginning of period				42.2			83.1


Cash and equivalents at end of period			$	46.4		$	49.4




KELLY SERVICES, INC. AND SUBSIDIARIES
REVENUE FROM SERVICES
(UNAUDITED)
(In millions of dollars)

		First Quarter (Commercial, PT and OCG)

						%		CC %
		2016		2015		Change		Change

Americas
	United States	$	934.7	$	883.0	5.9	%	5.9	%
	Canada		34.5		42.7	(19.0	)	(10.6	)
	Mexico		26.6		31.9	(16.8	)	0.4
	Puerto Rico		22.5		24.8	(9.5	)	(9.5	)
	Brazil		10.0		13.9	(28.2	)	5.4
Total Americas			1,028.3		996.3	3.2		4.6

EMEA
	France		56.5		56.4	0.2		2.6
	Switzerland		46.6		48.1	(3.1	)	0.9
	Portugal		33.7		31.3	7.5		10.2
	United Kingdom		23.6		23.6	(0.1	)	6.0
	Germany		15.4		13.4	15.1		18.0
	Russia		14.0		18.2	(23.1	)	(9.1	)
	Italy		13.4		12.5	7.1		9.1
	Norway		7.6		9.4	(18.8	)	(9.2	)
	Other		13.7		11.0	24.2		27.5
Total EMEA			224.5		223.9	0.3		4.7

APAC
	Singapore		31.8		31.3	1.5		4.7
	Australia		28.5		30.4	(6.5	)	2.0
	Malaysia		13.2		15.5	(14.2	)	(1.1	)
	New Zealand		9.7		10.5	(7.9	)	4.5
	Other		13.1		12.7	3.6		12.8
Total APAC			96.3		100.4	(4.1	)	4.0

Total Kelly Services, Inc.		$	1,349.1	$	1,320.6	2.2	%	4.6	%

Contact Information:

ANALYST CONTACT:
James Polehna
(248) 244-4586
james_polehna@kellyservices.com

MEDIA CONTACT:
Jane Stehney
(248) 244-5630
jane_stehney@kellyservices.com

Kelly Services(R) Reports Earnings and Revenue Gains in First Quarter 2016 and Announces Increased Dividend