MAY 13, 2014 Northcoast Research Investor Meetings New York, NY Kelly Services 1
Safe Harbor Statement The information provided in this presentation (both written and oral) relating to future events are subject to risks and uncertainties, such as competition; changing market and economic conditions; currency fluctuations; changes in laws and regulations, including tax laws, and other factors discussed in the company s SEC filings. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Kelly Services 2
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Portfolio of Solutions Commercial Staffing Specialties Office Services Light Industrial Electronic Assembly Marketing Contact Center Educational Services Professional & Technical Specialties Science Engineering IT Finance Law Healthcare Creative Services Contingent Workforce Outsourcing (CWO) - Independent Contractor Services (ICS) - Statement of Work (SOW) Recruitment Process Outsourcing (RPO) Executive Search Revenue 69% 22% 62% of GP 24% of GP 10% 15% of GP Outsourcing & Consulting Group (KellyOCG ) Business Process Outsourcing (BPO) - Contact Center Outsourcing (KellyConnect) - Legal Managed Review Services Workforce Analytics Consulting Career Transition and Executive Coaching Kelly Services 4
Kelly s Strategy: 2014 Pursue High-Margin PT Aggressively Grow OCG Maintain Commercial Core Capture Perm Placement Control Expenses Kelly Services 5
2014 Investment: Large Account Delivery Model (U.S.) Centralization and optimization of large account service delivery in U.S. - Consistency and efficiencies of scale - Improved visibility into high-margin opportunities - Local teams freed to focus on higher-margin growth in their markets Status: Transition of targeted large accounts complete More than $1B revenue now centralized Next: Drive aggressive PT growth within centralized accounts Drive further efficiencies through shared services Kelly Services 6
2014 Investment: Local PT Delivery Model (U.S.) Nationally focused recruiting centers to support teams of on-site, branch-based, and distributed recruiters for IT, Engineering, Science, and Finance specialties - Clear process for attracting and retaining top PT talent - Strong communities of product-dedicated recruiters - Consistent metrics for tracking performance Adding product-specific business development resources to grow PT in local U.S. markets Status: Expert leaders in place for all 4 recruiting centers Running ahead of budget for local PT sales headcount On track to launch recruiting centers in early Q3 Kelly Services 7
2014 Investment: Technology Improving billing process for large accounts - End-to-end improvements in order processing - Required as a larger portion of our business moves to outsourced solutions (e.g., supplier payments) Revamping front office system - Improved recruiter & candidate interfaces Status: New billing system underway at one of Kelly s largest clients Front office system is multi-year project; Phase 1 on track for Americas in 2014 Kelly Services 8
2014 Investment: Expansion of Talent Supply Chain Solutions Independent Contractor/Statement of Work - Meet increased demand for project-based work Supply chain analytics - Provide customers market insights into labor supply & demand Global supply chain development - Fill gaps in our capability to deliver talent around the world through supplier network Status: Providing supply chain analytics on several key large accounts Supplier portal changes underway Supply chain infrastructure near completion IC/SOW: Phase II product on track for 2015 launch Kelly Services 9
Q1 ** Kelly Services 10
(in millions) OCG Growth *Excluding Restructuring & Impairment Charges. Kelly Services 11
2014 Outlook Revenue up 5% - 7% YOY Gross Profit relatively flat SG&A up 7% - 9% YOY Increased regulatory pressures on planned investments Operating earnings down YOY Annual tax rate increases to the mid teens, assuming renewal of Work Opportunity Credits; If WOC is not renewed, our rate will be roughly 25 percentage points higher Kelly Services 12
Q2 2014 Outlook Revenue up 1% - 3% YOY Gross Profit up slightly YOY; down slightly sequentially SG&A up 7% - 9% YOY Kelly Services 13
Operations Summary: Q1 2014 Kelly Services Sales $ 1,331 GP $ 222 Expenses $ 216 Profit $ 6 ROS 0.5% Americas EMEA APAC OCG Sales $ 850 GP $ 132 Expenses $ 110 Profit $ 22 Sales $ 270 GP $ 44 Expenses $ 42 Profit $ 2 Sales $ 92 GP $ 15 Expenses $ 14 Profit $ 1 Sales $ 134 GP $ 33 Expenses $ 31 Profit $ 1 ROS 2.6% ROS 0.8% ROS 0.8% ROS 0.9% ----- (in $millions USD) Kelly Services 14
Revenue by Quarter (in millions) $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 (in millions) $1,410 $1,326 $1,355 $1,375 $1,367 $1,386 $1,339 $1,354 $1,346 $1,331 $1,209 $1,043 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 2013 2014 ----- *Note: Fourth quarter of 2009 included a 14th week (53 weeks for the year). The impact on the revenue was about 4 5%. Kelly Services 15
30% 25% Constant Currency Revenue Growth by Segment (Q1 2014) 25.9% 20% 15% 10% 9.6% 6.9% 9.3% 5% 2.2% 0% -5% -2.7% -2.4% -10% -7.2% Total Americas EMEA APAC OCG Commercial PT Commercial PT Commercial PT Kelly Services 16
Staffing Fee Income by Quarter (in millions) $30 $26 $26 $25 $23 $21 $20 $15 $23 $21 $20 $10 $5 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2013 2014 Kelly Services 17
Gross Profit Rate by Quarter 20% 18% 16% 15.8% 15.7% 16.0% 16.1% 15.8% 15.8% 16.0% 16.1% 16.5% 16.3% 16.8% 16.2% 16.5% 16.1% 16.4% 16.7% 16.7% 14% 12% 10% 8% 6% 4% 2% 15.4% 15.4% 15.3% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 2013 2014 GP Hire Act Kelly Services 18
Expense by Quarter (in millions) $250 $200 $150 $198 $179 $206 $209 $208 $200 $222 $216 $100 $50 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 2013 2014 ----- *Excluding Restructuring, Impairment & Certain Litigation Charges. Kelly Services 19
Return on Sales by Quarter (in millions) 2.0% 1.5% 1.5% 1.6% 1.5% 1.0% 0.5% 0.0% 0.3% 0.8% 1.1% 1.0% 1.3% 0.7% 0.5% -0.5% -1.0% -1.5% -1.7% -2.0% -2.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011 2012 2013 2014 ----- *Excluding Restructuring, Impairment & Certain Litigation Charges. Kelly Services 20
Comparison of Gross Profit & Expense: First Quarter (in millions) $250 $5.4 $6.2 $216.9 $222.3 $209.8 $216.0 $200 $150 $100 $50 $0 2013 Gross Profit 2014 2013 Expense 2014 ----- *Excluding Restructuring & Impairment Charges. Kelly Services 21
Cash Flows: as of March 30, 2014 (in millions) 2014 2013 Net Income $ 2.5 $ 12.9 Other Cash from Operating Activities (93.3) (7.0) Capital Expenditures (3.3) (2.8) Free Cash Flow $ (94.1) $ 3.1 Borrowing 26.5 (13.7) Available Cash Flow $ (67.6) $ (10.6) Dividends (1.9) (1.9) Other (0.5) 0.2 Cash Used $ (70.0) $ (12.3) Effect of Exchange Rates 2.2 (1.9) Net Change in Cash $ (67.8) $ (14.2) Cash at Period End $ 57.9 $ 62.1 Kelly Services 22
Balance Sheet: First Quarter (in millions) 2014 2013 Cash $ 57.9 $ 62.1 Accounts Receivable 1,080.2 999.8 Other Current Assets 90.8 93.1 Total Current Assets $ 1,228.9 $ 1,155.0 Long Term Assets 575.5 493.0 Total Assets $ 1,804.4 $ 1,648.0 Short Term Debt $ 54.8 $ 50.2 Other Current Liabilities 706.8 654.6 Total Current Liabilities $ 761.6 $ 704.8 Other Long Term Liabilities 217.6 184.7 Equity 825.2 758.5 Total Liabilities and Equity $ 1,804.4 $ 1,648.0 Working Capital $ 467.3 $ 450.2 Net Cash $ 3.1 $ 11.9 Debt-to-Total Capital 6.2% 6.2% Kelly Services 23
Kelly Services: Company Contacts Carl Camden President & Chief Executive Officer 248 244-7598 Michael Debs Senior Vice President, Chief Accounting Officer & Treasurer 248 244-4530 James Polehna Vice President, Investor Relations & Corporate Secretary 248 244-4586 kellyservices.com Kelly Services 24