Strong demand for education jobs was a lone bright spot in a job placement market that was worse than expected in the third quarter, staffing services company Kelly Services Inc. said.
“As we shared in August, our expectation assumed no change to the market conditions we faced in the second quarter,” said Chief Executive Peter Quigley in a conference call with analysts, according to an AlphaSense transcript. “In fact, macroeconomic headwinds in the third quarter proved to be more pronounced than anticipated.”
Kelly had reported in August second-quarter profit and revenue that missed expectations. But for the third-quarter, the company reported Thursday sales that missed expectations but profit that beat by a wide margin, sending the stock
KELYA,
surging 4.6% in afternoon trading toward a 15-month high.
Among the company’s business segments, third-quarter Education revenue jumped 22.9% from a year ago to $128.1 million, after running up 32.6% in the first quarter, amid “strong” demand from both existing and new customers.
“[C]ontinued double digit revenue growth demonstrate that our education business, including our market leading pre-K-12 and PTS [Pediatric Therapeutics Services] therapy solutions, is a significant growth engine, even as broader staffing market trends remain challenging,” Chief Financial Officer Olivier Thirot said on the post-earnings call.
Demand was very different, however, in Kelly’s other business segments.
In Science, Engineering and Technology (SET), revenue fell 8.0% to $295.7 million. And given continued deceleration in demand, permanent placement fees tumbled 39%.
For Professional & Industrial, revenue dropped 10.8% to $364.5 million. Within P&I, staffing product revenue was down 15%, placement fees plunged 50% amid continued weaker demand for full-time jobs.
Meanwhile, the company swung to net income for the quarter to Sept. 30 of $6.6 million, or 18 cents a share, from a loss of $16.2 million, or 43 cents a share, in the year-ago period.
Excluding nonrecurring items, such as business transformation-related charges, adjusted earnings per share doubled from last year to 50 cents, well above the FactSet consensus of 26 cents.
A week ago, Kelly had announced an agreement to sell its European staffing business to Gi Group Holdings S.P.A. for 130 million euro ($139.1 million at current currency prices).
The stock, which was headed for the highest close since Aug. 11, 2022, has rallied 15.1% year to date, while the S&P 500 index
SPX
has advanced 13.5%.
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