Kelly Services, Inc. (KELYA) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Kelly Services. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Terrence Larkin, Chairman of the Board of Kelly. Mr. Larkin, the floor is yours.

Good morning, and welcome to Kelly Services 2024 Annual Meeting of Shareholders. I am Terrence Larkin, Chairman of the Board. I am pleased to have you join this webcast, and I'd like to start by thanking Kelly's Board of Directors, all of whom are joining us today, and thank you to Kelly's leadership team members and other employees and guests from around the world who also have joined us. In 2020, we began holding our annual meeting virtually to protect the health and safety of our shareholders, employees and other guests. This format has proved beneficial by allowing all shareholders regardless of location, the ability to participate in the annual meeting safely and more efficiently. And the general response from shareholders has been positive over the last couple of years, prompting us to adopt the virtual format going forward. 2023 was a year of transformative action as we set out to build upon the progress achieved on Kelly's specialty growth journey. Amid persistent headwinds that impacted demand for staffing and recruitment process outsourcing services in Science, Engineering & Technology, Professional & Industrial and Outsourcing & Consulting, we captured growth in resilient markets. Our Education segment and higher-margin outcome-based solutions in P&I continue to demonstrate resilience amid a challenging operating environment. With our motivation on driving results in the near term, we remain focused on the future as well, driving significant progress on our transformation initiatives, optimizing operations sustainably, shifting to a higher margin, higher growth business mix, implementing strategic restructuring actions that further streamlined Kelly's operating model, accelerating profitable growth by creating long-term structural improvements across the enterprise to significantly improve the company's EBITDA margin. And in early January, completing the sale of Kelly's European staffing operations, unlocking more than $100 million of capital and additional net margin expansion. The Board is pleased with the progress the company has achieved while persevering through ongoing headwinds. Looking ahead to the future, we are committed to driving efficiency and effectiveness, sharpening our focus to capture increased customer demand and accelerating profitable growth. With the board's unwavering support, the company has taken a transformational step forward on its specialty growth journey through the acquisition of Motion Recruitment Partners, which we recently announced. We are confident that the addition of MRP's portfolio of businesses will enhance Kelly's revenue growth potential and accelerate EBITDA margin expansion, forming the basis for substantial long-term value creation. Kelly's President and CEO, Peter Quigley, will provide more detail about Kelly's ongoing transformation and the impact of the company's latest acquisition. On behalf of the entire Board of Directors, I would like to thank Don Parfet for his distinguished leadership as Chairman of the Board of Directors during the past 5 years. Kelly has benefited immensely from his guidance and insights as we have positioned the company for the future. We are grateful for his continued service on Kelly's Board as an independent director. Following my remarks, we will address questions submitted from Class B shareholders relative to the proxy items voted on during this meeting. General questions from Class B shareholders will be addressed after Peter's comments. The questions from shareholders may be submitted in the Q&A text box field provided on the web portal at any time during this meeting. A playback of this meeting will be available on our virtual shareholder meeting site within 24 hours, and it will remain available until the 2025 Shareholders' Meeting. The agenda and meeting guidelines for today's meeting are also posted on this meeting website. Before moving to the business portion of our meeting, I'd like to introduce the members of your Board of Directors. In addition to myself, the continuing members of Kelly's Board of Directors are: Gerald Adolph, George Corona, Robert Cubbin, Amala Duggirala, InaMarie Johnson, Leslie Murphy, Donald Parfet and Peter Quigley. I would like to thank my fellow Board members for their leadership, dedicated service and contributions to Kelly. We will now move to the business portion of the meeting and officially call the meeting to order. Vanessa Williams, General Counsel and Corporate Secretary of Kelly, who serves as Secretary of this meeting, certified that on April 15, proper notice of the date, time and meeting purpose, along with the web address for today's virtual meeting, was provided to all shareholders of record on March 21, 2024. The proxy holder appointed by the Board to vote on behalf of the shareholders at this meeting is Vanessa Williams. At this point in the meeting, the Chair officially appoints Cynthia Mall from the Office of the Corporate Secretary as the Inspector of Election. And I'm pleased to announce that there are present by proxy a sufficient number of voting shares of the company to constitute a quorum. At this time, any Class B shareholders who are logged in, but who have not already submitted a vote of their shares may do so now by clicking the vote button on your screen. The first item of business is the election of 9 directors. As identified in the 2024 proxy statement, the 9 director nominees standing for election are Gerald Adolph, George Corona, Robert Cubbin, Amala Duggirala, InaMarie Johnson, Leslie Murphy, Donald R. Parfet, Peter Quigley and myself. I will now entertain a motion for their election.

Mr. Chairman, I am Vanessa Williams, a Class B shareholder. I move for the election of directors for a term expiring at the Annual Meeting of Shareholders in the year 2025 or until the election and qualification of their successors.

Thank you, Vanessa. Is there a second to the motion?

Yes, Mr. Chairman, I'm Olivier Thirot, a Class B shareholder. I second the motion.

Thank you, Olivier. The second business item to consider is the proposal to approve by advisory vote the company's executive compensation. Is there a motion to approve this proposal?

I move the adoption of the compensation of the named executive officers, commonly known as say on pay as disclosed in the company's 2024 proxy statement.

Thank you. Is there a second to the motion?

I second the motion.

Thank you. The third item of business is to consider the proposal to approve the amendment of the company's restated certificate of incorporation to reflect updated Delaware Law Provisions permitting officer exculpation. Is there a motion to approve this proposal?

I move the adoption of the amendment of the company's restated Certificate of Incorporation to reflect updated Delaware Law Provisions permitting officer exculpation as disclosed in the company's 2024 proxy statement.

Thank you. Is there a second to the motion?

I second the motion.

The fourth and final business item of business to consider is the proposal to ratify the appointment of PricewaterhouseCoopers as Kelly Services independent registered public accounting firm for 2024. Is there a motion to approve this proposal?

I move that the proposal to ratify the appointment of PricewaterhouseCoopers as the independent registered public accounting firm for the year 2024 be approved.

Thank you. Is there a second to the motion?