Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Executive Overview
As we entered 2024, challenging staffing market dynamics continued as employers in most sectors maintained a guarded approach to hiring and focused on retaining their current workforce amid ongoing economic uncertainty. In more resilient pockets of the economy where employers are in need of talent, the supply of candidates to fill open roles remains constrained. These dynamics put pressure on our business, but we remain focused on capturing growth where it exists and positioning our resources to take advantage of even greater opportunities when conditions improve.
We remain focused on the future and are building on the aggressive actions we took in 2023 as part of our transformation journey. We continue to build on the goals of our transformation activities to improve Kelly’s profitability and accelerate growth over the long term. Our business unit and enterprise function teams, together with the Transformation Management Office, continue to make progress on multiple initiatives to drive organizational efficiency and effectiveness.
We are also committed to finding new avenues of growth. This includes a refreshed go-to-market strategy with a comprehensive approach to delivering the full suite of Kelly solutions to our large enterprise customers that is intended to capture a greater share of wallet as we move into 2024. We also remain committed to delivering the highest quality of service to all customers regardless of spend or size. In our P&I segment, for example, we have enhanced our local delivery model and rolled out our Kelly Now mobile application across the U.S. to meet the needs of clients and talent.
We completed the sale of our European staffing operations on January 2, 2024. We move forward with a further streamlined operating model focused on North American staffing and global MSP and RPO solutions.
Together these changes represent structural shifts in Kelly’s operations and are delivering meaningful improvement to the Company’s EBITDA margin which we expect to continue as we move forward in 2024 and beyond.
Financial Measures
Reported percentage changes were computed based on actual amounts in thousands of dollars.
EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA margin (EBITDA divided by revenue from services) are measures used for understanding the Company's ability to generate cash flow and for judging overall operating performance. EBITDA measures are non-GAAP (Generally Accepted Accounting Principles) measures and are used to supplement measures in accordance with GAAP. Our non-GAAP measures may be calculated differently from those provided by other companies, limiting their usefulness for comparison purposes. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Days sales outstanding (“DSO”) represents the number of days that sales remain unpaid for the period being reported. DSO is calculated by dividing average net sales per day (based on a rolling three-month period) into trade accounts receivable, net of allowances at the period end. Although secondary supplier revenues are recorded on a net basis (net of secondary supplier expense), secondary supplier revenue is included in the daily sales calculation in order to properly reflect the gross revenue amounts billed to the customer.
NM (not meaningful) in the following tables is used in place of percentage changes where: the change is in excess of 500%, the change involves a comparison between earnings and loss amounts, or the comparison amount is zero.
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Results of Operations
Total Company
(Dollars in millions)
First Quarter
2024 2023 % Change
Revenue from services $ 1,045.1 $ 1,268.3 (17.6) %
Gross profit 205.7 254.1 (19.1)
SG&A expenses excluding restructuring, depreciation, and amortization 178.0 227.3 (21.7)
Restructuring charges 2.3 6.6 (64.7)
Total SG&A expenses excluding depreciation and amortization 180.3 233.9 (22.9)
Depreciation and amortization 10.2 9.5 7.7
Total SG&A expenses 190.5 243.4 (21.7)
Gain on sale of EMEA staffing operations (11.6) — NM
Earnings from operations 26.8 10.7 150.2
Gain on forward contract 1.2 — NM
Other income (expense), net 1.8 2.0 (8.8)
Earnings before taxes 29.8 12.7 134.6
Income tax expense 4.0 1.8 128.0
Net earnings $ 25.8 $ 10.9 135.7 %
Gross profit rate 19.7 % 20.0 % (0.3) pts.
First Quarter Results
Revenue from services in the first quarter decreased 17.6%, which primarily reflects the January 2, 2024 sale of our EMEA staffing operations. Excluding the impact from the sale, revenue from services decreased 2.6%. This decline reflects revenue declines in Professional & Industrial, Science, Engineering & Technology and Outsourcing & Consulting, partially offset by increases in the Education segment. Compared to the first quarter of 2023 and excluding the impact from the sale, revenue from staffing services decreased 0.5% and revenue from outcome-based services decreased 5.9%. In addition, revenue from talent solutions decreased 5.7% and permanent placement revenue decreased 32.2% from the prior year, excluding the impact from the sale.
Gross profit decreased 19.1% largely driven by the sale of our EMEA staffing operations. Excluding the impact from the sale, gross profit decreased 8.3%. The gross profit rate decreased 30 basis points or 120 basis points excluding the impact from the sale. These decreases are due primarily to unfavorable business mix and a decrease in permanent placement revenue. 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 all segments.
Total SG&A expenses decreased 21.7%, primarily due to the sale of our EMEA staffing operations. Excluding this impact, SG&A expenses decreased 10.3%. Included in SG&A expenses in the first quarter of 2024 and 2023 were $2.3 million and $6.6 million of transformation and restructuring charges, respectively. Actions taken in the first quarter of 2024 were a continuation of the actions that were announced in the second quarter of 2023 as part of the comprehensive transformation initiative. The actions build on the strategic progress to monetize non-core assets, reinvest capital in organic and inorganic growth initiatives, and shift to higher-margin, higher-growth business mix. Actions taken in the first quarter of 2023 reflected management undertaking actions to further our cost management efforts in response to the demand levels and reflected a repositioning of our P&I staffing business to better capitalize on opportunities in local markets. In addition, SG&A expenses in 2024 include $5.6 million of transaction-related costs arising from the sale of our EMEA staffing operations. Excluding the impact from the sale, as well as transaction, transformation and restructuring charges, SG&A expenses decreased 11.6% primarily due to structural workforce reductions as part of our transformation initiatives, as well as lower performance-based incentive compensation expenses in response to lower revenue volume.
The gain on sale of EMEA staffing operations relates to the completion of the sale in January 2024 in which we have recognized a gain of $11.6 million as of the first quarter-end 2024.
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Earnings from operations for the first quarter of 2024 totaled $26.8 million, compared to $10.7 million in the first quarter of 2023. The increase is primarily related to the $11.6 million gain on the sale of our EMEA staffing operations in the first quarter of 2024, a decrease of $4.3 million in transformation and restructuring charges, and the impact of lower SG&A compared to the prior year, partially offset by $5.6 million of transaction costs directly related to the sale of our EMEA staffing operations and the impact of lower revenue compared to the prior year.
Gain on forward contract of $1.2 million represents the gain recognized in the first quarter of 2024 for the settlement of the foreign currency forward contract in January 2024 that was entered into in 2023 relating to the sale of the EMEA staffing operations.
Income tax expense was $4.0 million for the first quarter of 2024 and $1.8 million for the first quarter of 2023. Our tax expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of tax-exempt investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets and the tax effects of stock compensation, which are treated as discrete since they cannot be estimated.
The net earnings for the period were $25.8 million, compared to $10.9 million for the first quarter of 2023.
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Operating Results By Segment
(Dollars in millions)
First Quarter
2024 2023 % Change
Revenue from Services:
Professional & Industrial $ 358.4 $ 402.6 (11.0) %
Science, Engineering & Technology 289.3 306.4 (5.6)
Education 289.9 249.4 16.2
Outsourcing & Consulting 108.0 114.6 (5.7)
International — 195.8 (100.0)
Less: Intersegment revenue (0.5) (0.5) —
Consolidated Total $ 1,045.1 $ 1,268.3 (17.6) %
First Quarter Results
Professional & Industrial revenue from services decreased 11.0%. The decrease was due primarily to a 14.0% decline in revenue from staffing services resulting from lower hours volume, partially offset by higher bill rates. Revenue from outcome-based services decreased by 3.7% due primarily from lower demand for our call-center solutions. Revenue from permanent placement fees declined 42.4%.
Science, Engineering & Technology revenue from services decreased 5.6%. The revenue decline was driven by declines in hours volume in our staffing specialties, partially offset by higher bill rates. Revenue in our outcome-based services decreased by 8.8% and permanent placement fees declined 23.4%.
Education revenue from services increased 16.2%, driven by higher fill rates and increased demand for our services as compared to a year ago, reflecting the impact of net new customer wins and improving demand from existing customers.
Outsourcing & Consulting revenue from services decreased 5.7% as revenue declined in RPO and MSP, partially offset by increasing revenue in PPO.
International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our P&I segment. The P&I segment information for 2023 has been recast to conform to the new structure.
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Operating Results By Segment (continued)
(Dollars in millions)
First Quarter
2024 2023 Change
Gross Profit:
Professional & Industrial $ 63.9 $ 72.2 (11.7) %
Science, Engineering & Technology 64.4 71.3 (9.6)
Education 42.1 39.3 7.1
Outsourcing & Consulting 35.3 41.6 (15.0)
International — 29.7 (100.0)
Consolidated Total $ 205.7 $ 254.1 (19.1) %
Gross Profit Rate:
Professional & Industrial 17.8 % 18.0 % (0.2) pts.
Science, Engineering & Technology 22.3 23.3 (1.0)
Education 14.5 15.8 (1.3)
Outsourcing & Consulting 32.7 36.3 (3.6)
International — 15.2 (15.2)
Consolidated Total 19.7 % 20.0 % (0.3) pts.
First Quarter Results
Gross profit for the Professional & Industrial segment decreased on lower revenue volume. In comparison to the prior year, the gross profit rate decreased 20 basis points. This decrease reflects lower permanent placement revenues and higher employee-related costs, partially offset by improved business mix.
The Science, Engineering & Technology gross profit decreased on lower revenue volume. The gross profit rate also decreased 100 basis points due to unfavorable business mix and lower permanent placement revenues.
Gross profit for the Education segment increased on higher revenue volume. The gross profit rate decreased 130 basis points due primarily to unfavorable customer mix and lower permanent placement revenues from higher education executive search.
The Outsourcing & Consulting gross profit decreased on lower revenue volume, combined with a decrease in the gross profit rate. The gross profit rate decreased 360 basis points primarily due to a change in business mix within this segment and higher employee-related costs in PPO. The unfavorable business mix was primarily driven by declines in revenue in RPO and MSP, which generates higher margins and improving PPO revenue which generates lower margins.
International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our P&I segment. The P&I segment information for 2023 has been recast to conform to the new structure.
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Operating Results By Segment (continued)
(Dollars in millions)
First Quarter
2024 2023 % Change
SG&A Expenses (excluding depreciation and amortization):
Professional & Industrial $ 58.0 $ 73.4 (20.9) %
Science, Engineering & Technology 46.2 52.8 (12.5)
Education 24.0 23.9 0.3
Outsourcing & Consulting 37.1 41.7 (11.1)
International — 30.4 (100.0)
Corporate expenses 15.0 11.7 28.4
Consolidated Total $ 180.3 $ 233.9 (22.9) %
First Quarter Results
Total SG&A expenses excluding depreciation and amortization in Professional & Industrial decreased 20.9% from the prior year, or 17.7% excluding restructuring charges of $0.1 million in the first quarter of 2024 and $3.0 million in the first quarter of 2023. The decrease excluding restructuring charges is primarily due to lower salary-related costs as a result of cost management in response to lower revenue volume compared to the prior year, as well as the impact of transformation-related actions.
Total SG&A expenses excluding depreciation and amortization in Science, Engineering & Technology decreased 12.5% from the prior year, primarily due to lower salary-related costs and lower performance-based incentive compensation expenses. Lower salary-related costs reflect the response to lower revenue volume compared to the prior year, as well as the impact of transformation-related actions.
Total SG&A expenses excluding depreciation and amortization in Education increased 0.3% from the prior year. Costs related to increased year-over-year revenue levels were offset by the impact of transformation-related actions.
Total SG&A expenses excluding depreciation and amortization in Outsourcing & Consulting decreased 11.1% from the prior year, primarily due to lower performance-based incentive compensation expenses.
International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our P&I segment. The P&I segment information for 2023 has been recast to conform to the new structure.
Corporate expenses increased 28.4% from the prior year primarily due to EMEA staffing operations transaction-related costs and transformation-related charges, partially offset by lower legal settlement costs.
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Operating Results By Segment (continued)
(Dollars in millions)
First Quarter
2024 2023 % Change
Business Unit Profit (Loss)
Professional & Industrial $ 5.9 $ (1.2) NM %
Science, Engineering & Technology 18.2 18.5 (1.3)
Education 18.1 15.4 17.7
Outsourcing & Consulting (1.8) (0.1) NM
International — (0.7) 100.0
Business Unit Profit (Loss) 40.4 31.9 26.8
Corporate (15.0) (11.7) (28.3)
Gain on sale of EMEA staffing operations 11.6 — NM
Depreciation and amortization (10.2) (9.5) 7.7
Consolidated Total Earnings from Operations $ 26.8 $ 10.7 150.2 %
First Quarter Results
Professional & Industrial reported profit of $5.9 million for the quarter, compared to a loss of $1.2 million from a year ago. The increase in earnings was primarily due to lower SG&A expenses, partially offset by lower revenue and gross profit.
Science, Engineering & Technology reported profit of $18.2 million for the quarter, a 1.3% decrease from a year ago. The decrease in earnings was primarily due to declines in revenue and gross profit in most of our specialties within the SET business unit that were partially offset by lower expenses.
Education reported profit of $18.1 million for the quarter, compared to $15.4 million a year ago. The change was primarily due to higher revenue and gross profit.
Outsourcing & Consulting reported a loss of $1.8 million for the quarter, compared to a loss of $0.1 million a year ago. The change was primarily due to declines in revenue and gross profit, partially offset by lower SG&A expenses.
International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our P&I segment. The P&I segment information for 2023 has been recast to conform to the new structure.
Corporate expenses increased $3.3 million year-over-year primarily due to EMEA staffing operations transaction-related costs and transformation-related charges, partially offset by lower legal settlement costs.
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Financial Condition
Historically, we have financed our operations through cash generated by operating activities and access to credit markets. Our working capital requirements are primarily generated from temporary employee payroll, which is generally paid weekly or monthly, and customer accounts receivable, which is generally outstanding for longer periods. Since receipts from customers lag payroll to temporary employees, working capital requirements increase substantially in periods of growth. Conversely, when economic activity slows, working capital requirements may substantially decrease. This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period.
As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components: cash, cash equivalents and restricted cash, operating activities, investing activities and financing activities.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash totaled $208.9 million at the end of the first quarter of 2024 and $167.6 million at year-end 2023, including $33.5 million held for sale. As further described below, we used $25.5 million of cash for operating activities, generated $72.1 million of cash from investing activities and used $4.7 million of cash for financing activities.
Operating Activities
In the first three months of 2024, we used $25.5 million of net cash for operating activities, as compared to using $13.5 million in the first three months of 2023, primarily due to increased working capital requirements.
Trade accounts receivable totaled $1.2 billion at the end of the first quarter of 2024. Global DSO was 58 days at the end of the first quarter of 2024 and 59 days at year-end 2023, including amounts held for sale, and 59 days at the end of the first quarter of 2023.
Our working capital position (total current assets less total current liabilities) was $639.3 million at the end of the first quarter of 2024, an increase of $32.6 million from year-end 2023, excluding amounts held for sale as of year-end 2023. Our working capital position increased primarily as a result of lower accounts payable balances caused by the normalization of payment timing. The current ratio (total current assets divided by total current liabilities) was 1.8 at the end of the first quarter of 2024 and 1.6 at year-end 2023.
Investing Activities
In the first three months of 2024, we generated $72.1 million of cash from investing activities, as compared to using $2.2 million in the first three months of 2023. Included in cash generated from investing activities in the first three months of 2024 is $77.1 million of proceeds from the sale of the EMEA staffing operations, net of cash disposed. This was partially offset by $3.7 million of cash used for capital expenditures as well as $2.4 million of cash used for the settlement of the foreign currency forward contract in January 2024 in connection with the sale of the EMEA staffing operations. I ncluded in the cash used from investing activities in the first three months of 2023 is $4.4 million of cash used for capital expenditures, partially offset by a gain of $2.0 million for the receipt of earnout proceeds in connection with an investment that was sold in 2021.
Financing Activities
We used $4.7 million of cash for financing activities in the first three months of 2024, as compared to using $24.8 million in the first three months of 2023. The change in cash used for financing activities was primarily related to the buyback of the Company's common shares in the first three months of 2023 which represented repurchases of the Company's Class A common stock as part of the share repurchase program. Dividends paid per common share were $0.075 in the first three months of 2024 and 2023.
Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 0.0% at the end of the first quarter of 2024 and 2023.
New Accounting Pronouncements
See New Accounting Pronouncements footnote in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a description of new accounting pronouncements.
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Critical Accounting Estimates
For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K.
Contractual Obligations and Commercial Commitments
There were no significant changes to our contractual obligations and commercial commitments from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K. We have no material unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities.
Liquidity
We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents, securitization of customer receivables and committed unused credit facilities. Additional funding sources could include additional bank facilities or sale of non-core assets. To meet significant cash requirements related to our nonqualified retirement plan, we may utilize proceeds from Company-owned life insurance policies.
We assess and monitor our liquidity and capital resources globally. We use a global cash pooling arrangement (the "Cash Pool"), intercompany loans, dividends, capital contributions, redemptions and local lines of credit to meet funding needs and allocate our capital resources among our various subsidiaries. The Cash Pool is a set of cash accounts maintained with a single bank that must, as a whole, maintain at least a zero balance; individual accounts may be positive or negative. This allows subsidiaries with excess cash to invest and subsidiaries with cash needs to utilize the excess cash. We periodically review our foreign subsidiaries’ cash balances and projected cash needs. As part of those reviews, we may identify cash that we feel should be repatriated to optimize the Company’s overall capital structure. As of the end of the first quarter of 2024, these reviews have not resulted in specific plans to repatriate a majority of our international cash balances. In addition, as of the first quarter of 2024, $33.5 million of our international cash balances were included in the assets divested related to the sale of our EMEA staffing operations (see the Disposition footnote in the notes to our consolidated financial statements for more details). The Company continues to provide MSP, RPO and Functional Service Provider solutions in the EMEA region. Therefore, we expect much of our remaining international cash will be needed to fund working capital growth in our local operations.
We have historically managed our cash and debt closely to optimize our capital structure. As our cash balances build, we tend to pay down debt as appropriate. Conversely, when working capital needs grow, we tend to use corporate cash and cash available in the Cash Pool first, and then access our borrowing facilities. We expect our working capital requirements to increase if demand for our services increases.
On January 2, 2024, the Company completed the sale of its EMEA staffing operations to Gi Group Holdings S.P.A. and received cash proceeds of $110.6 million or $77.1 million net of cash disposed. The foreign currency forward contract that the Company entered into on November 2, 2023 to manage the foreign currency risk associated with the transaction was settled on January 5, 2024. A total loss of $2.4 million was realized upon settlement on the contract. The Company expects to receive additional cash proceeds related to the sale to reflect the cash-free, debt-free transaction basis, as well as working capital and other adjustments. The Company has recorded a receivable of $26.9 million representing the adjustments that are determinable which is expected to be received in the third quarter of 2024. The Company entered into a foreign currency forward contract on February 8, 2024 to manage the foreign currency risk associated with the additional expected proceeds. See the Disposition and Fair Value Measurements footnotes in the notes to our consolidated financial statements for more details.
As of the first quarter of 2024, we had $200.0 million of available capacity on our $200.0 million revolving credit facility and $103.9 million of available capacity on our $150.0 million securitization facility. The securitization facility carried no short-term borrowings and $46.1 million of standby letters of credit related to workers’ compensation. Together, the revolving credit and securitization facilities provide the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions. While we believe these facilities will cover our working capital needs over the short term, if economic conditions or operating results change significantly from our current expectations, we may need to seek additional sources of funds. As of the end of the first quarter of 2024, we met the debt covenants related to our revolving credit facility and securitization facility.
On May 2, 2024, the Company, MRP Merger Sub, Inc. (“Merger Sub”), a newly-formed, wholly owned subsidiary of the Company, MRP Topco (“Topco”), the indirect parent company of Motion Recruitment Partners, LLC (“Motion”), and Littlejohn Fund V, L.P. (“Littlejohn”), in its capacity as the securityholders’ representative, entered into an Agreement and Plan of Merger (the “Merger Agreement”) whereby the Company would indirectly acquire 100% of the equity interests in Motion by
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way of a merger of Merger Sub with and into Topco, with Topco surviving the merger (the “Merger”). The Company will pay cash at close of $425.0 million, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses. The transaction is expected to close in the second quarter of 2024, subject to regulatory approvals and other customary closing conditions. In addition, further cash consideration of up to $60.0 million may be due in the second quarter of 2025 if certain conditions are satisfied during an earnout period ending on March 31, 2025. The earnout payment is based on a multiple of gross profit in excess of an agreed-upon amount during the earnout period. We are also in the process of refinancing our revolving credit facility and securitization facility and expect it to be completed by the second quarter of 2024.
We monitor the credit ratings of our banking partners on a regular basis and have regular discussions with them. Based on our reviews and communications, we believe the risk of one or more of our banks not being able to honor commitments is insignificant. We also review the ratings and holdings of our money market funds and other investment vehicles regularly to ensure high credit quality and access to our invested cash.
Forward-Looking Statements
Certain statements contained in this report and in our investor conference call related to these results are “forward-looking” statements within the meaning of the applicable securities laws and regulations. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or variations or negatives thereof or by similar or comparable words or phrases. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions by us that may be provided by management, including oral statements or other written materials released to the public, are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about our Company and economic and market factors in the countries in which we do business, among other things. These statements are not guarantees of future performance, and we have no specific intention to update these statements.
Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business's anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependency on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this report and in our other filings with the Securities and Exchange Commission. Actual results may differ materially from any forward-looking statements contained herein, and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations. Certain risk factors are discussed more fully under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K.
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