What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 150 added, 94 removed, 140 unchanged (64% of the section changed)

1 unchanged sentence

Executive Overview

We entered 2025 propelled by positive momentum from our recent growth and efficiency improvements.

Our priorities remained focused on delivering organic growth, realizing efficiencies by further streamlining our operating model, and driving incremental margin expansion.

As anticipation of global trade policy shifts increased throughout the first quarter of 2025, we remained agile and ready to respond to changing external dynamics while keeping our sights set on our priorities.

By focusing on what we can control and through disciplined execution, we delivered solid results in the quarter and substantial progress on our strategic priorities.

We combined our former P&I and OCG segments into the ETM segment in the first quarter of 2025, responding to a shift in customer demand toward integrated workforce solutions and enabling a more streamlined and efficient go-to-market approach.

This streamlined structure builds upon the enterprise account growth initiative we implemented in 2023, further enhancing our ability to deliver the full suite of Kelly offerings to large enterprise accounts.

We also shifted certain customers from the SET segment to the ETM segment to support this integrated strategy.

Also in the first quarter of 2025, we moved Motion Recruitment Partners’ Sevenstep business from the SET segment to the ETM segment as part of the broader integration of MRP.

We also accelerated our progress on integrating MRP’s portfolio of businesses with our existing SET businesses.

We initiated plans to modernize SET’s front- and back-office systems leveraging MRP’s leading technology stack.

This will create a scalable, efficient, and integrated technology platform within SET that reduces complexity and enhances agility across the business.

In addition, we implemented targeted cost-reduction actions to deliver additional structural improvements to our cost base.

These actions underscore our commitment to enhancing Kelly’s profitability over the long term.

In parts of our portfolio where customers are taking a more measured approach to hiring, we took action to align resources with demand.

Together, our actions in the first quarter of 2025 reflect Kelly’s strategic progress, and our team’s ability to execute in any environment.

These achievements reinforce our confidence in the resilience of our business, the strength of our operating model, and the expertise of our team – momentum we aim to carry forward throughout the remainder of 2025.

In the second quarter, we continued to drive growth in more resilient markets, with each business unit delivering strategic contributions to Kelly’s results.

Our Education segment achieved another quarter of revenue growth as we maintained strong fill rates in the K-12 staffing business.

Across SET and ETM, outcome-based offerings excluding our contact center business sustained positive momentum with customers as we continued to shift our business mix toward higher margin, higher growth solutions.

Payroll process outsourcing remained a source of strength within the ETM segment’s talent solutions offerings and delivered robust revenue growth over the prior year.

Our results also reflect demand reductions with certain large customers, and a more measured approach to hiring among employers in some sectors in response to the dynamic trade and geopolitical landscape.

Staffing volumes associated with the U.S.

federal government were down measurably year-over-year and began to stabilize as the quarter progressed.

As market conditions evolved, we maintained our commitment to operational discipline and initiated actions to align resource levels with demand.

While delivering near-term results, we also remained focused on executing our growth and efficiency initiatives to position Kelly for the future.

The integration of MRP’s portfolio of businesses with our existing SET businesses is well underway, having completed the realignment of sales, recruiting and functional teams in the quarter as part of our redefined go-to-market strategy.

The integration of the Sevenstep talent solutions business with ETM’s talent solutions business is progressing similarly.

We continued the implementation of modernized front- and back-office systems within SET leveraging MRP’s leading technology stack to consolidate disparate systems thus reducing complexity and driving efficiency.

Our progress in the second quarter reflects our commitment to staying close to our customers and leveraging our differentiated capabilities to provide them with innovative workforce solutions.

Financial Measures

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(Dollars in millions)

First Quarter

2025 2024 % Change

Second Quarter June Year-to-Date

2025 2024 % Change 2025 2024 % Change

Revenue from services $ 1,101.8 $ 1,057.5 4.2 % $ 2,266.7 $ 2,102.6 7.8 %

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Total SG&A expenses 207.3 191.5 8.2 433.0 382.0 13.3

Gain on sale of EMEA staffing operations — (11.6) NM

(Gain) loss on sale of EMEA staffing operations (4.0) 10.0 (139.3) (4.0) (1.6) (139.3)

Gain on sale of assets — (5.5) NM — (5.5) NM

Asset impairment charge — 5.5 NM — 5.5 NM

Earnings from operations 22.2 12.2 81.0 33.0 39.0 (15.5)

Gain on forward contract — 1.2 NM

Gain on forward contract — — NM — 1.2 NM

Other income (expense), net (2.3) (6.5) 65.0 (5.5) (4.7) (15.8)

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Gross profit rate 20.5 % 20.2 % 0.3 pts.

First Quarter Results

Revenue from services in the first quarter increased 11.5%, which is primarily driven by the acquisition of MRP in May 2024.

Excluding the impact from the acquisition, revenue from services was flat year-over-year with increases in the Education segment mostly offset by decreases in the SET segment.

Compared to the first quarter of 2024 and excluding the impact from the acquisition, revenue from staffing services and outcome-based services were flat to the prior year.

20.4 % 19.9 % 0.5 pts.

Second Quarter Results

Revenue from services in the second quarter increased 4.2%, which was primarily driven by the acquisition of MRP in May 2024.

Excluding the impact from the acquisitions, revenue from services decreased 3.3% year-over-year with decreases in the ETM and SET segments partially offset by an increase in the Education segment.

Compared to the second quarter of 2024 and excluding the impact from the acquisitions, revenue from staffing services decreased 3.4% and revenue from outcome-based services decreased 5.5%.

Revenue from talent solutions increased 2.3% and permanent placement revenue decreased 8.7% from the prior year, excluding the impact from the acquisition.

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Excluding the impact from the acquisition, gross profit decreased 5.1%.

The gross profit rate increased 60 basis points to 20.3% primarily due to a 90 basis point increase due to the acquisition of MRP, partially offset by a 20 basis point decrease related to lower permanent placement fees and a 10 basis point decrease related to business mix and other.

The gross profit rate increased 30 basis points to 20.5% primarily due to a 70 basis point increase due to the acquisition of MRP, partially offset by a 30 basis point decrease related to business mix and other and a 10 basis point decrease related to lower permanent placement fees.

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 the ETM and SET segments excluding the acquisition and was flat year-over-year in the Education segment.

Total SG&A expenses increased 8.2%, primarily due to the acquisition of MRP.

Excluding the impact of the acquisition, SG&A expenses decreased 2.2%.

SG&A expenses in the second quarter of 2025 include $6.0 million of integration and realignment costs related to initiatives to integrate MRP and other prior acquisitions, consolidating operating segments, and further aligning processes and technology across the Company, $0.2 million of executive transition charges and $0.1 million of transaction costs related to the sale of our EMEA staffing operations.

Included in SG&A expenses in the second quarter of 2024 were $4.3 million of transformation and restructuring charges relating to 2023 initiatives and $1.6 million of transaction costs related to the sale of our EMEA staffing operations.

Excluding the impact from the acquisition, as well as integration and realignment, transaction, executive transition, and restructuring and transformation charges—and excluding depreciation and amortization—SG&A expenses decreased 1.1% from the prior year.

The gain and loss on sale of EMEA staffing operations relates to the January 2024 sale.

In the second quarter of 2025, we have recognized a gain of $4.0 million upon settlement of working capital and other adjustments.

The loss on sale of EMEA staffing operations in the second quarter of 2024 relates to a net working capital adjustment of $10.0 million.

Income tax expense was $0.9 million for the second quarter of 2025 compared to $1.1 million for the second quarter of 2024, with the change primarily due to changes in pretax income, non-deductible transaction costs in 2024 and the impact of the sale of EMEA staffing operations in both years.

June Year-to-Date Results

Revenue from services in the first six months of 2025 increased 7.8%, which was primarily driven by the acquisition of MRP in May 2024.

Excluding the impact from the acquisitions, revenue from services decreased 1.6% year-over-year with decreases in the ETM and SET segments partially offset by an increase in the Education segment.

Compared to the first six months of 2024 and excluding the impact from the acquisitions, revenue from staffing services decreased 1.6% and revenue from outcome-based services decreased 2.9% from the prior year.

Revenue from talent solutions increased 2.6% and permanent placement revenue decreased 19.8% from the prior year, excluding the impact from the acquisition.

Gross profit increased 10.2% largely driven by the acquisition of MRP.

Excluding the impact from the acquisition, gross profit decreased 3.1%.

The gross profit rate increased 50 basis points to 20.4% primarily due to an 80 basis point increase due to the acquisition of MRP, partially offset by a 20 basis point decrease related to business mix and other and a 10 basis point decrease related to lower permanent placement fees.

The gross profit rate decreased in the ETM and SET segments excluding the acquisition and increased in the Education segment.

Total SG&A expenses increased 13.3%, primarily due to the acquisition of MRP.

Excluding the impact of the acquisition, SG&A expenses increased 1.0%.

SG&A expenses in the first quarter of 2025 include $10.7 million of integration and realignment costs related to initiatives to integrate MRP and other prior acquisitions, consolidating operating segments, and further aligning processes and technology across the Company, $0.3 million of transaction costs related to the sale of our EMEA staffing operations, and $0.3 million of executive transition charges.

Included in SG&A expenses in the first quarter of 2024 were $5.6 million of transaction costs related to the sale of our EMEA staffing operations and $2.3 million of transformation and restructuring charges relating to 2023 initiatives.

Excluding the impact of the acquisition, SG&A expenses decreased 0.7%.

SG&A expenses in the first six months of 2025 include $16.7 million of integration and realignment costs related to initiatives to integrate MRP and other prior acquisitions, consolidating operating segments, and further aligning processes and technology across the Company, $0.5 million of executive transition charges and $0.4 million of transaction costs related to the sale of our EMEA staffing operations.

Included in SG&A expenses in the first six months of 2024 were $7.1 million of transaction costs related to the sale of our EMEA staffing operations and $6.6 million of transformation and restructuring charges relating to 2023 initiatives.

Excluding the impact from the acquisition, as well as integration and realignment, transaction, executive transition, and restructuring and transformation charges-and excluding depreciation and amortization-SG&A expenses were flat to the prior year.

The gain on sale of EMEA staffing operations relates to the completion of the sale in January 2024 in which we had recognized a gain of $11.6 million as of first quarter-end 2024.

The gain on sale of EMEA staffing operations relates to the January 2024 sale.

In the second quarter of 2025, we have recognized a gain of $4.0 million upon the settlement of working capital and other adjustments and previously recognized a gain of $1.6 million in the first six months of 2024.

The gain on sale of assets represents the sale of the Company's Ayers Group in the second quarter of 2024 for which we recognized a gain of $5.5 million in the first six months of 2024.

Impairment of assets in the first six months of 2024 represents the impairment of certain right-of-use assets related to our leased headquarters facility.

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 $1.8 million for the first quarter of 2025 compared to $4.0 million for the first quarter of 2024, with the decrease primarily related to changes in pretax income.

Income tax expense was $2.7 million for the first six months of 2025 compared to an income tax expense of $5.1 million for the first six months of 2024 with the change primarily due to changes in pretax income, non-deductible transaction costs in 2024 and the impact of the sale of the EMEA staffing operations in both years.

Operating Results By Segment

(Dollars in millions)

First Quarter

2025 2024 % Change

Second Quarter June Year-to-Date

2025 2024 % Change 2025 2024 % Change

Revenue from Services:

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Consolidated Total $ 1,101.8 $ 1,057.5 4.2 % $ 2,266.7 $ 2,102.6 7.8 %

First Quarter Results

The increase in ETM revenue was driven by the acquisition of Sevenstep, the MRP talent solutions business, as revenue excluding the acquisition was flat to prior year.

Excluding the acquisition, revenue from staffing services decreased 1.8%, which was offset by increases of 1.8% in outcome-based services and 3.0% in talent solutions.

Second Quarter Results

ETM revenue includes the impact from the addition of the Sevenstep business, which represents the talent solutions business that was acquired as part of the MRP acquisition.

Revenue excluding the acquisition decreased 5.1% from the prior year.

Revenue from staffing services decreased 7.7% resulting from lower hours volume primarily at certain large customers and revenue from outcome-based services decreased 6.2% due primarily from lower demand for our contact-center solutions, which were offset by an increase of 2.3% in talent solutions, excluding the acquisition.

Permanent placement fees increased 27.2%.

The increase in SET revenue from services was primarily driven by the acquisition of MRP staffing and outcome-based solutions businesses.

Excluding the acquisition, revenue from services decreased 7.2% primarily driven by declines in hours volume in our staffing specialties including the impact of changes in demand related to U.S.

federal government.

Excluding the acquisition, revenue from services decreased 8.5% primarily driven by declines in hours volume in our staffing specialties largely from changes in demand related to U.S.

federal government contractors.

Excluding the acquisition, revenue in our outcome-based services decreased 4.5%.

Permanent placement fees decreased, reflecting continued lower market demand.

The increase in Education revenue from services was driven by increased demand for our services as compared to a year ago, reflecting the impact of fill rate improvement and higher bill rates, partially offset by the impact of weather-related school closures.

The increase in Education revenue from services was driven by the impact of improved fill rates on stable demand for our services as compared to a year ago.

June Year-to-Date Results

ETM revenue includes the impact from the addition of the Sevenstep business.

Revenue excluding the acquisition decreased 2.6%.

Revenue from staffing services decreased 4.8% resulting from lower hours volume primarily at certain large customers and revenue from outcome-based services decreased 2.2% due primarily from lower demand for our contact-center solutions, which were offset by an increase of 2.6% in talent solutions, excluding the acquisition.

The increase in SET revenue from services was primarily driven by the acquisition of MRP staffing and outcome-based solutions businesses.

Excluding the acquisition, revenue from services decreased 7.8% primarily driven by declines in hours volume in our staffing specialties largely from changes in demand related to U.S.

federal government contractors.

Excluding the acquisition, revenue in our outcome-based services decreased 3.9%.

Permanent placement fees decreased, reflecting continued lower market demand.

The increase in Education revenue from services was driven by the impact of higher fill rates and higher bill rates on stable demand for our services as compared to a year ago, partially offset by the impact of weather-related school closures early in the year.

Operating Results By Segment (continued)

(Dollars in millions)

First Quarter

2025 2024 Change

Second Quarter June Year-to-Date

2025 2024 Change 2025 2024 Change

Gross Profit:

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Enterprise Talent Management 20.0 % 20.1 % (0.1) pts.

20.1 % 20.2 % (0.1) pts.

Science, Engineering & Technology 26.0 25.5 0.5 25.7 25.2 0.5

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Consolidated Total 20.5 % 20.2 % 0.3 pts.

First Quarter Results

Gross profit for ETM increased on higher revenue volume.

In comparison to the prior year, the gross profit rate decreased 10 basis points.

Factors impacting the gross profit rate included lower permanent placement fees which reduced the gross profit rate by 10 basis points and the impact of changes in business mix and employee-related costs reduced the gross profit rate by 20 basis points.

This was partially offset by a 20 basis point increase due to the acquisition of Sevenstep, a MRP talent solutions business.

20.4 % 19.9 % 0.5 pts.

Second Quarter Results

Gross profit for ETM decreased on lower revenue volume.

Factors impacting the gross profit rate included the impact of changes in business mix and higher employee-related costs which reduced the gross profit rate by 50 basis points, partially offset by higher permanent placement fees which increased the gross profit rate by 20 basis points.

There was an additional 20 basis point increase due to the addition of the Sevenstep business.

The SET gross profit increased primarily as a result of the acquisition of the MRP staffing and outcome-based solutions businesses.

The SET gross profit rate increased 70 basis points driven by a 100 basis point increase due to the MRP acquisition, which generates higher gross profit rates, and 50 basis points reflecting favorable business mix and employee-related costs, partially offset by an 80 basis point decrease as a result of lower permanent placement fees.

The change in the SET gross profit rate was driven by a 60 basis point increase due to the MRP acquisition, which generates higher gross profit rates, and 40 basis points reflecting favorable business mix and employee-related costs, partially offset by a 50 basis point decrease as a result of lower permanent placement fees.

Gross profit for the Education segment increased on higher revenue volume.

The gross profit rate increased 50 basis points due primarily to favorable employee-related costs.

The gross profit rate was flat to the prior year.

June Year-to-Date Results

Gross profit for the ETM segment decreased on lower revenue volume.

Factors impacting the gross profit rate included the impact of changes in business mix and employee-related costs which reduced the gross profit rate by 40 basis points, partially offset by higher permanent placement fees which increased the gross profit rate by 10 basis points.

There was an additional 20 basis point increase due to the addition of the Sevenstep business.

The SET gross profit increased resulting from the acquisition of the MRP staffing and outcome-based solutions businesses.

The change in the SET gross profit rate was driven by a 70 basis point increase due to the MRP acquisition, which generates higher gross profit rates, and 50 basis points reflecting favorable business mix and employee-related costs, partially offset by a 70 basis point decrease as a result of lower permanent placement fees.

Gross profit for the Education segment increased on higher revenue volume.

The gross profit rate increased due primarily to favorable employee-related costs.

Operating Results By Segment (continued)

(Dollars in millions)

First Quarter

2025 2024 % Change

Second Quarter June Year-to-Date

2025 2024 % Change 2025 2024 % Change

SG&A Expenses (excluding depreciation and amortization):

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Consolidated Total $ 194.8 $ 179.0 8.8 % $ 407.7 $ 359.3 13.4 %

First Quarter Results

The increase in ETM SG&A expenses excluding depreciation and amortization is primarily due to the acquisition of Sevenstep, the MRP talent solutions business.

Second Quarter Results

The decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower employee-related costs, partially offset by increases from the addition of the Sevenstep business.

Excluding the acquisition, expenses decreased 3.2% from the prior year primarily due to lower employee-related costs as a result of expense management actions in response to lower revenue volume compared to the prior year, partially offset by integration and realignment charges.

The increase in SET SG&A expenses excluding depreciation and amortization is primarily due to the acquisition of MRP.

Excluding the acquisition, expenses were flat to the prior year.

The increase in Education SG&A expenses excluding depreciation and amortization primarily related to increased year-over-year revenue levels.

The increase in Corporate expenses is primarily driven by integration and realignment charges in the first quarter of 2025.

The increase in SET SG&A expenses excluding depreciation and amortization was primarily due to the acquisition of MRP.

Excluding the acquisition, expenses decreased 1.6% primarily due to lower employee-related costs.

The increase in Education SG&A expenses excluding depreciation and amortization primarily related to increased costs to support year-over-year revenue growth.

The increase in Corporate expenses was primarily driven by integration and realignment charges in the second quarter of 2025.

June Year-to-Date Results

The increase in ETM SG&A expenses excluding depreciation and amortization was primarily due to the addition of the Sevenstep business.

Excluding the acquisition, expenses decreased 1.9% from the prior year primarily due to lower employee-related costs as a result of expense management actions in response to lower revenue volume compared to the prior year, partially offset by integration and realignment charges.

The increase in SET SG&A expenses excluding depreciation and amortization was primarily due to the acquisition of MRP.

Excluding the acquisition, expenses decreased 0.8% from the prior year.

The increase in Education SG&A expenses excluding depreciation and amortization primarily related to increased employee-related and other costs to support year-over-year revenue growth.

The increase in Corporate expenses was primarily driven by integration and realignment charges in the first six months of 2025.

Operating Results By Segment (continued)

(Dollars in millions)

First Quarter

2025 2024 % Change

Second Quarter June Year-to-Date

2025 2024 % Change 2025 2024 % Change

Business Unit Profit (Loss)

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Corporate (13.3) (12.4) 6.7 (29.2) (27.4) 6.3

Gain on sale of EMEA staffing operations — 11.6 NM

Asset impairment charge — (5.5) NM — (5.5) NM

Gain (loss) on sale of EMEA staffing operations 4.0 (10.0) 139.3 4.0 1.6 139.3

Gain (loss) on sale of assets — 5.5 NM — 5.5 NM

Depreciation and amortization (12.5) (12.5) (0.1) (25.3) (22.7) 11.4

Consolidated Total Earnings from Operations $ 22.2 $ 12.2 81.0 % $ 33.0 $ 39.0 (15.5) %

First Quarter Results

ETM reported profit decreased versus the prior year primarily due to higher SG&A expenses, partially offset by higher revenue and gross profit.

SET reported profit includes $3.8 million of business unit profit from the acquisition of MRP.

Second Quarter Results

ETM reported profit decreased versus the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses.

These results include the impact from the addition of the Sevenstep business.

SET reported profit increased versus the prior year primarily due to the acquisition of MRP.

Excluding the acquisition, the decrease in profit was due primarily to lower revenue and gross profit, partially offset by lower SG&A expenses.

Education reported profit increased versus the prior year primarily driven by higher revenue and gross profit, partially offset by an increase in SG&A expenses.

Corporate expenses increased over the prior year primarily driven by integration and realignment charges in the second quarter of 2025.

June Year-to-Date Results

ETM reported profit decreased versus the prior year primarily due to lower revenue, gross profit and higher SG&A expenses.

These results include the impact from the addition of the Sevenstep business.

SET reported profit decreased versus the prior year primarily due to the acquisition of MRP.

Excluding the acquisition, the decrease in profit was due primarily to lower revenue and gross profit.

Education reported profit of $19.3 million compared to profit of $18.1 million a year ago.

The change was primarily driven by higher revenue and gross profit, partially offset by an increase in SG&A expenses.

Corporate expenses increased 5.9% over the prior year primarily driven by integration and realignment charges in the first quarter of 2025.

Education reported profit increased versus the prior year primarily driven by higher revenue and gross profit, partially offset by an increase in SG&A expenses.

Corporate expenses increased over the prior year primarily driven by integration and realignment charges in 2025.

Financial Condition

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however, any such increase would not be sustainable in the event that an economic downturn continued for an extended period.

We also experience seasonal reductions in working capital usage in our Education business related to the summer school holidays.

As highlighted in the consolidated statements of cash flows, our liquidity and available capital resources are impacted by four key components:

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Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash totaled $34.5 million at the end of the first quarter of 2025 and $45.6 million at year-end 2024.

Cash, cash equivalents and restricted cash totaled $24.5 million at the end of the second quarter of 2025 and $45.6 million at year-end 2024.

As further described below, we generated $119.3 million of cash from operating activities, generated $24.7 million of cash from investing activities and used $172.7 million of cash for financing activities.

Operating Activities

In the first three months of 2025, we generated $23.9 million of net cash from operating activities, as compared to using $25.5 million in the first three months of 2024, primarily due to decreased working capital requirements as compared to the same period of the prior year.

Trade accounts receivable totaled $1.3 billion at the end of the first quarter of 2025.

Global DSO was 61 d ays at the end of the first quarter of 2025 and 59 days at year-end 2024.

Our working capital position (total current assets less total current liabilities) was $528.1 million at the end of the first quarter of 2025 including the impact of our acquisition of MRP, a decrease of $10.9 million from year-end 2024.

Excluding the decrease in cash, working capital decreased $0.1 million from year-end 2024.

The current ratio (total current assets divided by total current liabilities) was 1.6 at the end of the first quarter of 2025 and 1.7 at year-end 2024.

In the first six months of 2025, we generated $119.3 million of net cash from operating activities, as compared to generating $32.2 million in the first six months of 2024, primarily due to decreased working capital requirements as compared to the same period of the prior year.

Trade accounts receivable totaled $1.2 billion at the end of the second quarter of 2025.

Global DSO was 59 d ays at both the end of the second quarter of 2025 and at year-end 2024.

Our working capital position (total current assets less total current liabilities) was $426.4 million at the end of the second quarter of 2025, a decrease of $112.6 million from year-end 2024.

Excluding the decrease in cash, working capital decreased $91.6 million from year-end 2024, primarily driven by the use of cash to pay down long-term debt.

The current ratio (total current assets divided by total current liabilities) was 1.5 at the end of the second quarter of 2025 and 1.7 at year-end 2024.

Investing Activities

In the first three months of 2025, we generated $3.2 million of cash from investing activities, as compared to generating $72.1 million in the first three months of 2024.

Included in cash from investing activities in the first three months of 2025 is $6.4 million of cash from the sale of the PersolKelly investment, partially offset by $2.5 million of cash used for capital expenditures.

I ncluded in the cash from investing activities in the first three months of 2024 is $77.1 million of p roceeds from sale of EMEA staffing operations, net of cash disposed, partially offset by $3.7 million of cash used for capital expenditures and a $2.4 million payment for the settlement of forward contracts .

In the first six months of 2025, we generated $24.7 million of cash from investing activities, as compared to using $353.1 million in the first six months of 2024.

Included in cash from investing activities in the first six months of 2025 is $21.8 million of cash from the sale of EMEA staffing operations and $6.4 million of cash from the sale of the PersolKelly investment, partially offset by $4.5 million of cash used for capital expenditures.

I ncluded in the cash used for investing activities in the first six months of 2024 is $427.4 million used for the acquisition of MRP, $6.7 million of cash used for capital expenditures and a $2.4 million payment for the settlement of forward contracts.

These outflows were partially offset by $77.1 million of p roceeds from sale of EMEA staffing operations, net of cash disposed, and $4.4 million of proceeds from the sale of assets.

Financing Activities

We used $39.5 million of cash for financing activities in the first three months of 2025, as compared to using $4.7 million in the first three months of 2024.

The change in cash used for financing activities is driven by net repayments of $34.8 million on our credit facilities in the first three months of 2025.

Divi dends paid per common share were $0.075 in each of the first three months of 2025 and 2024.

We used $172.7 million of cash for financing activities in the first six months of 2025, as compared to generating $201.6 million in the first six months of 2024.

The change in cash used for financing activities was driven by net repayments of $165.1 million on our credit facilities in the first six months of 2025 compared to net proceeds of $210.4 million on our credit facilities in the first six months of 2024.

Divi dends paid per common share were $0.075 in each of the first two quarters of 2025 and 2024.

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 14.2% at the end of the first quarter of 2025 and 16.2% at year-end 2024.

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.

Our ratio of debt-to-total capital was 5.5% at the end of the second quarter of 2025 and 16.2% at year-end 2024.

Critical Accounting Estimates

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We have no material unrecorded commitments, losses, contingencies or guarantees associated with any related parties or unconsolidated entities.

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.

The credit facilities also include an accordion feature to increase our combined borrowing capacity by $250.0 million.

We expect to meet our ongoing short-term and long-term cash requirements principally through cash generated from operations, available cash and equivalents and our credit facilities.

Additional funding sources could include additional bank facilities or sale of non-core assets.

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As part of those reviews, we may identify cash that we feel should be repatriated to optimize our overall capital structure.

As of the end of the first quarter of 2025, these reviews have not resulted in specific plans to repatriate a majority of our international cash balances.

As of the end of the second quarter of 2025, these reviews have not resulted in specific plans to repatriate a majority of our international cash balances.

Following the sale of our EMEA staffing operations completed in the first quarter of 2024, discussed below, we continue to provide MSP, RPO and Functional Service Provider solutions in the EMEA region.

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and received cash proceeds of $110.6 million or $77.1 million net of cash disposed.

We expect 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.

As of first quarter-end 2025, we have recorded a net receivable of $17.0 million.

We are actively reconciling the receivable in accordance with the purchase agreement and expects it to be settled upon completion of this process.

In the second quarter of 2025, we received proceeds of $21.8 million from Gi in connection with the previously recorded receivable, which was fully settled as of the second quarter-end 2025.

We will not receive any proceeds from the contingent consideration opportunity associated with the transaction.

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Per the terms of the agreement, there was an earnout with a maximum potential cash payment of $60.0 million due to the seller in the second quarter of 2025.

As of first quarter-end 2025, the fair value of the earnout remained at zero, and no liability is recorded.

The earnout period concluded in the first quarter of 2025 and no further liability will be recognized.

See the Acquisitions and Disposition footnote in the notes to our consolidated financial statements for more details.

As of first quarter-end 2025, we had $120.0 million of available capacity on our $150.0 million revolving credit facility and $32.8 million of available capacity on our $250.0 million securitization facility.

As of second quarter-end 2025, we had $130.0 million of available capacity on our $150.0 million revolving credit facility and $153.1 million of available capacity on our $250.0 million securitization facility.

The revolving credit facility carried $20.0 million of long-term borrowings on the term benchmark line of credit.

The securitization facility carried $54.3 million of long-term borrowings and $42.6 million of standby letters of credit related to workers’ compensation.

The credit facilities also include an accordion feature to increase our combined borrowing capacity by $250.0 million.

On July 17, 2024, we entered into interest rate swaps that effectively locked in the variable Secured Overnight Financing Rate (“SOFR”) component of our interest rate for a portion of the long-term borrowings on the Securitization Facility.

As of first quarter-end 2025, we recorded a liability totaling $0.3 million related to the mark-to-market fair value change of the interest rate swaps.

The 12-month interest rate swap was settled early with the final payment made in June 2025.

As of second quarter-end 2025, we recorded a liability totaling $0.1 million related to the mark-to-market fair value change of the interest rate swaps.

See the Fair Value Measurements footnote and the Debt footnote in the notes to our consolidated financial statements for more details.

Together, the revolving credit and securitization facilities provide us with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.

We believe our cash flow from operations, the availability of liquidity under our credit facilities, including the accordion feature which allows us to increase our borrowing

capacity and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements, while maintaining sufficient liquidity for normal operating purposes.

As of first quarter-end 2025, we met the debt covenants related to our revolving credit facility and securitization facility.

As of first quarter-end of 2025, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.1 million, under which we had no borrowings.

We believe our cash flow from operations, the availability of liquidity under our credit facilities, including the accordion feature which allows us to increase our borrowing capacity and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements, while maintaining sufficient liquidity for normal operating purposes.

As of second quarter-end 2025, we met the debt covenants related to our revolving credit facility and securitization facility.

As of second quarter-end of 2025, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.2 million, under which we had no borrowings.

Details of our debt facilities are contained in the Debt footnote in the notes to our consolidated financial statements.

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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.

Actual results may differ materially from any forward-looking statements contained herein, and we undertake no duty to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis