What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 124 added, 148 removed, 142 unchanged (66% of the section changed)

1 unchanged sentence

Executive Overview

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.

In the third quarter, Kelly continued to capture growth in more resilient markets.

The Education segment delivered revenue growth driven by continued demand in the K-12 staffing and pediatric therapy specialties.

In SET, demand for engineering and telecom workforce solutions remained robust driven by investments in large capital projects such as data centers.

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

Kelly’s results also reflect reduced volumes in parts of our portfolio driven by lower demand among certain large customers and a more measured approach to hiring among employers in some sectors, primarily in response to the dynamic macroeconomic environment.

Results in ETM continued to be impacted by demand reductions among three large customers, which Kelly disclosed in the second quarter.

Staffing volumes in ETM and SET associated with the U.S.

federal government, which were materially reduced beginning in the first quarter of 2025 as a result of government efficiency actions, continued to trend lower in the third quarter.

Throughout the third quarter, Kelly maintained its commitment to aligning resources with demand and took a disciplined approach to expense management to address these dynamics.

As Kelly navigated a dynamic environment in the third quarter, the Company remained focused on positioning itself for the future.

Kelly continued to refine its go-to-market strategy with large enterprise customers and within SET, enhancing service delivery to improve the customer experience.

The Company also made further progress toward modernizing its front- and back-office systems within SET, leveraging MRP’s leading technology stack to consolidate disparate platforms, reduce complexity, and drive efficiency.

Kelly’s ability to capture growth in more resilient markets in the third quarter reflects the Company’s diversified portfolio of specialty businesses, each with industry leading positions and differentiated offerings.

As the demand environment continues to evolve, the Company will remain agile in pursuit of profitable growth and committed to long-term value creation.

Financial Measures

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EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA margin (EBITDA divided by revenue from services) are measures used for understanding our 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.

EBITDA measures are non-GAAP (U.S.

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.

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Total Company

(Dollars in millions)

Second Quarter June Year-to-Date

(in millions)

Third Quarter September Year-to-Date

2025 2024 % Change 2025 2024 % Change

6 unchanged sentences

Total SG&A expenses 194.4 219.0 (11.2) 627.4 601.0 4.4

(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

Goodwill impairment charge 102.0 — NM 102.0 — NM

(Gain) loss on sale of EMEA staffing operations (0.3) — NM (4.3) (1.6) (169.4)

(Gain) loss on sale of assets — 0.1 NM — (5.4) NM

Asset impairment charge — — NM — 5.5 NM

Earnings from operations 22.2 12.2 81.0 33.0 39.0 (15.5)

Gain on forward contract — — NM — 1.2 NM

Earnings (loss) from operations (102.1) 2.6 NM (69.1) 41.6 NM

Gain on forward contract — — — — 1.2 NM

Other income (expense), net (1.6) (4.4) 64.0 (7.1) (9.1) 22.9

Earnings before taxes 19.9 5.7 249.1 27.5 35.5 (22.6)

Income tax expense 0.9 1.1 (23.8) 2.7 5.1 (48.0)

Net earnings $ 19.0 $ 4.6 314.7 % $ 24.8 $ 30.4 (18.3) %

Earnings (loss) before taxes (103.7) (1.8) NM (76.2) 33.7 NM

Income tax expense (benefit) 46.4 (2.6) NM 49.1 2.5 NM

Net earnings (loss) $ (150.1) $ 0.8 NM % $ (125.3) $ 31.2 NM %

Gross profit rate 20.8 % 21.4 % (0.6) pts.

20.5 % 20.4 % 0.1 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.

Third Quarter Results

Revenue from services in the third quarter decreased 9.9% year-over-year with decreases in the ETM and SET segments, partially offset by an increase in the Education segment.

Compared to the third quarter of 2024, revenue from staffing services decreased 10.3% and revenue from outcome-based services decreased 13.1%.

Revenue from talent solutions decreased 1.4% and permanent placement revenue decreased 13.2% from the prior year.

Gross profit decreased 12.5%, primarily driven by lower revenue volume.

The gross profit rate decreased 60 basis points to 20.8%, primarily due to a 50 basis point decrease due to employee-related costs and a 10 basis point decrease related to business mix.

Total SG&A expenses decreased 11.2%, primarily due to expense management actions to reduce volume-related costs and reflects the benefits of the ongoing integration and realignment efforts.

SG&A expenses in the third quarter of 2025 include $3.1 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, $0.8 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 third quarter of 2024 were $6.1 million of integration and realignment costs related to initiatives to integrate MRP and aligning Company processes and $0.2 million of transformation and restructuring adjustments relating to 2023 initiatives and $3.1 million of transaction-related costs arising from the sale of our EMEA staffing operations and acquisition of MRP.

Excluding integration and realignment, transaction, executive transition, restructuring and transformation charges, and depreciation and amortization, SG&A expenses decreased 9.2% from the prior year.

The loss from operations in the third quarter was primarily due to the goodwill impairment charges driven by reduced demand, integration of MRP and Softworld acquisitions and realignment of reporting units in the SET segment.

Income tax expense was $46.4 million for the third quarter of 2025 compared to an income tax benefit of $2.6 million for the third quarter of 2024, with the change primarily driven by the valuation allowance and goodwill impairment charges.

September Year-to-Date Results

Revenue from services in the first nine months of 2025 increased 1.9%, which was primarily driven by the acquisition of MRP in May 2024.

Excluding the impact from the acquisitions, revenue from services decreased 4.2% 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%.

Compared to the first nine months of 2024 and excluding the impact from the acquisitions, revenue from staffing services decreased 4.3% and revenue from outcome-based services decreased 6.2% from the prior year.

Revenue from talent solutions increased 1.8% and permanent placement revenue decreased 19.0% from the prior year, excluding the impact from the acquisition.

2 unchanged sentences

The gross profit rate increased 10 basis points to 20.5%, primarily due to a 50 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.

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

Total SG&A expenses increased 4.4%, primarily due to the acquisition of MRP.

Excluding the impact of the acquisition, SG&A expenses decreased 3.9%.

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.

SG&A expenses in the first nine months of 2025 include $19.8 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, $1.3 million of executive transition charges and $0.8 million of transaction costs, of which $0.5 million were related to the sale of our EMEA staffing operations.

Included in SG&A expenses in the first nine months of 2024 were $12.5 million of integration costs related to initiatives to integrate MRP and aligning Company processes and transformation and restructuring charges relating to 2023 initiatives, and $10.3 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, restructuring and transformation charges, and depreciation and amortization, SG&A expenses were down 2.9% from the prior year.

The loss from operations in the first nine months of 2025 was primarily due to the goodwill impairment charges driven by reduced demand, integration of MRP and Softworld acquisitions and realignment of reporting units in the SET segment.

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 $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.

In the first nine months of 2025, we recognized a gain of $4.3 million upon the settlement of working capital and other adjustments and previously recognized a gain of $1.6 million in the first nine months of 2024.

The gain on sale of assets represents the sale of Ayers Group in the second quarter of 2024 for which we recognized a gain of $5.4 million in the first nine months of 2024.

Income tax expense was $49.1 million for the first nine months of 2025 compared to an income tax expense of $2.5 million for the first nine months of 2024, with the change primarily driven by the valuation allowance and goodwill impairment charges.

Operating Results By Segment

(Dollars in millions)

Second Quarter June Year-to-Date

(in millions)

Third Quarter September Year-to-Date

2025 2024 % Change 2025 2024 % Change

5 unchanged sentences

Consolidated Total $ 935.0 $ 1,038.1 (9.9) % $ 3,201.7 $ 3,140.7 1.9 %

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 8.5% primarily driven by declines in hours volume in our staffing specialties largely from changes in demand related to U.S.

Third Quarter Results

The decrease in ETM revenue of 13.1% was primarily related to a decrease of 16.4% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 17.2% from outcome-based services primarily due to the ramping down of a large contact-center customer that has fully ended as of the third quarter of 2025.

Permanent placement fees decreased 19.5%, reflecting lower market demand.

The decrease in SET revenue from services of 9.0% was 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%.

Revenue in our outcome-based services decreased 8.4% primarily due to lower project demand including from the U.S.

Federal Government.

Permanent placement fees decreased 13.3%, reflecting continued lower market demand.

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.

The increase in Education revenue from services was driven primarily by the impact of ongoing improved fill rates.

September Year-to-Date Results

ETM revenue includes the impact from the acquisition of Sevenstep, the MRP talent solutions business.

Revenue excluding the acquisition decreased 6.1%.

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.

Revenue from staffing services decreased 8.7%, resulting from lower hours volume primarily at certain large customers and revenue from outcome-based services decreased 7.2%, primarily due to the ramping down of a large contact-center customer that has fully ended as of the third quarter of 2025, which was offset by an increase of 1.8% 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.

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Operating Results By Segment (continued)

(Dollars in millions)

Second Quarter June Year-to-Date

(in millions)

Third Quarter September Year-to-Date

2025 2024 Change 2025 2024 Change

11 unchanged sentences

20.5 % 20.4 % 0.1 pts.

Second Quarter Results

Third 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 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.

Factors impacting the gross profit rate included the impact of higher employee-related costs, partially offset by changes in business mix, which reduced the gross profit rate by 60 basis points.

The SET gross profit 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 70 basis points and a 10 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 was flat to the prior year.

June Year-to-Date Results

Factors impacting the gross profit rate included the impact of lower employee-related costs, which increased the gross profit rate by 10 basis points and a 10 basis point increase as a result of higher permanent placement fees.

September 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.

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 40 basis points, partially offset by a 10 basis point increase due to the addition of the Sevenstep business.

The SET gross profit increased primarily due to the acquisition of the MRP staffing and outcome-based solutions businesses.

SET gross profit rate is flat compared to prior year and reflects the benefit of the MRP acquisition, which generates higher gross profit rates, offset by lower permanent placement fees and unfavorable changes in business mix.

Gross profit for the Education segment increased 20 basis points on higher revenue volume.

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

Operating Results By Segment (continued)

(Dollars in millions)

Second Quarter June Year-to-Date

(in millions)

Third Quarter September Year-to-Date

2025 2024 % Change 2025 2024 % Change

5 unchanged sentences

Consolidated Total $ 181.8 $ 204.5 (11.1) % $ 589.5 $ 563.8 4.6 %

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 was primarily due to the acquisition of MRP.

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

Third Quarter Results

The decrease in SET SG&A expenses excluding depreciation and amortization was 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.

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 decrease in Corporate expenses was primarily driven by lower employee-related costs, integration and realignment charges and transaction costs in the third quarter of 2025 as compared to prior year.

September Year-to-Date Results

The decrease in ETM SG&A expenses excluding depreciation and amortization was 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 the addition of the Sevenstep business and integration and realignment charges.

Excluding the acquisition, expenses decreased 4.4% from the prior year.

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

Excluding the acquisition, expenses decreased 4.4% 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.

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

The decrease in Corporate expenses was primarily driven by lower employee-related costs and transaction costs, partially offset by an increase in integration and realignment charges in the first nine months of 2025 as compared to prior year.

Operating Results By Segment (continued)

(Dollars in millions)

Second Quarter June Year-to-Date

(in millions)

Third Quarter September Year-to-Date

2025 2024 % Change 2025 2024 % Change

1 unchanged sentence

Enterprise Talent Management $ 9.1 $ 18.0 (48.9) % $ 27.0 $ 41.6 (34.8) %

Science, Engineering & Technology 19.3 18.9 2.1 32.7 33.1 (1.3)

Science, Engineering & Technology (82.4) 19.5 NM (49.7) 52.6 NM

Education (4.4) (3.3) (32.7) 28.5 27.5 3.5

Business Unit Profit (Loss) 44.0 47.1 (6.6) 83.5 87.5 (4.6)

Business Unit Profit (Loss) (77.7) 34.2 NM 5.8 121.7 (95.3)

Corporate (12.1) (17.0) (28.3) (41.3) (44.4) (7.0)

Asset impairment charge — — 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 EMEA staffing operations 0.3 — NM 4.3 1.6 (169.4)

Gain (loss) on sale of assets — (0.1) NM — 5.4 NM

Depreciation and amortization (12.6) (14.5) (12.9) (37.9) (37.2) 1.9

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

Second Quarter Results

Consolidated Total Earnings (loss) from Operations $ (102.1) $ 2.6 NM % $ (69.1) $ 41.6 NM %

Third 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.

SET reported profit (loss) decreased versus the prior year primarily due to the goodwill impairment charge.

Excluding the goodwill impairment charge, SET reported profit was flat compared to the prior year.

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

Corporate expenses decreased over the prior year primarily driven by lower employee-related costs, integration and realignment charges and transaction costs in the third quarter of 2025.

September Year-to-Date 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 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.

SET reported profit (loss) decreased versus the prior year primarily due to the goodwill impairment charge.

Excluding the impairment charge, SET profit was up 2.4% from the prior year.

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

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.

Corporate expenses decreased over the prior year primarily driven by lower employee-related costs and transaction costs, partially offset by an increase in integration and realignment charges in 2025.

Financial Condition

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Cash, Cash Equivalents and Restricted Cash

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.

Cash, cash equivalents and restricted cash totaled $35.4 million at the end of the third quarter of 2025 and $45.6 million at year-end 2024.

As further described below, we generated $94.0 million of cash from operating activities, generated $21.9 million of cash from investing activities and used $131.4 million of cash for financing activities.

Operating Activities

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.

In the first nine months of 2025, we generated $94.0 million of net cash from operating activities, as compared to generating $11.9 million in the first nine 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 third quarter of 2025.

Global DSO was 66 days at the end of the third quarter of 2025 and 59 days at year-end 2024.

Our working capital position (total current assets less total current liabilities) was $473.3 million at the end of the third quarter of 2025, a decrease of $65.7 million from year-end 2024.

Excluding the decrease in cash, working capital decreased $56.8 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.

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

Investing Activities

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.

In the first nine months of 2025, we generated $21.9 million of cash from investing activities, as compared to using $355.5 million in the first nine months of 2024.

Included in cash from investing activities in the first nine 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 $6.8 million of cash used for capital expenditures.

Included in the cash used for investing activities in the first nine months of 2024 is $427.4 million used for the acquisition of MRP, $9.1 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 proceeds from the sale of EMEA staffing operations, net of cash disposed, and $4.3 million of proceeds from the sale of assets.

Financing Activities

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.

We used $131.4 million of cash for financing activities in the first nine months of 2025, as compared to generating $217.3 million in the first nine months of 2024.

The change in cash used for financing activities was primarily driven by net payments of $121.0 million on our credit facilities in 2025 compared to net proceeds of $228.2 million on our credit facilities in 2024.

Dividends paid per common share were $0.075 in each of the first three 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 5.5% at the end of the second quarter of 2025 and 16.2% at year-end 2024.

Our ratio of debt-to-total capital was 9.1% at the end of the third quarter of 2025 and 16.2% at year-end 2024 .

Critical Accounting Estimates

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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 second 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 third 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.

Therefore, we expect much of our remaining international cash will be needed to fund working capital growth in our local operations.

On January 2, 2024, we completed the sale of our 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.

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.

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

On May 31, 2024, we indirectly acquired 100% of the equity interests in MRP for a purchase price of $425.0 million.

Under terms of the agreement, the purchase price was adjusted for estimated cash held by MRP at the closing date and estimated working capital adjustments, resulting in us paying cash of $440.0 million, funded with cash on hand and available credit facilities.

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.

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 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.

As of third quarter-end 2025, we had $150.0 million of available capacity on our $150.0 million revolving credit facility and $89.0 million of available capacity on our $250.0 million securitization facility.

The revolving credit facility carried no long-term borrowings on the floating or term benchmark lines of credit.

The securitization facility carried $118.4 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.

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 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.

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

As of third quarter-end of 2025, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.1 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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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.

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.

These statements are not guarantees of future performance, and we have no specific intention to update them, except as required by law.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors.

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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