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Item 7. Management’s Discussion and Analysis

2026-02-12 compared with 2025-02-13 · 191 added, 264 removed, 219 unchanged (68% of the section changed)

1 unchanged sentence

Executive Overview

While the challenging staffing market dynamics that developed in 2023 continued into 2024, we have remained focused on capturing a greater share of growth where it exists and converting a greater share of our revenue to bottom-line growth by continuing to enhance efficiency and focus across the Company.

We continue to build on the goals of our transformation activities and the aggressive actions we took in 2023 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 through 2025.

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 both our clients and our talent.

We completed the sale of our European staffing operations on January 2, 2024 and on June 12, 2024 announced the sale of the Ayers Group, a division of our OCG segment.

We move forward with a streamlined operating model focused on North American staffing and solutions and global Managed Service Provider ("MSP") and recruitment process outsourcing ("RPO") solutions.

To further expand our higher-margin, higher-growth specialties, we acquired Motion Recruitment Partners, LLC ("MRP") on May 31, 2024.

The acquisition of MRP enhanced the scale and capabilities of Kelly’s staffing and consulting solutions across technology, telecommunications, and government specialties in North America, and RPO solutions globally.

In addition, we remained focused on expanding the higher-margin therapy practice in our Education segment, evidenced by the November 2024 acquisition of Children’s Therapy Center ("CTC").

Together these changes represent structural shifts in Kelly’s operations and deliver meaningful improvement to the Company’s growth prospects and EBITDA margin profile, which we expect to continue as we move forward in 2025 and beyond.

In 2025, Kelly continued to advance its multi-year transformation, building on the decisive actions taken in 2023 and 2024 to streamline the portfolio, sharpen strategic focus, and expand into higher-margin, higher-growth specialties.

We remained focused on capturing a greater share of growth, converting a higher proportion of revenue into bottom-line performance, and positioning Kelly to benefit from an eventual recovery in the staffing environment.

Kelly entered 2025 with a simplified operating model concentrated on North American staffing, business process outsourcing (“BPO”) and specialty solutions and global Managed Service Provider (“MSP”) and recruitment process outsourcing (“RPO”) offerings, following the 2024 sale of its European staffing operations and the Ayers Group and acquisition of Motion Recruitment Partners (“MRP”) and Children’s Therapy Center (“CTC”).

These portfolio actions reflected a deliberate shift toward businesses with more attractive growth profiles, scalable platforms, and improved EBITDA margin potential.

We continued to execute our refreshed go-to-market strategy, designed to deliver the full suite of Kelly solutions to large enterprise customers and capture a greater share of wallet while maintaining high service levels for customers of all sizes.

This strategy was supported by ongoing commitment to delivering greater effectiveness and data-driven sales processes and initiatives.

Critical to positioning Kelly for future growth was the hiring of Chris Layden as President and Chief Executive Officer in September 2025.

Layden succeeded Peter Quigley, who announced his intention to retire in February 2025.

Layden brings dynamic industry leadership and extensive experience leading organizations through periods of significant change, while delivering growth and strengthening competitive positioning.

Layden’s hiring underscores Kelly’s commitment to enhancing its operational capabilities and service delivery while transforming its technology processes and platforms.

During 2025, Kelly faced a dynamic macroeconomic environment characterized by sluggish labor market demand and policy shifts which had significant impacts on the industry, including Kelly.

In the face of these headwinds, Kelly demonstrated measurable progress in cost discipline and selective market strength.

At the same time, we accelerated structural and demand-driven cost optimization initiatives, including technology modernization, acquisition integration and process efficiencies to enhance execution and agility while positioning Kelly to capture market share and improve profitability when staffing market conditions stabilize.

Structural cost actions, operating model simplification, acquisition integration and portfolio reshaping are expected to support continued improvement in Kelly’s growth prospects and financial profile as we move through 2026 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.

Reported percentage changes are computed based on millions.

Prior year percent changes were computed based on actual amounts in thousands.

Prior year percent changes have been recast to conform to the new presentation which is calculated based on millions.

All dollar amounts are presented in millions except for per share data.

Days sales outstanding (“DSO”) represents the number of days that sales remain unpaid for the period being reported.

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Total Company

(Dollars in millions)

(in millions)

2025 2024 % Change

1 unchanged sentence

Gross profit 853.0 882.6 (3.4)

SG&A expenses excluding restructuring, depreciation, and amortization 760.8 856.0 (11.1)

Restructuring charges 6.1 38.6 (84.2)

SG&A expenses excluding integration, realignment, restructuring charges, and depreciation and amortization 747.1 750.8 (0.5)

Integration, realignment and restructuring charges 27.8 16.1 72.7

Total SG&A expenses excluding depreciation and amortization 774.9 766.9 1.0

1 unchanged sentence

Total SG&A expenses 825.9 818.4 0.9

Goodwill impairment charge 72.8 — NM

Asset impairment charge 13.5 2.4 451.8

Gain on sale of assets (5.4) — NM

Gain on sale of EMEA staffing operations (1.6) — NM

Earnings (loss) from operations (15.1) 24.3 NM

Other income (expense), net (6.8) 0.6 NM

Earnings (loss) before taxes (21.9) 24.9 NM

Income tax benefit (21.3) (11.5) (84.1)

Goodwill impairment charge 102.0 72.8 40.1

Asset impairment charge — 13.5 NM

Gain on sale of EMEA staffing operations (4.1) (1.6) (156.3)

Gain on sale of assets (1.0) (5.4) 81.5

Earnings (loss) from operations (69.8) (15.1) (362.3)

Other income (expense), net (9.0) (6.8) (32.4)

Earnings (loss) before taxes (78.8) (21.9) (259.8)

Income tax expense (benefit) 175.3 (21.3) NM

Net earnings (loss) $ (254.1) $ (0.6) NM

2 unchanged sentences

For a discussion of total company 2024 results compared to 2023, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed on February 13, 2025.

In the segment level discussions that follow the total company discussion, the comparative results for 2023 and 2022 have been recast to conform to the new structure in which our Mexico operations were transferred to our Professional & Industrial ("P&I") segment following the sale of our EMEA staffing operations and to reflect our updated corporate allocation method.

Revenue from services decreased 10.4%, which primarily reflects the January 2, 2024 sale of our EMEA staffing operations, partially offset by an increase related to the acquisition of MRP in May 2024.

Excluding the impact from the sale and the acquisition, revenue from services increased 0.5%.

This increase reflects revenue increases in the Education and Outsourcing & Consulting ("OCG") segments, partially offset by declines in the P&I and Science, Engineering & Technology ("SET") segments.

Compared to 2023 and excluding the impact from the sale and acquisition, revenue from staffing services increased 1.7% and revenue from outcome-based services decreased 3.2%.

In addition, revenue from talent solutions increased 3.0% and permanent placement revenue decreased 24.2% from the prior year, excluding the impact from the sale and the acquisition.

Gross profit decreased 8.2% largely driven by the sale of our EMEA staffing operations, partially offset by an increase related to the acquisition of MRP.

Excluding the impact from the sale and the acquisition, gross profit decreased 4.7%.

The gross profit rate increased 0.5 basis points to 20.4% and was favorably impacted by the sale of our EMEA staffing operations and the acquisition of MRP.

Excluding the impact from the sale and the acquisition, the gross profit rate declined 110 basis points.

The decrease is due primarily to business mix and a decrease in permanent placement revenue.

In the segment level discussions that follow the total company discussion, the comparative results for 2024 and 2023 have been recast to conform to the new structure.

Our operating segments, which also represent our reportable segments, are based on the organizational structure for which financial results are regularly evaluated by our chief operating decision-maker (“CODM”, our CEO) to determine resource allocation and assess performance.

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.

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

Also in the first quarter of 2025, we moved MRP's Sevenstep business from the SET segment to the ETM segment as part of the broader integration of MRP.

The 2024 and 2023 ETM and SET segment information has been recast to conform to the new structure.

Our three reportable segments:

(1) Enterprise Talent Management, (2) Science, Engineering & Technology and (3) Education, reflect the specialty services we provide to customers and represent how the business is organized internally.

Revenue from services decreased 1.9% year-over-year with decreases in the ETM and SET segments, partially offset by an increase in the Education segment and by the acquisition of MRP in May 2024.

Excluding the impact from the acquisition, revenue from services decreased 6.2%.

Compared to last year and excluding the impact from the acquisition, revenue from staffing services decreased 6.0% and revenue from outcome-based services decreased 9.4% from the prior year.

Revenue from talent solutions increased 1.1% and permanent placement revenue decreased 20.9% from the prior year, excluding the impact from the acquisition.

Gross profit decreased 3.4% on lower revenue volume, partially offset by the acquisition of MRP.

Excluding the impact from the acquisition, gross profit decreased 9.7%.

The gross profit rate decreased 30 basis points to 20.1% and was favorably impacted by the acquisition of MRP.

Excluding the acquisition, the gross profit rate declined 70 basis points.

The decrease is due primarily to changes in business mix, higher employee-related costs and lower permanent placement revenue.

Permanent placement revenue has higher gross profit due to very low direct costs of services and thus has a disproportionate impact on gross profit rates.

The gross profit rate decreased in all segments excluding the sale and the acquisition.

Total selling, general and administrative ("SG&A") expenses decreased 12.4%, including the sale of our EMEA staffing operations and the acquisition of MRP.

Excluding these impacts, SG&A expenses decreased 8.6%.

Included in SG&A expenses in 2024 and 2023 were $6.1 million and $38.6 million of restructuring and transformation charges, respectively.

Actions taken in both periods were a continuation of the actions that were announced in the second quarter of 2023 as part of the comprehensive transformation initiative.

In addition, restructuring 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.

SG&A expenses in 2024 also include $17.9 million of transaction-related costs arising from the sale of our EMEA staffing operations and acquisition of MRP, $10.0 million of integration costs related to initiatives to integrate MRP and aligning Company processes and technology, and $2.3 million of executive transition charges.

Excluding the impact of the sale and acquisition, as well as transaction, integration, restructuring and executive transition charges—and excluding depreciation and amortization—SG&A expenses decreased 8.5% primarily due to structural workforce reductions as part of our transformation initiatives, as well as proactive resource management and lower variable, performance-based incentive compensation expenses in response to lower revenue volume.

The gross profit rate decreased in the ETM and SET segments and had a slight increase in the Education segment.

Total selling, general and administrative (“SG&A”) expenses increased 0.9%, primarily due to the acquisition of MRP.

Excluding the impact of the acquisition, SG&A expenses decreased 4.8%.

Included in SG&A expenses in 2025 were $27.8 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.

Also included in SG&A was $2.7 million of executive transition charges and $0.8 million of transaction costs.

Included in SG&A expenses in 2024 were $17.9 million of transaction costs arising from the sale of our EMEA staffing operations and acquisition of MRP, $10.0 million of integration costs related to initiatives to integrate MRP and aligning Company processes and technology, $6.1 million of restructuring and transformation costs and $2.3 million of executive transition charges.

Excluding the impact of the acquisition, as well as transaction, integration, restructuring and executive transition charges—and excluding depreciation and amortization—SG&A expenses decreased 4.7% primarily due to momentum on structural and demand-driven expense optimization initiatives and lower variable, performance-based incentive compensation expenses in response to lower revenue volume.

Depreciation and amortization represents the total company depreciation and amortization of intangibles, including the amortization of hosted software.

The gain on sale of EMEA staffing operations relates to the completion of the sale in January 2024 in which we recognized a gain of $1.6 million in 2024.

The $5.4 million gain on sale of assets in 2024 represents the sale of the Company's Ayers Group in the second quarter of 2024.

Impairment of assets in 2024 represents the impairment of certain right-of-use ("ROU") assets related to our leased headquarters facility.

The goodwill impairment charge in 2024 relates to our Softworld reporting unit which delivers technology staffing and workforce services and is included in the SET segment.

Changes in internal projections of financial performance due to continued challenging market conditions resulted in a lower estimated fair value for the reporting unit and an impairment charge of $72.8 million.

Impairment of assets in 2023 represents the impairment of ROU assets related to an unoccupied office space lease exited in the second quarter.

Loss from operations in 2024 totaled $15.1 million, compared to earnings from operations of $24.3 million in 2023.

The decrease is primarily related to the goodwill impairment charge, higher asset impairment charges and the impact of lower revenue compared to the prior year, partially offset by the impact of lower SG&A compared to the prior year, the gain on sale of Ayers Group and the gain on sale of our EMEA staffing operations.

The goodwill impairment charge in 2025 was primarily driven by reduced demand, integration of MRP and Softworld acquisitions and the realignment of reporting units in the SET segment.

The goodwill impairment charge in 2024 related to our Softworld reporting unit which delivers technology staffing and workforce services and is included in the SET segment.

The impairment of assets in 2024 represents the impairment of certain right-of-use (“ROU”) assets related to our leased headquarters facility.

Loss from operations in 2025 totaled $69.8 million, compared to a loss from operations of $15.1 million in 2024.

The decrease is primarily related to the goodwill impairment charges, increased costs for integration, realignment and restructuring activities, the impact of lower revenue and gross profits and higher SG&A as compared to the prior year.

The change in other income (expense), net is primarily the result of an increase in interest expense related to the long-term debt taken on in 2024 in conjunction with the acquisition of MRP.

Income tax benefit was $21.3 million in 2024 compared to an income tax benefit of $11.5 million in 2023.

2024 benefited from lower pretax earnings, which included an $18.5 million tax benefit from the impairment of tax-deductible goodwill.

2023 benefited from recording a $15.0 million benefit on outside basis difference in held for sale assets, offset by a net $4.4 million charge for valuation allowance changes.

Our tax benefit or 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 non-taxable 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 or changes in judgment regarding the realizability of deferred tax assets.

The net loss for 2024 was $0.6 million, compared to net earnings of $36.4 million in 2023.

Income tax expense was $175.3 million in 2025 compared to an income tax benefit of $21.3 million in 2024.

The 2025 expense was impacted by $197.6 million of federal and state valuation allowances established against U.S.

general business credit carryforwards and other deferred tax assets, and a $6.2 million impact from a non-tax deductible goodwill impairment charge.

This was offset by an $18.4 million benefit from the impairment of tax-deductible goodwill.

In 2024, the benefit was driven by an $18.4 million tax benefit from the impairment of tax-deductible goodwill.

Operating Results By Segment

(Dollars in millions)

2024 2023 2024 vs.

% Change 2022 2023 vs.

(in millions)

2025 2024 2025 to 2024

% Change 2023 2024 to 2023

Revenue From Services:

Professional & Industrial $ 1,470.7 $ 1,539.5 (4.5) % $ 1,709.9 (10.0) %

Enterprise Talent Management $ 2,005.5 $ 2,196.1 (8.7)% $ 2,214.4 (0.8)%

Science, Engineering & Technology 1,240.4 1,165.7 6.4 970.6 20.1

Education 1,010.7 972.3 3.9 841.9 15.5

Outsourcing & Consulting 468.3 454.7 3.0 468.0 (2.8)

International — 812.1 (100.0) 887.0 (8.4)

International — — NM 812.1 NM

Intersegment revenue (5.7) (2.3) (147.8) (3.3) 30.3

Consolidated Total $ 4,250.9 $ 4,331.8 (1.9)% $ 4,835.7 (10.4)%

The decrease in P&I revenue from services was due primarily to a 5.6% decline in staffing services resulting from lower hours volume, partially offset by higher bill rates.

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

Revenue excluding the acquisition decreased 9.1%.

Revenue from staffing services decreased 11.7%, resulting from lower demand primarily at certain large customers and revenue from outcome-based services decreased 12.1%, 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 1.1% 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 9.3%, primarily driven by lower staffing services demand related to U.S.

federal government contractors.

Excluding the acquisition, revenue in our outcome-based services decreased 5.5%.

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.

The decrease in ETM revenue from services was due primarily to a 3.9% decline in staffing services resulting from lower demand, partially offset by higher bill rates.

Revenue from outcome-based services decreased 0.9% due to lower demand for our call-center solutions, partially offset by higher revenue from other specialties.

The increase in SET revenue from services was driven by the acquisition of MRP in May 2024.

Excluding the acquisition, revenue from services decreased 4.5%, primarily due to declines in hours volume in our staffing specialties, partially offset by higher bill rates.

Excluding the acquisition, revenue from services decreased 6.6%, primarily due to lower demand in our staffing specialties, partially offset by higher bill rates.

Excluding the acquisition, revenues from outcome-based services decreased 6.3%.

1 unchanged sentence

Increased demand for our services reflects new customer wins and an increased fill rate related to demand of existing customers.

The increase in OCG revenue from services was driven by increased demand in payroll process outsourcing ("PPO"), partially offset by declines in RPO and MSP.

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.

The decrease in P&I revenue from services was due primarily to a 17.5% decline in staffing services resulting from lower hours volume, partially offset by higher bill rates.

Revenue from outcome-based services increased 13.6% due to the expansion of existing customers.

The decrease in SET revenue from services was driven by a decline in staffing services resulting from declines in hours volume in our staffing specialties, partially offset by higher bill rates.

Revenues from outcome-based services increased 3.7% and permanent placement fees were down 40.2%.

The increase in Education revenue from services includes the impact of the acquisition of PTS in May 2022.

Excluding the acquisition, revenue increased 29.8% reflecting an increased fill rate and an increased demand for our services from existing customers and from net new customer wins.

The decrease in OCG revenue from services includes the revenue from the acquisition of RocketPower in March 2022.

Excluding the acquisition, revenue decreased 3.4% due primarily to lower RPO and MSP revenue.

The decrease in International revenue from services was primarily the result of the sale of our Russian operations in July 2022 and lower volume in several geographies, partially offset by favorable foreign currency fluctuations.

International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our ETM segment.

Operating Results By Segment (continued)

(Dollars in millions)

2024 2023 2024 vs.

Change 2022 2023 vs.

(in millions)

2025 2024 2025 to 2024

% Change 2023 2024 to 2023

Gross Profit:

Professional & Industrial $ 261.3 $ 277.1 (5.7) % $ 313.1 (11.5) %

Enterprise Talent Management $ 392.8 $ 444.9 (11.7)% $ 465.7 (4.5)%

Science, Engineering & Technology 313.2 297.9 5.1 246.9 20.7

Education 147.0 139.8 5.2 128.7 8.6

Outsourcing & Consulting 145.9 163.5 (10.8) 169.6 (3.7)

International — 120.1 (100.0) 131.8 (8.8)

International — — NM 120.1 NM

Consolidated Total $ 853.0 $ 882.6 (3.4)% $ 961.4 (8.2)%

Gross Profit Rate:

Professional & Industrial 17.8 % 18.0 % (0.2) pts.

Enterprise Talent Management 19.6 % 20.3 % (0.7) pts.

21.0 % (0.7) pts.

1 unchanged sentence

Education 14.5 14.4 0.1 15.3 (0.9)

Outsourcing & Consulting 31.2 36.0 (4.8) 36.3 (0.3)

International — — — 14.8 (14.8)

1 unchanged sentence

19.9 % 0.5 pts.

Gross profit for the P&I segment decreased on lower revenue volume.

In comparison to the prior year, the gross profit rate decreased 20 basis points primarily due to declines in permanent placement revenue and business mix which were partially offset by lower employee-related costs.

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

Factors impacting the gross profit rate included higher employee-related costs and changes in business mix, which reduced the gross profit rate by 70 basis points.

SET gross profit increased primarily due to the acquisition of MRP.

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

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

The gross profit rate increased 10 basis points due to lower employee-related costs, partially offset by changes in business mix.

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

In comparison to the prior year, the gross profit rate decreased 70 basis points primarily due to changes in business mix and lower permanent placement revenue, partially offset by lower employee-related costs.

SET gross profit increased resulting from the acquisition of MRP, partially offset by the decrease in revenue volume in other components of the segment.

The gross profit rate increased 80 basis points due to the acquisition of MRP, which generates higher gross profit rates.

This impact was partially offset by a 40 basis point decrease in the gross profit rate in other components of SET reflecting business mix and lower permanent placement fees, partially offset by lower employee-related costs.

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

The gross profit rate decreased 90 basis points due primarily to customer mix, lower permanent placement fees and higher employee-related costs.

OCG gross profit decreased with a decrease in the gross profit rate.

The gross profit rate decreased 480 basis points primarily due to a change in business mix within this segment as a result of strong growth in PPO.

The unfavorable business mix was primarily driven by declines in revenue in RPO and MSP, which generate 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.

Gross profit for the P&I segment decreased on lower revenue volume combined with a decrease in the gross profit rate.

In comparison to the prior year, the gross profit rate decreased 30 basis points.

This decrease reflects lower permanent placement income and higher employee-related costs, partially offset by favorable business mix.

SET gross profit decreased on lower revenue volume.

The gross profit rate decreased 70 basis points due to lower permanent placement revenues, partially offset by favorable business mix.

This impact was partially offset by a 60 basis point decrease in the gross profit rate in other components of SET reflecting changes in business mix and lower permanent placement revenue, partially offset by lower employee-related costs.

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

The gross profit rate decreased 50 basis points due primarily to lower permanent placement fees and unfavorable customer mix, partially offset by lower employee-related costs.

OCG gross profit decreased on lower revenue volume, combined with a decrease in the gross profit rate.

The gross profit rate decreased 30 basis points primarily driven by declines in revenue in RPO and MSP, which generate higher margins.

International gross profit decreased primarily as a result of the sale of our Russian operations in July 2022 and the servicing of certain customer programs by OCG in 2023.

Partially offsetting these impacts was improving gross profit primarily driven by higher revenue volume in Portugal and Germany as well as favorable foreign currency fluctuations.

The gross profit rate decreased 90 basis points due primarily to changes in business mix, lower permanent placement revenue and higher employee-related costs.

International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our ETM segment.

Operating Results By Segment (continued)

(Dollars in millions)

2024 2023 2024 vs.

% Change 2022 2023 vs.

(in millions)

2025 2024 2025 to 2024

% Change 2023 2024 to 2023

SG&A Expenses (excluding depreciation and amortization):

Professional & Industrial $ 226.6 $ 260.8 (13.1) % $ 293.5 (11.2) %

Enterprise Talent Management $ 373.0 $ 385.9 (3.3)% $ 432.2 (10.7)%

Science, Engineering & Technology 247.1 226.7 9.0 184.8 22.7

Education 101.0 95.9 5.3 92.4 3.8

Outsourcing & Consulting 140.2 159.3 (11.9) 154.6 3.0

International — 122.0 (100.0) 126.5 (3.4)

International — — NM 122.0 NM

Corporate expenses 53.8 58.4 (7.9) 63.2 (7.6)

Consolidated Total $ 774.9 $ 766.9 1.0% $ 894.6 (14.3)%

The decrease in total SG&A expenses excluding depreciation and amortization in P&I includes the impact of restructuring and transformation charges.

Excluding restructuring and transformation charges of $0.3 million in 2024 and $6.7 million in 2023, the decrease is 10.9%.

The decrease excluding restructuring and transformation charges is primarily due to lower direct salaries 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.

The decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and 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 4.5% from the prior year.

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

Excluding the acquisition, expenses decreased 6.5% from the prior year due to lower shared service costs which are included in other segment expenses and lower direct salaries reflecting expense management actions in response to lower revenue volume compared to the prior year, partially offset by an increase in integration and realignment charges in 2025 as compared to prior year restructuring and transformation 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 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 2025 as compared to prior year.

The decrease in total SG&A expenses excluding depreciation and amortization in ETM includes the impact of restructuring and transformation charges and the impact from the addition of the Sevenstep business.

Excluding the impact of these items, expenses decreased by 10.5% primarily due to lower direct salaries 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.

Other segment expenses declined primarily due to lower shared service costs for IT, finance, human resources and legal support and lower facilities and equipment-related costs.

2 unchanged sentences

The increase in total SG&A expenses excluding depreciation and amortization in Education is primarily due to increased direct salaries and other segment expenses as revenue levels increased and were partially offset by the impact of transformation-related actions.

The decrease in total SG&A expenses excluding depreciation and amortization in OCG is due primarily to lower direct salaries expense partially offset by the impact of restructuring charges in 2023.

Direct salaries declined as a result of lower incentive compensation expense, as well as the result of transformation-related actions.

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.

International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our ETM segment.

The decrease in Corporate expenses includes the impact of transaction, integration and executive transition costs.

Excluding these impacts, expenses decreased 12.6%.

This decrease primarily reflects lower legal settlement costs and employee compensation costs.

This decrease primarily reflects lower legal settlement costs and employee

compensation costs.

Transaction, integration and executive transition costs were $21.5 million and restructuring and transformation charges were $5.1 million in 2024.

Restructuring and transformation charges were $19.9 million and transaction costs were $6.9 million in 2023.

The decrease in total SG&A expenses in P&I includes the impact of restructuring charges.

Excluding restructuring charges of $6.7 million, the decrease is 13.4%.

The decrease excluding restructuring charges is primarily due to lower direct salaries, which includes performance-based compensation expenses due to transformation-related actions and in response to lower revenue volume.

The decrease in total SG&A expenses in SET is primarily due to lower direct salaries as a result of lower performance-based incentive compensation expenses.

The increase in total SG&A expenses in Education includes the first quarter impact of the acquisition of PTS in May 2022.

Excluding the impact of the PTS acquisition, SG&A expenses increased 11.9% from 2022, due primarily to higher direct salaries, which includes performance-based incentive compensation expenses, as headcount has increased as revenues have grown.

The increase in total SG&A expenses in OCG includes the impact of restructuring charges and the first quarter impact of the acquisition of RocketPower in March 2022.

Excluding restructuring charges of $3.0 million, the increase was 1.2%.

Excluding restructuring charges and the impact of the RocketPower acquisition, SG&A expenses were flat to 2022.

The decrease in total SG&A expenses in International was primarily due to the impact of the sale of our Russian operations in July 2022, partially offset by employee termination costs in 2023 related to the sale of the EMEA staffing operations in the first quarter of 2024 and favorable foreign currency fluctuations.

The increase in Corporate expenses was primarily due to restructuring and transformation charges as well as transaction costs in 2023 related to the sale of the EMEA staffing operations in the first quarter of 2024.

Excluding restructuring and transformation charges of $23.0 million and transaction costs of $3.8 million, expenses increased 14.4% year-over-year.

The increase excluding these charges is primarily due to higher legal settlement expenses.

Operating Results By Segment (continued)

(Dollars in millions)

2024 2023 2024 vs.

% Change 2022 2023 vs.

(in millions)

2025 2024 2025 to 2024

% Change 2023 2024 to 2023

Business Unit Profit (Loss)

Professional & Industrial $ 34.7 $ 16.0 116.1 % $ 19.6 (17.9) %

Science, Engineering & Technology 17.0 75.0 (77.4) 79.0 (5.0)

Enterprise Talent Management $ 19.8 $ 59.0 (66.4)% $ 31.2 89.1%

Science, Engineering & Technology (35.9) (1.6) NM 62.0 NM

Education 46.0 43.9 4.8 36.3 20.9

Outsourcing & Consulting 5.7 2.2 152.4 (26.0) NM

International — (1.9) (100.0) 5.3 NM

International — — NM (1.9) NM

Business Unit Profit (Loss) 29.9 101.3 (70.5) 127.6 (20.6)

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Asset impairment charge — (13.5) NM — NM

Gain on sale of EMEA staffing operations 1.6 — NM — NM

Loss on disposal — — NM (18.7) NM

Gain (loss) on sale of assets 5.4 — NM 6.2 NM

Gain on sale of EMEA staffing operations 4.1 1.6 156.3 — NM

Gain on sale of assets 1.0 5.4 (81.5) — NM

Depreciation and amortization (51.0) (51.5) (1.0) (40.1) 28.4

Consolidated Total Earnings from Operations $ (15.1) $ 24.3 NM % $ 14.8 65.0 %

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

Consolidated Total Earnings (loss) from Operations $ (69.8) $ (15.1) (362.3)% $ 24.3 NM

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

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

SET reported loss includes an increase in goodwill impairment charges and the impact of the 2024 acquisition of MRP.

Excluding the goodwill impairment and acquisition impacts, SET business unit loss increased from the prior year due 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 driven by the impact of higher fill rates and bill rates, partially offset by an increase in SG&A expenses.

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.

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

These results include the impact of $1.0 million of business unit profit from the addition of the Sevenstep business.

SET reported profit in 2024 includes a $72.8 million goodwill impairment charge related to Softworld and $11.8 million of business unit profit from the acquisition of MRP.

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Education reported profit increased versus the prior year primarily due to higher revenue and gross profit.

OCG reported profit increased compared to a year ago due primarily to lower SG&A expenses and an increase in revenue, partially offset by a decline in gross profit.

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.

International reflects the sale of our EMEA staffing operations in January 2024 and the transfer of our Mexico operations to our ETM segment.

Corporate expenses decreased year-over-year primarily due to lower transformation-related charges, partially offset by higher transaction-related expenses from the sale of our EMEA staffing operations and integration costs related to the acquisition of MRP.

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

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

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

2023 results also include the impact of first quarter profit of $3.4 million from PTS acquired in May 2022.

OCG reported profit in 2023, compared to a loss in 2022.

The change was primarily due to the impact of the 2022 $41.0 million charge related to the impairment of goodwill of RocketPower, the impact of a $2.0 million ROU asset impairment charge in the second quarter of 2023, the impact of restructuring charges and the impact of lower revenue and gross profit.

International reported a loss in 2023, compared to profit in 2022.

The change was primarily due to the transfer of certain customer programs to Outsourcing & Consulting, the impact of the sale of our Russian operations in 2022 and employee termination costs in 2023 related to the sale of the EMEA staffing operations in the first quarter of 2024.

Corporate expenses increased in 2023 from 2022 primarily due to restructuring and transformation charges of $23.0 million and transaction costs of $3.8 million.

Results of Operations

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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.

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 invoiced to customers weekly or monthly and is outstanding for longer periods.

Since receipts from customers lag payroll payments to temporary employees, working capital requirements increase and operating cash flows may decrease substantially in periods of growth.

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Such increases dissipate over time if the economic downturn continues 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 $45.6 million at year-end 2024, compared to $167.6 million, including $33.5 million held for sale, at year-end 2023.

As further described below, during 2024, we generated $26.9 million of cash from operating activities, used $361.6 million of cash for investing activities and generated $214.8 million of cash from financing activities.

Cash, cash equivalents and restricted cash totaled $37.7 million at year-end 2025, compared to $45.6 million at year-end 2024.

As further described below, during 2025, we generated $122.6 million of cash from operating activities, generated $22.3 million of cash from investing activities and used $161.1 million of cash for financing activities.

Operating Activities

In 2024, we generated $26.9 million of net cash from operating activities, as compared to generating $76.7 million in 2023 and using $76.3 million in 2022.

The decrease from prior year is primarily due to increased working capital requirements.

Ne t cash used for operating activities in 2022 included $86.8 million of cash outflows related to the repayment of U.S.

payroll taxes originally deferred in 2020.

In addition, in 2022 we paid $48.4 million of income taxes related to the sale of Persol Holdings common stock.

Trade accounts receivable totaled $1.3 billion at year-end 2024 and $1.2 billion at year-end 2023, excluding $200.9 million held for sale .

Global DSO was 59 days for 2024 and 2023, which included receivables held for sale in 2023.

Accounts payable and accrued liabilities was $613.8 million at year-end 2024, and decreased $32.3 million from year-end 2023 as a result of a decrease in supplier payables related to our MSP business.

Our working capital position (total current assets less total current liabilities), was $539.0 million at year-end 2024 including the impact of our acquisition of MRP of $71.2 million.

Our working capital position at year-end 2023 was $606.7 million or $485.3 million excluding amounts held for sale of $121.4 million.

Held for sale amounts were disposed of in the sale of our EMEA staffing operations in 2024.

Excluding the impact of the sale and the MRP acquisition in 2024, working capital decreased $17.5 million year-over-year.

Working capital decreased from 2023 primarily due to lower cash balances.

In 2025, we generated $122.6 million of net cash from operating activities, as compared to generating $26.9 million in 2024 and generating $76.7 million in 2023.

The increase from prior year is primarily due to decreased working capital requirements.

Trade accounts receivable totaled $1.2 billion at year-end 2025 and $1.3 billion at year-end 2024.

Global DSO was 61 days for 2025 and 59 days for 2024 .

Deferred tax expense of $168.5 million in 2025 compared to a deferred tax benefit of $27.8 million in 2024 is due to an increase in the valuation allowance on deferred tax assets in 2025.

This allowance was principally due to cumulative losses in recent years, which were driven by goodwill impairment charges.

Cumulative losses are a significant piece of negative evidence that limits the ability to consider other evidence, such as projections for future growth, when assessing the recoverability of deferred tax assets.

Our working capital position (total current assets less total current liabilities), was $446.5 million at year-end 2025 and $539.0 million for 2024, including the impact of our 2024 acquisition of MRP of $71.2 million.

The decrease in working capital is due to lower trade accounts receivable from reduced revenue and the cash collected during the year was used to pay down debt balances.

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

Investing Activities

In 2024, we used $361.6 million of net cash for investing activities, compared to using $14.1 million in 2023 and generating $167.5 million in 2022.

Included in cash used for investing activities in 2024 is $431.9 million of cash used for the acquisition of MRP in June 2024 and CTC in November 2024, net of cash received, $11.1 million of cash used for capital expenditures, partially offset by $77.1 million of proceeds from the sale of the EMEA staffing operations, net of cash disposed.

In 2025, we generated $22.3 million of net cash for investing activities, compared to using $361.6 million in 2024 and $14.1 million in 2023.

Included in cash from investing activities in 2025 is $21.8 million of cash proceeds received in connection with the settlement of the receivable related to the sale of EMEA staffing operations and $6.4 million of cash from the sale of the PersolKelly investment (see Acquisitions and Dispositions footnote).

This was partially offset by $8.5 million of cash used for capital expenditures.

Included in cash used for investing activities in 2024 was $431.9 million of cash used for the acquisition of MRP in May 2024 and CTC in November 2024, net of cash received, $11.1 million of cash used for capital expenditures, partially offset by $77.1 million of proceeds from the sale of the EMEA staffing operations, net of cash disposed.

Included in cash used for investing activities in 2023 is $15.3 million of cash used for capital expenditures, partially offset by $2.0 million for the receipt of the final payment in connection with an investment that was sold in 2021.

Included in cash generated from investing activities in 2022 is $196.9 million of proceeds from the sale of the investment in Persol Holdings, $119.5 million of proceeds from the sale of almost all of the Company's shares in our equity investment in PersolKelly and $10.1 million of proceeds from the sale of land and other real property.

This was partially offset by $58.3 million of cash used for the acquisition of RocketPower in March 2022, net of cash received, $84.8 million of cash used for the acquisition of PTS in May 2022, net of cash received, $12.0 million of cash used for capital expenditures, and $6.0 million of cash disposed from the sale of our operations in Russia in July 2022, net of proceeds.

Capital expenditures in 2024, 2023 and 2022 primarily related to the Company's IT infrastructure and technology programs.

Capital expenditures in 2025, 2024 and 2023 primarily related to our IT infrastructure and technology programs.

Financing Activities

In 2024, we generated $214.8 million of cash for financing activities, as compared to using $59.6 million in 2023 and using $50.6 million in 2022.

The cash generated from financing activities is driven by the net borrowings of $239.4 million on the Company's credit facilities in connection with the acquisition of MRP and represents the primary driver of the change in cash from 2023 related to financing activities, in addition to a decrease in the purchase of treasury stock.

The change in cash used for financing activities from 2022 to 2023 was primarily related to the year-over-year change in the purchase of treasury stock, representing a repurchase program for the buyback of the Company's common shares.

In 2024, the buyback of $10.0 million represents repurchases of the Company's Class A common stock compared to $42.2 million in shares repurchased in 2023 and $7.8 million in 2022.

In addition, the $27.2 million buyback of common shares in 2022 represents the buyback of the Company's common shares held by Persol Holdings in February 2022.

Dividends paid per common share were $0.30 in 2024 and 2023 and $0.275 in 2022.

In 2025, we used $161.1 million of cash for financing activities, as compared to generating $214.8 million in 2024 and using $59.6 million in 2023.

The cash used from financing activities is driven by net payments of $137.5 million in 2025 compared to

net proceeds of $239.4 million in 2024 on our credit facilities in connection with the acquisition of MRP.

The acquisition of MRP represents the primary driver of the change in cash from 2024.

The change in cash used for financing activities from 2023 to 2024 was primarily related to a decrease in Class A common stock repurchases.

In 2025, w e repurchased $10.0 million of our Class A common stock compared to $10.0 million in shares repurchased in 2024 an d $42.2 million i n 2023.

Dividends paid per common share were $0.30 in 2025, 2024 and 2023.

Payments of dividends are restricted by the financial covenants contained in our debt facilities.

Details of this restriction are contained in the Debt footnote in the notes to our consolidated financial statements.

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 16.2% at year-end 2024.

We had no debt outstanding at year-end 2023.

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, which were amended in the second quarter of 2024, now include an accordion feature which allows us to increase our combined borrowing capacity by $250.0 million as discussed in the Debt footnote in the notes to our consolidated financial statements.

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 our relative capital structure and leverage.

Our ratio of debt-to-total capital was 9.4% at year-end 2025 and 16.2% at year-end 2024 .

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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We assess and monitor our liquidity and capital resources globally.

We use 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.

We use the Cash Pool, intercompany loans, dividends, capital contributions, and local lines of credit to meet funding needs and allocate our capital resources among our various subsidiaries.

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

As of year-end 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, 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.

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

As of year-end 2024, the Company has recorded a net receivable of $16.4 million.

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

The Company entered into foreign currency forward contracts to manage the foreign currency risk associated with the transaction, which were settled during 2024.

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

On May 31, 2024, the Company 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 the Company 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.

In the fourth quarter of 2024, the initial fair value of the earnout was written down to zero.

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

On November 13, 2024, Kelly Services USA, LLC ("KSU"), a wholly owned subsidiary of the Company, acquired 100% of the issued and outstanding limited liability company interests of CTC.

Under terms of the purchase agreement, the purchase price of $3.3 million was adjusted for cash held by CTC at the closing date and estimated working capital adjustments, resulting in the Company paying cash of $3.1 million.

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

We expect much of our international cash will be needed to fund working capital growth in our local operations as working capital needs, primarily trade accounts receivable, increase during periods of growth.

At year-end 2025, we had $150.0 million of available capacity on our $150.0 million revolving credit facility and $105.5 million of available capacity on our $250.0 million securitization facility.

The revolving credit facility carried $40.0 million of long-term borrowings on the term benchmark line of credit.

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

The securitization facility carried $101.9 million of long-term borrowings and $42.6 million of standby letters of credit related to workers’ compensation.

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 year-end 2024, the Company recorded a liability totaling $0.4 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 the Company with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions.

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

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.

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Details of our debt facilities as of the 2025 year end are contained in the Debt footnote in the notes to our consolidated financial statements.

We repurchased $10.0 million of the Company's Class A common stock in fiscal 2024 pursuant to the $50.0 million share repurchase program, which was approved by the Company's board of directors in November 2024.

We repurchased $10.0 million of our Class A common stock in fiscal 2025 pursuant to the $50.0 million share repurchase program, which was approved by our board of directors in November 2024.

A total of $30.0 million remains available under the share repurchase program as of year-end 2025.

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In addition to our discussion of liquidity and capital resources, consideration should also be given to the following contractual obligations:

• Long-term debt - The Company maintains a revolving credit facility and securitization facility as discussed above in Liquidity.

• Long-term debt - We maintain a revolving credit facility and securitization facility as discussed above in Liquidity.

Further details regarding these facilities, including terms, rates and conditions, can be found in the Debt footnote in the notes to our consolidated financial statements.

• Leases - The Company has operating leases for headquarters and field offices and various equipment.

• Leases - We have operating leases for headquarters and field offices and various equipment.

Our leases generally have remaining lease terms of one year to 10 years.

As of December 28, 2025, we have lease payment obligations of $67.7 million, with $15.1 million payable within the next 12 months.

See our Leases footnote in the notes to our consolidated financial statements for further information.

• Accrued workers compensation - The Company has a combination of insurance and self-insurance contracts in the U.S.

See the Lease footnote in the notes to our consolidated financial statements for further information.

• Accrued workers compensation - We have a combination of insurance and self-insurance contracts in the U.S.

under which it bears the first $1.0 million of risk per accident.

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Further details can be found in the Summary of Significant Accounting Policies footnote in the notes to our consolidated financial statements.

• Accrued retirement benefits - The Company provides nonqualified retirement plans for officers and certain other employees.

• Accrued retirement benefits - We provide nonqualified retirement plans for officers and certain other employees.

As of December 28, 2025, the value of our obligations under these plans are $289.3 million, with $25.6 million payable within the next 12 months.

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• Purchase obligations - Our purchase obligations represent unconditional commitments relating primarily to technology services and online tools which we expect to utilize generally within the next three fiscal years, in the ordinary course of business.

As of December 29, 2024, the value of our non-cancelable unconditional purchase obligations is $72.5 million, with $34.5 million expected to be paid within the next 12 months.

As of December 28, 2025, the value of our non-cancelable purchase obligations is $61.5 million, with $44.0 million expected to be paid within the next 12 months.

Critical Accounting Estimates

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If the carrying value of the net assets assigned to a reporting unit exceeds the estimated fair value of a reporting unit, goodwill is deemed impaired and is written down to the extent of the difference.

For the step one quantitative test, we determine the fair value of our reporting units using the income approach.

For the step one quantitative test, we utilized a third-party valuation specialist to assist in determining the fair value of our reporting units using the income and market approach.

Under the income approach, estimated fair value is determined based on estimated future cash flows discounted by an estimated market participant weighted-average cost of capital, which reflects the overall level of inherent risk of the reporting unit being measured.

Estimated future cash flows are based on our internal projection model and reflects management’s outlook for the reporting units.

Assumptions and estimates about future cash flows and discount rates are complex and often subjective.

Under the market approach, the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of each reporting unit was used.

Assumptions and estimates about market comparables, future cash flows, discount rates and long-term growth rates are complex and often subjective.

They can be affected by a variety of factors, including external factors such as industry and economic trends and internal factors such as changes in our business strategy and our internal forecasts.

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expected future revenue growth rates, profit margins and discount rates.

The goodwill resulting from the acquisition of Softworld during the second quarter of 2021 was allocated to the SET reportable segment and Softworld was deemed to be a separate reporting unit.

The goodwill resulting from the acquisition of PTS during the second quarter of 2022 was allocated to the Education reportable segment and PTS was deemed to be a separate reporting unit.

The goodwill resulting from the acquisition of RocketPower during the first quarter of 2022 was allocated to the OCG reportable segment and RocketPower was deemed to be a separate reporting unit, which was fully impaired by year-end 2022.

The goodwill resulting from the acquisition of MRP in the second quarter of 2024 was allocated to the SET reportable segment and was deemed to be a separate reporting unit.

The goodwill resulting from the acquisition of CTC in the fourth quarter of 2024 was allocated to the Education reportable segment.

See the Acquisitions and Dispositions footnote in the notes to our consolidated financial statements for more information.

Although we believe the assumptions and estimates we have made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.

Different assumptions of the anticipated future results and growth from our business could result in an impairment charge, which would decrease operating income and result in lower asset values on our consolidated balance sheet.

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter of 2025.

Pursuant to the segment changes in first quarter of 2025, the goodwill reporting units were reassessed (see the Segment Disclosures footnote in the notes to our consolidated financial statements).

As of year-end 2025, the Company determined that there are three reporting units with assigned goodwill.

The three reporting units tested in the fourth quarter of 2025 were SET, Education and RPO.

The RPO reporting unit is part of the ETM segment and contains goodwill transferred from Sevenstep, (the RPO business acquired with MRP in 2024).

Prior period components related to SET and Education were aggregated into one reporting unit as of year-end 2025.

Because the reporting units had been reassessed during the year, and due to the goodwill impairment recognized in the third quarter of 2025, our annual goodwill impairment testing included a step one quantitative analysis for each reporting unit.

As a result of the quantitative assessments, we determined that the estimated fair value of the each reporting unit exceeded its carrying value with headroom greater than 10%;

therefore goodwill was not impaired as of year-end 2025 (see the Goodwill and Intangible Assets footnote in the notes to our consolidated financial statements).

However, if current expectations of future revenue and profit margins are not met, or if market factors outside of our control change significantly, including discount rate, then the goodwill of our reporting units may be impaired in the future, resulting in goodwill impairment charges.

As a measure of sensitivity of the fair value for the three reporting units tested in 2025, while holding all other assumptions constant, an increase in the discount rate of 100 basis points or a decrease of 100 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2024.

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The remaining goodwill balance for the Softworld reporting unit was $38.5 million as of year-end 2024.

Our quantitative analyses used significant assumptions, including:

expected future revenue growth rates, profit margins and discount rate.

Although we believe the assumptions and estimates we have made are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.

As a measure of sensitivity of the fair value for the MRP reporting unit, while holding all other assumptions constant, an increase in the discount rate of 75 basis points or a decrease of 75 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would not result in an impairment of goodwill.

The estimated fair value of the MRP reporting unit exceeds the carrying value by less than 10%.

If current expectations of future revenue and profit margins are not met, or if market factors outside of our control change significantly, including discount rate, then the goodwill of the MRP reporting unit may be impaired in the future, resulting in goodwill impairment charges.

As a measure of sensitivity for the fair value for Softworld reporting unit, while holding all other assumptions constant, an increase in the discount rate of 75 basis points or a decrease of 75 basis points in the revenue growth rate assumptions for each forecasted period used to determine the fair value of the reporting unit would result in additional goodwill impairment of approximately $9.9 million and $8.8 million, respectively.

If current expectations of future revenue and profit margins are not met, or if market factors outside of our control change significantly, including discount rate, then the goodwill of the Softworld reporting unit may be further impaired in the future, resulting in additional goodwill impairment charges.

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2023.

We performed a step one quantitative test for the Softworld and PTS reporting units.

As a result of the quantitative assessment, we determined that the estimated fair value of the Softworld and PTS reporting units was more than its carrying value.

Additionally, we performed a step zero qualitative analysis for the Education reporting unit to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary.

As a result of the quantitative and qualitative assessments, the Company determined goodwill was not impaired as of year-end 2023.

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2022.

We performed a step one quantitative test for the Softworld and PTS reporting units.

As a result of the quantitative assessment, we determined that the estimated fair value of the Softworld and PTS reporting units was more than its carrying value.

Additionally, we performed a step zero qualitative analysis for the Education and RocketPower reporting units to determine whether a further quantitative analysis was necessary and concluded that a step one quantitative analysis was not necessary at that time.

As a result of the quantitative and qualitative assessments, the Company determined goodwill related to these reporting units was not impaired at that time.

During the second half of 2022, customers within the high-tech industry vertical, in which RocketPower specializes, reduced or eliminated their full-time hiring, reducing demand for RocketPower’s services, and on-going economic uncertainty had more broadly impacted the growth in demand for RPO in the near-term.

These changes in market conditions therefore caused triggering events requiring interim impairment tests for both long-lived assets and goodwill as of the third and fourth quarters of 2022.

We performed a long-lived asset recoverability tests for RocketPower and determined that undiscounted future cash flows exceeded the carrying amount of the asset group and were recoverable.

We performed interim step one quantitative tests for RocketPower’s goodwill and determined that the estimated fair value of the reporting unit no longer exceeded the carrying value.

Based on the result of our interim goodwill impairment tests, we recorded a total goodwill impairment charge of $41.0 million as of year-end 2022 to write-off all of RocketPower's goodwill balance.

We completed our annual impairment test for all reporting units with goodwill in the fourth quarter for the fiscal year ended 2023 and as a result of the quantitative and qualitative assessments performed, we determined goodwill was not impaired as of year-end 2023.

At year-end 2025 and 2024, total goodwill amounted to $202.1 million and $304.2 million, respectively.

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For further discussion, see the Contingencies footnote in the notes to our consolidated financial statements.

At year-end 2024 and 2023, the gross accrual for litigation costs amounted to $1.5 million and $6.4 million, of which $1.5 million was held for sale, respectively, which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.

See the Acquisitions and Dispositions footnote in the notes to our consolidated financial statements for more information.

At year-end 2025 and 2024, the gross accrual for litigation costs amounted to $2.8 million and $1.5 million, respectively, which is included in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet.

NEW ACCOUNTING PRONOUNCEMENTS

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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 to conform the statement to actual results or changes in our expectations.

Certain risk factors are discussed more fully under “Risk Factors” in Part I, Item 1A of this report.

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-K

Item 7. Management’s Discussion and Analysis