Item 1. Financial Statements
Item 1. Financial Statements.
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(in millions, except per share data)
13 Weeks Ended 26 Weeks Ended
June 28,
2026 June 29,
2025 June 28,
2026 June 29,
2025
Revenue from services $ 1,038.2 $ 1,101.8 $ 2,078.9 $ 2,266.7
Cost of services 826.2 876.3 1,670.5 1,804.7
Gross profit 212.0 225.5 408.4 462.0
Selling, general and administrative expenses 195.9 207.3 395.2 433.0
Asset impairment charge — — 2.2 —
Gain on sale of EMEA staffing operations — ( 4.0 ) — ( 4.0 )
Earnings from operations 16.1 22.2 11.0 33.0
Other income (expense), net ( 1.7 ) ( 2.3 ) ( 3.3 ) ( 5.5 )
Earnings before taxes 14.4 19.9 7.7 27.5
Income tax expense 3.0 0.9 2.2 2.7
Net earnings $ 11.4 $ 19.0 $ 5.5 $ 24.8
Basic earnings per share $ 0.31 $ 0.52 $ 0.15 $ 0.68
Diluted earnings per share $ 0.31 $ 0.52 $ 0.15 $ 0.67
Average shares outstanding:
Basic 34.7 35.2 34.6 35.1
Diluted 35.2 35.7 35.1 35.6
See accompanying unaudited Notes to Consolidated Financial Statements.
4
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
13 Weeks Ended 26 Weeks Ended
June 28,
2026 June 29,
2025 June 28,
2026 June 29,
2025
Net earnings $ 11.4 $ 19.0 $ 5.5 $ 24.8
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax expense of $ 0.0 , $ 0.6 , $ 0.2 and $ 0.6 , respectively
— 5.0 ( 1.2 ) 6.3
Less: Reclassification adjustments included in net earnings — — — —
Foreign currency translation adjustments — 5.0 ( 1.2 ) 6.3
Other comprehensive income (loss) — 5.0 ( 1.2 ) 6.3
Comprehensive income $ 11.4 $ 24.0 $ 4.3 $ 31.1
See accompanying unaudited Notes to Consolidated Financial Statements.
5
KELLY SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions)
June 28, 2026 December 28, 2025
Current Assets
Cash and equivalents $ 24.2 $ 33.0
Trade accounts receivable, less allowances of $ 9.7 and $ 10.0 , respectively
1,224.6 1,188.7
Prepaid expenses and other current assets 47.7 46.6
Total current assets 1,296.5 1,268.3
Noncurrent Assets
Property and equipment, net 18.0 20.5
Operating lease right-of-use assets 35.5 42.9
Deferred taxes 164.2 163.2
Retirement plan assets 309.9 289.7
Goodwill 202.1 202.1
Intangibles, net 211.5 226.2
Other assets 43.0 37.7
Total noncurrent assets 984.2 982.3
Total Assets $ 2,280.7 $ 2,250.6
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 661.6 $ 631.4
Operating lease liabilities 10.8 12.3
Accrued payroll and related taxes 155.5 140.9
Accrued workers' compensation and other claims 21.0 20.9
Income and other taxes 17.7 16.3
Total current liabilities 866.6 821.8
Noncurrent Liabilities
Long-term debt 78.1 101.9
Operating lease liabilities 39.8 44.9
Accrued workers' compensation and other claims 34.3 34.2
Accrued retirement benefits 272.7 263.7
Other long-term liabilities 7.2 7.6
Total noncurrent liabilities 432.1 452.3
Commitments and contingencies (see Contingencies footnote)
Stockholders' Equity
Capital stock, $ 1.00 par value
Class A common stock, 100.0 million shares authorized; 35.2 million shares issued at 2026 and 2025
35.2 35.2
Class B common stock, 10.0 million shares authorized; 3.3 million shares issued at 2026 and 2025
3.3 3.3
Treasury stock, at cost
Class A common stock, 3.8 million shares at 2026 and 4.3 million shares at 2025
( 55.2 ) ( 63.1 )
Class B common stock ( 0.6 ) ( 0.6 )
Paid-in capital 35.1 36.3
Earnings invested in the business 965.1 965.1
Accumulated other comprehensive income (loss) ( 0.9 ) 0.3
Total stockholders' equity 982.0 976.5
Total Liabilities and Stockholders' Equity $ 2,280.7 $ 2,250.6
See accompanying unaudited Notes to Consolidated Financial Statements.
6
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in millions)
Earnings Invested in the Business Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity
Common Stock Treasury Stock Paid-in Capital
Class A Class B Class A Class B
Balance at December 28, 2025 $ 35.2 $ 3.3 $ ( 63.1 ) $ ( 0.6 ) $ 36.3 $ 965.1 $ 0.3 $ 976.5
Net issuance of stock awards — — 7.0 — ( 5.2 ) — — 1.8
Net income (loss) — — — — — ( 5.9 ) — ( 5.9 )
Dividends — — — — — ( 2.7 ) — ( 2.7 )
Other comprehensive income (loss), net of tax — — — — — — ( 1.2 ) ( 1.2 )
Balance at March 29, 2026 $ 35.2 $ 3.3 $ ( 56.1 ) $ ( 0.6 ) $ 31.1 $ 956.5 $ ( 0.9 ) $ 968.5
Net issuance of stock awards — — 0.9 — 4.0 — — 4.9
Net income (loss) — — — — — 11.4 — 11.4
Dividends — — — — — ( 2.8 ) — ( 2.8 )
Other comprehensive income (loss), net of tax — — — — — — — —
Balance at June 28, 2026 $ 35.2 $ 3.3 $ ( 55.2 ) $ ( 0.6 ) $ 35.1 $ 965.1 $ ( 0.9 ) $ 982.0
Earnings Invested in the Business Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity
Common Stock Treasury Stock Paid-in Capital
Class A Class B Class A Class B
Balance at December 29, 2024 $ 35.2 $ 3.3 $ ( 60.8 ) $ ( 0.6 ) $ 34.2 $ 1,230.2 $ ( 6.9 ) $ 1,234.6
Net issuance of stock awards — — 5.3 — ( 3.7 ) — — 1.6
Net income (loss) — — — — — 5.8 — 5.8
Dividends — — — — — ( 2.8 ) — ( 2.8 )
Other comprehensive income (loss), net of tax — — — — — — 1.3 1.3
Balance at March 30, 2025 $ 35.2 $ 3.3 $ ( 55.5 ) $ ( 0.6 ) $ 30.5 $ 1,233.2 $ ( 5.6 ) $ 1,240.5
Net issuance of stock awards — — 0.8 — 3.5 — — 4.3
Net income (loss) — — — — — 19.0 — 19.0
Dividends — — — — — ( 2.7 ) — ( 2.7 )
Other comprehensive income (loss), net of tax — — — — — — 5.0 5.0
Balance at June 29, 2025 $ 35.2 $ 3.3 $ ( 54.7 ) $ ( 0.6 ) $ 34.0 $ 1,249.5 $ ( 0.6 ) $ 1,266.1
See accompanying unaudited Notes to Consolidated Financial Statements.
7
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
26 Weeks Ended
June 28,
2026 June 29,
2025
Cash flows from operating activities:
Net earnings $ 5.5 $ 24.8
Adjustments to reconcile net earnings to net cash from operating activities:
Asset impairment charge 2.2 —
Deferred income taxes ( 1.0 ) ( 6.9 )
Depreciation and amortization 19.7 21.5
Operating lease asset amortization 5.2 5.4
Provision for credit losses and sales allowances 0.8 3.2
Stock-based compensation 6.8 7.2
Gain on sale of EMEA staffing operations — ( 4.0 )
Other, net 1.0 ( 0.1 )
Changes in operating assets and liabilities
Accounts receivable ( 43.6 ) 91.9
Other assets ( 2.8 ) 3.2
Accounts payable 36.7 ( 19.8 )
Other liabilities ( 6.7 ) ( 7.1 )
Net cash from operating activities 23.8 119.3
Cash flows from investing activities:
Capital expenditures ( 2.6 ) ( 4.5 )
Proceeds from sale of EMEA staffing operations, net of cash disposed — 21.8
Proceeds from sale of PersolKelly investment — 6.4
Proceeds from company-owned life insurance 2.7 1.6
Other investing activities 0.1 ( 0.6 )
Net cash from investing activities 0.2 24.7
Cash flows from financing activities:
Proceeds from long-term debt 718.8 774.4
Payments on long-term debt ( 742.6 ) ( 939.5 )
Dividend payments ( 5.5 ) ( 5.5 )
Payments of tax withholding for stock awards ( 1.5 ) ( 1.9 )
Other financing activities ( 0.4 ) ( 0.2 )
Net cash used in financing activities ( 31.2 ) ( 172.7 )
Effect of exchange rates on cash, cash equivalents and restricted cash ( 2.5 ) 7.6
Net change in cash, cash equivalents and restricted cash ( 9.7 ) ( 21.1 )
Cash, cash equivalents and restricted cash at beginning of period 37.7 45.6
Cash, cash equivalents and restricted cash at end of period (1)
$ 28.0 $ 24.5
8
KELLY SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
(in millions)
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported in the Company's consolidated balance sheets:
26 Weeks Ended
June 28,
2026 June 29,
2025
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents $ 24.2 $ 18.0
Restricted cash included in prepaid expenses and other current assets 0.5 0.5
Noncurrent assets:
Restricted cash included in other assets 3.3 6.0
Cash, cash equivalents and restricted cash at end of period $ 28.0 $ 24.5
See accompanying unaudited Notes to Consolidated Financial Statements.
9
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(In millions, except share and per share data)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the “Company,” “Kelly,” “we” or “us”) have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 28, 2025, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2026 (the 2025 consolidated financial statements). There were no changes in accounting policies from those disclosed in the Form 10-K. The Company’s second fiscal quarter ended on June 28, 2026 and June 29, 2025, each of which contained 13 weeks (“second quarter”). The corresponding June year-to-date periods for 2026 and 2025 each contained 26 weeks (“June year-to-date”).
Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year's presentation, as discussed in the Revenue and Segment Disclosures footnotes. All amounts are reported in millions except for share and per share data.
2. Revenue
Revenue Disaggregated by Service Type
Kelly has three operating segments: Enterprise Talent Management (“ETM”), Science, Engineering & Technology (“SET”), and Education. In the first quarter of 2026, the Company aligned government customers from the ETM segment to the SET segment to better position the services within the Company’s segment structure (see Segment Disclosures footnote). The Company's segments deliver talent through staffing services, permanent placement or outcome-based services. The Company's ETM segment also delivers talent solutions including managed service provider (“MSP”), payroll process outsourcing (“PPO”), and recruitment process outsourcing (“RPO”). The 2025 ETM and SET segment information has been recast to conform to the new alignment.
The following tables present the Company's segment revenues disaggregated by service type:
Second Quarter 2026
Staffing Services Outcome-based Services Talent Solutions Permanent Placement Total
Enterprise Talent Management $ 239.3 $ 109.6 $ 134.9 $ 1.7 $ 485.5
Science, Engineering & Technology 172.9 118.7 — 10.0 301.6
Education 251.5 — — 2.0 253.5
Total Segment Revenue $ 663.7 $ 228.3 $ 134.9 $ 13.7 $ 1,040.6
Intersegment ( 2.4 )
Total Revenue from Services $ 1,038.2
10
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Second Quarter 2025
Staffing Services Outcome-based Services Talent Solutions Permanent Placement Total
Enterprise Talent Management $ 265.8 $ 120.8 $ 126.9 $ 2.9 $ 516.4
Science, Engineering & Technology 204.5 107.3 — 9.3 321.1
Education 262.7 — — 2.6 265.3
Total Segment Revenue $ 733.0 $ 228.1 $ 126.9 $ 14.8 $ 1,102.8
Intersegment ( 1.0 )
Total Revenue from Services $ 1,101.8
June Year-to-Date 2026
Staffing Services Outcome-based Services Talent Solutions Permanent Placement Total
Enterprise Talent Management $ 468.6 $ 216.4 $ 256.2 $ 3.5 $ 944.7
Science, Engineering & Technology 341.5 230.9 — 18.4 590.8
Education 544.9 — — 2.7 547.6
Total Segment Revenue $ 1,355.0 $ 447.3 $ 256.2 $ 24.6 $ 2,083.1
Intersegment ( 4.2 )
Total Revenue from Services $ 2,078.9
June Year-to-Date 2025
Staffing Services Outcome-based Services Talent Solutions Permanent Placement Total
Enterprise Talent Management $ 541.6 $ 254.0 $ 244.7 $ 5.2 $ 1,045.5
Science, Engineering & Technology 414.3 216.7 — 17.4 648.4
Education 570.6 — — 3.7 574.3
Total Segment Revenue $ 1,526.5 $ 470.7 $ 244.7 $ 26.3 $ 2,268.2
Intersegment ( 1.5 )
Total Revenue from Services $ 2,266.7
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Revenue Disaggregated by Geography
The Company's operations are subject to different economic and regulatory environments depending on geographic location. The Company's Education segment operates in the Americas region, the SET segment operates in the Americas and Europe regions, and the ETM segment operates in the Americas, Europe and Asia-Pacific regions.
The table below presents the Company's revenues disaggregated by geography:
Second Quarter June Year-to-Date
2026 2025 2026 2025
Americas
United States $ 932.7 $ 986.9 $ 1,871.3 $ 2,043.5
Other 75.6 86.2 149.9 169.5
Total Americas Region 1,008.3 1,073.1 2,021.2 2,213.0
Total Europe Region 13.4 11.9 25.6 21.5
Total Asia-Pacific Region 16.5 16.8 32.1 32.2
Total Kelly Services, Inc. $ 1,038.2 $ 1,101.8 $ 2,078.9 $ 2,266.7
3. Credit Losses
The rollforward of the Company's allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheets, is as follows:
June Year-to-Date
2026 2025
Allowance for credit losses:
Beginning balance $ 6.4 $ 4.9
Current period provision 0.1 2.7
Currency exchange effects — 0.1
Write-offs ( 1.7 ) ( 0.3 )
Ending balance $ 4.8 $ 7.4
Write-offs are presented net of recoveries, which were not material for second quarter-end 2026 or 2025. No other allowances related to other receivables were material as of second quarter-end 2026 or 2025.
12
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
4. Fair Value Measurements
Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes approximate their fair values due to the short-term maturities of these assets and liabilities. Long-term debt is related to revolving credit agreements, and their carrying values approximate fair value as the interest rates are variable and reflect current market rates.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present assets and liabilities measured at fair value on a recurring basis as of second quarter-end 2026 and year-end 2025 in the consolidated balance sheets by fair value hierarchy level, as described below.
Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. There were no transfers between Level 1, Level 2, and Level 3 assets or liabilities in the second quarter of 2026 or 2025.
As of Second Quarter-End 2026
Description Total Level 1 Level 2 Level 3
Money market funds $ 3.3 $ 3.3 $ — $ —
Total assets at fair value $ 3.3 $ 3.3 $ — $ —
EMEA staffing indemnification $ ( 1.4 ) $ — $ — $ ( 1.4 )
Brazil indemnification ( 0.9 ) — — ( 0.9 )
Total liabilities at fair value $ ( 2.3 ) $ — $ — $ ( 2.3 )
As of Year-End 2025
Description Total Level 1 Level 2 Level 3
Money market funds $ 4.7 $ 4.7 $ — $ —
Total assets at fair value $ 4.7 $ 4.7 $ — $ —
EMEA staffing indemnification $ ( 1.4 ) $ — $ — $ ( 1.4 )
Brazil indemnification ( 0.9 ) — — ( 0.9 )
Total liabilities at fair value $ ( 2.3 ) $ — $ — $ ( 2.3 )
Money Market Funds
Money market funds represent investments in money market funds that hold government securities, all of which are restricted as of second quarter-end 2026 and year-end 2025, and are included in other assets in the consolidated balance sheets. These restricted funds represent cash balances that are required to be maintained to fund disability claims in California. The valuations of money market funds are based on quoted market prices of those accounts as of the respective period end.
Indemnification Liabilities
As of second quarter-end 2026, the Company’s indemnification liabilities totaled $ 2.3 million, consisting of $ 1.4 million related to the January 2024 sale of the EMEA staffing operations, with $ 0.1 million in accounts payable and accrued liabilities and $ 1.3 million in other long-term liabilities, and $ 0.9 million related to the 2020 sale of the Brazil operations included in other long-term liabilities in the consolidated balance sheets. These balances are unchanged from year-end 2025. No payments were made under either indemnification agreement during June year-to-date 2026, and the impact of remeasurement adjustments and foreign currency exchange rate fluctuations was not significant. These liabilities are classified as Level 3 and remeasured on a recurring basis using discounted probability-weighted cash flows, with changes recognized in earnings.
13
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Equity Investment Without Readily Determinable Fair Value
As of second quarter-end 2026, the Company holds an equity investment without a readily determinable fair value, measured under the measurement alternative, with a carrying value of $ 3.5 million included in other assets in the consolidated balance sheets. No impairment indicators were identified and no observable price changes occurred during the second quarter of 2026.
5. Integration, Realignment and Restructuring
2026 Actions
As a continuation of the efforts announced in 2025, the Company incurred integration and realignment costs of $ 2.9 million and $ 7.6 million for the second quarter and June year-to-date 2026, respectively. For the second quarter of 2026, integration and realignment costs consisted of $ 1.6 million of IT-related charges, $ 0.2 million of severance and $ 1.1 million of fees and other costs to execute the initiatives. For June year-to-date 2026, integration and realignment costs consisted of $ 5.1 million of IT-related charges, $ 0.5 million of severance and $ 2.0 million of fees and other costs to execute the initiatives. The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits . The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the tables below.
Second Quarter 2026
IT-related Charges Severance Fees and Other Total
Science, Engineering & Technology $ — $ 0.1 $ 0.1 $ 0.2
Corporate 1.6 0.1 1.0 2.7
Total $ 1.6 $ 0.2 $ 1.1 $ 2.9
June Year-to-Date 2026
IT-related Charges Severance Fees and Other Total
Science, Engineering & Technology $ — $ 0.3 $ 0.2 $ 0.5
Education — 0.1 — 0.1
Corporate 5.1 0.1 1.8 7.0
Total $ 5.1 $ 0.5 $ 2.0 $ 7.6
Additionally, in the first quarter of 2026, the Company recognized an impairment charge of $ 2.2 million for certain right-of-use assets related to the Company’s ongoing realignment of its lease portfolio and was recorded in the asset impairment charge in the consolidated statements of earnings.
2025 Actions
In the first quarter of 2025, the Company launched various initiatives aimed at integrating MRP and other prior acquisitions, combining operating segments, and further aligning processes and technology across the Company. The costs incurred related to these integration and realignment initiatives totaled $ 6.1 million and $ 16.8 million during the second quarter and June year-to-date 2025, respectively. For the second quarter of 2025, integration and realignment costs consisted of $ 1.7 million of IT-related charges, $ 2.1 million of severance and $ 2.3 million of fees and other costs to execute the initiatives. For June year-to-date 2025, integration and realignment costs consisted of $ 7.0 million of IT-related charges, $ 6.5 million of severance and $ 3.3 million of fees and other costs to execute the initiatives. The severance costs incurred as a part of these efforts are primarily accounted for in accordance with ASC 712 Compensation - Nonretirement Postemployment Benefits . The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the tables below.
14
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Second Quarter 2025
IT-related Charges Severance Fees and Other Total
Enterprise Talent Management $ — $ 1.0 $ 0.1 $ 1.1
Science, Engineering & Technology 0.1 0.9 — 1.0
Education — 0.1 — 0.1
Corporate 1.6 0.1 2.2 3.9
Total $ 1.7 $ 2.1 $ 2.3 $ 6.1
June Year-to-Date 2025
IT-related Charges Severance Fees and Other Total
Enterprise Talent Management $ — $ 3.7 $ 0.1 $ 3.8
Science, Engineering & Technology 0.1 2.0 — 2.1
Education — 0.1 — 0.1
Corporate 6.9 0.7 3.2 10.8
Total $ 7.0 $ 6.5 $ 3.3 $ 16.8
6. Intangibles
During the second quarter of 2026, as part of ongoing integration and realignment efforts, the Company reassessed and reduced the remaining useful life of certain finite-lived intangible assets, resulting in accelerated amortization expense accounted for prospectively over the revised estimated remaining useful life. Accelerated amortization was immaterial for the second quarter of 2026. Accelerated amortization expense of $ 6.8 million is estimated to be recognized during the remainder of 2026, resulting in total amortization expense of $ 36.2 million for 2026. The revised annual intangible amortization expense is expected to be $ 33.9 million in 2027, $ 32.3 million in 2028, $ 28.8 million in 2029, and $ 25.4 million in 2030.
7. Debt
Revolving Credit Facility
The Company has a $ 150.0 million, five-year revolving credit facility (the “Facility”), with a termination date of May 29, 2029. The Facility is available to be used to fund working capital, acquisitions and general corporate needs. The Facility is secured by certain assets of the Company, excluding U.S. trade accounts receivable.
At the end of the second quarter of 2026 and at year-end 2025, there were no long-term borrowings under the Facility and a remaining borrowing capacity of $ 150.0 million. To maintain availability of the funds, the Company pays a facility fee on the full amount of the Facility, regardless of usage. The facility fee varies based on the Company’s leverage ratio as defined in the agreement. The Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, had a facility fee of 20.0 basis points at the end of the second quarter of 2026 and 15.0 basis points at year-end 2025. The Facility’s financial covenants and restrictions are described below, all of which were met at the end of the second quarter of 2026:
• The Company must maintain a certain minimum interest coverage ratio of earnings before interest, taxes, depreciation, amortization (“EBITDA”) and certain cash and non-cash charges that are non-recurring in nature to interest expense as of the end of any fiscal quarter.
• The Company must maintain a certain maximum ratio of total indebtedness to the sum of net worth and total indebtedness at all times.
• Dividends, stock buybacks and similar transactions are limited to certain maximum amounts.
• The Company must adhere to other operating restrictions relating to the conduct of business, such as certain limitations on asset sales and the type and scope of investments.
15
KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Securitization Facility
On June 22, 2026, the Company and Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company (the “Receivables Entity”), amended the Receivables Purchase Agreement related to its $ 250.0 million, securitization facility (the “Securitization Facility”). The amendment (i) extended the maturity date to June 22, 2028, and (ii) changed certain of the terms and conditions.
Under the Securitization Facility, the Company will sell certain trade receivables and related rights (“Receivables”), on a revolving basis, to the Receivables Entity. The Receivables Entity may from time to time sell an undivided variable percentage ownership interest in the Receivables. The Securitization Facility, which contains a cross-default clause that could result in termination if defaults occur under the Company's other loan agreements, also allows for the issuance of standby letters of credit (“SBLC”) and contains certain restrictions based on the performance of the Receivables.
At the end of the second quarter of 2026, the Securitization Facility had $ 78.1 million of long-term borrowings, SBLCs of $ 42.6 million related to workers’ compensation and a remaining borrowing capacity of $ 129.3 million. The rate for these borrowings includes the adjusted daily SOFR and a 1.10 % utilization rate on the amount of the Company's borrowings. The rate for the SBLCs of 1.10 % represents a utilization rate on the outstanding balance. In addition, the Company pays a commitment fee on the unused capacity of 35.0 basis points when usage is greater than 50 % of the purchase limit or 40.0 basis points when usage is equal to or less than 50 % of the purchase limit. At year-end 2025, the Securitization Facility had $ 101.9 million of long-term borrowings, SBLCs of $ 42.6 million related to workers’ compensation and a remaining borrowing capacity of $ 105.5 million. The rate for these borrowings also included an additional 0.10 % SOFR margin. The Company paid a commitment fee of 40.0 basis points on the unused capacity in 2025.
The Receivables Entity’s sole business consists of the purchase or acceptance through capital contributions of trade accounts receivable and related rights from the Company. As described above, the Receivables Entity may retransfer these receivables or grant a security interest in those receivables under the terms and conditions of the Receivables Purchase Agreement. The Receivables Entity is a separate legal entity with its own creditors who would be entitled, if it were ever liquidated, to be satisfied out of its assets prior to any assets or value in the Receivables Entity becoming available to its equity holders, the Company. The assets of the Receivables Entity are not available to pay creditors of the Company or any of its other subsidiaries, until the creditors of the Receivables Entity have been satisfied. The assets and liabilities of the Receivables Entity are included in the consolidated financial statements of the Company.
Local Credit Facilities
The Company had total unsecured, uncommitted short-term local credit facilities of $ 3.1 million at the end of the second quarter of 2026. The Company had no borrowings under these lines at the end of the second quarter of 2026 and at year-end 2025.
8. Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) by component, net of tax, for the second quarter and June year-to-date of 2026 and 2025 are included in the table below.
Second Quarter June Year-to-Date
2026 2025 2026 2025
Foreign currency translation adjustments:
Beginning balance $ ( 0.9 ) $ ( 5.6 ) $ 0.3 $ ( 6.9 )
Other comprehensive income (loss) before reclassifications — 5.0 ( 1.2 ) 6.3
Amounts reclassified from accumulated other comprehensive income (loss) — — — —
Net current-period other comprehensive income (loss) — 5.0 ( 1.2 ) 6.3
Ending balance ( 0.9 ) ( 0.6 ) ( 0.9 ) ( 0.6 )
Total accumulated other comprehensive income (loss) $ ( 0.9 ) $ ( 0.6 ) $ ( 0.9 ) $ ( 0.6 )
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
9. Earnings Per Share
The reconciliation of basic and diluted earnings per share on common stock for the second quarter and June year-to-date 2026 and 2025 is as follows:
Second Quarter June Year-to-Date
2026 2025 2026 2025
Net earnings $ 11.4 $ 19.0 $ 5.5 $ 24.8
Less: earnings allocated to participating securities ( 0.6 ) ( 0.6 ) ( 0.3 ) ( 0.8 )
Net earnings available to common shareholders $ 10.8 $ 18.4 $ 5.2 $ 24.0
Average common shares outstanding (millions):
Basic 34.7 35.2 34.6 35.1
Dilutive share awards 0.5 0.5 0.5 0.5
Diluted 35.2 35.7 35.1 35.6
Basic earnings per share $ 0.31 $ 0.52 $ 0.15 $ 0.68
Diluted earnings per share $ 0.31 $ 0.52 $ 0.15 $ 0.67
Dilutive share awards are related to deferred common stock related to the non-employee directors deferred compensation plan and performance shares for the second quarter and June year-to-date 2026 and 2025 (see Stock-Based Compensation footnote for a description of performance shares). Dividends paid per share for Class A and Class B common stock were $ 0.075 for the second quarter of 2026 and 2025 and $ 0.15 for June year-to-date 2026 and 2025.
In November 2024, the Company's board of directors authorized a $ 50.0 million Class A share repurchase program that expires on December 2, 2026. During the second quarter and June year-to-date 2026 and 2025, the Company did not repurchase any Class A shares under the repurchase program. A total of $ 30.0 million remained available under the share repurchase program as of second quarter-end 2026.
10. Stock-Based Compensation
For the second quarter of 2026, the Company recognized stock compensation expense of $ 3.4 million and a related tax benefit of $ 0.4 million. For the second quarter of 2025, the Company recognized stock compensation expense of $ 3.5 million and a related tax benefit of $ 0.6 million. For June year-to-date 2026, the Company recognized stock compensation expense of $ 6.8 million and a related tax benefit of $ 0.5 million. For June year-to-date 2025, the Company recognized stock compensation expense of $ 7.2 million and a related tax benefit of $ 0.9 million.
Restricted Stock
A summary of the status of nonvested restricted stock as of second quarter-end 2026 and the year-to-date changes is presented as follows below (in thousands of shares except per share data).
Restricted Stock
Shares Weighted Average Grant Date Fair Value
Nonvested at year-end 2025 1,329 $ 15.72
Granted 1,146 10.39
Vested ( 375 ) 16.83
Forfeited ( 221 ) 14.63
Nonvested at second quarter-end 2026 1,879 $ 12.37
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Performance Shares
2026 Grant
During June year-to-date 2026, the Company granted performance share awards associated with the Company’s Class A common stock to certain senior officers. The payment of performance share awards is contingent upon the achievement of a specific EBITDA margin performance goal with a relative revenue growth modifier over a stated period of time. The maximum number of performance shares that may be earned is 200 % of the target shares originally granted. These awards have three one-year performance periods: 2026, 2027 and 2028, with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods. Earned shares during each performance period will cliff vest in February 2029 after approval of the financial results by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares.
A summary of the status of all nonvested performance shares at target as of second quarter-end 2026 and the year-to-date changes is presented as follows below (in thousands of shares except per share data). The vesting adjustment in the table below represents a portion of the 2023 performance shares that did not vest because actual achievement was below the threshold level or was not achieved, and resulted in no payout.
Performance Shares
Shares Weighted Average Grant Date Fair Value
Nonvested at year-end 2025 616 $ 15.00
Granted 496 9.55
Vested ( 168 ) 16.31
Forfeited ( 124 ) 11.09
Vesting adjustment ( 33 ) 15.18
Nonvested at second quarter-end 2026 787 $ 11.00
11. Other Income (Expense), Net
Included in other income (expense), net are the following:
Second Quarter June Year-to-Date
2026 2025 2026 2025
Interest income $ 0.5 $ 0.9 $ 0.9 $ 1.7
Interest expense ( 2.1 ) ( 3.5 ) ( 4.1 ) ( 7.5 )
Other ( 0.1 ) 0.3 ( 0.1 ) 0.3
Other income (expense), net $ ( 1.7 ) $ ( 2.3 ) $ ( 3.3 ) $ ( 5.5 )
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
12. Income Taxes
Income tax expense was $ 3.0 million for the second quarter of 2026 and income tax expense was $ 0.9 million for the second quarter of 2025. Income tax expense was $ 2.2 million for June year-to-date 2026 and income tax expense was $ 2.7 million for June year-to-date 2025. The variance was driven by changes in pretax income and partially offset by the benefit of work opportunity tax credits in the first half of 2025.
As of year-end 2025, the Company has recorded valuation allowances against its U.S. general business credit carryforwards, foreign tax credit carryforwards, certain loss carryforwards, and certain future deductible items. The Company will continue to evaluate the need for valuation allowances against deferred tax assets on a quarterly basis and may adjust the allowance as circumstances change.
The work opportunity credit program is a temporary provision in the U.S. tax law and has expired for employees hired after 2025. While the work opportunity credit has routinely been extended, it is uncertain whether it will again be extended. In the event the program is not renewed, the Company will continue to receive credits for qualified employees hired prior to 2026.
13. Contingencies
The Company is continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of its business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes, and tax-related matters, which could result in a material adverse outcome.
The Company records accruals for loss contingencies when the Company believes it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet. At second quarter-end 2026 and year-end 2025, the gross accrual for litigation costs amounted to $ 1.6 million and $ 2.8 million, respectively.
The Company maintains insurance coverage which may cover certain losses. When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet. At second quarter-end 2026 and year-end 2025, there were no related insurance receivables.
The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is zero to $ 1.1 million as of second quarter-end 2026. This range includes matters where a liability has been accrued but it is reasonably possible that the ultimate loss may exceed the amount accrued and for matters where a loss is believed to be reasonably possible, but a liability has not been accrued. The aggregate range only represents matters in which the Company is currently able to estimate a range of loss and does not represent the maximum loss exposure. The estimated range is subject to significant judgment and a variety of assumptions and only based upon currently available information. For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss.
While the ultimate outcome of these matters cannot be predicted with certainty, the Company believes that the resolution of any such proceedings will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.
14. Segment Disclosures
The Company’s operating segments, which also represent its reportable segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker (“CODM”, the Company’s CEO) to determine resource allocation and assess performance. The Company’s three reportable segments: (1) ETM, (2) SET and (3) Education, reflect the specialty services the Company provides to customers and represent how the business is
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
organized internally. Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.
In the first quarter of 2026, the Company aligned government customers from the ETM segment to the SET segment to better position the services within the Company’s segment structure. The 2025 ETM and SET segment information has been recast to conform to the new alignment.
The following tables present information about the reported revenue from services of the Company by reportable segment, along with a reconciliation to earnings before taxes, for the second quarter and June year-to-date 2026 and 2025. Asset information by reportable segment is not presented since the Company does not produce such information internally nor does it use such information to manage its business.
Second Quarter 2026
ETM SET Education Inter-Segment Total
Revenue from services $ 485.5 $ 301.6 $ 253.5 $ ( 2.4 ) $ 1,038.2
Cost of services (1)
386.0 225.1 217.5 ( 2.4 ) 826.2
Gross profit 99.5 76.5 36.0 — 212.0
Direct salaries (2)
59.9 41.0 14.9
Other segment expenses (3)
28.8 17.3 10.4
SG&A expenses 88.7 58.3 25.3 — 172.3
Business unit profit $ 10.8 $ 18.2 $ 10.7 $ — $ 39.7
Corporate SG&A ( 11.8 )
Depreciation and amortization (4)
( 11.8 )
Consolidated earnings from operations 16.1
Other income (expense), net ( 1.7 )
Earnings before taxes $ 14.4
June Year-to-Date 2026
ETM SET Education Inter-Segment Total
Revenue from services $ 944.7 $ 590.8 $ 547.6 $ ( 4.2 ) $ 2,078.9
Cost of services (1)
759.6 442.5 472.6 ( 4.2 ) 1,670.5
Gross profit 185.1 148.3 75.0 — 408.4
Direct salaries (2)
119.5 81.5 31.5
Other segment expenses (3)
56.1 34.4 20.5
SG&A expenses 175.6 115.9 52.0 — 343.5
Asset impairment charge — 2.2 — 2.2
Business unit profit $ 9.5 $ 30.2 $ 23.0 $ — $ 62.7
Corporate SG&A ( 28.2 )
Depreciation and amortization (4)
( 23.5 )
Consolidated earnings from operations 11.0
Other income (expense), net ( 3.3 )
Earnings before taxes $ 7.7
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
Second Quarter 2025
ETM SET Education Inter-Segment Total
Revenue from services $ 516.4 $ 321.1 $ 265.3 $ ( 1.0 ) $ 1,101.8
Cost of services (1)
413.0 238.1 226.2 ( 1.0 ) 876.3
Gross profit 103.4 83.0 39.1 — 225.5
Direct salaries (2)
61.1 46.7 15.1
Other segment expenses (3)
31.7 16.5 10.4
SG&A expenses 92.8 63.2 25.5 — 181.5
Business unit profit $ 10.6 $ 19.8 $ 13.6 $ — $ 44.0
Corporate SG&A ( 13.3 )
Gain on sale of EMEA staffing operations 4.0
Depreciation and amortization (4)
( 12.5 )
Consolidated earnings from operations 22.2
Other income (expense), net ( 2.3 )
Earnings before taxes $ 19.9
June Year-to-Date 2025
ETM SET Education Inter-Segment Total
Revenue from services $ 1,045.5 $ 648.4 $ 574.3 $ ( 1.5 ) $ 2,266.7
Cost of services (1)
834.8 482.4 489.0 ( 1.5 ) 1,804.7
Gross profit 210.7 166.0 85.3 — 462.0
Direct salaries (2)
129.4 97.5 31.5
Other segment expenses (3)
64.4 34.8 20.9
SG&A expenses 193.8 132.3 52.4 — 378.5
Business unit profit $ 16.9 $ 33.7 $ 32.9 $ — $ 83.5
Corporate SG&A ( 29.2 )
Gain on sale of EMEA staffing operations 4.0
Depreciation and amortization (4)
( 25.3 )
Consolidated earnings from operations 33.0
Other income (expense), net ( 5.5 )
Earnings before taxes $ 27.5
(1) Cost of services represent those costs directly associated with the earning of revenue. The primary examples of these types of costs are temporary employee wages, along with other employee-related costs, including associated payroll taxes, temporary employee benefits, such as service bonus, holiday pay, health insurance and workers’ compensation costs. These costs differ fundamentally from SG&A expenses in that they arise specifically from the action of providing the Company's services to customers whereas SG&A costs are incurred regardless of whether or not the Company places temporary employees with the Company's customers.
(2) Direct salaries refers to the compensation expenses for employees directly related to the Company’s operations and service delivery. These expenses include salaries, related payroll taxes, various benefits and performance-based incentives and bonuses for these employees.
(3) Other segment expenses includes shared services costs for IT, human resources, legal and finance support, other professional services and overhead expenses, facilities and equipment-related costs and operational software licenses.
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
(4) Represents total company depreciation and amortization of intangibles, including the amortization of hosted software.
Depreciation and amortization expense is included in SG&A expenses in the consolidated statements of earnings. Depreciation and amortization expense amounts below include amortization of implementation costs for hosted software, which are excluded in the presentation of depreciation and amortization in the consolidated statements of cash flows. The depreciation and amortization amounts by segment are as follows:
Second Quarter June Year-to-Date
2026 2025 2026 2025
Depreciation and amortization:
Enterprise Talent Management $ 2.4 $ 2.7 $ 4.6 $ 5.9
Science, Engineering & Technology 7.2 7.7 14.6 15.2
Education 2.2 2.1 4.3 4.2
15. New Accounting Pronouncements
Recently Adopted
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU allows for a practical expedient to be used when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Topic 606. The new guidance was effective for annual periods beginning after December 15, 2025, with early adoption permitted. This ASU applies to trade accounts receivable and could impact the calculation of the allowance for uncollectible accounts receivable. The Company adopted this guidance in the first quarter of 2026 and the adoption did not have a material impact to the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued ASU 2025-11, Interim Reporting, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendment specifies when an entity is subject to ASC 270, and addresses the form and content of financial statements and interim disclosure requirements. The ASU clarifies that an entity must disclose events since the end of the last annual reporting period that have a material impact. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company does not expect this update to have a material impact to the Company's consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other - Internal-Use Software (Subtopic 350-40). This ASU simplifies and modernizes guidance for internal-use software by clarifying capitalization thresholds, improving comparability and reducing judgment diversity across all software development methodologies. This ASU is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires additional information about certain expense categories in the notes to the financial statements. The new guidance will be effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and related disclosures.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies several disclosure and presentation requirements in the FASB Accounting Standard Codification to align them with SEC regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with
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KELLY SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
early adoption permitted by June 30, 2027. For any amendments in which the SEC has not yet removed the applicable requirement from its regulations by June 30, 2027, the pending content of the related amendment in the FASB codification will not be effective. The Company does not expect this update to have a material impact to the Company’s consolidated financial statements.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact to the Company's consolidated financial statements and related disclosures.
16. Related Party Transactions
Hunt Equity Opportunities, LLC (“Hunt Equity”) controls approximately 92.2 % of the outstanding shares of Kelly Class B common stock as of May 19, 2026. There were no material transactions between the Company and Hunt Equity during the second quarter of 2026.
17. Subsequent Event
On August 4, 2026, the Company’s board of directors declared a dividend of $ 0.075 per share. The dividend is payable on September 2, 2026 to stockholders of record as of the close of business on August 19, 2026 .
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.