KELYA - Kelly Services (KELYA) - NobleCon 18 Presentation
NobleCon 18. Kelly Services CEO Peter Quigley and CFO Olivier Thirot presented at NobleCon 18. Highlights of the presentation were the recent Persol Holdings and PersolKelly sales, the RocketPower acquisition, and strategy for future acquisitions. A rebroadcast is available at https://noble.mediasite.com/mediasite/Catalog/Full/4ec6170801b441318e66ea53d53540a421.More Cash in the Pocket. The Company highlighted their recent sale of Persol Holdings common shares and PersolKelly joint venture interest. Both these sales accumulated roughly $235 million, net of repurchases of common shares. This additional cash will prove to be beneficial, in our view, as the Company is aggressively looking for companies to purchase.RocketPower Acquisition. Another recent event for the Company was their RocketPower acquisition, which provides Kelly Services with more expansion in regards to their recruitment process outsourcing (RPO) and greater penetration into the high-tech industry. The RPO industry has been seeing double-digit growth the last few years and is expected to be a $5+ billion industry in 2022.Looking for More. Kelly Services is wanting to continue on with their to the roll-up strategy, as they look for potential companies that fit primarily into the Education, OCG, and SET segments of their business. The Company generated cash flow of $468 million from 2019-2021, with 73% of it being used for acquisitions. Management expects a similar percentage going forward with expected total cash flow to increase.Maintaining Outperform and $30 PT. We are maintaining our Outperform rating and our 12-month price target of $30. While the recovery is occurring at a slower pace than anticipated, Kelly's specialization focus, spiced up with the capital from the Persol sales, will help drive faster top line growth and higher margins over time. At our price target, KELYA shares would trade at 18x our 2022 adjusted EPS estimate, 6.8x EV/estimated 2022 EBITDA, and 0.15x EV/estimated 2022 revenues. Read More >>