kelya-20260329

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-1088

KELLY SERVICES, INC.

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(Exact name of registrant as specified in its charter)


Delaware						38-1510762
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

999 West Big Beaver Road, Troy, Michigan 48084

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(Address of principal executive offices) (Zip Code)

(248) 362-4444

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(Registrant’s telephone number, including area code)

No Change

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(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Class A Common Stock, $1.00 par value per share	KELYA	The Nasdaq Stock Market LLC
Class B Common Stock, $1.00 par value per share	KELYB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At April 27, 2026, 31,373,149 shares of Class A and 3,296,041 shares of Class B common stock of the Registrant were outstanding.

KELLY SERVICES, INC.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			4
Item 1. Financial Statements (unaudited).			4
Consolidated Statements of Earnings			4
Consolidated Statements of Comprehensive Income (Loss)			5
Consolidated Balance Sheets			6
Consolidated Statements of Stockholders' Equity			7
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			29
Item 4. Controls and Procedures.			29
PART II. OTHER INFORMATION			29
Item 1. Legal Proceedings.			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			30


Item 5. Other Information.			30
Item 6. Exhibits.			31
SIGNATURES			33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

KELLY SERVICES, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

(in millions, except per share data)


	13 Weeks Ended
	March 29, 2026		March 30, 2025
Revenue from services	$	1,040.7	$	1,164.9
Cost of services	844.3		928.4
Gross profit	196.4		236.5
Selling, general and administrative expenses	199.3		225.7



Asset impairment charge	2.2		—


Earnings (loss) from operations	(5.1)		10.8

Other income (expense), net	(1.6)		(3.2)
Earnings (loss) before taxes	(6.7)		7.6
Income tax expense (benefit)	(0.8)		1.8




Net earnings (loss)	$	(5.9)	$	5.8

Basic earnings (loss) per share	$	(0.17)	$	0.16
Diluted earnings (loss) per share	$	(0.17)	$	0.16

Average shares outstanding:
Basic	34.4		35.0
Diluted	34.4		35.5

See accompanying unaudited Notes to Consolidated Financial Statements.

KELLY SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)


	13 Weeks Ended
	March 29, 2026		March 30, 2025
Net earnings (loss)	$	(5.9)	$	5.8
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax expense of $0.2 and tax benefit of $0.0, respectively	(1.2)		1.3
Less: Reclassification adjustments included in net earnings	—		—
Foreign currency translation adjustments	(1.2)		1.3



Other comprehensive income (loss)	(1.2)		1.3
Comprehensive income (loss)	$	(7.1)	$	7.1

See accompanying unaudited Notes to Consolidated Financial Statements.

KELLY SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions)


	March 29, 2026		December 28, 2025
Current Assets
Cash and equivalents	$	25.6	$	33.0
Trade accounts receivable, less allowances of $10.8 and $10.0, respectively	1,216.0		1,188.7
Prepaid expenses and other current assets	57.2		46.6

Total current assets	1,298.8		1,268.3

Noncurrent Assets



Property and equipment, net	18.8		20.5
Operating lease right-of-use assets	37.6		42.9
Deferred taxes	158.2		163.2
Retirement plan assets	283.0		289.7
Goodwill	202.1		202.1
Intangibles, net	218.8		226.2

Other assets	37.7		37.7
Total noncurrent assets	956.2		982.3
Total Assets	$	2,255.0	$	2,250.6

Liabilities and Stockholders' Equity
Current Liabilities

Accounts payable and accrued liabilities	$	621.6	$	631.4
Operating lease liabilities	11.4		12.3
Accrued payroll and related taxes	147.2		140.9
Accrued workers' compensation and other claims	21.3		20.9
Income and other taxes	17.1		16.3

Total current liabilities	818.6		821.8

Noncurrent Liabilities
Long-term debt	130.5		101.9
Operating lease liabilities	42.0		44.9

Accrued workers' compensation and other claims	34.7		34.2
Accrued retirement benefits	253.6		263.7
Other long-term liabilities	7.1		7.6

Total noncurrent liabilities	467.9		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, 3.9 million shares at 2026 and 4.3 million shares at 2025	(56.1)		(63.1)
Class B common stock	(0.6)		(0.6)
Paid-in capital	31.1		36.3
Earnings invested in the business	956.5		965.1
Accumulated other comprehensive income (loss)	(0.9)		0.3
Total stockholders' equity	968.5		976.5
Total Liabilities and Stockholders' Equity	$	2,255.0	$	2,250.6

See accompanying unaudited Notes to Consolidated Financial Statements.

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

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

See accompanying unaudited Notes to Consolidated Financial Statements.

KELLY SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in millions)


	13 Weeks Ended
	March 29, 2026		March 30, 2025
Cash flows from operating activities:
Net earnings (loss)	$	(5.9)	$	5.8
Adjustments to reconcile net earnings to net cash from operating activities:


Asset impairment charge	2.2		—
Deferred income taxes	5.0		(0.8)
Depreciation and amortization	9.9		11.0
Operating lease asset amortization	2.6		2.6
Provision for credit losses and sales allowances	1.2		3.0
Stock-based compensation	3.4		3.7




Other, net	0.3		(0.3)
Changes in operating assets and liabilities
Accounts receivable	(26.3)		10.5
Other assets	(4.5)		0.6
Accounts payable	(7.3)		(24.2)
Other liabilities	(6.0)		12.0
Net cash (used in) from operating activities	(25.4)		23.9

Cash flows from investing activities:
Capital expenditures	(1.1)		(2.5)

Proceeds from sale of PersolKelly investment	—		6.4




Other investing activities	(0.1)		(0.7)
Net cash (used in) from investing activities	(1.2)		3.2

Cash flows from financing activities:

Proceeds from long-term debt	389.5		412.3
Payments on long-term debt	(360.9)		(447.1)

Dividend payments	(2.7)		(2.8)
Payments of tax withholding for stock awards	(1.4)		(1.8)


Other financing activities	(0.3)		(0.1)
Net cash from (used in) financing activities	24.2		(39.5)

Effect of exchange rates on cash, cash equivalents and restricted cash	(5.8)		1.3
Net change in cash, cash equivalents and restricted cash	(8.2)		(11.1)

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)	$	29.5	$	34.5

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:


	13 Weeks Ended
	March 29, 2026		March 30, 2025
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents	$	25.6	$	28.2

Restricted cash included in prepaid expenses and other current assets	0.2		0.4
Noncurrent assets:
Restricted cash included in other assets	3.7		5.9
Cash, cash equivalents and restricted cash at end of period	$	29.5	$	34.5

See accompanying unaudited Notes to Consolidated Financial Statements.

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 first fiscal quarter ended on March 29, 2026 and March 30, 2025, each of which contained 13 weeks.

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:


	First Quarter 2026
	Staffing Services		Outcome-based Services		Talent Solutions		Permanent Placement		Total
Enterprise Talent Management	$	229.3	$	106.8	$	121.3	$	1.8	$	459.2
Science, Engineering & Technology	168.6		112.2		—		8.4		289.2
Education	293.4		—		—		0.7		294.1
Total Segment Revenue	$	691.3	$	219.0	$	121.3	$	10.9	$	1,042.5
Intersegment									(1.8)
Total Revenue from Services									$	1,040.7

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)


	First Quarter 2025

	Staffing Services		Outcome-based Services		Talent Solutions		Permanent Placement		Total
Enterprise Talent Management	$	275.8	$	133.2	$	117.8	$	2.3	$	529.1
Science, Engineering & Technology	209.8		109.4		—		8.1		327.3
Education	307.9		—		—		1.1		309.0
Total Segment Revenue	$	793.5	$	242.6	$	117.8	$	11.5	$	1,165.4
Intersegment									(0.5)
Total Revenue from Services									$	1,164.9

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:


	First Quarter
	2026		2025
Americas
United States	$	938.6	$	1,056.6
Other	74.3		83.3



Total Americas Region	1,012.9		1,139.9











Total Europe Region	12.2		9.6






Total Asia-Pacific Region	15.6		15.4
Total Kelly Services, Inc.	$	1,040.7	$	1,164.9

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:


	First Quarter
	2026		2025
Allowance for credit losses:
Beginning balance	$	6.4	$	4.9
Current period provision	0.4		2.3



Write-offs	(0.8)		(0.2)
Ending balance	$	6.0	$	7.0

Write-offs are presented net of recoveries, which were not material for first quarter-end 2026 or 2025. No other allowances related to other receivables were material as of first quarter-end 2026 or 2025.

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 first 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 first quarter of 2026 or 2025.


	As of First Quarter-End 2026
Description	Total		Level 1		Level 2		Level 3

Money market funds	$	3.7	$	3.7	$	—	$	—



Total assets at fair value	$	3.7	$	3.7	$	—	$	—



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 first 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 first 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 sheet. These balances are unchanged from year-end 2025. No payments were made under either indemnification agreement during the first quarter of 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.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Equity Investment Without Readily Determinable Fair Value

As of first 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 sheet. No impairment indicators were identified and no observable price changes occurred during the first quarter of 2026.

5. Integration, Realignment and Restructuring

2026 Actions

As a continuation of the efforts announced in 2025, integration and realignment costs for the first quarter of 2026 consisted of $3.5 million of IT-related charges, $0.3 million of severance and $0.9 million of fees and other costs to execute the initiatives. The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the table below.


	First Quarter 2026
	IT-related Charges		Severance		Fees and Other		Total

Science, Engineering & Technology	$	—	$	0.2	$	0.1	$	0.3
Education	—		0.1		—		0.1
Corporate	3.5		—		0.8		4.3
Total	$	3.5	$	0.3	$	0.9	$	4.7

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. For the first quarter of 2025, integration and realignment costs consisted of $5.3 million of IT-related charges, $4.4 million of severance and $1.0 million of fees and other costs to execute the initiatives. The integration and realignment costs are recorded in SG&A expenses in the consolidated statements of earnings and are shown in the table below.


	First Quarter 2025
	IT-related Charges		Severance		Fees and Other		Total
Enterprise Talent Management	$	—	$	2.7	$	—	$	2.7
Science, Engineering & Technology	—		1.1		—		1.1

Corporate	5.3		0.6		1.0		6.9
Total	$	5.3	$	4.4	$	1.0	$	10.7

6. Debt

On January 27, 2026, the Company amended and restated its revolving credit facility (the “Facility”) and its Receivables Purchase Agreement related to its securitization facility (the “Securitization Facility”) solely to provide that the closing of the Hunt Equity Opportunities, LLC (“Hunt Equity”) purchase of the Company's Class B common stock would not constitute a change in control under either agreement (see Related Party Transactions footnote). No other terms were modified.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Revolving Credit Facility

The Company has a $150.0 million, five-year revolving credit 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 first 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 15.0 basis points at the end of the first quarter of 2026 and at year-end 2025. The Facility’s financial covenants and restrictions are described below, all of which were met at the end of the first 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.

Securitization Facility

The Company has a Receivables Purchase Agreement with Kelly Receivables Funding, LLC, a wholly owned bankruptcy remote special purpose subsidiary of the Company (the “Receivables Entity”), related to its $250.0 million, three-year, Securitization Facility. The Receivables Purchase Agreement will terminate May 28, 2027, unless terminated earlier pursuant to its terms.

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 first quarter of 2026, the Securitization Facility had $130.5 million of long-term borrowings, SBLCs of $42.6 million related to workers’ compensation and a remaining borrowing capacity of $76.9 million. The rate for these borrowings includes the adjusted daily SOFR plus a 0.10% margin 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 of 40.0 basis points on the unused capacity. 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 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.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

Local Credit Facilities

The Company had total unsecured, uncommitted short-term local credit facilities of $3.1 million at the end of the first quarter of 2026. The Company had no borrowings under these lines at the end of the first quarter of 2026 and at year-end 2025.

7. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the first quarter of 2026 and 2025 are included in the table below.


	First Quarter
	2026		2025
Foreign currency translation adjustments:
Beginning balance	$	0.3	$	(6.9)
Other comprehensive income (loss) before reclassifications	(1.2)		1.3
Amounts reclassified from accumulated other comprehensive income (loss)	—		—
Net current-period other comprehensive income (loss)	(1.2)		1.3
Ending balance	(0.9)		(5.6)















Total accumulated other comprehensive income (loss)	$	(0.9)	$	(5.6)

8. Earnings (Loss) Per Share

The reconciliation of basic and diluted earnings (loss) per share on common stock for the first quarter of 2026 and 2025 is as follows:


	First Quarter
	2026		2025
Net earnings (loss)	$	(5.9)	$	5.8
Less: earnings allocated to participating securities	—		(0.2)
Net earnings (loss) available to common shareholders	$	(5.9)	$	5.6

Average common shares outstanding (millions):
Basic	34.4		35.0
Dilutive share awards	—		0.5
Diluted	34.4		35.5

Basic earnings (loss) per share	$	(0.17)	$	0.16
Diluted earnings (loss) per share	$	(0.17)	$	0.16

Due to the Company’s net loss in the first quarter of 2026, potentially dilutive share awards outstanding, primarily related to non-employee directors deferred compensation plan and performance shares (see Stock-Based Compensation footnote for a description of performance shares), of 0.5 million had an anti-dilutive effect on diluted earnings per share and were excluded from the computation. Potentially dilutive shares outstanding for the first quarter of 2025 were primarily related to deferred common stock associated with the non-employee directors deferred compensation plan and performance shares. Dividends paid per share for Class A and Class B common stock were $0.075 for the first quarter of 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 first quarter of 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 first quarter-end 2026.

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

9. Stock-Based Compensation

For the first quarter of 2026, the Company recognized stock compensation expense of $3.4 million and a related tax benefit of $0.1 million. For the first quarter of 2025, the Company recognized stock compensation expense of $3.7 million and a related tax benefit of $0.3 million.

Restricted Stock

A summary of the status of nonvested restricted stock as of first quarter-end 2026 and changes during this period 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	1,093	10.42
Vested	(352)	16.77
Forfeited	(111)	15.21
Nonvested at first quarter-end 2026	1,959	$	12.60

Performance Shares

2026 Grant

During the first quarter of 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 first quarter-end 2026 and changes during this period 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	476	9.60
Vested	(167)	16.31
Forfeited	(31)	10.30
Vesting adjustment	(33)	15.18
Nonvested at first quarter-end 2026	861	$	11.10

KELLY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(UNAUDITED)

10. Other Income (Expense), Net

Included in other income (expense), net are the following:


	First Quarter
	2026		2025
Interest income	$	0.4	$	0.8
Interest expense	(2.0)		(4.0)



Other income (expense), net	$	(1.6)	$	(3.2)

11. Income Taxes

Income tax benefit was $0.8 million for the first quarter of 2026 and income tax expense was $1.8 million for the first quarter of 2025. The variance was driven by changes in pretax income and the benefit of work opportunity tax credits in the first quarter of 2025.

The Company's interim tax provision is calculated using the estimated annual effective tax rate applied to year-to-date income, adjusted for 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 tax-exempt investments in life insurance policies. It is also adjusted for discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets and the tax effects of stock compensation. The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

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 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 Company intends to maintain a valuation allowance until sufficient positive evidence exists to support realization of the deferred tax assets.

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.

12. 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 first quarter-end 2026 and year-end 2025, the gross accrual for litigation costs amounted to $2.3 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 first 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 $1.9 million as of first 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

KELLY SERVICES, INC.

SEC Form 10-Q filed by Kelly Services Inc.