Ladies and gentlemen, good morning and welcome to Kelly Services’ Fourth Quarter Earnings Conference Call. All parties will be on listen-only until the question-and-answer portion of the presentation. Today’s call is being recorded at the request of Kelly Services. If anyone has any objections, you may disconnect at this time. I would now like to turn the meeting over to your host, Mr. Carl Camden, President and CEO. Sir, you may begin.

Thank you, John and good morning everyone. Welcome to Kelly Services’ 2014 fourth quarter and year end conference call. With me on today’s call is Patricia Little, our CFO and also with us is George Corona, our Chief Operating Officer. Let me remind you that any comments made during this call, including the Q&A, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the company’s actual future performance. Before we review our fourth quarter results, it’s worth noting that 2014 was a year of important change at Kelly as we focused on growth and implemented aggressive investments, particularly in our professional and technical specialties and our OCG practices. During the second half of the year, we launched a new PT recruiting model on our local U.S. operations and added business development resources focused on PT sales growth. We finished transitioning our targeted large accounts into a centralized service model and we made significant progress in building out elements of OCG’s talent supply chain. With these investments in place, we then implemented the management simplification plan we discussed on our last earnings call taking $35 million out of our 2015 expense base. In short, it was a year of significant change. And as we look at our fourth quarter and full year results, I am pleased to say the strategy is on track and our investments are gaining traction. Turning to the results, revenue was $1.4 billion for the quarter, up almost 6% in constant currency year-over-year. For the full year, Kelly’s revenue was $5.6 billion compared to $5.4 billion…

Thank you, Carl. Revenue totaled $1.4 billion, up 6% in constant currency compared to the fourth quarter last year, that’s up 3% in nominal currency with the difference caused by weakening European and Asian currencies. Staffing placement fees were down 2% in constant currency year-over-year as we continue to experience declines in EMEA that more than offset the 10% growth we saw in the Americas. Our gross profit rate was 16.3%, down 40 basis points compared to the fourth quarter last year. In constant currency, overall GP was up $7.9 million, about 3%. Our 2014 full year GP rate was 16.3%, down 10 basis points from last year. During the quarter, we recorded $6.2 million in restructuring related to our management simplification plan, with $3.9 million in severance and $2.3 million in lease termination cost. Combined with the third quarter, we have recorded a total of $9.9 million for this plan in line with our initial expectations. We have executed this plan on schedule and our restructuring effort now brings additional efficiency to our operating models across the organization. In the Americas segment, we have streamlined our local U.S. field operations through the consolidation or closure of 52 branches simplified or centralized large account delivery structure and flattened our U.S. management structure. In OCG, we have aligned resources more efficiently against areas that deliver rapid growth in return on investment. And overall, we optimized our corporate headquarters operations. This management simplification plan has reduced our global workforce by over 100 permanent positions and in the fourth quarter we saw the first positive outcome with $2.3 million savings in SG&A. We also confirmed that the total result of the management simplification plan is to reduce our future expense growth by $35 million of SG&A. This will allow the top line growth…

Thank you, Patricia. There is no doubt that 2014 was the fast paced year of change at Kelly. And I am very pleased with our fourth quarter performance and full year results. The teams did well throughout a year of significant transition. We ended the year with a clear plan to adjust our go-to-market strategy and we made aggressive investments to better align our operating models. In particular, we adjusted our approach to recruiting PT talent, strengthen the span and depth of OCG practices, and finish moving our targeted large accounts into a centralized service delivery model. There were significant investments and notable changes. So, let me put some additional color around our progress and outlook. In the Americas, we adjusted our operating models to reflect key differences between selling into and recruiting for and servicing large versus local accounts. The scale, scope and complexity of these accounts varies greatly and our new models ensure that we have the right resources and deployment strategies for each market segment. In our local accounts, we created a centrally managed PT recruiter model that aligns our recruiters by niche, enabling them to build deeper, more highly specialized talent pipelines. This approach coupled with the addition of specialized business development resources enables us to sell and fill higher margin HPT business. To sharpen our focus, we closed more than 50 U.S. branches and are concentrating our efforts where they are most likely to yield the highest return. With these transitions complete, we are pleased with the trends we are seeing in our local PT business. And we expect local PT growth to accelerate in early 2015. In our large accounts, we have finished moving our targeted accounts into a centralized model and are focusing our sales and recruiting teams more clearly on growing PT…

[Operator Instructions] And first we will go to Tobey Sommer with SunTrust. Please go ahead.

Hi, Tobey.

Hi, good morning. Carl, if you want to defer the questions to having someone else speak, I will understand.

That’s why George is here, he can answer them all.

Yes. What is the frame if you could from a long-term perspective, what your goals are for the investment in PT, maybe as an expression of where you want the percentage of revenue to be, some sort of financial model impacts that you are targeting. And I understand it will be over time, it’s not a guidance thing for this year, but they will be helpful? Thanks.

Okay. I will start with this and then maybe George can fill in. Now, what we really want to accomplish from the PT investments, frankly as well as the OCG investments is to have a more balanced model. Clearly, we have an enormous strength in our model for commercial and we are proud of that and that’s our fortress and we will continue to view that as a prime important. What we want to do is balance that with the equivalent strength in PT and then an equivalent strength in OCG to present more solutions based set of services to our large customers. And I will let George weigh in as well.

Tobey, when you look at it, what we are really trying to accomplish is, we look at the market and the market is transforming on us rapidly especially the PT market. So, what we have sort to do in order to get what Patricia said which is a more balanced portfolio we have to go at the market differently. So we bifurcated our system between delivering to our large customers, which have different needs to the local markets. And we are aligning our PT resources to be far more niche oriented. In the past, we were, give us all your orders, we will see what we can do. Now, we are looking at where the opportunities really exist or niche specialties and aligning both our sales resources and our recruiting candidate pipelines to align against that. So, in order to get to the more balanced portfolio, you have to go at the market differently and in 2014 it was all about realigning ourselves to be able to do that.

Right. And can you translate that realignment to a financial implication for the P&L?

Just as the more balanced operating earnings that come from the PT to have it approach the impact that we have from commercial.

Okay, so sort of at the operating line or something like that?

Yes.

Okay. In RPO within OCG, I was a little surprised that it didn’t grow faster. I was wondering if you could comment about what new sales and new customer potential sales look like and maybe if existing clients are hitting their hiring targets or maybe not quite doing that? Thank you.

Yes. So, when you look at it and look at in the pieces that you brought up, clearly, answering your question about it didn’t grow as fast as what you expected to, we have a few large clients whose needs were down for the quarter, some of them driven by market conditions. So, oil and gas related companies hiring less. And when you look at those, they drove the growth rate down. But, when we look at the overall health of the funnel within the business, that’s overall up and we expect as the economy continues to improve, there will be more full-time hiring. So, we are pretty bullish about that.

And then just ask a question about what you are hearing from the larger customers with the currency changes etcetera. Is – are U.S. customers raining in at all their ambitions over the last 2 or 3 months in which the currency changes have been precipitous?

Less over currencies, somewhat more over the instability, which I separate they coincide in some countries. But questions about how much do you continue to invest in Eastern Europe and the Russia zone and so long where you have instability accompanied by a result of currency, but not very many customers talking specifically about currency changing significantly their strategy. We watch oil and gas because we do particularly well in oil and gas. And there is not so much of currency issue but just watching shifts in demand and production around the world and what that does.

Okay. Thank you very much. I will get back in the queue.

Great. Thanks Tobey.

And next we will go to John Healy with Northcoast Research. Please go ahead.

Thank you. Carl, I want to ask or you can defer to George as well about the oil and gas exposure you said you do well there, I remember years ago you announced a big OCG relationship with BP. And we are just trying to understand the exposure the company has and what you have seen maybe in the last 6 to 8 weeks that signify any sort of our rate of change or any sort of deviation from what you have seen much of 2014?

We certainly have seen when we talk to our customers in that space the ones that are heavily dependent on the upstream piece of the marketplace or the price of oil. They are becoming much more cautious about their hiring plans, but we don’t have them coming out and saying we are dumping lost of workers yet. We also have a good amount of our business in the oil and gas – in the downstream areas where lower price of oil actually helps them. So they are going to help to offset a bit of the companies that are in the upstream part of the business. So right now cautioned, but not panic.

Is there a way to quantify kind of the company’s exposure to either upstream or downstream and if it’s…?

Yes, on that, no.

Okay. Is it a material size, maybe if I ask that way?

Well, one way to think about it is yes, natural resources overall are one of our largest segment. But I think you can look at our performance in engineering which is frankly what we supply most into. And you can see that we did really well in engineering this quarter. So again we are not seeing – I would say that the upstream and the downstream are balancing out and not creating either much of a – as much a headwind there is in some cases a tailwind.

Okay, great. And Patricia I wanted to ask your comments on the forecast for the SG&A growth.

Yes.

I think it was 4% to 5% for 2015 can you help us understand what number that’s off, is that off an adjusted SG&A number is that off the GAAP number and is that 4% to 5% booked for the benefit of the $35 million in savings or is that post the benefit?

Alright, so it’s versus 2014 excluding restructuring.

Okay.

And it includes the benefit of the $35 million management simplification plan. And it’s also worth noting that it’s at constant currency. So to the extent that I mentioned the currency is a headwind on our revenue line obviously would also reduce that impact on an SG&A line.

Okay, that makes a lot of sense. And then I wanted to ask as you think about the 52 branches in the U.S. I remember years ago you guys did pretty large branch recalibration in Europe do you see more of that, is that done or where do we stand as it relates to that opportunity?

Well, when you look at John – excuse me I got something in my throat but…

Contagious over there.

We are well here. And we will always look to fine tune our branch network. So we don’t have anything out there right now that says let’s go do another batch of 50. But over time especially as it relates to professional and technical you need to be – you don’t have to be as present with brick-and-mortar to be able to reach the candidate community and be able to put them to work. So we will look for opportunities that will make us more efficient in our deployment of brick-and-mortar branches. But we will still be able to address the same market space. So we look for refinement there. Sorry.

No worries. Thank you guys and feel better.

Okay.

[Operator Instructions] And we will go back to Tobey Sommer. Please go ahead.

Thank you. Just one follow-up about your revenue guidance.

Yes.

Are there any adjustments to the comparison since you give us a growth rate and not a dollar figure, anything that we need to know about what we are adding the growth to?

No, I think it’s a pretty straight up number of 2014 comparison. Again, we did give you the number in constant currency, because with the way it’s been fluctuating, I mean, everyday I could do a new number on it and it would change. So, right now that currency piece will be worth about 3 points, so what’s worth tomorrow, I wish I could tell you, but I can’t. So, there is nothing, there is no big adjustments in the way the revenue is structured that would make that anything, but a straight up comparison with this big caveat around currency.

Okay. And then kind of two add-ons to the two – my questions here, do you – how, Carl, you mentioned that yes, some customers are a little bit more cautious probably about some economies being a little bit less stable, not necessarily the currency. So, how do you feel about confidence extending a top line guidance goal for a full year given at least some increased caution from customers?

I will start this and let – and then let Patricia correct me. We are – we have a huge proportion of our business in the United States. We have a pretty clear picture of what’s happening inside the U.S. economy. You are seeing – as I said in my comments, we are now seeing a steady stream of nice job growth. You have got pretty good models out there as to what’s taking place in the U.S. And then on the OCG business, another big source of growth, you have an adoption curve which has favored continued growth on that regardless of what’s taking place as more companies adopt that as a talent supply chain kind of management structure. Would I have less confidence and as I would look out at Europe and parts of Asia? Sure, but they are also the very smallest parts of our business.

The only thing I will add to that is to the extent that are U.S. based, which is largely U.S. headquartered companies in our large customers that experience uncertainty, one of the first places they turn to manage uncertainty is to their labor structure and overall that can favor us.

Okay. And then is it possible to isolate the expectation you have for growth this year based on the local initiative in professional and technical, so for example, how much to growth would you expect that to contribute?

I will talk to that. So, we expect both the investments that we have made in large and local, which as George and Carl explained are different types of investments to bear fruit, especially in the PT side of the business. They are going to happen at different stages in the year. We are earlier on our local transformation and we expect it to deliver good results. In fact, we are already seeing traction in the fourth quarter for that. So, we expect that earlier in local. It’s also the smaller piece though. Large, again, we are seeing some good orders on that side, so very strong order generation and we expect that to be a little bit later in the year in about the second half mid year.

And I will speak one last one and then I am done.

Okay.

In the RPO business, do you expect that growth to reaccelerate in this year?

So, when you look at that, we have to take a look at the size of the large clients that we have, right. And we do expect from what our visibility is to them that they are going to tend to be a little bit lower this year. Our new funnel, obviously, we have a lot of confidence in that, but it takes time to implement them. So, I think you would expect to see what you saw in the last quarter going forward for the next couple of quarters until we get new wins implemented.

Okay, thanks for your help.

And we have no further questions in queue.

Great, thank you John.

Thank you.