Good morning and welcome to the Kelly Services Second Quarter Earnings Conference Call. All parties will be on a listen-only mode until the question-and-answer portion of the presentation. Today's call is being recorded at the request of Kelly Services. And if anyone has any objections, you may disconnect at this time. I would now like to turn the meeting over to your host, Mr. George Corona, President and CEO. Sir, you may begin.

Thank you, Justin and good morning. Welcome to Kelly Services 2017 second quarter conference call. With me on today's call is Olivier Thirot, our CFO. Let me remind you that any comments made during this call, including the Q&A 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 dive into Kelly's second quarter results, let me remind you that year-over-year comparisons are impacted by the joint venture we finalized in July, 2016 and prior-year restructuring charges. For the sake of clarity, I'll start by walking through our companywide results with and without these impacts. As reported, including the impact of the APAC JV and prior year restructuring, Kelly's revenue of 1.3 billion was down 3.1% compared to the second quarter last year. We achieved earnings from operations of 20.3 million, more than doubling the 9.9 million we delivered last year and diluted earnings per share were $0.47 compared to $0.23 per share last year. As adjusted for the impact of the APAC JV and prior-year restructuring, revenue was up 4.4% year-on-year in the second quarter. We achieved earnings from operations of 20.3 million, 71% higher than last year and earnings per share were $0.47 compared to the adjusted earnings per share of $0.27 last year. It was a strong quarter that continued to build on the momentum we saw in Q1 and we are pleased with our performance. Once again we delivered topline growth, healthy operating earnings and solid returns for our shareholders. Before we look more closely at how specific elements of…

Thank you, George. Revenue totaled 1.3 billion, down 3.1% compared to second quarter last year. As George described, our 2016 Q2 results include our APAC staffing results which were deconsolidated during the third quarter of 2016. Excluding the APAC staffing results in 2016, revenue increased by 4.4%. Our Q2 performance reflects a solid improvement and builds on the improving revenue trends we experienced in the first quarter, driven primarily by continued improvement in our locally delivered staffing business in the Americas and international. Staffing placement fees were down 17% year over year. Excluding the APAC staffing results from 2016, perm fees were up 2% with modest fee growth in the Americas and nearly flat [Technical Difficulty] in international. Overall, gross profit was down 2 million year-on-year. Excluding the APAC staffing results in 2016, GP was up 12 million or nearly 6%. Our gross profit rate was 17.2%, up 40 basis points when compared to the second quarter last year. Our overall GP rate reflects ongoing structural improvement as well as the impact of APAC staffing on the prior-year rate. SG&A expenses were down 5.5% year-over-year. Included in our 2016 Q2 results were 3.4 million of restructuring charges related primarily to our Americas staffing segment. Excluding the impact of the APAC staffing business and our restructuring charges in 2016, SG&A expenses were up 2%. Included in SG&A expenses for the quarter are 2.5 million of onetime savings in executive compensation expense, which is reported as a component of corporate expenses. In our operations, expenses increases reflect good leverage on our second quarter GP growth and our continued commitment to manage expenses in line with GP growth for the full year. We remain focused on expense control and generating returns on investments in our service delivery infrastructure. Earnings from operations were 20.3…

Thank you, Olivier. Kelly entered the year with confidence, fueled by proven results and our second quarter confirms that we are continuing to deliver on the promise of profitable growth. On an adjusted basis, we grew revenue by 4% and increased operating earnings by 71% in the quarter. All three of our operating segments delivered improved results in revenue, GP and operating profit and we improved our conversion rate by more than 60% over the prior year. Our America Staffing segment continued its forward momentum, capturing good top line growth, while delivering double digit improvements in operating profits. Our local operating teams are more focused than ever and our targeted investments are yielding results. And Kelly Educational Staffing continues to excel as a market leader and deliver solid growth year-over-year. Our international segment remains tightly focused on pursuing core specialties across Europe and capturing the growth opportunities that are available to us. And our Global Talent Solutions segment continues to deliver top and bottom line growth as we help companies navigate a more holistic approach to Talent Solutions. It was a successful quarter that confirmed our strategic direction and advanced our growth trajectory. Our performance demonstrated our continued ability to grow the top line, operate with increased efficiency and deliver a solid return to our shareholders, all while continuing to invest in the future. As always, we will keep a close eye on the state of the global economy and labor markets, yet, we are moving forward with a confidence that is rooted in results delivered by our exceptional Kelly teams, knowing that together we are adapting the market trends and accelerating our relentless pursuit of profitable growth. Olivier and I will now be happy to answer your questions.

[Operator Instructions] It looks like first, we have the line of John Healy of Northcoast Research. Your line is open.

George, I wanted to ask you a couple of questions, kind of now that you're kind of in the new role for a little bit of time now. When you look at the footprint of the business, primarily internationally, is there anything that you kind of look at and you say, hey, this might make sense for Kelly to bring in a partner or this might make sense for, maybe a different approach from geographic standpoint? And then secondly, I wanted to ask just about the pace of investments going forward. Clearly, you guys are getting some return on what you've done in the US. I was just hoping to get some color in terms of how we might think about investment into recruiters and sales folks over the next 18 months or so and how that might compare to the revenues in the business?

Okay. All right. Well, let me start with the first question. When we think about our footprint, we've been very intentional over the years of looking at making sure that we only operate in those countries where we believe that we have a significant advantage to be able to do it, whether that be scale or specialization. And at this point in time, John, we're pretty comfortable that we've got our EMEA footprint in that position that we're operating in the countries where we can make a difference, where we can make a profit. And remember that as we continue to globalize our GTS segment, that footprint allows us to be able to deliver there. So at this time, we're comfortable, but I would tell you that we always look at that and we're always vigilant in making sure. And as what you saw, what we did in APAC, we made a different choice in APAC based on where that marketplace was and a good partner that we had. So that's kind of the answer to the first question. Your second question was how to think about investments. Is that right?

Yeah. Just in terms of where we are in terms of the phase, if it's largely been completed and should we expect investments to continue and maybe, Olivier can chime in just in terms of how revenues and SG&A might kind of look compared to one another over the next 18 months or so?

All right. I'll let Olivier answer that.

So you mean overall or specifically related to EMEA or the US or America?

I would say the US as well as Europe if you could?

Let me try to take the, I'll let Olivier do the numbers side. When you think about where we are in the cycle and what we've seen, so what you saw was the second quarter particularly in the Americas and in the United States, we started to see revenue acceleration coming and where we are in the United States is we're in a position where what we would be doing is what we always do, which is investing in to where we see demand. And so long as we continue to see that demand is good and that we have, we don't have the capacity to meet it, we'll continue to invest in recruiters, but when you do that for the most part, you're matching revenue and expenses. And you might be off a quarter, but you're matching revenue and expenses. And so at this point in time, we'll continue to invest where we see that there's demand. There will be other investments that we're going to continue to make and they're going to come more in the technology area as we upgrade our systems and we employ new technologies that will ultimately make us more efficient and we will be doing that over the course of the next two years is investing more in technology. With that, I'll let Olivier.

Well, overall, when you look at our outlook for Q3, we confirm top line acceleration overall. Our outlook now is 4% to 5% growth and that is going to continue to be combined with progress in our GP rate because of our structural improvement in our business mix. So we continue to see the traction in the next coming months. We are going to continue to keep an eye on our, I would say, infrastructure and resources to continue to keep a good leverage and a good improvement in our conversion rate. It doesn't mean we don't invest. I mean, we invest to follow the growth in demand, especially in our staffing business, whether it's EMEA or in the Americas, but we don't do it specifically ahead of demand. I mean, we just make sure that we have the capabilities to really grab the demand we have, especially when you think about the seasonality that is now coming, especially in the US. We need to make sure we have the right resources to capture the good momentum that we have started to see over the last two quarters.

And you also saw that our fastest growing segment this quarter was our Outcome Based Services, we'll continue to invest in that because we're at high double digit growth in that area.

And at this point, we actually have no further questions here by phone.

Okay.

Justin, thank you very much.