Good morning, and welcome to Kelly Services Fourth Quarter and Full Year 2021 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. A fourth quarter webcast presentation is also available on Kelly's website for this morning's call. I would now like to turn the meeting over to your host, Mr. Peter Quigley, President and CEO. Please go ahead.

Thank you, John. Hello, everyone, and welcome to Kelly Services fourth quarter conference call. With me today is Olivier Thirot, our Chief Financial Officer, who will walk you through our Safe Harbor language, which can be found in our presentation materials.

Thank you, Peter, and good morning, everyone. 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. In addition, during the call, certain data will be discussed on a reported and on an adjusted basis. Discussion of items on an adjusted basis are non-GAAP financial measures designed to give insight into certain trends in our operations. References to organic growth in our discussion today exclude the results of our Q2 2021 acquisition of Softworld. We have also provided the slide deck that we are using on today's call on our website. Now, back to you, Peter.

Thanks, Olivier. Before we turn to Kelly’s fourth quarter performance, I’d like to address this morning's announcement regarding a significant and bold step in our transformation as a specialty talent solutions provider. Today, we announced transactions that unlock more than 250 million after tax dollars that we can strategically redeploy to accelerate our growth in high margin high growth specialties. We're accomplishing this through an agreement with our valued partner personnel to unwind our cross ownership and reduce our ownership interest in our APAC joint venture PersolKelly. As we've noted in prior calls, and investor materials, neither our shareholding and Persol nor ownership in the JV contributes any EBITDA to our financial results. Monetizing our investments in Persol and PersolKelly provides us with an unprecedented amount of capital to invest in our specialty growth strategy. To give you a sense of the scope of these actions, between cash from the APAC transactions and our existing borrowing capacity, we now have more than a half billion dollars of available capital. These are the kinds of resources we need to pursue high margin, high growth businesses that drive quantitative and qualitative improvement in our results. At the same time, while continuing to make long term structural improvements in our existing businesses, improvements that are demonstrably contributing to our multiyear GP rate improvement. While we are unwinding our interest in Persol and PersolKelly, we remain unequivocally committed to our OCG practice in APAC where OCG business in APAC has enjoyed exceptional, profitable growth in the last several years and we will continue to relentlessly support original and global customers in the APAC region that require a best-in-class MSP, RPO and other leading talent solutions. The PersolKelly JV has enjoyed its own considerable success since its formation, and it will continue to partner with…

Thank you Peter. So you know, I wouldn't review our most recent results, but I will come back to our APAC transactions in more detail just after the 2022 outlook. Before I review the current value of the results, one important point related to the prior year. 2022 was a 53-week fiscal year for Kelly. And our Q4 2020 results include an extra week of operating activity where the impact is material to understand the underlying business trend that will provide the impact of the additional week in 2020 in our year-over-year comparisons. Now looking at the first quarter of 2021; revenue totaled $1.3 billion up 0.7% from the prior year, including 40 basis point of unfavorable currency impact. Excluding the impact of the extra week, revenues were up 6% on a constant currency basis, as the impact of the extra week unfavourably impacts the comparison by about 500 basis points. Included in that increase, our 290 basis points of favorable impact from our acquisition of Softworld, as well as the 210 basis points unfavorable impact resulting from the changes in the Mexican staffing market legislation. We also monitor our revenue recovery rate, which compares current valued results to the corresponding pre-COVID 2019 period on a constant currency basis. Our Q4 organic revenue recovery rate is 91%, consistent with Q3. For the fourth quarter, our Education segment continues to report the highest year-over-year growth rate of 44% as a comparable 2020 period was impacted by significant school closures. For the quarter, Education's Recovery rate was 97%, which was lower than the Q3 rate. Although we have strong demand from the return to in-person learning, high levels of full time teacher vacancies, and new customer wins, our growth has been constrained by a more challenging than anticipated talent market, especially in…

Thanks for those details Olivier. As we enter 2022, we're encouraged by increased demand for our services reflected in our healthy sales pipelines, and new customer wins across all five of our segments. While talent shortages may continue to challenge this growing demand, we expect talent shortages to subside overtime, and we are encouraged by recent improvements in the labor force participation rate and the relaxation of COVID induced restrictions that constrain the availability of talent. In the year ahead, we expect each of our specialty business units to deliver strategic contributions to our performance. Our P&I segment will focus on growing higher margin outcome based specialties in 2022. And we will adopt new and updated technologies to create greater efficiencies and staffing and approach that should lead to improving productivity and higher gross margin. We expect SET to deliver meaningful returns on our 2021 inorganic and organic investments, and Softworld should continue to deliver double digit growth in the segment. Education will continue to capture K-12 growth in 2022 and further expand its adjacencies, balancing investments and future growth with a need to effectively manage the segments cost base. In OCG, we expect to see continued double digit growth and strong leverage as the segment continues to deliver cutting edge market insights, tech enabled solutions and workforce strategies that guide clients through the recovery. In addition to robust MSP growth, we intend to invest in our fast growing RPO business. And in our International segment, we expect continued growth in regional and local specialties, as our team's leveraged Kelly's infrastructure to drive increased efficiency. The growth strategies in our five business segment, enabled by our focused operating model, together with our aggressive and smart use of capital, are designed to drive organic and inorganic growth for Kelly in 2022 and beyond delivering results that we expect will create new shareholder value. To share more about what we expect from the year ahead, I'll now welcome back, Olivier.

Thank you, Peter. As we reflect on the 2021 results and look ahead, we expect a continuation of the current trend of steady increases in demand, as well as continuation of the current level of talent mismatch, putting some pressure on fulfillment. We also believe those recent trends in inflation and the upward pressure on wages at all skill levels will continue into 2022. For the full year, we expect revenue to be up 4.5% to 5.5% in nominal currency. Our expectation reflect that there are no material changes in business or governmental restrictions related to COVID-19, demand continues to improve and that the steps we are taking to address the current talent mismatch will expand the supply of talent available to us. Even with older folks Education will continue to be challenged in early 2022 as talent supply remains constant and internationals revenue growth rate will be negatively impacted by the Mexico legislation change until we anniversary the impact in the second half of the year. In addition, we expect that changes in the workforce strategies of a few large customers could potentially create some headwinds in P&I and SET. And finally, we expect that our targeted growth initiatives will begin to provide measurable acceleration of organic revenue growth. We expect our GP rate to be about 19.4%. Our [Indiscernible] structural improvements in GP rate expectations reflect continued growth in our fee based business. The continued shift in mix to higher margin inflation and a more gradual pace of growth in our lower margin specialty. We continue to take steps to drive meaningful cost savings and provide additional leverage. Our restructuring initiatives in Q4 2021 is a continuation of this before. In addition, we'll continue to focus on productivity improvements in each business unit as we move into 2020.…

Thank you, Olivier. With the worst of the pandemic behind us and a sustainable recovery ahead, we are heralding 2022 as a year of transformative progress, as companies and talent lean into new growth opportunities they are turning to Kelly for what's next. Sustained fee growth points toward our customer’s investments in their future workforces, and increased demand in our staffing and outsourcing businesses reflects a market eager for the specialty solutions we provide. The recovery may not have followed the path we predicted two years ago, but we continue to make real progress on the path we do control, Kelly's specialty growth strategy. We announced this strategy two years ago, and it continued to make good on its promises. We said, we would increase Kelly's focus. And we have since launched an operating model with five clearly defined specialties led by experienced and committed business unit leaders laser focused on driving growth within their specialty. We said, we would more aggressively pursue inorganic growth, and we have since made two acquisitions in our Education specialty and the company's largest ever acquisition with a purchase of Softworld in our high margin SET specialty. We said, we would drive organic growth, and we have since launched innovative new products such as K-12 tutoring, skilled professional solutions, and Helix UX while continuing to provide exceptional support of our customers and talent during an unprecedented global crisis. We said, we would take steps to unlock capital and we have since sold and leased back our headquarters properties, and sold our Brazil staffing operations. And with today's announcement regarding Persol and the PersolKelly JV, Kelly proves it's gearing up for even more meaningful change in 2022 and beyond unlocking significant capital to invest in our chosen specialties, drive growth where we know we can win and create additional value for our shareholders. We believe this will be an extraordinary year for all the right reasons, a year where the world emerges from the pandemic script and Kelly enters a bold new era of growth. It's an exciting journey that we're honored to share with all of our stakeholders. We're thankful to our employees for their agility and commitment to fulfilling our noble purpose every day, to our talent for entrusting us with the next steps in their careers, to our clients and suppliers for their partnership and collaboration, to our board of directors for their support of our aggressive growth strategy, and to our shareholders for their confidence that Kelly's best days lie ahead. John, you can now open the call to questions.

[Operator Instructions] And first from the line of John Healy with Northcoast Research. Please go ahead.

Thank you and congrats on the close of the year and the milestone of getting closer to monetizing these unique assets you have. Just wanted to spend a minute on that transaction, I know you've talked about the $255 million of incremental cash or capital to fund the transformation. I just want to make sure that is net of also reducing the share count by call it a million and a half shares. And that would be incremental capital relative to the 113 million or so that you had on your balance sheet at year end. Additionally, you can talk about the transformation. But given where the stock price is, are you contemplating, potentially maybe returning some of that capital in terms of shares shrinkage, as we look at 22?

Good morning, John. It’s Olivier So I'm going to start and Peter is going to follow up. If you think about the two, I'm in the approximately 265 million, it is net of tax, number one and number two net of the 27 million of buyback that I was explaining during the call. So it's really basically the addition of the 46.5% of the JV, which is about $114 million net of tax, an estimate of our estimation of $169 million net proceeds coming from the blog trade that we are initiating now to sell, our personal shares. And then deducted from those two numbers is the 27 million buyback that I was referring to. Peter, do you want to add something?

Good morning, John, and thank you for the comments. So with discussions with our board of directors, obviously, we spend a lot of time talking about capital allocation. We are as part of this transaction buying back $27.2 million of stock, that won't affect the liquidity of the shares, due to the fact that it was owned by Persol. But as I said, two years ago, on this call we believe, I believe that the best use of our capital is to add to our organic growth strategy with inorganic growth, through finding high quality, attractive targets like Softworld that we don't overpay for, but that add substantially to our margin profile and to our growth profile. And that's what we intend to do subject to on-going discussions with our board around capital allocation.

And we are going to continue as we shared to be extremely mindful on, of course, is strategic feat. But also making sure that we pay the right price, you know that we are using amongst those things, one KPI, which is an internal rate of return, the bar we have set, as you know at 25% is pretty high to ensure that of course there is a very nice and good strategic feat, but also, we are mindful about paying the right price. And I think John, we have a unique opportunity between the $250 million of cash combined with, possible balance sheet leverage up to, I would say to 2.2 times EBITDA so about another 250 million to put something like health [Indiscernible] on the table to really accelerate our inorganic strategy.

Great. And just wanted to ask just about the about the solutions business and, and how and what you're seeing there. I mean, clearly, there's some traction and some success happening there. Any sort of categories or areas within kind of that elevated HR services you provide that are doing exceptionally well right now, or you feel like that, that, as we emerge post pandemic, that there's may or may be a more structural case to the growth potential.

I think it's more broad base. John, I think that companies coming out of the pandemic recognize the benefit of flexibility and also the outsourcing of noncore operations. And that's what we're seeing in terms of the demand. We're also seeing customers adopt our skilled professional solution which we launched last year in our professional and industrial segment, which basically allows them the opportunity to address the talent shortage in a less conventional way by using a outcome business model, and we're seeing excellent uptake of that solution, and we had, as I mentioned in my remarks, we have expectations for that business to continue to see growth in 2022.

Great, thank you so much.

Thanks, John.

Thanks, John.

Our next question is from Joe Gomes with NOBLE Capital. Please go ahead.

Good morning. And let me add my congratulations also for the transaction at the end of the year.

Thanks, Joe.

Just, you have a goal of growing revenue in nine and a half to 10 and a half for the full year. You came in a little bit shorter that, is that kind of a reflection on, the research in COVID? Going in late into the fourth quarter, or was there something else behind that? And, you did a much better job in restraining SG&A expenses versus what you were believing should be up on your guidance, just wondering what was behind that also, that all have to do with the restructuring benefits that we saw.

Yes, Joe, I'll let Olivier comment on the SG&A. I think the top line was particularly constrained as a result of Omicron in the fourth quarter, even starting in late third quarter, but in particular in the fourth quarter, in both our P&I and our Education segment. And the the absences and other implications for the availability of talent as well as vaccine mandates, and on-going supply chain disruptions created some headwinds in the fourth quarter that we think in 2022 are the worst is going to be behind us. So that's what I would attribute in terms of topline, I’ll let Olivier comment on the SG&A.

Yes. So and back to Q4, I would also mention again this impact of the 53rd week. So you need to think about, I mean, exiting 2021 at a revenue growth of about 6%, as I did mention, which is really putting about this one time, even the [Indiscernible] years, or so that we have to deal with an additional week. So seeing about more like 6%, including, of course of world but we don't say where we are, I would say at about three and a half. So we know that we need some acceleration that I would say otherwise, I think it was a pretty okay, run rate revenue wise in the fag end of 2021. On the SG&A yes, you're right. I mean, when you look at, no, we like to use incremental conversion rate, which is basically saying well, if we deliver $100 more of GP, how much we push to the bottom line. That has been challenging, I would say, up to Q3 of last year. We have started to show meaningful leverage in Q4, our so called ITR, incremental conversion rate was about 24%, 25%. We think we can do better, especially again in 2022. One of the reasons is basically, improvement in, I would say, our cost management, which is a little bit challenging in the recovery phase. The second thing is more on 2022, where we expect to benefit from this Q4 2021 action, the outcome would be savings starting in 2022 in excess of 10 million. And that combined with really focusing on productivity improvements, and efficiency in each business unit should continue to provide meaningful improvement in what we call leverage or incremental conversion rate as we move into 2022.

Okay, thank you for that. And you talk about the challenges in talent acquisition. And I was just thinking, if you look at the markets that you're in, and especially skill set, do you find yourself having a stronger candidate pool relative to your peers in any of these markets?

Well, I think in Education. In Education, notwithstanding the challenges of we believe we're best-in-class in terms of attracting talent in the Education space. In the lower, lower wage, it is a challenge. And we believe that as healthcare concerns abate with the putting Omicron behind us, schools gaining additional stabilization, so parents can come back to work, wages continue to increase, and they begin to look more attractive to people that may have stayed on the side lines. We think there is opportunity to increase the talent pool and fill the demand that, as we've indicated, for the last few quarters, continues to experience strong growth across all of our five segments.

Okay, I'll throw in one more, if I may since we're looking at the monetization investments here. How does that acquisition pipeline look today? What are we talking in terms of seeing in valuations? Is it more attractive? Or is it kind of gotten less attractive over the past, six or nine months?

Well the pipeline remains, I would say robust. Joe, the -- there was in 2021, probably a spike in properties on the market due to issues around potential tax changes. But the market is solid for identifying attractive properties. As Olivier mentioned earlier, we're not going to overpay. We will walk away from deals if the valuations are beyond what we think is reasonable. But the areas that we're particularly interested in are would be in our science, engineering, technology and telecom as reflected in our acquisition of Softworld. In the Education space, particularly in adjacencies, to our K-12 practice, and also opportunities in our OCG or OCG businesses demonstrated an ability to leverage and we think if there are properties that we can use to enhance our MSP or RPO practices. Again, assuming the valuation is appropriate; we would be interested in that area as well.

I would just add, knowing the caps [ph] that we have available now, combined balance sheet leverage and cash flow, say by transaction, we have half a billion of capital available. So as Peter was mentioning, during this prepared remarks, we have an opportunity to go bigger, bolder. So we are looking at properties at the level of software that is not more because we have to get there now to where we go bigger, bolder, and accelerate, our transformation, especially around getting…

Great. I really look forward to seeing how that all unfolds. I appreciate you guys taking the questions. Thank you.

Thanks, Joe.

Thank you, Joe.

Next, we'll go to the line of Kevin Steinke with Barrington Research. Please go ahead

Good morning.

Morning, Kevin.

Good morning. Just want to ask a little bit more about the top line growth outlook for 2020. Should we think of Mexico having a meaningful impact on that outlook for 2022? And also is there any impact from currency that you're building into that growth guidance?

Yes, I mean, I would comment of course, usually we give our guidance especially on revenue in nominal currency. When you look at Q4 the unfavorable impact was about 40 basis point. So I wouldn't, I would not see that as a major item in 2022 unless things are changing. Back to your point, but Mexico, if you think about Q4 of 2021 where we have for the first time the full impact of this new legislation. It did impact us by about 210 basis points on our top line as mentioned. So it's going to be something that is going to impact us in the quarters to come until we anniversary this change. We did accrue [Ph] in September of 2021. I think saying that, when you look at beyond the impact on revenue, it is a positive on our margin. It is partly why we have seen some GP rate improvement, especially in Q4 in our international business. So the impact on the gross profit dollar is much less than what we see in the revenue because, of course, it's an opportunity for Kelly. And this is what we do now to change basically the value proposition we offer to our customers in Mexico, and move to higher margin type of solutions, which is what we start to see and our GP rate over there is moving up. The last thing is that of course knowing the reduction in revenue in Mexico, which is about 70%, down in Q4, we have also adjusted our cost base to really reflect on the new business model we see now emerging. So I would say significant impact on the revenue, much less of an impact on GP dollar. And I would call it limited impact on the bottom line overall. But yes, on the revenue, I mean, we are going to continue to see that until we anniversary, this change in September.

Okay, thanks. And so that was helpful to relate it to the strategy in Mexico, it sounds like it still make sense to be in that market for you and just move up market to some higher margin solutions. Is that correct?

Yes.

Okay. And also thinking about the 2022 outlook, you mentioned, I think Olivier factoring in some potential customer changes to their workforce strategies within P&I and SET. I don't know if you could expand on that at all.

Yes Kevin, I'll let Olivier comment as well. But essentially in this challenging talent market, companies are modifying their historical use of contingent labor. For example, they are not across the board, but there are customers that, for example, are moving earlier to permanent placement of employees, as opposed to using contingent labor, because they are concerned about being able to attract and retain talent, given their own turnover. Some companies are moving towards converting our employees at a much higher rate than historical practices would be. And those are the kinds of changes due to the existing macro environment that could have an impact on in particular, top line revenue if companies are taking that approach. So those are the kinds of changes in business models that we're seeing. In some instances, we don't think it's a permanent change. We think it's just a reflection of the existing constraints talent market. And when things get more relaxed, we expect the companies will probably revert back to a more normal practice in terms of use of contingent labor.

Okay, yes that's helpful. And with that more aggressive stance by some customers on permanent hiring, I guess, how much does that factor into your gross margin outlook. You called out continued growth in permanent placement helping out gross margin and maybe just kind of what are you expecting, or how are you thinking about permanent placement growth in 2022?

Yes, basically when you think about the outlook, we project a GP rate of 19.4%, which is, which is about 70 basis points up versus 2021. Just for you to know 2021 versus 2020 we are up about 40 basis points, but you might remember that in 2020 our GP rate was favorably impacted by about 20 basis point coming from wage subsidies. So on the kind of like-for-like basis I would say the 40 basis points would be more like 60 basis points, so something very similar that we see for 2022. Of course, we don't expect the fees to continue to grow at the type of level we have seen now. I was sharing today that in Q4, our fee business is up 95% versus 2020 in Q4 of 2021, and more than 50% versus 2019. So, we know that with the talent shortage, we are going to continue to get good traction in the fee business. But we believe that, this dynamic is going to continue, but certainly to lower pace than what we have seen in 2021. So yes, we plan and we expect some fee business to continue to fund well, but not with the impact we have seen in 2021 certainly.

Okay, that's helpful. Just a couple more here for me. I think you also mentioned in your prepared comments about assuming continued impact of talent supply on the revenue growth outlook for 2022. Is there any way to frame that up in terms of the amount of impact you'd expect on growth? And is that something it sounded like, you're kind of assuming that that would persist throughout the year?

Well, Kevin, I don't know it persists throughout the year. I mean, we're not projecting that it's going to end immediately. As I mentioned earlier, we believe that the worst is behind us. We believe that as health care concerns with Omicron are in the rear view mirror, with schools being stabilized and open again on a more regular basis with wages increasing, we think the labor force participation rate rate is likely to continue to progress in the right direction. And that's good news for us. Because the demand we have, the issue is, is being able to fill all of the demand and the more people that are coming back to work, the better. So I don't necessarily foresee that it's going to persist through the year. I think we're going to continue to see gradual improvement throughout the year.

Yes, but probably and we did mention it today it’s going to be a little bit challenging, especially for Education, the early start of 2022. I think overall, the good news is wage inflation in Q4. We have seen wage inflation at about 11% in P&I as well as in Education. That's very helpful for us to be able to attract talents. It's one of the outcome of the discussions we have with some customers to help them realize the new market environment especially on in terms of supply. And interestingly in P&I we have seen also wage inflation at shy of 8% in Q4. So all that is good for us because inflation is good for us. But also because it's good, because it's really helpful to attract talents.

Right. Okay, that makes sense. And just lastly, the 4.5% to 5.5% growth in SG&A, you're expecting -- what's the base that we should roll that off of the 2021 base? Is it the adjusted number excluding restructuring charges?

Yes, I would say that's, that's exactly what we were referring to. Usually, it's really, excluding or structuring. So you should get there. That would be probably the best way to apply the run; we have a four and a half to five and a half.

Great, thank you. And congratulations on your APAC monetization and looking forward to continue to improvement in 2022.

Thanks, Kevin.

Thank you, Kevin.

Next, we'll go to Josh Vogel with Sidoti. Please go ahead.

Hey, good morning, Peter and Olivier. And yes, congratulations, certainly exciting news there with monetizing those APAC investments. And thanks for the helpful slide at the end of the deck just covering that in more detail. So you covered a lot of what like a lot of the questions I had and maybe I just want to build off some of the other questions that we just heard. But maybe going a little bit deeper into Q4, when I'm looking at the gross profit bridge, obviously a big tailwind from perm. I was just curious, how much was that above forecast when you issued the guidance coming out of Q3? Basically just like how much was baked into that guidance number?

Yes, I would say we were expecting a nice improvement year-over-year. But to little bit below, then what we are seen. So forth you have seen is of course, after the 80 basis points. This one was fully anticipated. Basically so far, we push our margin by about 50 basis points since acquisition. So Q2, Q3 Q4, I would say permanent placement 80 basis points we are usually cautious on that, because we have some visibility on term placement, but especially at the end of each year when you start to be close to year end some companies are some time putting a little bit of temporary stop on their recruitment. So usually, it's really difficult to forecast, Q4 especially the far end of Q4. We have seen traction [Indiscernible] anticipated especially at the front end of the year, which actually is good news. In them how we can bridge term placement from the front end of 2021 to 2022. The rest, I would say, we have always a little bit of movement in what is called employee related costs. It was a little bit more favorable than anticipated in Q4. But these are kinds of things where usually you can have like quarter quarterly fluctuation, but overall, we know on a more like couple of quarters, usually we anticipate well, sometime it's a little bit more difficult to look at just one specific quarter for employee related costs. So overall, slightly better than anticipated. But I would say, not massively different than what we're anticipating.

That's helpful. And certainly a tailwind from the employer related costs out of it. But you do mention that it was higher in SET. And I was just curious that, so that's just kind of like a one off, there?

Difficult to know, because we have several items, including healthcare and payroll tax workers comp. I would say probably some of it is more temporary than anything else. But there are a lot of things at play. So yes, I would say the majority of it is probably temporary, although we shall see.

Okay and you had some comments about wage inflation at P&I and Education. So I think you said was 8% and P&I 11% in Education? Does that mean your bill rates were up by those metrics or were they even better?

I would say, when you look at our spread in Education and P&I, basically, it's the same meaning we have done a good job and pushing this 11% plus wage inflation to our rate. And interestingly when you look at SET, in SET, we have done that meaning our spread did improve in Q4, meaning our bill rate went up at a faster pace and the roughly 8% wage inflation I was mentioning. And that's basically a good outcome because as you know organically said, we are really trying to get our deal weight moving up. And that's a very strong sign that you can see in Q4, where our spread is already moving up, in a very interesting way, which is basically further boosting the eight persons wage inflation. We have seen to reset.

All right, great. And I know there's a lot of questions already on the revenue guidance outlook you gave and understanding Mexico be a little bit of a headwind, but just looking at the other moving parts. What -- how much of software because there's an extra quarter of software and how much does that add? And then also, what are your expectations about wage inflation and bill rate improvement that's built into that full year outlook?

Yes, so on software you ever seen that basically, if you look at Q4 software did provide about a boost of about 290 basis points of growth. So we are going to see that again in Q1 2022 unless and until we anniversary the acquisition of Softworld on April the fifth. So I would say if you think about the impact, I mean, roughly speaking, very high level you can take 290 basis points divided by four, because you're going to be -- sorry, divided by no, it should be sorry, I'm making the mess as we speak 290 basis point for Q1, but it's going to be only Q1 in 2022 of course. Sorry for the mix up. The -- for inflation, we usually are more careful than what we see. Meaning to be clear, we have not forecasted the type of wage inflation I was sharing with you today. Like 11% in Education, 11% in P&I, we believe that you can slow down because of the current environment, the improvement of the supply and demand balance. And also because we believe inflation, also now at 7.5% in January is going to ease. So usually we are pretty cautious. So I would say we are far below the 11% we are mentioning today. And that may be a surprise, a positive surprise on revenue, especially at the beginning of 2022. But again, usually judge we are cautious on not baking too much on very, very high type of double digit wage inflation.

Now understood thank you. And just last one, kind of more housekeeping and for the benefit of those of us building out the models here. With the Class A and B repurchase, what share count should we -- would they lose a share count should we be using on the income statement? What does that do to the equity section on the balance sheet?

Yes, I mean, the -- so it's basically roughly 1.6 million shares. I mean, to be precise, I think it's mainly A shares and B shares is some like 1470 something so negligible. So the majority is 1.6 million is really A shares. It's about 4% of our outstanding shares. So it's going to have an impact on EPS, but I wouldn't call it major impact when you get EPS in the future.

Okay, great. Well, thank you again, and congrats on the APAC related news.

Thanks, Josh. Appreciate it.

Thank you, Josh.

And, Mr. Quigley, we have no further questions in queue at this time.

Okay John, thank you very much. Appreciate your support. And I think we can end the call.

Thank you, John. Thank you all.

Yes, you're very welcome. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.