KELLY SERVICES INC
For the period ended Sep 27, 2026. Filed Nov 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 27, 2026 · Filed Nov 5, 2026
KELYB$25.55-4.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-28; filed 2026-08-06.
0000055135-26-000161
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-27; filed 2026-11-05.
0000055135-26-000173
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 79 current paragraphs.
28 unchanged; 39 reworded; 9 added; 3 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
In the third quarter, we delivered results that reflect positive trends across much of the portfolio. We achieved a third consecutive quarter of sequential revenue improvement on a year-over-year basis as we capitalized on increasingly constructive demand trends and as the impact of the previously disclosed discrete impacts continued to diminish. Our results reflect improvement in our gross profit margin and continued SG&A discipline.
Current report
ETM pivoted to positive reported revenue growth on a year-over-year basis in the quarter. Talent Solutions grew on a year-over-year basis for the third consecutive quarter, driven by strong demand for our MSP and RPO offerings. While reported Staffing revenue declined year-over-year, strong demand for temporary talent across our client base contributed to another quarter of positive revenue growth in Staffing on an underlying basis excluding the discrete impacts.
Current report
SET delivered another quarter of sequential revenue improvement driven by double-digit growth in Outcome-Based Solutions and Permanent Placement revenue on a year-over-year basis, although total SET revenue decreased year-over-year. Across SET’s specialties, Science delivered another quarter of revenue growth, Engineering pivoted to growth on healthy pipeline conversion, and Technology continued to strengthen driven by demand for Outcome-Based Solutions.
Current report
In Education, year-over-year revenue trends reflect continued enrollment pressure in key K-12 public school districts to begin the new school year, and shifts in the mix of roles placed in the quarter. These dynamics offset renewal momentum and net new business wins that Education delivered in the second quarter. In each business, we continued to align resources with demand and maintained a disciplined approach to expense management overall.
Current report
Our performance in the quarter reflects growing operational momentum as we continue to execute our growth and efficiency initiatives. We remain well positioned to capitalize on improving demand trends, driving profitable growth and long-term value creation.
Current report
The goodwill impairment charge of $102.0 million in the third quarter of 2025 was primarily driven by reduced demand, integration of MRP and Softworld acquisitions and the realignment of reporting units in the SET segment.
Current report
The goodwill impairment charge of $102.0 million for the first nine months of 2025 was primarily driven by reduced demand, integration of MRP and Softworld acquisitions and the realignment of reporting units in the SET segment.
Current report
Education SG&A expenses excluding depreciation and amortization were flat in the third quarter of 2026 as compared to the prior year primarily due to expense management actions.
Current report
Corporate expenses were flat in the third quarter of 2026 as compared to the prior year primarily due to expense management actions.
Removed paragraphs (3)
Previous report
In the second quarter, we delivered sequential improvement in each business across Kelly. The discrete impact of demand reductions among three large ETM customers and the U.S. federal government, which we initially disclosed in the second quarter of 2025, is lessening but remains visible in our results. Trends among these customers who continue to do business with Kelly remained stable on a sequential basis.
Previous report
In ETM, staffing revenue excluding the discrete impacts returned to positive year-over-year growth driven by broad-based demand across customers and verticals, Business Process Outsourcing excluding contact center solutions also pivoted to growth in the quarter and Talent Solutions delivered another quarter of revenue growth as new customer wins came online and demand continued to increase. In SET, trends in each specialty vertical improved compared to the first quarter, with the Telecom specialty delivering another quarter of year-over-year growth. In Education, results improved modestly on a sequential basis while we continued to experience pressure from prior year delayed contract decisions and enrollment declines. In each business, we continued to align resources with demand and maintained a disciplined approach to expense management overall as part of our ongoing focus on efficiency.
Previous report
Our ability to deliver sequential improvement across the enterprise while driving progress on our strategic initiatives in the second quarter reflects our enhanced focus on execution and operational discipline. Our progress will position us to capitalize on improving demand trends, and driving profitable growth and long-term value creation.
Reworded paragraphs (39)
Previous wording
Revenue from services in the second quarter decreased 5.8% year-over-year with decreases in the ETM, SET, and Education segments. Compared to the second quarter of 2025, the decrease is primarily due to declines in revenue from staffing services of 9.5%, partially offset by increases in revenue from talent solutions of 6.3% from the prior year.
Current wording
Revenue from services in the third quarter decreased 0.8% year-over-year with decreases in the SET and Education segments, offset by an increase in the ETM segment. Compared to the third quarter of 2025, the decrease is primarily due to declines in revenue from staffing services of 6.5%, partially offset by increases in revenue from talent solutions of 11.6% from the prior year.
Previous wording
Gross profit decreased 6.0% year-over-year, primarily driven by lower revenue volume. The gross profit rate decreased 10 basis points (“bps”) to 20.4%, primarily due to changes in business mix, partially offset by lower employee-related costs. The gross profit rate decreased in the SET and Education segments and increased in the ETM segment.
Current wording
Gross profit increased 0.2% year-over-year, largely driven by higher permanent placement fees. The gross profit rate increased 20 basis points (“bps”) to 21.0%, primarily due to higher permanent placement fees and lower employee-related costs, partially offset by changes in business mix. Permanent placement revenue has very low direct costs of services and has a disproportionate impact on gross profit rates. The gross profit rate decreased in the SET and Education segments and increased in the ETM segment.
Previous wording
Total SG&A expenses decreased 5.5% year-over-year, primarily due to expense management actions to reduce volume-related costs, and reflects the benefits of the ongoing structural actions including integration and realignment efforts. SG&A expenses in the second quarter of 2026 include $2.9 million of integration and realignment costs related to continuation of ongoing initiatives and $0.3 million of executive transition charges. Included in SG&A expenses in the second quarter of 2025 were $6.0 million of integration and realignment costs related to initiatives to integrate MRP and align our processes, $0.2 million of executive transition charges, and $0.1 million of transaction-related costs arising from the sale of our EMEA staffing operations. Excluding integration and realignment, transaction, executive transition charges, and depreciation and amortization, SG&A expenses decreased 4.0% from the prior year.
Current wording
Total SG&A expenses decreased 0.4% year-over-year, primarily due to expense management actions to reduce volume-related costs, partially offset by an increase in intangible amortization expense. SG&A expenses in the third quarter of 2026 include $5.1 million of integration and realignment costs related to continuation of ongoing initiatives, $0.1 million of executive transition costs, and $0.1 million of transaction costs primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Included in SG&A expenses in the third quarter of 2025 were $3.1 million of integration and realignment costs related to initiatives to integrate MRP and align our processes, $0.8 million of executive transition costs, and $0.4 million of transaction costs arising from the sale of our EMEA staffing operations. Excluding integration and realignment, transaction costs, executive transition costs, and depreciation and amortization, SG&A expenses decreased 2.5% from the prior year.
Previous wording
The asset impairment charge of $2.2 million in the first quarter of 2026 relates to certain right-of-use assets and reflects our ongoing realignment of our lease portfolio.
Current wording
The asset impairment charge of $0.2 million in the third quarter of 2026 relates to certain right-of-use assets and reflects our ongoing realignment of our lease portfolio.
Previous wording
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the second quarter of 2025, we recognized a gain of $4.0 million upon the settlement of working capital and other adjustments.
Current wording
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the third quarter of 2025, we recognized a gain of $0.3 million upon the settlement of working capital and other adjustments.
Previous wording
Income tax expense was $3.0 million for the second quarter of 2026 compared to income tax expense of $0.9 million for the second quarter of 2025, driven by changes in pretax income and the benefit of work opportunity tax credits in the second quarter of 2025.
Current wording
Income tax expense was $1.2 million for the third quarter of 2026 compared to income tax expense of $46.4 million for the third quarter of 2025. The decrease was primarily driven by the non-recurring valuation allowance and goodwill impairment charges recorded in the third quarter of 2025, partially offset by the tax effect of changes in pretax income largely attributable to the goodwill impairment in 2025 and lower work opportunity tax credit benefit in 2026 compared to 2025.
Previous wording
Revenue from services June year-to-date 2026 decreased 8.3% year-over-year with decreases in the ETM, SET, and Education segments. Compared to the June year-to-date 2025, the decrease is primarily due to declines in revenue from staffing services and outcome-based services of 11.2% and 5.0%, respectively, partially offset by growth in revenue from talent solutions of 4.7%.
Current wording
Revenue from services September year-to-date 2026 decreased 6.1% year-over-year with decreases in the ETM, SET, and Education segments. Compared to September year-to-date 2025, the decrease is primarily due to declines in revenue from staffing services and outcome-based services of 9.9% and 1.0%, respectively, partially offset by growth in revenue from talent solutions of 7.1%.
Previous wording
Gross profit decreased 11.6%, largely driven by lower revenue volume. The gross profit rate decreased 80 bps to 19.6%, primarily due to higher employee-related costs in the beginning part of the year.
Current wording
Gross profit decreased 8.1%, largely driven by lower revenue volume. The gross profit rate decreased 40 bps to 20.1%, primarily due to higher employee-related costs in the beginning part of the year and changes in business mix, partially offset by higher permanent placement fees. Permanent placement revenue has very low direct costs of services and has a disproportionate impact on gross profit rates. The gross profit rate decreased in all segments.
Previous wording
Total SG&A expenses decreased 8.7%, primarily due to expense management actions to reduce volume-related costs and reflects the benefits of the ongoing structural actions including integration and realignment efforts. SG&A expenses in the first six months of 2026 include $7.6 million of integration and realignment costs related to continuation of ongoing initiatives, $1.8 million of executive transition charges and $0.8 million of transaction costs primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Included in SG&A expenses in the first six months of 2025 were $16.7 million of integration costs related to initiatives to integrate MRP and align our processes, $0.5 million of executive transition charges and $0.4 million of transaction costs related to the sale of our EMEA staffing operations.
Current wording
Total SG&A expenses decreased 6.2%, primarily due to expense management actions to reduce volume-related costs and reflects the benefits of the ongoing structural actions including integration and realignment efforts. SG&A expenses in the first nine months of 2026 include $12.7 million of integration and realignment costs related to continuation of ongoing initiatives, $1.9 million of executive transition costs and $0.9 million of transaction costs primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Included in SG&A expenses in the first nine months of 2025 were $19.8 million of integration costs related to initiatives to integrate MRP and align our processes, $1.3 million of executive transition costs and $0.8 million of transaction costs related to the sale of our EMEA staffing operations. Excluding integration and realignment, transaction costs, executive transition costs, and depreciation and amortization, SG&A expenses decreased 5.8% from the prior year.
Previous wording
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the first six months of 2025, we recognized a gain of $4.0 million upon the settlement of working capital and other adjustments.
Current wording
The gain on sale of EMEA staffing operations relates to the January 2024 sale. In the first nine months of 2025, we recognized a gain of $4.3 million upon the settlement of working capital and other adjustments.
Previous wording
Income tax expense was $2.2 million for the first six months of 2026 compared to income tax expense of $2.7 million for the first six months of 2025, with the change primarily driven by changes in pretax income and the benefit of work opportunity tax credits in the first six months of 2025.
Current wording
Income tax expense was $3.4 million for the first nine months of 2026 compared to income tax expense of $49.1 million for the first nine months of 2025. The decrease was primarily driven by the non-recurring valuation allowance and goodwill impairment charges recorded in the third quarter of 2025, partially offset by the tax effect of changes in pretax income largely attributable to the goodwill impairment in 2025 and lower work opportunity tax credit benefit in 2026 compared to 2025.
Previous wording
The decrease in ETM revenue from services of 6.0% was primarily driven by a decrease of 10.0% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 9.3% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025. Permanent placement fees decreased 41.4%, reflecting lower market demand. These decreases were partially offset by an increase of 6.3% in talent solutions driven by new customer wins and volume increases.
Current wording
The increase in ETM revenue from services of 2.4% was primarily driven by an increase of 11.6% in talent solutions driven by new customer wins and volume increases and an increase of 19.0% in permanent placement fees. These increases were partially offset by a decrease of 1.2% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 0.6% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025.
Previous wording
The decrease in SET revenue from services of 8.9% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to U.S. federal government contractors and IT services, partially offset by an increase in permanent placement fees.
Current wording
The decrease in SET revenue from services of 2.0% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to IT services, partially offset by an increase in permanent placement fees.
Previous wording
The decrease in Education revenue from services of 4.4% was driven primarily by a reduction in demand in key markets due to declines in student enrollment.
Current wording
The decrease in Education revenue from services of 6.4% was driven primarily by a reduction in demand in key markets.
Previous wording
The decrease in ETM revenue from services of 9.6% was primarily driven by a decrease of 13.5% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 14.8% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025. Permanent placement fees decreased 32.7%, reflecting lower market demand. These decreases were partially offset by an increase of 4.7% in talent solutions driven by new customer wins and volume increases.
Current wording
The decrease in ETM revenue from services of 5.8% was primarily driven by a decrease of 9.6% in staffing services resulting from lower hours volume primarily at certain large customers and a decrease of 10.6% from outcome-based services primarily due to the relationship exit of a large contact-center customer that ended as of the third quarter of 2025. Permanent placement fees decreased 17.8%, reflecting lower market demand. These decreases were partially offset by an increase of 7.1% in talent solutions driven by new customer wins and volume increases.
Previous wording
The decrease in SET revenue from services of 6.1% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to U.S. federal government contractors and IT services, partially offset by an increase in permanent placement fees.
Current wording
The decrease in SET revenue from services of 6.7% was primarily driven by declines in hours volume in our staffing specialties, largely from changes in demand related to U.S. federal government contractors and IT services, partially offset by an increase in permanent placement fees.
Previous wording
The decrease in Education revenue from services of 4.6% was driven primarily by the impact of prior year delayed contract decisions, weather-related school closures and a reduction in demand in key markets due to declines in student enrollment.
Current wording
The decrease in Education revenue from services of 5.0% was driven primarily by the impact of prior year delayed contract decisions, weather-related school closures and a reduction in demand in key markets due to declines in student enrollment.
Previous wording
Gross profit for ETM decreased on lower revenue volume. The gross profit rate increased by 50 bps primarily due to lower employee-related costs, partially offset by lower permanent placement fees.
Current wording
Gross profit for ETM increased on higher revenue volume. The gross profit rate increased by 40 bps primarily due to lower employee-related costs.
Previous wording
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 50 bps primarily due to changes in business mix and higher employee-related costs, partially offset by higher permanent placement fees.
Current wording
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 30 bps primarily due to changes in business mix and higher employee-related costs, partially offset by higher permanent placement fees.
Previous wording
Gross profit for the ETM segment decreased on lower revenue volume. The gross profit rate decreased by 50 bps primarily due to higher employee-related costs.
Current wording
Gross profit for the ETM segment decreased on lower revenue volume. The gross profit rate decreased by 30 bps primarily due to higher employee-related costs and lower permanent placement fees.
Previous wording
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 40 bps primarily due to changes in business mix, partially offset by lower employee-related costs and higher permanent placement fees.
Current wording
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 40 bps primarily due to changes in business mix and higher employee-related costs, partially offset by higher permanent placement fees.
Previous wording
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 50 bps, primarily due to higher employee-related costs and lower permanent placement fees.
Current wording
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 100 bps primarily due to higher employee-related costs and changes in business mix.
Previous wording
The 4.4% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Current wording
The 2.6% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and expense management actions.
Previous wording
The 12.4% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Current wording
The 2.1% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Previous wording
The 9.4% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and lower shared service costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Current wording
The 7.3% decrease in ETM SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and lower shared service costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Previous wording
The 7.8% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Current wording
The 9.3% decrease in SET SG&A expenses excluding depreciation and amortization was primarily due to lower salary-related costs and performance-based incentive compensation as a result of operating efficiencies and expense management actions in response to lower revenue volume compared to the prior year.
Previous wording
The 0.8% decrease in Education SG&A expenses excluding depreciation and amortization primarily related to lower performance-based incentive compensation.
Current wording
The 0.5% decrease in Education SG&A expenses excluding depreciation and amortization primarily related to lower performance-based incentive compensation.
Previous wording
The 3.4% decrease in Corporate expenses was primarily driven by lower integration, realignment, and restructuring charges, partially offset by investment in the Growth Office and other corporate initiatives in the first six months of 2026 as compared to the prior year.
Current wording
The 2.2% decrease in Corporate expenses was primarily driven by lower integration, realignment, and restructuring charges, partially offset by investment in the Growth Office and other corporate initiatives in the first nine months of 2026 as compared to the prior year.
Previous wording
ETM business unit profit increased compared to the prior year due to lower SG&A expenses. SET and Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses.
Current wording
ETM and Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses. SET business unit profit increased primarily due to a non-recurring goodwill impairment charge recorded in the prior year. Excluding the goodwill impairment charge, SET decreased compared to the prior year due to lower revenue and gross profit, partially offset by lower SG&A expenses.
Previous wording
Cash, cash equivalents and restricted cash totaled $28.0 million at the end of the second quarter of 2026 and $37.7 million at year-end 2025. As further described below, we generated $23.8 million of cash from operating activities, generated $0.2 million of cash from investing activities and used $31.2 million of cash for financing activities.
Current wording
Cash, cash equivalents and restricted cash totaled $26.3 million at the end of the third quarter of 2026 and $37.7 million at year-end 2025. As further described below, we used $30.7 million of cash for operating activities, generated $9.2 million of cash from investing activities and generated $10.0 million of cash from financing activities.
Previous wording
In the first six months of 2026, we generated $23.8 million of net cash from operating activities, as compared to generating $119.3 million in the first six months of 2025. The decrease was primarily due to higher working capital requirements as compared to the same period of the prior year.
Current wording
In the first nine months of 2026, we used $30.7 million of net cash for operating activities, as compared to generating $94.0 million in the first nine months of 2025. The decrease was primarily due to higher working capital requirements as compared to the same period of the prior year.
Previous wording
Trade accounts receivable totaled $1.2 billion at the end of the second quarter of 2026. Global DSO was 61 days at both second quarter-end 2026 and year-end 2025.
Current wording
Trade accounts receivable totaled $1.3 billion at the end of the third quarter of 2026. Global DSO was 68 days at the end of the third quarter of 2026 and 61 days at year-end 2025.
Previous wording
Our working capital position (total current assets less total current liabilities) was $429.9 million at the end of the second quarter of 2026, a decrease of $16.6 million from year-end 2025. The current ratio (total current assets divided by total current liabilities) was 1.5 at the end of the second quarter of 2026 and 1.5 at year-end 2025.
Current wording
Our working capital position (total current assets less total current liabilities) was $486.3 million at the end of the third quarter of 2026, an increase of $39.8 million from year-end 2025. The current ratio (total current assets divided by total current liabilities) was 1.5 at the end of the third quarter of 2026 and at year-end 2025.
Previous wording
In the first six months of 2026, we generated $0.2 million of cash from investing activities, as compared to generating $24.7 million in the first six months of 2025. Cash generated by investing activities in the first six months of 2026 is primarily driven by $2.7 million of proceeds from company-owned life insurance, partially offset by $2.6 million of capital expenditures. Included in the cash generated by investing activities in the first six months of 2025 is $21.8 million of proceeds from the sale of our EMEA staffing operations, $6.4 million of cash from the sale of the PersolKelly investment and $1.6 million of proceeds from company-owned life insurance, partially offset by $4.5 million of cash used for capital expenditures.
Current wording
In the first nine months of 2026, we generated $9.2 million of cash from investing activities, as compared to generating $21.9 million in the first nine months of 2025. Cash generated by investing activities in the first nine months of 2026 is primarily driven by $13.7 million of proceeds from company-owned life insurance, partially offset by $4.3 million of cash used for capital expenditures. Included in the cash generated by investing activities in the first nine months of 2025 is $21.8 million of proceeds from the sale of our EMEA staffing operations, $6.4 million of cash from the sale of the PersolKelly investment and $1.6 million of proceeds from company-owned life insurance, partially offset by $6.8 million of cash used for capital expenditures.
Previous wording
We used $31.2 million of cash for financing activities in the first six months of 2026, as compared to using $172.7 million in the first six months of 2025. The change in cash used from financing activities was primarily driven by lower net repayments of $23.8 million on our credit facilities in 2026 compared to net repayments of $165.1 million on our credit facilities in 2025. Dividends paid per common share were $0.075 in each of the first two quarters of 2026 and 2025.
Current wording
We generated $10.0 million of cash from financing activities in the first nine months of 2026, as compared to using $131.4 million in the first nine months of 2025. The change in cash generated from financing activities was primarily driven by net proceeds of $20.6 million on our credit facilities in 2026 compared to net payments of $121.0 million on our credit facilities in 2025. Dividends paid per common share were $0.075 in each of the first three quarters of 2026 and 2025.
Previous wording
Debt-to-total capital (total debt reported in the consolidated balance sheet divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 7.4% at the end of the second quarter of 2026 and 9.4% at year-end 2025.
Current wording
Debt-to-total capital (total debt reported in the consolidated balance sheets divided by total debt plus stockholders’ equity) is a common ratio to measure the relative capital structure and leverage of the Company. Our ratio of debt-to-total capital was 11.1% at the end of the third quarter of 2026 and 9.4% at year-end 2025.
Previous wording
As of second quarter-end 2026, we had $150.0 million of available capacity on our $150.0 million revolving credit facility and $129.3 million of available capacity on our $250.0 million securitization facility. The revolving credit facility carried no long-term borrowings on the floating or term benchmark lines of credit. The securitization facility carried $78.1 million of long-term borrowings and $42.6 million of standby letters of credit related to workers’ compensation. The credit facilities also include provisions that would allow for expansion of our combined borrowing capacity by $250.0 million.
Current wording
As of third quarter-end 2026, we had $150.0 million of available capacity on our $150.0 million revolving credit facility and $84.9 million of available capacity on our $250.0 million securitization facility. The revolving credit facility carried no long-term borrowings on the floating or term benchmark lines of credit. The securitization facility carried $122.5 million of long-term borrowings and $42.6 million of standby letters of credit related to workers’ compensation. The credit facilities also include provisions that would allow for expansion of our combined borrowing capacity by $250.0 million.
Previous wording
Together, the revolving credit and securitization facilities provide us with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions. We believe our cash flow from operations, the availability of liquidity under our credit facilities, including the expansion provisions which allows us to increase our borrowing capacity and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements, while maintaining sufficient liquidity for normal operating purposes. As of second quarter-end 2026, we met the debt covenants related to our revolving credit facility and securitization facility.
Current wording
Together, the revolving credit and securitization facilities provide us with committed funding capacity that may be used for general corporate purposes subject to financial covenants and restrictions. We believe our cash flow from operations, the availability of liquidity under our credit facilities, including the expansion provisions which allow us to increase our borrowing capacity and our ability to access capital from financial markets will be sufficient to meet our anticipated cash requirements, while maintaining sufficient liquidity for normal operating purposes. As of third quarter-end 2026, we met the debt covenants related to our revolving credit facility and securitization facility.
Previous wording
As of second quarter-end of 2026, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.1 million, under which we had no borrowings. Details of our debt facilities are contained in the Debt footnote in the notes to our consolidated financial statements.
Current wording
As of third quarter-end 2026, we had additional unsecured, uncommitted short-term local credit facilities totaling $3.0 million, under which we had no borrowings. Details of our debt facilities are contained in the Debt footnote in the notes to our consolidated financial statements.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The asset impairment charge of $2.4 million for the first nine months of 2026 relates to certain right-of-use assets and reflects our ongoing realignment of our lease portfolio.
Current report — wording carried from elsewhere
The SET gross profit decreased on lower revenue volume. The gross profit rate decreased by 10 bps primarily due to changes in business mix, partially offset by higher permanent placement fees.
Current report — wording carried from elsewhere
ETM business unit profit increased compared to the prior year due to higher revenue and gross profit along with lower SG&A expenses. SET business unit profit increased primarily due to a non-recurring goodwill impairment charge recorded in the prior year. Excluding the goodwill impairment charge, SET decreased compared to the prior year due to lower revenue and gross profit, partially offset by lower SG&A expenses. Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Gross profit for the Education segment decreased on lower revenue volume. The gross profit rate decreased by 120 bps primarily due to higher employee-related costs and lower permanent placement fees.
Previous report — wording carried elsewhere
The 11.3% decrease in Corporate expenses was primarily driven by lower integration, realignment, and restructuring charges in the second quarter of 2026 as compared to the prior year.
Previous report — wording carried elsewhere
The 0.8% decrease in Education SG&A expenses excluding depreciation and amortization primarily related to lower performance-based incentive compensation.
Previous report — wording carried elsewhere
ETM, SET, and Education business unit profit decreased compared to the prior year primarily due to lower revenue and gross profit, partially offset by lower SG&A expenses.