Kelly Services Inc (KELYB) 2025 Q4 法說會逐字稿

Good morning, and welcome to the Kelly Services fourth-quarter and full-year conference call. (Operator Instructions) Today's call is being recorded at the request of Kelly Services. (Operator Instructions)

I would now like to turn the meeting over to your host, Mr. Scott Thomas, Kelly's Head of Investor Relations. Please go ahead.

Good morning, and welcome to Kelly's fourth-quarter and full-year conference call. With me today are Kelly's Chief Executive Officer, Chris Layden; and our Chief Financial Officer, Troy Anderson.

Before we begin, I'll remind you that the comments made during today's call, including the Q&A session, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments. We do not assume any 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, we'll discuss certain data 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. For more information regarding non-GAAP measures and other required disclosures, please refer to our earnings press release, presentation and once filed Form 10-K all of which can be accessed through our Investor Relations website at ir.kellyservices.com.

With that, I'll turn the call over to Chris.

Thank you, Scott, and good morning, everyone. Before I discuss Kelly's performance in the fourth quarter, I'd like to reflect on the recent developments that mark an important moment on the company's journey. On January 30, we announced that Kelly had entered an agreement with Hunt companies related to its purchase of the controlling stake of our Class B common stock. In conversations with Hunt, it's clear they see many of the same opportunities I saw as I consider joining the company as CEO, an iconic brand to build upon, a strong balance sheet with consistent free cash flow, a clear pathway to accelerate growth and significant value to be unlocked. I welcome their support as we pursue these opportunities and realize Kelly's full potential.

As part of the agreement, our Board has been reconstituted and 4 new board members have been appointed. Our new directors bring extensive experience, which positions them to be strong contributors to the Board as we drive progress on Kelly's strategic journey. I look forward to engaging with them and continuing to work with the entire Board to create lasting value for all of our stakeholders. Now let's review the highlights from our performance in the fourth quarter. Starting first with the broader macroeconomic environment.

The dynamics that shaped our results through the third quarter persisted in the fourth quarter. Employers continue to take a cautious approach to hiring amid a mixed labor market. At the same time, we capitalized on positive trends in each segment, which were reflected in our performance in the quarter. Kelly delivered revenue at the top end of our expectations as we doubled down on our commitment to stabilize the company's performance and enhance how we're going to market as one Kelly enterprise. We achieved continued year-over-year growth in Education, driven by solid demand for K-12 and therapy specialties.

In SET, we delivered top line growth on a year-over-year basis in our telecom specialty and sequential revenue stability in Life Sciences. In an ETM, we achieved stable sequential revenue performance in our staffing, MSP and BPO specialties, excluding contact center solutions. Across the enterprise, we continue to align resources with demand and maintained a disciplined approach to expense management. These results also reflect our deliberate shift towards customer centricity. My time in the field with our customers and talent has reinforced how this approach unlocks value for employers and for Kelly.

Recently, I visited with the CEO of a consumer technology company that is designing and building some of the world's most advanced audio solutions. I had the opportunity to see firsthand how Kelly has helped evolve their workforce as they've scaled advanced manufacturing capacity in the U.S. to meet growing demand. When our relationship began 8 years ago, they produced 10,000 units a year. Today, that number has grown to 4 million with our team supporting key work streams from R&D to final production and distribution.

As they have invested in advanced robotics and capital equipment, our workforce has evolved alongside them, learning new skills, adapting to new processes and helping them scale production in the U.S. As more manufacturers ramp up domestic capital investments and reshore operations, Kelly is well positioned to capitalize, leveraging our differentiated solutions, a customer-centric delivery model and market leadership in North America. Parallel to these efforts, we reached a significant milestone in our technology modernization initiative that will power our growth well into the future. In December, our acquisitions in SET successfully completed the cutover from their legacy technology stack to the modernized platform Kelly acquired through our acquisition of MRP. This marks the first of a multiphase strategy to move our enterprise from a fragmented and outdated mix of front, middle and back-office technologies to a unified best-in-class platform.

With our SET acquisitions fully operational within the platform, the business is now benefiting from deeper data and insights, AI and automation at scale and enhance productivity. These benefits will extend across SET and the enterprise as we execute on our phased approach with the majority of Kelly's businesses and functions slated to be operational within the platform in 2027. With our technology modernization initiative gaining momentum, we also accelerated the integration of AI across the enterprise. In the fourth quarter, we launched a proprietary internal AI platform, GRACE boost, to every employee at Kelly. This is the latest iteration of GRACE, a stand-alone J&I tool, which we initially deployed nearly 2 years ago to simplify sales and recruiting workflows.

With Boost, we've taken its capabilities a step further including directly integrating AI into the applications our people use every day. This integration eliminates swivel chair processes a limited option while improving its ability to learn users' workflows, provide contextual assistance and ultimately enhance productivity. As we continue to double down on customer centricity, we're also leveraging AI to enhance the customer and talent experience directly. During the quarter, we deployed a tailored AI recruiting solution with a large multinational manufacturing customer, enabling them to rapidly staff a key assembly line. The AI agent calls, screens and answers questions from applicants helping our recruiters hone in on top candidates and accelerate the hiring process, and the results have exceeded our expectations.

Talent feedback has been overwhelmingly positive. Customer satisfaction has improved meaningfully, and we're meeting their needs faster and at a lower cost. The solution is highly configurable and scalable and we're pursuing opportunities to deploy it to additional customers. These examples reflect Kelly's focus on practical applications that put AI directly in the hands of our employees and our customers to solve real business challenges leveraging the combined power of people and technology to deliver results with clear alignment to our strategy. We're also aligning our leadership team to accelerate growth.

Yesterday, we announced the appointment of Pat McCall as Kelly's Chief Growth Officer. Pat brings 30 years of sales and operations experience and a proven track record, accelerating profitable growth and leading global staffing and IT services firms. In this newly created role, he will help bring to bear the full strength of Kelly's portfolio, working across the enterprise to strengthen large enterprise account management and expand new customer acquisition. We're pleased to welcome him to the team, and we look forward to his contributions towards Kelly's growth strategy. Additionally, we announced in the fourth quarter the initiation of a comprehensive search for the next President of SET.

Kelly has engaged a nationally recognized firm to conduct a search for a proven leader with significant experience in enhancing go-to-market strategies capitalizing on opportunities created by AI in driving profitable growth. I'm excited about the caliber of candidates we're speaking to, and I look forward to sharing an update soon when our process concludes. The positive momentum we generated in the fourth quarter has set Kelly on the right path entering 2026. As we carry forward this momentum, we remain confident in our strategy, underpinned by a strong balance sheet, healthy cash generation and a balanced approach to capital allocation. In a moment, I'll share more on our priorities for the year.

First, I'll turn it over to Troy to provide more details on the results in the quarter and for the full year.

Thank you, Chris, and good morning, everybody. For the fiscal year, revenue totaled $4.25 billion which was down 1.9% overall and roughly flat, excluding acquisitions and discrete impacts from reduced demand from the federal government and 3 top customers, which we have discussed in prior quarters. For the fourth quarter of 2025, revenue totaled $1.1 billion, a decrease of 11.9% versus Q4 of last year or down 3.9% on an underlying basis, excluding the discrete impacts. As a reminder and brief update regarding these impacts, federal government demand largely stabilized in Q3 with a modest sequential decline in Q4, mainly due to seasonality. For the 3 top customers, one stabilized at the current reduced demand levels beginning in Q3, one fully ran off in August and the largest one remains one of our top customers and saw continued demand reductions throughout Q4, and could see some further reduction in 2026.

At the segment level, Education grew 1.3% reflecting continued fill rate improvement. SET's underlying revenue declined 5.4% in the quarter, which was modestly better than our expectations and reflects demand pressure within information technology and other key specialties partially offset by growth in telecom. Underlying ETM also declined 5.4% and was modestly better than our expectations with varying levels of declines across the primary specialty areas. On an absolute basis, underlying ETM revenue has been relatively consistent across the quarters throughout 2025. For Q4 revenue by service type, staffing services reflects modest growth in our Education business and pressure from government, large customer and macro environment impacts in SET and ETM.

Our outcome-based offerings, excluding contact center solutions were down year-over-year, reflecting timing of project demand and new business within SET and ETM. Talent Solutions was down year-over-year, reflecting a mix of performance across the individual specialties. Perm fees represented approximately 1% of revenue, which was consistent with the prior year. Reported gross profit was $197 million, down 18.4% versus the prior year quarter reflecting the lower revenue performance, along with increased employee-related costs and business mix changes in the quarter. The employee-related costs were driven primarily by health care and workers' compensation claims expense as well as certain impacts related to the large customer runoffs.

The gross profit rate was 18.8%, a decrease of 150 basis points compared to the prior year quarter. Education's GP rate held flat at 14.2%, while SET at 24.2% declined 130 basis points and ETM at 18.1% declined 220 basis points. We made significant progress improving our SG&A expense profile in the quarter with reported SG&A expenses of $198.5 million, a decrease of 8.7%. On an adjusted basis, SG&A expenses decreased 11.1% year-over-year, reflecting the momentum we are gaining on structural and volume-related cost optimization efforts. Expenses decreased across all the segments as we continue to drive durable and sustainable efficiencies in our operating model through technology enhancements and process efficiencies, including leveraging AI.

Reduced incentive compensation expenses also contributed to the decline in the quarter. Existing initiatives like the continued realignment within the ETM segment and integration of MRP and other acquisitions within SET are progressing well and will drive increased go-to-market and cost efficiencies going forward. In connection with our various efforts, we recognized $9.8 million of charges in the quarter. These included costs associated with improving technology and processes across the enterprise as well as severance expenses and executive transition costs. We expect to incur certain of these expenses through 2026 as we make continued progress and expand upon our various optimization efforts, including our technology modernization initiative.

As a result of the overall business performance and a $127.9 million increase to the tax valuation allowance, our reported loss per share was $3.69 for the quarter. On an adjusted basis, we delivered earnings per share of $0.16 compared to $0.79 in the prior year with the decline over the prior year primarily due to lower profitability and discrete tax items. For the full year, the reported loss per share was $7.24 including $7.61 of noncash negative impacts from goodwill impairments and tax valuation allowances. Full year adjusted earnings per share was $1.26. Adjusted EBITDA was $21 million, with an adjusted EBITDA margin of 2%, which was down 170 basis points versus the prior year quarter and below our expectations.

The revenue and gross profit declines I previously noted, drove the decrease versus the prior year, while incremental GP rate pressure drove the shortfall versus expectations. Education margin expanded by 30 basis points year-over-year driven by the revenue growth and expense optimization efforts. ETM and SET saw margin pressure due to the elevated revenue gross profit declines despite substantial SG&A reductions. Moving to the balance sheet and cash flow. We generated strong operating cash flow this year with $122.6 million through the fourth quarter, up significantly versus the prior year.

Total available liquidity as of the end of the quarter was $288 million, comprising $33 million in cash and $255 million on our credit facilities, leaving us ample capital allocation flexibility. Total borrowings of $102 million decreased $16 million versus the prior quarter and $137 million versus the prior year-end. Our debt-to-EBITDA leverage ratio was less than 1 at the end of the fiscal year. In addition to the debt repayment during the quarter, we completed $10 million of Class A share repurchases, leaving us with $30 million remaining on the current Class A share repurchase authorization. We also maintained our quarterly dividend of $0.075 per share.

Total capital deployed across these 3 areas was approximately $30 million in the quarter and $158 million for the fiscal year. These actions reflect our confidence in Kelly's strategy and cash flow generation and our commitment to opportunistically deploying capital in pursuit of attractive returns for shareholders. As we look ahead to 2026, we are assuming no material change in the macroeconomic or industry dynamics. Consistent with what we discussed last quarter, during the first half of 2026, we will still be experiencing the larger year-over-year effects of the discrete impacts from the federal government and the 3 large ETM customers with some residual impact into the third and fourth quarters. Given that, we expect Q1 to look very similar to Q4 with revenue declining between 11% and 13% year-over-year or an underlying decline of 3% to 5%, excluding discrete impacts and adjusted EBITDA margin of approximately 1.5% which steps down from Q4, primarily due to payroll tax resets.

As we progress through the year, assuming no new material impacts, we expect to see relative improvement in our year-over-year performance, each successive quarter for both revenue and adjusted EBITDA margin. That should translate to modest revenue growth in the second half of the year and a roughly mid-single-digit decline on a full year basis. For adjusted EBITDA margin, we expect to see measurable year-over-year margin expansion in the second half of the year and a modest increase on a full year basis. We are excited about the momentum we are building and the many opportunities that lie ahead in 2026. I'm grateful to all of the Kelly team members for their unwavering commitment and resilience as we position the company for growth and enhanced profitability over the long term.

I'll now turn the call back to Chris for his closing remarks.

Thank you, Troy. The path to improve year-over-year performance becomes clear as we move through 2026 and the discrete impacts we've discussed begin to anniversary. The actions we're taking today are designed to ensure we capitalize on that inflection. Let me share more about our priorities for 2026, which build on the strategic pillars we discussed last quarter. First and foremost is growth.

Our focus on growth is reflected in the formation of a growth office, which under Pat's experienced leadership will work across our businesses to enhance how we go to market as one Kelly enterprise. And having identified organic growth drivers in each business, we have a clear path to improve top line performance as we progress through the year. In Education, our pipeline of net new K-12 staffing opportunities remain strong. We're well positioned to continue to gain share in this growing market as more schools seek to improve fill rates through our industry-leading offering. In districts where we already have strong relationships, we're driving penetration of our higher-margin pediatric therapy services to meet growing demand.

In SET, we're sharpening our focus on high-growth areas, including data centers, AI and cybersecurity, where our scale and expertise are uniquely suited to meet customers' evolving needs. We're also continuing to capitalize on the shift towards higher-margin statement of work and consulting engagements. As an example, in Life Sciences, where Kelly is already the second largest staffing provider in the U.S., we're capturing growth in the clinical trials market through our differentiated functional service provider solution or FSP. Our outsourcing model provides sponsors with specialized scalable expertise to more efficiently manage specific functions in clinical trials from data management and biostatistics to pharmacovigilance. With new deals coming online, including a multiyear contract with a global pharmaceutical company, we expect FSP will continue to be an important contributor to Kelly's top and bottom line going forward.

In an ETM, we have several MSP and enterprise staffing wins slated to go live in the first quarter. This includes a new MSP program with a global financial services firm, one of the largest MSP deals Kelly has ever won. Our scale and capabilities which contributed to this win are reflected in our recent recognition by HRO Today as the #1 global provider of total workforce solutions, encompassing MSP, RPO and staffing. As we build on this momentum and enhance how we go to market as an enterprise, I expect our new business pipeline to continue to grow and our conversion of these opportunities to accelerate. Let me talk next about our second strategic priority, efficiency.

We'll continue to align resources with demand while reengineering our cost base to drive further structural efficiencies and enhance profitability. Our SG&A trajectory reflects the momentum we're building and our technology modernization initiative is central to this effort. And our enterprise AI strategy reflects a targeted approach to unlocking productivity and growth across the business. And finally, culture. Culture remains fundamental to how we'll achieve our growth and efficiency ambitions with an emphasis on customer centricity, visibility and accountability.

We'll continue making it easier to do business with Kelly spending time in the field to better understand the needs of our customers and talent and holding ourselves to the highest standard of execution across every part of the business. As we enter 2026, the investments we've made in our portfolio, our technology and our people have positioned us to emerge stronger on the other side. There is much work to be done but I am confident in our plan, our team and our ability to execute. I want to thank our shareholders for their support and trust at this important moment on Kelly's journey. I also want to express my gratitude to the Kelly team for their perseverance and resilience as we closed last year.

The fourth quarter was a sprint, and we ran through the tape. Now it's time to carry our momentum forward and deliver on the promise of 2026. I look forward to working alongside our team to realize our collective ambitions and create long-term value for our stakeholders.

Operator, you can now open the call to questions.

(Operator Instructions) Joe Gomes, Noble Capital.

So Chris, I appreciate your comments on Hunt and just kind of dig a little deeper here and see maybe you provide a little more insight. We've gone from a passive owner of control of Kelly to an active shareholder here. And trying to get a better handle on what Hunt is bringing to the table. Do they have expertise in the staffing business. Maybe you can talk some more about that.

And then what does this mean for the A shareholders. If we look here, the B shares are -- have risen in price or they've now diverged fairly significantly from A. And historically, they've pretty much traded in tandem. I mean, obviously, there's been periods where they have diverged, but it's just trying to get a better handle of what all this can mean here for the A shareholders and what they could see here going forward.

Yes, Joe, great question, and thank you for it. We're really excited to welcome the Hunt team. And as you heard in my prepared remarks and what we shared even last week, Hunt companies continue to express their support of our team and the focus that we have in accelerating growth. They saw a lot of the same opportunities that I've highlighted over my first 5 months. and the opportunity to unlock a lot more value here at Kelly.

Now we continue to maintain a market-leading position across this diversified portfolio, the deep client relationships that continue to allow us to support global employers as their needs evolve. And we know that the Hunt team is committed to that. We are not expecting any -- or anticipating any changes to our business operation, our client relationships, our strategic initiatives, and we remain committed to continue to create lasting value for our shareholders, and we look forward to working with our new directors on that. There really is an opportunity for value for all shareholders and interests are aligned in that regard. Now specifically, maybe to the second half of your question on just some of the protections that were secured.

The agreement that we have with the Hunt companies does include some governance protections and those governance protections, we think, really align to all shareholders and give us a benefit for our Class A and our Class B going forward, where we know there's a tremendous opportunity to unlock value.

Great for that. I appreciate it. And on the SET business, the underlying revenue trends have worsened the last 3 quarters. And maybe you could speak a little bit more to that? And what do we see here in that business that could change those trends here?

Yes. No, as you indicated, and I'll let Troy weigh in a little bit as well, right, underlying SET declined 5.4% in the quarter, but this was modestly better than our expectations. The decline reflects some continued demand pressure in the technology space, but we also saw that offset with really nice growth out of our telecom segment. As we indicated, the Life Sciences, our science segment where we're #2 continues to show a lot of positive momentum, large pharma companies leveraging our functional service provider offering, which leads the market, and we expect to continue to see demand for customers needing a more flexible, outcome-based solution in the science space. And in IT, right, that's our largest segment.

We continue to see some headwinds from AI-driven productivity increases, reducing some demand for roles like programmers or areas like quality assurance. But we're also seeing an increase and an uptick in roles directly related to the development and deployment of AI solutions. We expect that pipeline to continue to grow as well. And as we go throughout the year, continue to see sequential quarter-on-quarter improvement. Troy, anything else do you want to add?

Sure. Yes. Thanks, Chris and Joe, for the question. The underlying has actually been -- we did have a little bit of an uptick here, 2 points or so relative to what we saw in the last 2 quarters. We were in the low 3s in Q2 and Q3 and around 4 in Q1.

And similar to some comments we had offered last quarter. Last year, in the fourth quarter, we grew 4% organically overall. And a lot of that growth was in the -- at the time of the P&I segment, but SET held pretty firm as well, and we didn't see some of the normal seasonality we would see there where it does trend down a little bit in the fourth quarter given their professional roles. And so you tend to see some holidays and the like. So I think it's really more a function of a compare with SET and ETM as well versus really anything really changing in the business per se.

Kartik Mehta, Northcoast Research.

Chris, I think you addressed a little bit of this question in the previous answer you gave, but I'm interested there's so much talk about AI and the impact that's having on many companies. And you've talked about using AI at Kelly. And I'm wondering if you kind of sit back and look, do you think the net impact of AI has been positive, negative or neutral for Kelly as far as demand for services compared to maybe what you've been able to do from AI, from efficiency and cost perspective?

Kartik, yes, no, absolutely. We remain confident that AI presents a net positive opportunity for Kelly. Employers continue to be increasingly focused on leveraging the power of AI to drive productivity improvements and accelerate growth. The AI-enabled recruiting solution I discussed in our prepared remarks is just one demonstration of the way that we're bringing that to market and differentiating. Our unique solutions also continue to provide employers, particularly big employers, global employers with the flexibility, the scalability that they need to bridge their workforces into a more AI-enabled workforce.

And in that way, it unlocks really the power of people and technology and we think we'll unlock a lot of value for Kelly.

And then, Chris, as you kind of look at the trends for the first week of 2026 especially on the permanent hiring or the fee business. I'd be curious as to kind of what you're seeing in terms of demand from your customers and if that's giving you any kind of look forward into what 2026 could bring?

Yes, it's a good question, and we're really not seeing a significant change. It continues to be stable in that regard. Perm represents about 1% of total GP and we continue to see stability there.

Kevin Steinke, Barrington Research Associates.

Just one of the start out by exploring kind of the margin trend here in the fourth quarter. And as you move into 2026, specifically to the fourth quarter, where adjusted EBITDA margin came in relative to your expectations. I think you mentioned incremental gross margin pressure. Was that the primary reason for the variance versus expectations? And can you just dig a little bit more into the drivers of that?

I know you called out the higher employee-related costs and also business mix. But maybe a little bit more detail on how those affected the margin relative to your expectations?

Yes, that sounds good. Well, I'll talk a little bit about the EBITDA margin performance, and I'll have Troy provide a little bit of color on just the kind of discrete impact on the GP side with some of the health care related costs. As you know and as we've talked about, our strategy continues to be centered around driving profitable growth. And EBITDA margin expansion has been it's going to continue to be an important part of that. Our EBITDA margin expansion in the fourth quarter and on a full year basis fell short of our expectations.

Troy talked in his prepared remarks. I know we talked over the last couple of quarters about some of the discrete customer impacts. But with this in mind, we continue, as we've shown, our focus on aligning expenses with demand is a real lever for us, and this is reflected in the SG&A and cost management reductions you saw both in the third quarter and the fourth quarter, and we'll continue to be very focused there. We also recognize the need to address longer-term opportunities to reengineer our cost base, shifting our business mix to higher margin markets, solutions and offerings, and that's a big part of our growth story. And I would say, just as I turn it over to Troy talk a little bit about the discrete GP impact.

Some of this margin and the incremental expansion that we've talked about, it will play out as we move in the anniversary some of those discrete impacts the first half of the year, where we're going to see margin expansion in the second half of 2026 with a modest increase on a full year basis. But I'll have Troy give you a little bit more color on the GP impact.

Yes. Thanks. Good coverage there, Chris. And Kevin, yes, the -- certainly, the 150 basis point decline on the GP rate was, again, incremental to what we expected. And you see the largest portion of that hitting ETM both at the GP level and at the EBITDA level and a little bit on SET as well.

And we had some of this in Q3 also around the employee-related costs. We just had escalations, some changes as we pivot from '25 to '26 that drove some outsized utilization against the health care coverage. And then workers' comp is largely driven by health care costs, especially older claims that are still open and so periodically, we do have adjustments to those based upon the third-party estimates around those. So it's just a combination of factors as we came into the back part of the year here that put pressure on those 2 items that we expect we'll reset as we get into '26. And we've put some processes in place to have better visibility and better management there as we go forward.

Okay. That's helpful. And when we look ahead to 2026 here, just wanted to explore a little bit more the outlook you discussed in terms of successive improvement in quarterly performance as you move throughout 2026 on both, I guess, revenue and adjusted EBITDA margin. I guess, obviously, the comparisons get easier as you move throughout the year, but can you talk about the other factors that you expect to drive that progressive improvement, say, in terms of organic growth drivers, business mix, et cetera.

Yes, sure. So I'll take that. And Chris, certainly add any color as I go through it. But the -- just Q4 to Q1, not a whole lot going to change in the business, still about an 8-point impact on those discrete items. The margin profile will not change dramatically.

We'll have the payroll tax reset, which is common across all the companies. And so that puts some incremental pressure on Q1 margins. But as we work through the year, the various growth initiatives, again, Pat coming on board, some of the things that Chris has talked about as far as our organic growth drivers, opportunities we have to bring full Kelly to our customers and to the market along with the work we're doing from a technology modernization perspective and the benefits we expect to continue realizing there through '26 and '27 along with just other efficiency and optimization initiatives that we have planned throughout the year. That should all be accumulating as we go through the year in addition to the easier comps, as you indicated, as we get into the back half of the year. But net returning to growth on an organic basis, again, assuming no new major material impacts, assuming no major change in the macro environment, returning to organic growth and measurable margin expansion in the back half of the year.

And look, if we get some positive tailwinds out of the economy, we should -- we would expect to take our fair share of that as well.

Great. I just wanted to follow up there. You mentioned again the bringing on the Chief Growth Officer. And maybe you can just delve a little bit more into the opportunities you see by bringing on that role and where -- what sort of initiatives you can execute relative to maybe what the company had left on the table before.

Yes, exactly. The growth, as you've heard me say, it's the single most important value creation lever at this stage of our journey. We're excited to welcome Pat in this new role, a newly created role. And he's going to have a clear mandate, and that's really to bring the full strength of Kelly's portfolio to the market. And we've got to go win more market share with our large customers, in particular.

We got to build a much more unified client-centric go-to-market model, reduce some of the access points, as you've heard us talk about. And he's going to help us drive organic growth. We know how much opportunity there is, particularly with these large customers to do more with them. We've got really an unmatched product portfolio now in product mix, and we've got to make sure we're bringing that to all of our customers, both in the traditional ways where we do staffing, but also in more outcome-based and solution work. And so they'll be focused also on driving acquisition of new customers, driving pipeline acceleration across the enterprise, and we're excited to bring him into the leadership team starting this Monday.

Great. Lastly, I just wanted to ask about, Chris, you talked about in your prepared remarks a real-world example of an internal AI recruiting solution you built out, I think, for one particular customer. And I think you talked about looking to deploy that more broadly. What would that mean for Kelly from an efficiency and cost efficiency perspective?

And is that -- do you think that's something could be meaningful in terms of the number of recruiters you employ or any other metrics that it could help on your journey to continue improving margins.

Well, we really see a lot of customer impact. And what I'll start with is really to say that we believe that we can really deliver AI at scale, helping us provide deeper data and insights, AI and automation at scale. And some of that productivity is really a little borne out in the EBITDA margin expansion as you see us growing throughout the year. And particularly in the second half of the year as we have the benefits of the program that I mentioned before, the impact of products like GRACE Boost that are now deployed across all of our customer base and our employee base. And finally, our industry-leading talent management platform, Kelly Helix continues to lead the market helping customers with deep workforce insights around their workforce mix, integrating AI-based chatbot, to drive faster workflows and workforce decision-making.

We really see that continuing to drive increased productivity and efficiency for us and again, we've -- we're showing some of that in the step-up you'll see throughout the year.

And I would now like to turn the conference back to Chris Layden for closing remarks.

Great. Well, thank you all. We look forward to seeing you next quarter.

And this concludes today's program. Thank you for participating. You may now disconnect.