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

Thank you, John. Good morning, everyone. Welcome to Kelly Services 2016 Q3 conference call. With me on the call today is Olivier Thirot, our CFO, and George Corona, our Chief Operating Officer. Let me remind you that any comments made during this call, including the Q&A, may include forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments and we have no obligation to update the statements made on this call. Please refer to our SEC filings for a description of the risk factors that could influence the Company's actual future performance. As we begin to look at Kelley's third quarter results, let me point out that our year over year comparisons are represented in constant currency due to ongoing fluctuations in foreign currency exchange rates with the exception of our year over year earnings from operations and earnings per share comparisons which are represented in nominal currency. And as an additional resource to help you navigate our quarterly results, we once again published a slide deck on the Investor Relations page of our public website summarizing our key financial performance indicators. Now let's turn to Kelly's third quarter results. It's important to note that during the quarter we transferred our APAC staffing operations to TS Kelly Asia Pacific joint venture which is anticipated had an impact on Kelly's third quarter results. For the sake of clarity, I’ll walk through the results this morning with and without the impact of the JV. Including the impact of the JV, Kelly’s reported revenue for the quarter was $1.2 billion, 7.1 decrease compared to last year. We achieved earnings from operations of 18.8 million in the third quarter, up 13% over the 16.6 million we delivered last year. And our third quarter diluted earnings…

Thank you, Carl. Revenue totaled 1.2 billion, down 7.6% compared to the third quarter last. Revenue was down 0.7% after excluding the APAC business from our 2015 results are nearly flat on a constant currency basis. During the third quarter, we saw a continued moderation of the impact of foreign currency translation on our nominal revenue growth at about 60 basis points for the third quarter. Now consistent with Carl, the remainder of my year over year comments are represented in constant currency. Staffing placement fees were down 19% year-over-year or down 3% after excluding the APAC staffing business from our 2015 results. While we saw flat fee growth in the Americas, there was a decline in the fees in EMEA as a result of ongoing economic uncertainty. In constant currency, overall gross profit was down 12 million or 5%. After excluding the APAC staffing business from our 2015 results, gross profit was up 1 million. Our gross profit rate was 7.2 % - 17.2%, up 30 base points when compared to the third quarter last year. Our GP rate reflects an improving business mix and continued improvement in the GP rate for our OCG business. The overall pace of GP rate improvement has slowed as we have begun to anniversary the work started last year to improve our US staffing GP rate. SG&A expense were down 6.9 % year over year. After excluding the results of the APAC staffing business from our 2015 results, SG&A expenses were down 1.4%. Expenses were down in all of our staffing businesses, but up in our global OCG business reflecting continued investment in that business unit. Included in our third quarter corporate expenses, our saving of 7.5 million related to the reduction of our performance-based compensation expense. Earnings from operations were 18.8 million…

Thank you, Olivier. Kelly entered the year with a firm commitment to become an even more competitive and profitable company and today's quarterly report confirms that we are continuing to deliver on that commitment. Sifting through the complexity of our third quarter results, I think there's three key takeaways. First Kelly's US staffing operations are continuing to deliver solid execution, despite sluggish demand and economic uncertainty. We've aligned our cost structure to market realities and we're going to continue to adapt as conditions change. Second, although Kelly's reported quarterly revenue was down, our overall gross profit rate increased 30 basis points and we reduced expenses. And the third key takeaway, this leverage enabled us to once again deliver strong growth in operating earnings, our third quarter reported earnings were 13% higher than last year. With these short term results conforming our commitment to profitability, we're also making significant progress against our long-term strategy for growth. Our joint venture in Asia is now complete, establishing a dominant presence in the APAC region and paving the way for continued growth in our wholly owned OCG segment in the outsourcing and consulting space. Kelly’s gains from the JV are also yielding new opportunities for strategic investment. As we refine our capital allocation plans, we're evaluating near-term organic investments in technology that will support our global strategy and longer-term, inorganic investments to accelerate the strategic growth areas of our business. In our staffing business, our US branch network continues to focus on capturing growth and our PT specialties KES and core commercial business, refining our sales and recruiting processes as we connect US customers with the talent they need to move their companies forward. Our centrally delivered staffing in the Americas faces headwinds as the economy slows and large customers transition to a competitive sourced model, yet, we’re responding by adjusting our account structure, we're seeing our performance stabilize as we align our resources with demand. Our OCG segment continues to deliver solid performance, as more clients adopt a talent supply chain management approach and after a temporary dip in growth rates in the third quarter, we expect to see a return to double digit GP growth, as this year's new customer wins and expansions are implemented next year. We remain confident in this segment’s strategic direction and in the investments we're making to increase top and bottom line growth in OCG. As a whole, we're satisfied with Kelly's third quarter performance and our ability to deliver strong leverage, solid operating earnings and strategic progress on a low growth environment. We’re of course keeping a careful eye on the state of the economy and the labor market in the US and yet, we're moving forward with confidence knowing we're prepared to respond to market trends and ready to maintain our relentless pursuit of profitable growth. Olivier and I will now be happy to answer your questions along with George Corona, our Chief Operating Officer. John, the call can now be opened.

[Operator Instructions] And we’ll go to the line of John Healy with Northcoast Research. Please go ahead.

I wanted to ask a little bit about the relationship between the OCG business and the business in the Americas. I know you kind of talked to some client wins on the OCG side, re-accelerating the growth engine of the business for next year. Is there anything that we can kind of think to that might be able to kind of bring the core Americas business along with it? Are there any client wins along that side that might go on with it or are we kind of in a situation where the Americas business is going to kind of be moving around at a glacial pace and the growth really just comes from OCG next year?

Well, George and I will both give you an answer here. So right now, as we look at the industry growth of our major competitors, it's a flat to negative growth environment right now in the Americas for core temporary staffing. You see a lot of other forms of flexible labor increasing in particular independent contractors and so on. And that’s something more capturable obviously in the OCG segment. I don't see a situation in the near term where you would see a rapid acceleration or ability to capture significant market growth inside the temporary staffing markets. It's more likely to happen as it has been happening for us in OCG. It's my perspective. George is closer to the detail of the day in and day out battle and let him hit some.

John, when we look at it, certainly every time we went to something in OCG, it ultimately will end up supporting us in staffing somewhere. But when you think about the sheer size of our US business, it's just not going to be enough to change the economic fact, because they’re out there. We're pretty pleased when we take a look at how we performed relative to the market that we're picking up market share. And as the market improves, we’ll do fine. But I think as Carl said, I don't see anything that would put the winds coming from OCG that are going to dramatically change the trajectory of the US staffing business.

Okay. Fair enough. And along those same lines, with the OCG business, when you look at the customer wins in this year again there, are those customers that are just becoming active for the first time with programs or do you think these are competitive wins? And then additionally, when you look at the OCG, the uptake amongst your customer base outside of the US, is it drastically different than what you're seeing in the US today?

So let me take those pieces. When we look at it, we're getting wins from existing clients and we're getting wins from new clients. So it’s kind of across the board. And when we're looking at some of the wins that we have, we're starting to expand current programs in OCG, so in other words, we had them as generation one or generation two programs. And now, they're starting to grow with those by bringing on different kinds of things that they're doing like statement of work, like independent contractor kinds of things. So we're expanding what we're doing, but we're also bringing out a lot of first time customers, where we’re winning them competitively in the marketplace. So that piece of it is going well. When you look at development of the different regions of the world, certainly, the US has better out front in terms of -- the US companies have been out front, in terms of stopping these new work styles, and are starting to slowly move across the globe. Europe is behind the US, but ahead of Asia in the adoption of these programs, but ultimately, we believe that it will all come to center, as these companies operate more globally.

And we already have significant accounts from companies that are headquartered in Europe or companies headquartered in Asia along with the North American headquartered companies. So the adoption is -- the adoption outside of the North American companies is proceeding -- North American base is proceeding, but a little slower than it was inside the US.

They’re just not ready yet. They haven’t.

Got you. And I was just hoping on, maybe Olivier, you could just kind of go over again kind of the cash flow impact of the JV and how much I guess maybe cash you still have in the business, I don’t know if you look at it that way in terms of receivables and working capital side of, I’m just trying to understand kind of the timing of some of the cash flows here?

Yeah. There are a lot of moving parts. Let me explain from the cash impact. I mean, we did receive about 36 million of cash out of the transaction, but we de-consolidated about 18 million. So the net impact is about 18 point something million. The impact on our receivables, payables, and so on that is not very significant, if you look at from that, yes, so I mean, there is no real impact, because that wasn’t really small. I mean, if you look at receivable, that was a very small portion of our overall, I would say, receivables, if you look at over $1 billion. So that has not really significant impact. I would say the major impact is really the cash proceeds that we have used to lower then our debt and you might see that now our leverage ratio is less than 1%. So that's of course combining with free cash and opening for some discussions about investments in the future, as mentioned by Carl for that question.

Thank you very much.

[Operator Instructions] And, Mr. Camden, no further questions coming in.

It’s because we were so brilliantly clear. Thanks, John. Appreciate your moderating. Thank you all for listening. We’ll talk to you all again. Bye.

Ladies and gentlemen, that does conclude your conference. Thank you for your participation. You may now disconnect.