Good morning and welcome to Kelly Services' Second Quarter 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. I would now like to turn the meeting over to your host, Mr. George Corona, President and CEO. Sir, you may begin.

Thank you, John and good morning. Welcome to Kelly Services' 2018 second quarter conference call. With me on today's call is Olivier Thirot, our CFO. Let me remind you that any comments made during this call, including the Q&A, 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 walk through and results this morning, let me point out that my year-over-year comparisons are represented in nominal currency with the exception of our international staffing segment, which is in constant currency. Also I'd like to remind you that the recent adoption of the required accounting standard related to equity investments has introduced volatility into the recorded net earnings of many companies including our own. In his remarks, Olivier will explain this in more detail. Turning to Kelly's second quarter results. Revenue was $1.4 billion, up 4% compared to the second quarter of. Earnings from operations were $20.4 million in the second quarter compared with 2017 earnings of $20.3 million. The diluted earnings per share were a loss of $0.40 per share compared to a $0.47 per share gain in 2017. Approximately $0.94 of this 2018 EPS number is related to a non-cash pretax loss on our Persol common stock. As a result of decreases in its market price, which we are reporting here in accordance with the new accounting standard I mentioned. Excluding this unrealized loss, diluted earnings per share were $0.74 per share for the quarter, $0.07 per share higher than a year ago. We are pleased to have delivered a good…

Thank you George. Revenue totaled $1.4 billion, up 4% compared to the second quarter last year. Our total company reported results were favorably impacted by 100 basis points due to foreign exchange. So, on a constant currency basis, our revenue growth for the second quarter was 3%. Our Q2 performance also include the results of Teachers On Call, which added 130 basis points to our total revenue growth rate. Overall, the Q2 revenue growth rate reflects continued growth in America Staffing and continued although slowing performance in our international staffing. Permanent placement fees were up 26% year-over-year from continued positive movement in both Americas and International Staffing. Overall, gross profit was up 5.1%. Our gross profit rate was 17.3%, up 10 basis points when compared to the second quarter last year. The rate improvement reflect the impact of structural margin improvement in our GTS segment and the impact of higher [Indiscernible] offset by the impact of customer mix in both Staffing segments' gross profit rate. SG&A expenses were up 5.6% year-over-year. The increase in expense relates primarily to additional resources in America Staffing as a result of current tenant environment. Our expenses also include an increasing technology investments compared to the prior year. In addition, the year-over-year expense comparisons also reflect the impact of $2.5 million of favorable adjustments relating to executive compensation, which reduced corporate expenses in 2017. We are continuing to generating returns from our investments in our sales, service, delivering transaction and will continue to manage expenses across all of our operations in line with GP growth for the full year. Earnings from operations were $20.4 million in the second quarter compared with 2017 earnings of $20.3 million. These results reflect the conversion rate of return of gross profit of 8.5% compared to 8.9% for Q2 2017.…

Thank you, Olivier. In a tight labor market, we were pleased with our team's ability to execute during the second quarter. As we look to the remainder of the year, we will continue to concentrate on three things. First, we will continue to focus on delevering more value-added services. We're going to continue to optimize our structural mix increase profitability, and create deeper relationships of our customers. By deepening these relationships, we increase our professional and technical exposure, drive higher margin products into these professional spaces. Second, we will continue to proactively manage expenses. We made improvements in this area during Q2 and we intend to scrutinize our expenses going forward, making all areas of our business more efficient will help to redirect capital for investments to support future growth. And finally, we will continue to invest in future areas of growth. This includes new technology and innovations that enable us to operate our business more efficiently and connect people to work in new ways that enrich their lives. Demonstrating our commitment to investing in the future of work, our latest investment into the Kelly Innovation Fund which recently participated in the seed fund raising round for Kenzie Academy, a tech apprenticeship program that develops modern tech workers. Kenzie blends integrated immersive learning and paid apprenticeships to transforming tech education. We made this investment in future talent because we believe in supporting the retraining and upskilling of today's workers as technology continues to drive major changes in the way people work. Through our Kelly Innovation Fund which we launched in early 2018, we will continue to invest in the next generation of workforce solutions. Just as we pioneered the Modern Staffing industry 72 years ago, we are actively focusing on exciting opportunities that will help us deliver greater efficiency or produce game-changing innovations. I look forward to reporting back to you on the results of our efforts next quarter. And Olivier and I will now be happy to answer your questions.

[Operator Instructions] And we'll go to line of Kyle Patterson with Northcoast Research. Please go ahead.

Good morning everyone. Thank you for taking my question. On for John Healy this morning. And -- so first I'm curious about just some of the revenue trends that you guys have been seeing within the U.S. market. I was curious how you guys would create the progress of the PT shift and if you're seeing revenues accelerating or decelerating in the quarter?

So, when we look at revenue, I look at it from two perspectives, supply and demand. So, the demand has continued pretty strong within the marketplace. But what we're seeing is a few trends going on. Number one, we're seeing a lot more permanent hiring than we achieved in the past and that effects are per the placement fee. So if you're seeing is two dynamics. Number one, a lot of convergence of temporary staffing into permanent hiring, so temp to perm hiring. But something that is unique has started this quarter was we're also seeing particularly in the commercial space customers going right to permanent hiring, so direct hiring rather than hiring temp. So, that has a little bit of tempering effect on your temporary staffing growth rate, but it increases your permanent placement fees. So, when we look at the market still remains strong from a demand perspective, but the constrained labor supply and the way that customers are using, they are starting to have a little bit of downward impact on the growth rate that we have. But we're also seeing particularly strong demand in our outcome based services as well and that continues.

Okay, great. And then at the end of the call when you're talking about the Kenzie Academy and congratulations on the inaugural investment and I was curious on the purpose -- like of the investment strategy with the Kelly Innovation Fund, is that more to be focused on one specific area or is it meant to be invested in many different types of areas that could complement various parts of the business?

Yes, it's really designed for us to take a look at the new technologies that are coming out in the workforce solutions area that can help us in a couple of different ways. So, number one, we will look for opportunities to be able to invest in technologies that change the way people work and make them more efficient. We will look for opportunities for technology breakthroughs. They enhance our business operating model to make us more efficient and more productive as we move forward. And we will look for ways to invest in the future of work and in the training of the workforce because as we know it's happening as we move forward, more jobs are being automated and as those jobs are automated, the people that were in those jobs need to gather new skills to able to be productive in the workforce and we will invest in places like the Kenzie Academy that helps to retrain workers and make them ready for the new jobs of the future.

Okay, very good. And then you know with Persol and what we saw this quarter given the volatility that this could add to the reported earnings going forward, but also take into consideration the gains that you've already made with the asset. Is this something that you expect to be holding more for the long-term or have you guys contemplated or will contemplate monetizing it and just reinvesting those proceeds back into the business?

Yes. So, when we look at the Persol investment, we run into that investment and partnership with Persol for some very specific strategic reasons. Those strategic reasons were; number one, to be able to support the needs of our global customers in the Japanese market where we currently don't have operations and we formed a joint venture that allowed us to spend more of our time on our -- in Asia on our outsourcing consulting products and more of our capital investment there, while we continue to have a footprint in the fastest growing market which is Asia and a partnership with a company we receive investment in Asia and is looking to grow it. And we're very happy on all three of those fronts with the investment. Also the investment has been very profitable for us as we take a look even though we had the fluctuation this quarter, it is going introduce volatility, but the strategic reasons that we run into it still hold. And as long as those still hold, they would be an important part of our go-forward strategy.

Okay. Okay. And then within the solutions business, I was just curious if you could provide some more color on what you're seeing currently in there and over the next few quarters as well?

So, it's clear that as we look at the business and the way that customers -- particularly right now, larger customers are looking to lose talent and with the talent shortages, they are moving more and more rapidly towards the companies like Kelly to provide them with an outcome based solutions. And we don't see any slowdown in the demand for those types of activities and we're having good success in continuing to win those products. So, we continue to see growth in that area, particularly, in BPO. Right now in the current hiring environment, the RPO business, there's a lot of demand out there. Although it's a smaller business for us, we still have opportunities to continue to see that grow and we see that continuing. And then finally with the CWO product that we have which is more of a procurement based products, we're starting to see customers shifting some temporary employment purchases of their product more towards by instatement work activities. So, we continue to see good growth in the solutions business and we're going to have continued improvement structurally in our margins. So, that's what we talk about from the fact that those are higher margin services. And when we look at those, we're much more focused on how fast growth -- traffic grows in those areas rather than topline revenue.

Okay, great. And then lastly just more of a housekeeping question. Looking at the full year guidance, it looks like revenue growth expectations were slightly moderated. Was that mainly the impact? I noticed you took down about 80 basis points of expectation of favorable currency impact, was that the main reason for the expectation moderations? Or does this also have to do with the international segment showing some slowing growth?

Interesting, you're right to mention that because we give our guidance, especially, on the revenue side nominal currency. On that outlook, the favorable impact was about 150 basis points and now it's about 70. We have not impact in our Q3 when we anticipate the negative impact of about 50 basis points due to currency fluctuation; I would say mainly the reason euro versus U.S. If you exclude currency, basically, our previous outlook was expecting a revenue growth in constant currency between 4% to 5% and now we're ranging from 2.8% to 3.8%. And the main driver as George was explaining is basically our America Staffing and especially U.S. staffing business that's slowing down. Again, it's heavily balanced on the supply side as oppose to lower expectations on the demand side.

Okay, great. Thank you guys for taking my questions and good luck this quarter.

Thank you.

Thank you.

[Operator Instructions] And while in a few moments, Mr. Corona no further questions coming in.

Okay. John, thank you very much.