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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

Commission File Number 0-1088

KELLY SERVICES, INC.

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(Exact name of registrant as specified in its charter)

Delaware						38-1510762
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

999 West Big Beaver Road, Troy, Michigan 48084

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(Address of principal executive offices) (Zip Code)

(248) 362-4444

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(Registrant’s telephone number, including area code)

No Change

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(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbols			Name of each exchange on which registered
Class A Common			KELYA			NASDAQ Global Market
Class B Common			KELYB			NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☐			Accelerated filer			☒
Non-accelerated filer			☐			Smaller reporting company			☐
Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At April 29, 2024, 32,200,118 shares of Class A and 3,321,601 shares of Class B common stock of the Registrant were outstanding.

PART I. FINANCIAL INFORMATION

(UNAUDITED)

(In millions of dollars except per share data)

 

			13 Weeks Ended
			March 31, 2024						April 2, 2023
Revenue from services			$	1,045.1					$	1,268.3
Cost of services			839.4						1,014.2
Gross profit			205.7						254.1
Selling, general and administrative expenses			190.5						243.4
Gain on sale of EMEA staffing operations			(11.6)						—
Earnings from operations			26.8						10.7
Gain on forward contract			1.2						—
Other income (expense), net			1.8						2.0
Earnings before taxes			29.8						12.7
Income tax expense			4.0						1.8
Net earnings			$	25.8					$	10.9
Basic earnings per share			$	0.71					$	0.29
Diluted earnings per share			$	0.70					$	0.29
Average shares outstanding (millions):
Basic			35.4						37.1
Diluted			35.8						37.4

(UNAUDITED)

 

			13 Weeks Ended
			March 31, 2024						April 2, 2023
Net earnings			$	25.8					$	10.9
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax benefit of $0.0, and tax expense of $0.0, respectively			(0.5)						2.3
Less: Reclassification adjustments included in net earnings			(0.6)						—
Foreign currency translation adjustments			(1.1)						2.3
Pension liability adjustments, net of tax benefit of $0.4			—						—
Less: Reclassification adjustments included in net earnings			0.4						—
Pension liability adjustments			0.4						—
Other comprehensive income (loss)			(0.7)						2.3
Comprehensive income (loss)			$	25.1					$	13.2

(UNAUDITED)

(In millions)

			March 31, 2024						December 31, 2023
Assets
Current Assets
Cash and equivalents			$	200.7					$	125.8
Trade accounts receivable, less allowances of $8.8 and $8.4 respectively			1,152.9						1,160.6
Prepaid expenses and other current assets			83.2						48.9
Assets held for sale			—						291.3
Total current assets			1,436.8						1,626.6
Noncurrent Assets
Property and equipment:
Property and equipment			140.7						138.1
Accumulated depreciation			(115.2)						(113.5)
Net property and equipment			25.5						24.6
Operating lease right-of-use assets			46.3						47.1
Deferred taxes			318.9						321.1
Retirement plan assets			243.7						230.3
Goodwill, net			151.1						151.1
Intangibles, net			132.5						137.7
Other assets			40.6						43.1
Total noncurrent assets			958.6						955.0
Total Assets			$	2,395.4					$	2,581.6

(UNAUDITED)

(In millions)

			March 31, 2024						December 31, 2023
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities			$	581.2					$	646.1
Operating lease liabilities			8.4						8.4
Accrued payroll and related taxes			165.9						156.2
Accrued workers’ compensation and other claims			22.0						22.1
Income and other taxes			20.0						17.2
Liabilities held for sale			—						169.9
Total current liabilities			797.5						1,019.9
Noncurrent Liabilities
Operating lease liabilities			42.0						42.9
Accrued workers’ compensation and other claims			40.9						40.9
Accrued retirement benefits			229.5						217.4
Other long-term liabilities			8.7						6.8
Total noncurrent liabilities			321.1						308.0
Commitments and contingencies (see Contingencies footnote)
Stockholders’ Equity
Capital stock, $1.00 par value
Class A common stock, 100.0 million shares authorized; 35.2 million shares issued at 2024 and 2023			35.2						35.2
Class B common stock, 10.0 million shares authorized; 3.3 million shares issued at 2024 and 2023			3.3						3.3
Treasury stock, at cost
Class A common stock, 3.0 million shares at 2024 and 3.2 million shares at 2023			(52.5)						(56.7)
Class B common stock			(0.6)						(0.6)
Paid-in capital			27.1						30.6
Earnings invested in the business			1,264.8						1,241.7
Accumulated other comprehensive income (loss)			(0.5)						0.2
Total stockholders’ equity			1,276.8						1,253.7
Total Liabilities and Stockholders’ Equity			$	2,395.4					$	2,581.6

(UNAUDITED)

(UNAUDITED)

(UNAUDITED)

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts reported in our consolidated balance sheets:

			13 Weeks Ended
			March 31, 2024						April 2, 2023
Reconciliation of cash, cash equivalents and restricted cash:
Current assets:
Cash and cash equivalents			$	200.7					$	111.7
Restricted cash included in prepaid expenses and other current assets			0.6						0.5
Noncurrent assets:
Restricted cash included in other assets			7.6						8.9
Cash, cash equivalents and restricted cash at end of period			$	208.9					$	121.1

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements of Kelly Services, Inc. (the “Company,” “Kelly,” “we” or “us”) have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and notes required by generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, necessary for a fair statement of the results of the interim periods, have been made. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. The unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the fiscal year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 20, 2024 (the 2023 consolidated financial statements). There were no changes in accounting policies as disclosed in the Form 10-K. The Company’s first fiscal quarter ended on March 31, 2024 and April 2, 2023, each of which contained 13 weeks.

Certain reclassifications have been made to the prior year's consolidated financial statements to conform to the current year's presentation. Specifically, as discussed in the Segment Disclosures footnote, the Company has made a change to its reportable segments during the first quarter of 2024. We have also reclassified the presentation of our retirement plan assets, which represents our investment in life insurance contracts, and intangibles, net from the other assets line item to separate line items within our consolidated balance sheet.

2.  Revenue

In 2024, Kelly has four operating segments: Professional & Industrial (“P&I”), Science, Engineering & Technology (“SET”), Education, and Outsourcing & Consulting Group ("Outsourcing & Consulting," "OCG"). Prior to 2024, the Company also had an International operating segment (see Segment Disclosures footnote). The 2023 P&I segment information has been recast to conform to the new structure. Other than OCG, each segment delivers talent through staffing services, permanent placement or outcome-based services. Our OCG segment delivers talent solutions including managed service provider ("MSP"), payroll process outsourcing ("PPO"), recruitment process outsourcing ("RPO"), and talent advisory services.

The following table presents our segment revenues disaggregated by service type (in millions of dollars):

Our operations are subject to different economic and regulatory environments depending on geographic location. Our P&I and Education segments operate in the Americas region, our SET segment operates in the Americas and Europe regions, and OCG operates in the Americas, Europe and Asia-Pacific regions. In 2023, our International segment included our staffing operations in Europe as well as Mexico, which is included in the Americas region. After the sale of the Company's EMEA staffing operations in January 2024 (see Disposition footnote), the Mexico operations, which were previously in our International segment, are now included in our P&I segment.

The below table presents our revenues disaggregated by geography (in millions of dollars):

The below table presents revenues from our SET, OCG and former International segment, which previously included our Mexico operations, disaggregated by geographic region, (in millions of dollars):

Deferred fulfillment costs, which are included in prepaid expenses and other current assets in the consolidated balance sheet, were $2.3 million as of first quarter-end 2024 and $3.4 million as of year-end 2023. Amortization expense for the deferred costs in the first quarter of 2024 and 2023 was $2.4 million.

The rollforward of our allowance for credit losses related to trade accounts receivable, which is recorded in trade accounts receivable, less allowance in the consolidated balance sheet, is as follows (in millions of dollars):

			First Quarter
			2024						2023
Allowance for credit losses:
Beginning balance			$	8.0					$	7.7
Current period provision			0.4						0.8
Currency exchange effects			(0.1)						0.1
Disposition of EMEA staffing operations			(2.4)						—
Write-offs			—						(0.8)
Ending balance			$	5.9					$	7.8

Write-offs are presented net of recoveries, which were not material for first quarter-end 2024 or 2023. As of first quarter-end 2024, the Company has a receivable of $26.9 million related to the sale of our EMEA staffing operations (see Disposition footnote). The Company has determined that no credit loss provision is required on this receivable as it is considered collectible. No other allowances related to other receivables were material as of first quarter-end 2024 or 2023.

4.  Disposition

On January 2, 2024, the Company completed the sale of its EMEA staffing operations ("disposal group"), which was included in the Company's International operating segment, to Gi Group Holdings S.P.A. ("Gi"). Upon closing, the Company received cash proceeds of $110.6 million, or $77.1 million net of cash disposed, which is included in investing activities in the consolidated statements of cash flows. The total gain on the transaction as of the first quarter-end 2024 is $11.6 million, which is recorded in the gain on sale of EMEA staffing operations in the consolidated statements of earnings. The Company expects to receive additional cash proceeds to reflect the cash-free, debt-free transaction basis, as well as working capital and other adjustments. The Company does not expect to receive any proceeds from the contingent consideration opportunity associated with the transaction. Included in the gain as of first-quarter end 2024, the Company has recorded a euro-denominated receivable from Gi of $26.9 million representing the adjustments that are determinable and is expected to be received in the third quarter of 2024. The receivable is included in prepaid expenses and other current assets in the consolidated balance sheet.

The disposal group did not meet the requirements to be classified as discontinued operations as the sale did not have a material effect on the Company's operations and did not represent a strategic shift in the Company's strategy. Our consolidated earnings from operations for the first quarter of 2023 included a loss of $1.3 million from the EMEA staffing operations.

The major classes of divested assets and liabilities were as follows (in millions of dollars):

Trade accounts receivable, short-term borrowings, accounts payable, accrued liabilities and accrued payroll and related taxes approximate their fair values due to the short-term maturities of these assets and liabilities.

The following tables present assets and liabilities measured at fair value on a recurring basis as of first quarter-end 2024 and year-end 2023 in the consolidated balance sheet by fair value hierarchy level, as described below.

Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs.

Money market funds represent investments in money market funds that hold government securities, of which $7.6 million as of first quarter-end 2024 and $8.0 million as of year-end 2023 are restricted as to use and are included in other assets in the consolidated balance sheet. The money market funds that are restricted as to use account for the majority of our restricted cash balance and represents cash balances that are required to be maintained to fund disability claims in California. The remaining money market funds as of first quarter-end 2024 and year-end 2023 are included in cash and equivalents in the consolidated balance sheet. The valuations of money market funds are based on quoted market prices of those accounts as of the respective period end.

On February 8, 2024, the Company entered into a foreign currency forward contract with a notional amount of €17.0 million to manage the foreign currency risk associated with the additional expected proceeds in the third quarter of 2024 related to the sale of our EMEA staffing operations (see Disposition footnote). The expected proceeds are recorded as a euro-denominated receivable which is remeasured each period. The forward contract was designated as a fair value hedge, with the mark-to-market changes of the forward contract offsetting the mark-to-market changes of the receivable in the gain on sale of EMEA staffing operations in the consolidated statements of earnings. The contract was valued using observable inputs, such as foreign currency exchange rates, and is considered a level 2 liability.

The Company recorded an unrealized gain of $0.1 million for the first quarter 2024 with a net receivable associated with the forward contract of $0.1 million recorded in prepaid expenses and other current assets on the consolidated balance sheet.

On November 2, 2023, the Company entered into a foreign currency forward contract with a notional amount of €90.0 million to manage the foreign currency risk associated with the sale of our EMEA staffing operations, which was completed on January 2, 2024. This contract was not designated as a hedging instrument; therefore, it was marked-to-market and the changes in fair value were recognized in earnings. The Company's foreign currency forward contract was valued using observable inputs, such as foreign currency exchange rates, and is considered a level 2 liability. The Company recorded an unrealized loss of $3.6 million for the year ended 2023 and had a net liability associated with the forward contract of $3.6 million as of year-end 2023. The Company settled the forward contract on January 5, 2024 for $2.4 million of cash. Accordingly, the Company recognized a gain of $1.2 million in the first quarter of 2024 in gain on forward contract on the consolidated statements of earnings, which partially offsets the $3.6 million loss recognized in 2023, for a total loss of $2.4 million on the contract.

During the first quarter of 2024, the Company recorded an indemnification liability for $2.1 million relating to the sale of our EMEA staffing operations in January 2024. The liability is included in other long-term liabilities in the consolidated balance sheet and the expense is included in the gain on sale of EMEA staffing operations in the consolidated statements of earnings. As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences for an indefinite term. The Company's maximum exposure under these indemnifications is not estimable at this time due to uncertainties to potential outcomes and the facts and circumstances involved in the agreement. Management believes the risk of material exposure is remote. The valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital. The valuation, which represents the fair value, is considered a level 3 liability, and is measured on a recurring basis.

As of first quarter-end 2024, the Company had an indemnification liability totaling $2.9 million with $0.1 million in accounts payable and accrued liabilities and $2.8 million in other long-term liabilities, and $3.0 million at year-end 2023, with $0.1 million in accounts payable and accrued liabilities and $2.9 million in other long-term liabilities in the consolidated balance sheet related to the 2020 sale of the Brazil operations. As part of the sale, the Company agreed to indemnify the buyer for losses and costs incurred in connection with certain events or occurrences initiated within a six-year period after closing. The aggregate losses for which the Company will provide indemnification shall not exceed $8.8 million. The valuation of the indemnification liability was established using a discounted cash flow methodology based on probability weighted-average cash flows discounted by weighted-average cost of capital. The valuation, which represents the fair value, is considered a level 3 liability, and is being measured on a recurring basis. During the first quarter of 2024 and 2023 the Company recognized a decrease of $0.1 million and an increase of $0.1 million, respectively, to the indemnification liability related to exchange rate fluctuations in other income (expense), net in the consolidated statements of earnings.

The Company had previously recorded an earnout liability relating to the 2020 acquisition of Greenwood/Asher. The initial valuation of the earnout liability was established using a Black Scholes model and represented the fair value and was considered a level 3 liability. During the first quarter of 2023, the Company paid the remaining earnout liability totaling $3.3 million, representing the year two portion of the earnout. In the consolidated statements of cash flows, $1.4 million of the payment is reflected as a financing activity representing the initial fair value of the earnout, with the remainder flowing through operating activities.

On March 1, 2022, the Company sold the majority of its investment in PersolKelly Pte. Ltd. (the "JV"). Prior to February 2022, the Company had a 49% ownership interest in the JV, a staffing services business currently operating in ten geographies in the Asia-Pacific region. The Company holds a 2.5% interest in the JV, which is measured using the measurement alternative for equity investments without a readily determinable fair value. The measurement alternative represents cost, less impairment, plus or minus observable price changes. The investment totaled $6.4 million as of first quarter-end 2024, representing total cost plus observable price changes to date.

In the first quarter of 2024, the Company incurred $2.3 million of restructuring charges and transformation fees as a continuation of the actions that were announced in the second quarter of 2023 as part of the comprehensive transformation initiative. The transformation activities include $1.1 million of severance and $1.2 million of costs to execute the transformation through the use of an external consultant. The severance and transformation costs are recorded in selling, general and administrative ("SG&A") expenses in the consolidated statements of earnings.

The restructuring and transformation costs included in SG&A are detailed below for the first quarter of 2024 (in millions of dollars):

In the first quarter of 2023, the Company undertook restructuring actions to further our cost management efforts in response to the current demand levels and reflect a repositioning of our P&I staffing business to better capitalize on opportunities in local markets. Restructuring costs incurred in the first quarter of 2023 totaled $6.6 million and were recorded entirely in SG&A expenses in the consolidated statements of earnings.

The restructuring and transformation costs included in SG&A are detailed below for the first quarter of 2023 (in millions of dollars):

A summary of the global restructuring balance sheet accrual, included in accrued payroll and related taxes and accounts payable and accrued liabilities in the consolidated balance sheet, is detailed below (in millions of dollars):

The remaining balance of $4.7 million as of first quarter-end 2024 primarily represents the costs to execute the transformation initiatives and severance costs, and the majority is expected to be paid by the end of 2024. No material adjustments are expected to be recorded.

The changes in accumulated other comprehensive income (loss) by component, net of tax, for the first quarter 2024 and 2023 are included in the table below. Amounts in parentheses indicate debits.

			First Quarter
			2024						2023
			(In millions of dollars)
Foreign currency translation adjustments:
Beginning balance			$	0.6					$	(7.4)
Other comprehensive income (loss) before reclassifications			(0.5)						2.3
Amounts reclassified from accumulated other comprehensive income (loss)			(0.6)						—
Net current-period other comprehensive income (loss)			(1.1)						2.3
Ending balance			(0.5)						(5.1)
Pension liability adjustments:
Beginning balance			(0.4)						(1.1)
Other comprehensive income (loss) before reclassifications			—						—
Amounts reclassified from accumulated other comprehensive income (loss)			0.4						—
Net current-period other comprehensive income (loss)			0.4						—
Ending balance			—						(1.1)
Total accumulated other comprehensive income (loss)			$	(0.5)					$	(6.2)

The reconciliation of basic and diluted earnings per share on common stock for the first quarter 2024 and 2023 follows (in millions of dollars except per share data):

Potentially dilutive share awards are related to deferred common stock related to the non-employee directors deferred compensation plan and performance shares for the first quarter of 2024 and 2023 (see Stock-Based Compensation footnote for a description of performance shares). Dividends paid per share for Class A and Class B common stock were $0.075 for the first quarter of 2024 and 2023.

In November 2022, the Company's board of directors authorized a $50.0 million Class A share repurchase program, which was completed in August 2023. During the first quarter of 2023, the Company repurchased 1,099,728 shares for $18.3 million. A total of 2,971,471 shares were repurchased under the share repurchase program at an average price of $16.83 per share.

For the first quarter of 2024, the Company recognized stock compensation expense of $2.8 million and a related tax benefit of $0.7 million. For the first quarter of 2023, the Company recognized stock compensation expense of $3.1 million and a related tax benefit of $0.3 million.

During the first quarter of 2024, the Company granted performance share awards associated with the Company’s Class A common stock to certain senior officers. The payment of performance share awards is contingent upon the achievement of specific revenue growth and earnings before interest, taxes, depreciation and amortization ("EBITDA") margin performance goals ("financial measure performance share awards") over a stated period of time. The maximum number of performance shares that may be earned is 200% of the target shares originally granted. These awards have three one-year performance periods: 2024, 2025 and 2026, with the payout for each performance period based on separate financial measure goals that are set in February of each of the three performance periods. Earned shares during each performance period will cliff vest in February 2027 after approval of the financial results by the Compensation Committee, if not forfeited by the recipient. No dividends are paid on these performance shares.

In December 2021, the Compensation Committee approved a retention-based grant of 308,000 financial measure performance awards to certain senior officers which may be earned upon achievement of three financial goals over a performance period beginning in fiscal 2022 through the third quarter of 2024, with each goal having a unique projected achievement date. Each goal can be earned independent of the other two goals. Any shares earned during the performance period will cliff-vest three years after achievement of the respective performance goals and approval of the financial results by the Compensation Committee.

On May 7, 2024, the Compensation Committee confirmed the actual performance achievement for the final financial goal related to the 2021 retention-based grant, which was not achieved before the end of the performance period and resulted in no payout.

A summary of the status of all nonvested performance shares at target as of first quarter-end 2024 and changes during this period is presented as follows below (in thousands of shares except per share data). The vesting adjustment in the table below

represents the 2021 financial measure performance shares that did not vest because actual achievement was below the threshold level and resulted in no payout.

			Financial Measure Performance Shares
			Shares						Weighted Average Grant Date Fair Value
Nonvested at year-end 2023			674						$	17.49
Granted			170						19.96
Vested			(136)						18.88
Forfeited			—						—
Vesting adjustment			(28)						15.76
Nonvested at first quarter-end 2024			680						$	18.41

A summary of the status of nonvested restricted stock as of first quarter-end 2024 and changes during this period is presented as follows below (in thousands of shares except per share data).

			Shares						Weighted Average Grant Date Fair Value
Nonvested at year-end 2023			784						$	18.52
Granted			356						20.81
Vested			(197)						18.63
Forfeited			(32)						18.63
Nonvested at first quarter-end 2024			911						$	19.39

Included in other income (expense), net for the first quarter 2024 and 2023 are the following:

Included in Other for the first quarter of 2023 is a gain of $2.0 million for the receipt of earnout proceeds in connection with an investment that was sold in 2021.

Income tax expense was $4.0 million for the first quarter of 2024 and $1.8 million for the first quarter of 2023. The quarterly variance primarily relates to changes in pretax income.

Our tax expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of tax-exempt investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets and the tax effects of stock compensation.

The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company is continuously engaged in litigation, threatened litigation, claims, audits or investigations arising in the ordinary course of its business, such as matters alleging employment discrimination, wage and hour violations, claims for indemnification or liability, violations of privacy rights, anti-competition regulations, commercial and contractual disputes, and tax-related matters which could result in a material adverse outcome.

We record accruals for loss contingencies when we believe it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Such accruals are recorded in accounts payable and accrued liabilities and in accrued workers’ compensation and other claims in the consolidated balance sheet. At first quarter-end 2024 and year-end 2023, the gross accrual for litigation costs amounted to $4.4 million and $6.4 million, respectively, of which $1.5 million was held for sale at year-end 2023.

The Company maintains insurance coverage which may cover certain losses. When losses exceed the applicable policy deductible and realization of recovery of the loss from existing insurance policies is deemed probable, the Company records receivables from the insurance company for the excess amount, which are included in prepaid expenses and other current assets and other assets in the consolidated balance sheet. At first quarter-end 2024 and year-end 2023, the related insurance receivables amounted to $0.2 million.

The Company estimates the aggregate range of reasonably possible losses, in excess of amounts accrued, is $0.1 million to $7.8 million as of first quarter-end 2024. This range includes matters where a liability has been accrued but it is reasonably possible that the ultimate loss may exceed the amount accrued and for matters where a loss is believed to be reasonably possible, but a liability has not been accrued. The aggregate range only represents matters in which we are currently able to estimate a range of loss and does not represent our maximum loss exposure. The estimated range is subject to significant judgment and a variety of assumptions and only based upon currently available information. For other matters, we are currently not able to estimate the reasonably possible loss or range of loss.

While the ultimate outcome of these matters cannot be predicted with certainty, we believe that the resolution of any such proceedings will not have a material adverse effect on our financial condition, results of operations or cash flows.

The Company’s operating segments, which also represent its reporting segments, are based on the organizational structure for which financial results are regularly evaluated by the Company’s chief operating decision-maker ("CODM", the Company’s CEO) to determine resource allocation and assess performance. The Company’s four reportable segments in 2024, (1) Professional & Industrial, (2) Science, Engineering & Technology, (3) Education, and (4) Outsourcing & Consulting, reflect the specialty services the Company provides to customers and represent how the business is organized internally. Prior to 2024, the Company also had an International operating segment. Beginning in the first quarter of 2024, the Company's organizational structure no longer includes the International segment following the sale of the EMEA staffing operations in January 2024. Our Mexico operations, which were previously in our International segment, are now included in the Professional & Industrial segment. Professional & Industrial segment information for the prior year has been recast to conform to the new structure. Intersegment revenue represents revenue earned between the reportable segments and is eliminated from total segment revenue from services.

In addition to the change in our segment structure in the first quarter of 2024, we reassessed the allocation of corporate expenses to the operating segments and allocated additional costs which are attributable to the business from corporate.

In the first quarter of 2024, the Company changed the primary segment profitability measure from earnings from operations to a business unit profit measure that excludes depreciation and amortization. This change will provide management greater visibility into the financial performance of the segments and how they contribute to the Company's overall performance.

Prior periods have been recast to reflect the current period allocation method and new segment profitability measurement. The update had no impact on the consolidated financial information.

The following tables present information about the reported revenue from services and gross profit of the Company by reportable segment, along with a reconciliation to earnings before taxes, for the first quarter of 2024 and 2023. Asset information by reportable segment is not presented, since the Company does not produce such information internally nor does it use such information to manage its business.