Q1 2021 ManpowerGroup Inc Earnings Call
Thanks, Jack. It has been one year since we first referred to the unfolding uncertainty of COVID-19 and the resulting lockdowns in many of our markets at that time. We all had little idea of the magnitude of what lay ahead or what the road to recovery and the most challenging operating environment in our history would look like
from that moment on we were determined to mitigate the impact on our financial results with early and strong actions and continued investments in strategic initiatives. So we emerge stronger when the pandemic ends.
Those priorities have enabled us to start 20 21 in a good position as we see that the signs of recovery continue to play out in many markets that said the recovery is unknown and although many markets are steadily strengthening other markets particularly in Europe continue to experience COVID-19 related difficulties, which are resulting in the need for more restrictions and which is impacting the rate of recovery. Overall. We Believe are heading in the right direction and expect continued Improvement.
Turning to our financial results in the first quarter. Revenue was four point nine billion dollars of 1% year-over-year in constant currency.
We saw increased demand in many of our key markets and this resulted in a better-than-expected financial performance.
On a reported basis, we recorded an operating profit for the quarter of $98 excluding restructuring charges in the prior-year operating profit was up 8% in consultation currency marking a significant sequential improvement from the operating profit decline of 24% in the fourth quarter.
Operating profit margin was 120 basis points from the prior-year on a reported basis and after excluding restructuring charges in the prior-year operating profit margin increased ten basis points.
Earnings per diluted share was $1.11 excluding restructuring charges in the prior. This reflects a constant currency increase of 28% off.
The improving demand for services relates to the recent results of RQ21 manpowergroup employment Outlook survey which indicated broad-based Improvement in hiring Intentions by employers wage.
Our survey of 42,000 employers and forty three countries noted positive net employment trends across the majority of markets a markedly different and improved Outlook compared to the same time last year.
77% of employers anticipate returns to endemic hiring levels before the end of 2021 which is also a significant improvement from previous quarter service.
Among the major markets the top the list in terms of overall hiring intentions for the second quarter.
As the demand for skilled workers continues to strengthen technology-related rolls continue to be in demand as has been the case throughout much of the crisis. However, we're now seeing strengthened imagine also for talent within the manufacturing sector's as evidenced by the strong manufacturing PMI data in March.
Even the industry's most impacted by the pandemic Hospitality entertainment and airlines are showing positive signs of rehiring with indications. They will see significant increases in the second half of this year.
Logistics also shows no signs of reverting back to pre-crisis levels as a consumer shift to online retail is likely structural.
As workplaces reopen and workers return in phases. We are seeing demand for HR skills, especially with a greater focus on hiring and well-being and this is evidenced in the significantly improved demand for our peel services.
Organizations that were reducing Staffing levels and 20/20 are now seeking strategic and operational flexibility as the optimize their Workforce plans reassessed Talent needs and Implement would work models. We are well positioned to provide the expertise and services to meet this Rising Demand right now like to turn it over to Jack to take you through the financials and Country performances details.
Thanks Jonas revenues in the first quarter came in above our constant currency guidance range. Our gross profit margin came in at the midpoint of our guidance range are operating profit was ninety million representing an increase of 161% or 146% on a constant currency basis, excluding restructuring charges in the prior-year operating profit increased 43% or 8% on a constant currency basis this resulted in operating profit margin of 2% which was fifty basis points above the high end of our guidance.
Freaking a revenue Trend down into a bit more detail after adjusting for the positive impact of currency of about 6% are constant currency Revenue increased 1% off after considering that dispositions and fewer billing days. The organic days adjusted Revenue increase was 2% This represented a significant improvement from the fourth quarter Revenue off of six and half percent on a similar basis.
Turning to the EPS bridge on slide for earnings-per-share was a dollar 11:00 would significantly exceeded our guidance range walking from our guidance midpoint our results. In fact improved operational performance of 42 cents slightly lower-than-expected foreign currency exchange rates, which had a negative impact of one cent a slightly better-than-expected effective tax rep that added $0.01 and the lower weighted average share count from share repurchases that also added $0.01
Looking at our gross profit margin in detail. Our gross margin came in at 15.6%
underlying Staffing margin contributed to a 10 basis-point reduction a lower contribution from permanent recruitment. Also contributed ten basis points of GP margin reduction, which was offset by a dog mix of MSP gross profit on very strong growth in the quarter.
Next let's review our gross profit by business line during the quarter the Manpower brand comprise 63% of gross profit are experienced professional business comprise 21% interest Solutions brand comprise 16%
In the quarter our Manpower brand report an organic constant currency gross profit growth of 2% This was a significant improvement from the 11% decline in the fourth quarter off gross profit, not experienced brand declined 6% year-over-year during the quarter and an organic constant currency basis, which represent an improvement from the 14% decline in the fourth quarter of
Talent Solutions includes our Global market-leading RPO MSP and right management offerings organic gross profit increased 6% in constant currency year-over-year, which is an improvement from the one percent growth in the fourth quarter.
This is primarily driven by our MSP business with double-digit GDP growth our our po business experience significant Improvement during the quarter in crossback to low single-digit percentage gross gross profit.
All right, ma'am.
Business continues to see a run-off from previous outplacement activity as recovery strengthens and experience the reduction in gross profit of about 1% year-over-year.
Our sg&a expense in the quarter was $670 million and represented a 2% decline on a reported basis from the prior-year.
Excluding restructuring charges in the prior-year sg&a was flat on a constant currency basis currency changes reflected an increase of $35 million.
The remaining underlying decrease was driven by 1 million from that dispositions into million of operational cost reductions.
That's cheating expenses as a percentage of Revenue represented 13.6% in the first quarter reflecting first quarter seasonality in revenues.
The America segment comprise 20% of Consolidated revenue revenue in the quarter was 1 billion an increase of 1% in constant currency oup was $44 and excluding restructuring costs in the prior-year oup increased 52% in constant currency and all your P. Margin increased a hundred fifty basis points to 4.4%
The u.s. Is the largest country in the Americas segment comprising 61% of segment revenues Revenue in the US was $609 Million representing a flat Trend compared to the prior-year of adjusting for franchise Acquisitions and days this represented a 1% increase which is an improvement from the 5% decline in the fourth quarter.
Excluding restructuring charges in the prior-year oup for our us business increased 122% year-over-year to $29 million in the quarter oup margin was 4.8%
Within the the Manpower brand comprise 35% of gross profit in the quarter.
Revenue for the Manpower brand in the US increased 7% when adjusted for days and franchise Acquisitions, which represents a significant improvement from the 2% decline in the fourth quarter.
Experis Brandon the comprise 29% of gross profit in the quarter within experis in the it skills comprise approximately eighty percent of revenues expect us revenues declined 11% on a day's adjusted basis during the quarter representing an improvement from the 14% decline in the fourth quarter the US experience business experience Revenue Trend improved during the quarter and exited the quarter and single-digit percentage declines, and we expect to cross over to growth late in the second quarter.
Talent Solutions in the US contributed 36% of gross profit and experienced Revenue growth of 6% in the quarter. This was driven by our po which experienced significant double-digit Revenue growth as hiring programs continue to strengthen the US MSP business continued to perform well and experience mid-to-high single-digit Revenue growth in the quarter career transition activity continued to run off which contributed to revenue reductions and right management in the as other Town Solutions offerings experience solid growth.
Provided there are no significant business restrictions impacting our clients across the u.s. In the second quarter. We expect ongoing underlying Improvement in Revenue growth for the in the range of 23% to 27% year-over-year.
To write a bit more context comparing expected second-quarter revenues to pre-crisis levels on an organic basis. This represents a 4% decline from 2019 results using this point of our guidance for the US.
Mexico operation experience Revenue decline of 4% in constant currency in the quarter representing the improvement from the 6% decline in the fourth quarter as discussed. Last quarter Mexico is in the process of advancing labor legislation that could prohibit certain types of temporary staffing not considered specialized services.
The proposed legislation is in the process of review by the Senate.
When the legislation is adopted in final form, we will assess the potential impact on our business. It is possible to legislation could be finalized before the end of April and we would expect the effective date would be a number of months following enactment of the new law will provide a further update during our second quarter earnings call.
Mexico represented between 2.5 and 3% of our Global revenues in 2020.
Revenue Canada, increased 3% in days adjusted constant currency during the quarter this represented an improvement from the fourth quarter days adjusted Revenue decline of 10% off revenues in the other countries within America has increased 9% in constant currency reflecting improvement from the 4% increase in the fourth quarter. This was driven by significant constant currency wage growth in Argentina, Brazil and Chile.
Southern Europe Revenue comprise 44% of Consolidated Revenue in the quarter revenue and southern Europe came in at 2.2 billion crossing over to growth of 2% in constant currency. This reflects ongoing improvement from the fourth quarter Trend driven by France, Italy and Switzerland.
O u p equals $73 million excluding restructuring costs in the prior-year oup increased 2% in constant currency and all you P margin was flat at 3.4% off.
France Revenue comprise 55% of the southern Europe segment in the quarter and increased 1% and days adjusted constant-currency. Although increased restrictions slowed the rate of underlying Revenue agent meant the French business perform. Well in a challenging environment this reflects the days adjusted constant currency decline of about 9 to 10% in January and February month and growth of 27% in March as we began to anniversary the onset of the pandemic
Oup was $43 million in the quarter and all you pay margin was 3.6%
As we begin the second quarter despite the increased restrictions in France. We are holding Associates on assignment relatively steady and cautiously anticipate modest Improvement in Iraq during the quarter. We are estimating a year-over-year constant currency increase in revenues in the range of 68% to 72% in the second quarter, overall Thursday anniversary, the bottom of the pandemic comparing estimated second-quarter revenues to pre-crisis levels in constant currency this represents an 11% decline the 2019 levels in the second quarter using the midpoint of our guidance.
Revenue in Italy equals 403 million in the quarter reflecting an increase of 14% in days adjusted constant currency, which was a significant improvement from the 3% growth in the fourth quarter of
excluding restructuring costs in the prior-year oup increased 13% year-over-year in constant currency 219 million, you know u p margin was flat to the prior-year Italy is already performing above pre-crisis 2019 levels in the first quarter.
We estimate that Italy will continue to perform very well in the second quarter with your over year Revenue growth in the range of 42% to 46%
revenue in Spain increase 5% and days adjusted constant currency from the prior-year this represents a reduction from the significant growth in the fourth quarter, which reflected significant seasonal year-end Logistics activity.
Revenue in Switzerland increase 7% and days adjusted constant currency from the prior-year in the quarter this represents a significant improvement from the 14% decrease in the fourth quarter.
Northern Europe segment comprise 23% of Consolidated Revenue in the quarter Revenue declined 2% in constant currency to 1.1 billion representing a significant improvement from the 11% wage and in the fourth quarter driven by all major markets, excluding restructuring costs in the prior-year oup decreased 14% in constant currency, you know, you pay margin decreased ten basis points to 0.4%
Largest market in northern Europe segment is the UK which represented 38% of segment Revenue in the quarter during the quarter UK revenues grew 6% in a suggested constant currency, which represented a significant improvement from the 7% decline in the fourth quarter our UK business continues to see strong public sector activity and increase demand across all brands. The UK is already performing above pre-crisis 2019 levels in the first quarter.
We expect growth in the 30% to 35% constant currency range year-over-year in the second quarter, which also reflects significant new customer activity.
In Germany revenues declined 16% in days adjusted constant currency in the first quarter, which represented a significant improvement from the 31% decline in the fourth quarter on the same basis.
Although Germany continues to be a difficult market for our industry. We expect to see ongoing Revenue Improvement in Germany with year-over-year growth in the second quarter.
In the nordics revenues decline 1% and days adjusted constant-currency representing an improvement from the 6% decline on the same basis from the fourth quarter.
Revenue in the Netherlands decrease 4% in days adjusted constant-currency representing an improvement from the 12% decline on the same basis in the fourth quarter.
Belgium experience the days adjusted Revenue decline of 14% in constant currency during the quarter which also reflects improvement from the 25% decline on the same basis in the fourth quarter with other markets in northern Europe crossed over to growth in the quarter Revenue increased 18% in constant currency, which represents ongoing improvement from the fourth quarter increase of 9% off the currency. This is driven by strong Revenue growth in Poland, Russia and Ireland.
The asia-pacific middle-east segment comprises 13% of total company Revenue in the quarter Revenue was flat and constant currency to 627 million wage was $19 million, excluding restructuring costs in the prior-year or decrease 7% in constant currency and o u p margin decreased Thirty basis points to 3% off Revenue growth in Japan was up 6% in days adjusted constant currency, which represents a slight improvement from the 5% growth rate in the fourth quarter or Japan business continues form very well. And we expect ongoing Revenue growth in the second quarter revenues in Australia were flat and days adjusted constant currency. This represented an improvement from the 2008 decline on the same basis in the fourth quarter.
Revenue in other markets in asia-pacific middle-east declined 7% in constant currency, which was equal to the rate of Revenue decline in the fourth quarter.
Now the manpowergroup greater China limited has released their 2020 annual report. We'd like to provide a brief update on their results as we previously disclosed. We Remain the largest shareholder it record our approximate 37% share of earnings below operating profit in twenty twenty the companies successfully managed an extremely challenging environment and recorded year-over-year Revenue growth of 6% which included 28% Staffing Revenue growth in mainland China and it changed an increase in profits attributable to owners.
We are very pleased.
with the progress of manpowergroup Greater China Limited
I'll now turn the cash loan balance sheet during the first quarter free cash flow equal $228 compared to $172 million in the prior year quarter reflecting more significant accounts receivable declines in the prior-year quarter at quarter-end Day sales outstanding decreased year-over-year by almost four days to 56 days Capital expenditures represented thirteen million during the quarter.
During the first quarter. We purchased one point 1 million shares of stock for a hundred million as of March 31st. We have two point two million shares remaining for a purchase. The Six Million share program approved in August of 2019.
Our balance sheet was strong quarter in with cash of 1.52 billion and total debt of 1.08 billion representing a net cash position of $440 million bucks is a quarter and reflect total gross debt to trailing 12 months adjusted ebitda of 2.33 and total debt to Total capitalization at 31%
our debt and credit facility did not change in the quarter in addition a revolving credit facility for six hundred million remained unused
Next hour view our outlet for the second quarter of 2021 a guidance continues to assume no material additional lockdowns or business restrictions impacting our clients in any of our large markets Beyond those that exist today.
On that basis, we are forecasting earnings per share for the second quarter to be in the range of a dollar Thirty $6 to a dollar forty $4 which includes a favorable impact from foreign currency of ten cents per share our our constituency Revenue guidance growth range is between 27% and 31% The midpoint of our constant currency guidance is 29% a slight increase in Billing days in the second quarter is partially offset by the slight impact of net dispositions. And as a result our outlook for organic life adjusted Revenue growth is also 29% at the midpoint.
Adding the context of comparisons to pre-crisis activity levels. This would represent a second quarter organic constant currency decline in the range of -4 per cent to -6 per cent compared to 2019 revenues.
We expect our operating profit margin during the second quarter to be up 180 basis points at the midpoint compared to the prior-year this reflects. Another quarter of continued strong sequential underlying Improvement.
we estimate that the
Effective tax rate in the second quarter will be 34%
Based on improved earnings mix we are now estimating the full year effective tax rate will be approximately 34% a 1% improvement from our previous estimate of 35% off.
As usual our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate are weighted average shares to be 55.4 million.
I will now turn it back to Jonas.
Thank you Jack.
A challenging operating environment has not slowed our investments and plans to accelerate our diversification digitization and Innovation initiatives our plans to simplify and prioritize. Our office is realize improved efficiencies.
And it's all the disruption what we knew all along has been confirmed and it is the combination of technology and people first approach of our teams that allows us to confidently manage Globe certainty deliver locally and collaborate both personally and remotely as necessary.
A good example of this is the recent recognition by industry analysts Alm for our digital enabled data-driven Workforce Solutions in manpowergroup Talent Solutions. We are the only company in our industry to have received the Pacesetter designation and it serves as a good example of the strength of our powersuite technology platforms.
ESG is it very important component of our strategy and we're also proud to have been recognized around the globe for our commitment to driving positive change for people and societies and for our responsible business practices.
We have been awarded the highest recognition by Echo bodice provider a trusted business sustainability ratings are France and Norway businesses achieve the global Platinum award wage placing us on the top 1% of all companies assess. We now have platinum gold and silver ecobot is ratings in more than twenty countries.
For the 12th year manpowergroup has also been recognized by as a world's most ethical company again. We are the only company in the industry to earn this award wage. These recognitions are Testament to the dedication and commitment of our people to keep the world of returning in a sustainable and ethical way placing millions of people into jobs during a global pandemic living our purpose that meaningful and sustainable employment has the power to change the world.
I know like to open the call for Q&A hang up operator.
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by the number one. Please make sure that your line is unlimited and record your name after the prompt off. Cancel your request, please press * 2.
Our first question is coming from the line of Andrew steinerman from JPMorgan is open. Hi, this is Jack Jack. Let me ask you a question of how you set up the second quarter. Revenue guy did seem like how you reference both year-over-year and a reference to a 2019. So when I think about the the second quarter 21 Revenue to be 4% below second quarter. 2019 Ram is I I get that context what what I'm a little puzzled by is when I think about operating margins the operating margin guide for second-quarter, which is 2.4 to the midpoint is like a hundred thirty basis points below the second quote a 2019 level which was I think 3.7 and so my question is why the big operating margin different versus second quarter of 2019 if revenues are only down 4% from those levels.
Thank you Andrew. I would say I think the thing to keep in mind is we're still going through the deleveraging process. And so we see that in q1 with the higher revenues. We were you know, we were very pleased with the fact that our higher GPA basically fell down to the bottom line in q1. We held our costs relatively in line with what we estimated so that that was a very good result but it does reflect that. You know, we are starting to see the the deleveraging and ineffectively that's playing out in the queue to forecast. So although revenues and GP dollars are improving which is great and part of our overall forecast on a cost side. We're still going through that process and I'd say that's that's the biggest reason we would expect as we continue to see increased demand going forward.
You would see Improvement in that operating profit margin going forward so sequentially and I think that's what I would really focus on is sequentially we've seen very very good ongoing Improvement in a operating profit. Margin over the last three quarters now here in the first quarter very good Improvement. And in the in the second quarter up 180 basis points year-over-year wage as we continue to see the benefits of the revenues coming back and getting more and more operational leverage with that. So, I think that that will continue to strengthen as we continue to see the increase in demand. Okay. Thank you very much.
Thank you. Our next question is from the line of Jeff silver of BMO Capital Market. Your line is open. Thank you so much. You had a really strong beat from really better-than-expected operating performance in the quarter. Can we get a little bit more color compared to your expectations where that these came from?
Yeah Jeff, this is Jack. I'd be happy to give you a little color. So I'd say if you look at our biggest operations, you can see the very strong growth in Italy. So it'll be definitely be performed above our expectations in the first quarter. And that's great. We did note that they're above 2019 levels currently and we see that obviously continuing into the next quarter. So he continued very strong, uh performance from our Italy operations. I would say the US was very very strong. And what's great about the us and we talked about this in the past the US are best mix of businesses. We saw Talent Solutions coming back very very strong in the first quarter. We talked about the RPO double-digit growth in the US. Am I speaking in used to be very strong so us was a big contributor to the outperformance and I would say France even though France has been in a more difficult and
Pharma with the restrictions in place
They did a very good job managing their costs based on the fact that they did not have the progress during the course of the quarter that some of the other markets did that did not have a strict of restrictions but despite that they've done a very very good job managing their profitability so of our biggest businesses, they all contributed very nicely with better-than-expected performance. And I think lastly I would call out the great performance of the UK. So we saw the UK crossover to growth the UK is performing very well may be highlighted the fact that you know, the UK is actually brought on some new clients and that takes uh us into the second quarter of forecast for their improved performance going forward as well. So long are four largest businesses were with a big drivers Jeff.
Okay, that's really helpful. And if I could focus on you, you know, we're seeing a lot of headlines of companies, you know scrambling for talent specifically in Blue Collar jobs. I'm wondering if you're seeing that and if so what you're doing about that.
Good morning, Jeff. Yes. This is this is something that we're seeing in the US as well. So there has been a tightening of supply of workers. Now some of that we think is related to the Easter holidays. Some of that is related to the extra unemployment payments as well as a stimulus payments. So people are taking advantage of those but you know, whatever the effect is that wage are seeing we expect it to be temporary and you know, we think that the supply will continue to to adjust to a more normalized environment, but overall, you know, it's great to see that the US market is coming back so strong and as you might have seen on the latest labor market report, the penetration rate is is already past a password was changed up higher and that's a really good sign as well.
Okay, great. Thanks so much.
Thanks, Jeff.
Thank you. Our next question is from the line of mine off. Nick of Barclays. Your line is open. Thank you. Good morning. Gentlemen, you know the the comparison was this 2019. Obviously, I was helpful and clearly it's it's still down because things haven't fully reopened. But I was just curious how you guys think about whether you know, once things open if this if this cycle has been a reset like we, you know at the starting point of you know, a multi-year growth. And I was just hoping you'd give us some of your thoughts there.
We think that's a trend that we are seeing now are really the traditional dynamics of the beginning of the new cycle and the beginning of a recovery that we're seeing play off now and you know, we we look at this from two perspectives. First of all, we're as we're very pleased to see that despite the continued lockdowns and a lot of our major markets. We saw a cyclical recovery. So companies started to ramp up their workforces in in in the in the face of increasing demand for their products and services. And at the same time, we may also increased demand for some of our more strategic product in terms of structural flexibility such as manpowergroup Talent Solutions, and that would also indicate that we're in a phase where companies are really appreciating the services and solutions we provide to to enable them to have more strategic and operational flexibility. So we're really seeing both
these Trends start to
Take shape and we see this as as being very positive for the business and I would just add to that amount of you know, based on the question at the opening of the the cubes regarding the operating profit. Margin for the second quarter. I think the thing to you know, there is, you know, we still have some pretty good upside opportunity as markets like Francis loosen the restrictions in the future and see the recovery really take hold so, you know, as we mentioned in our prepared remarks those restrictions really prevented them from the the Improvement that some of our other countries saw and they operated close to down 10% for the first two months of the quarter until they anniversary the pandemic but you know, when you look at the second quarter France is still down 11% versus 2019 levels and as they continue to recover that's really going to help our operating leverage as we should.
Forward so I think that's the one item I would ask people to to remember our biggest operation 25% of our revenues is still 11% under 2019 levels as we saw in the fourth quarter when those restrictions are lifted, we would expect to see similar dynamics that that we saw in December where there will be pent-up demand that will come through once those rejections are listed.
Okay, got it. That's very helpful. And and just the one other question I had was could you just comment a bit on the competitive environment like our competitors being rational rational choice? So is there kind of boost, you know drive to just you know, get all the recovery here.
We are in a very competitive industry, but overall if I look at pricing it is rational still so that's a good a good sign. I think the competitive environment is strong in a number of countries, but we've been able to drive our business with the very good pricing discipline. So we've seen some good foundation of margins good and Bill rate expansion as well and a number of countries notably in the US. So we expect that to continue also going forward. All right. Thank you very much.
Thank you. Our next question is from the line of Mark Martin from Baird. Your line is open. Hey, congratulations, and on the the strong results here in the first quarter and The Back-up beat, you know nature of the comments going into the second quarter. I'm wondering if you can talk a little bit about you know, a couple of different things one. You want to see you talk about the digitization efforts that you have underway. Could you you know provide some granular sense for for how that's improved the efficiency, you know, it's recruiters account managers speed of placements. Is that just to keeping you even with the competition or do you feel like you're you're getting ahead of the competition which countries are the most advanced and what are some of the implications longer-term wage?
Thanks, Mark. We have a comprehensive technology.
Transformation roadmap and as we've discussed in past learning calls, it's really all the way from the back to the middle to the front and I would say from a recruiter productivity perspective. We really starting to see some great impact of the tools. We started to implement the number of years ago. Most notably, you know, they'd helped us navigate this pandemic and we're able to connect with candidates and recruit individuals remotely to a much greater degree than we were able to do before we had those tools but I would say to give you a little bit of a color on what what the difference would be for a recruiter and the number of our markets were leveraging Ai and data to serve up the most likely candidates for placement alongside the banking of the most viable orders that any recruiter has received. So we rank both orders as well as the candidates to fill those orders and that's served.
The recruiter when he or she starts their work and that means they can immediately get down to connecting with the candidates and you know finding the perfect match. So we save a lot of time in terms of creating the match and sending them on the assignments and we previously talked a lot about our mobile apps for associates and candidates for instance in France and what that helps us do is of course, they have a lot of self-service capabilities that they are availing themselves too and that frees up a lot of time for our people and once they are able to both find you assignments change their current assignment find out when they got paid so all of those transactional activities that take up a lot of time used to take up a lot of time for a recruiters, they are the ones that we're seeing increasingly move away and either be done and controlled more by the associate himself or herself Direct.
Or our ability to fill order is faster with a better match enabled by technology, but I would say and you heard of say that as well in the prepared remarks make sure that it's the combination of the human Talent with the enabling technology. That's the that's the that's creating the magic so it's not just technology on a stand-alone basis. It is the experience of our recruiters and talent agents for those that are also been trained to conduct a my path assignment that really is showing the difference is that we think we are still at the very early stages of this. So we still have a long way to go to gain some further opportunities both from a growth perspective. So growing our business as well as gaining further efficiencies.
Great and then can obviously that would have some implications with regards to the margin profiles longer-term, correct?
as we will
Be able to optimize the match the best talent available to the orders that we can fill the fastest that should have a very positive impact on our client satisfaction or candidates at home. And then yes also on our margin profile. I would just add to that Mark I think you know, uh to your point about what specific markets so the US I think, you know, we're seeing you know, our our life. It's part of Talent Solutions is been part of the powersuite technology implementation. We're seeing very good GP margins strong very strong GP margins and that business with the experience business in the US is been part of our powersuite front office implementation. We're starting to see the benefits of that inefficiency will be even more as the recovery take continues to take off and we see convenience come back and I think the other example that we would point to is our associate our market-leading associate app in France, which we've talked about in the past that's really dead.
Provided uh significant efficiencies for us as we think about the processing of all of our Associates data when it comes to time and and expenses and those type of things. So some really good job examples where those have definitely driven more efficiencies in those countries, and and we see, you know, as as volume starts to come back and and revenue starts to come back when we get more operating leverage will see that come through in a stronger way in both the GP margin line in the operating profit margin, right and then just a quick follow-up with regards to president Lopez song over. You know initial proposal in Mexico. I know the Senate is still, you know considering it but how how has the what name is being considered now changed relative to the initial proposal. What's what's your general sense?
At this point it's actually quite hard to know because the devil will be in the detail in how the legislation is drafted Mark. So we are really, you know, not very much further way, then from or rather. We not much further along from our discussion at our last or any earnings call. It's still being debated because how it gets applied and how it's written in the fine. Detail is ultimately what's going to be determining the impact on employers at large in Mexico. And of course also our industry in Mexico, so that's that's still being debated and we hope to be able to provide a more detailed update on our next earnings call in July.
I appreciate that. And then you met made a leadership change in in northern Europe. Can you talk a little bit about that?
We from time to time we do move our people around and we have a very talented Global Executive that's going to take over the northern Europe region Ricardo barbarians comes from our most profitable country operation, but he's had prior pan European and Latin American assignments as well. So very experienced wage operational executive that's going to continue to drive across the growth in northern Europe. And as you've seen northern Europe is the one region that's lacking in the growth rates. And it's of course also where we have most of the bench countries in our business and so we would expect it to lag and we look forward to his impact in helping us drive that business forward.
Thank you.
smart
Thank you. Our next question is from the line of Kevin McVeigh of credits with your line is open.
Great. Thanks so much for giving us this factored into the guidance. If it all was at least on the q1 or any thoughts on that. Correct, ma'am.
So Kevin, I'm assuming you're referring to the US stimulus in I answered that question. Just just a while ago that we're we're we believed were seeing some of the supply shortages that we believe also are temporary being impacted by those stimulus payments as people are staying on the sidelines not engaging in the workforce, but we do believe that this is a temporary effect and that it will stabilize once those funds run out and you know, we come back to a more normalized normalized environment.
Alpha limit did you give specific numbers as as to have the glow red shift up in the corner? If you did, I apologize. I missed that if you could repeat that.
We don't we don't necessarily give details on Bill rates. But what what I would say to kind of get to your question is we see good positive momentum. I'd say Jonas talked about where we're seeing some good opportunity. I would put the US and Japan at the top of the list in terms of our ability to you know to improve pricing those markets that's going really well generally speaking. I think we have further opportunity and our European businesses as we start to see the recovery take hold but they generally speaking positive momentum on Bill rates across most of our our businesses.
Thank you.
Thank you. Our next question is from the line of Gary Bisbee of Bank of America security your line is open.
Hey guys, good morning. Appreciate the color on long-term, you know efficiency Potential from technology and other things you're doing if if I were to think a little shorter term over the next several quarters wage. How should we think about sort of headcount Investments back in the business? Obviously, you cut a ton of sg&a last year but revenues coming back in sg&a starting to come back and I think the guidance certainly implies that but, you know, are you adequately staffed for for the pace of the next 2 quarters? Do you think you can bring that cost back sort of in line with revenue or are there any walk-ins are areas where you're going to have to more quickly bring back costs give and give it all you took out last year. Thank you.
Thanks, Gary. I would say our goal is always to bring the
AWS back to to be prepared for the increase in demand and that's what we've been doing. I'd say, you know just to give you a bit of a data point at the end of March are ftes. We're still down 3% year-over-year. But if we go back that was, you know closer to 9% at the end of end of 2020. So we've been progressively increasing our ftes and we're investing in the business in those markets that are seeing the great growth opportunity. So, you know, we've been steadily investing money on consultants in Italy that is paying off with positive perm in the first quarter from recruitment gross profit dollars year-over-year and we see that market continuing to age and we're doing the same thing in the US and are experienced business. We're we're certainly increasing Demand on the US side, but I'd say we're doing it carefully I did talk off.
About France that that hasn't seen the same level of growth we expect that to kick in once the restrictions are loosened in France and then we'll start to ramp up headcount and and we're doing that, uh currently in very specialized roles as well. And we talked about perm recruitment. So that is something we're we're watching carefully, you know, when we bought that 2020 the name of the game was recovery ratio. So how much SGA we can cut to us at the GP declines. Now the name of the game is GP flow through so much of that increase in GP. Can we bring down to the bottom line? And we're very happy with what we did in the first quarter and that's how we're going to continue to manage this going forward great and then the follow-up just walk ins businesses, you know, obviously strong performance there. What what's the key to further adoption of these businesses and and even what's happened are there any Opera?
You know as businesses rethink, oh whole host of different things about their workforces, but to try to drive further penetration of these businesses and the you know, I guess Up Cycle that starting now.
We think we're starting to see exactly that Gary. So we we talked about, you know, not losing any of our clients and the Talent Solutions space, you know during depends emack and how we want some big logos and opportunities over the last six months our pipeline looks very strong and in conversations with clients, they are really thinking about how to bring on Thursday work forces be they contingent or perm in new ways post-pandemic. So we think this will be the next leg and not only in the cyclical growth but also in the structural secular growth certain also here in the US which is the most mature Market but especially in Europe and that's where the penetration rates of these offerings is much lower than what it is in the US and that's where we'll think where we think we will see a very very good opportunities to catch up to the US penetration rates and ultimately both of them moving higher as those strategic Solutions.
things are becoming more attractive post-pandemic for
Any of our client companies? Thanks. Appreciate the caller.
Thank you. All right. Next question is from the line of Tobey Sommer of security your line is open.
Thanks. Could you talk to us about what you see your GP mix being over the medium-to-long term between the core Manpower branch and in your other higher-margin services, and and when we may see some Capital deployment in that direction to kind of further shape the business.
Tobey this is Jack. Yeah, I'd be happy to talk to that. So I'd say you know as you've seen our goal is to continue to grow the experience and Talent Solutions businesses to become a bigger part of the overall GP dollar pie. And and we we typically give an update on on that mix. I would say that that's going well we've been able to do that. Uh, you know, if I look back at the last year certainly experience particularly in the first quarter coming back very strong in terms of the ongoing Improvement. Um, so, you know that mix we would expect to see that that part of the business grow and become a bigger part over the medium-term. I think organic growth is our number one priority in those businesses and that and that's going well, but I think we've been pretty open from a capital allocation side, you know when it's dead.
The one area that we do keep an eye out for is on the professional staffing side the experis side as well as Council Uche ins and that would be an opportunity and if you look at what you've done in the past that's where we've had an area of focus as well. So, you know from a capital allocation. Our strategy is is the same we look at our excess cash from the dead ends. Number one priority beyond that if there is an acquisition that will get priority for the excess cash. If there isn't will continue to look at share repurchases as a vehicle to return back to our shareholders, but doing that opportunistically
Thanks, and as my follow-up absent further Regulatory and legislative changes to different tax jurisdictions wage, which the company operates should be a normalization of profitability have an effect on the tax rate in the out years.
It definitely will Toby I think even even this year. We're seeing a positive development. So three months ago with what we were thinking at that time in terms of the earnings mix for the year. We forecasted a 35% effective tax rate for the full year with the increased earnings in the first quarter and what we're projecting for the second quarter that improved effects and increase pre-tax profits has lowered that effective rate to 34% for the full year. So wanted to make sure everyone caught that in the prepared remarks off and and as I said before the positive changes in France will continue to be a Tailwind for us as pre-tax profits continue to increase to pre-owned and demek levels. So we will overtime see that now 34% gradually improved to 30% as we get back to pre tax levels of uh,
profit and so that's that's a
A positive he'll win for us as we go forward. And as you said that ignores any other changes, we do know that France already has has part of their tax reform is going to step down again next year from 27 and half percent to 25% corporate tax rate. We already have the great benefit of the CV AE reduction and wage and we'll see what happens in terms of other geographies with any tax changes, but but we'll manage those as they come through.
Thank you.
Thank you. Our last question is from the line of George Tong of Goldman Sachs. Your line is open Hai. Thanks. Good morning. Do you know that that restrictions in France are continuing to have an impact on my life of revenue recovery there. Can you discuss how revenues in France performed on the month-over-month sequential basis moving through one Q in into early April.
Yes, George, this is Jack. I guess what I would say is if you look at our biggest operation in France, I think you know as part of the prepared remarks, we gave an indication that that's really where the receiver have been quite strict with the curfews and the weekend restrictions and they were running at about 10% down for January and February generally speaking and and really that kind of continued through the first half of March and then they anniversary the big drop but you know, I think the important thing is the associates On Assignment which gives you an indication of what's you know, what's happening on an underlying basis and that was relatively steady and as we look into April and April's a bit of a funny month because we have the Easter holidays and that's so forth but it continues to hold fairly well in most recent week just picked up a little bit so I would say, you know generally performing in, New Jersey.
Countries where there are restrictions the business is actually been performing fairly. Well considering those restrictions. I think if I turn to another country like Italy totally was very strong over the course of the quarter overall continued to strengthen. So on a day's adjusted basis, you know 6% growth in January went off 13% growth in February went to above 20% So again restrictions in place in Italy, but those restrictions haven't really impacted ability to work and to travel for work purposes and the Italy businesses. I mentioned is already even with those restrictions in place already above 2019 levels and I think the third one is a UK, which is same, you know, very very strong progress. So the UK had very strong results in the first quarter and we saw you know them
leaving march with a 10% days of
Adjusted growth rate. So I'd say that gives you a bit of a flavor for our three biggest businesses. Um, and generally speaking, you know, they're they're managing the restrictions. Well, we would look into Q2 we would expect over time some of those restrictions to start to use and we would see further Improvement.
Got it makes sense. And I guess that's a follow-up aside from Friends. Where do you see most potential impact from ongoing or renewed restrictions that could impact the pace of revenue recovery?
Say that most companies at this point. George are looking past the pandemic and thinking about where they need to be when the restrictions are lifted. We've seen a solution of what happens with the vaccination rates and you know anywhere from in Israel where the vaccination rates is up to 80% ourselves here in the US the UK countries in Latin America lights chili at about 40% and then Europe being at about 20% and some countries in Asia. Notably. Japan significantly behind that way vaccination rate. And what we have observed is that's the vaccination rates are rising confidence in the economy is rising and even with existing lockdowns or additional lockdowns companies are preparing their workforces. So what they will believe is going to be a robust and strong economic recovery and growth environment coming out on the other side, and that's why they are hiring wage.
To the best of their ability despite the restrictions. So unless there is some big reversal in virus infections that would necessitate a significant lockdown which is difficult to imagine at this point. I think we will continue to see companies looking past the pandemic and preparing their Workforce for the globe recovery and you can see that in a lot of the external p.m. I date that you can see it in the services data as well that the the outlooks are strengthening and companies are responding accordingly.
Very helpful. Thank you.
Thank you George. And with that we come to the end of our first quarter earnings call and we look forward to speaking with all of you again for a second quarter earnings call in July, but everyone have a good rest of the week.
Thank you for participating in today's conference. You mean disconnect?