Q2 2021 ManpowerGroup Inc Earnings Call

July 20, 2021

Yeah.

Right.

[music].

Welcome to manpower group second quarter earnings results Conference call. At this time, all participants are in a listen only mode until the Q&A session of today's conference. This call will be recorded if you have any objections. Please disconnect at this time and now I will turn the call over.

Tim Manpower group, Chairman and CEO Jonas Prising, Sir you may begin.

Welcome to the second quarter conference call for 'twenty 'twenty, 1 of our Chief Financial Officer, Jack Mcginnis, who was on the call with me today.

For your convenience we have included our prepared remarks within the Investor Relations section of our website at manpower group Dot com.

I will start by going through some of the highlights of the quarter and Jack will go through the second quarter results and guidance for the third quarter.

I will then share some concluding thoughts before we start our Q&A sessions, but before we proceed Jack will now cover the Safe Harbor language.

Good morning, everyone. This conference call includes forward looking statements, including statements regarding the impact of the COVID-19, pandemic, which are subject to known and unknown risks node certainties. These statements are based on management's current expectations or beliefs actual results might differ materially from those projected in the forward looking statements, we assume no obligation to us.

Date or revise any forward looking statements.

Slide 2 of our earnings release presentation. Further identifies forward looking statements made in this call and factors that may cause our actual results to differ materially and the information regarding reconciliation of non-GAAP measures.

Thanks, Jack halfway through 2020, 1 I am increasingly optimistic about the strength of the global recovery as vaccine rollouts gain momentum and lockdown restrictions ease we're seeing dramatic increases in hiring optimism the.

Pace of the recovery of strong with the hiring intent picking up much faster than after the previous economic downturn and although the recent infection increases are concerning we do not believe they will materially impact the positive recovery trajectory.

I spent a considerable amount of time during the second quarter in Europe, but the market leaders teams and clients. This included time with our French team at Viva Tech 1 of the world's largest technology conferences in Paris, which I will talk about the later as part of our innovation update and together with other global leaders I also spent time with president of micro and.

The government at the choose France event.

I believe that the future for France looks bright as the government continues on its path to make France more competitive and our business is very well positioned to benefit as their economy growth.

It is clear from my discussions with clients. The demand is coming back very strongly for our services across all of our brands.

This is evidenced in temporary and permanent placement activity as well as demand for workforce solutions.

Companies increasingly need our help in finding and re skilling talent to enable them to leverage the fast improving economic recovery and accelerate the digital transformation to emerge stronger post pandemic.

Turning to our financial results from the second quarter revenue was $5.3 billion up 31% year over year in constant currency.

We grew revenue significantly in our key markets.

And this resulted in better than expected financial performance.

Our operating profit for the quarter was $170 million operating profit was up significantly as we anniversaried the depth of the pandemic financial impact.

Operating profit margin of <unk>, 2% and after excluding special charges in the prior year operating profit margin increased 260 basis points.

Earnings per diluted share was $2 of <unk>.

As we welcome of stronger economic recovery than anticipated. We also see our clients experiencing supply constraints with much tighter labor markets in many countries and competition for talent heating up.

Our most recent talent shortage survey of 42000 employers in 43 countries found that 69% of employers globally, a 15 year high a reporting difficulties hiring skilled workers across many industries.

Although of explanations are more widespread workers are still dealing with issues created by the pandemic, such as health care and child care concerns.

Unemployment benefits and related programs are also having a lingering effect on work of supply.

We expect the pandemic related talent shortages to ease over the coming quarters, but over the medium to long term the impact of Digitization and other structural labor market changes are here to stay.

This means hiring of skilled talent and supporting people to Reskill and Upskill from growth rolls will be a driver of demand into the foreseeable future.

It is of workers market right now and as a result, we're also beginning to see employers respond to what workers want.

Wage increases in places more flexibility skills development and the clear commitment to ESG, especially clarity around the organization social and climate impact.

I would now like to turn it over to Jack to take you through the financials and country performance details.

Thanks, Jonas revenues in the second quarter came in at the high end of our constant currency guidance range.

Gross profit margin came in well above our guidance range operating profit was $170 million, representing a significant increase from the prior year period, which was heavily impacted by the pandemic.

Operating profit margin was 3.2%, which was 80 basis points above the midpoint of our guidance.

Breaking our revenue trend down into a bit more detail after adjusting for the positive impact of currency of about 10% our constant currency revenue increased 31%.

As the impact of net dispositions and slightly more billing days was very minor the.

Organic days adjusted revenue increase was also 31%.

Comparing to pre pandemic revenues, our second quarter revenues were below 2019 levels by 4% on an organic days adjusted constant currency basis, representing a 1.5% improvement from the first quarter trend on the same basis.

Turning to the EPS bridge on slide 4.

Earnings per share was $2, <unk>, which significantly exceeded our guidance range.

Walking from our guidance midpoint. Our results included improved operational performance of <unk> 55.

Slightly higher than expected foreign currency exchange rates, which had a positive impact of <unk>.

The slightly better than expected effective tax rate that added <unk>.

And favorable other expenses, which added <unk> <unk>.

Looking at our gross profit margin in detail our gross margin came in at 16, 3%.

Staffing margin contributed 60 basis point increase which included 20 basis points related to direct cost accrual adjustments in France right.

Presenting of 40 basis points underlying improvement in staffing margin.

Permanent recruitment contributed a 50 basis point GP margin improvement is hiring activity was strong across our largest markets.

Our experienced managed services business in Europe contributed 10 basis point margin improvement.

These increases were partially offset by other business mix factors, primarily involving a lower mix of right management career transition business.

Next let's review of our gross profit by business line during the quarter. The manpower brand comprised 64% of gross profit our experienced professional business comprised 21% and talent solutions comprised 15%.

During the quarter, our manpower brand reported an organic constant currency gross profit year over year growth of 51%.

Our manpower business experienced the biggest decline a year ago and as a result experienced the biggest increase this period and the recovery.

Compared to pre pandemic levels. This represented a decrease of 4% from the second quarter of 2019 on an organic constant currency basis.

Gross profit in our experience brand increased 23% year over year during the quarter on an organic constant currency basis.

This represented a decrease of 1% from the second quarter of 2019 on an organic constant currency basis.

<unk> solutions includes our global market, leading <unk>, MSP and right management offerings.

Organic gross profit increased 27% in constant currency year over year.

This represented an increase of 12% from the second quarter of 2019 on the organic constant currency basis.

Our RPM business posted double digit GP growth during the quarter on significant growth in hiring activity.

Our MSP business, which has performed well for several quarters continued to experience double digit growth in gross profit in the quarter.

Our right management business continues to see of run off in outplacement activity as recovery strengthens and experienced a reduction in gross profit of about 9% year over year.

Our SG&A expense in the quarter was $690 million and represented a 10% increase on a reported basis from the prior year.

Excluding goodwill and other impairment charges in the prior year SG&A was 17% higher on a constant currency basis.

This compares to an increase in gross profit of 40% in constant currency and reflects balanced investment, allowing for strong gross profit flow through during the quarter.

Operational costs increased by $96 million and net dispositions represented a $1 million reduction.

Currency changes reflected an increase of $42 million.

G&A expenses as a percentage of revenue represented 13, 1% in the second quarter, representing ongoing improvement in our efficiency as revenue recovers.

The Americas segment comprised 20% of consolidated revenue Rec.

Revenue in the quarter was $1 billion, an increase of 23% in constant currency.

OUP was $56 million.

Excluding impairment costs from the prior year OUP increased to 116% in constant currency and OUP margin increased 230 basis points to 5.4%.

The U S is the largest country in the Americas segment, comprising 60% of segment revenues revenue in the U S was $629 million, representing a 22% increase compared to the prior year.

Adjusting for franchise acquisition in days this represented the 21% increase.

Excluding impairment charges in the prior year OUP for our U S business increased 149% year over year to $38 million in the quarter.

OUP margin was 6%.

Within the U S. The manpower brand comprised 35 percentage of gross profit during the quarter revs.

Revenue for the manpower brand in the U S increased 36% during the quarter.

While the U S. Manpower business continues to recover we have noted softness in candidate supply during the second quarter and we expect this to continue during the summer months.

The experienced brand in the U S comprised 32% of gross profit in the quarter within the experienced in the U S. It skills comprised approximately 80% of revenues.

Experienced U S revenues grew 5% during the quarter.

We are encouraged by the current trends in our U S experience business and anticipate continued improvement into the third quarter.

Talent solutions in the U S contributed 33% of gross profit and experienced revenue growth of 14% in the quarter.

This was driven by our Po, which experienced dramatic revenue growth is hiring programs continued to strengthen.

The U S. MSP business continued to perform well and experienced double digit revenue growth in the quarter.

Career transition activity continued to run off as the economy strengthens which contributed to revenue reductions in right management in the U S.

In the third quarter, we expect ongoing underlying improvement in revenue growth for the U S. In the range of 11% to 15% year over year.

Comparing estimated third quarter revenues to pre crisis levels in constant currency. This represented the 2% decline compared to 2019 levels in the third quarter using the midpoint of our guidance.

Our Mexico operation experienced revenue growth of 6% in constant currency in the quarter.

On April 20, <unk>, the Mexican government passed labor legislation that will prohibit certain types of temporary staffing not considered specialized services beginning on July 23.

As such companies operating in Mexico will be prohibited from using temporary staffing for functions that are already deemed to be in house core competencies of their workforce.

We have been working with our clients as the market absorbs this legislation and anticipate that we will have a reduction in revenues in our Mexico business beginning in the third quarter as clients navigate through the legislation and ship their workforce strategies accordingly.

Although this will result in revenue reductions over the next few quarters, we believe the mix shift towards more specialized staffing will improve the margin profile of our Mexican business.

We also believe there may be additional revenue opportunities over time as clients adjust their workforce strategies.

Although it is difficult to forecast based on how quickly the legislation is being enacted right.

Currently estimating of revenue decrease for the Mexican business in the third quarter in the range of -28% to -32% in constant currency.

Mexico represented 2.8% of our 2020 revenues.

Revenue in Canada increased 22% and days adjusted constant currency during the quarter.

Revenue in the other countries within the Americas increased 40% in constant currency. This was driven by significant constant currency revenue growth in Argentina, Colombia, Peru and Chile.

Southern Europe revenue comprised 46% of consolidated revenue in the quarter Rev.

Revenue in Southern Europe came in at $2.4 billion growing 51% in constant currency.

This reflects ongoing improvement driven by France and Italy.

P equaled $115 million and OUP margin was 4.8%.

France revenue comprised 56% of the southern Europe segment in the quarter and increased 67% and days adjusted constant currency.

Compared to the same period in 2019, France revenues were down 12%.

Although restrictions had an impact on the rate of revenue improvement during the quarter. The French business continued to perform well in the challenging environment and we expect ongoing improvement now that the majority of the restrictions have been lifted.

OUP was $66 million in the quarter and OUP margin was 4.9%.

As previously referenced direct cost accrual adjustments, representing approximately $10 million benefited France's results.

As we begin the third quarter, we are estimating of year over year constant currency increase in revenues for France, and the range of 12% to 16%.

Comparing estimated third quarter revenues to pre crisis levels in constant currency. This represents a 5% decline compared to 2019 levels in the third quarter using the midpoint of our guidance.

Revenue in Italy, equaled $469 million in the quarter, reflecting an increase of 57% and days adjusted constant currency.

Through the second quarter revenues in Italy continued to exceed 2019 levels.

OUP equaled $32 million and OUP margin was 6.8%.

We estimate that Italy will continue to perform very well in the third quarter with year over year constant currency revenue growth in the range of 20% to 24%.

Revenue in Spain increased 12% and days adjusted constant currency from the prior year and revenue in Switzerland increased 33% and days adjusted constant currency.

Our northern Europe segment comprised 22% of consolidated revenue in the quarter.

Revenue increased 23% in constant currency to $1.2 billion driven by all major markets.

OUP represented $18 million and OUP margin was 1.5%.

Our largest market in the northern Europe segment is the UK, which represented 37% of segment revenues in the quarter.

During the quarter UK revenues grew 30% and days adjusted constant currency, which included significant new business.

The UK continued to perform above 2019 levels in the second quarter.

We expect continued strong growth in the 34% to 38% constant currency range year over year in the third quarter.

In Germany revenues increased 9% and days adjusted constant currency in the second quarter.

Although Germany continues to be of difficult market for our industry, we expect to see ongoing revenue improvement in Germany in the third quarter.

In the Nordics revenues grew 17% and days adjusted constant currency.

Revenue in the Netherlands increased 9% and days adjusted constant currency.

Belgium experienced days adjusted revenue growth of 24% in constant currency during the quarter.

Revenue in other markets in Northern Europe grew 41% in constant currency in the quarter. This was driven by strong revenue growth in Poland, Russia and Ireland.

The Asia Pacific Middle East segment comprises 12% of total company revenue in.

In the quarter revenue grew 6% in constant currency to $620 million or.

OUP was $22 million and OUP margin was 3.6%.

Revenue in Japan grew 10% and days adjusted constant currency, which represents an improvement from the 6% growth right in the first quarter.

Our Japan business continues to lead the market in revenue growth and we expect the ongoing mid to high single digit revenue growth in the third quarter.

Revenues in Australia were down 11% and days adjusted constant currency revenue in other markets in Asia Pacific Middle East grew 9% in constant currency.

I'll now turn to cash flow and balance sheet during.

During the first 6 months of the year of free cash flow equaled $171 million compared to $577 million in the prior year quarter, reflecting significant accounts receivable declines in the prior year period.

At quarter end day sales outstanding decreased year over year by almost 2 days to 56 days.

Capital expenditures represented $12 million during the quarter.

During the second quarter, we purchased 432000 shares of stock for $50 million.

Our year to date purchases stand at 1.5 million shares of stock for $150 million.

As of June 30, we have 1.9 million shares remaining for repurchase under the 6 million share program approved in August of 2019.

Our balance sheet was strong at quarter end with cash of 1.46 billion and total debt of 1.9 billion, resulting in a net cash position of $368 million.

Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $1.79.

And total debt to total capitalization at 31%.

Our debt and credit facilities did not change in the quarter. In addition, our revolving credit facility for $600 million remained unused.

Next I'll review, our outlook for the third quarter of 2021 or.

Our guidance continues to assume no material additional lockdowns are business restrictions impacting our clients than any of our largest markets beyond those that exist today.

On that basis, we are forecasting earnings per share for the third quarter to be in the range of $1.86 to $1.94, which.

Which includes a favorable impact from foreign currency of <unk> <unk> per share.

Our constant currency revenue guidance growth range is between 12% and 16%.

The midpoint of our constant currency guidance of 14%.

Minor decrease in billing days in the third quarter and the slight impact of net dispositions impact the growth rate slightly resulting in an outlook for organic days adjusted revenue growth of 15% at the midpoint.

Adding the context of comparisons of the pre crisis activity levels. This would represent the third quarter organic constant currency decline in the range of 1% to 3% compared to 2019 revenues.

We expect our operating profit margin during the third quarter to be up 50 basis points at the midpoint compared to the prior year.

This reflects another quarter of continued strong sequential underlying improvement.

We estimate the effective tax rate in the third quarter will be 33%.

Based on our improved earnings mix, we are now estimating the full year effective tax rate will approximate 33% of 1% improvement from our previous estimate of 34% provided last quarter.

As usual our guidance does not incorporate restructuring charges or additional share repurchases and we estimate our weighted average shares will be $55.2 million.

I will now turn it back to you on this.

Thanks Jack.

We continue to invest in technology and are making great progress on our exploration plans to diversify digitize and innovate.

Starting with diversification, we've been recognized again for our award winning <unk> business within our talent solutions brand, scoring highly of our strong tech ecosystem, our consulting capabilities data driven solutions and business intelligence.

This is the 11th year, we have been named the global leader in <unk> and the average grew peak matrix assessment. We've also just been named MSP leader for the eighth consecutive year by Everest recognizing us at the top end market impact. The also recognize our global leadership and tech as well as our workforce strategies data driven approach and skill.

The solutions, including right management, and our consulting capabilities.

I congratulate our talent solutions colleagues for our leadership and the IPO of MSP space, which is an important component of our diversification strategy to grow higher margin value business.

Next from Digitization and continued to rapidly execute our technology and web transformation.

Power sweep tech stack is helping us to grow our competitive advantage as we shift to cloud platforms, improving our customer experience, while streamlining our candidate management.

Our approach ensures we're always current able to plug in with the best Tech and the capability to scale, while turning our data into key asset.

We continue to move at speed 19 market deployments have been completed and another 16 are in flight, we look forward to providing a further update on this at year end.

We're also making great progress in innovation in June we joined the biggest names in tech at the World famous Viva Technology Conference in Paris.

As the conferences only HR part of since it launched 5 years ago. This is of great opportunity for us to showcase our newest innovation and work with more than 30, HR startups on how we're using AI machine learning and data driven predictive performance tools together with our human expertise to upskill people at speed and <unk>.

Scale and match people, 2 jobs with better accuracy and speed than either humans or machines could do on their own.

Building, a better brighter future of work requires bold the disruptive ideas and collaboration across business government and education.

This is how we will create sustainable skills resilient communities and greater prosperity for all.

I'd now like to open the call for Q&A.

Operator.

Thank you we will now begin the question and answer session to ask the question. Please press star 1 please the meager Fallon and record your name and company name slowly and clearly when prompted.

With the required to introduce your question the cancel your request kras.

1 moment please for the first question.

The first question came from the line of Andrew Steinman of Jpmorgan. Your line is now open.

Good morning, Andrew I wanted to ask you. If you felt like we were at the beginning of a new economic expansion cycle I definitely took note of your U S comments, where you said demand or your labor feels stronger than I expected in a typical economic recovery of then I heard the.

The caveat that the supply at least through the summer months seemed more constrained than a typical economic recovery and some of my question is for the U S and for Europe do you feel like this is the beginning of an economic expansion were temporary help really benefits for a couple of years.

Or do you feel like you were going to kind of get back to where we were in 2019.

Good morning, Andrew and yes, it's a great question and our view would be twofold first of all there are some anomalies in terms of how we got into the economic recession, and how we're getting out of that economic recessions of the speed of the downturn the speed of the recovery.

The supply shortages that we're seeing in the U S and frankly also in other in other countries for various reasons as we spoke about in our prepared remarks, but our feeling is that all of this leads to the.

The beginning of a new economic cycle, and we are seeing stepping back from some of these anomalies really the the signs of what that would look like and to your point around the the increased demand for strategic and operational flexibility, we truly believe that our penetration rates.

We'll continue to we'll continue to improve and we'll surpassed prior peak levels from the previous cycle, because if you ever needed. A reminder of the benefit of that flexibility. Both in terms of increasing the need for work force adjusting to an unexpected event, but long.

Their term adjusting to structural changes with skills changing as companies want to make sure. They have the skill sets in the workforce to take advantage of technological progress.

And other structural drivers we feel we really feel that this is this is going to be.

A question of long term demand for our services and solutions all of this new economic cycle.

Right and just make a comment about the supply do you feel like supply will improve in the United States as we get into the fall.

But from what we can see today.

The work is clearly still have health concerns they have child care concerns and we have a very significant impact of stimulus package and unemployment benefits.

For the most part at least in terms of the unemployed. The additional unemployment benefits will will will terminate the around the sixth of September for a lot of states some of them already have.

And of those additional benefits and we feel that this has been a factor in the.

The supply of the workforce back into the labor markets and of course, we're also hopeful that vaccination rates will continue to improve and those 2 in combination we believe it will.

We'll increase the supply of workers into the labor market. So that we can see this normalize over the coming quarters.

Well Scott Thanks for your comments I appreciate it.

Thanks Sandra.

Thank you and our next question is from the line of Jeff Silber of BMO capital markets. Your line is now open.

Thank you so much along the lines of the supply constraints is there anything you're doing on your own proactively to try to mitigate that that might have been different now than it has been in the past.

We have not really adjusting to the.

The supply constraints that we see by offering upskilling and reskilling opportunities for our existing associates and Thats under the program called might path, where we have the ability to take our existing associates on the assignment retain them by offering them progression in terms of the the skills and the job opportunities of that we have and of course.

All kinds of other measures that we can whether it's referral of bonuses assignment completion bonuses all of those in collaboration with our clients are clearly measures that we're taking to attract and retain the associates that we have.

On assignments and I would say this is something that we're seeing not only in the U S. Net it's also to a lesser degree evident in Europe, but as I mentioned in my earlier remarks, we really see this as a temporary effect and an anomaly following the pandemic and we expect it to normalize over the coming quarters.

Really expect to see some changes 1 of the U S. The additional employee unemployment benefits are running out in September. So we would expect the situation to improve because we feel that there is ample supply, but it's being held back for various reasons and those reasons will will dissipate over time.

Okay fair enough.

In looking at your operating margin guidance for the third quarter.

It looks like the revenues compared to 3 Q2.19 should be higher yet your operating margin guidance of 3 to 3.2% as lower then re queue of 19th 3.6 is there something structurally going on now or are you just maybe being a little bit more conservative.

Yes. This is Jack no I'd be happy to take that so.

We did say at the end when we gave the third quarter guide when you compare to 2019 were still below so we were down I think the range. We provided was down -1 to -3%. So just to clarify that that was still below 2019, so at the midpoint that's about $2.

2% below 2019 levels and I think the if you think about our biggest businesses.

France, we mentioned.

It was still below by 12% in the second quarter, that's going to improve in the third quarter, but they'll still be below <unk> by 5% from 2019 levels. So that's the biggest business, we have 25% of our revenues and Thats, having an impact the good news is the operating margin is definitely.

Moving on an underlying basis.

As I look at the second quarter.

We did talk about the accrual adjustment we had in France that added about 20 basis points. If you take that out our $3..2 was about 3 point O and if you look at the guidance into the third quarter that improves to the 3.1%. So we are seeing sequential underlying improvement.

In the U S. We mentioned is still below 2019, and we think with the the forecast for the third quarter, we're going to continue to narrow that gap as well. So those are the top 2 businesses. The good news is we are making progress in narrowing that GAAP and on an underlying basis. If you look back first quarter, we were down from.

<unk> 2019 about 5.5%.

Second quarter.

As we mentioned we were down about 4%. So we saw that ongoing improvement and we're projecting another 2% improvement to -2% from the third quarter versus 2019, so quarter by quarter. We continue to narrow that gap and you should expect that our operating profit margin will continue to improve with the.

The same trend.

Okay I must have been looking at U S. Dollar that only thank you for the clarification appreciate it.

Sure.

Thank you. The next question is from the line of Hamzah, Missouri of Jefferies. Your line is now open.

Hi. Thank you this is Mario <unk> filling in for Hamzah.

Could you just comment on how much of your margin target of $4.5 5%.

Based on further upside from leveraging gross margin I guess specifically.

How much more room is there to increase exposure to the mid size customers versus the enterprises or to the drive that higher margin solution.

In professional staffing mix, just wondering where you are in that journey.

Sure I'd be happy to talk about that maybe first I'll. Just say we are definitely still committed to the 4.5% of 5% EBITDA margin target more than ever I think we're very encouraged by the progress we've been making in this recovery quarter over quarter in terms of operating profit.

<unk>.

And what I'd say is how we're going to get there to your question is certainly GP margin is going to be part of the equation I think what we saw this quarter was good GP margin development.

Perm came back very very strongly this quarter you can see the impact that that had in our GP margins.

I would say the.

The permanent hiring market is very very strong in our largest markets right. Now so we talked about Italy, we talked about the U S. The U K is coming back and narrowing that GAAP to pre pandemic levels. So GP margin mix is going to be part of the equation, you mentioned solutions and experience that.

It's definitely part of our.

Our roadmap to improve the contribution from those businesses and this quarter was a great example of the opportunity there. So both talent solutions and the experienced growing very very strongly and that trend. We expect that trend to continue into the third quarter as well so improving the mix the contribution from those businesses.

Mrs going forward will definitely help and to your point on convenience. So we have the large enterprise, which definitely from a mix shift was part of what we saw in 2020 became a bigger part in the convenience market, which is higher margin is coming back and we saw that start to happen in the U S. The.

<unk> had very very good GP margin improvement during the quarter and we expect convenience to continue to come back and I think thats. There is more to go in that regard and thats going to help us be an additional tailwind in improving our staffing margin going forward as well. So I think all of those factors are.

Going to be issues that are going to are going to be initiatives are going to help us increase GP margin and along the same time, we've talked to a great extent about the technology investments, we're making those technology investments are increasing our recruiter productivity, that's going to help our GP margin as well.

And that's going to help our overall SG&A efficiencies, so that along with our other cost transformation initiatives, which we've talked about in the past in terms of our back office initiatives and other items all of those are going to be part of the mix to continue to improve our operating profit margin progressively going forward.

Great. Thank you and then just my follow up is on the.

The the bill pay rates, so could you walk us through maybe what Youre seeing right now.

On the bill pay rates across your portfolio and maybe you can talk us through how you're thinking about labor inflation and the impact on your business.

And then maybe just as supply comes back into the market how that labor inflation I think of the timing of what you're expecting on that normalized.

Well from a as the starting point Mario wage inflation is generally good for our business as we were able to increase our our bill rates and in line with at least that wage inflation.

And we are seeing some good.

Hey, Bill GAAP expansion in the number of markets, notably the U S and Japan.

And we are seeing especially for a number of manpower of skill sets. Some very strong of wage inflation right now as I'm sure. You've also seen a lot of the efforts from employers to attract and retain their employees.

Also come not only with wage increases, but also 1 time bonuses the the referral retention.

And the and those kinds of that are of that onetime nature, so that wage inflation doesn't get out of hand.

Because of employers are very well versed on what it is that they can pay to be competitive in the market and whilst we are seeing a spike a little bit in some of those of wages in some of the skill sets over time, we think that wage inflation will moderate and more accurately reflect then also.

Of an improved supply into the labor market as the lingering effects of the pandemic and the stimulus.

Initiatives.

The start to.

Start to wear off and you get a little bit more of a normalized labor market dynamic. So we are seeing a slightly.

Slightly higher wage inflation in particular for some manpower skills.

But we feel that this will get adjusted.

All the time until more normalized level, there as well.

Great. Thank you.

Thank you and the next question is from the line of Mark <unk> of Baird. Your line is now open.

Hey, good morning on the subject.

Jack.

And of a few different questions 1.

You've made some fairly positive comments with regards to France from of longer term perspective, I'm wondering if you can just discuss some of the things that are giving you. The reason for optimism with regards to just France, becoming more competitive in general.

Thanks, Mike, Yes I.

I think we've been very positive on France for a while if you recall the structural reforms that France has implemented as it relates to our industry from a labor market perspective.

That has had a positive effect, but the overriding ambition of France, and the French administration is to make France more competitive in the global economy and that means lowering tax rates, making sure. The labor costs are in line with our closest competitors in Europe and the globally.

And directing investments into areas that they believe are fast growing parts of the economy. So having had the opportunity to spend some time with precedent in my call and as governments along with other global leaders.

A few weeks ago in France.

It is a program that they also intend to promote going going forward and that we believe is a very positive sign we think they have further opportunities of number of areas to address the labor markets, making them, even more competitive as well as further investments in infrastructure and specifics.

Actors and all of this taken together gives us a great deal of optimism as it relates to France is role.

And the opportunities that we will have as manpower group in France to see our business continue to grow.

Right and then can you talk a little bit about what youre seeing in the U K on a monthly or weekly basis, obviously, they're further along in terms of the.

The new wave with regards to Delta.

And the impact there in terms of the number of cases, how is that translating to actual demand on the street.

What does that portend for the rest of the world.

Yes, Mark this is Jack I would be happy to talk to that so I would say the UK is actually been performing very very well despite the.

The the issues with the Delta variant that has we've seen start to increase more recently and if I look at that trend I think the year over year monthly trends.

Sure.

Arent overly helpful because of the prior year was really the depth of the pandemic, but what I would say when you compare to 2019 levels. The U K has actually been above 2019 levels in both the first quarter and the second quarter and we expect that to continue in the U K has actually won some significant new business.

This as well which is great.

I would say it hasnt really been a big factor in our business in the UK.

And in the outlook continues to look very strong in terms of demand from our customers in the UK I did mentioned perm.

And in the U K made some good progress in Perm recruitment in the second quarter as well still not quite back to pre pandemic, but definitely narrowing the gap quite significantly so I would say on an overall basis on the UK business has actually been performing very well. Despite the recent increases in the delta dealt.

The variance.

Right and then last question is just with regards to gross margins I mean really nice improvement.

In the second quarter, it's been it's been a few years since we've achieved this level.

And I know, we had the 20 basis point improvement from the accruals in France in terms of the reversal, but when I take a look at the.

The performance and then I take a look at the midpoint of the guidance for the third quarter is that conservatism or is it perhaps mix in terms of maybe places like France of becoming a little bit bigger of a part of the mix or how should we think about the guidance for gross margins for the third quarter relative to the second.

The quarter.

Yes, no good.

Good question Mark of what I would say, it's generally in line with what we're seeing on an underlying basis currently so.

To your point 16, 3% in Q2 take out the accrual adjustment that we called out for 20 basis points. So on an underlying basis.

16, 1 we're guiding to 16 point of next quarter that 10 basis points is largely a bit of of mix.

Remember in the third quarter, we do have the holiday impact in some of our European countries that put a little pressure on our bench as result of that so it's not uncommon to see a little bit of pressure from the second quarter 2 of the third quarter in those markets, but on an overall basis I would say gen.

<unk> in line and still we expect good underlying positive momentum on staffing margin going into the next quarter.

Great. Thank you.

Thank you and the next question is from the line of Kevin Mcveigh of Credit Suisse. Your line is now open.

Great. Thanks, Hey.

And I guess in regards to kind of.

Where we are in the cycle I guess Jack of illnesses.

You've done a much better job with margins this cycle.

Is there any way to think about how we should think about just the longer term the impact on margins as we transition through the next up cycle and when you were able to hold onto a lot more of the margin.

In this downturn as opposed to <unk>.

Of our cycle, so how should we think about that.

We're working our way through this upturn.

Thanks, Kevin.

So I would say this is a bit related to the previous discussion I think we've had in terms of our margin target and to your point.

A bit related to our views on the cycle in terms of the economic recovery and the opportunity going forward. So, yes, I would say.

We're very pleased by the margin progression that we've seen over the last few quarters I think if you think about the opportunity to continue that I think per.

<unk> very very strong this quarter, we actually are back to 2019 levels in Perm organically.

Which is great to see so very strong.

The Perm contribution to margin is significant and that is going to be an opportunity for us as we go forward and we've been investing in that we've been investing in Perm consultants in some of our key markets and we're starting to see.

Good results.

As a result of that investment so as we look forward I would say our GP margin initiatives combined with the technology agenda that we've been implementing and as Jonas mentioned, we're making very very good progress on the technology agenda, we've been implementing at speed on plan.

And those those are all proceeding very very well so when we get to the end of this year will really be down to just a handful of markets that don't that will be.

Implementing the new front office system and will be very very well positioned to continue to see the improvement from that recruiter efficiency going forward. So I would say, we're very optimistic about the opportunity to March to that EBITDA margin target and once.

1 step at the time, but once we get to that we'll talk more about what snacks, but I think.

As John has said earlier, we look at this economic recovery as having some real legs and some real momentum, particularly in the manufacturing sector that we've talked a lot of about that really impacted our business quite significantly in the second half of 2018 in 2019, and we think that that's going to have a good run going forward as well so.

All of those factors give us the confidence that we have a very very good opportunity to improve our operating profit margin.

The medium term here.

That helps and then Jack any thought as to kind of the length of assignments just given the tightness of supply of people keeping candidates on assignment of a little bit longer just any anything to call out in terms of the client conversations around tone, just as we're thinking about the near term trends.

I would say Kevin that the.

The clients and us are very focused on keeping our associates on the assignment, but as you can imagine at the very tight labor markets of the competition for talent is high so.

We probably see.

The more more churn than we would normally do but on the other hand, we've been able to manage it well and this is our business and we know how to recruit and attract and retain people. So I think it is is it depends of course on the on.

The where you are in the world, but overall it is a tight supply market from a workforce perspective, but we are managing managing to mitigate those impacts of reasonably well I would say.

Super Thank you.

Thank you and the next question is from the line of Tobey Sommer of true of Securities. Your line is now open.

Hey, good morning. This is Jasper bibb on for Tobey.

I wanted to follow up on margin guidance from where the company is in the process of bringing back the SG&A like should we be looking for more SG&A in the fourth quarter as of <unk> guidance pretty close to what the cost base can look like theyre going forward.

Jasper This is Jack so I would say what you've seen us do.

During the pandemic, we took cost down very sharply.

To manage our recovery ratio and we did that very well and now in the recovery, we've been investing in that growth and so when I look back at the first quarter, our ftes were still down year over year about 3%.

On average in the second quarter.

When we compare to the second quarter to the first quarter were up about 3% in Ftes and I would expect as demand continues to improve and we continue to recover you should expect that we will be continuing to invest in that I think the.

Key will be that we're managing that very carefully so during the pandemic, we've talked a lot about the recovery ratio now it's all about GP flow through so that incremental GP year over year, we're seeing a good amount of that fall down to the bottom line and so we will continue to invest but we will do that care.

The fleet to ensure that we continue to get good GP flow through going forward. So you should expect that we will continue to take costs up with that increase in GP dollars coming through but we'll do that carefully to ensure theres still good flow through down to operating profit dollars.

Okay.

And then with respect the talent solutions and what's driving your new client wins there beyond the cyclical rebound do you think more clients are looking to adopt solutions like <unk> or MSP as they rethink their cost structures talent management programs et cetera.

Covid.

Welcome to our clients' Jasper they are clearly, indicating that yes, right now they have a significant need but the sudden onset of the pandemic also reminded them of the needs to have the flexibility both ramping down and ramping up so we really see this as.

Another impetus for market penetration in terms of human capital outsourcing solutions, such as our RPM of offerings and our MSP offerings under the talent solutions brand. So we've been very encouraged by the progress and based on those offerings and talent solutions as a whole.

Is now above 2019 levels because of the strong resurgence of the RPM and the continued very strong progress of our MSP offerings. So we think that this is.

Certainly benefiting from the cyclical rebound of the bus in terms of the new client wins, we had and that we've talked about the prior quarters that were of scale during the pandemic and our current pipeline we feel very good about the progress that we've made and the outlook for talent solutions going forward as well.

Got it nice part of guys. Thanks for taking the question.

Yes.

Thank you and the next question is from the line of Gary Bisbee of Bank of America Securities. Your line is now open.

Hey, guys. Good morning. So the first question, it's interesting the Italy and I think you just said the U K are ahead of 2019 of few markets. It looks like in other Americas, clearly ahead, but yet a lot of markets are well behind that just market factors.

Sort of what are the key.

Variable determining how quickly the business come back versus 2019 of what are the gating factors if any to some of those true.

<unk> more of like the ones that are already ahead.

Well the the starting point is probably the depth and the degree to which they were hit during the pandemic. So as Jack noted earlier, France is making its way back to.

2.2019 levels, but also the their hit and the how deep. They went as you know from our industry perspective, the steepest decline of all countries globally. So is the starting point would be how deep and how hard was the market the market hit and.

After that you have specific market conditions, what are the strength of various sectors compared to others and what was the severity of the Lockdowns and how much was business impacted on how quickly. We're those lockdowns released and then finally, what is the confidence and the speed around the vaccination rates.

Those are the things that combined.

Make certain markets recover a little bit quicker, but I would say the most important aspect of this is how deep the the market dropped initially and then then how quickly are they able to make their way back that would sort of be on average. The reason why you see some the disparity, but having said all.

All of that as we noted in our prepared remarks, the recovery is broad based across the markets and industries manufacturing and services.

So it is that is a common factor across all of the markets, where we operate and the speed of the recovery against the especially 2019 depends a bit on those factors I mentioned.

Okay, Great and then there's been a lot of press reports around workers' shifting from some industries. The others. For example, maybe people not wanting to go back in the hospitality jobs, but having moved to other industries, where there's been more hiring during the pandemic.

Are you seeing that in countries outside of the U S, where I think it's been discussed a lot and what are the implications if any for your business from sort of shifts in the type of work.

The workers' 1 of the.

The forum.

First of all I'd say that the labor market dynamics in the U S are probably a little bit unique. It is a highly dynamic very open labor markets, where we have a significant level of churn even in a normal in the normal year end certainly post pandemic.

Or within still the the ending parts hopefully of depend them again, it's still a labor market that's impacted with some anomalies related to that to that pandemic. So the fact that people are moving between industries. Although it may be at somewhat of an accelerated pace right now really is a hallmark of the U S.

Labor market as a whole and to a much lesser degree.

Is a phenomena that we see in other markets.

Overall, I think our task and what we're very good at is finding skilled workers or specific industries and meeting the needs of those workers as matching those of the demand from the employers and we have as of 1 of our hallmarks to try and understand what skill set.

Our applicable not only to 1 specific industry, but the multiple industries. So that we can provide opportunities to workers. So.

At this point.

Is.

Impacting our ability or rather what is impacting us in the U S. As we mentioned in our prepared remarks has to do with supply.

Not the churn and the increased movement between industries and that's really a factor that that we are looking at but as I mentioned earlier, we expect that to dissipate over the coming quarters.

But this movement between industries is frankly quite logical.

Certain industry is heavily impacted in the outlook is uncertain. It is understandable that workers will do everything they can to try and find the gainful employment in another industry with our skill sets are applicable and thats, what youre seeing happening now I don't think of this is going to impair the ability for the hospitality industry over the <unk>.

Long term to attract workers.

Lee they will adjust our hiring practices and offer better pay and conditions as the need to compete in the market for talent at once they've done that they will start to normalize that flow as the remainder of the remaining and lingering effects of the pandemic star.

The start to start to start to decrease and then I would just add Gerry we didn't include our industry vertical update as an appendix to our earnings slides as we show we don't have.

Significant exposure to the hospitality industry. So if that trend does persist that you mentioned that could be an opportunity from a work of supply side into some of the sectors that we are strong in.

Thank you.

Right.

Thank you and the next question is from the line of Matt of Pittsburgh of Barclays. Please go ahead with your question.

Thank you I just had 1 quick question for you guys and that is obviously you said your guidance isn't as GM of any future lockdowns, but it sounds like maybe the delta vein will cause some of that so I was just curious.

Combat since we've been through this for a year and a half of so how are you guys preparing for potential locked down and maybe what are your clients, saying just trend.

Gauge, what the impact could be I presume that it would be less than what we saw last year, but just trying to see how you guys are thinking through that.

Well, we've navigated through the existing Lockdowns for the better part of the second quarter and they then subsequently eased.

During June and in some places now.

Countries are implementing additional lockdowns, but what we what we saw in the second quarter and frankly.

For 4 of large parts of the pandemic excluding the initial.

<unk>.

The governments really focused on reducing social interactions to the greatest degree possible by allowing work to continue to the greatest degree possible. So we think that there will be exactly the same objectives going forward and I think the latest lockdowns that youre seeing for instance.

Occurring in France are making a clear distinction between those those that are vaccinated in terms of how the lockdowns affect them.

Not very much if at all and those that are <unk>, which are the ones that unfortunately are the the most impacted by the surge in delta variance and that is certainly true in Europe and as far as other countries in other parts of the world, where the lower vaccination rates flatten the.

America is making its way through this pandemic and managing to keep their economic growth going and improving.

The Asia Pac is now seeing some resurgence and of course their strategy has been to isolate and closed our countries, but for the most part when we look at Japan has had that may be 3 of 4 state of the emergencies. They have focused on maintaining the ability to go to work and reduce the social.

The interaction so in summary, we would expect that governments would apply exactly the same principle of reducing social interactions in the areas where the infections occur.

The focus on incentivizing increase vaccination rates and that is why at this point, we don't expect any material impact of Lockdowns clearly as we mentioned that can change, but if the government's navigate this as they have in the past during more difficult times with no vaccination.

Available we expect this to be managed in exactly the same way and therefore at this point not expecting material impact.

Alright, thank you.

Thank you and our final question came from the line of George Tong with Goldman Sachs. Your line is now open.

Hi, Thanks, Good morning, I just wanted to follow up on that last question on the impact of Lockdowns again, your guidance assumes no material additional lockdowns or business restrictions beyond those that exist today can you describe which of your markets are seeing the most restrictions currently obviously things are in flux right now you talked about the U K.

In France and in parts of Asia and the.

I guess, even though your guidance assumes no material impact from the adult the variance how would you frame the downside risks.

In terms of potential impact.

George as I mentioned in my in my previous response.

Clearly first of all of this can change, but if the past is a guide to what we can think of what governments will do they will want to continue to keep of the economic growth engine going and minimize the impact of any restrictions to the greatest degree possible certainly tweaking.

On the growth and to their populations as well so what's different compared to the prior lockdowns and of course.

All of the progress that you've seen over the quarters here over the last 4 quarters really has been under.

Quite severe lockdowns that have progressively been eased, but really majorly only been eased over the last quarter or so and frankly in the last part of the second quarter in many countries. We've shown an ability to adapt to those restrictions and still be able to serve our customers.

And meet the increased demand for flexibility and the strategic and operational workforce additions on the temporary until the permanent basis. So it's very hard to predict of course, what what the resurgence of would do but we think the stance of governments will be very similar if not even more.

More focused on trying to keep the engine going trying to motivate their people to get vaccinated and that in combination is why we are at this point.

Believing that they want to be a major impact, but as I mentioned this can change but based on what we are seeing today that appears to be the case.

Got it and then lastly can you discuss the competitive environment and if you've seen any changes in market share is in your key geographies as economies begin to recover.

We're really seeing a.

Traditional dynamic in terms of a recovery, albeit may be somewhat different in terms of the speed of certain.

Certain of our services and solutions as Jack mentioned, our permanent placement activity is actually above 2019 of normally permanent placements and permanent recruitment is a bit of of lagging.

Our lagging offering in the traditional recovery, but in this case it has actually been synced.

Synced with and in some cases, even ahead of the temporary staffing recovery. So we think the dynamics overall.

The very similar tradition of recovery may be on somewhat faster speed and in terms of the market. It remains very competitive but also rational and is not really theres really nothing I'd call out that is that is different from what we've talked about the prior quarters.

Got it very helpful. Thank you.

And that brings us to the end of our Q2 earnings call. We look forward to speaking with you again on our third quarter earnings call and the very importantly for today go box. Thanks.

1 of a great rest of the week.

Thank you and that concludes today's conference. Thank you all for participating you may now disconnect.

[music].

And CEO Jonas Prising, Sir you may begin.

Welcome to the second quarter conference call for 2020, 1 of our Chief Financial Officer, Jack Mcginnis, who was on the call with me today and.

For your convenience we have included our prepared remarks within the Investor Relations section of our website at manpower group Dot com.

I will start by going through some of the highlights of the quarter and Jack will go through the second quarter results and guidance for the third quarter.

I will then share some concluding thoughts before we start our Q&A sessions, but before we proceed Jack will now cover the Safe Harbor language.

Good morning, everyone. This conference call includes forward looking statements, including statements regarding the impact of the COVID-19, pandemic, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs actual results might differ materially from those projected in the forward looking statements, we assume no obligation to us.

Date or revise any forward looking statements.

2 of our earnings release presentation. Further identifies forward looking statements made in this call and factors that may cause our actual results to differ materially in the information regarding reconciliation of non-GAAP measures.

Pace of the recovery of strong with the hiring of intense picking up much faster than after the previous economic downturn and although the recent inspection increases are concerning we do not believe they will materially impact the positive recovery trajectory.

I spent a considerable amount of time during the second quarter in Europe with the market leaders teams and clients. This included time with our French team at Viva Tech 1 of the worlds largest technology conferences in Paris, which I will talk about the later as part of our innovation update and together with other global leaders I also spend time with president of the micro and.

The government at the choose France event.

I believe that the future for France looks bright as the government continues on its path to make France more competitive and our business is very well positioned to benefit as their economy growth.

It is clear from my discussions with clients. The demand is coming back very strongly for our services across all of our brands.

This is evidenced in temporary and permanent placement activity as well as demand for workforce solutions.

Turning to our financial results from the second quarter revenue was $5.3 billion up 31% year over year in constant currency.

We grew revenue significantly in our key markets.

And this resulted in better than expected financial performance.

Our operating profit for the quarter was $117 million operating profit was up significantly as we anniversaried the depth of the pandemic financial impact.

Operating profit margin of <unk>, 2% and after excluding special charges in the prior year operating profit margin increased 260 basis points.

Earnings per diluted share was $2 of <unk>.

As we welcome the stronger economic recovery than anticipated, we also see our clients experiencing supply constraints with much tighter labor markets in many countries and competition for talent heating up.

Our most recent talent shortage survey of 42000 employers in 43 countries found that 69% of employees globally, a 15 year high of reporting difficulties hiring skilled workers across many industries.

Although vaccinations of more widespread workers are still dealing with issues created by the pandemic such as healthcare and childcare concerns.

Unemployment benefits and related programs are also having a lingering effect on walk of supply.

We expect the pandemic related talent shortages to ease over the coming quarters, but over the medium to long term the impact of Digitization and all the structure labor market changes are here to stay.

This means hiring of skilled talent and supporting people to Reskill and Upskill from growth rolls will be a driver of demand into the foreseeable future.

It is of workers market right now and as a result, we're also beginning to see employers respond to what workers want.

Wage increases in places more flexibility of skills development and the clear commitment to ESG, especially clarity around the organization social and climate impact.

I would now like to turn it over to Jack to take you through the financials and country performance details.

Thanks, Jonas revenues in the second quarter came in at the high end of our constant currency guidance range gross profit margin came in well above our guidance range operating profit was $170 million, representing a significant increase from the prior year period, which was heavily impacted by the pandemic.

Operating profit margin was 3.2%, which was 80 basis points above the midpoint of our guidance.

Breaking our revenue trend down into a bit more detail after adjusting for the positive impact of currency of about 10% our constant currency revenue increased 31%.

As the impact of net dispositions and slightly more billing days was very minor the organic days adjusted revenue increase was also 31%.

Turning to the EPS bridge on slide 4 earnings per share was $2.02, which significantly exceeded our guidance range.

Walking from our guidance midpoint. Our results included improved operational performance of <unk> 55.

Slightly higher than expected foreign currency exchange rates, which had a positive impact of <unk>.

The slightly better than expected effective tax rate that added to it.

And favorable other expenses, which added <unk> <unk>.

Looking at our gross profit margin in detail our gross margin came in at 16, 3%.

Staffing margin contributed 60 basis point increase which included 20 basis points related to direct cost accrual adjustments in France, representing.

Representing a 40 basis points underlying improvement in staffing margin.

Permanent recruitment contributed a 50 basis point GP margin improvement is hiring activity was strong across our largest markets are.

<unk> managed services business in Europe contributed 10 basis point margin improvement.

These increases were partially offset by other business mix factors, primarily involving a lower mix of right management career transition business.

Next let's review of our gross profit by business line.

During the quarter the manpower brand comprised 64% of gross profit our experienced professional business comprised 21% and talent solutions comprised 15%.

During the quarter, our manpower brand reported an organic constant currency gross profit year over year growth of 51%.

Our manpower business experienced the biggest decline a year ago and as a result experienced the biggest increase this period and the recovery.

Compared to pre pandemic levels. This represented a decrease of 4% from the second quarter of 2019 on an organic constant currency basis.

Gross profit in our experience brand increased 23% year over year during the quarter on an organic constant currency basis.

This represented a decrease of 1% from the second quarter of 2019 kind of organic constant currency basis.

<unk> solutions includes our global market, leading <unk>, MSP and right management offerings organic gross profit increased 27% in constant currency year over year.

This represented an increase of 12% from the second quarter of 2019 on the organic constant currency basis.

Our RPM business posted double digit GP growth during the quarter and significant growth in hiring activity.

Our MSP business, which has performed well for several quarters continued to experience double digit growth from gross profit in the quarter.

Our right management business continued to see of run off in outplacement activity as the recovery strengthens and experienced some reduction in gross profit of about 9% year over year.

Our SG&A expense in the quarter was $690 million and represented a 10% increase on a reported basis from the prior year.

Excluding goodwill and other impairment charges in the prior year SG&A was 17% higher on a constant currency basis.

This compares to an increase in gross profit of 40% in constant currency and reflects balanced investment, allowing for strong gross profit flow through during the quarter.

Operational costs increased by $96 million and net dispositions represented a $1 million reduction.

Currency changes reflected in an increase of $42 million.

G&A expenses as a percentage of revenue represented 13, 1% in the second quarter, representing ongoing improvement in our efficiency as revenue recovers.

The Americas segment comprised 20% of consolidated revenue Rec.

Revenue in the quarter was $1 billion, an increase of 23% in constant currency.

<unk> was $56 million.

Excluding impairment costs from the prior year OUP increased 116% in constant currency and OUP margin increased 230 basis points to 5.4%.

The U S is the largest country in the Americas segment, comprising 60% of segment revenues revenue in the U S was $629 million, representing a 22% increase compared to the prior year.

Adjusting for franchise acquisition in days this represented the 21% increase.

Excluding impairment charges in the prior year OUP for our U S business increased 149% year over year to $38 million in the quarter.

OUP margin was 6%.

Within the U S. The manpower brand comprised 35 percentage of gross profit during the quarter revs.

The revenue for the manpower brand in the U S increased 36% during the quarter.

While the U S. Manpower business continues to recover we have noted softness in candidate supply during the second quarter and we expect this to continue during the summer months.

The experienced brand in the U S comprised 32% of gross profit in the quarter with an experienced in the U S. It skills comprised approximately 80% of revenues.

Experienced U S revenues grew 5% during the quarter.

We are encouraged by the current trends in our U S experience business and anticipate continued improvement into the third quarter.

Talent solutions in the U S contributed 33% of gross profit and the experienced revenue growth of 14% in the quarter.

This was driven by our Po, which experienced dramatic revenue growth is hiring programs continued to strengthen.

The U S. MSP business continued to perform well and the experienced double digit revenue growth in the quarter.

Career transition activity continued to run off as the economy strengthens which contributed to revenue reductions in right management in the U S.

In the third quarter, we expect ongoing underlying improvement in revenue growth for the U S. In the range of 11% to 15% year over year.

Comparing estimated third quarter revenues to pre crisis levels in constant currency. This represented the 2% decline compared to 2019 levels in the third quarter using the midpoint of our guidance.

Our Mexico operation experienced revenue growth of 6% in constant currency in the quarter.

On April 23rd the Mexican government passed labor legislation that will prohibit certain types of temporary staffing not considered specialized services beginning on July 23rd.

As such companies operating in Mexico will be prohibited from using temporary staffing for functions that are already deemed to be in house core competencies of their workforce.

Although this will result in revenue reductions over the next few quarters, we believe the mix shift towards more specialized staffing will improve the margin profile of our Mexican business.

We also believe there may be additional revenue opportunities over time as clients adjust their workforce strategies.

Although it is difficult to forecast based on how quickly. The legislation is being enacted we're currently estimating of revenue decrease for the Mexican business in the third quarter in the range of -28% to -32% in constant currency.

Mexico represented 2.8% of our 2020 revenues.

Revenue in Canada increased 22% and days adjusted constant currency during the quarter.

Revenue in the other countries within the Americas increased 40% in constant currency. This was driven by significant constant currency revenue growth in Argentina, Colombia, Peru and Chile.

Southern Europe revenue comprised 46% of consolidated revenue in the quarter Rep.

Revenue in Southern Europe came in at $2.4 billion growing 51% in constant currency.

This reflects ongoing improvement driven by France and Italy.

P equal to $115 million and OUP margin was 4.8%.

France revenue comprised 56% of the southern Europe segment in the quarter and increased 67% and days adjusted constant currency.

Compared to the same period in 2019, France revenues were down 12%.

OUP was $66 million in the quarter and OUP margin was 4.9%.

As previously referenced direct cost accrual adjustments, representing approximately $10 million benefited France's results.

As we begin the third quarter, we are estimating of year over year constant currency increase in revenues for France in the range of 12% to 16%.

Comparing estimated third quarter revenues to pre crisis levels in constant currency. This represents a 5% decline compared to 2019 levels in the third quarter using the midpoint of our guidance.

Revenue in Italy, equaled $469 million in the quarter, reflecting an increase of 57% and days adjusted constant currency.

Through the second quarter revenues in Italy continued to exceed 2019 levels.

OUP equaled 32 million and OUP margin was 6.8%.