Q3 2024 ManpowerGroup Inc Earnings Call

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Speaker Change: Welcome to ManPour Group's third quarter earnings results conference call. You'll be putting the snowly mode until the question answers time begins. This call is being recorded if you catered drop off now, please do so. I would like to turn the call over to ManPour Group's chairman of CEO, Mr. Jonas Prising. Sir, you may begin.

Jonas Prising: Welcome and thank you for joining us for a third quarter 2024 conference call.

Jonas Prising: A chief financial officer, Jack McGinnis, is with me today. For your convenience, we have included a prepared remarks within the investor relations sections of our website at mampagroop.com. I will start by going to some of the highlights of the quarter, then Jack will go through the third quarter results and guidance for the fourth quarter of 2024.

Jonas Prising: I will then share some concluding thoughts before we start our Q&A session.

Speaker Change: Jack will now cover the safe harbor language.

Jack Mcginnis: Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties.

Jack Mcginnis: These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the port looking statements. We assume no obligation to update or revise any forward-looking statements.

Jack Mcginnis: So I too have our earnings release presentation further identifies forward looking statements made in this call. In fact, there's that may cause our actual results to differ materially and information regarding reconciliation of non-gap measures.

Speaker Change: Thanks, Jack!

Speaker Change: I recently returned from visits with our teams and clients in Europe, including spending two days with country managers from across our key markets.

Speaker Change: and has market experts, each of them speaks with CEOs and business leaders every day.

Speaker Change: So central to our discussions was the broader economic environment and what we're hearing from our clients on the ground.

Speaker Change: Right now, we see a continuation of the cautious employer approach we've been talking about for some time, particularly in Europe and North America. While the situation is good in Latin America and Asia-Pacific.

Speaker Change: In essence, there hasn't been a significant tone change in the conversation so we've been having with employers over the past 12 months.

Speaker Change: The remain focused on managing the macroeconomic and geopolitical challenges impacting their businesses.

Speaker Change: Most are optimistic yet cautious about market conditions improving and they are largely maintaining that current workforce.

Speaker Change: Since the timing of any improvement is not certain, there's still hesitant to increase their spend and expand their workforce without a significant step change in economic outlook.

Speaker Change: Looking at Labour Markets broadly.

Speaker Change: We continue to see Resilion Pop-Line Trends, with unemployment holding relatively steady in many places and little indication of widespread layoffs.

Speaker Change: In our Q3 earnings call last year, we spoke about our industry being at the leading edge. The first to feel the impact going into downturn and the first to benefit from improving outlooks on the other side.

Speaker Change: While we're not seeing signals of significant improvements, we're also not seeing signs of significantly weaker environment ahead.

Speaker Change: Our most recent Mampag group employment outlook survey of 38,000 employers published in September, found employers report cautious yet steady hiring intentions for the three months ahead.

Speaker Change: With many prioritizing, retaining and attracting workers with specialized, flexible skills, and adaptive of a mindset to adjust to the evolving requirements.

Speaker Change: We believe this growing demand for specialized and flexible skill sets will serve as well. Fight new hiring, remaining at lower levels in many places, labor markets remain historically tight, as demand and supply mismatches process.

Speaker Change: Companies are seeking deeper pulls of expert talent and new ways to scale and we scale talent as well as increase mobility within their own organization, particularly as advances in AI transform roles and increase the value of soft skills.

Speaker Change: Now turning to our results, in the third quarter, revenue was $4.5 billion, down 2% year of the year in constant currency.

Speaker Change: A report at Abitaw for the quarter was $79 million.

Speaker Change: adjusting for restructuring, ABBTA was $117 million, representing an increase of 2% in constant currency year over year. Reported ABTA margin was 1.7% and adjusted ABTA margin was 2.6%.

Speaker Change: Herding for the Luda chair was 47 cents on a reported basis while adjusted earnings for the Luda chair was $1.29.

Speaker Change: Justice Earnings for shared decreased 8% Euro-Vier in Council and Currency.

Speaker Change: Regardless of the environment we find ourselves in, we are focused on maximizing the opportunity to deliver services today, while being well positioned to capitalize more broadly when market conditions improve.

Speaker Change: The Diversity of Ideographic and Client Industry Vertical Mix, for my tea to health care and life sciences, dust drills, consumer goods, and public sector.

Speaker Change: is serving as well. Now data is enabling us to provide real-time assessments, which are experiencing headwinds and tailwinds by market.

Speaker Change: We currently see encouraging science in healthcare and life sciences and select pockets within industrials.

Speaker Change: We're stepping up our sales activity accordingly.

Speaker Change: We're also seeing improvements in the man-parselle pipeline for both a number of opportunities and the pipeline size has grown throughout 2024.

Jack Mcginnis: I'll now turn it over to Jack to take you through the results and more detail. Thanks, Jonas. Revenue's in the third quarter, came in at the midpoint of our Consecurrency guidance range.

Jack: Cross-profit margin came in at the low end of our guidance range. As adjusted, even though it was 117 million representing a 2% increase in cost and currency compared to the prior year period.

Jack: As adjusted, even the margin was 2.6% in claiming it the high end of our guidance range, representing 10 days' points of improvement year over year.

Jack: During the quarter, year over year, for currency movements had an impact on our results. For a currency translation, drove a 1% unbearable impact to the U.S. dollar reported revenue trend, in addition to the constant currency decrease of 2%.

Jack: Organic days adjusted, Consecurrency revenue also decreased 2% in the quarter, slightly better than our guidance.

Jack: Turning to the EPS Bridge, reported in that earnings per share was 47 cents. Adjust to the EPS was a dollar 29 and came in very close to the midpoint of our guidance range.

Jack: Blocking from our guidance midpoint of a dollar 30, a results included a stronger operational performance of four cents, a lower-weighted average share count to the share of purchases in the quarter, which had a positive impact of one cent, a higher tax rate on country mix, which had a negative impact of four cents.

Jack: A foreign currency impact that was two cents better than our guidance and interest in other expenses had a negative impact of four cents.

Jack: Restructuring costs and is screen tax charged represented 82 cents resulting in the reported EPS of 47 cents.

Jack: Next, let's review our revenue by business line, year over year on an organic consequence basis, the manpower brand revenue trend was flat in the quarter. The experienced brand declined by 10 percent, and talent solutions brand had a revenue increase of 7 percent.

Jack: But in town solutions, our PO business experience of year-over-year revenue decline, which was a slight improvement from the trend in the second quarter. Our SP business revenues increase compared to the prior year, while right-manage an experience of year-over-year revenue growth on higher out-placement volumes in the quarter.

Jack: I'll give more color on the transfer in the previous quarter when I cover gross profit trends.

Jack: Looking at our gross profit margin in detail, a gross margin came in at 17.3% for the quarter. Staffing margin contributed at 10 basis point reduction due to mixed ships and lower volumes, while pricing remains solid.

Jack: Permanent recruitment including town solutions RPO contributed 20 basis point GP Marcher and Reduction. The permanent hiring activity in the third quarter decreased year over year.

Jack: Right management career transition with Intel Solutions contributed to 10 basis points of improvement as Outplace and Activity was solid in the third quarter. Other items resulted in a 10 basis point margin decrease.

Jack: Moving on to our gross profit by business line, during the quarter, the Manfar brand comprised 60 percent of gross profit, our spiritual business comprised 24 percent, and town solutions comprised 16 percent.

Jack: During the quarter, our consolidated gross profit decreased by 4% on an organic consequence basis year over year, representing an improvement from the 6% decline in the second quarter.

Jack: Our manpower brand reported an organic gross profit decrease of 2% in constant current to year over year and improvement from the 4% decline in the second quarter.

Jack: Gross Prophet and our spirit's brand decreased 12% in organic consequence of year over year. A decline from the 7% decrease in the second quarter, reflecting the continuation of a challenging professional staffing environment.

Jack: Gross Profit and Town Solutions increased 9% in organic consequences per year over year, representing an improvement from the second quarter decrease of 11%.

Jack: All brands within town solutions achieved gross profit growth in the quarter is our PO&MST volumes were slightly higher in the third quarter compared to the previous quarter and right management volumes also increased sequentially driven by increased activity in France and the UK.

Jack: Report to the SGA and A expense in the quarter was 711 million.

Jack: Excluding Restructuring Costs, SGA as adjusted, was down 5% year-over-year on a constant currency basis.

Jack: The year over year SC&AD creases largely consisted of reductions in operational costs of 32 million. During the quarter, corporate expenses were reduced for incentive and certain other health plan trends, and we would expect corporate costs to return to prior quarter run rate trends next quarter.

Jack: Underlying corporate costs continued to include our back office transformation spend and these programs are progressing well with expected medium and long-term efficiencies.

Jack: Cerncy changes also contributed to a $7 million decrease, adjusted SGNA expenses as a percentage of revenue represented 14.8% in constant currency in the quarter. Restructuring costs in the third quarter total 38 million.

Jack: The America segment comprise 23% of consolidated revenue. Revenue quarter was 1.1 billion representing an increase of 2% compared to the prior year period on a currency basis.

Jack: As adjusted, OUP was 41 million, and OUP margin was 3.9%. Restructuring charges of 5 million included the largest actions in the US with modest amounts and Argentina in Canada.

Jack: The U.S. is the largest country in the America segment, comprising 66% of segment revenues.

Jack: Revenue in the US was 697 million during the quarter, representing a 4% days adjusted decrease compared to the prior year.

Jack: This represents a slight additional decrease from the 2% decline in the second quarter, as manpower and talent solutions partially offset the non-recurrents of experienced health care IT projects.

Jack: As adjusted, OUP for our U.S. business was 26 million in the quarter.

Jack: As adjusted, OUP margin was 3.7% within the U.S. the manpower brand comprised 24% of gross profits during the quarter.

Jack: Revenue for the Manpower brand in the U.S. crossed back over to growth, increasing 1% days adjusted during the quarter, which will step up from the slight decline in the second quarter. The experienced brand in the U.S. comprise 42% of gross profit in the quarter, within the experience in the U.S. IT skills comprise approximately 90% of revenues. The U.S. IT skills comprise 42% of gross profit in the U.S. IT skills.

Jack: Experts U.S. revenue decreased 11% on a day's adjusted base during the quarter, compared to the 3% decline in the second quarter due to the expected non-recurrents of healthcare IT go live projects in the third quarter.

Jack: Town Solutions in the U.S. contributed 34% of gross profit and also crossed over to growth during the quarter with a revenue increase of 10%. An improvement from the 2% decline in the second quarter.

Jack: Our Peel revenue increased in the U.S. Reflecting increased activity and select client programs.

Jack: The U.S. M.S.P. business executed well during the quarter, posting strong revenue increases. A lot of place in activity within our right management business level, Dough, year over year.

Jack: In the fourth quarter of 2024, we expect the rate of revenue to be similar to the third quarter trends for our overall US business.

Jack: Southern Europe revenue comprised 46% of consolidated revenue in the quarter. Revenue in Southern Europe was 2.1 billion, representing a 1% decrease in constant currency. As adjusted, OUP for our Southern Europe business was 81 million in the quarter, and OUP margin was 3.9%.

Jack: Restructuring charges of 5 million represent actions in our France, Spain, and regional head office.

Jack: France revenue comprised 56% of the Southern Europe segment in the quarter and decreased 5% on a day-to-day adjusted of the country.

Jack: As adjusted, all you'd be for our French business was 44 million in the quarter.

Jack: A Justin O'YouT margin was 3.7%. The Olympics provided a modest boost in activity in the middle of the quarter and the month of September experience a slight further decrease in line with activity levels in the second quarter.

Jack: Activity to date in October is largely consistent with the trans-experience and September, and we are estimating a fourth quarter trend to reflect a slight further decline from the third quarter trend.

Jack: Revenue in Italy, equaled 419 million in the third quarter, reflecting a decrease of 1% on a day's adjusted in the country.

Jack: OUP equal 27 million and OUP margin was 6.5%.

Jack: We estimate that Italy will have a slightly improved revenue trend in the fourth quarter compared to the third quarter. Our Northern Europe segment comprise 19% of the consolidated revenue in the quarter. Revenue of 828 million represented in 11% decline in consequence.

Jack: As a just it, OUP was flat.

Jack: This was the most challenged part of our business, subject to lowest economic growth rates with many markets operating a benchmark model, which creates higher financial and operational pressures than we see in other markets.

Jack: The restructuring charges of 26 million represented 11 million in the Nordics, 9 million in Germany, with modest additional charges in the UK, the Netherlands, Belgium and regional head office.

Jack: Our largest market in the Northern Europe segment is the UK, which represents 35% of segment revenues in the quarter. During the quarter, UK revenues decreased 12% on a day's adjusted count to currency basis.

Jack: You can market continues to be very challenging and we expect the rate of revenue declined to worsen in the fourth quarter compared to the third quarter based on reduced seasonal holiday and lower public sector demand. In Germany, revenue decreased 16% in days of just a constant currency in the quarter.

Jack: Germany manufacturing transit been weak driving further declines.

Jack: In the fourth quarter we are expecting a similar to slightly worse year-over-year revenue decline compared to the third quarter trend.

Jack: The Nordics continue experience very difficult market conditions with revenues decreasing 19% in days of drastic consequences currency in the quarter.

Jack: Within the Nordics, Sweden is experiencing the largest declines based on a weak manufacturing and auto-adviaments.

Jack: The Swedish market was also impacted by the introduction of New Temporary Worker term limits, beginning in October of 2024. For many more clients than we expected, converted our manpower temporary staff to their permanent payrolls ahead of this change.

Jack: We believe temporary worker demand impacts from the shortened term limits to two years will normalize in the quarters ahead as it has in many other European markets that have instituted similar adjustments in the past. The age of Pacific Middle East segment comprises 12% of our total company revenue.

Jack: In the quarter, revenue is equal to 563 million representing an increase of 3% in organic cost of currency.

Jack: As adjusted, OUP was 25 million, and OUP marginal was 4.5%.

Jack: for structuring charges of 2 million relate to actions taken in our Australian business.

Jack: A largest market in the APME segment is Japan, which represents 52% of segment revenues in the quarter. Revenue in Japan grew 9% on a day's adjusted, constant currency basis.

Jack: We remain very pleased with the consistent performance of our Japan business and we expect continued strong revenue growth in the fourth quarter.

Jack: This is part of our ongoing strategy to optimize our mix of businesses and geo footprint. We have recently agreed to sell our South Korea business, which will operate as a manpower of choice in the future.

Speaker Change: We expect this transaction to close at the end of October which will be reflected in my guidance for the fourth quarter. I'll now turn the cash flow in balance sheet. In the third quarter, free cash flow represented 67 million and compares to 245 million in the prior year. One time restructuring related payments on the wind down of our Germany ProServia business decreased our free cash flow during 2024.

Speaker Change: A quarter-end day sales outstanding decreased by about two days to 57 days.

Speaker Change: During the third quarter, capital expenditures represent 16 million.

Speaker Change: During a third quarter of a repurchased 415,000 shares of stock for $29 million.

Speaker Change: As of September 30, we have 3.1 million chairs remaining for a purchase under the Share Program, approved in August of 2023.

Speaker Change: Our balance you've ended the quarter with cash of $411 million and totaled that of $1 billion.

Speaker Change: Next at equal 614 million a quarter ant. Our debt ratio is a quarter ant reflect total gross debt to trelling 12 months adjusted EBITDA of 2.1 and total debt total capitalization at 32%.

Speaker Change: Our debt and credit facility arrangements remain unchanged during the quarter as displayed in the appendix of the presentation.

Speaker Change: Next, I'll review our Outlook for the fourth quarter of 2024.

Speaker Change: Based on trends in the third quarter, and October activity today, our forecast is cautious and anticipate that the fourth quarter will continue to be challenging in North America in Europe.

Speaker Change: Within Europe, you're the more you continue to experience the most challenging conditions.

Speaker Change: and we anticipate lower seasonal holiday activity and extended year-end plant closures.

Speaker Change: As I mentioned, we expect to sell of our South Korea business to close at the end of October and importantly, our guidance only reflects one month of South Korea operations and we have provided organic variances to show like for like revenue trends.

Speaker Change: With that said, we are forecasting earnings per share for the fourth quarter to be in the range of 98 cents to $1.

Speaker Change: The guidance range also includes an unfavorable foreign currency impact of one cent per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a decrease of 1% and 5% and at the midpoint is a 3% decrease.

Speaker Change: The impact of the South Korea disposition is about 1% of the decrease and there is about one more working day in the fourth quarter.

Speaker Change: In summary, our organic day-sadjusted Consecurrency Revenue Decrease represents 4% at the midpoint.

Speaker Change: This represents a slight decrease compared to the third quarter trend on the same basis.

Speaker Change: Even the margin for the fourth quarter is projected to be down 30 basis points at the midpoint compared to the prior year. We estimate the effective tax rate for the fourth quarter will be 37.5 percent, which reflects the overall mixed effect of lower earnings from lower tax geographies in the current environment, as well as the impact evaluation allowances and certain markets, which will reverse in the future when those markets rebound.

Speaker Change: The government of France very recently published the preliminary budget for 2025.

Speaker Change: Although the preliminary budget currently includes provisions that would increase our corporate tax rate in France temporarily in 2024 and 2025, we will wait to quantify this potential impact along with other possible provisions until the budget review by all the appropriate stakeholders in the French government is further along.

Speaker Change: In addition, as usual, our guidance does not incorporate restructuring charges or additional scare repurchases, and we estimate our weighted average shares to be 48.1 million.

Speaker Change: We will carve out the gain loss impact on its sail of our South Korea business separately in our Fort Quarter results.

Speaker Change: Our guidance also does not include the impact of the non-cash hyperinflationary balance sheet-related currency translation adjustment for our Argentina business. And we will also report that separately if it is a meaningful amount.

Jonas Prising: and we'll now turn it back to Jonas. Thank you, Jack.

Jonas Prising: We are steadfast in being front of mind with our clients and our talent and teams of experts across our strong existing brands, manpower, experience and talent solutions.

Jonas Prising: Building deep relationships, specialist partners with a data, insight, solutions, and seamless execution to earn the loyalty and trust for the long term.

Jonas Prising: We have expanded visibility with our clients this year, with in-person and virtual touch points showing strong increases.

Jonas Prising: In a data of the hills we are improving our wind rates quarter and quarter and year on year, as we continue building the land loyalty.

Jonas Prising: We know data analysis becomes insights that drive better outcomes for our clients, associates and candidates.

Jonas Prising: We are convinced the data-centric commercial muscle we are building is positioning us to win in the market.

Jonas Prising: AI enabled dashboards, source from our global data platforms, ensure our teams focus on the activities that create the most value for our clients and our prospects.

Speaker Change: As you've seen in our actions this quarter, while we've taken a surgical approach to analyzing demand signals across our verticals and plane segments, we're also being laser-focused on how we manage costs.

Speaker Change: We strive to optimize profitability and ensure that we have the talent, innovation and digital platforms to capture growth.

Speaker Change: We remain committed to our diversification, digitization and innovation strategy, and to find new ways of creating value for clients and our candidates.

Speaker Change: Our manpah brand is our history and our future, and we're intent on strengthening our positioning for candidates as an employer of choice, stands by their side to build skills and offer great opportunities throughout their career journey.

Speaker Change: That's why one of our priorities is finding new ways to meet our candidates where they are. We're delighted to have recently opened job hobs in several wallmarked locations across the US.

Speaker Change: Offering one-stop convenience and breaking down barriers for local job seekers.

Speaker Change: Report of led the US industry with this model and to continuously improve how we attract top talent and create exceptional opportunities for both job seekers and employers.

Speaker Change: We're also delighted.

Speaker Change: To have again been honoured with multiple leadership recognitions in ever-groups 2024 peak matrix assessments, including talent solutions being named as global leader in contingent workforce management with the 11th consecutive year.

Speaker Change: Experience as a leader in IT, contingent talent and strategic solutions in both the US and UK and MAM Power as a leader in UK business and professionals contingent talent and strategic solutions.

Speaker Change: and Colesing.

Speaker Change: We are committed to creating shareholder value by building a sustainable company that takes care of all of our stakeholders.

Speaker Change: Employees, clients, candidates, and the communities in which we operate. We're proud of our ongoing commitment to people and planet, and at New York Climate Week in September, we released our fourth annual working to change the world report.

Speaker Change: Tracking our progress in building a skilled global workforce to leverage innovation and emerging technologies for a better greener tomorrow. We cannot underestimate the impact on work or workers of the transformative changes taking place in AI and the global green transition.

Speaker Change: This report shares the many ways we're guiding both employers and workers who this moment of transformation.

Speaker Change: Building partnerships with clients to dress skills gaps and developing in-demand talent pools with our manpower might path and experience academy training programs. We know this work energizes our people and replies that the name of Forbes world's best employer, recognizing our commitment to talent development.

Speaker Change: I would like to close by thanking our teams around the world for their considerable efforts to build a future of work and to our clients and candidates for trusting us to be their guides on this journey.

Speaker Change: Operator, please open the line for Q&A.

Speaker Change: Thank you. If you would like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again.

Speaker Change: Our first question comes from Carcagmeta with North Coast Research. Your line is open.

Speaker Change: I think...

Speaker Change: Yes, maybe just, I know you talked a little about the trends that were happening, at least in September, maybe in October for some of the geographies. I'm just wondering, as you looked at the entire order, what you saw in the business, and if there was any change, even month by month.

Speaker Change: Thanks for the question, Cartic. Yeah, I'd be happy to talk about what we saw during the course of the court, all right?

Speaker Change: Maybe starting with France as we talked about in the prepared remarks, you know, France. We did see that boost from the Olympics in the middle of the quarter.

Speaker Change: So that flattered the results a bit and we anticipated that as we moved into September we did see a step down and we have them.

Speaker Change: Here in early October, very similar rates just saw the last week we this morning as well. And so, basically, as we ended, we had them at about minus 6% from a revenue trend. So that's what we've incorporated into the guide for the fourth quarter for France in line with recent activity in both September and October at this stage.

Speaker Change: And I'd say, you know, if we go to the U.S., as I mentioned.

Speaker Change: for the most part performed on an overall basis very well in line with our expectations.

Speaker Change: And I'd say it was pretty even over the course of the quarter. You know, from a mid-singled digit perspective, as you saw kind of what we posted there in terms of percentage defined, and it was really good to see that manpower and talent solutions.

Speaker Change: In the U.S. actually helped offset some of the pressure we continue to see on the professional side.

Speaker Change: I'd say that was pretty even on an overall basis over the course of the quarter in the US and then in Italy I'd say also similar story Italy was came in slightly better than we anticipated.

Speaker Change: and if you look at the pace during the course of the quarter sequential improvement from the previous second quarter into the third quarter and I'd say that ran most of the quarter, I'd say August was a little bit better on a day's adjusted basis.

Speaker Change: But all in all, I think Italy coming in at that, you know, minus 1% days adjusted, very close to flat year over year.

Speaker Change: We anticipate Italy will continue that trend into the fourth quarter with slight improvement. So Italy has been one of the more resilient markets in Europe and that certainly is part of our outlook in Q4. And maybe lastly in terms of the bigger countries, just the UK.

Speaker Change: You know, as we said, you, you, K was

Speaker Change: Difficult seeing some of the most pressure among our largest countries and certainly.

Speaker Change: and we talked about Northern Europe seeing some of the most significant pressure. That was pretty constant over the entire quarter running very close to that quarterly average that we talked about at minus 12% for the entire quarter pretty constant the entire...

Speaker Change: the entire way July, August and September and as I said we expect that to step down a bit further.

Speaker Change: Based on the fact that we expect December, which is always a sensitive month when we look at the fourth quarter, to be a little softer on the logistics side transportation, as well as public sector demand pulling back a bit more in the fourth quarter. So that's a bit of a puts and takes from the biggest markets.

Speaker Change: That's really helpful Jack and Jack.

Speaker Change: You've done a good job in managing the SG&A costs and it sounds like you're going to manage it even further. But as the business stands now, what do you think the incremental margins will be going forward? Compared to where they were considering some of the efficiency costs and some of the other processes you've been able to put in place?

Speaker Change: Thanks, Karthik. I'd say you're right. We, you know, as we.

Speaker Change: As we said previously, we've been making adjustments. You saw us make some adjustments.

Speaker Change: Pretty significantly, at the end of last year in 2023.

Speaker Change: And that was predicated on what we anticipated to be a softer first half of this year that certainly played out and here we are now in the second half of this year with conditions continuing right and so so we leaned in and we made additional adjustments this quarter you can see that number structuring charges.

Speaker Change: and that's all that preserved bottom line margin in this current environment, which is continuing. So what I would say is that will help us preserve margin in, as you know, the environment continues in the demand appetite currently. But as we go forward, I think the real good news here is we're making really good progress advancing our transformation agenda. We've talked about that in the prepared remarks.

Speaker Change: and we see that on the front office side with the progress we made with power sweet front office and that's going to help recruit our efficiency. That'll come through more meaningfully when we have more operational leverage and we're doing the same thing on the back office side with very good progress in the implementation of our power sweet back office.

Speaker Change: That will drive savings for us as we complete those migration. So as I've talked about in the past, I would expect that to be in the range of 25 basis points improvement in our EBITDA margin as we get through and complete those transformations on the back off the side.

Speaker Change: and that will come through in efficiencies as you move forward. When we get operational leverage back in the business, when we start to see the markets rebound, then of course we'll start to get back to more historical, even the margin ranges, and then we'd add those savings to that level on top of that from the transformation.

Speaker Change: Perfect, thank you so much, it really appreciate it.

Speaker Change: Thank you. Our next question comes from Trevor Romeo. With William Blair, your line is open.

Trevor Romeo: Good morning. Thanks so much for taking the questions. First one I had was with kind of just on manpower brand versus experience.

Trevor Romeo: and maybe seen a little bit of a growing divergence in performance between the two. It looked like manpower was kind of flat and the quarter experience was down, I think 10% globally, year over year. Just what would you attribute the difference in demand trends between the two?

Trevor Romeo: Two, you know, is it just a question of kind of timing of when each one started to decline and each one's at a different point in the cycle now, or are there other fundamental factors you

Speaker Change: Good morning, Trevor. No, great question. So if you think back during the pandemic, there was a big hiring bubble.

Speaker Change: of IT and other professional resources, especially within the tech sector, but I would say it was pretty broad, broad increases in hiring.

Speaker Change: and as we are looking at an environment where many organizations are looking to manage their costs based on the headwinds, the economic headwinds and maintain the work forces that they had.

Speaker Change: Clearly, the professional resourcing side is seeing more significant headwinds.

Speaker Change: and we've been very pleased with how Mampar has held up. Frankly, the cyclicality of what we're seeing today, we think, can be explained.

Speaker Change: by the post-pandemic anomalies that we saw both leading into.

Speaker Change: During and then afterwards as companies were adjusting their payrolls, having said that though, I think the outlook for professional and the resourcing and the need in our case.

Speaker Change: for IT skills will continue to be very strong over the medium to long-term. Everything that you read about, everything that every organization talks about is to make investments in the digital space and to do that, they need projects, they need resources with the skills, they need the solutions that we can provide in experience. So I think our outlook is very good in terms of what we see, experience being able to do for us and how it can perform, but right now you can see that there is a bit of a gap between how Manpower and experience is progressing.

Speaker Change: We think it's temporary.

Speaker Change: No pun intended.

Speaker Change: Helpful. And then just click follow up on the South Korea divestiture, which is curious why you decided to sell that business and transition to the franchise model and anything you could say about the financial impact or the proceeds received from the sale would be helpful.

Speaker Change: We'll try to ask them in the strategic areas around our portfolio and over the past years you have seen us look at certain geographies where we feel they could be better served, managed within a franchise model in terms of their ability to drive growth at a faster rate and take market share at a faster rate. They tend to be markets. [inaudible]

Speaker Change: that are more complex.

Speaker Change: Lower Margin markets, maybe with a higher risk profile, then we think is suitable for a company of ours, of our statute to manage directly as wholly on subsidiaries.

Speaker Change: So we've been pruning our portfolio of geographies and transitioning those authorizations and those markets into franchise models which we think will make us more successful from a ManpowerGroup perspective but also make the franchise holder more successful in terms of being able to unleash their abilities, maybe with lower margins, gaining greater share at the faster pace than would be consistent with the targets that we have from a financial financial and operating much in perspective.

Speaker Change: In terms of your question on the financial details, we'll disclose that after we close the transaction as I said we expect to close it at the end of this month, very beginning of the next month.

Speaker Change: and we'll have more to say on that in the fourth quarter, but I would say from modeling purposes, think of it as running generally about $80 million a quarter, so as you think about the impact.

Speaker Change: From a revenue trend perspective, and as I said, we have one month in the guide for the month of October.

Speaker Change: That would give you a pretty good idea, you know, I think the main punchline for the fourth quarter is it doesn't have a significant impact in terms of the loss of those two months on our bottom line EPS and we'll talk more about that after we close the transaction.

Speaker Change: Okay, thank you both, appreciate the time.

Speaker Change: Thank you, everyone.

Speaker Change: Thank you. Our next question comes from Mark Markon with Beard. Your line is open.

Mark Markon: Good morning and thanks for taking my questions, Jonas and Jack.

Mark Markon: Um...

Mark Markon: You know at the beginning of your commentary you've cited that you know conditions aren't really changing that much

Mark Markon: and when we take a look, particularly at Northern Europe.

Mark Markon: You know, it doesn't look like things have changed, well, they've changed, but they've gotten worse.

Mark Markon: I'm wondering, you know, how are you thinking about, you know, what would be the catalyst?

Mark Markon: to lead to improvement in the overall economic environment that's specifically in Northern Europe.

Mark Markon: and...

Mark Markon: You know, how long do you think that would take to to come about and and if it doesn't come about, you know, any time soon, you know, are there additional steps that we could take to, you know, improve the the profitability level there.

Speaker Change: Thanks, Mark. As I mentioned in my prepared remarks, Northern Europe is our most challenged region and has been for quite some time. And as you've seen, we've taken significant actions to write the business and adjust.

Speaker Change: What is the most challenging market conditions?

Speaker Change: across the world. If you look at the economic growth outlook.

Speaker Change: for Germany. It is the weakest economy in Europe.

Speaker Change: The Nordics are seeing significant economic headwinds and mostly everybody in that region is seeing the pressures The macroeconomic pressures really coming to bear and that is of course something that's reflected in the performance of our industry and specifically for our company as well Having said that, you know, we are confident that at some point when the market turns back these are great places to be and these are important markets for us to operate They also happen to be markets where we primarily and have

Speaker Change: Bench Models.

Speaker Change: and they are harder to manage in a downturn, because the associates are part of our permanent payrolls, so it takes us some time to make and take the required actions to right-size the business when the demand drops.

Speaker Change: So we would never rule any further actions out in terms of what we need to do to adjust to the market conditions.

Speaker Change: But we also want to make sure that we maintain the strength in what we think are a good market in a more normalized environment.

Speaker Change: As you saw maybe this morning mark the ECB once again for the second time in five weeks lowered their interest rates.

Speaker Change: Founder 3.25% by 25 basis points. So I think that is going to be positive from encouraging businesses.

Speaker Change: who start to invest more.

Speaker Change: and I think as you look at the inflation rate has come down as well and you know we continue to monitor this last year you heard us take action in Germany specifically and wind down our Preservia business which is an important decision for us which I think puts us in a very good position as those markets improve.

Speaker Change: I mean, aside from the rates coming down, are there any other things that you would expect to see in the not-too-distant future that would positively impact growth in Northern

Speaker Change: You know, I think a lot of it, Mark, depends on the macroeconomic circumstances. Of course, as we talked about in our prepared remarks, we've increased our sales activities, there are industry verticals that are, you know, positive, that where we are seeing increases in our pipeline. So we're doing everything that you do expect us to do. Manage demand and increase the pressure on demand to try and get some good results out of that being very focused on our cost structure and then keep on investing into the kind of digital transformation that Jack mentioned earlier that we think is going to improve our efficiency and our productivity both from a recruiter and frontline perspective as well as from a back office perspective. So those are the things

Speaker Change: that we can control, that we are working on, and that we are very, very determined to make sure that we know that you are back to where it needs to be. This is certainly a pressure point for us as a company, but it is also a pressure point from an industry perspective. We can see the markets being tough for us, and for mostly everyone in our industry as well.

Speaker Change: Yeah, we've just certainly seen that. One last question if I can squeeze one in Jack, I know you, you know, one of the fur until, you know, the final rulings come out and all the interested parties comment.

Speaker Change: As we take a look at the French tax proposals, you know, how would you suggest investors think about, you know, based on the most likely scenarios and what's been out in the press, you know, how to think about tax rates, you know, as we, as we look out.

Speaker Change: Yeah, thanks Mark for the question, so yeah, I'm a little hesitant to talk to it because it's still very preliminary and particularly when you think about where the government is right now, so it's a bit unprecedented.

Speaker Change: We're used to a preliminary budget that's very far along within Parliament that usually...

Speaker Change: is adjusted very lightly as it gets finalized and what we'll see how this one advances.

Speaker Change: through the various factions of parliament and the discussions, but specific to your question on the tax rate. I think the way investors should think about it.

Speaker Change: is the way the government's talked about. It is a temporary increase on the tax rate, is what they're looking at. That's what's proposed.

Speaker Change: and it would, uh, it's being applied to the largest companies, um, we fall into that bucket, of course, based on the size of our French business.

Speaker Change: and it would really only be for 2024 and 2025.

Speaker Change: and it is a measure to help them.

Speaker Change: Sureup, this deficit that they have today, but everything we understand is they're still committed to their long-term tax reform that they put in place that took their right down.

Speaker Change: and this would just be a temporary measure. So we'll see how this advances here through the end of the year.

Speaker Change: and you know we'll have a lot more to say about that at year end. I think the last thing is again it's just 2024 and 2025.

Speaker Change: 24 would be hit a bit harder in terms of the increase, the way it's drafted, and 25 would be a lesser increase.

Speaker Change: and we'll have more to say that on that year and but again I say the main takeaway is temporary and still committed to making France more competitive for corporates and their longer term tax reform and getting back to where they were.

Speaker Change: Great thanks for the comments, we should have.

Speaker Change: Thank you. Our next question comes from George Tongue with Goldman Sachs. Your line is open.

Speaker Change: Hi, thanks. Good morning. Can you talk about behavioral changes among employers that you're seeing in the 10th space, this cycle, compared to prior cycles, it seems like 10 staffing trends are lagging, firm trends, and wondering if hiring managers are bypassing this cycle and going straight to current hiring.

Speaker Change: Good morning, George. You know, looking at this, I would say it's now for the last 12 months roughly playing out as we would expect it to play out and as we have seen it play out in the past. We've won important difference and that is that employers have been holding on to their workforce.

Speaker Change: for much longer with economic headwinds than we have seen in the past. And we think this comes from the pandemic experience of the difficulty of finding talent. And we can see that employers are being very surgical in their hiring at this stage.

Speaker Change: But I don't really see any difference in behavior or preferring permanent hiring or temporary hiring. In fact, our temporary staffing business is doing much better than our permanent.

Speaker Change: Recruitment is both within the brands of experience and manpower as well as in talent solutions RPO.

Speaker Change: So I wouldn't read any different, I don't see any difference in employer behavior with the exception of they are holding onto their workforces, they are not ready to invest in new workforce from a temporary or contingent perspective to the degree that we saw of course in better economic times, but we fully expect them to revert back to tapping into those resources as the economic conditions improve in their respective industries.

Speaker Change: as we would expect from recruitment also to come back and be as as strong as we've seen in the past because certainly our ability is the business and within our brands of manpark experience and talent solutions to satisify satisfy permaninent recruitment needs have really become much much stronger and it's a very important part of our business and we'd expect that to come back in the same way once conditions improve as well

Speaker Change: Got it. That's helpful. And you talked earlier about taking additional cost actions based on the extended duration of the current operating environment. Can you elaborate a little bit more on where these cost actions are concentrated?

Speaker Change: You're a judge. I'd be happy to do that. I think in line with the discussion we just had on Northern Europe, the biggest part of it is in Northern Europe.

Speaker Change: So, you know, of the total restructuring that we took of the 37.6 million Germany was about 9 million. Sweden was about 7 million Norway was just about 4 million.

Speaker Change: We did have a bit in France as well, much more modest and in the US we also had about 3.5 million as well.

Speaker Change: So I'd say those were some of the bigger moving pieces, but think about it the way we talked about it. I think the most pressure right now is in some of the bench countries that kind of follows where we've taken some of the restructuring.

Speaker Change: But also where we haven't seen demand pick up the way we were originally anticipating earlier in the year. So we've done some right sizing to adjust that. We've been very focused on, you know, more the overhead, the back, back office, the functions, the regional head offices. And as, you know, as you heard, Jonas, say, trying to preserve sales strength. So we've been very careful and surgical as you've heard. They've done our prepared comments.

Speaker Change: Thanks. Very helpful. Thank you.

Speaker Change: Thank you. Our next question comes from Monov Petnik with Barclays. Your line is open.

Speaker Change: Hi, good morning. This is Princey on Furmanas. I just wanted to ask around.

Speaker Change: You're a prayer girl marks where you were saying that you're seeing improvements in the manpower.

Speaker Change: Stills.

Speaker Change: Pipeline, where...

Speaker Change: I wanted to just see if you can expand on that or is it?

Speaker Change: That with mainly new clients.

Speaker Change: and any color that you can provide would be great.

Speaker Change: We see some very nice improvements in our pipeline, both for our existing accustomed base, but primarily on our new business and new client base.

Speaker Change: And this is the result of our increased focus over the last 12 months to really make sure that we are increasing our demand generating activities that are being very focused on the industry verticals that we think can be fruitful and that we leveraging the technologies that we've implemented so that we spend our time on the opportunities that we think can yield better results and faster growth for us going forward. And that's why we're pleased to see that the pipeline is increasing. In an environment like this, having an increasing pipeline means the conversion rate and the monetization rate, the timing of that is [inaudible]

Speaker Change: Branded, because whilst we're winning more deals, the size of the deals tends to be smaller and the speed to monetization tends to be slower. But regardless of that, having one of these deals is going to be beneficial for us in the short term, but certainly also in the medium to long term when the market conditions improve and those those deals start to come to their full monetization potential and generate great their amounts of revenue growth for Manpower and as well as full experience and talent solutions.

Speaker Change: Great, and can you speak a little bit to what you're seeing in terms of competitive dynamics?

Speaker Change: Industry has always been a competitive industry, but as we mentioned in our prepared remarks.

Speaker Change: Prising is also competitive, but rational. So the pricing levels, as you can see from our gross profit margins, are stable. The changes that we saw quarter over quarter are primarily driven by business mix and geomix changes, not by pricing pressure, the demand for skilled talent.

Speaker Change: It's still strong and our customers know that it's difficult to find people with the right skills and I think that is what we're seeing reflected in the dynamics of our industry but it's always going to be a competitive industry but at this stage we're seeing the pricing and being solid and behavioral rational Thanks [inaudible]

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Josh Chan with UBS. Your line is open.

Speaker Change: Hi, good morning, Jonas and Jack. Thanks for taking my questions. I want to ask about the conversations you're having with your customers. I think for a while now, we've heard that customers are being cautious because of high interest rates and global elections. But as you mentioned, the ECB has started to cut rates, the Fed has started to cut rates. Elections are progressing I guess globally. So, as all of these play out, how do you see demand being catalyzed in the upcoming quarters? Do you expect...

Speaker Change: Summer's lotion or the expected kind of discontinuous sluggishness to persist even though some of these events are kind of transpiring. Thank you.

Speaker Change: What has you heard from our outlook? We certainly think that this kind of environment that frankly we have seen now almost for the full year will continue into Q4. So when we're together again at your end, we'll see if any of those items that you mentioned have started to move the needle. Ultimately, we do believe that those are exactly the kind of elements that will start to move the needle. Give employers greater confidence that the worst is over. Start looking ahead, starting to activate the projects and the developments that they've been planning for. The environment still may be being a little bit uncertain means they will turn to contingent and flexible.

Speaker Change: and the next little workforce first.

Speaker Change: Accelerate the digital investments that they've done, which should show us some good improvement in demand for our experience resources.

Speaker Change: So we think the actions that are being taken and where we are is clearly going to be improving. The question is when?

Speaker Change: And what we're saying is that we didn't see anything materially change in the third quarter. We don't expect to see anything materially change into the fourth quarter and then when we get together again at the end of.

Speaker Change: Then we talk about our year end results, you know, we'll update that view and see if anything has changed then but the kinds of actions that we're seeing on lower inflation actions by central banks to lower interest rate to stimulate demand I think are exactly the kind of and and getting past elections in many of in many of the countries solidify budgets and things like that to provide for greater certainty and create a more dynamic business environment. [inaudible]

Speaker Change: I think so, that's certainly my sense. I guess, as you think about your margin progression going from Q3 to Q4, I think typically Q3 and Q4 margins are relatively solid, but according to your guidance, there's a bigger step down this Q4 than what seems to be normal. Could you talk about what's driving that's the initial margin decline? Thank you.

Jack Mcginnis: Jack, I'd be happy to talk to that, I think.

Jack Mcginnis: You know, the main takeaway on that is, you know, in our sequentially, in our Q3 results in the SG&A, I did talk about the fact that, you know, we had some favorability and corporate costs that I carved out, and I talked about that with incentive and some of the health care.

Jack Mcginnis: Planned Related.

Jack Mcginnis: Charges being more favorable this quarter and we expect the Q4 will kind of return to the run rate we saw in previous quarters for corporate. So that's that's part of it sequentially.

Jack Mcginnis: and that's part of the reason we were slightly better on EBITDA than the midpoint of our guide in Q3.

Jack Mcginnis: But I'd say the other part is really kind of what I was referring to in terms of December being a sensitive month for the fourth quarter. And so December, if December is really strong with holiday related activity.

Jack Mcginnis: and volumes and we don't see plant closures, extended plant closures like you typically see in a softer environment.

Jack Mcginnis: Then it could be a stronger environment, but we're not anticipating that at the moment.

Jack Mcginnis: So I think we're anticipating kind of a continuation of some of the caution we've seen out there. That means when you get to December , you know some some IP projects will probably be paused around the holidays for an extra week or so. Then they normally would and plants may decide to close for an extra week or so. So that's why this year, sequentially, you're not seeing us able to hold the same level of margin. But like I said, I think it's a bit unique based on the way we're just seeing December at the stage.

Speaker Change: Thanks for the college jack and take a walk through your time.

Speaker Change: Thank you.

Speaker Change: Thank you, our next question comes from Jeff Silver with BMO Capital Markets, your line is open.

Speaker Change: Hey, good morning, this is Ryan on for Jeff. Just looking at the talent solutions business, it looks like it had a pretty notable change from TUQ, just on a year of a year basis, I know you had called out the right management and MSP, driving some of the strength, but it was wondering if you could give any more color on some of the diverging trends between talent solutions and the other business lines. Thank you.

Speaker Change: Thanks for the question, Ryan. I think we're all very quickly on that. I think what we are seeing is some improving trends. It was really great to see all three offerings have GP growth in the quarter, so that's good. That's a nice step in the right direction. Our POs, we set on an overall basis, is seeing an improved trend from sequentially from the last quarter.

Speaker Change: and as we talked about our PLN, the US actually grew and we are seeing in select programs.

Speaker Change: Some good activity. So it's not for our base yet, but it's a start, so it's somewhat encouraging, but we'll wait and see whether that continues to be a nice trend going into the fourth quarter and whether whether we see that spread into other programs. MSP has been very, very strong for us.

Speaker Change: Early Nice Growth in the Quarter. That business has been executing very well and we've seen that actually continue to grow at higher rates as we progress for the year. And like we said, right was very strong in France and the UK, and that was really the big driver there. So I'd say that's kind of the wrap up on town solutions. It's a good step in the right direction and we'll continue to monitor that as we go forward. Thanks.

Speaker Change: Thank you and then can you talk a little bit more about the Walmart job hub just with the business rationale there is within what you expect from that partnership.

Speaker Change: You're right. Yeah, no, we're excited about that. It's a very nice innovation as we think about

Speaker Change: a market that is more candidate restrained as part of our innovation initiatives we want to meet candidates.

Speaker Change: In new ways and in different places, of course a lot of those encounters are going to be enabled by digital platforms but they're also going to be in new physical spaces and that's why we think this partnership with Walmart for us in the US is a very very exciting opportunity. We'll see how it evolves over time but it's the kind of initiatives. [inaudible]

Speaker Change: that we're taking as part of how we navigate this environment, making sure that we invest in sales and create demand, making sure that we manage our costs appropriately but still maintaining the strength and the investments into products and innovations that excite customers, as well as excite our candidates and makes it easier for them to access meaningful and sustainable employment aligned with our purpose. And therefore we're excited to monitor and see how this progresses and continue to drive this kind of innovation in the US as well as in many other markets across the world.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Toby Summer, with Chuous, your line is open.

Toby Summer: Thank you. I wanted to ask you what kind of growth.

Toby Summer: the industry and the company could achieve if we get to some sort of recovery in recruiting. Because this is a different scenario. In prior recoveries, there's generally been a recession or GDP that hasn't grown or other sort of more obvious telltale signs that aren't idiosyncratic to the industry. Following those periods, yourselves, manpower and the industry of grown double digits at the top floor.

Speaker Change: How do you envision this perhaps being different given that your customers are retaining permanent talent and might have more capacity headed into a rebound than this typical.

Speaker Change: Well, Tobey, I don't think from our perspective it's a question of if it's a question of when the recovery starts to happen. And as far as the shape of the recovery is concerned, that's actually quite hard to predict. Now, when you think back about where we are in the world, Latin America and Asia Pacific continue to perform very well. The economic headwinds in terms of low economic growth, zero growth in the Eurozone clearly indicates that this is an economic cycle where our industry is, you know,

Speaker Change: Really feeling the effects in this economic cycle like we felt the effects in past economic cycles.

Speaker Change: So then we come to the US and we look at the US and I think the anomalies that you might be referring to are very visible here We have good economic growth yet our industry has really been operating as if it was a recession for the better part of two years

Speaker Change: The way we think about it, at least, is that the first year of those two years were driven by pandemic anomalies, where companies starting to feel headwinds, they're adjusting, they're monitoring the costs very carefully, and the brunt of that need for cost cuts came, as it relates to workforce, came into our industry. But what we're seeing over the last 12 months is really a cooling economy, a cooling labor market.

Speaker Change: and our industry really, the dynamics of the industry playing out the way we've seen it play out in the past. If you look at the penetration rate of our industry here in the US, it really shows us that we have some really good growth opportunities as we look ahead.

Speaker Change: The question is going to be what kind of economic confidence are we going to be seeing in the manufacturing sector, the manufacturing in the US?

Speaker Change: The PMI has been below 50, for 23 months out of 24 with a brief blip.

Speaker Change: You know at the beginning of this year and then below 50 again so that you know seeing that turn around from the manufacturing perspective is going to be important and then I also think it's very important to look at the employment and labor market and realize that most of the growth that we've seen in employment and the strength of the labor market in the US in particular is driven by versions of public sector hiring [inaudible]

Speaker Change: Be it in healthcare, healthcare being more private here in the US, but the same is true also for Europe , private sector, hiring is lagging public sector, hiring. So, government spending and driven employment is a big factor, healthcare is a big factor, and then hospitality, leisure, restaurant spend, that's where the growth has been from the workforce. But if you look at manufacturing employment, you look at many other industry verticals, and the US, that traditionally are the sectors that are driving growth in demand for our industry and as far as we're concerned, growth in demand for services and manpower and experience and intelligence solutions, those have been weak.

Speaker Change: for quite some time and we would expect them to rebound, but as to the shape and the timing of that curve, that's very difficult to predict.

Operator: Thank you, Jonas. Within the experience business in the U.S.

Speaker Change: Within the experience business in the U.S. could you speak to the offers of more color on the IT and tech exposure in differences you may be seeing between convenience and your larger customers. Into the extent you have exposure and managed services and more sort of project consulting related work. Thank you.

Joshua Chan: could you speak to the, some, offer some more color on the IT and tech exposure in, in differences you may be seeing between convenience and your larger customers and to the extent you have exposure and managed services and more sort of project consulting related work. Thank you.

Jonas Prising: Sure, now we have a very strong presence in IT resourcing as well as in solutions, and the most of our customers are big enterprise users of those services. We continue to see pretty strong headwinds and low demand for larger enterprise clients. They're pausing projects. They are reallocating resources from traditional IT projects into AI, spend, cyber, spend there.

Speaker Change: We have a very strong presence in IT, resourcing as well as in solutions and most of our customers are big enterprise users of those services and we continue to see pretty strong headwinds and low demand for larger enterprise clients, their pausing project, their reallocating resources from traditional IT projects into...

Jonas Prising: Where the demand is still strong, but on a volume and on a scale basis, those are relatively small opportunities for experience in terms of what moves the needle on the larger projects. So we are very strong on the solution side, as we mentioned in our prepared notes. We can see a better performance from the convenience side of the business on the experience. But you are seeing headwinds there as well companies are a little bit more smaller companies a little bit more cautious in terms of starting the projects.

Speaker Change: A.I. Spend Cyberspend, that's where the demand is still strong, but on a volume and on a scale basis those are relatively small opportunities for for experience in terms of what moves the needle on the larger projects.

Speaker Change: So we are very strong on the solution side as we mentioned in our prepared notes. We can see a better performance from the convenience side of the business on the experience.

Speaker Change: But you are seeing headwinds there as well. Companies are a little bit more, smaller companies a little bit more.

Jonas Prising: But as you step back from all of that and you think about what's happening with all corporations large and small, the investments that they are thinking about doing and are executing today. In terms of their plans for digital transformation means that in terms of demand outlook, you know the timing being uncertain, but in terms of it coming back and coming back strong, we feel really good about that, and our business is very well positioned to take advantage of the market coming back when it does.

Speaker Change: Cauches in terms of starting the projects. But as you step back from all of that and you think about what's happening with all corporations large and small the investments that they are thinking about doing and are executing today in terms of their plans for digital transformation means that terms of demand outlook, you know the timing being uncertain but in terms of it coming back and coming back strong we feel really good about that and our business is very well positioned to take advantage that you have the market coming back when it does.

Operator: Thank you.

Operator: Thanks everyone for participating in the Q3 earnings call, and we look forward to speaking with you again when we discuss our year and results in a few months. Thanks everyone, have a great rest of the week.

Speaker Change: Thank you everyone for participating in the Q3 earnings call and we look forward to speaking with you again when we discuss our year and results in a few months. Thanks everyone, have a great rest of the week.

Operator: Thank you for your participation. You may now disconnect. Everyone have a great day.

Speaker Change: Thank you for your participation. You may now disconnect. Everyone have a great day.

Operator: you you you you you you you you you you you you you you you you you you you you you you you you you you you you Welcome to ManpowerGroup's third quarter on these results conference call.

Speaker Change: noone

Operator: You'll be putting the snowy mode until the question answers time begins. This call is being recorded. If you catered drop off now, please do so.

Speaker Change: Welcome to ManpowerGroup's third quarter earnings results conference call. You will be put in listenly mode until the question and answer time begins. This call is being recorded. If you care to drop off now, please do so. I would not like to turn the call over to Manpower Group's chairman and CEO , Mr. Jonas Prising. Sir, you may begin.

Jonas Prising: I would like to turn on the call over to ManpowerGroup's Chairman of CEO, Mr. Jonas Prising.

Jonas Prising: Sir, you may begin. Welcome. And thank you for joining us for our third quarter 2024 conference call.

Jonas Prising: Welcome, and thank you for joining us for a third quarter 2024 conference call.

Jonas Prising: A Chief Financial Officer, Jack McGinnis, is with me today. For your convenience, we have included prepared remarks within the Investor Relations sections of our website at ManpowerGroup.com. I will start by going through some of the highlights of the quarter, then Jack will go through the third quarter results and guidance for the fourth quarter of 2024. I will then share some concluding thoughts before we start our Q&A session.

Jonas Prising: A chief financial officer, Jack McGinnis, is with me today, for your convenience. We have included our prepared remarks within the Investor Relations sections of our website at mampagroop.com.

Jonas Prising: I will start by going to some of the highlights of the quarter, then Jack will go through the third quarter results and guidance for the fourth quarter of 2024.

Jonas Prising: I will then share some concluding thoughts before we start our Q&A session.

John McGinnis: Jack will now cover the safe harbor language.

John McGinnis: Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, 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 update or revise any forward-looking statements.

Speaker Change: Jack will now cover the safe harbor language.

Jack Mcginnis: Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, 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 update or revise any forward-looking statements.

John McGinnis: It's like two of our earnings release presentations further identifies forward-looking statements made in this call. In fact, there's that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Jack Mcginnis: So I too have our earnings release presentation further identifies forward looking statements made in this call, in factors that may cause our actual results to differ materially and information regarding reconciliation of non-gap measures.

John McGinnis: Thanks, Jack.

Jonas Prising: I recently returned from visits without teams and clients in Europe, including spending two days with country managers from across our key markets. And as market experts, each of them speaks with CEOs and business leaders every day. So central to our discussions was the broader economic environment and what we're hearing from our clients on the ground. Right now, we see a continuation of the cautious employer approach we've been talking about for some time, particularly in Europe and North America, while the situation is good in Latin America and Asia-Pacific. In essence, there hasn't been a significant tone change in the conversations we've been having with employers over the past 12 months.

Speaker Change: Thanks, Jack.

Speaker Change: I recently returned from visits with our teams and clients in Europe, including spending two days with country managers from across our key markets.

Speaker Change: and has market experts, each of them speaks with CEOs and business leaders every day.

Speaker Change: So, central to our discussions with the broader economic environment and what we're hearing from our clients on the ground.

Speaker Change: Right now, we see a continuation of the cautious employer approach we've been talking about for some time, particularly in Europe and North America. While the situation is good in Latin America and Asia-Pacific.

Speaker Change: In essence, there hasn't been a significant tone change in the conversation so we've been having with employers over the past 12 months.

Jonas Prising: They remain focused on managing the macroeconomic and geopolitical challenges impacting their businesses. Most are optimistic yet cautious about market conditions improving, and they are largely maintaining that current workforce. Since the timing of any improvement is not certain, there's still hesitant to increase their spend and expand their workforce without a significant step change in economic outlook. Looking at labor markets broadly, we continue to see resilient top line trends with unemployment holding relatively steady in many places and little indication of widespread layer.

Speaker Change: The remain focused on managing the macroeconomic and geopolitical challenges impacting their businesses.

Speaker Change: Booster Optimistic, Yet Cautious.

Speaker Change: about market conditions improving and they are largely maintaining that current workforce.

Speaker Change: Since the timing of any improvement is not certain, there's still hesitant to increase their spend and expand their workforce without a significant step change in economic outlook.

Speaker Change: Looking at labor markets broadly, we continue to see resilient top line trends with unemployment holding relatively steady in many places and little indication of widespread layoffs.

Speaker Change: In our Q3 earnings call last year, we spoke about our industry being at the leading edge, the first to feel the impact going into downturn, and the first to benefit from improving outlooks on the other side. While we're not seeing signals of significant improvement, we're also not seeing signs of significantly weaker environment ahead. [inaudible]

Speaker Change: Our most recent ManpowerGroup employment outlook survey of 38,000 employers published in September , found employers report cautious yet steady hiring intentions for the three months ahead, with many prioritizing retaining and attracting workers of specialized, flexible skills, and adaptable mindset to adjust to the evolving requirements.

Speaker Change: We believe this growing demand for specialized and flexible skill sets will serve as well. Fight new hiring, remaining at lower levels in many places, labor markets remain historically tight, as demand and supply mismatches process.

Speaker Change: Companies are seeking deeper pulls of expert talent and new ways to scale and we scale talent as well as increase mobility within their own organization, particularly as advances in AI transform roles and increase the value of soft skills.

Speaker Change: Now turning to our results, in the third quarter, revenue was $4.5 billion, down 2% year-of-year in housing currency.

Speaker Change: A report at Abyta for the quarter was $79 million, adjusting for restructuring Abyta was $117. Report at Abyta margin was 1.7% and adjusted Abyta margin was 2.6%.

Speaker Change: Earnings for the Luda chair was 47 cents on a reported basis while adjusted earnings for the Luda chair was $1.29.

Speaker Change: Just that earnings per share decreased 8% Euro-veer in council currency.

Speaker Change: Regardless of the environment we find ourselves in, we are focused on maximizing the opportunity to deliver services today, while being well positioned to capitalize more broadly when market conditions improve. The diversity of our geographic and client industry vertical mix from IT to healthcare and life sciences, dustules, consumer goods, and public sector.

Speaker Change: is serving as well. Now data is enabling us to provide real-time assessments which are experiencing headwinds and tailwinds by market.

Speaker Change: We currently see encouraging signs in healthcare and life sciences and select pockets with industrials who are stepping up our sales activity accordingly.

Speaker Change: We're also seeing improvement in the manpower sales pipeline, but both the number of opportunities and the pipeline size has grown throughout 2024. I'll now turn it over to Jack to take you through the results in more detail. Thanks, Jonas. Revenues in the third quarter came in at the midpoint of our constant currency guidance range. Cross-profit margin came in at the low end of our guidance range. As adjusted, even it was 117 million, representing a 2% increase in constant currency compared to the prior year period. As adjusted, even the margin was 2.6% and came in at the high end of our guidance range, representing 10 basis points of improvement year over year.

Speaker Change: During the quarter, year over year, for currency movements had an impact on our results. For a currency translation, drove a 1% unbearable impact to the U.S. dollar reported revenue trend in addition to the consequences decrease of 2%.

Speaker Change: Organic days of adjusted consequences, currency revenue also decreased 2% in the quarter, slightly better than our guidance.

Speaker Change: According to the EPS Bridge, reported that earnings per share was 47 cents. Adjusted EPS was a dollar 29 and came in very close to the midpoint of our guidance range.

Speaker Change: Blocking from our guidance midpoint of a dollar thirty, a results included a stronger operational performance of four cents, a lower-weighted average share count to the share repurchases in the quarter, which had a positive impact of one cent, a higher tax rate on country mix, which had a negative impact of four cents.

Speaker Change: A foreign currency impact that was two cents better than our guidance and interest in other expenses had a negative impact of four cents.

Speaker Change: Researching class and his screen text tried to represent an 82 cents resulting in the reported EPS of 47 cents.

Speaker Change: Next, let's review our revenue by business line. You're over year on an organic, counter-currency basis, the manpower brand revenue trend was flat in the quarter. The experienced brand declined by 10 percent, and talent solutions brand had a revenue increase of 7 percent.

Speaker Change: With Intel Solutions, our PO Business Experiencing Year Over Year Revenue Decline, which was a slight improvement from the trend in the second quarter. Our SP Business revenues increased compared to the prior year, while right-managing experience year over year revenue growth on higher out-placement volumes in the quarter.

Speaker Change: I'll give more color on the transfer in the previous quarter when I cover gross profit trends.

Speaker Change: Looking at our gross profit margin in detail, a gross margin came in at 17.3% for the quarter. Staffing margin contributed at 10 basis point reduction due to mixed ships and lower volumes, while pricing remains solid.

Speaker Change: Permanent recruitment, including town solutions RPO, contributed 20 basis point U.P. Marcher and Reduction, was permanent hiring activity in the third quarter decreased year over year.

Jonas Prising: Restructuring charges of 5 million represented actions in our France, Spain, and regional head office. France revenue comprised 56% of the Southern Europe segment in the quarter, and decreased 5% on a day-to-day suggested Concernity Basis. As adjusted, OUP for our French business was 44 million in the quarter. Adjusted OUP margin was 3.7%. The Olympics provided a modest boost in activity in the middle of the quarter, and the month of September experienced a slight further decrease in line with activity levels in the second quarter. Activity to date in October is largely consistent with the trends experienced in September, and we are estimating a fourth quarter trend to reflect the slight further decline from the third quarter trend.

Jonas Prising: Revenue in Italy equals 419 million in the third quarter, reflecting a decrease of 1% on a day-to-day suggested Concernity basis. OUP equals 27 million, and OUP margin was 6.5%. We estimate that Italy will have a slightly improved revenue trend in the fourth quarter compared to the third quarter.

Jonas Prising: Our Northern Europe segment comprised 19% of the consolidated revenue in the quarter. Revenue of 828 million represented an 11% decline in Concernity, as adjusted OUP was flat. This was the most challenged part of our business, subject to the lowest economic growth rates, with many markets operating a benchmark model, which creates higher financial and operational pressures than we see in other markets.

Jonas Prising: The restructuring charges of 26 million represented 11 million in the Nordics, 9 million in Germany, with modest additional charges in the UK, the Netherlands, Belgium, and regional head office. Our largest market in Northern Europe segment is the UK, which represented 35% of segment revenues in the quarter. During the quarter, UK revenues decreased 12% on a day-to-day suggested Concernity basis. The UK market continues to be very challenging, and we expect the rate of revenue decline to worsen in the fourth quarter compared to the third quarter based on reduced seasonal holiday and lower public sector demand. In Germany, revenues decreased 16% in days adjusted Concernity in the quarter.

Jonas Prising: Germany manufacturing trends have been weak, driving further declines. In the fourth quarter, we are expecting a similar to slightly worse year-over-year revenue decline compared to the third quarter trend. The Nordics continue to experience very difficult market conditions, with revenues decreasing 19% in days adjusted Concernity in the quarter. Within the Nordics, Sweden is experiencing the largest declines based on a weak manufacturing and auto-environments. The Swedish market was also impacted by the introduction of new temporary worker term limits, beginning in October of 2024. Where many more clients than we expected converted our manpower temporary staff to their permanent payrolls ahead of this change.

Jonas Prising: We believe temporary worker demand impacts from the shortened term limits to two years will normalize in the quarters ahead, as it has in many other European markets that have instituted similar adjustments in the past.

Jonas Prising: The age of Pacific Middle East segment comprises 12% of our total company revenue. In the quarter, revenue is equal to 563 million, representing an increase of 3% in organic concern. As adjusted, OUP was 25 million and OUP margin was 4.5%.

Jonas Prising: Researching charges of 2 million relate to actions taken in our Australian business. A largest market in the APME segment is Japan, which represented 52% of segment revenues in the quarter. Revenue in Japan grew 9% on a day's adjusted concept currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the fourth quarter.

Jonas Prising: This part of our ongoing strategy to optimize our mix of businesses and geo footprint, we have recently agreed to sell our South Korea business, which will operate as a manpower franchise in the future. We expect this transaction to close at the end of October, which will be reflected in my guidance for the fourth quarter.

Jonas Prising: I'll now turn the cash flow in balance sheet. In the third quarter, free cash flow represented 67 million and compares to 245 million in the prior year. One time, restructuring-related payments on the wind down of our Germany ProServia business decreased our free cash flow during 2024. At quarter end, day sales outstanding decreased by about 2 days to 57 days. During the third quarter, capital expenditures represented 16 million. During the third quarter, we purchased 415,000 shares of stock for $29 million. As of September 30th, we have 3.1 million shares remaining for a purchase under the share program approved in August of 2023.

Jonas Prising: Our balance sheet ended the quarter with cash to $411 million, and total debt of $1 billion. Next, that equals 614 million at quarter end. Our debt ratio is a quarter end, reflect total gross debt to trailing 12 months adjusted EBITDA of 2.1, and total debt total capitalization at 32%. Our debt and credit facility arrangements remain unchanged during the quarter, as displayed in the appendix of the presentation.

Jonas Prising: Next, I'll review our outlook for the fourth quarter of 2024. Based on trends in the third quarter and October activity today, our forecast is cautious and anticipates that the fourth quarter will continue to be challenging in North America and Europe. Within Europe, Europe continues to experience the most challenging conditions, and we anticipate lower seasonal holiday activity and extended year-end plant closures. As I mentioned, we expect to sell our South Korea business to close at the end of October, and accordingly, our guidance only reflects one month of South Korea operations, and we have provided organic variances to show like-for-like revenue trends.

Jonas Prising: With that said, we are forecasting earnings per share for the fourth quarter to be in the range of 98 cents to $8. The guidance range also includes an unfavorable foreign currency impact of one cent per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a decrease of 1 percent and 5 percent, and at the midpoint is a 3 percent decrease. The impact of the South Korea disposition is about 1 percent of the decrease, and there is about one more working day in the fourth quarter.

Jonas Prising: In summary, our organic day's adjusted constant currency revenue decrease represents 4 percent at the midpoint. And Trevor, in terms of your question on the financial details, we'll disclose that after we close the transaction. As I said, we expect to close it at the end of this month, very beginning of the next month. And we'll have more to say on that in the fourth quarter, but I would say for modeling purposes, think of it as running generally about $80 million a quarter. So, as you think about the impact from a revenue trend perspective, and as I said, we have one month in the guide for the month of October, that would give you a pretty good idea.

Jonas Prising: I think the main punchline for the fourth quarter is it doesn't have a significant impact in terms of the loss of those two months on our bottom line EPS, and we'll talk more about that after we close the transaction.

Operator: Okay, thank you both. I appreciate the time. Thanks, Trevor.

Mark Marcon: Thank you. Our next question comes from Mark Markon with Beard. Your line is open. Good morning, and thanks for taking my questions, Jonas and Jack. You know, at the beginning of your commentary, you cited that, you know, conditions aren't really changing that much. And, you know, when we take a look, particularly at Northern Europe, you know, it doesn't look like things have changed. Well, things that they've gotten worse. I'm wondering, you know, how are you thinking about, you know, what would be the catalyst, you know, to lead to improvement. You know, in the overall economic environment that's specifically in Northern Europe, and, you know, how long do you think that would take to come about.

Jonas Prising: And, and if it doesn't come about, you know, any time soon, you know, are there additional steps that we could take to, you know, improve the profitability level there. Thanks, Mark.

Jonas Prising: Yeah, as I mentioned in my prepared remarks, Northern Europe is our most challenged region and has been for quite some time. And as you've seen, we've taken significant actions to write the business and adjust to what is the most challenging market conditions across the world. The significant economic headwinds and mostly everybody in that in that region is seeing the pressures, both the macro economic pressures really coming to bear. And that is, of course, something that's reflected in the performance of our industry and specifically for our company as well. Having said that, you know, we are confident that at some point when the market turns back, these are great places to be, and these are important markets for us to operate.

Jonas Prising: They also happen to be markets where we primarily and have bench models, and they are harder to manage in a downturn because the associates are part of our permanent payrolls that takes us some time to make and take the required actions to right size the business when the demand to drop.

Operator: Thanks, very helpful. Thank you very much. Thank you.

Manav Patnaik: Our next question comes from Manav Patnaik with Barclays. Your line is open. Hi, good morning.

Jonas Prising: This is Prince Ray on for our monas. I just wanted to ask around your prepare-go-marks where you were saying that you're seeing improvements in the manpower sales pipeline, where I wanted to just see if you could expand on that. Or is that with mainly new clients? Any color that you can provide would be great. Yeah, we see some very nice improvements in our pipeline, both for our existing customer base, but primarily on our new business and new client base. And this is the result of our increased focus over the last 12 months to really make sure that we are increasing our demand generating activities that are being very focused on the industry verticals that we think can be fruitful and that we leveraging the technologies that we've implemented so that we spend our time on the opportunities that we think can yield better results and fast the growth for us going forward.

Jonas Prising: And that's why we're pleased to see that the pipeline is increasing.

Jonas Prising: In an environment like this, having an increasing pipeline means the conversion rate and the monetization rate, the timing of that is extended because, whilst we're winning more deals, the size of the deals tends to be smaller and the speed to monetization tends to be slower. But regardless of that, having one of these deals is going to be beneficial for us in the short term, but certainly also in the medium to long term, when the market conditions improve and those deals start to come to their full monetization potential and generate great amounts of revenue growth for Mampar and as well as full experience and talent solutions.

Jonas Prising: Right, and can you speak a little bit about what you're seeing in terms of competitive dynamics? Industry has always been a competitive industry, but as we mentioned in our prepared remarks, pricing is also competitive, but rational. So the pricing levels, as you can see from our gross profit margins, are stable. The changes that we saw quarter of a quarter are primarily driven by business mix and geo mix changes, not by pricing pressure. The demand for skilled talent is still strong, and our customers know that it's difficult to find people with the right skills. And I think that is what we're seeing reflected in the dynamics of our industry.

Jonas Prising: But it's always going to be a competitive industry, but at this stage we're seeing the pricing being solid and behavior rational.

Operator: Thanks, Donald. Thank you.

Joshua K. Chan: Our next question comes from Josh Chan with UBS; your line is open. Thank you, Jonas. Within the experience business in the US, could you speak to the, some, offer some more color on the IT and tech exposure and differences you may be seeing between convenience and your larger customers and to the extent you have exposure and managed services and more sort of project consulting related work. Thank you. Sure, now we have a very strong presence in IT resourcing as well as in solutions, and the most of our customers are big enterprise users of those services. We continue to see a pretty strong headwinds and low demand for larger enterprise clients.

Jonas Prising: They're pausing project. They are reallocating resources from traditional IT projects into AI, spend cyber spend there. That's where the demand is still strong, but on a volume and on a scale basis, those are relatively small opportunities for experience in terms of what moves the needle on the larger project. So we are very strong on the solution side, as we mentioned in our prepared notes. We can see a better performance from the convenience side of the business on the experience. But you are seeing headwinds there as well companies are a little bit more smaller companies a little bit more cautious in terms of starting the projects.

Jonas Prising: But as you step back from all of that and you think about what's happening with all corporations large and small, the investments that they are thinking about doing and are executing today.

Jonas Prising: In terms of their plans for digital transformation, means that terms of demand outlook, you know the timing being uncertain, but in terms of it coming back and coming back strong, we feel really good about that, and our business is very well positioned to take advantage of the market coming back when it does.

Operator: Thank you.

Operator: Thanks, everyone, for participating in the Q3 earnings call, and we look forward to speaking with you again when we discuss our year and results in a few months. Thanks, everyone. Have a great rest of the week.

Operator: Thank you for your participation. You may now disconnect. Everyone have a great day.