MAN - Earnings call transcript Q1 2018

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Operator

Welcome to ManpowerGroup First Quarter Earnings Results Conference Call. At this time, all participants are in a listen-only mode until the Q&A session of today’s conference. This call will be recorded.

If you have any objections, please disconnect at this time. And now, I will turn the call over to ManpowerGroup Chairman and CEO, Jonas Prising. begin. may you Sir,

Jonas Prising

going to me quarter Financial today will and today McGinnis. Welcome of the XXXX. first the Officer, call And I quarter by call the with is start some the morning. of conference highlights first for Jack through some Good our Jack will second well thoughts segments, on as final balance will our operating follow quarter, and session. sheet outlook the through and the the and comments I then cash with go for Q&A our results our flow, before Chief as

go Before will Safe further we read language. any Jack into our Harbor now call, the

Jack McGinnis

or This everyone. Actual materially differ those and morning, subject These results to projected forward-looking and from forward-looking statements. in conference Good expectations statements, uncertainties. which on are beliefs. call includes based statements might risks unknown are the known current management’s

or actual factors the filings Company’s materially forward-looking can be cause Additional found in of Form information and from could on the the assume results Exchange statements. concerning the Commission those Securities obligation incorporated report it and reference. in XX-K statement is statements to forward-looking in that differ of only herein and the call is other annual in speaks made, we Company, Any today’s as update which forward-looking by to of which revise information any date no

to measures appropriate useful believe our manpowergroup.com. investors. During where financial of non-GAAP on We of call our today, Relations we information section for provide those at a certain which we the will measures, website reference include Investor reconciliation GAAP

Jonas Prising

Jack. Thanks,

constant growth was came in currency increase billion, to underlying same-day Revenue with start the the of currency. quarter rate very revenue basis, a an pleased constant our are We $X.X On organic year. X%. our X% in strong at in

strong France strong We revenue with growth Southern in X% in in segment, double-digit Italy and Spain. growth continue our and Europe see to

for certain strong in the same-day APME segment. UK markets, basis trends profit see other the in Operating our $XXX up constant a and also million, We growth double-digit improving X% European quarter in was and saw currency.

year this later the will had the discuss charges, During restructuring both more detail, call. which year, we and prior in of first the Jack quarter in

Excluding constant operating our of profit operating in XX flat was Operating the profit profit margin was both in excluding at increase the guidance charges, X% range. prior and year quarter, the after for basis of charges restructuring margin an currency. X.X%, prior these came high $XXX over from the points year. end And to the years, restructuring at up million

contraction by performance increase quarter, improvement the quarter of quarter share offset Our the in some restructuring the productivity Earnings XX% was $X.XX, currency. share per per earnings further and and good SG&A also cost was in profit margin leverage. constant charges the gross reflects excluding in $X.XX; an for

revenue global favorable to encouraged The strength profit a outlook and and that solid in with by and second growth of are shows strong labor continued survey economy hiring global year We hiring stronger our ManpowerGroup necessary services employment our of was intentions labor in quarter confirmed favorable of meet to markets. talent this continued human markets we and skill is well-positioned and intent in countries by capital the trends than needs key which very the showed with clients showing the XX and portfolio global provide start solutions. operating surveyed Access XX are countries our to the QX. extensive through footprint of XX to environment, market-leading stronger

our to turn provide offering would in our review segment like solutions We results a RPO Jack global our and growth continue by our again additional year to we’re second to for that, in see and and information the of once eighth over it quarter with analysts independent row. I outlook. leader recognized to And in strong as financial a business,

Jack McGinnis

Thanks, Jonas.

this our our constant of strong Currency growth. with decline growth a low a performance for of a XX is constant X% currency the reported a guidance excluding currency had basis operating our currency usual constant impact we range. costs, On translation basis which costs points resulted of profit revenue midpoint on quarter, guidance on guidance XX than which points. XX% was performance at range. bigger profit on the further quarter the profit restructuring range. a constant our or end basis at basis This margin currency top declined gross profit had basis, was end XX As of slightly growth Jonas restructuring gross excluding X% in of first points, decline of mentioned, operating margin adding above our X.X% margin of an Revenue

basis Although our driving to costs. costs profit percentage XX% basis and a restructuring before positively profit prior SG&A year, on to improved declined more as points points again basis the XX about Breaking compared our into a revenue, once rate the revenues impacted the by operating currency in result our contributed margin margin acquisitions constant gross strong quarter. down of a currency detail, growth revenue XX growth bit our

reported earnings were was which on includes in earnings $X.XX had restructuring a was the growth per currency days, basis, which quarter billing per costs up $X.XX, basis, reported XX% growth on X%, revenues impact X% a after share. adjusting represents which revenue While constant share our On negative rate. for organic a

guidance excluded last our stated restructuring I costs. As quarter,

the other $X.XX drivers Excluding $X.XX previous than to from to performance the offset comprised these acquisitions to Switzerland include related growth value per on higher midpoint attributable operational of performance franchise. foreign market of our result by costs, part share higher to $X.XX earnings $X.XX of guidance partially currency investments, this expected, attributable better The interest of additional range. costs expenses of adjustments leverage. under recorded was accounting translation, above are by $X.XX, related was in operational ownership adjustments as requirements. and the new value improved available-for-sale driven our The earnings market revenue partial The our pickup investments and expense impact our

margin profit gross our at Looking in detail.

by a driven decline X.X%. on primarily in interim of margin at a gross Our staffing came reported basis, XX%

Our the in quarter. from gross from by higher margin XX was basis increase lower offset Right permanent profit Management of points recruitment contribution

in negatively payrolls impacted January the As the was tax XX our from impacting client sickness payroll The I decline the as X, reduced Germany, of paid margin and earlier, points rates effective France prior mix mentioned businesses profit Belgium. XXXX, in for margin expected year. CICE in credits basis by impacted by staffing accounts large higher Italy, gross interim currency Netherlands and the staffing

our Next, profit by line. business let’s review gross

comprised quarter, brand the XX% During of the profit. Manpower gross

Solutions Management Our Right comprised and experienced comprised professional XX%, X%. XX%, ManpowerGroup business

solutions achieved Solutions. once was growth higher offerings strongest ManpowerGroup Our again by within value our

outsourcing a brand, increased clerical from Manpower X% in profit is profit decrease derived light industrial RPO declines skills skills representing is driven our profit end-user gross our X%. growth global flat profit during well the of This currency X% XX% from the slight in This the X% and gross slight profit continued quarter. Office as U.S. constant experienced the RPO, currency, constant in outplacement gross Management offerings, talent-based growth including quarter, business. the I growth quarter. segment of a UK. and Gross constant fourth profit light activity will the good IT, MSP XX% during a skills Solutions Right solutions the constant quarter represents experienced in skills. Right a in quarter, our brand in clerical as decline. a the was Experis from quarter. includes the a to Gross review. the in decline currency decrease and increase in growth Within was decline the derived slight from and of quarter. also growth currency MSP Manpower approximately from during ManpowerGroup rate infrastructure in by was During fourth office and support as X% in the deceleration on Management quarter. with our the Proservia, reported our comment in and fourth from market-leading experienced businesses and brand our Proservia the industrial up Gross XX% my quarter, in

including $XX expense million, years. of an prior from SG&A restructuring million was excluding and costs, excluding On up million in currency, restructuring X% was $XXX was changes, basis million increase increase the operations. constant costs. driven an compared in acquisitions $XX currency expense were organic expenses $X $XXX by year reported from SG&A $XX $XX both from million from costs Our quarter SG&A million of restructuring million, This year. after to the from the prior the

expenses operational leverage across the as XX driven SG&A our percentage higher Excluding quarter costs, on continued restructuring and revenue basis efficiency businesses. improved focus the by in a to growth revenue points improved operational on a XX.X%, of

on that, of The operating the with segments revenue. decrease expect savings country in a performance the We second expenses comprised through expected restructuring over XX% by incremental segment minor segment to based of isolated driven billion, fourth this decline cost currency. the represented basis the next, XX% costs by in expect The cost a quarter. year comprising was in X% recover U.S. to in margin year-over-year. the the certain will slowing U.S. with $XXX OUP segment. discuss OUP restructuring decreasing cost in currency a of by for Revenue US. quarter. trend constant reduced I SG&A of the of break level compared up accounts million above to improvement the in in segment, will XX% million, Argentina. Americas prior quarter X% $XX in points the Americas of restructuring X% improvement billing year-over-year. the management decrease OUP in the quarter initiatives consolidated excluding X% Adjusting as cost down and The and revenue out was largest for of driven the with volumes This the next part centralization and we XX months. Americas year. Revenue was the compared the overall were prior constant Profitability represented revenues. $X days, strong by increase costs, improved the $XX million, XX was is increased Restructuring in

increased points management. our our of quarter. to due margin by overall pricing margin Despite as to discipline the once for trends, strong evidenced the operational again as OUP margin X.X%, the an primarily U.S. in gross X% was improved challenging OUP revenue efficiency and from in prior basis continues the the on expansion focus profit expansion million. business SG&A business strong quarter, the During year, $XX OUP cost to strong U.S. XX

Within the X% quarter. or of quarter in U.S. in X% down XX% Manpower Manpower quarter. decrease when in Manpower the X% a the fourth during the business adjusting gross U.S., has billing from the Revenue days, for the down the the in brand decline expect new The comprised The the U.S. was profit of the Within brand in a in end activity pipeline IT XX% the comprised towards of growth XX% gross a will of profit the of skills second positive approximately which we brand of revenues. quarter. provide strong quarter. trend Experis Experis U.S., the for comprised

compared from During the quarter, year decline revenues fourth the our XX% in the Experis X% experienced to the quarter. declined prior

certain by profit in to The We this which driven X% led decline quarter, revenue to we in fourth Experis decline expected and quarter margin associated quarter the the the in isolated decline margin gross quarter another the a quarter has of business Solutions explained the business improved gross gross clients. during non-recurrence on a further focused profit in quarter. we quarter. And last of in U.S. into ManpowerGroup quarter. this XX% to in compared Experis the the expansion in margin resulted experienced reduced the profitable U.S., as the to from very demand of the business second during in MSP-related contributed X% and first with business, profit again expect in continued the be improve been trend low this the decline quarter.

for value to continue We our MSP clients demand see solutions. our by RPO and strong higher

constant Our constant reflect in second inflation. into to impact Mexico in up Revenue currency. currency, we of quarter, revenue the the of growth continues XX% and quarter business in Mexico also the expect performed in in which well quarter. in operation XX% growth had good the was The Argentina

revenue the inflationary in environment. constant and We X% focus up basis. growth margin Peru, growth and XX% on improvement currency driven growth primarily in on the other strong Revenue was This Brazil, was in countries continue Columbia. terms or within an Americas organic by payment given to

represented XX% Europe in a Southern currency. at Europe billing of in the came days quarter. XX% rate the this of revenue XX% average revenue consolidated of in in increase On an billion, quarter. Southern deceleration comprised Revenue a fourth constant an growth $X.X from XX%, in the growth rate the revenue basis,

from OUP in impacting and margin constant to OUP segment the rate in activities partially in front basis office year. gross very up costs back Restructuring growth expected office France Italy. the Italy. XX% Europe offset and Permanent growth Excluding relate prior restructuring to recruitment the and the France high reductions improved Spain down costs, the by primarily negatively the Southern million due rate primarily XX% of currency. was points quarter, comprised slowing X% X% in over XX currency XX% prior prior represented in centralization year currency. operating in year. at in revenue optimization increased leverage was margin year the were CICE, the in profit This growth from strong constant and the of fourth prior the was in At $X.X from constant quarter

was OUP down CICE constant basis currency X%. payroll in the decrease a staffing quarter decrease currency the recruitment points reducing margin January in paid the previously partially rate very was CICE related X% during Permanent at currency; effective Permanent was X% at profit. decline XX% impacted discussed, growth helped constant margin our first million, from in quarter. strong of eligible $XX offset OUP the of quarter. during to with gross recruitment constant XX XXXX, X, results, growth beginning X% As and wages

see of increased in growth currency represented quarter the million the Excluding XX% improvement the France. Italy impact of in to $XXX XX% constant constant continue in trends in CICE, Revenue first margin to with our rate growth. staffing underlying and we in offset has growth a Business of recruitment plus on strong basis. associated resulted currency staffing changes fourth mix average very quarter which permanent an partially This in by growth. been the daily revenue margins, reduced consecutive represented have through XX%

the basis recruitment Specifically, year. permanent currency over constant on fees increased XX% a prior

offset as OUP XX% by up and costs, expanded in X.X% XX profit to cost management growth operating strong points restructuring Excluding margin to basis OUP SG&A $XX declines. gross leverage constant currency margin and was million

growth growth average over revenue We XX% the currency. constant second are on growth very digits Based Spain our slight a the currency and basis, quarter the year very improvement the pleased double prior rate organic the On high for in represents lower the Italy expect currency second business. X%. performance rate days, was in constant we an XX% into from continue year, growth very fourth last Revenue in organic to up billing was quarter strong quarter the strong, growth with in of growth quarter. our in was rates constant Adjusting the rate. the

into will Spain expect second have to We continue a very quarter. performance the strong

Our in the basis, Northern quarter. adjusted constant Europe days improvement a of revenue in in Northern up Europe a On comprised which saw XX% the to quarter. grew organic fourth of Revenue X% currency was constant billion. represents billing continuation the consolidated X% we currency $X.X

technology other in and points. and constant Before margin margin declined Germany X% restructuring XX costs, currency basis in by OUP down and related declines primarily UK, quarter the in which as Belgium. driven increased the costs initiatives OUP staffing activities experienced decline to Norway front the the restructuring and was office was UK, The delivery well centralization and back Netherlands, The optimization costs. office other Germany, model and

in in is flat Our Northern improvement recruitment at This UK, adjusted currency quarters rate. represented quarter decline in billing UK growth X% constant were the the from largest improving on X% the down segment quarter. segment during X% of which quarter. XX% market the the three revenue consecutive were represents increased fees Permanent trend. currency days in of in revenues the fourth basis, revenue a and a constant Europe

which of constant in declines, revenue X% in After flat currency deceleration business from improved our revenue business in represented fourth growth constant growth first slight in to X% quarters the quarter. Manpower the the quarter a several the Experis UK currency growth Our experienced the quarter.

the average quarter. the the deceleration which on expect ago growth growth the overall the year on was The average basis, on yearly billing from the X% an to the in relatively expected anniversary an constant the which quarter quarter, X% second constant of the basis We Revenue UK daily up revenue stable In remain X% in rates on in Germany on the period. up X% growth trend quarter days represented X% first growth an to for average we a growth growth Nordics, or on flat into into basis. first grow represents in fourth quarter. based revenue was continued increase revenues basis, in the high an an the quarter the same basis currency very fourth currency from in the

on in currency. in The in period Revenue respectively representing a growth and of a Japan OUP Russia. at in X% adjusted In Japan a up experienced and basis year; was for X% Finland comprised $XX in points management. same fourth SG&A expect stronger Middle that higher adjusting China. represented the expected in recruitment currency. which was revenues Northern quarter. strong daily recruitment We in basis. billing margin the an average slightly a from XX% in Belgium the in and rate, daily was growth growth and adjusting by constant on up the currency in high were in after restructuring currency, in and New quarter. the prior growth from the Asia be on revenue this up by XX% other Europe Revenue the constant than on and was segment comparable XX Asia countries was Zealand constant the expect currency in efficiency we OUP driven was into improvement and billing currency result performed excluding Revenues revenue currency, Revenue Pacific cost basis, quarter. days, but and growth Both Other and Company of daily continued revenue from growth same a revenue growth including the basis. levels was million strong this to growth to driven XX% XX% $XXX in XX% costs East the days, strong average total represented million markets increase basis Permanent Australia, revenue. quarter, significant the in quarter. the X% constant for Malaysia X% Middle growth currency, XX% strong in for OUP revenue X% in of margin growth, The representing or the days, in number X% billing the representing increased increase currency. on constant growth X% markets quarter adjusting the very Poland, increased This slower within strong a very had Netherlands the XX% fourth see expectations improved constant constant of Both strong, average and in X% growth and up increase increase Pacific constant in similar billing fourth Permanent very to second the Taiwan, East of India, constant quarter. an by growth double-digit was the second revenue in X% days markets growth SG&A OUP in the Singapore. X% quarter, in and at driven in China, Australia in prior quarter,

activity. quarter, continued based the to Management slow Right Our first business reduced on in outplacement

were During currency the million the following in in a $XX XX% constant down revenues fourth decline quarter. quarter, to XX%

reductions as a on reductions. the helped offset currency of impact XX% SG&A basis, partially decreased OUP costs, restructuring Excluding to constant revenue

Free relates the the item cash a costs the balance points. from CICE impacting represented during the XXX In defined free for of basis capital decreased cash tax in restructuring million, to year-over-year CICE we March cash now in year for the of and OUP the flow million. sale flow to period, of Management $XX operations prior XXXX France cash credit. represented quarter centralization credit as businesses, million. sold variance $XXX significant costs, tax I’ll outflow French turn One sheet. expenditures Right flow, $X.X cash within less Excluding our Nordics. initiatives Restructuring margin

first not in did sell the this XXXX of we quarter However, French tax CICE the year. credit

Excluding million. free $XX the sale, prior flow the year CICE cash was

as our current of driven two lightest of from by some first one Good to million, first flow. DSO flow second faster by our is relates quarter In quarters did included XXXX timing quarter flow Europe April payments; of driving cash XXXX being we is Friday. the have overall sell driven contingent portion paid acquisitions. by our tax the for are cash seeing consideration, classification approximately the increase At changes CICE quarter business quarter-end, cash cash French classified countries, a factor is increased operations. cycles. second days position The the to growth typically million outflow X.X for the quarter-end, which the is substantially quarter, of which Consistent timing with €XXX increase excess the in will the We days factors, main we reflected in The of free with outstanding sales which payment prior in during cash quarters, as the ongoing tend liability the operating longer mix which credit revenue Southern of all flows. $XX of be

We to to during DSO. represented on trend improve the execute expenditures Capital quarter. million of the initiatives $XX continue

During purchased XXX,XXX of $XX million. the quarter, stock for shares we

remaining July March As shares XXst, program million share have approved of X of in repurchase under the XXXX. for million we X.X

of million, million. of million sheet $XXX to with debt at cash debt strong $XXX $XXX balance bringing and total was quarter-end Our net our

with to Our XX trailing at months X.X are XX%. total quarter-end capitalization debt debt and total comfortable to of total ratios debt EBITDA very at

At facilities €XXX not change quarter-end, outstanding quarter. effective Our we €XXX with with of had XXXX maturing debt million an maturing credit June and and of rate note in in note interest a effective the in rate an of September million X.X% X.X%, of interest XXXX. did a

XXX for which agreement credit revolving remained unused. a million, have we addition, In

outlook XXXX. the of quarter second Next, our review I will for

share. costs, be $X.XX, of of $X.XX which per Excluding range per we forecasting positive to foreign share are from a impact includes to earnings $X.XX the restructuring in currency

currency our slight growth the the We the impact about and for adjusted primarily good the the the rate Americas the in France Asia second low days outlook very constant billing a the more low currency organic range. expect The a the half rates Europe a very second in Our Middle standpoint, single in for year-ago high basis growth the in growing quarter, from days we high quarter represents Italy From constant digits the and adjusted mid in digits revenue quarter. mid currency first organic between revenue There’s which rate of range East represents the increased about guidance is year-over-year. anniversary of feel in range X%, to of with Southern day high single period. the in growth is to Americas XX and decrease to X% Europe, revenue in to X%. in opportunity growth Europe single-digit This growing APME. be due Pacific single-digit of growth range, Northern and double-digit to in segment a constant growth revenue and currency the growing projection acquisitions points for X% growth constant

basis, difference at Right an in regional expect decline the impact On Northern of APME. on a the and X% high in revenue billing favorable the Management Americas days the about growth X% in unfavorable of about revenue impact have in We single-digits. a Europe and will

gross margin. quarter be quarter, lower flat margin the offset leverage should compared which profit revenue reflecting will operating during solid to Our and growth prior the operating second year

We expect and invest is quarter the continue guidance. resources additional to second incorporated technology our during and in to into this

rate the tax approximate second income quarter XX.X%. our in We to expect

and through to weighted As share XXst. reflecting be not shares estimate usual, March incorporate average additional XX.X repurchases, our does we share our repurchases guidance million,

the recorded and back to to centralization additional addition the to costs $XX the In Germany, in restructuring and have second first of approximately costs primarily we will Netherlands, a the million. the UK restructuring optimization $X office in This quarter, million quarter office relates in of continuation activities front Italy. we the

of are planning restructuring not any the currently balance during additional XXXX. costs We

X, pension in Lastly, relatively effective of we serves The previously other on profits SG&A, pension-related and adopted the as retirement operating recorded this this accounting new of costs, record The certain to the for and post accounting January impact certain expenses. XXXX, is benefit new impact of interest change costs. small. presentation

the restated Jonas. Form quarterly it annual back included X-K have furnished and information XXXX morning. our We and and this would basis, turn like with same the figures I With XXXX to that, to on that

Jonas Prising

our that quarter. the Jack. office charges model initiatives business further Thanks, optimizations. Jack to record These and activities with expecting technology-driven driving transformation These overall further our we delivery market transformation and explained usual and branch in productivity actions technology as and back to initiatives, second enhance on and going strategic will These improvement reach. profitable are our actions which our process first leveraging focused recorded relate focus for with restructuring growth the include efficiency align to quarter priorities enhance along our the primarily performance forward. investment

year. sustainable committed of millions people value each are workforce the being We employment to global leading solutions and meaningful and globally company, providing for our for clients

productivity, support profitable in productivity. applications and that initiatives, we capabilities front We improve To satisfaction employee client greater this, across efficiency, to on the our client and do growth, that attraction, our capabilities leveraging as candidate office culture, leverage candidate experience. facilitate collaborative continue our our global assets applications enhanced and is utilize digital well invest and our priority revenue operations. Our and growth as enhance global to

remarks, good We changing clients work. business very the progress strategy. are to and the them so we of to are relevant making prepared they and our what execute world that far navigate our conclude which confident as enables our offer is are we To continuing strategy, candidates digital committed to overall

growth, about of for opportunities global good very portfolio footprint and profitable our feel we workforce continued ahead, our Looking leveraging solutions.

time, for only world. call result our also our ninth a now Operator? and proud commitment We’re to conduct of be most across like companies do again a to performance, of most and world’s how this our we as not but named only the passion business, that, been both open for companies great the people Fortune the would for the Q&A. admired to pleased with Ethisphere with ethical industry very to in And our what for I our in improve company recognized we have being progress year the

Operator

Steinerman [Operator Our is JP coming Morgan. Andrew first from question Instructions] of

line is now open. Your

Michael Cho

Michael My is in commentary. trends is This around for the question Hi. Andrew. first U.S. Cho

You quarter trough? feel Manpower would it mentioned the passing second improve. quarter revenue a is like trends the Does first

Jonas Prising

Yes.

think, in we talked I met and saw we U.S really what the that evolution had calls. our the earnings first in in the about expected prior quarter

prepared quarter see Manpower to improvement as see quarter. We and towards And we’re the see to you’ve expected Experis. bit to our are in positive first for second also the of to we quarter heard Notably, turn improvements dip. an expecting looking a down a of the from the in remarks, end

think So, we are on we track.

We’re not we’re right but confident the speed heading with progress, the we’re the pleased of direction. in that

Jack McGinnis

I just was in as had anticipated first to forecasted quarter, volume. we in Mike. few add The really And to was that would and reduction very the isolated said, pressure that saw accounts Jonas

quarter. we we that is why we quarter which was mentioned in of So, what improvement saw quarter second second growth, we first in happening, into from also that the the expected really that the that there. And knew rate was decline

Michael Cho

you efficiencies could of percentage remarks reasonable SG&A more in the lot about on expectation for SG&A that’s or SG&A of commentary the been ongoing. as on a the a I in term? efficiencies. If What near thanks. There initiatives squeeze is do a think revenues Understood, one was prepared just the

Jonas Prising

there say a percentage look SG&A SG&A revenue, in us I in a of you yearXend this the quarter. I’d steady us that targets. look ratio seen as the from quarters again you’ve percentage financial conversation really GP. a is improvement Mike, that regarding items, at goes restructuring what new as to you as the Yes. we at of nature guess, had back at saw that we what of And is our when And this do trend recent

of some the to you what accomplishing this some We actions office the continued of in are efficiencies. profit last are that that of And U.S. were those related margins had talked back expanded levers in And operating optimization about and seeing performing the is the we year activities quarter terms we that.

continue we And that examples we are where that look to to as what operating many currently. we see continue You going Europe profit that’s margin. doing do are to at expanding of in

us, taking for ongoing are help that quarter-out terms and actions some quarter-in seen of that seeing well you’ve of of are significant day-in element And as regard. the will improvement in some day-out now we more that as what in you’re and is

think I’d improvement forward. I say to that’s that and to So, should you continue I’d going say see what expect

Operator

you. Thank

next Capital. from Jeff Our is BMO coming Silber, question

line Your now open. is

Jeff Silber

so focus I gross to Thanks on wanted margins. much.

highlighted impact continue fact gross more interim the you down the that if wondering you you if was? were and expect trends I those bit the margin XX of can forward? CICE on just the basis decline staffing a from And of margins what that if out give a little can rest points. going You perspective, parse to am gross Thanks. color about

Jonas Prising

I’d Okay. happy to be that, Jeff. talk to

down about XX as as full is to telegraphed, your in step that of we of was we points in basis points quarter, XX profit quarter in million impact points. margin decline had point basis And weighting was in the isolation annual the -- effect saw we of staffing trend in down was of down €XX the overall. quarter that the XX subsidy CICE and as about it XXXX. quarters Fourth points But on terms have was staffing. the of gross from to the on on consolidated XX that that the a in quarter. basis. XX fourth points first margin staffing full And in impact And that X% basis that roughly was coming as for basis provide So, of terms and that well impact the we CICE, so, previous well basis the quarter the expected now X%, down steady the in did to

would So, the item highlighted that we sickness. that was prepared the I certainly other in of pressure. remarks the say, part is

Belgium, and So, was say, and that primary the the pressure that Germany, bit in of elevated impact the points in basis roughly talk mix. staffing talked are sickness margin I’d to about items. due takes and We Netherlands more about some Italy and some client two And in about had We those an of did was XX quarter. of puts on had countries. the a

actually talked with more on has Italy, more pressure in on and the that growth, that quarter high accounts the been a about we’ve staffing very the large bit as So, first came in weighted through margin. recently, growth

able on offset good So, expanding as U.S. we’re expand were despite very GP example margin, mentioned revenue we of margin. to we’ve that trends been actually I areas doing a is think GP where job the staffing margin where a the earlier, there of and overall And nice some there.

Jeff Silber

reforms. and Okay. of demand your proposals terms you’re any labor I France in shift there of would market impact and I’m appreciated. know business my some wondering expectations seeing forward terms some to of back follow-up, because if That’s be helpful. If that, has any for going could I in initiatives for been

Jonas Prising

years. in as have the for during you temporary contracts those as we’ve would been by Jeff, on of many renew and staff XX-month our contracts to for temporary recall a changes the seen to an being of XX large extending couple way fixed changes say of legislation And I you may period. that positive term twice able the all months, the business, in

is far would have to we But, that that that are that year don’t seen think direct in the business confidence So, in the in I well. reform But, different last coming and climate you’ve I would And and an in with seen France the we’ve positive. that really changes, that the in year our the a forms improvement I feeling as industry -- think into overall this France. impact continues they overall -- see that. as latest say as I been of say,

fertile growth also more the our and may rates, certainly business, helped on not a they in whilst has environment. and a have just the general make had improved beliefs business business So, economic rate growth confidence impact it direct do France well a and improvement

Operator

Thank you.

Goldman from question Next coming Tong is Sachs. George of

now Your line is open.

George Tong

various revisit the the in to pricing impact, a color pricing remaining in how the margin bill sounds pay and sickness. I’d you maybe for expect discuss and quarter. coming from like mix. four spreads to of Thanks two your gross to and detail markets is Can the and impact like pricing you it performance the little CICE environment, from the quarters? Part more evolve over on next the

Jonas Prising

seeing lot fact that’s is say a Yes. opposed that remains scale, forward as we coming as a we that’s price for we profitable that growth that some would of lot the sure at with for and such making detail environment we of the that fast-growing as and pressure continue business pricing maybe it an describe right access means on the And to talent value the other some size something really accounts. maintain countries improving discipline to focus but sure start through our pricing I overall need that would else. the more in nothing would through the to well. rational a And to ability the stability of us we pricing will as power, getting to From that labor we’re Jack, perspective, of gives you as that difficult, I I Italy mix George, it And from are the can expect although and us form of Maybe it countries. it is going deliver Having make that, competitive. which pricing relative said coming the where that pressure. means, if faster are The driving bigger markets describe services growing wouldn’t clients. go see this.

Jack McGinnis

about of think Sure. items trends, terms few I a to consider. ongoing stabilizing. in guess, George, I the France We’ve talked

year. highlight second half to last started we that the so, in And of

we staffing growth impacting in did So, made. very that the to accounts, And see remarks prepared large high France mix that in the and with and margin. the at and clients saw year, stabilize the on start end I we line of the in pressure large

see that first to quarter in first impact the quarter In continued terms good here. quarter into is absorbing as of CICE that first really the which we are

I’d are looking that to improvement. correlation in the what at an use as at And we that’s Italy a So moment.

very, mix growth, well. expect it’s had similar that what growth. start recent stabilize some And and that been and higher France, at very based has that on should high in to Italy, accounts, happened and you larger more their France to that growth should stage growth So, as of in

they that that stabilization bit And in further are so, should a behind time. over happen but

And Australia, I good would the bit from ongoing that GP perspective U.S., element we of would unique earlier, say bit some mentioned an European the have as we the well. did as with consider but margin Belgium, in is were increases dealing I sickness a of Japan, businesses with quarter So, Sweden. I this a in

and profit client a our issue what with gross countries. examples is I’d dealing -- are European some of there’s where say margin So, really what good are we expanding predominantly some in we mix

George Tong

your follow-up. and quick helpful. update as provide penetration are very a any it, a you what markets Got in temp just you various on to And with rates notable Can out? markets call seeing

Jonas Prising

markets, think recovering I which opportunity the still that consider have mid Well, in would to cycle we still improving. we is and European now and

least to grow. average and get rate in think for coming some us the European that nice market course of rates the to fast prior penetration are it’s room France rates is peak that their we up, the penetration a Spain. where still mature there’s places is that So, like but we the the Italy and since the are growing still think there also below of penetration major European still to markets, in very

still there is room go say in would I So, Europe. to

markets way cases to and course maybe global you the in there would still are get many go less Of average. to have long what to rates emerging a mature penetration a consider

an for based specifically only when very us, hovering for that growth here. the is get good it’s some in we progress us growth. back opportunity U.S. historical we additional really, have markets, a for of And course So, that we But, U.S. still on provides high. the to opportunities the economy, for that around think

Operator

Thank you.

Marcon Next question from of R.W. is coming Baird. Mark

is Your line now open.

Mark Marcon

Thanks taking my question. for morning. Good

I’ve profit? total as of First, a percentage what of gross kind missed but was it, perm

Jack McGinnis

about of XX.X%. percentage a as -- perm Mark, XX%, just So, GP was total XX%

Mark Marcon

you XX.X%. And would level going feel up comfortable what to?

Jack McGinnis

And slightly permanent a We a also and growth. very course double-digit lower year, we still continued feel in share also basis. story growth growth think only I XX% a many And think story somewhere we clients on between it’s is so us and talent, first a success many, strong what And the good. we XX% would said for provider fourth that wanted perm of are that growth be than but basis but on last good in have a capabilities far years. not temporary the of success great as ahead. are now of our that’s skilled seeing the feel as as still And solid although been look XX%, a quarter there opportunities of XX% to very our for been our is about we quarter, opportunity

So, it diversify continue to business. component to is the us for an important

Mark Marcon

the France. regards And was change CICE X% that just of margin, gross France, margin the it with what to relates then, gross in X the temp impact to as in the

Jonas Prising

Yes.

XX the on think and million the Mark, way on for overall So, basis quarter. gross the down estimate €XX the in for this CICE an of that margin is, the was basis, Company to overall rates it the of annual in I margin guess, we impact the points profit about terms -- consolidated is about step gross

Mark Marcon

trying just out was it figure to I France. Yes. for just

Jonas Prising

in range. Yes. XX I would points say, France, it’s speaking, the probably basis in generally

Mark Marcon

we take the for going that about should savings terms ones into of and to that to second. those? ones come from the some of that quarter initiatives, in regards to how the you think Both first mentioned then restructuring going in you’re And are with the much

Jonas Prising

Sure.

X on full call So, probably are quarter restructuring quarter talk an then, those We run quarter provide we savings second quarter, the quarter about just we’ve second second But, the actions through the it X.X still the in but on a full And that quarter, through on for Mark. at a X.X to expect X, a in rate, should see is fourth the savings full will beginning what the coming basis. we the to times the on quarter. through third gave we rate basis. million, in of will range come the update somewhere those about on the I And costs. of rate in run say And XX would the on those should to XX% -- on that in start say early costs the little come in would the run million those based X savings, be over done think second second a I costs.

Mark Marcon

one and squeeze in. I if last then, it one could Terrific,

You number factor saw a talk some about growth countries tremendous if or that’s because you some there like Pacific, been as highlighted. growth don’t that’s cyclical but you a that Asia that usually Is just in between in the smaller you driving it well. occurring. wondering is has I’m some the two, strong secular parse can But, tailwinds sounds really it there of

Jonas Prising

our is markets emerging working Mark. you almost -- feel of in it’s global that in clients, compared low know, the with works very out penetration it’s two effects. in associates population more than standards. overall to those we us that Thanks, those rates you And Yes. presence terms of We very XX% have as markets. our One our of really of that good in are the at markets. And number have

well. secular have that as you for what’s we to sets the the have in is have here will that emerging developed based skill an markets driving need that we global compete And to So, similar growth. in companies markets, believe markets opportunity in

the is hard skill that come going to up by. to inflation talent access So, wage and is

And seeing so, activities, of contingent therefore, both are permanent recruitment good many as as demand these really our emerging in some well very services markets.

well. should and markets emerging So, we as going how see and feel forward in there are we very where good good growth some about positioned we that

Jack McGinnis

item I’d example. that a just one as And add good to

business don’t there we a higher have growth in rates -- India, that’s expansion the good driving seen actually And some we year. Experis but India, India about bolt-on that higher we and lot India. talked did in talk last acquisition they in about really margins and really So,

that’s very So, working been well.

Operator

Thank you.

is of Macquarie next Our Capital. coming question Hamzah from Mazari

Your open. now line is

Hamzah Mazari

Thank Hey. Good morning. you.

technology delivery potential your initiatives a to digital internally have to You as could hoping a business? maybe automation your little speak and you on potentially you model. touched on tailwind bit I was and

Jonas Prising

improve we invest for to in areas. business. specific as our think current see clients Well, that ampersand become candidates. value of thanks, about Hamzah. the And the our tools for you it well expect, an quarters improve in would it’s to create a in really seen this digital make apply both three to we and our do part quarter because we the more and more Well, also this at can that our technology efficient more to as efficient. closer to and of as can and you reach Number and what can course objectives bit and clients to collect prior And data increase leverage our of we taking you’ve of we that we one, productivity. connected same artificial more many as intelligence and are that candidates, become have able digital to our when and course the everything productive little but and can We for also effect ability being sticky

and business better. drive our that’s we’ve that course, clients their employees something to end to of as that things So, activity in the our seen us a our to and which time as technologies within going so can and think relationship automate very been do forward still candidates interacting of value because much the you can expect continue them doing, we that of business. evolution of transactional growth. drive course it as the is business aspect are employees better makes the create helps it high-tech, of approach high-touch we lot help for technology us people trying of with in that And and on far and gives as also to then to focus easier that of do our rapid continue opportunities our us And us a

countries digital good We’ve geographies. deploying tools leverage progress collaboration number in we can now three So, buckets that so faster many our but are those really opportunities. very a relates it made you some various chatbots global our between for much been And that we’ve information that we have think as We think still screening. we of move to more of investments. can

help apps then, sophisticated of is way and more to to candidates markets. facing And deploy candidates, efficiency and of associates terms we We that technologies that are office deploy predicting mobile in performance; and number cloud-based help deployed being greater have our and employees clients our see and and the starting productive. a drive in front that in help course, where continue that systems and of future also are really very us

Hamzah Mazari

customer second just employment then, to in cycle? temp tax And reform with more in you hiring? think lead you. you you to do perspective going from about -- to are Any impact helpful. Thank hiring? the inning specifically, of do you is question. how that Very Great. customers we employment share could us on what U.S. think color And tax are as reform your Maybe U.S. the from cycle a temp hearing and think you

Jonas Prising

the there some to there very far, market view, in labor that tight although are not growth are say the in the said that would have yet. I inflation is that we think very more U.S. We reform, in high demand, cycles And it opportunities but still it’s wage for for about that good U.S. the increase tax in is future, for to is hire overall, people still outlook. the but is the our far that a to see frankly too this at But, very positive part is cycles, here. the And are our a we starting a and that later clearly for is progress and our of through modestly that that continued perspective. clients us economic improve, positive for from in concerned, in the And is little of us think specifically might It room We us, a for as later the early also opportunities room create to -- have come U.S have where growth as helped reason because has market positive, clients outlook tax bullish course reform good U.S. which some here has -- they are I the to I mentioned, will from give growing stage. and for be of looking bit are that as so

also where and from from the right the good outlook So, from clients. our now U.S. what we feel current and we about is hear

Hamzah Mazari

Great.

turn your Thank metrics specifically over. inflation U.S.? rates bill anything and different Just your Is in anything cycles, this in wondering wage between a those different there’s will follow-up, business. I of cycle pay you. it terms if there versus there Just in U.S. prior gap two the the between

Jonas Prising

wage would unemployment, I than be this aware of our expected say or in to of at is it view extremely one is. organizations And could effect inflation stronger of our it rate that have demands. their customers being what an

So, can know they they afford. alternatives. what hire and have exactly also in time, they they skills more And they cost just need what

think we increase, that or to And increase we’ve has wage So, don’t that it’s for don’t a inflation we much period dampening a very seen while very on than rate in time. in the past, expect inflation. seen going lower effect we we wage rapidly of a -- have levels that long despite to reach we matter, unemployment think

skill spreads, of reflection shifting are very the the a I depending not our as sets. They’re course, They bill As far think on perspective, stable. they pay are from much.

stables. those; in for some are talk expand are about are many our they heard sets, able they you’ve of As businesses, us of our but we skill to

what that seeing that major there. in shift any compared the So, to seen we’re respect think don’t we’re not we different And have I a past. seeing in really

Operator

you. Thank

Sommer question coming SunTrust. next Tobey from Our of is

is open. now line Your

Tobey Sommer

margin that bottom recent just you curious of how line do With margin sort respect EBITDA gross assume, longer square to target, margin gross the aspirational term kind margin? against of your what declines

Jonas Prising

lot But, we I margin the the when have profit about forward. the going main is efficiencies. one talked certainly be think we EBITDA say talked to say what SG&A the gross of is the combination Tobey, and to efficiency so profit gross our did I going of targets, would paths we a about financial it’s a that SG&A expanding

think our segmentation looking segmentation, well. focus I be be a continuation for continuing on to of And going as to of clients profit process it’s ongoing at SMB really larger the gross on going us. the an that’s the and the side, to

in the of in certainly of that cost that we’ve been well and we’ve pressure larger It what has laid very of what a clearly, lot declines, seen was quarters on in say profit, out, terms of past point So, doing recent And client gross are kind we side. the large terms of terms on to the as the the the I mix would has in growth. account recent than a in lot driven. of been your

phenomenon going continue. will a that wouldn’t I So, that anticipate that forward, new say is I would

mix well to we’ve see compared past, seen in importantly that we margin by our as see offset offset the see comments the see anniversary. think but to fees would my subside eventually normalized Staffing pressures as you that And at past. to in perm then, will going shift should and business to solutions to as businesses. that what stabilization starts that continue seen start that about rational more be big and cycle but trends should think I some anniversary what as And we those some I staffing stabilize. earlier of rates expect would recruitment accounts mix likely in the margin we you’ve of a and pressure

that how that’s question. So, I’d to guide

Tobey Sommer

U.S., Okay, top-line and to kind or until start grow and how discipline to thanks. and margin grow? able of past the In maybe pricing we’re the the the over some long stabilize of see

Jonas Prising

for doing overall then the frankly our Well, should And as that mentioned a towards still growth quarter. of good end hopeful very be business margin that. the couple somewhere profitability. remarks, thinking see had we Experis in that prepared an behind would gross are we quarters our of well, are MSP return that we Manpower we although to solutions we the profit And have of course and our is that’s

taking think pricing to overall growth as more the balance profitable end discipline the as to has something or expect bottom-line as positive comes progress transform Manpower, some of like see do going it’s So, us Experis as we we June great I It’s a -- business results. deliver we continue the and good between see and initiative, progress -- been than and there. that the and the would really And some but some transformation longer to enabled then concerned, and after would would couple I that to But to for on. SG&A, expect we still expect would us turn far quarters year that. is the like top-line that the coming of said efforts

Operator

you. Thank

coming Our Barclays. from is Patnaik Manav next of question

now is line open. Your

Ryan Leonard

Leonard This on Hi. Ryan Manav. is for

a make any from times fill these create sense positive delivery or effects be I margin or Just of restructuring shortening revenue there kind up with some is and that investments, of kind of guess. the to to question the on market function in just or of speeding needing it that models the to tech order takes Is keep chance could this a roles? delivery

Jonas Prising

to really deploy I the enabled the physical hand, technology, it’s ability in models also as our that us one to because reach. gives terms earlier, on both by opportunity gives of branches market infrastructure it other Well, the the mentioned delivery us of are reduce but hand on them, greater much

process, as efficiency with productivity instances. for course, efficiency tremendously we this percentage making opportunities our of actually in over being while and terms improving theme of deploying seen that drive revenue think we So, manage SG&A. we also it’s our sure that these grow to to a but And been still And has productivity. of of a strong can technology in terms our down to sure helpful and continue us improve while many for you’ve in our the great in able business. growth, make SG&A provides bringing technology that opportunities many and also We some tremendous years, of GP as growth the improve

Ryan Leonard

guys taking thanks. pieces more or back, and European broadly, of terms opportunities tail looking some more longer I there it, interesting that footprint? more be the allocation I be Is you at the And market. something been a or in interested the staffing names, step some Got and guess digital in towards have would of of would acquisitions guess organic the geographic your capital expanding market

Jonas Prising

be that would the slower it technology is evolution on what and that is today. won’t it our I accelerating view say is than

can the value. vector, technology that important the So, ownership. we more is strategy drive to that for we is strategic us than feel ensure that best And time to

not what’s to to partners, We’re higher rapidly us the really And then value to cloud, is mobile is make the fund the investment creating for a -- going company. keep and And a to able leveraging R&D continuous market is difficult. a therefore, very with clear we’re at leveraging technology be difference. the and pace working evolving speed that with

approach that So, technology. our be principled would on

major tools tools operations see you’re but new is come new and unlikely and market. global So, and are as then speed technology the whenever very likely there’s best those upgrade you then deploy make evolutions us investments there to upgrade in new and our deploy to at technology technology and us there, see across itself, new to greater

Ryan Leonard

you. Thank it. Got

Jonas Prising

with to the for come you And look very everyone. quarter much. XXXX call. the with you speaking end we call to earnings earnings on next And of Thanks, first forward our that, Thank we second our quarter.

Operator

And for that concludes Thank participation. today’s your conference. you

may You disconnect. now

ManpowerGroup (MAN) 20 Apr 182018 Q1 Earnings call transcript