# ManpowerGroup Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [ManpowerGroup Inc.](/companies/man.md) (CIK 871763)
- Form: 10-Q
- Filed: 2023-08-04
- Accepted by EDGAR: Aug 4, 2023, 16:32 ET
- Period: 2023-06-30
- Accession: 0000950170-23-038599
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/871763/000095017023038599/man-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/871763/000095017023038599/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $4.86bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $9.61bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $3.99bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-01-01 to 2023-06-30 | $7.88bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-04-01 to 2023-06-30 | $862.3m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-01-01 to 2023-06-30 | $1.73bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-04-01 to 2023-06-30 | $754.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-01-01 to 2023-06-30 | $1.50bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $107.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $225.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $20.0m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $38.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $30.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $63.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $65.2m | us-gaap:ProfitLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $143.0m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $1.29 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $2.80 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $1.30 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $2.84 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 50,700,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 51,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | −$31.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $34.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $73.1m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $79.9m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-06-30 | $407.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $5.59bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $8.87bn | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $4.62bn | us-gaap:LiabilitiesCurrent |
| Current portion of debt | at 2023-06-30 | $22.3m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2023-06-30 | $2.44bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 64,037 characters.

See the financial measures section on page 35 for further information on the Non-GAAP financial measures of constant currency and organic constant currency.

#### Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). Statements made in this quarterly report that are not statements of historical fact are forward-looking statements. In addition, from time to time, we and our representatives may make statements that are forward-looking. Forward-looking statements are based on management’s current assumptions and expectations and are subject to risks and uncertainties that are beyond our control and may cause actual results to differ materially from those contained in the forward-looking statements. Forward-looking statements can be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “may,” “believe,” “seek,” “estimate,” and other similar expressions. Important factors that could cause our actual results to differ materially from those contained in the forward-looking statements include, among others, the risk factors discussed in Item 1A – Risk Factors in our annual report on Form 10-K for the year-ended December 31, 2022, which information is incorporated herein by reference. Such risks and uncertainties include, but are not limited to, volatile, negative or uncertain economic conditions, particularly in Europe, including inflation, impacts of the Russia-Ukraine War and its related supply-chain impact; other geopolitical risk and uncertainty; changes in labor and tax legislation in places we do business; failure to implement strategic technology investments; and other factors that may be disclosed from time to time in our SEC filings or otherwise. We caution that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.

#### Business Overview

Our business is cyclical in nature and is sensitive to macroeconomic conditions generally. Client demand for workforce solutions and services is dependent on the overall strength of the labor market and secular trends toward greater workforce flexibility within each of the segments where we operate. Improving economic growth typically results in increasing demand for labor, resulting in greater demand for our staffing services while demand for our outplacement services typically declines. During periods of decreased demand, as we experienced in the second quarter of 2023, our operating profit is generally impacted unfavorably as we experience a deleveraging of selling and administrative expenses, which may not decline at the same pace as revenues. By contrast, during periods of increased demand we are generally able to improve our profitability and operating leverage as our cost base can support some increase in business without a similar increase in selling and administrative expenses.

As we concluded the second quarter of 2023, we observed softening demand for staffing services due to increased economic uncertainty, and we expect this trend to continue. We believe that downside risks to the global economic outlook have continued to increase through the second quarter of 2023, and may worsen in future periods. These economic risks are particularly high in Europe, driven by elevated inflation, the Russia-Ukraine war and its related supply chain impacts, and higher interest rates. As Europe represents a significant portion of our operations, we continue to monitor economic conditions in our Southern Europe and Northern Europe segments. The Americas market is also experiencing a challenging operating environment, driven primarily by elevated inflation, sensitivity to supply chain impacts, and the United States' sensitivity to rising interest rates, which could impact other countries given the importance of the United States economy. As a result of these factors, we expect the business environment will continue to be challenging for us, especially in the United States and Europe, with many companies delaying hiring decisions or reducing their demand for contingent labor.

During the second quarter of 2023, the strength of the dollar, particularly against the Euro, had a 0.8% unfavorable impact on revenues from services and an approximately $0.04 per share unfavorable impact on net earnings per share – diluted in the quarter. Substantially all of our subsidiaries derive revenues from services and incur expenses within the same currency and generally do not have cross-currency transactions, and therefore, changes in foreign currency exchange rates primarily impact the translation of reported earnings and not our actual cash flow unless earnings are repatriated. To understand the performance of our underlying business, we utilize constant currency or organic constant currency variances for our consolidated and segment results.

During the second quarter of 2023 compared to the second quarter of 2022, we experienced a -13.0% revenue decrease in the Americas, primarily driven by the decrease in demand for our Manpower and Experis staffing/interim services and the unfavorable impact of currency exchange rates. During the second quarter of 2023 compared to the second quarter of 2022, we experienced a 1.2% revenue increase in Southern Europe, primarily due to the favorable impact of currency exchange rates and an increase in demand for our Talent Solutions outplacement services. During the second quarter of 2023 compared to the second quarter of 2022, we experienced a -7.3% revenue decrease in Northern Europe, primarily due to a decrease in our Manpower and Experis staffing/interim services and the unfavorable impact of currency exchange rates. We experienced a -0.7% revenue decrease in APME in the second quarter of 2023 compared to the second quarter of 2022 primarily due to the unfavorable impact of currency exchange rates and decreased demand for our Experis interim services.

From a brand perspective, we experienced revenue decreases in Manpower, Experis and Talent Solutions in the second quarter of 2023 compared to the second quarter of 2022. In our Manpower brand, the revenue decrease was primarily due to decreased demand for staffing services, especially within the manufacturing sector, and the impact of unfavorable currency exchange rates. The revenue decrease in our Experis brand was primarily due to decreased demand for interim services from both enterprise and convenience customer segments, and the impact of unfavorable currency exchange rates. On an overall basis, the revenue decrease in our Talent Solutions brand, which includes Recruitment Process Outsourcing (RPO), TAPFIN - Managed Service Provider (MSP) and our Right Management offerings, was primarily due to decreased demand for our RPO offerings relative to the prior year period, as the permanent recruitment environment was exceptionally strong during the second quarter of 2022. The decrease was also due to our MSP business which experienced revenue declines during the quarter, as we exited lower margin arrangements and experienced significant activity levels in the prior year period. This revenue decrease in Talent Solutions was partially offset by an increase in demand for our outplacement services under Right Management.

Our gross profit margin decreased in the second quarter of 2023 compared to the second quarter of 2022, primarily due to an unfavorable change in business mix, particularly due to declines in our permanent recruitment businesses. The decrease in gross profit margin in the second quarter of 2023 compared to the second quarter of 2022 was partially offset by growth in our higher-margin outplacement offerings within Right Management.

Our operating profit decreased -40.4% in the second quarter of 2023 while our operating profit margin decreased 140 basis points compared to the second quarter of 2022. Excluding restructuring costs of $14.5 million incurred in the second quarter of 2023 and acquisition integration costs of $2.7 million incurred in the second quarter of 2022, our operating profit decreased -33.4% while operating profit margin decreased 110 basis points compared to the second quarter of 2022. The operating profit margin decreased primarily because we did not reduce selling and administrative expenses for the quarter at the same rate as the decline in revenues and gross profit.

We continue to monitor expenses closely to ensure we maintain the benefit of our efforts to optimize our organizational cost structures, while investing appropriately to support the ability of the business to grow in the future and enhance our productivity, technology and digital capabilities. We are focused on managing costs as efficiently as possible in the short term while continuing to progress transformational actions aligned with our strategic priorities.

#### Operating Results - Three Months Ended June 30, 2023 and 2022

The following table presents selected consolidated financial data for the three months ended June 30, 2023 as compared to 2022.

*(in millions, except per share data)*

|  | 2023 | 2022 | Variance | Constant Currency Variance |
| --- | ---: | ---: | ---: | ---: |
| Revenues from services | $4,856.1 | $5,074.1 | (4.3)% | (3.5)% |
| Cost of services | 3,993.8 | 4,152.9 | (3.8)% | (3.0)% |
| Gross profit | 862.3 | 921.2 | (6.4)% | (5.7)% |
| Gross profit margin | 17.8% | 18.2% |  |  |
| Selling and administrative expenses | 754.7 | 740.5 | 1.9% | 2.5% |
| Operating profit | 107.6 | 180.7 | (40.4)% | (39.1)% |
| Operating profit margin | 2.2% | 3.6% |  |  |
| Interest and other expenses, net | 11.8 | 6.7 | 76.7% |  |
| Earnings before income taxes | 95.8 | 174.0 | (45.0)% | (43.4)% |
| Provision for income taxes | 30.6 | 51.8 | (41.0)% |  |
| Effective income tax rate | 31.9% | 29.8% |  |  |
| Net earnings | $65.2 | $122.2 | (46.6)% | (45.2)% |
| Net earnings per share – diluted | $1.29 | $2.29 | (43.8)% | (42.2)% |
| Weighted average shares – diluted | 50.7 | 53.4 | (5.1)% |  |

The year-over-year decrease in revenues from services of -4.3% (-3.5% in constant currency and -3.7% in organic constant currency) was attributed to:

- a revenue decrease in the Americas of -13.0% (-9.3% in constant currency) primarily due to the decreased demand for our Manpower and Experis staffing/interim services, a decrease in our RPO business on lower permanent recruitment, a decrease in our MSP business as we exited lower margin arrangements, and the unfavorable impact of foreign currency exchange rates, partially offset by an increase in demand for our Talent Solutions outplacement services. The United States, our largest market in the Americas, experienced a revenue decrease of -18.5% primarily driven by decreased demand for our Experis and Manpower staffing/interim services, a decrease in our permanent recruitment business of -44.8% and a decrease in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand for our Talent Solutions outplacement services;
- a revenue decrease in Northern Europe of -7.3% (-6.3% in constant currency), primarily due to decreased demand for our Manpower and Experis staffing/interim services, a -14.7% decrease (-14.0% in constant currency) in our permanent recruitment business and the unfavorable impact of foreign currency exchange rates, partially offset by the increased demand for our Talent Solutions outplacement services. Within the Northern Europe region, we experienced revenue decreases in the United Kingdom, Nordics, and the Netherlands of -12.0%, -16.4%, and -4.4%, respectively (-11.8%, -8.9% and -6.5%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany and Belgium of 5.6% and 7.0%, respectively (3.3% and 4.6%, respectively, in constant currency); and
- a revenue decrease in APME of -0.7% (increase of 4.2% in constant currency) primarily due to the unfavorable impact of currency exchange rates, partially offset by increased demand for our Manpower staffing services and our Talent Solutions outplacement services; partially offset by
- a revenue increase in Southern Europe of 1.2% (decrease of -0.9% in constant currency and -1.3% in organic constant currency) which was primarily due to the favorable impact of currency exchange rates and an increase in demand for our Talent Solutions outplacement services, partially offset by a decrease in demand for our Manpower staffing services. France, the largest market in Southern Europe, experienced a revenue increase of 3.2% (0.9% in constant currency and -0.1% in organic constant currency), which was primarily due to the favorable impact of currency exchange rates and an increase in demand for our Talent Solutions outplacement services. The increase in France was partially offset by decreased demand for our Manpower staffing services as clients reduced demand for our services in certain sectors, primarily construction and logistics. Italy, our second-largest market in Southern Europe, experienced a revenue increase of 0.8% (decrease of -1.5% in constant currency), which was primarily due to the favorable impact of foreign currency exchange rates and increased demand for our Experis consulting services, partially offset by decreased demand for our Manpower and Experis staffing/interim services.

The year-over-year 40 basis point decrease in gross profit margin was primarily attributed to:

- a 40 basis point unfavorable impact due to significant revenue growth in our permanent recruitment business in the prior year period;
- a 20 basis point unfavorable impact from decreases in Experis project and other managed services; and
- a 10 basis point unfavorable impact from the decrease in staffing/interim margins; partially offset by
- a 30 basis point favorable change in business mix as the higher-margin Right Management outplacement business represented a higher percentage of the revenue mix.

The 1.9% increase in selling and administrative expenses in the second quarter of 2023 (increase of 2.5% in constant currency and 1.9% in organic constant currency) was primarily attributed to:

- a 13.7% increase (14.3% in constant currency and 13.1% in organic constant currency) in non-personnel costs, due to increased consulting and outside services costs associated with our technology and back-office transformation initiatives and office leases, partially offset by the favorable impact of currency exchange rates; and
- restructuring costs of $14.5 million incurred in the second quarter of 2023, primarily related to headcount reductions; partially offset by
- a -2.8% decrease (-2.2% in constant currency and -2.5% in organic constant currency) in personnel costs, due to a decrease in bonuses and sales commissions costs, partially offset by an increase in salary-related costs due to inflation;
- a -0.6% decrease due to the impact of changes in currency exchange rates; and
- the nonrecurrence of $2.7 million in acquisition integration costs incurred in the second quarter of 2022.

Selling and administrative expenses as a percent of revenues increased 90 basis points in the second quarter of 2023 compared to the second quarter of 2022 due primarily to:

- a 50 basis point unfavorable impact as non-personnel costs increased, primarily due to investments in consulting and outside services used in various transformation projects;
- a 30 basis point unfavorable impact as a result of the restructuring costs incurred in the second quarter of 2023; and
- a 10 basis point unfavorable impact as personnel costs increased, due to the investment in recruiters and sales talent in certain markets where we see opportunities, without a similar rate of increase in revenues.

Interest and other expenses, net is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses, including those associated with noncontrolling interests. Interest expense, net was $11.6 million in the second quarter of 2023 compared to $7.8 million in the second quarter of 2022 primarily due to the higher interest rate environment. Foreign exchange loss, net was $5.1 million in the second quarter of 2023 compared to $3.3 million in the second quarter of 2022 primarily due to non-cash currency translation loss related to our Argentina business. Argentina is required to be treated as a hyperinflationary economy and the non-cash currency translation losses reflected the devaluation of the Argentine peso during the quarter. This is a non-cash accounting charge as our Argentina business operates in their local currency. Miscellaneous expense, net was $4.9 million in the second quarter of 2023 compared to $4.4 million in the second quarter of 2022.

We recorded income tax expense at an effective rate of 31.9% for the three months ended June 30, 2023, as compared to an effective rate of 29.8% for the three months ended June 30, 2022. The 2023 rate was favorably impacted by the scheduled reduction in the French business tax rate from 0.75% to 0.375% effective January 1, 2023 and unfavorably impacted by a lower level of pre-tax earnings with a less beneficial mix due in part to restructuring costs recorded in the quarter. In certain countries in which we recorded restructuring costs, we did not recognize a corresponding tax benefit due to the recognition of valuation allowances against anticipated tax losses. The 31.9% effective tax rate for the second quarter of 2023 was higher than the United States Federal statutory rate of 21% primarily due to the French business tax, tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, and the overall mix of earnings.

Net earnings per share - diluted was $1.29 in the second quarter of 2023 compared to $2.29 in the second quarter of 2022. Restructuring costs recorded in the second quarter of 2023 unfavorably impacted net earnings per share - diluted by approximately $0.23, net of tax, in the second quarter of 2023. Non-cash currency translation loss related to our Argentina business in the second quarter of 2023 unfavorably impacted net earnings per share - diluted by approximately $0.06, net of tax, in the second quarter of 2023. Foreign currency exchange rates unfavorably impacted net earnings per share - diluted by approximately $0.04 per share in the second quarter of 2023.

Weighted average shares - diluted decreased to 50.7 million in the second quarter of 2023 from 53.4 million in the second quarter of 2022. This decrease was due to the impact of share repurchases completed since the second quarter of 2022, partially offset by grants of share-based awards.

#### Operating Results - Six Months Ended June 30, 2023 and 2022

The following table presents selected consolidated financial data for the six months ended June 30, 2023 as compared to 2022.

*(in millions, except per share data)*

|  | 2023 | 2022 | Variance | Constant Currency Variance |
| --- | ---: | ---: | ---: | ---: |
| Revenues from services | $9,608.4 | $10,217.4 | (6.0)% | (2.8)% |
| Cost of services | 7,883.0 | 8,399.1 | (6.1)% | (2.9)% |
| Gross profit | 1,725.4 | 1,818.3 | (5.1)% | (2.2)% |
| Gross profit margin | 18.0% | 17.8% |  |  |
| Selling and administrative expenses | 1,499.9 | 1,498.9 | 0.1% | 2.7% |
| Operating profit | 225.5 | 319.4 | (29.4)% | (25.4)% |
| Operating profit margin | 2.3% | 3.1% |  |  |
| Interest and other expenses, net | 19.3 | 9.4 | 106.1% |  |
| Earnings before income taxes | 206.2 | 310.0 | (33.5)% | (29.4)% |
| Provision for income taxes | 63.2 | 96.2 | (34.3)% |  |
| Effective income tax rate | 30.6% | 31.0% |  |  |
| Net earnings | $143.0 | $213.8 | (33.1)% | (29.0)% |
| Net earnings per share – diluted | $2.80 | $3.97 | (29.4)% | (25.1)% |
| Weighted average shares – diluted | 51.0 | 53.8 | (5.3)% |  |

27

The year-over-year decrease in revenues from services of -6.0% (-2.8% in constant currency and 3.0% in organic constant currency) was attributed to:

- a revenue decrease in the Americas of -11.3% (-7.7% in constant currency) primarily due to the decreased demand for our Manpower and Experis staffing/interim business, a -31.7% decrease (-30.9% in constant currency) in our permanent recruitment business, and a decrease in our MSP business as we exited lower margin arrangements, partially offset by the increase in demand for our Talent Solutions outplacement services. The United States, our largest market in the Americas, experienced a revenue decrease of -16.0% primarily driven by decreased demand for our Manpower and Experis staffing/interim services, a decrease in our permanent recruitment business of -37.7%, and a decrease in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand for our Talent Solutions outplacement services;
- a revenue decrease in Southern Europe of -2.3% (-1.2% in constant currency and -1.6% in organic constant currency) which was primarily due to a decrease in our Manpower staffing services and the unfavorable impact of changes in currency exchange rates, partially offset by the increase in demand for our Talent Solutions outplacement services. France, the largest market in Southern Europe, experienced a revenue increase of 0.7% (1.7% in constant currency and -0.7% in organic constant currency), which was primarily due to the increase in demand for our Talent Solutions outplacement services, partially offset by the unfavorable impact of changes in currency exchange rates. Italy, our second-largest market in Southern Europe, experienced a revenue decrease of -2.1% (-1.2% in constant currency), which was primarily due to a decrease in demand for our Manpower and Experis staffing/interim services due to the impact of significant revenue growth in the prior year period and the unfavorable impact of foreign currency exchange rates. The decrease in Italy was partially offset by a 7.8% increase (9.0% in constant currency) in our permanent recruitment business and increased demand for our Experis consulting services;
- a revenue decrease in Northern Europe of -9.5% (-5.1% in constant currency and -4.9% in organic constant currency), which was primarily due to decreased demand for our Manpower and Experis staffing/interim services, a -9.0% decrease (-4.4% in constant currency) in our permanent recruitment business and the unfavorable impact of foreign currency exchange rates, partially offset by the increased demand for our Talent Solutions permanent recruitment and outplacement services. Within Northern Europe, we experienced revenue decreases in the United Kingdom, Nordics, and the Netherlands of -15.7%, -12.8% and -7.3%, respectively (-11.1%, -3.2% and -6.2%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany and Belgium of 1.5% and 0.5%, respectively (2.7% and 1.4%, respectively, in constant currency); and
- a revenue decrease in APME of -1.4% (increase of 5.8% in constant currency) primarily due to the unfavorable impact of foreign currency exchange rates, partially offset by increased demand for our Manpower staffing services and our Talent Solutions outplacement services.

The year-over-year 20 basis point increase in gross profit margin was primarily attributed to:

- a 20 basis point favorable impact from the improvement in the staffing/interim margins; and
- a 20 basis point favorable impact from a change in business mix as the higher-margin Right Management outplacement business represented a higher percentage of the revenue mix; partially offset by
- a 20 basis point unfavorable impact due to decreases in the permanent recruitment margins.

The 0.1% increase in selling and administrative expenses in the first half of 2023 (2.7% in constant currency and 2.2% in organic constant currency) was primarily attributed to:

- a 5.2% increase (8.0% in constant currency and 6.9% in organic constant currency) in non-personnel costs, due to an increase in costs related to office leases and consulting and outside services costs associated with our technology and back-office transformation initiatives, partially offset by a decrease in costs related to bad debt; and
- restructuring costs of $21.1 million incurred in the first half of 2023, primarily related headcount reductions; partially offset by
- a -2.0% decrease (increase of 0.6% in constant currency and increase of 0.4% in organic constant currency) in personnel costs due to a decrease in bonuses and sales commissions costs, partially offset by an increase in salary-related costs due to inflation;
- a -2.6% decrease due to the impact of changes in currency exchange rates;
- a loss on the disposition of our Russia business of $9.7 million incurred in the first half of 2022; and
- the nonrecurrence of $6.4 million in acquisition integration costs incurred in the first half of 2022.

Selling and administrative expenses as a percent of revenues increased 90 basis points in the first half of 2023 compared to the first half of 2022 due primarily to:

- a 40 basis point unfavorable impact as personnel costs increased, due to the investment in incremental recruiters and sales talent in certain markets where we see opportunities, without a similar rate of increase in revenues;
- a 40 basis point unfavorable impact as non-personnel costs increased, due to investments in consulting and outside services used in various transformation projects and an increase in office lease costs;
- a 20 basis point unfavorable impact as a result of the restructuring costs incurred in the first half of 2023; and
- a 10 basis point unfavorable impact from changes in currency exchange rates; partially offset by
- a 20 basis point favorable impact due to acquisition integration costs and the disposition of our Russia business in the first quarter of 2022.

Interest and other expenses, net is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses, including those associated with noncontrolling interests. Interest expense, net was $22.2 million in the first half of 2023 compared to $15.4 million in the first half of 2022 primarily due to the higher interest rate environment. Miscellaneous expense, net was $11.1 million in both the first half of 2023 and the first half of 2022. Foreign exchange loss, net was $8.2 million in the first half of 2023 compared to $5.1 million in the first half of 2022 primarily due to non-cash currency translation loss related to our Argentina business. Argentina is required to be treated as a hyperinflationary economy and the non-cash currency translation losses reflected the devaluation of the Argentine peso during the first half of 2023. This is a non-cash accounting charge as our Argentina business operates in their local currency.

We recorded income tax expense at an effective rate of 30.6% for the six months ended June 30, 2023, as compared to an effective rate of 31.0% for the six months ended June 30, 2022. The 2023 rate was favorably impacted by the scheduled reduction in the French business tax rate from 0.75% to 0.375% effective January 1, 2023. The 30.6% effective tax rate for the first half of 2023 was higher than the United States Federal statutory rate of 21% primarily due to the French business tax, tax losses in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, and the overall mix of earnings.

Net earnings per share - diluted was $2.80 in the first half of 2023 compared to $3.97 in the first half of 2022. Restructuring costs recorded in the first half of 2023 unfavorably impacted net earnings per share - diluted by approximately $0.28, net of tax, in the first half of 2023. Foreign currency exchange rates unfavorably impacted net earnings per share - diluted by approximately $0.17 per share in the first half of 2023. Non-cash currency translation losses related to our Argentina business in the first half of 2023 unfavorably impacted net earnings per share - diluted by approximately $0.06, net of tax, in the first half of 2023.

Weighted average shares - diluted decreased to 51.0 million in the first half of 2023 from 53.8 million in the first half of 2022. This decrease was due to the impact of share repurchases completed since the first half of 2022, partially offset by grants of share-based awards.

#### Segment Operating Results

#### Americas

In the Americas, revenues from services decreased -13.0% (-9.3% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. In the United States (which represents 67% of the Americas' revenues), revenues from services decreased -18.5% in the second quarter of 2023 compared to the second quarter of 2022, primarily driven by a decrease in demand for our Experis and Manpower staffing/interim services, a decrease in demand for our permanent recruitment business of -44.8% and a decrease in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand for our Talent Solutions outplacement services. In Other Americas, revenues from services increased 0.9% (14.0% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022 primarily due to increased demand for our Manpower staffing services, partially offset by the unfavorable impact of currency exchange rates. The constant currency increase in Other Americas was primarily due to inflation in Argentina. The increase in Other Americas was driven by revenue increases in Mexico and Argentina of 13.3% and 20.9%, respectively (-0.1% and 138.0%, respectively, in constant currency), partially offset by a decrease in revenues in Canada of -14.3% (-9.9% in constant currency). The constant currency increase in Argentina was primarily due to inflation.

In the Americas, revenues from services decreased -11.3% (-7.7% in constant currency) in the first half of 2023 compared to the first half of 2022. In the United States, revenues from services decreased -16.0% in the first half of 2023 compared to the first half of 2022, primarily driven by decreased demand for our Manpower and Experis staffing/interim services and a decrease in our permanent recruitment business of -37.7% and a decrease in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand for our Talent Solutions outplacement services. In Other Americas, revenues from services increased 0.2% (12.9% in constant currency) in the first half of 2023 compared to the first half of 2022 primarily due increased demand for our Manpower staffing services, partially offset by the unfavorable impact of foreign currency exchange rates. The constant currency increase in Other Americas was primarily due to inflation in Argentina. The increase in Other Americas was driven by revenue increases in Mexico and Argentina of 10.4% and 24.2%, respectively (-1.1% and 134.7%, respectively, in constant currency), partially offset by a revenue decrease in Canada of -13.2% (-8.0% in constant currency). The constant currency increase in Argentina was primarily due to inflation.

Gross profit margin decreased in the second quarter and first half of 2023 compared to the second quarter and first half of 2022 primarily due to decreases in our high-margin permanent recruitment business, partially offset by a higher percentage of the revenue mix coming from our higher-margin Talent Solutions outplacement business and increased margins in our staffing/interim business.

Selling and administrative expenses decreased -6.9% (-5.4% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022, primarily due to a decrease in bonuses and sales commissions as a result of decreased profitability in certain markets and zero acquisition integration costs in the second quarter of 2023 compared to acquisition transaction costs of $2.7 million in the second quarter of 2022. The decreases were partially offset by $0.8 million of restructuring costs incurred in the second quarter of 2023 compared to zero in the second quarter of 2022.

Selling and administrative expenses decreased -4.3% (-2.7% in constant currency) in the first half of 2023 compared to the first half of 2022, primarily due to a decrease in bonuses and sales commissions as a result of decreased profitability in certain markets and zero acquisition integration costs in the first half of 2023 compared to acquisition integration costs of $6.4 million in the first half of 2022. The decreases were partially offset by $1.6 million of restructuring costs incurred in the first half of 2023 compared to zero in the first half of 2022, and an increase in salary-related costs.

Operating Unit Profit (“OUP”) margin in the Americas decreased to 3.9% in the second quarter of 2023 from 6.4% in the second quarter of 2022. In the United States, OUP margin decreased to 3.6% in the second quarter of 2023 from 7.2% in the second quarter of 2022 primarily due to decreases in our higher-margin permanent recruitment and Experis interim services, decreased operating leverage and a slight decrease in the gross profit margin due to an unfavorable business mix, partially offset by an increase in our higher-margin Talent Solutions outplacement business. Other Americas OUP margin increased to 4.7% in the second quarter of 2023 from 4.5% in the second quarter of 2022 primarily due to gross profit margin improvement.

Operating Unit Profit (“OUP”) margin in the Americas decreased to 4.1% in the first half of 2023 from 6.1% in the first half of 2022. In the United States, OUP margin decreased to 3.8% in the first half of 2023 from 6.9% in the first half of 2022 primarily due to decreases in our higher-margin permanent recruitment business and Experis interim services, decreased operating leverage and a slight decrease in the gross profit margin, partially offset by an increase in our higher-margin Talent Solutions outplacement business. Other Americas OUP margin increased to 4.8% in the first half of 2023 from 4.3% in the first half of 2022 primarily due to gross profit margin improvement.

#### Southern Europe

In Southern Europe, revenues from services increased 1.2% (-0.9% in constant currency and -1.3% in organic constant currency) in the second quarter of 2023 compared to the second quarter of 2022. In France (which represents 57% of Southern Europe’s revenues), revenues from services increased 3.2% (0.9% in constant currency and -0.1% in organic constant currency) in the second quarter of 2023 compared to the second quarter of 2022. In Italy (which represents 21% of Southern Europe’s revenues), revenues from services increased 0.8% (-1.5% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. The increase in France is primarily due to the favorable impact of currency exchange rates and the increase in demand for our Talent Solutions outplacement services. The increase in France was partially offset by decreased demand for our Manpower staffing services. The increase in Italy was primarily due to the favorable impact of foreign currency exchange rates and increased demand for our Experis consulting services, partially offset by decreased demand for our Manpower and Experis staffing/interim services. In Other Southern Europe, revenues from services decreased -3.5% (-4.7% in constant currency) during the second quarter of 2023 compared to the second quarter of 2022, primarily due to decreased demand for our Manpower staffing services, partially offset by the favorable impact of currency exchange rates. The decrease in Other Southern Europe was driven by a revenue decrease in Spain of -6.6% (-8.7% in constant currency), partially offset by a revenue increase in Switzerland of 1.7% (decrease of -5.4% in constant currency).

In Southern Europe, revenues from services decreased -2.3% (-1.2% in constant currency and -1.6% in organic constant currency) in the first half of 2023 compared to the first half of 2022. In France, revenues from services increased 0.7% (1.7% in constant currency and -0.7% in organic constant currency) in the first half of 2023 compared to the first half of 2022. In Italy, revenues from services decreased -2.1% (-1.2% in constant currency) in the first half of 2023 compared to the first half of 2022. The increase in France is primarily due to the increase in demand for our Talent Solutions outplacement services, partially offset by the impact of foreign currency exchange rates. The decrease in Italy was primarily due to the decrease in demand for our Manpower and Experis staffing/interim services due to the impact of significant revenue growth in the prior year period, and the unfavorable impact of foreign currency exchange rates. The decrease in Italy was partially offset by a 7.8% increase (9.0% in constant currency) in our permanent recruitment business and increased demand for our Experis consulting services. In Other Southern Europe, revenues from services decreased -9.2% (-7.6% in constant currency) during the first half of 2023 compared to the first half of 2022, primarily due to decreased demand for our Manpower staffing services and the unfavorable impact of currency exchange rates. The decrease in Other Southern Europe was driven by revenue decreases in Spain and Switzerland of -17.3% and -4.1%, respectively (-16.4% and -7.4%, respectively, in constant currency).

Gross profit margin was stable in the second quarter of 2023 compared to the second quarter of 2022. The stability was primarily due to increased activity in our higher-margin Talent Solutions outplacement services which balanced out the unfavorable impact of decreased activity in our Manpower and Experis staffing/interim services.

Gross profit margin increased in the first half of 2023 compared to the first half of 2022. The increase was primarily due to the impact of a higher percentage of the revenue mix coming from our higher-margin Talent Solutions Outplacement services and increased margins in our staffing/interim business.

Selling and administrative expenses increased 11.2% (9.1% in constant currency and 7.3% in organic constant currency) during the second quarter of 2023 compared to the second quarter of 2022 primarily due to the increase in salary-related costs, $6.0 million in restructuring costs incurred in the second quarter of 2023 compared to zero in the second quarter of 2022 and the unfavorable impact of currency exchange rates, partially offset by a combination of decreases to bonuses and sales commissions and office related costs.

Selling and administrative expenses increased 6.8% (8.2% in constant currency and 6.4% in organic constant currency) during the first half of 2023 compared to the first half of 2022 primarily due to the increase in salary-related costs and $6.4 million in restructuring costs incurred in the first half of 2023 compared to zero in the first half of 2022, partially offset by the favorable impact of currency exchange rates and a decrease in bonuses and sales commissions as a result of decreased profitability in certain markets.

OUP margin in Southern Europe decreased to 4.2% in the second quarter of 2023 from 5.1% in the second quarter of 2022. In France, the OUP margin was 3.9% for the second quarter of 2023 compared to 5.0% for the second quarter of 2022. The decrease in France was due to the increase of selling and administrative expenses primarily due to increased personnel costs and back office initiatives, as well as increased office lease costs. In Italy, the OUP margin increased to 7.9% for the second quarter of 2023 from 7.8% for the second quarter of 2022 primarily due to an increase in the gross profit margin. In Other Southern Europe, the OUP margin decreased to 1.4% for the second quarter of 2023 from 2.7% for the second quarter of 2022 primarily due to the combination of increasing selling and administrative expenses, which increased at a faster rate than revenues and gross profit.

OUP margin in Southern Europe decreased to 4.2% in the first half of 2023 from 4.7% in the first half of 2022. In France, the OUP margin was 3.9% for the first half of 2023 compared to 4.6% for the first half of 2022. The decrease in France was primarily due to the increase of selling and administrative expenses, which increased at a faster rate than revenues. In Italy, the OUP margin increased to 7.6% for the first half of 2023 from 7.2% for the first half of 2022 primarily due to an increase in the gross profit margin. In Other Southern Europe, the OUP margin decreased to 2.2% for the first half of 2023 from 2.9% for the first half of 2022 primarily due to the combination of increasing selling and administrative expenses, which increased at a faster rate than gross profit.

#### Northern Europe

In Northern Europe, the largest country operations include the United Kingdom, the Nordics, Germany, the Netherlands and Belgium (comprising 34%, 22%, 15%, 10%, and 8%, respectively, of Northern Europe’s revenues). In the Northern Europe region, revenues from services decreased -7.3% (-6.3% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. Within Northern Europe, we experienced revenue decreases in the United Kingdom, Nordics, and the Netherlands of -12.0%, -16.4% and -4.4%, respectively (-11.8%, -8.9% and -6.5%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany and Belgium of 5.6% and 7.0% respectively (3.3% and 4.6%, respectively, in constant currency). The revenue decrease in Northern Europe was primarily due to decreased demand for our Manpower and Experis staffing/interim services, a -14.7% decrease (-14.0% in constant currency) in our permanent recruitment business and the unfavorable impact of foreign currency exchange rates, partially offset by the increased demand for our Talent Solutions outplacement services.

In the Northern Europe region, revenues from services decreased -9.5% (-5.1% in constant currency and -4.9% in organic constant currency) in the first half of 2023 compared to the first half of 2022. Within the Northern Europe region, we experienced revenue decreases in the United Kingdom, Nordics, and the Netherlands of -15.7%, -12.8% and -7.3%, respectively (-11.1%, -3.2% and -6.2%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany and Belgium of 1.5% and 0.5% respectively (2.7% and 1.4%, respectively, in constant currency). The revenue decrease in Northern Europe was primarily due to decreased demand for our Manpower and Experis staffing/interim services, a -9.0% decrease (-4.4% in constant currency) in our permanent recruitment business and the unfavorable impact of foreign currency exchange rates, partially offset by the increased demand for our Talent Solutions permanent recruitment and outplacement services.

Gross profit margin decreased in the second quarter of 2023 compared to the second quarter of 2022 primarily due to business mix changes and a reduction in permanent recruitment activity.

Gross profit margin increased in the first half of 2023 compared to the first half of 2022 primarily due to increases in our staffing/interim margins and the increased demand for our higher-margin outplacement services.

Selling and administrative expenses increased 4.1% (4.9% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. The increase is primarily due to an increase in salary-related costs and $7.7 million in restructuring costs incurred in the second quarter of 2023 compared to zero in the second quarter of 2022, partially offset by the favorable impact of currency exchange rates.

Selling and administrative expenses decreased 1.1% (increase of 3.1% in constant currency and increase of 3.2% in organic constant currency) in the first half of 2023 compared to the first half of 2022. The decrease is primarily due to the favorable impact of currency exchange rates and the disposition of our Russia business of $10.2 million incurred in the first quarter of 2022, partially offset by $10.3 million in restructuring costs incurred in the first half of 2023 compared to zero in the first half of 2022 and an increase in salary-related costs.

OUP margin for Northern Europe decreased to -1.0% in the second quarter of 2023 from 1.1% in the second quarter of 2022. The decrease was primarily due to the decrease in gross profit margin and the combination of increasing selling and administrative expenses and decreasing revenues and gross profit.

OUP margin for Northern Europe decreased to -0.2% in the first half of 2023 from 0.7% in the first half of 2022. The decrease was primarily due to a decrease in revenues, which decreased at a faster rate than selling and administrative expenses.

#### APME

Revenues from services decreased -0.7% (increase of 4.2% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. In Japan (which represents 48% of APME’s revenues), revenues from services increased 5.7% (11.9% in constant currency) due to increased demand in our Manpower and Experis staffing/interim services, partially offset by the unfavorable impact of the change in currency exchange rates. In Australia (which represents 11% of APME’s revenues), revenues from services decreased -14.2% (-8.5% in constant currency), primarily due to decreased demand for our Experis interim services and the unfavorable impact of currency exchange rates, partially offset by increased demand for our Manpower staffing services and Talent Solutions outplacement services.

Revenues from services decreased -1.4% (increase of 5.8% in constant currency) in the first half of 2023 compared to the first half of 2022. In Japan, revenues from services increased 2.2% (increase of 12.3% in constant currency) due to increased demand for our Manpower and Experis staffing/interim services and increased demand for our Talent Solutions outplacement services, partially offset by the unfavorable impact of currency exchange rates. In Australia, revenues from services decreased -9.4% (-3.6% in constant currency), primarily due to decreased demand for our Experis interim services and the unfavorable impact of currency exchange rates, partially offset by increased demand for our Manpower staffing services and increased demand for our Talent Solutions permanent recruitment and outplacement services.

Gross profit margin increased in the second quarter and first half of 2023 compared to the second quarter and first half of 2022 primarily due to an increased business mix of our higher-margin Talent Solutions outplacement services and increases in the margin for our staffing/interim business.

Selling and administrative expenses increased 0.1% (5.3% in constant currency) in the second quarter of 2023 compared to the second quarter of 2022. The increase is primarily due to increases in various non-personnel costs related to an increase in recruiting and retention efforts as a result of increased profitability in certain markets, partially offset by the favorable impact of currency exchange rates.

Selling and administrative expenses increased 0.2% (7.3% in constant currency) in the first half of 2023 compared to the first half of 2022. The increase is primarily due to $2.5 million in restructuring costs incurred in the first half of 2023 compared to zero in the first half of 2022 and increases in various non-personnel costs related to an increase in recruiting and retention efforts as a result of increased profitability in certain markets, partially offset by the favorable impact of currency exchange rates.

OUP margin for APME increased to 4.3% in the second quarter of 2023 from 3.7% in the second quarter of 2022 due to an increase in the gross profit margin. OUP margin for APME increased to 3.9% in the first half of 2023 from 3.4% in the first half of 2022 due to an increase in the gross profit margin.

#### Financial Measures

#### Constant Currency and Organic Constant Currency Reconciliation

Changes in our financial results include the impact of changes in foreign currency exchange rates, acquisitions, and dispositions. We provide “constant currency” and “organic constant currency” calculations in this report to remove the impact of these items. We express year-over-year variances that are calculated in constant currency and organic constant currency as a percentage.

When we use the term “constant currency,” it means that we have translated financial data for a period into United States dollars using the same foreign currency exchange rates that we used to translate financial data for the previous period. We believe that this calculation is a useful measure, indicating the actual growth or decline of our operations. We use constant currency results in our analysis of subsidiary or segment performance, including Argentina which operates in a hyperinflationary economy. We also use constant currency when analyzing our performance against that of our competitors. Substantially all of our subsidiaries derive revenues and incur expenses within a single country and, consequently, do not generally incur currency risks in connection with the conduct of their normal business operations. Changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash flow unless earnings are repatriated.

When we use the term “organic constant currency,” it means that we have further removed the impact of acquisitions in the current period and dispositions from the prior period from our constant currency calculation. We believe that this calculation is useful because it allows us to show the actual growth or decline of our ongoing business.

The constant currency and organic constant currency financial measures are used to supplement those measures that are in accordance with United States Generally Accepted Accounting Principles (“GAAP”). These Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate such financial results differently. These Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to measures presented in accordance with GAAP.

Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to certain of our reported results, are provided below:

| Revenues from services: Americas: | Three Months Ended June 30, 2023 Compared to 2022 Reported Amount(a) | Reported Variance | Impact of Currency | Constant Currency Variance | Impact of Acquisitions and Dispositions (In Constant Currency) | Organic Constant Currency Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| United States | $736.7 | (18.5)% | — | (18.5)% | — | (18.5)% |
| Other Americas | 362.0 | 0.9% | (13.1)% | 14.0% | — | 14.0% |
|  | 1,098.7 | (13.0)% | (3.7)% | (9.3)% | — | (9.3)% |
| Southern Europe: |  |  |  |  |  |  |
| France | 1,278.2 | 3.2% | 2.3% | 0.9% | 1.0% | (0.1)% |
| Italy | 457.8 | 0.8% | 2.3% | (1.5)% | — | (1.5)% |
| Other Southern Europe | 490.9 | (3.5)% | 1.2% | (4.7)% | (0.5)% | (4.2)% |
|  | 2,226.9 | 1.2% | 2.0% | (0.9)% | 0.4% | (1.3)% |
| Northern Europe | 952.5 | (7.3)% | (0.9)% | (6.3)% | — | (6.3)% |
| APME | 599.4 | (0.7)% | (4.9)% | 4.2% | — | 4.2% |
|  | 4,877.5 |  |  |  |  |  |
| Intercompany Eliminations | (21.4) |  |  |  |  |  |
| Consolidated | $4,856.1 | (4.3)% | (0.8)% | (3.5)% | 0.2% | (3.7)% |
| Gross Profit | $862.3 | (6.4)% | (0.7)% | (5.7)% | 0.6% | (6.3)% |
| Selling and Administrative Expenses | $754.7 | 1.9% | (0.6)% | 2.5% | 0.6% | 1.9% |
| Operating Profit | $107.6 | (40.4)% | (1.3)% | (39.1)% | 0.8% | (39.9)% |

(a) In millions for the three months ended June 30, 2023.

| Revenues from services: Americas: | Six Months Ended June 30, 2023 Compared to 2022 Reported Amount(a) | Reported Variance | Impact of Currency | Constant Currency Variance | Impact of Acquisitions and Dispositions (In Constant Currency) | Organic Constant Currency Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| United States | $1,506.7 | (16.0)% | — | (16.0)% | — | (16.0)% |
| Other Americas | 722.2 | 0.2% | (12.7)% | 12.9% | — | 12.9% |
|  | 2,228.9 | (11.3)% | (3.6)% | (7.7)% | — | (7.7)% |
| Southern Europe: |  |  |  |  |  |  |
| France | 2,447.5 | 0.7% | (1.0)% | 1.7% | 2.4% | (0.7)% |
| Italy | 880.0 | (2.1)% | (1.0)% | (1.2)% | — | (1.2)% |
| Other Southern Europe | 967.3 | (9.2)% | (1.6)% | (7.6)% | (0.5)% | (7.1)% |
|  | 4,294.8 | (2.3)% | (1.1)% | (1.2)% | 0.4% | (1.6)% |
| Northern Europe | 1,920.1 | (9.5)% | (4.4)% | (5.1)% | (0.2)% | (4.9)% |
| APME | 1,205.3 | (1.4)% | (7.2)% | 5.8% | — | 5.8% |
|  | 9,649.1 |  |  |  |  |  |
| Intercompany Eliminations | (40.7) |  |  |  |  |  |
| Consolidated | $9,608.4 | (6.0)% | (3.1)% | (2.8)% | 0.2% | (3.0)% |
| Gross Profit | $1,725.4 | (5.1)% | (2.9)% | (2.2)% | 0.6% | (2.8)% |
| Selling and Administrative Expenses | $1,499.9 | 0.1% | (2.6)% | 2.7% | 0.5% | 2.2% |
| Operating Profit | $225.5 | (29.4)% | (4.0)% | (25.4)% | 0.8% | (26.2)% |

(a) In millions for the six months ended June 30, 2023.

#### Liquidity and Capital Resources

Cash used to fund our operations is primarily generated through operating activities and provided by our existing credit facilities. We believe our available cash and existing credit facilities are sufficient to cover our cash needs for the foreseeable future. We assess and monitor our liquidity and capital resources globally. We use a global cash pooling arrangement, intercompany borrowing, and some local credit lines to meet funding needs and allocate our capital resources among our various entities. As of June 30, 2023, we had $369.6 million of cash held by foreign subsidiaries. We have historically made and anticipate future cash repatriations to the United States from certain foreign subsidiaries to fund domestic operations.

Cash used in operating activities was $31.2 million during the six months ended June 30, 2023, as compared to $21.3 million generated during the six months ended June 30, 2022. Changes in operating assets and liabilities utilized $246.0 million of cash during the six months ended June 30, 2023 compared to $273.5 million utilized during the six months ended June 30, 2022. These changes were primarily attributable to the timing of collections and payments. Accounts receivable decreased to $4,995.2 million as of June 30, 2023 from $5,137.4 million as of December 31, 2022 primarily due to the revenue decline, partly offset by the impact of changes in currency exchange rates. Days Sales Outstanding ("DSO") approximated 58 days as of June 30, 2023, an increase of 2 days from December 31, 2022.

The nature of our operations is such that our most significant current asset is accounts receivable and our most significant current liabilities are payroll-related costs, which are generally paid either weekly or monthly. As the demand for our services increases, we generally experience an increase in our working capital needs, as we continue to pay our associates on a weekly or monthly basis while the related accounts receivable is outstanding for much longer, which may result in a decline in operating cash flows.

Conversely, as the demand for our services declines, we generally experience a decrease in our working capital needs, as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivable balance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items. While this may result in an increase in our operating cash flows, longer payment terms and timing of payroll, tax and supplier related payments significantly impact our cash position and cash flows each period, such as we experienced during the six months ended June 30, 2023. Any increase in operating cash flows from an economic slowdown would not be sustained in the event that a downturn continues for an extended period.

Capital expenditures were $34.6 million for the six months ended June 30, 2023 compared to $41.7 million for the six months ended June 30, 2022. These expenditures were primarily comprised of purchases of computer equipment, office furniture and other costs related to office openings and refurbishments, as well as capitalized software costs. The lower expenditures in 2023 compared to 2022 are primarily due to the timing and nature of capital expenditures.

From time to time, we acquire and invest in companies throughout the world, including franchises. No cash consideration was paid during the six months ended June 30, 2023. For the six months ended June 30, 2022, the total cash consideration paid for acquisitions, net of cash acquired, was $1.4 million, which represents a contingent consideration payment related to a previous acquisition.

Net debt repayments were $5.6 million in the six months ended June 30, 2023, as compared to net debt proceeds of $384.7 million in the six months ended June 30, 2022.

Our €500.0 million notes and €400.0 million notes are due June 2026 and June 2027, respectively. When those notes mature, we plan to either repay the amounts with available cash or borrowings under our $600.0 million revolving credit facility or a new borrowing. The credit terms, including interest rate and facility fees, of any replacement borrowings will be dependent upon the condition of the credit markets at that time. We currently do not anticipate any problems accessing the credit markets for replacement of those notes.

Our $600.0 million revolving credit agreement requires that we comply with a leverage ratio (Net Debt-to-Net Earnings before interest and other expenses, provision for income taxes, intangible asset amortization expense, depreciation and amortization expense ("EBITDA")) of not greater than 3.5 to 1 and a fixed charge coverage ratio of not less than 1.5 to 1. As defined in the agreement, we had a Net Debt-to-EBITDA ratio of 1.53 to 1 and a fixed charge coverage ratio of 4.94 to 1 as of June 30, 2023. Based on our current forecast, we expect to be in compliance with our financial covenants for the next 12 months.

As of June 30, 2023, we had borrowings of $4.0 million and letters of credit of $0.4 million issued under our $600.0 million revolving credit facility. Additional borrowings of $595.6 million were available to us under the facility as of June 30, 2023.

In addition to the previously mentioned facilities, we maintain separate bank credit lines with financial institutions to meet working capital needs of our subsidiary operations. As of June 30, 2023, such uncommitted credit lines totaled $326.9 million, of which $305.9 million was unused. Under the Credit Agreement, total subsidiary borrowings cannot exceed $300.0 million in the first, second and fourth quarters, and $600.0 million in the third quarter of each year. Due to these limitations, additional borrowings of $279.0 million could have been made under these lines as of June 30, 2023.

We have assessed our liquidity position as of June 30, 2023 and for the near future. As of June 30, 2023, our cash and cash equivalents balance was $407.6 million. We also have access to the previously mentioned revolving credit facility that could have immediately provided us with up to $600.0 million of additional cash, less any outstanding borrowings and letters of credit, and we have an option to request an increase to the total availability under the revolving credit facility by an additional $300.0 million and each lender may participate in the requested increase at their discretion. In addition, we have access to the previously mentioned credit lines to meet the working capital needs of our subsidiaries, of which $279.0 million was available to use as of June 30, 2023. Our €500.0 ($543.4) million notes mature in June 2026, and our €400.0 ($432.7) million notes mature in June 2027. Based on the above, we believe we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations currently and in the near future.

The Board of Directors declared a semi-annual dividend of $1.47 and $1.36 per share on May 5, 2023 and May 6, 2022, respectively. The 2023 dividends were payable on June 15, 2023 to shareholders of record as of June 1, 2023. The 2022 dividends were paid on June 15, 2022 to shareholders of record as of June 1, 2022.

In August 2023, the Board of Directors authorized the repurchase of 5.0 million shares of our common stock, with terms consistent with the previous authorizations. The authorization was in addition to the August 2021 and 2019 Board authorizations to repurchase 4.0 million and 6.0 million shares of our common stock, respectively. Share repurchases may be made from time to time through a variety of methods, including open market purchases, block transactions, privately negotiated transactions or similar facilities. During the first six months of 2023, we repurchased a total of 1.1 million shares under the 2021 authorization at a cost of $81.9 million, including 25,000 shares at a cost of $2.0 million that were repurchased but not yet settled. During the first six months of 2022, we repurchased a total of 1.7 million shares comprised of 1.2 million shares under the 2019 authorization and 0.5 million shares under the 2021 authorization, at a total cost of $160.0 million. As of June 30, 2023, there were 0.9 million shares remaining authorized for repurchase under the 2021 authorization and no shares remaining authorized for repurchase under the 2019 authorization.

We had aggregate commitments of $2,055.4 million as of June 30, 2023 related to debt, operating leases, severance and office closure costs, transition tax resulting from the Tax Act and certain other commitments compared to $2,020.3 million as of December 31, 2022.

We also have entered into guarantee contracts and stand-by letters of credit totaling $882.7 million and $840.2 million as of June 30, 2023 and December 31, 2022, respectively ($833.9 million and $793.0 million for guarantees, respectively, and $48.8 million and $47.2 million for stand-by letters of credit as of June 30, 2023 and December 31, 2022, respectively). The guarantees primarily relate to staffing license requirements, operating leases and indebtedness. The stand-by letters of credit mainly relate to workers’ compensation in the United States. If certain conditions were met under these arrangements, we would be required to satisfy our obligations in cash. Due to the nature of these arrangements and our historical experience, we do not expect any significant payments under these arrangements. Therefore, they have been excluded from our aggregate commitments. The cost of these guarantees and letters of credit was $0.9 million for both the six months ended June 30, 2023 and 2022.

We recorded $21.1 million in restructuring costs during the six months ended June 30, 2023. We did not record any restructuring costs during the six months ended June 30, 2022. During the six months ended June 30, 2023, we made payments of $12.8 million out of our restructuring reserve, which is used for severance and office closures and consolidations in multiple countries and territories. We expect a majority of the remaining $21.5 million reserve will be paid by the end of 2023.

#### Recently Issued Accounting Standards

See Note 2 to the Consolidated Financial Statements.

## Market risk

As filed, 235 characters.

Our 2022 Annual Report on Form 10-K contains certain disclosures about market risks affecting us. There have been no material changes to the information provided which would require additional disclosures as of the date of this filing.

## Controls and procedures

As filed, 1,517 characters.

We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management of the company, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding timely disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at a reasonable assurance level pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation discussed above that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 206 characters.

As of the date of this filing, the Company and its operations continue to be subject to the risk factors previously disclosed in the “Risk Factors” sections contained in the 2022 Annual Report on Form 10-K.

Filed Aug 4, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-038599. Last ingested by Listed: Oct 30, 2026, 16:41 ET. No prices; not investment advice.