# ManpowerGroup Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [ManpowerGroup Inc.](/companies/man.md) (CIK 871763)
- Form: 10-Q
- Filed: 2024-05-03
- Accepted by EDGAR: May 3, 2024, 16:30 ET
- Period: 2024-03-31
- Accession: 0000950170-24-052961
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/871763/000095017024052961/man-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/871763/000095017024052961/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $4.40bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $3.64bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $763.7m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $697.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $65.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $20.4m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$17.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $39.7m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.81 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.82 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 48,900,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $116.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $11.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $50.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $604.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $5.25bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $8.49bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $4.50bn | us-gaap:LiabilitiesCurrent |
| Current portion of debt | at 2024-03-31 | $15.6m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $2.18bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 44,472 characters.

See the financial measures section on page 29 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, 2023, 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, geopolitical risk and uncertainty; changes in labor and tax legislation in places we do business; failure to implement strategic transformation initiatives and 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 first quarter of 2024, 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.

In the first quarter of 2024, we continued to observe decreased demand for staffing services and permanent recruitment services due to increased economic uncertainty, and we expect this trend to continue. The economic uncertainty is particularly high in Europe and the United States, driven by elevated inflation and higher interest rates. As a result of these factors, we expect the business environment will continue to be challenging for us in future periods, especially in North America and Europe, with many companies delaying hiring decisions or reducing their demand for contingent labor. The current economic uncertainty is exacerbated by increasing geopolitical tensions, which could further negatively impact our operations in future periods.

During the first quarter of 2024, the United States dollar was generally stable, on average, relative to the currencies in most of our markets, and overall had a slight unfavorable impact on our reported results. The changes in the foreign currency exchange rates had a -1.8% 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 local currency and generally do not have cross-currency transactions, and therefore, changes in foreign currency exchange rates primarily impact 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 first quarter of 2024 compared to the first quarter of 2023, we experienced an -8.3% revenue decrease in the Americas, primarily driven by decreased demand for our Manpower and Experis staffing/interim services, decreased demand for our permanent recruitment services, a decrease in our TAPFIN - Managed Service Provider (MSP) business as we exited lower margin arrangements and the unfavorable impact of currency exchange rates. During the first quarter of 2024 compared to the first quarter of 2023, we experienced a -4.2% revenue decrease in Southern Europe, primarily due to decreased demand for our Manpower staffing services, partially offset by the favorable impact of currency exchange rates. During the first quarter of 2024 compared to the first quarter of 2023, we experienced a -10.1% revenue decrease in Northern Europe, primarily due to a decreased demand for our Manpower and Experis staffing/interim services, decreased demand in our permanent recruitment business and decreased demand for our Experis outcome-based solutions and consulting services, partially offset by the favorable impact of foreign currency exchange rates. We experienced an -11.7% revenue decrease in APME in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the unfavorable impact of foreign currency exchange rates and decreased activity in our RPO permanent recruitment business driven by the non-recurrence of a government contract from the prior year period, partially offset by increased demand for our Manpower and Experis staffing/interim services.

From a brand perspective, we experienced revenue decreases in Manpower, Experis and Talent Solutions in the first quarter of 2024 compared to the first quarter of 2023. In our Manpower brand, the revenue decrease was primarily due to decreased demand for staffing services, our permanent recruitment services and our Manpower Solutions services. The revenue decrease in our Experis brand was primarily due to decreased demand for interim services, our permanent recruitment services and our Experis Solutions services. On an overall basis, the revenue decrease in our Talent Solutions brand, which includes RPO, MSP and our Right Management offerings, was primarily due to decreased demand for our RPO permanent recruitment offerings. This revenue decrease in Talent Solutions was partially offset by an increase in demand for our Right Management outplacement services.

In the first quarter of 2024 our gross profit margin decreased 90 basis points compared to the first quarter of 2023, primarily due to declines in our higher-margin permanent recruitment businesses and our Manpower and Experis staffing/interim services and the unfavorable impact of operational losses from our Proservia business in Germany that we are exiting. The decrease in gross profit margin in the first quarter of 2024 compared to the first quarter of 2023 was partially offset by growth in our higher-margin outplacement offerings within Right Management.

Our operating profit decreased -44.1% in the first quarter of 2024 while our operating profit margin decreased 100 basis points compared to the first quarter of 2023. Excluding the loss of $6.2 million in operating profit due to operational losses from our Proservia business in Germany in the first quarter of 2024 that we are exiting and restructuring costs of $6.6 million incurred in the first quarter of 2023, our operating profit decreased -42.1% while operating profit margin decreased 100 basis points compared to the first quarter of 2023. The operating profit margin decreased primarily due to a decrease in gross profit margin, as noted above.

#### Operating Results - Three Months Ended March 31, 2024 and 2023

The following table presents selected consolidated financial data for the three months ended March 31, 2024 as compared to 2023.

*(in millions, except per share data)*

|  | 2024 | 2023 | Variance | Constant Currency Variance |
| --- | ---: | ---: | ---: | ---: |
| Revenues from services | $4,403.3 | $4,752.3 | (7.3)% | (5.5)% |
| Cost of services | 3,639.6 | 3,889.2 | (6.4)% | (4.4)% |
| Gross profit | 763.7 | 863.1 | (11.5)% | (10.1)% |
| Gross profit margin | 17.3% | 18.2% |  |  |
| Selling and administrative expenses | 697.8 | 745.2 | (6.4)% | (5.1)% |
| Operating profit | 65.9 | 117.9 | (44.1)% | (41.7)% |
| Operating profit margin | 1.5% | 2.5% |  |  |
| Interest and other expenses, net | 8.4 | 7.5 | 12.2% |  |
| Earnings before income taxes | 57.5 | 110.4 | (47.9)% | (45.3)% |
| Provision for income taxes | 17.8 | 32.6 | (45.4)% |  |
| Effective income tax rate | 31.0% | 29.5% |  |  |
| Net earnings | $39.7 | $77.8 | (49.0)% | (46.4)% |
| Net earnings per share – diluted | $0.81 | $1.51 | (46.2)% | (43.5)% |
| Weighted average shares – diluted | 48.9 | 51.6 | (5.1)% |  |

The year-over-year decrease in revenues from services of -7.3% (-5.5% in constant currency) was attributed to:

- a revenue decrease in the Americas of -8.3% (-1.1% in constant currency) primarily due to the $81.3 million unfavorable impact of foreign currency exchange rates, decreased demand of $12.8 million for our Manpower and Experis staffing/interim services, decreased activity of $6.3 million in our permanent recruitment business and a decrease of $2.9 million in our MSP business as we exited lower margin arrangements, partially offset by the increase in demand of $5.8 million for our Talent Solutions outplacement services. The United States, our largest market in the Americas, experienced a revenue decrease of -8.3% primarily driven by decreased demand of $55.4 million for our Manpower and Experis staffing/interim services, decreased activity of $7.1 million in our permanent recruitment business and a decrease of $3.0 million in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand of $5.3 million in our Talent Solutions outplacement services;
- a revenue decrease in Southern Europe of -4.2% (-4.9% in constant currency) which was primarily due to decreased demand of $85.5 million for our Manpower staffing services, partially offset by the $14.7 million favorable impact of changes in currency exchange rates. France, the largest market in Southern Europe, experienced a revenue decrease of -4.3% (-5.4% in constant currency), which was primarily due to decreased demand of $60.0 million for our Manpower staffing services, partially offset by the $12.9 million favorable impact of foreign currency exchange rates. Italy, our second-largest market in Southern Europe, experienced a revenue decrease of -4.2% (-5.4% in constant currency), which was primarily due to decreased demand of $21.2 million for our Manpower and Experis staffing/interim services, partially offset by the $4.7 million favorable impact of foreign currency exchange rates;
- a revenue decrease in Northern Europe of -10.1% (-12.1% in constant currency), primarily due to decreased demand of $89.9 million for our Manpower and Experis staffing/interim services, decreased demand of $18.3 million for our Experis Solutions services and decreased demand of $10.6 million in our permanent recruitment business, partially offset by the $20.1 million favorable impact of foreign currency exchange rates. Within Northern Europe, we experienced revenue decreases in the United Kingdom of $35.1 million, the Nordics of $59.2 million, Germany of $8.4 million and the Netherlands of $3.3 million, which represented revenue decreases of -10.4%, -26.1%, -6.0% and -3.3%, respectively (-14.1%, -25.3%, -7.0% and -4.4%, respectively, in constant currency). These decreases were partially offset by a revenue increase in Belgium of $3.3 million, which represented a revenue increase of 4.7% (3.5% in constant currency); and
- a revenue decrease in APME of -11.7% (-4.8% in constant currency and -3.6% in organic constant currency) primarily due to the $41.6 million unfavorable impact of foreign currency exchange rates and decreased activity of $25.6 million in our RPO permanent recruitment business driven by the non-recurrence of a government contract from the prior year period, partially offset by increased demand of $4.1 million for our Manpower and Experis staffing/interim services.

The year-over-year 90 basis point decrease in gross profit margin was primarily attributed to:

- a 50 basis point unfavorable impact from decreases to permanent recruitment, including Talent Solutions RPO, as permanent hiring demand continued to soften and experienced reduced levels;
- a 50 basis point unfavorable impact from the decrease in staffing/interim margins due to mix shifts and lower volumes while pricing remained stable; and
- a 20 basis point unfavorable impact due to operational losses from our Proservia business in Germany that we are exiting; partially offset by
- a 20 basis point favorable impact from increases in our higher-margin Right Management outplacement business as we continued to experience increased activity; and
- a 10 basis point favorable impact from foreign currency exchange rates.

The -6.4% decrease in selling and administrative expenses in the first quarter of 2024 (-5.1% in constant currency and -5.0% in organic constant currency) was primarily attributed to:

- a $28.4 million, or -6.7% decrease (-5.5% in constant currency) in personnel costs primarily due to a $23.5 million decrease in salary costs as we saw the effects of restructuring actions taken throughout 2023;
- a $9.4 million, or -1.3% decrease due to the impact of changes in currency exchange rates;
- the non-recurrence of restructuring costs in the first quarter of 2024 compared to $6.6 million incurred in the first quarter of 2023; and
- a $2.6 million, or -2.9% decrease (-1.2% in constant currency) in non-personnel costs, primarily due to a $3.1 million decrease in office lease costs and $2.5 million decrease in consulting and outside services costs associated with our technology and back-office transformation initiatives, partially offset by a $2.6 million increase in bad debt.

Selling and administrative expenses as a percent of revenues increased 10 basis points in the first quarter of 2024 compared to the first quarter of 2023 due primarily to:

- a 20 basis point unfavorable impact as non-personnel costs increased as a percent of revenues; and
- a 10 basis point unfavorable impact from changes in currency exchange rates; partially offset by
- a 20 basis point favorable impact as a result of restructuring costs incurred in the first quarter of 2023.

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 $20.4 million in the first quarter of 2024 compared to $18.7 million in the first quarter of 2023 primarily due to increased revolver and other short term borrowings at a higher interest rate during the period. Foreign exchange loss, net was $2.4 million in the first quarter of 2024 compared to $3.1 million in the first quarter of 2023 primarily due to a reduction in foreign currency exchange losses year over year. Miscellaneous income, net was $8.1 million in both the first quarter of 2024 and 2023.

We recorded income tax expense at an effective rate of 31.0% for the three months ended March 31, 2024, as compared to an effective rate of 29.5% for the three months ended March 31, 2023. The 2024 rate was unfavorably impacted by the overall mix of earnings and partially offset by the scheduled reduction in the French business tax rate from 0.38% to 0.28% effective January 1, 2024. The 31.0% effective tax rate for the three months ended March 31, 2024 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 $0.81 in the first quarter of 2024 compared to $1.51 in the first quarter of 2023. Losses related to our Proservia Germany wind down in the first quarter of 2024 unfavorably impacted net earnings per share - diluted by approximately $0.13, net of tax, in the first quarter of 2024.

Weighted average shares - diluted decreased to 48.9 million in the first quarter of 2024 from 51.6 million in the first quarter of 2023. This decrease was due to the impact of share repurchases completed since the first quarter of 2023.

#### Segment Operating Results

#### Americas

In the Americas, revenues from services decreased -8.3% (-1.1% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. In the United States (which represents 66% of the Americas' revenues), revenues from services decreased -8.3% in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by decreased demand of $55.4 million for our Manpower and Experis staffing/interim services, decreased activity of $7.1 million in our permanent recruitment business and a decrease of $3.0 million in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand of $5.3 million for our Talent Solutions outplacement services. In Other Americas, revenues from services decreased -8.4% (increase of 12.5% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023 primarily due to the $81.3 million unfavorable impact of foreign currency exchange rates, partially offset by increased demand of $42.6 million for our Manpower and Experis staffing/interim services. The constant currency increase in Other Americas was primarily due to inflation in Argentina. The decrease in revenues from services in Other Americas was primarily driven by revenue decreases in Argentina and Canada of $18.8 million, or -40.7%, and $20.0 million, or -20.6%, respectively (+157.2% and -20.8%, respectively, in constant currency), partially offset by a revenue increase in Mexico of $11.2 million, or 20.5% (9.7% in constant currency).

Gross profit margin decreased 70 basis points in the first quarter of 2024 compared to the first quarter of 2023 primarily due to decreased margins in our staffing and interim services, particularly within Experis, which contributed 110 basis points to the decrease, decreased activity in our permanent recruitment business which contributed 50 basis points to the decrease and decreased margins in our MSP business which contributed 20 basis points to the decrease. These contributions were partially offset by increased demand in our higher-margin Right Management outplacement business, which had a 50 basis point offsetting impact and the favorable impact of currency exchange rates, which had a 60 basis point offsetting impact.

Selling and administrative expenses decreased -3.1% (increase of 1.3% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the $9.7 million favorable impact of currency exchange rates and a $4.5 million decrease in salaries from a reduction in headcount. The decreases were partially offset by the $2.4 million increase in lease and other office related costs, a $1.8 million increase in bonuses and sales commissions and a $1.6 million increase to software maintenance related costs.

Operating Unit Profit (“OUP”) decreased -46.4% (-43.0% in constant currency), which represents a 2.5% OUP margin, a decrease from 4.3% in the first quarter of 2023. This decrease was primarily due to decreased profitability in the United States business of $18.1 million, which includes the decreased demand for our Manpower and Experis staffing/interim services and decreased activity in our permanent recruitment business, as noted above. In the United States, OUP margin decreased to 1.8% in the first quarter of 2024 from 4.0% in the first quarter of 2023 primarily due to a decrease in gross profit margin as we saw decreased demand for our Manpower and Experis staffing/interim services and decreased activity in our RPO permanent recruitment business. The decrease was also due to an increase in our selling and administrative expenses as a percentage of revenue as we reduced costs slower than the decline in gross profit. Other Americas OUP margin decreased to 4.0% in the first quarter of 2024 from 4.8% in the first quarter of 2023 primarily due to an increase in our gross profit margin, specifically in our Manpower staffing services, partially offset by an increase in our selling and administrative expenses as a percent of revenue as we reduced costs slower than the decline in gross profit.

#### Southern Europe

In Southern Europe, revenues from services decreased -4.2% (-4.9% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. In France (which represents 56% of Southern Europe’s revenues), revenues from services decreased -4.3% (-5.4% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. The decrease in France is primarily due to decreased demand of $60.0 million for our Manpower staffing services, partially offset by the $12.9 million favorable impact of foreign currency exchange rates. In Italy (which represents 20% of Southern Europe’s revenues), revenues from services decreased -4.2% (-5.4% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. The decrease in Italy was primarily due to decreased demand of $21.2 million for our Manpower and Experis staffing/interim services, partially offset by the $4.7 million favorable impact of foreign currency exchange rates. In Other Southern Europe, revenues from services decreased -3.9% (-3.3% in constant currency) in 2024 compared to 2023, primarily due to decreased demand of $8.1 million for our Manpower and Experis staffing/interim services and $5.3 million for our Experis solutions services. The decrease in Other Southern Europe was driven by revenue decreases in Spain and Switzerland of $8.2 million, or -6.9%, and $8.8 million, or -7.6%, respectively (-8.0% and -12.6%, respectively, in constant currency).

Gross profit margin decreased 60 basis points in 2024 compared to 2023. The decrease was primarily due to decreased activity in our higher margin Manpower staffing services, which contributed 30 basis points to the decrease, decreased activity in our permanent recruitment services which contributed 20 basis points to the decrease and decreased activity in our Experis solutions services which contributed 20 basis points to the decrease. These contributions were partially offset by increased demand in our higher-margin Right Management outplacement business which had a 10 basis point offsetting impact.

Selling and administrative expenses decreased -2.2% (-3.1% in constant currency) during the first quarter of 2024 compared to the first quarter of 2023 primarily due to a $3.6 million decrease in salary-related costs, partially offset by the $1.9 million unfavorable impact of currency exchange rates.

OUP in Southern Europe decreased -22.2% (-22.7% in constant currency), which represents a 3.5% OUP margin, a decrease from 4.3% in the first quarter of 2023. This OUP decrease was primarily due to decreased profitability in the France reporting unit of $11.8 million. In France, the OUP margin decreased to 3.0% for the first quarter of 2024 compared to 3.8% for the first quarter of 2023. The decrease in France was due to decreases in staffing margins and an increase in our selling and administrative expenses as a percent of revenue. In Italy, the OUP margin decreased to 6.8% for the first quarter of 2024 from 7.3% for the first quarter of 2023 primarily due to an increase in our selling and administrative expenses as a percent of revenue, partially offset by an increase in gross profit margin. In Other Southern Europe, the OUP margin decreased to 2.1% for the first quarter of 2024 from 3.0% for the first quarter of 2023 primarily due to decreases in our gross profit margin, specifically within our staffing services.

#### Northern Europe

In Northern Europe, the largest country operations include the United Kingdom, the Nordics, Germany, the Netherlands and Belgium (comprising 35%, 19%, 15%, 11% and 9%, respectively, of Northern Europe’s revenues). In the Northern Europe region, revenues from services decreased -10.1% (-12.1% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. Within Northern Europe, we experienced revenue decreases in the United Kingdom of $35.1 million, the Nordics of $59.2 million, Germany of $8.4 million and the Netherlands of $3.3 million, which represented revenue decreases of -10.4%, -26.1%, -6.0% and -3.3%, respectively (-14.1%, -25.3%, -7.0% and -4.4%, respectively, in constant currency). These decreases were partially offset by a revenue increase in Belgium of $3.3 million, which represented a revenue increase of 4.7% (3.5% in constant currency). The revenue decrease in Northern Europe was primarily due to decreased demand of $89.9 million for our Manpower and Experis staffing/interim services, decreased demand of $18.3 million for our Experis Solutions services and decreased demand of $10.6 million in our permanent recruitment business, partially offset by the $20.1 million favorable impact of foreign currency exchange rates.

Gross profit margin decreased by 80 basis points in 2024 compared to 2023 primarily due to decreased demand in our permanent recruitment business, particularly in Manpower and Experis, which contributed 60 basis points to the decrease, decreased demand in our Experis Solutions services, which contributed 40 basis points to the decrease, and decreases in our staffing/interim margins, which contributed 40 basis points to the decrease. These contributions were partially offset by a shift in business mix towards our higher-margin Talent Solutions outplacement and MSP services, which had a 60 basis point offsetting impact.

Selling and administrative expenses decreased -11.5% (-13.3% in constant currency) in the first quarter of 2024 compared to the first quarter of 2023. The decrease is primarily due to the $10.2 million decrease in salary costs due to headcount reductions, the $3.4 million decrease to consulting and other outside services, the $3.3 million decrease in bonuses and sales commissions as a result of decreased profitability in certain markets and no restructuring costs incurred in 2024 compared to $2.5 million in 2023. These decreases were partially offset by the $3.0 million unfavorable impact of currency exchange rates.

OUP in Northern Europe decreased -99.9% (-108.6% in constant currency), which represents a 0.0% OUP margin, a decrease from 0.5% in the first quarter of 2023. This OUP decrease was primarily driven by a decrease in profitability of our bench model countries in the Nordics, which experienced an aggregate decrease of $8.5 million, partially offset by increased profitability in other bench model countries, notably Germany and the Netherlands, which experienced increases of $4.8 million and $1.0 million, respectively. The OUP decrease was partially offset by decreased selling and administrative expenses as a percentage of revenue as we saw the effects of restructuring actions taken in the prior year period.

#### APME

Revenues from services decreased -11.7% (-4.8% in constant currency and -3.6% in organic constant currency) in the first quarter of 2024 compared to the first quarter of 2023. In Japan (which represents 51% of APME’s revenues), revenues from services decreased -5.3% (increase of 6.3% in constant currency) due to the $33.2 million unfavorable impact of foreign currency exchange rates, partially offset by increased demand of $20.4 million for our Manpower and Experis staffing/interim services. In Australia, revenues from services decreased -52.9% (-51.0% in constant currency), primarily due to decreased activity of $25.3 million in our RPO permanent recruitment business driven by the non-recurrence of a government contract from the prior year period, decreased demand of $9.4 million for our Manpower and Experis staffing/interim services and the $1.3 million unfavorable impact of foreign currency exchange rates.

Gross profit margin decreased 160 basis points in 2024 compared to 2023 primarily due to decreased activity in our permanent recruitment business, particularly Talent Solutions RPO, which contributed 260 basis points to the decrease and the unfavorable impact of foreign currency exchange rates, which contributed 10 basis points to the decrease. These contributions were partially offset by improvement in our staffing/interim margins, which had a 90 basis point offsetting impact, and improvements in our higher-margin Right Management outplacement services margins, which had a 20 basis point offsetting impact.

Selling and administrative expenses decreased -23.7% (-17.9% in constant currency and -16.9% in organic constant currency) in the first quarter of 2024 compared to the first quarter of 2023. The decrease is primarily due to a $6.3 million decrease in salary related costs from a reduction in headcount, the $4.6 million favorable impact of currency exchange rates, a $2.8 million decrease in office lease related costs and zero restructuring costs incurred in 2024 compared to $2.5 million in 2023.

OUP in APME decreased -6.1% (increases of 3.3% in constant currency and 4.7% in organic constant currency) which represents a 3.7% OUP margin, an increase from 3.5% in the first quarter of 2023. This OUP decrease was primarily driven by decreased profitability in Japan reporting unit of $0.8 million, partially offset by decreases to selling and administrative expenses, as noted above.

#### 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 March 31, 2024 Compared to 2023 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 | $680.4 | (8.3)% | — | (8.3)% | — | (8.3)% |
| Other Americas | 356.0 | (8.4)% | (20.9)% | 12.5% | — | 12.5% |
|  | 1,036.4 | (8.3)% | (7.2)% | (1.1)% | — | (1.1)% |
| Southern Europe: |  |  |  |  |  |  |
| France | 1,119.3 | (4.3)% | 1.1% | (5.4)% | — | (5.4)% |
| Italy | 404.3 | (4.2)% | 1.2% | (5.4)% | — | (5.4)% |
| Other Southern Europe | 457.7 | (3.9)% | (0.6)% | (3.3)% | — | (3.3)% |
|  | 1,981.3 | (4.2)% | 0.7% | (4.9)% | — | (4.9)% |
| Northern Europe | 870.3 | (10.1)% | 2.0% | (12.1)% | — | (12.1)% |
| APME | 535.1 | (11.7)% | (6.9)% | (4.8)% | (1.2)% | (3.6)% |
|  | 4,423.1 |  |  |  |  |  |
| Intercompany Eliminations | (19.8) |  |  |  |  |  |
| Consolidated | $4,403.3 | (7.3)% | (1.8)% | (5.5)% | (0.2)% | (5.3)% |
| Gross Profit | $763.7 | (11.5)% | (1.4)% | (10.1)% | (0.1)% | (10.0)% |
| Selling and Administrative Expenses | $697.8 | (6.4)% | (1.3)% | (5.1)% | (0.1)% | (5.0)% |
| Operating Profit | $65.9 | (44.1)% | (2.4)% | (41.7)% | (0.1)% | (41.6)% |

(a) In millions for the three months ended March 31, 2024.

#### 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 March 31, 2024, we had $429.3 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 generated in operating activities was $116.0 million during the three months ended March 31, 2024, as compared to $124.6 million generated during the three months ended March 31, 2023. Changes in operating assets and liabilities generated $37.1 million and $2.4 million of cash during the three months ended March 31, 2024 and 2023, respectively. These changes were primarily attributable to the timing of collections and payments. Accounts receivable decreased to $4,458.5 million as of March 31, 2024 from $4,830.0 million as of December 31, 2023 primarily due to the revenue decline and the impact of changes in currency exchange rates. Days Sales Outstanding ("DSO") increased by one day from December 31, 2023, to 55 days as of March 31, 2024.

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 are 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. 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 $11.8 million for the three months ended March 31, 2024 compared to $13.2 million for the three months ended March 31, 2023. 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.

From time to time, we acquire and invest in companies throughout the world, including franchises. For the three months ended March 31, 2024, total cash consideration paid for acquisitions, net of cash acquired, was $1.1 million, which represents a contingent consideration payment related to a previous acquisition. No cash consideration was paid during the three months ended March 31, 2023.

Net debt borrowings were $3.5 million in the three months ended March 31, 2024 as compared to net repayments of $10.7 million in the three months ended March 31, 2023.

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 2.03 to 1 and a fixed charge coverage ratio of 3.17 to 1 as of March 31, 2024. Based on our current forecast, we expect to be in compliance with our financial covenants for the next 12 months.

As of March 31, 2024, we had letters of credit of $0.4 million issued under our $600.0 million revolving credit facility. Additional borrowings of $599.6 million were available to us under the facility as of March 31, 2024.

In addition to the previously mentioned facilities, we maintain separate bank credit lines with financial institutions to meet the working capital needs of our subsidiary operations. As of March 31, 2024, such uncommitted credit lines totaled $301.7 million, of which $284.0 million was unused. Under the revolving 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 $282.3 million could have been made under these lines as of March 31, 2024.

We have assessed our liquidity position as of March 31, 2024 and for the near future. As of March 31, 2024, our cash and cash equivalents balance was $604.8 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 $282.3 million was available to use as of March 31, 2024. Our €500.0 ($538.1) million notes mature in June 2026, and our €400.0 ($428.7) 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 $1.54 and $1.47 per share on May 3, 2024 and May 5, 2023, respectively. The 2024 dividends are payable on June 14, 2024 to shareholders of record as of June 3, 2024. The 2023 dividends were paid on June 15, 2023 to shareholders of record as of June 1, 2023.

In August 2023 and August 2021, the Board of Directors authorized the repurchase of 5.0 million shares and 4.0 million shares of our common stock, respectively. We conduct share repurchases from time to time through a variety of methods, including open market purchases, block transactions, privately negotiated transactions or similar facilities. During the three months ended March 31, 2024, we repurchased a total of 0.7 million shares under the 2023 authorization at a cost of $50.0 million. During the three months ended March 31, 2023, we repurchased a total of 0.4 million shares under the 2021 authorization at a cost of $30.0 million. As of March 31, 2024, there were 3.9 million shares remaining authorized for repurchase under the 2023 authorization and no shares remaining authorized for repurchase under the 2021 authorization.

We had aggregate commitments of $2,220.3 million as of March 31, 2024 related to debt, operating leases, severance and office closure costs, transition tax resulting from the Tax Act and certain other commitments compared to $2,320.5 million as of December 31, 2023.

We also have entered into guarantee contracts and stand-by letters of credit totaling $739.9 million and $745.7 million as of March 31, 2024 and December 31, 2023, respectively ($691.1 million and $696.9 million for guarantees as of March 31, 2024 and December 31, 2023, respectively, and $48.8 million for stand-by letters of credit as of both dates). 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 $0.4 million and $0.0 million for the three months ended March 31, 2024 and 2023, respectively

During the three months ended March 31, 2024, we did not record any restructuring costs. We recorded $6.6 million in restructuring costs during the three months ended March 31, 2023 . During the three months ended March 31, 2024, we made payments of $30.3 million out of our restructuring reserve, which is used for severance, office closures and consolidations, and professional and other fees related to restructuring in multiple countries and territories. We expect a majority of the remaining $59.7 million reserve will be paid by the end of 2024.

#### Recently Issued Accounting Standards

See Note 2 to the Consolidated Financial Statements.

## Market risk

As filed, 235 characters.

Our 2023 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 2023 Annual Report on Form 10-K.

Filed May 3, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-052961. Last ingested by Listed: Nov 2, 2026, 15:00 ET. No prices; not investment advice.