ManpowerGroup Inc.: Form 10-Q for the period ended Jun 30, 2024

See the financial measures section on page 34 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 second 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 second quarter of 2024, we continued to observe decreased demand for staffing services and permanent recruitment services primarily 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 the United States 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 second 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 -3.4% unfavorable impact on revenues from services and an approximately $0.05 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 second quarter of 2024 compared to the second quarter of 2023, we experienced a -3.1% revenue decrease in the Americas, primarily driven by the unfavorable impact of currency exchange rates and decreased demand for our permanent recruitment services, partially offset by increased demand for our Manpower staffing services. During the second quarter of 2024 compared to the second quarter of 2023, we experienced a -5.8% revenue decrease in Southern Europe, primarily due to decreased demand for our Manpower staffing services, the unfavorable impact of currency exchange rates and decreased demand for our permanent recruitment services. During the second quarter of 2024 compared to the second quarter of 2023, we experienced a -12.1% revenue decrease in Northern Europe, primarily due to a decreased demand for our Manpower and Experis staffing/interim services, decreased demand for our Experis Solutions services, and decreased demand for our permanent recruitment services. We experienced a -9.7% revenue decrease in APME in the second quarter of 2024 compared to the second quarter of 2023 primarily due to the unfavorable impact of currency exchange rates and decreased demand for our permanent recruitment services.

From a brand perspective, we experienced revenue decreases in Manpower, Experis and Talent Solutions in the second quarter of 2024 compared to the second quarter of 2023. In our Manpower brand, the revenue decrease was primarily due to decreased demand for staffing services and our permanent recruitment services. The revenue decrease in our Experis brand was primarily due to decreased demand for interim services, our Experis Solutions services and our permanent recruitment 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 and our MSP business.

In the second quarter of 2024, our gross profit margin decreased 40 basis points compared to the second quarter of 2023, primarily due to declines in our higher-margin permanent recruitment businesses, partially offset by growth in our higher-margin Talent Solutions outplacement business and our MSP businesses.

Our operating profit decreased -6.1% in the second quarter of 2024 while our operating profit margin remained the same compared to the second quarter of 2023. Excluding the loss of $2.9 million in operating profit due to operational losses from our Proservia business in Germany in the second quarter of 2024 that we are exiting and restructuring costs of $14.5 million incurred in the second quarter of 2023, our operating profit decreased -14.8%. Operating profit margin decreased 20 basis points compared to the second 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 June 30, 2024 and 2023

The following table presents selected consolidated financial data for the three months ended June 30, 2024 as compared to 2023.

(in millions, except per share data)

The year-over-year decrease in revenues from services of -6.9% (-3.5% in constant currency and -3.3% in organic constant currency) was attributed to:

• a revenue decrease in the Americas of -3.1% (increase of 5.0% in constant currency) primarily driven by the $88.8 million unfavorable impact of currency exchange rates and a $3.6 million decrease in demand for our permanent recruitment services, partially offset by increased demand of $61.9 million for our Manpower staffing services. The United States, our largest market in the Americas, experienced a revenue decrease of -1.7% primarily driven by a $5.3 million decrease in demand for our permanent recruitment services and a $3.9 million decrease in demand for our Manpower and Experis staffing/interim services;
• a revenue decrease in Southern Europe of -5.8% (decrease of -4.4% in constant currency) primarily driven by a $90.3 million decrease in demand for our Manpower staffing services, the $31.8 million unfavorable impact of currency exchange rates and a $6.8 million decrease in demand for our permanent recruitment services, partially offset by a $4.7 million increase in demand for our Talent Solutions outplacement services. France, the largest market in Southern Europe, experienced a revenue decrease of -7.3% (-6.2% in constant currency) primarily driven by an $80.5 million decrease in demand for our Manpower staffing services and the $13.9 million unfavorable impact of currency exchange rates, partially offset by a $4.6 million increase in demand for our Talent Solutions outplacement services. Italy, our second-largest market in Southern Europe, experienced a revenue decrease of -5.0% (-3.9% in constant currency) primarily driven by an $18.6 million decrease in our Manpower staffing services and the $4.9 million unfavorable impact of currency exchange rates, partially offset by a $3.0 million increase in demand for our Manpower solutions services;
• a revenue decrease in Northern Europe of -12.1% (-12.0% in constant currency) primarily driven by a $92.5 million decrease in demand for our Manpower and Experis staffing/interim services, a $20.9 million decrease in demand for our Experis solutions services and a $7.8 million decrease in our permanent recruitment services. Within our Northern Europe segment, we experienced revenue decreases in the United Kingdom of $37.7 million, the Nordics of $42.6 million, Germany of $24.8 million, the Netherlands of $2.4 million and Belgium of $4.0 million, which represented revenue decreases of -11.5%, -20.2%, -17.6%, -2.5% and -4.9%, respectively (-12.2%, -19.4%, -16.6%, -1.3% and -3.8%, respectively, in constant currency); and
• a revenue decrease in APME of -9.7% (-2.0% in constant currency and 0.7% in organic constant currency) primarily driven by the $46.3 million unfavorable impact of currency exchange rates and a $20.4 million decrease in demand for our permanent recruitment services, partially offset by a $17.4 million increase in demand for our Manpower staffing services.

The year-over-year 40 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; and
• a 10 basis point unfavorable impact from the decrease in staffing/interim margins due to mix shifts and lower volumes while pricing remained stable; partially offset by
• a 10 basis point favorable impact from increased career transition activity in Right Management as outplacement activity increased; and
• a 10 basis point favorable impact due to the effects of currency exchange rates.

The -9.3% decrease in selling and administrative expenses in the second quarter of 2024 (-6.5% in constant currency and -6.4% in organic constant currency) was primarily attributed to:

• a $22.4 million, or -7.2% decrease (-4.5% in constant currency) in personnel costs primarily due to a $14.2 million decrease in salary costs as we saw the effects of restructuring actions taken in 2023;
• a $20.4 million, or -2.8% decrease due to the impact of changes in currency exchange rates;
• the non-recurrence of restructuring costs in the second quarter of 2024 compared to $14.5 million incurred in the second quarter of 2023; and
• a $13.3 million, or -8.7% decrease (-5.8% in constant currency) in non-personnel costs, primarily due to a $6.4 million decrease in office lease and other office costs, a $5.5 million decrease in consulting and outside services costs associated with our technology and back-office transformation initiatives and a $1.4 million decrease in advertising and promotional expenses.

Selling and administrative expenses as a percent of revenues decreased 40 basis points in the second quarter of 2024 compared to the second quarter of 2023 due primarily to:

• a 30 basis point favorable impact as a result of the restructuring costs incurred in the second quarter of 2023;
• a 10 basis point favorable impact as personnel costs decreased as a percent of revenues, primarily due to percent of revenue decreases in salaries, bonuses and sales commissions as we saw the effects of restructuring actions taken in 2023; and
• a 10 basis point favorable impact as non-personnel costs decreased as a percent of revenues, primarily due to percent of revenue decreases in office leases and consulting and outside services; partially offset by
• a 10 basis point unfavorable impact from changes in currency exchange rates.

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 $13.4 million in the second quarter of 2024 compared to $11.6 million in the second 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 $1.8 million in the second quarter of 2024 compared to $5.1 million in the second quarter of 2023 primarily due to a reduction in foreign currency exchange losses year over year. Miscellaneous income, net was $6.5 million in the second quarter of 2024 compared to $4.9 million in the second quarter of 2023.

We recorded income tax expense at an effective rate of 34.9% for the three months ended June 30, 2024, as compared to an effective rate of 31.9% for the three months ended June 30, 2023. The 2024 rate was unfavorably impacted by the lower level and 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 34.9% effective tax rate for the second quarter of 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 $1.24 in the second quarter of 2024 compared to $1.29 in the second quarter of 2023. Losses related to our Proservia Germany wind down in the second quarter of 2024 unfavorably impacted net earnings per share - diluted by approximately $0.06, net of tax, in the second quarter of 2024.

Weighted average shares - diluted decreased to 48.4 million in the second quarter of 2024 from 50.7 million in the second quarter of 2023. This decrease was due to the impact of share repurchases completed since the second quarter of 2023, partially offset by grants of share-based awards.

Operating Results - Six Months Ended June 30, 2024 and 2023

The following table presents selected consolidated financial data for the six months ended June 30, 2024 as compared to 2023.

(in millions, except per share data)

The year-over-year decrease in revenues from services of -7.1% (-4.5% in constant currency and -4.3% in organic constant currency) was attributed to:

• a revenue decrease in the Americas of -5.7% (increase of 1.9% in constant currency) primarily driven by the $170.1 million unfavorable impact of currency exchange rates and a $9.9 million decrease in demand for our permanent recruitment services, partially offset by increased demand of $34.8 million for our Manpower and Experis staffing/interim services and a $9.6 million increase in demand for our Manpower solutions services. The United States, our largest market in the Americas, experienced a revenue decrease of -5.1% primarily driven by a $58.3 million decrease in demand for our Manpower and

Experis staffing/interim services and a $12.5 million decrease in demand for our permanent recruitment services, partially offset by a $4.6 million increase in demand for our Talent Solutions outplacement services;

• a revenue decrease in Southern Europe of -5.0% (-4.6% in constant currency) primarily driven by a $185.0 million decrease in demand for our Manpower and Experis staffing/interim services, the $17.1 million unfavorable impact of currency exchange rates, a $12.0 million decrease in demand for our permanent recruitment services and a $9.7 million decrease in demand for our Manpower and Experis solutions services, partially offset by a $7.1 million increase in demand for our Talent Solutions outplacement services. France, the largest market in Southern Europe, experienced a revenue decrease of -5.9% (-5.8% in constant currency) primarily driven by a $140.4 million decrease in demand for our Manpower staffing services and a $4.2 million decrease in demand for our permanent recruitment services, partially offset by a $6.5 million increase in demand for our Talent Solutions outplacement services. Italy, our second-largest market in Southern Europe, experienced a revenue decrease of -4.6% (-4.6% in constant currency) primarily driven by a $40.6 million decrease in our Manpower staffing services and a $3.6 million decrease in demand for our permanent recruitment services, partially offset by a $2.6 million increase in demand for our Manpower solutions services;
• a revenue decrease in Northern Europe of -11.1% (-12.1% in constant currency) primarily driven by a $182.5 million decrease in demand for our Manpower and Experis staffing/interim services, a $39.2 million decrease in demand for our Experis solutions services and an $18.4 million decrease in our permanent recruitment services, partially offset by the $19.6 million favorable impact of currency exchange rates and a $7.7 million increase in demand for our Talent Solutions outplacement and MSP services. Within our Northern Europe segment, we experienced revenue decreases in the United Kingdom of $72.9 million, the Nordics of $101.8 million, Germany of $33.3 million, the Netherlands of $5.7 million and Belgium of $0.6 million, which represented revenue decreases of -10.9%, -23.2%, -11.8%, -2.9 and -0.4%, respectively (-13.2%, -22.5%, -11.8%, -2.9% and -0.4%, respectively, in constant currency); and
• a revenue decrease in APME of -10.7% (-3.4% in constant currency and -2.2% in organic constant currency) primarily driven by the $87.9 million unfavorable impact of currency exchange rates, a $45.8 million decrease in demand for our permanent recruitment services and a $10.4 million decrease in demand for our Experis solutions services, partially offset by a $19.3 million increase in demand for our Manpower and Experis staffing/interim services.

The year-over-year 60 basis point decrease in gross profit margin was primarily attributed to:

• a 60 basis point unfavorable impact from decreases to permanent recruitment, including Talent Solutions RPO, as permanent hiring demand continued to soften and experienced reduced levels; and
• a 20 basis point unfavorable impact from the decrease in staffing/interim margins due to mix shifts and lower volumes while pricing remained stable; partially offset by
• a 20 basis point favorable impact from increased career transition activity in Right Management as outplacement activity increased.

The -7.8% decrease in selling and administrative expenses in the first half of 2024 (-5.8% in constant currency and -5.7% in organic constant currency) was primarily attributed to:

• a $50.8 million, or -6.9% decrease (-5.0% in constant currency) in personnel costs primarily due to a $37.7 million decrease in salary costs as we saw the effects of restructuring actions taken in 2023;
• a $29.8 million, or -2.0% decrease due to the impact of changes in currency exchange rates;
• the non-recurrence of restructuring costs in the first half of 2024 compared to $21.1 million incurred in the first half of 2023; and
• a $16.4 million, or -6.0% decrease (-3.7% in constant currency) in non-personnel costs, primarily due to a $9.4 million decrease in office lease and other office costs and an $8.0 million decrease in consulting and outside services costs associated with our technology and back-office transformation initiatives.

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

• a 20 basis point favorable impact as a result of restructuring costs incurred in the first half of 2023 that did not recur in the first half of 2024; and
• a 10 basis point favorable impact as personnel costs as a percent of revenue decreased, primarily due to a percent of revenue decrease in salaries as we saw the effects of restructuring actions taken in 2023; partially offset by
• a 10 basis point unfavorable impact as non-personnel costs as a percent of revenues increased, primarily due to percent of revenue decreases in office leases and consulting and outside services; and
• a 10 basis point unfavorable impact from changes in currency exchange rates.

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 $25.7 million in the first half of 2024 compared to $22.2 million in the first half 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 $4.2 million in the first half of 2024 compared to $8.2 million in the first half of 2023 primarily due to a reduction in foreign currency exchange losses year over year. Miscellaneous income, net was $12.8 million in the first half of 2024 compared to $11.1 million in the first half of 2023.

We recorded income tax expense at an effective rate of 33.4% for the six months ended June 30, 2024, as compared to an effective rate of 30.6% for the six months ended June 30, 2023. The 2024 rate was unfavorably impacted by the lower level and 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 33.4% effective tax rate for the first half of 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 $2.05 in the first half of 2024 compared to $2.80 in the first half of 2023. Losses related to our Proservia Germany wind down in the first half of 2024 unfavorably impacted net earnings per share - diluted by approximately $0.19, net of tax, in the first half of 2024.

Weighted average shares - diluted decreased to 48.7 million in the first half of 2024 from 51.0 million in the first half of 2023. This decrease was due to the impact of share repurchases completed since the first half of 2023, partially offset by grants of share-based awards.

Segment Operating Results

Americas

In the Americas, revenues from services decreased -3.1% (increase of 5.0% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023. In the United States (which represents 65% of the Americas' revenues), revenues from services decreased -1.7% in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by a $5.3 million decrease in demand for our permanent recruitment services and a $3.9 million decrease in demand for our Manpower and Experis staffing/interim services. In Other Americas, revenues from services decreased -5.7% (increase of 17.1% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by the $88.8 million unfavorable impact of foreign currency exchange rates, partially offset by a $56.3 million increase in demand for our Manpower and Experis staffing/interim services. The constant currency increase in Other Americas was primarily due to inflation in Argentina. Within our Other Americas segment, we experienced decreases in Argentina and Canada of $19.6 million, or -39.2%, and $9.1 million, or -10.2%, respectively (+132.5% and -8.5%, respectively, in constant currency), partially offset by a revenue increase in Mexico of $6.4 million, or 10.9% (8.1% in constant currency).

In the Americas, revenues from services decreased -5.7% (increase of 1.9% in constant currency) in the first half of 2024 compared to the first half of 2023. In the United States, revenues from services decreased -5.1% in the first half of 2024 compared to the first half of 2023, primarily driven by a $58.3 million decrease in demand for our Manpower and Experis staffing/interim services and a $12.5 million decrease in demand for our permanent recruitment services, partially offset by a $4.6 million increase in demand for our Talent Solutions outplacement services. In Other Americas, revenues from services decreased -7.0% (increase of 14.8% in constant currency) in the first half of 2024 compared to the first half of 2023, primarily driven by the $170.1 million unfavorable impact of foreign currency exchange rates, partially offset by a $98.8 million increase in demand for our Manpower and Experis staffing/interim services. The constant currency increase in Other Americas was primarily due to inflation in Argentina. Within our Other Americas segment, we experienced decreases in Argentina and Canada of $38.4 million, or -39.9%, and $29.1 million, or -15.6%, respectively (+144.4% and -14.9%, respectively, in constant currency), partially offset by a revenue increase in Mexico of $17.6 million, or 15.5% (8.9% in constant currency).

Gross profit margin decreased 60 basis points in the second quarter of 2024 compared to the second quarter of 2023 primarily due to decreased margins in our staffing and interim services, particularly within Experis, which contributed 50 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 Talent Solutions outplacement business which contributed 10 basis points to the decrease. These contributions were partially offset by the favorable impact of currency exchange rates, which had a 50 basis point offsetting impact.

Gross profit margin decreased 70 basis points in the first half of 2024 compared to the first half of 2023 primarily due to decreased margins in our staffing and interim services, particularly within Experis, which contributed 80 basis points to the decrease, and decreased activity in our permanent recruitment business which contributed 50 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 and the favorable impact of currency exchange rates, which had a 50 basis point offsetting impact.

Selling and administrative expenses decreased -7.6% (-2.3% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by the $11.5 million favorable impact of currency exchange rates and a $2.8 million decrease in consulting and outside services costs associated with our technology and back-office transformation initiatives.

Selling and administrative expenses decreased -5.4% (-0.5% in constant currency) in the first half of 2024 compared to the first half of 2023, primarily driven by the $21.2 million favorable impact of currency exchange rates and a $1.7 million decrease in salaries from a reduction in headcount.

Operating Unit Profit (“OUP”) increased 4.4% (10.9% in constant currency), in the second quarter of 2024, which represents a 4.2% OUP margin, an increase from 3.9% in the second quarter of 2023. This increase was primarily due to increased profitability in our United States business of $4.3 million, which experienced decreases to selling and administrative expenses, partially offset by decreases in higher-margin permanent recruitment revenues, as noted above. In the United States, OUP margin increased to 3.9% in the second quarter of 2024 from 3.3% in the second quarter of 2023 primarily due to a decrease in our selling and administrative expenses as a percent of revenue, partially offset by decreased activity in our higher-margin permanent recruitment business, as noted above. Other Americas OUP margin decreased to 4.8% in the second quarter of 2024 from 5.2% in the second 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 our gross profit margin as we saw a change in business mix towards higher margin Manpower staffing work.

OUP decreased -22.5% (-17.6% in constant currency), in the first half of 2024, which represents a 3.4% OUP margin, a decrease from 4.1% in the first half of 2023. This decrease was primarily due to decreased profitability in our United States business of $13.8 million, which experienced decreased activity in our higher-margin permanent recruitment business, as noted above, partially offset by decreases to selling and administrative expenses. In the United States, OUP margin decreased to 2.9% in the first half of 2024 from 3.7% in the first half of 2023 primarily due to decreased activity in our higher-margin permanent recruitment and Manpower staffing businesses, as noted above, partially offset by a decrease in our selling and administrative expenses as a percent of revenue. Other Americas OUP margin decreased to 4.4% in the first half of 2024 from 5.0% in the first half of 2023 primarily due to an increase in our selling and administrative expenses as a percent of revenue.

Southern Europe

In Southern Europe, revenues from services decreased -5.8% ( -4.4% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023. In France (which represents 56% of Southern Europe’s revenues), revenues from services decreased -7.3% (-6.2% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by an $80.5 million decrease in demand for our Manpower staffing services and the $13.9 million unfavorable impact of currency exchange rates, partially offset by a $4.6 million increase in demand for our Talent Solutions outplacement services. In Italy (which represents 21% of Southern Europe’s revenues), revenues from services decreased -5.0% (-3.9% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by an $18.6 million decrease in our Manpower staffing services and the $4.9 million unfavorable impact of currency exchange rates, partially offset by a $3.0 million increase in demand for our Manpower solutions services. In Other Southern Europe, revenues from services decreased -2.6% (0.0% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023, primarily due to the $13.0 million unfavorable impact of currency exchange rates, partially offset by a $4.4 million increase in demand for our Manpower and Experis staffing/interim services. Within our Other Southern Europe segment, we experienced a revenue decrease in Switzerland of $14.8 million, or -11.8% (-11.3% in constant currency), partially offset by a revenue increase in Spain of $1.6 million, or 1.3% (2.5% in constant currency).

In Southern Europe, revenues from services decreased -5.0% (-4.6% in constant currency) in the first half of 2024 compared to the first half of 2023. In France, revenues from services decreased -5.9% (-5.8% in constant currency) in the first half of 2024 compared to the first half of 2023, primarily driven by a $140.4 million decrease in demand for our Manpower staffing services and a $4.2 million decrease in demand for our permanent recruitment services, partially offset by a $6.5 million increase in demand for our Talent Solutions outplacement services. In Italy, revenues from services decreased -4.6% (-4.6% in constant currency) in the first half of 2024 compared to the first half of 2023, primarily driven by a $40.6 million decrease in our Manpower staffing services and a $3.6 million decrease in demand for our permanent recruitment services, partially offset by a $2.6 million increase in demand for our Manpower solutions services. In Other Southern Europe, revenues from services decreased -3.3% (-1.6% in constant currency) during the first half of 2024 compared to the first half of 2023, primarily driven by the $15.8 million unfavorable impact of currency exchange rates and a $11.4 million decrease in demand for our Experis solutions services. Within our Other Southern Europe segment, we experienced revenue decreases in Spain and Switzerland of $6.6 million, or -2.8% and $23.6 million, or -9.8%, respectively (-2.7% and -11.9%, respectively, in constant currency).

Gross profit margin decreased 30 basis points in the second quarter of 2024 compared to the second quarter of 2023. The decrease was primarily due to decreased activity in our higher margin Manpower staffing services, which contributed 20 basis points to the decrease and decreased activity in our permanent recruitment 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.

Gross profit margin decreased 50 basis points in the first half 2024 compared to the first half 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 10 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 -6.6% (-5.2% in constant currency) during the second quarter of 2024 compared to the second quarter of 2023, primarily due to the non-recurrence of $6.0 million in restructuring costs, the $3.3 million favorable impact of currency exchange rates, and a $2.4 million decrease in salary-related costs.

Selling and administrative expenses decreased -4.5% (-4.2% in constant currency) during the first half of 2024 compared to the first half of 2023, primarily due to the non-recurrence of $6.4 million in restructuring costs, a $6.0 million decrease in salary-related costs, a $2.3 million decrease in consulting and outside services, and a $1.8 million decrease in bonuses and sales commissions.

OUP decreased -10.3% (-9.0% in constant currency), in the second quarter of 2024, which represents a 4.0% OUP margin, a decrease from 4.2% in the second quarter of 2023. This OUP decrease was primarily due to decreased profitability in the France reporting unit of $9.2 million. In France, the OUP margin decreased to 3.4% for the second quarter of 2024 compared to 3.9% for the second quarter of 2023, primarily driven by increases to selling and administrative expenses as a percent of revenue. In Italy, the OUP margin decreased to 7.8% for the second quarter of 2024 from 7.9% for the second 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 increased to 1.9% for the second quarter of 2024 from 1.4% for the second quarter of 2023 primarily due to a decrease in our selling and administrative expenses as a percent of revenue, partially offset by decrease to our gross profit margin as we saw decreased activity in higher-margin Manpower staffing services, as noted above.

OUP decreased -16.1% (-15.7% in constant currency) in the first half of 2024, which represents a 3.8% OUP margin, a decrease from 4.2% in the first half of 2023. This OUP decrease was primarily due to decreased profitability in the France reporting unit of $21.0 million. In France, the OUP margin decreased to 3.2% for the first half of 2024 compared to 3.9% for the first half of 2023 primarily driven by an increase in selling and administrative expenses as a percent of revenue and a decrease in overall gross profit margin as we saw decreases in our higher-margin permanent recruitment business. In Italy, the OUP margin decreased to 7.3% for the first half of 2024 from 7.6% for the first half of 2023 primarily driven by an increase 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 2.0% for the first half of 2024 from 2.2% for the first half of 2023 primarily due to a decrease in gross profit margin as we saw decreased activity in higher-margin business solutions services, as noted above, partially offset by a decrease in selling and administrative expenses as a percent of revenue.

Northern Europe

In Northern Europe, the largest country operations include the United Kingdom, the Nordics, Germany, the Netherlands and Belgium (comprising 35%, 20%, 14%, 11% and 9%, respectively, of Northern Europe’s revenues). In the Northern Europe region, revenues from services decreased -12.1% (-12.0% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023. Within our Northern Europe segment, we experienced revenue decreases in the United Kingdom of $37.7 million, the Nordics of $42.6 million, Germany of $24.8 million, the Netherlands of $2.4 million and Belgium of $4.0 million, which represented revenue decreases of -11.5%, -20.2%, -17.6%, -2.5% and -4.9%, respectively (-12.2%, -19.4%, -16.6%, -1.3% and -3.8%, respectively, in constant currency). The revenue decrease in Northern Europe was primarily driven by a $92.5 million decrease in demand for our Manpower and Experis staffing/interim services, a $20.9 million decrease in demand for our Experis solutions services and a $7.8 million decrease in our permanent recruitment services.

In the Northern Europe region, revenues from services decreased -11.1% (-12.1% in constant currency) in the first half of 2024 compared to the first half of 2023. Within our Northern Europe segment, we experienced revenue decreases in the United Kingdom of

$72.9 million, the Nordics of $101.8 million, Germany of $33.3 million, the Netherlands of $5.7 million and Belgium of $0.6 million, which represented revenue decreases of -10.9%, -23.2%, -11.8%, -2.9 and -0.4%, respectively (-13.2%, -22.5%, -11.8%, -2.9% and -0.4%, respectively, in constant currency). The revenue decrease in Northern Europe was primarily driven by a $182.5 million decrease in demand for our Manpower and Experis staffing/interim services, a $39.2 million decrease in demand for our Experis solutions services and a $18.4 million decrease in our permanent recruitment services, partially offset by the $19.6 million favorable impact of currency exchange rates and a $7.7 million increase in demand for our Talent Solutions outplacement and MSP services.

Gross profit margin increased by 30 basis points in the second quarter of 2024 compared to the second quarter of 2023 primarily due to a shift in business mix towards our higher-margin Talent Solutions outplacement and MSP services, which contributed 60 basis points to the increase, partially offset by a decreased activity in our higher-margin permanent recruitment business, which had a 30 basis point offsetting impact.

Gross profit margin decreased by 20 basis points in the first half of 2024 compared to the first half of 2023 primarily due to decreased demand in our permanent recruitment business, particularly in Manpower and Experis, which contributed 40 basis points to the decrease, decreased demand in our Experis Solutions services, which contributed 30 basis points to the decrease, and decreases in our staffing/interim margins, which contributed 20 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, and the favorable impact of currency exchange rates, which had a 10 basis point offsetting impact.

Selling and administrative expenses decreased -14.3% (-14.1% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023. The decrease is primarily driven by a $14.9 million decrease in total personnel costs as we experience the impacts of significant restructuring action taken in 2023 and no restructuring costs incurred in the second quarter of 2024 compared to $7.7 million in second quarter of 2023.

Selling and administrative expenses decreased -12.9% (-13.7% in constant currency) in the first half of 2024 compared to the first half of 2023. The decrease is primarily driven by a $30.4 million decrease in total personnel costs as we experience the impacts of significant restructuring actions taken in 2023 and no restructuring costs incurred in the first half of 2024 compared to $10.3 million in the first half of 2023.

OUP in Northern Europe increased 75.6% (73.1% in constant currency) in the second quarter of 2024, which represents a -0.3% OUP margin, an increase from -1.0% in the second quarter of 2023. This OUP increase was primarily driven by an increase in profitability of our bench model countries, notably the Nordics, Germany and the Netherlands which experienced increases of $4.2 million, $5.0 million and $1.4 million, respectively. The OUP increase was also driven by a decrease in selling and administrative expenses as we saw the effects of restructuring actions taken in the prior year period, as noted above.

OUP in Northern Europe increased 49.4% (35.0% in constant currency) in the first half of 2024, which represents a -0.1% OUP margin, an increase from -0.2% in the first half of 2023. This OUP increase was primarily driven by an increase in profitability of our bench model countries, notably Germany and the Netherlands which experienced increases of $9.8 million, and $2.4 million, respectively, partially offset by a decrease in profitability in the Nordics, which experienced an aggregate decrease of $4.3 million. The OUP increase was also driven by a decrease in selling and administrative expenses as we saw the effects of restructuring actions taken in the prior year period, as noted above.

APME

Revenues from services decreased -9.7% (-2.0% in constant currency and 0.7% in organic constant currency) in the second quarter of 2024 compared to the second quarter of 2023. In Japan (which represents 51% of APME’s revenues), revenues from services decreased -3.8% (increase of 9.2% in constant currency), primarily driven by the $37.4 million unfavorable impact of currency exchange rates, partially offset by a $26.3 million increase in demand for our Manpower and Experis staffing/interim services. In Australia (which represents 6% of APME’s revenues), revenues from services decreased -46.1% (-45.4% in constant currency), primarily driven by a $21.8 million decrease in our permanent recruitment business driven by the non-recurrence of a government contract from the prior year period and a $6.7 million decrease in demand for our Manpower and Experis staffing/interim services.

Revenues from services decreased -10.7% (-3.4% in constant currency and -2.2% in organic constant currency) in the first half of 2024 compared to the first half of 2023. In Japan, revenues from services decreased -4.5% (increase of 7.7% in constant currency), primarily driven by the $70.6 million unfavorable impact of currency exchange rates, partially offset by a $46.7 million increase in demand for our Manpower and Experis staffing/interim services. In Australia, revenues from services decreased -49.6% (-48.3% in constant currency), primarily driven by a $47.1 million decrease in our permanent recruitment business driven by the non-recurrence of a government contract from the prior year period and a $16.1 million decrease in demand for our Manpower and Experis staffing/interim services.

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 230 basis points to the decrease and decreased gross profit across training solutions services, which contributed 20 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.

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 240 basis points to the decrease, a decrease in gross profit across training solutions services, which contributed 20 basis points to the decrease, and the unfavorable impact of 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 increased activity in our higher-margin Right Management outplacement services, which had a 20 basis point offsetting impact.

Selling and administrative expenses decreased -22.8% (-16.3% in constant currency) in the second quarter of 2024 compared to the second quarter of 2023. The decrease is primarily due to a $5.6 million decrease in salary related costs, the $5.2 million favorable impact of currency exchange rates and a $3.3 million decrease in consulting and outside services.

Selling and administrative expenses decreased -23.3% (-17.1% in constant currency) in the first half of 2024 compared to the first half of 2023. The decrease is primarily driven by a $11.9 million decrease in salary related costs from a reduction in headcount, the $9.9 million favorable impact of currency exchange rates, a $7.6 million decrease in office lease costs and other office related costs and a $5.6 million decrease in consulting and outside services costs.

OUP in APME decreased -2.0% (increases of 8.2% in constant currency and 9.0% in organic constant currency), in the second quarter of 2024, which represents a 4.6% OUP margin, in the second quarter of 2024, an increase from 4.3% in the second quarter of 2023. This OUP decrease was primarily driven by the impact of currency exchange rates, partially offset by a decrease in selling and administrative expenses, as noted above.

OUP in APME decreased -3.8% (increases of 6.0% in constant currency and 7.0% in organic constant currency), in the first half of 2024, which represents a 4.2% OUP margin, in the first half of 2024, an increase from 3.9% in the first half of 2023 This OUP decrease was primarily driven by the impact of currency exchange rates, partially offset by a decrease in 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:

(a) In millions for the three months ended June 30, 2024.

(a) In millions for the six months ended June 30, 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 June 30, 2024, we had $315.2 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 $21.9 million during the six months ended June 30, 2024, as compared to $31.2 million used during the six months ended June 30, 2023. Changes in operating assets and liabilities utilized $191.2 million of cash during the six months ended June 30, 2024 compared to $246.0 million utilized during the six months ended June 30, 2023. These changes were primarily attributable to the timing of collections and payments. Accounts receivable decreased to $4,595.7 million as of June 30, 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 two days from December 31, 2023 to 56 days as of June 30, 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 $23.7 million for the six months ended June 30, 2024 compared to $34.6 million for the six months ended June 30, 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. The lower expenditures in 2024 compared to 2023 are primarily due to the timing of the expenditures.

From time to time, we acquire and invest in companies throughout the world, including franchises. For the six months ended June 30, 2024, total cash consideration paid for acquisitions, net of cash acquired, was $2.8 million, which represents a contingent consideration payment related to a previous acquisition. No cash consideration was paid during the six months ended June 30, 2023.

Net borrowings were $124.7 million as compared to net debt repayments of $5.6 million in the six months ended June 30, 2024 and June 30, 2023, respectively.

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 2.71 to 1 and a fixed charge coverage ratio of 3.14 to 1 as of June 30, 2024. Based on our current forecast, we expect to be in compliance with our financial covenants for the next 12 months.

As of June 30, 2024, we had borrowings of $76.0 million and letters of credit of $0.4 million issued under our $600.0 million revolving credit facility, as well as $45.0 million drawn under our uncommitted credit facility. Those borrowings were made in the second quarter to fund our working capital needs. Additional borrowings of $523.6 million were available to us under our $600.0 million revolving credit facility as of June 30, 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 June 30, 2024, such uncommitted credit lines totaled $298.5 million, of which $281.1 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 $281.1 million could have been made under these lines as of June 30, 2024.

We have assessed our liquidity position as of June 30, 2024 and for the near future. As of June 30, 2024, our cash and cash equivalents balance was $468.9 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 $281.1 million was available to use as of June 30, 2024. Our €500.0 ($534.3) million notes mature in June 2026, and our €400.0 ($425.8) 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 were paid 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 six months ended June 30, 2024, we repurchased a total of 1.0 million shares under the 2023 authorization at a cost of $77.0 million. During the six months ended June 30, 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. As of June 30, 2024, there were 3.6 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 $2,263.7 million as of June 30, 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 $603.2 million and $745.7 million as of June 30, 2024 and December 31, 2023, respectively ($556.4 million and $696.9 million for guarantees as of June 30, 2024 and December 31, 2023, respectively, and $46.8 and $48.8 million for stand-by letters of credit, 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 were $0.7 million and $0.9 million for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, we did not record any restructuring costs. During the six months ended June 30, 2023, we recorded $21.1 million in restructuring costs. During the six months ended June 30, 2024, we made payments of $51.0 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 $39.0 million reserve will be paid by the end of 2024.

Recently Issued Accounting Standards

See Note 2 to the Consolidated Financial Statements.

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.

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.

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.