MANPOWERGROUP INC. ManpowerGroup Second Quarter Results | July 19, 2019
FORWARD-LOOKING STATEMENT
This presentation contains statements, including financial projections, that are forward-looking in nature. These statements are based on management's current expectations or beliefs, and are subject to known and unknown risks and uncertainties regarding expected future results. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the ManpowerGroup Inc. Annual Report on Form 10-K dated December 31, 2018, which information is incorporated herein by reference, and such other factors as may be described from time to time in the Company's SEC filings. Any forward-looking statements in this presentation speak only as of the date hereof.
The Company assumes no obligation to update or revise any forward-looking statements. We reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include a reconciliation of these measures, where appropriate, to GAAP on the Investor Relations section of our website at manpowergroup.com.
July 2019 | 2 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Consolidated Financial Highlights
As | As | Q2 Financial Highlights | |||||||||
Reported | Adjusted(1) | ||||||||||
5% | 5% | Revenue $5.4B | |||||||||
0% CC | 0% CC | ||||||||||
10 bps | 10 bps | Gross Margin 16.2% | |||||||||
37% | 12% | Operating Profit $131M | |||||||||
33% CC | 7% CC | ($196M as adjusted) | |||||||||
130 bps | 30 bps | OP Margin 2.4% | |||||||||
(3.7% as adjusted) | |||||||||||
3% | 13% | EPS$2.11 | |||||||||
1% CC | 8% CC | ($2.05 as adjusted) | |||||||||
- As Adjusted figures exclude (a) the impact of an $80M gain from our acquisition of the remaining interest in our Manpower Switzerland business in Q2 2019, which was recorded in interest and other expenses below operating profit; (b) the impact of goodwill impairment and related tax and other charges of $76M in Q2 2019, of which $66M was recorded in SG&A and $10M was recorded in provision for income
July 2019taxes; and (c) the impact of restructuring costs of $15M ($12M3net of tax) in Q2 2018. | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
EPS Bridge - Q2 vs. Guidance Midpoint
July 2019 | 4 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Consolidated Gross Margin Change
-0.1%
16.3%
16.2%
Q2 2018 | Solutions | Q2 2019 |
July 2019 | 5 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Business Line Gross Profit - Q2 2019(1)
$870M | Growth | |||
4% | -5% | |||
-3% OCC | ||||
13% | -6% | |||
-3% OCC |
63%-6%
20%
-8%
1% OCC
-5% OCC
-6%-2% OCC
█Manpower █Experis █ManpowerGroup Solutions █Right Management █ManpowerGroup - Total
(1) Business line classifications can vary by entity and are subject to change as service requirements change.
July 2019 | 6 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
SG&A Expense Bridge - Q2 YoY
(in millions of USD)
(1)
- This was unfavorably impacted 10 bps due to the effect of currency exchange rates on our business mix. In constant currency, SG&A excluding goodwill impairment and related charges was 13.7% of Revenue.
July 2019 | 7 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Americas Segment
(19% of Revenue)
As | Q2 Financial Highlights | |||
Reported | ||||
1% | Revenue $1.0B | |||
3% CC | ||||
13% | OUP $49M | |||
11% CC | ||||
70 bps | OUP Margin 4.7% | |||
Operating Unit Profit (OUP) is the measure that we use to evaluate segment performance. OUP is equal to segment revenues less direct costs and branch and national headquarters operating costs.
July 2019 | 8 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Americas - Q2 Revenue Growth YoY
% of Segment | Average Daily | ||||||||
Revenue | Revenue Growth - CC | ||||||||
60% | US | -1% | -1% | ||||||
-1% | |||||||||
14% | Mexico | 3% | 5% | ||||||
2% | |||||||||
8% | Canada | 6% | 12% | ||||||
10% | |||||||||
18% | Other | -4% | |||||||
13% | |||||||||
Revenue Growth | Revenue Growth - CC | ||||||||
July 2019 | 9 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Southern Europe Segment
(45% of Revenue)
As | Excluding | Q2 Financial Highlights | ||||
Reported | Restructuring | |||||
Costs(1) | ||||||
2% | 2% | Revenue $2.4B | ||||
4% CC | 4% CC | |||||
1% | 0% | OUP$124M | ||||
7% CC | 5% CC | |||||
20 bps | 10 bps | OUP Margin 5.2% | ||||
(1) Excludes the impact of restructuring costs of $2.3M in Q2 2018.
July 2019 | 10 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Southern Europe - Q2 Revenue Growth YoY
- of Segment Revenue
59%France
17%Italy
7%Spain
5%Switzerland
12%Other
Average Daily | |||
Revenue Growth - CC | |||
-6% | 0% | 0% | |
-11% | -6% | ||
-6% | |||
-6% | -1% | 4% | |
0%
Acquired April 2019
0%
-2%
3%
Revenue Growth Revenue Growth - CC
July 2019 | 11 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Northern Europe Segment
(22% of Revenue)
As | Excluding | Q2 Financial Highlights | |||||
Reported | Restructuring | ||||||
Costs(1) | |||||||
15% | 15% | Revenue $1.2B | |||||
10% CC | 10% CC | ||||||
2% | 36% | OUP $24M | |||||
5% CC | 32% CC | ||||||
20 bps | 70 bps | OUP Margin 2.0% | |||||
(1) Excludes the impact of restructuring costs of $13.2M in Q2 2018
July 2019 | 12 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Northern Europe - Q2 Revenue Growth YoY
- of Segment Revenue
Average Daily
Revenue Growth - CC
33%
17%
22%
12%
8%
8%
UK
Germany -30%-26%
Nordics
Netherlands(1)-26%
Belgium
Other
Revenue Growth
-8%
-3%
-9%
-2%
-21%
-11%
-6%
-2%
4%
Revenue Growth - CC
-1%
-24%
3%
-22%
-8%
(1) On an organic basis, revenue for Netherlands decreased 22% or -17% in constant currency (ADR in organic
July 2019 | constant currency is -19%). | 13 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
APME Segment
(13% of Revenue)
As | Q2 Financial Highlights | |||
Reported | ||||
2% | Revenue $709M | |||
1% CC | ||||
4% | OUP $28M | |||
1% CC | ||||
10 bps | OUP Margin 4.0% | |||
July 2019 | 14 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
APME - Q2 Revenue Growth YoY
- of Segment Revenue
33% | Japan | |
17% | Australia/NZ | -22% |
-16% | ||
50% | Other (1) |
Average Daily
Revenue Growth - CC
4% | 10% |
5% | |
-15%
3%
7%
Revenue Growth | Revenue Growth - CC | ||
(1) On an organic basis, revenue for APME Other increased 11% or +16% in constant currency.
July 2019 | 15 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Right Management Segment
(1% of Revenue)
As | Excluding | Q2 Financial Highlights | ||||
Reported | Restructuring | |||||
Costs(1) | ||||||
4% | 4% | Revenue $50M | ||||
1% CC | 1% CC | |||||
13% | 11% | OUP $9M | ||||
12% CC | 9% CC | |||||
200 bps | 160 bps | OUP Margin 17.9% | ||||
(1) Excludes the impact of restructuring costs of ($0.2M) in Q2 2018.
July 2019 | 16 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Cash Flow Summary - 6 Months YTD
(in millions of USD) | 2019 | 2018 | |||
Net Earnings | 181 | 240 | |||
Non-cash Provisions and Other | 205 | 51 | |||
Change in Operating Assets/Liabilities | (109) | (115) | |||
Capital Expenditures | (24) | (27) | |||
Free Cash Flow | 253 | 149 | |||
Change in Debt | 4 | 168 | |||
Acquisitions of Businesses, including Contingent | |||||
Considerations, net of cash acquired | 92 | (23) | |||
Other Equity Transactions | (4) | (15) | |||
Repurchases of Common Stock | (101) | (113) | |||
Dividends Paid | (65) | (66) | |||
Effect of Exchange Rate Changes | (9) | (28) | |||
Other | 8 | 7 | |||
Change in Cash | 178 | 79 |
July 2019 | 17 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Balance Sheet Highlights
Total Debt | 1,750 |
(in millions of USD) | |
1,500 | |
1,250 | |
1,000 | |
750 | |
500 | |
250 | |
0 |
1,075 | 1,056 | |||||||||||||||
1,073 | Total Debt | |||||||||||||||
948 | ||||||||||||||||
825 | Net Debt (Cash) | |||||||||||||||
855 | ||||||||||||||||
483 | 490 | |||||||||||||||
303 | ||||||||||||||||
259 | ||||||||||||||||
227 | ||||||||||||||||
125 |
2015 2016 2017 2018 Q1 Q2
Total Debt to |
Total Capitalization 30% |
20% |
10%
24%25% 25%
2019
28% 28% 28%
0%
2015 | 2016 | 2017 | 2018 | Q1 | Q2 |
2019 |
July 2019 | 18 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Debt and Credit Facilities - June 30, 2019
(in millions of USD)
Interest | Maturity | Total | Remaining | |||
Rate | Date | Outstanding | Available | |||
Euro Notes - €500M | 1.809% | Jun 2026 | 563 | - | ||
Euro Notes - €400M | 1.913% | Sep 2022 | 453 | - | ||
Revolving Credit Agreement(1) | 3.40% | Jun 2023 | - | 599 | ||
Uncommitted lines and Other (2) | Various | Various | 57 | 273 | ||
Total Debt | 1,073 | 872 |
- The $600M agreement requires that we comply with a Leverage Ratio (netDebt-to-EBITDA) of not greater than 3.5 to 1 and a Fixed Charge Coverage Ratio of not less than 1.5 to 1, in addition to other customary restrictive covenants. As defined in the agreement, we had a net Debt-to-EBITDA ratio of 0.83 and a fixed charge coverage ratio of 5.30 as of June 30, 2019. As of June 30, 2019, there were $0.5M of standby letters of credit issued under the agreement.
- Represents subsidiary uncommitted lines of credit & overdraft facilities, whichtotal $329.9M. Totalsubsidiary borrowings are limited to $300M due to restrictions in our Revolving Credit Facility, with the exception of Q3 when subsidiary borrowings are limited to $600M.
July 2019 | 19 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Third Quarter 2019 Outlook
Revenue | Total | Flat/Down 2% (Flat/Up 2% CC) |
Americas | Up 2-4% (Up 4-6% CC) | |
Southern Europe | Up 3-5% (Up 6-8% CC) | |
Northern Europe | Down 6-8% (Down 2-4% CC) | |
APME | Down 14-16% (Down 14-16% CC) | |
Right Management | Down 1-3% (Up/Down 1% CC) | |
Gross Profit Margin | 15.9 - 16.1% | |
Operating Profit Margin | 3.5 - 3.7% | |
Tax Rate | 35.5%(+1.7% for France rate change) | |
EPS | $1.88 - $1.96(unfavorable $0.04 currency and | |
unfavorable $0.05 taxes) |
July 2019 | 20 | ManpowerGroup |
ManpowerGroup 2019 Second Quarter Results
Key Take Aways
The second quarter revenue trends were consistent with the first quarter trend on an organic constant currency basis demonstrating ongoing stabilization in Europe.
There continues to be demand for our extensive portfolio of workforce solutions and services in many markets providing good opportunities for profitable growth going forward.
We are making portfolio adjustments in line with our strategic priorities to drive sustainable, profitable growth and achieve our stated financial targets.
We believe our commitment to upskilling our associates at scale across our countries and brands utilizing global offerings such as MyPath is unparalleled in our industry.
July 2019 | 21 | ManpowerGroup |
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Disclaimer
ManpowerGroup Inc. published this content on 19 July 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 July 2019 20:34:07 UTC
