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ManpowerGroup Reports 3rd Quarter 2018 Results

MILWAUKEE, Oct. 19, 2018 /PRNewswire/ -- ManpowerGroup (NYSE: MAN) today reported that net earnings per diluted share for the three months ended September 30, 2018 were $2.43 compared to $2.04 in the prior year period. Net earnings in the quarter were $158.0 million compared to $137.7 million a year earlier. Revenues for the third quarter were $5.4 billion, a decrease of 1% from the year earlier period.

Financial results in the quarter were impacted by the stronger U.S. dollar relative to foreign currencies compared to the prior year period.  On a constant currency basis, revenues increased 1% and net earnings per diluted share increased 21%.  Earnings per share in the quarter were negatively impacted 4 cents by changes in foreign currencies compared to the prior year.

Jonas Prising, ManpowerGroup Chairman & CEO, said, "Our third quarter results reflect a more challenging economic environment than we had anticipated, in particular for some countries in Europe. While we are cautious on our outlook, we are confident in our ability to manage in a more uncertain environment. We believe our market leading global footprint and diversified business mix, enabled by technology, will continue to serve us well as access to human capital and workforce agility remains a strategic priority for employers globally.  

"We are anticipating the fourth quarter of 2018 diluted net earnings per share to be in the range of $2.15 to $2.23, which includes an estimated unfavorable currency impact of 5 cents. This includes an estimated one-time negative impact of 27 cents related to reduced gross profit in France," Prising stated.

Net earnings for the nine months ended September 30, 2018 were $398.4 million, or $6.03 per diluted share compared to net earnings of $329.1 million, or $4.84 per diluted share in the prior year. The year to date period included restructuring costs which reduced earnings per share by 45 cents. The prior year to date period included restructuring costs which reduced earnings per share by 41 cents and discrete income tax benefits which increased earnings per share by 19 cents.  Revenues for the nine-month period were $16.6 billion, an increase of 8% from the prior year in reported U.S. dollars or 4% in constant currency.  Earnings per share for the nine-month period were positively impacted 19 cents by changes in foreign currencies compared to the prior year, or 23 cents excluding the restructuring costs.

In conjunction with its third quarter earnings release, ManpowerGroup will broadcast its conference call live over the Internet on October 19, 2018 at 7:30 a.m. CDT (8:30 a.m. EDT). Interested parties are invited to listen to the webcast and view the presentation by logging on to http://investor.manpowergroup.com/  in the section titled "Investor Relations."

Supplemental financial information referenced in the conference call can be found at http://investor.manpowergroup.com/ .

About ManpowerGroup

ManpowerGroup® (NYSE: MAN), the leading global workforce solutions company, helps organizations transform in a fast-changing world of work by sourcing, assessing, developing and managing the talent that enables them to win. We develop innovative solutions for hundreds of thousands of organizations every year, providing them with skilled talent while finding meaningful, sustainable employment for millions of people across a wide range of industries and skills. Our expert family of brands – Manpower®, Experis®, Right Management® and ManpowerGroup® Solutions – creates substantially more value for candidates and clients across 80 countries and territories and has done so for 70 years. In 2018, ManpowerGroup was named one of the World's Most Ethical Companies for the ninth year and one of Fortune's Most Admired Companies for the sixteenth year, confirming our position as the most trusted and admired brand in the industry. See how ManpowerGroup is powering the future of work: www.manpowergroup.com

Forward-Looking Statements

This news release contains statements, including earnings projections, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding the Company's expected future results. The Company's actual results may differ materially from those described or contemplated in the forward-looking statements. Factors that may cause the Company's actual results to differ materially from those contained in the forward-looking statements can be found in the Company's reports filed with the SEC, including the information under the heading 'Risk Factors' in its Annual Report on Form 10-K for the year ended December 31, 2017, which information is incorporated herein by reference.

ManpowerGroup

Results of Operations

(In millions, except per share data)

Three Months Ended September 30

% Variance

Amount

Constant

2018

2017

Reported

Currency

(Unaudited)

Revenues from services (a)

$5,418.7

$5,464.8

-0.8%

1.3%

Cost of services 

4,528.1

4,564.2

-0.8%

1.3%

  Gross profit

890.6

900.6

-1.1%

1.0%

Selling and administrative expenses

673.9

671.9

0.3%

2.5%

  Operating profit

216.7

228.7

-5.2%

-3.4%

Interest and other expenses

11.8

11.7

0.4%

  Earnings before income taxes

204.9

217.0

-5.5%

-4.0%

Provision for income taxes

46.9

79.3

-40.7%

  Net earnings

$   158.0

$   137.7

14.7%

16.6%

Net earnings per share - basic

$     2.45

$     2.06

18.9%

Net earnings per share - diluted

$     2.43

$     2.04

19.1%

21.1%

Weighted average shares - basic

64.5

66.8

-3.5%

Weighted average shares - diluted 

65.0

67.6

-3.9%

(a)  Revenues from services include fees received from our franchise offices of $6.2 million and $6.4 million for the three months ended September 30, 2018 and 2017, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $278.7 million and $272.9 million for the three months ended September 30, 2018 and 2017, respectively.

 

ManpowerGroup

Operating Unit Results

(In millions)

Three Months Ended September 30

% Variance

Amount

Constant

2018

2017

Reported

Currency

(Unaudited)

Revenues from Services:

  Americas:

      United States  (a)

$   633.2

$   659.9

-4.0%

-4.0%

      Other Americas

406.8

401.6

1.3%

11.7%

1,040.0

1,061.5

-2.0%

1.9%

  Southern Europe:

      France

1,460.6

1,481.7

-1.4%

-0.6%

      Italy

410.2

386.1

6.3%

7.2%

      Other Southern Europe

460.8

450.6

2.2%

4.3%

2,331.6

2,318.4

0.6%

1.7%

  Northern Europe

1,287.1

1,367.9

-5.9%

-3.9%

  APME

713.0

665.4

7.2%

10.3%

  Right Management 

47.0

51.6

-8.9%

-7.5%

$5,418.7

$5,464.8

-0.8%

1.3%

Operating Unit Profit:

  Americas:

      United States

$     33.2

$     43.5

-23.7%

-23.7%

      Other Americas

18.1

16.0

12.7%

21.7%

51.3

59.5

-13.8%

-11.4%

  Southern Europe:

      France

78.8

77.6

1.5%

2.3%

      Italy

25.7

24.2

6.0%

6.7%

      Other Southern Europe

17.1

16.2

6.1%

8.3%

121.6

118.0

3.1%

4.0%

  Northern Europe

40.5

49.8

-18.6%

-16.8%

  APME

32.4

27.4

18.1%

20.9%

  Right Management 

6.5

8.1

-19.1%

-18.2%

252.3

262.8

Corporate expenses

(26.3)

(25.3)

Intangible asset amortization expense

(9.3)

(8.8)

    Operating profit

216.7

228.7

-5.2%

-3.4%

Interest and other expenses (b)

(11.8)

(11.7)

    Earnings before income taxes

$   204.9

$   217.0

(a)  In the United States, revenues from services include fees received from our franchise offices of $3.7 million and $3.9 million for the three months ended September 30, 2018 and 2017, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $169.9 million and $164.3 million for the three months ended September 30, 2018 and 2017, respectively.

(b)  The components of interest and other expenses were:

2018

2017

        Interest expense

$     10.2

$     12.6

        Interest income

(1.5)

(1.2)

        Foreign exchange loss

3.0

0.1

        Miscellaneous expenses, net

0.1

0.2

$     11.8

$     11.7

 

ManpowerGroup

Results of Operations

(In millions, except per share data)

Nine Months Ended September 30

% Variance

Amount

Constant

2018

2017

Reported

Currency

(Unaudited)

Revenues from services (a)

$16,598.0

$15,396.8

7.8%

3.6%

Cost of services

13,899.3

12,846.7

8.2%

3.9%

  Gross profit

2,698.7

2,550.1

5.8%

2.2%

Selling and administrative expenses

2,119.9

1,998.3

6.1%

2.4%

  Operating profit

578.8

551.8

4.9%

1.3%

Interest and other expenses

38.4

38.5

-0.5%

  Earnings before income taxes

540.4

513.3

5.3%

1.5%

Provision for income taxes

142.0

184.2

-22.9%

  Net earnings

$     398.4

$     329.1

21.0%

17.2%

Net earnings per share - basic

$       6.08

$       4.89

24.3%

Net earnings per share - diluted

$       6.03

$       4.84

24.6%

20.7%

Weighted average shares - basic

65.6

67.3

-2.6%

Weighted average shares - diluted

66.1

68.1

-2.8%

(a)  Revenues from services include fees received from our franchise offices of $17.6 million and $17.5 million for the nine months ended September 30, 2018 and 2017, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $789.4 million and $759.3 million for the nine months ended September 30, 2018 and 2017, respectively.

 

ManpowerGroup

Operating Unit Results

(In millions)

Nine Months Ended September 30

% Variance

Amount

Constant

2018

2017

Reported

Currency

(Unaudited)

Revenues from Services:

  Americas:

      United States  (a)

$  1,890.0

$  1,992.7

-5.2%

-5.2%

      Other Americas

1,225.1

1,151.9

6.4%

11.8%

3,115.1

3,144.6

-0.9%

1.1%

  Southern Europe:

      France

4,397.1

3,975.5

10.6%

3.3%

      Italy

1,266.8

1,047.0

21.0%

12.9%

      Other Southern Europe

1,413.7

1,235.5

14.4%

8.4%

7,077.6

6,258.0

13.1%

5.9%

  Northern Europe

4,097.9

3,888.3

5.4%

-0.3%

  APME

2,158.0

1,941.2

11.2%

9.7%

  Right Management 

149.4

164.7

-9.3%

-11.1%

$16,598.0

$15,396.8

7.8%

3.6%

Operating Unit Profit:

  Americas:

      United States

$      98.1

$     114.3

-14.2%

-14.2%

      Other Americas

52.8

41.4

27.6%

33.6%

150.9

155.7

-3.1%

-1.5%

  Southern Europe:

      France

209.5

198.9

5.4%

-0.9%

      Italy

82.8

70.0

18.2%

10.3%

      Other Southern Europe

48.7

41.4

17.7%

13.8%

341.0

310.3

9.9%

3.6%

  Northern Europe

81.8

94.7

-13.7%

-16.0%

  APME

87.5

70.8

23.4%

22.0%

  Right Management 

23.4

25.4

-7.8%

-8.8%

684.6

656.9

Corporate expenses

(79.0)

(79.5)

Intangible asset amortization expense

(26.8)

(25.6)

    Operating profit

578.8

551.8

4.9%

1.3%

Interest and other expenses (b)

(38.4)

(38.5)

    Earnings before income taxes

$     540.4

$     513.3

(a)  In the United States, revenues from services include fees received from our franchise offices of $10.8 million and $11.0 million for the nine months ended September 30, 2018 and 2017, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $485.6 million and $487.6 million for the nine months ended September 30, 2018 and 2017, respectively.

(b)  The components of interest and other expenses were:

2018

2017

        Interest expense

$      37.1

$      36.4

        Interest income

(4.1)

(3.4)

        Foreign exchange loss

2.8

0.4

        Miscellaneous expenses, net

2.6

5.1

$      38.4

$      38.5

 

ManpowerGroup

Consolidated Balance Sheets

(In millions)

Sep. 30

Dec. 31

2018

2017

(Unaudited)

ASSETS

Current assets:

  Cash and cash equivalents

$   682.6

$   689.0

  Accounts receivable, net

5,331.3

5,370.5

  Prepaid expenses and other assets

150.4

111.7

      Total current assets

6,164.3

6,171.2

Other assets:

  Goodwill

1,315.6

1,343.0

  Intangible assets, net

256.0

284.0

  Other assets

839.4

927.7

      Total other assets

2,411.0

2,554.7

Property and equipment:

  Land, buildings, leasehold improvements and equipment

627.5

633.4

  Less:  accumulated depreciation and amortization

477.5

475.7

      Net property and equipment

150.0

157.7

             Total assets

$8,725.3

$8,883.6

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$2,248.7

$2,279.4

  Employee compensation payable

212.6

230.6

  Accrued liabilities

447.7

490.9

  Accrued payroll taxes and insurance

717.0

794.7

  Value added taxes payable

525.4

545.4

  Short-term borrowings and current maturities of long-term debt

41.2

469.4

      Total current liabilities

4,192.6

4,810.4

Other liabilities:

  Long-term debt

1,037.5

478.1

  Other long-term liabilities

685.0

737.5

      Total other liabilities

1,722.5

1,215.6

Shareholders' equity:

  ManpowerGroup shareholders' equity

    Common stock

1.2

1.2

    Capital in excess of par value

3,326.9

3,302.6

    Retained earnings 

3,060.7

2,713.0

    Accumulated other comprehensive loss

(393.2)

(288.2)

    Treasury stock, at cost

(3,270.1)

(2,953.7)

       Total ManpowerGroup shareholders' equity

2,725.5

2,774.9

  Noncontrolling interests

84.7

82.7

          Total shareholders' equity

2,810.2

2,857.6

             Total liabilities and shareholders' equity

$8,725.3

$8,883.6

 

ManpowerGroup

Consolidated Statements of Cash Flows

(In millions)

Nine Months Ended

September 30

2018

2017

(Unaudited)

Cash Flows from Operating Activities:

  Net earnings

$398.4

$329.1

  Adjustments to reconcile net earnings to net cash provided by operating activities:

      Depreciation and amortization

64.8

62.3

      Deferred income taxes

(9.5)

40.4

      Provision for doubtful accounts

15.5

13.7

      Share-based compensation

19.5

21.4

  Changes in operating assets and liabilities, excluding

    the impact of acquisitions:

      Accounts receivable

(140.8)

(399.5)

      Other assets

31.8

(7.5)

      Other liabilities

(77.7)

227.6

            Cash provided by operating activities

302.0

287.5

Cash Flows from Investing Activities:

  Capital expenditures

(39.8)

(40.2)

  Acquisitions of businesses, net of cash acquired

(8.2)

(27.3)

  Proceeds from the sale of investments, property and equipment

7.8

11.9

            Cash used in investing activities

(40.2)

(55.6)

Cash Flows from Financing Activities:

  Net change in short-term borrowings

(5.0)

(2.4)

  Proceeds from long-term debt

583.3

0.1

  Repayments of long-term debt

(408.3)

(0.3)

  Payments for debt issuance costs

(2.4)

-

  Payments of contingent consideration for acquisitions

(18.6)

(12.9)

  Proceeds from share-based awards and other equity transactions

4.7

40.8

  Payments to noncontrolling interests

(1.9)

-

  Other share-based award transactions

(17.3)

(18.2)

  Repurchases of common stock

(299.2)

(178.0)

  Dividends paid

(66.0)

(62.2)

            Cash used in financing activities

(230.7)

(233.1)

Effect of exchange rate changes on cash

(37.5)

69.6

Change in cash and cash equivalents

(6.4)

68.4

Cash and cash equivalents, beginning of period

689.0

598.5

Cash and cash equivalents, end of period

$682.6

$666.9

 

ManpowerGroup. (PRNewsFoto/ManpowerGroup) (PRNewsFoto/)

 

SOURCE ManpowerGroup