United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended: September 30, 2023 or ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from: ______to______ Commission file number: 1-10686 MANPOWERGROUP INC. (Exact name of registrant as specified in its charter) | Wisconsin | 39-1672779 | | -- ...

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended: June 30, 2023 or ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from: ______to______ Commission file number: 1-10686 MANPOWERGROUP INC. (Exact name of registrant as specified in its charter) | Wisconsin | 39-1672779 | | --- | - ...

PART I FINANCIAL INFORMATION [Item 1 Financial Statements (unaudited)](index=3&type=section&id=Item%201%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for ManpowerGroup Inc. as of March 31, 2023, and for the three months then ended, including Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Shareholders' Equity, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased from $9,130.4 million at year-end 2022 to $8,889.6 million as of March 31, 2023, primarily due to reduced accounts receivable, while total shareholders' equity slightly increased to $2,509.4 million Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $5,657.9 | $5,934.4 | | Accounts receivable, net | $4,773.2 | $5,137.4 | | Goodwill | $1,631.7 | $1,628.1 | | **Total assets** | **$8,889.6** | **$9,130.4** | | **Total current liabilities** | $4,579.6 | $4,911.7 | | Long-term debt | $972.4 | $959.9 | | **Total liabilities** | $6,380.2 | $6,672.3 | | **Total shareholders' equity** | **$2,509.4** | **$2,458.1** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2023, revenues from services decreased to $4,752.3 million from $5,143.3 million in the prior-year period, leading to a decline in net earnings to $77.8 million, or $1.51 per diluted share Q1 2023 vs Q1 2022 Performance (in millions, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues from services | $4,752.3 | $5,143.3 | | Gross profit | $863.1 | $897.1 | | Operating profit | $117.9 | $138.7 | | Net earnings | $77.8 | $91.6 | | Net earnings per share – diluted | $1.51 | $1.68 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash provided by operating activities increased to $124.6 million in Q1 2023 from $70.6 million in Q1 2022, driven by changes in operating assets and liabilities, with the company ending the quarter with $706.7 million in cash and cash equivalents Cash Flow Summary (in millions) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Cash provided by operating activities | $124.6 | $70.6 | | Cash used in investing activities | $(13.2) | $(18.6) | | Cash used in financing activities | $(48.8) | $(95.8) | | **Change in cash and cash equivalents** | **$67.7** | **$(70.5)** | | Cash and cash equivalents, end of period | $706.7 | $777.3 | - Repurchases of common stock decreased to **$30.0 million** in Q1 2023 from $59.9 million in Q1 2022[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed financial disclosures, including $6.6 million in Q1 2023 restructuring costs, a 29.5% effective income tax rate, a goodwill balance of $1,631.7 million with impairment risk for the Netherlands unit, and segment revenue declines across most regions - The company recorded **$6.6 million in restructuring costs** during Q1 2023, primarily for severance and office closures, with no such costs in Q1 2022[55](index=55&type=chunk) - The effective income tax rate for Q1 2023 was **29.5%**, down from 32.6% in Q1 2022, favorably impacted by a reduction in the French business tax rate[59](index=59&type=chunk) - The Netherlands reporting unit, with remaining goodwill of **$55.8 million**, faces a heightened risk for additional impairment if operating performance does not improve[39](index=39&type=chunk) Revenues by Segment (in millions) | Segment | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Americas | $1,130.2 | $1,251.2 | | Southern Europe | $2,067.9 | $2,193.9 | | Northern Europe | $967.6 | $1,094.5 | | APME | $605.9 | $618.2 | | **Total (before eliminations)** | **$4,771.6** | **$5,157.8** | [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses softening demand for staffing services due to economic uncertainty, particularly in Europe, with Q1 2023 revenues decreasing 7.6% to $4.75 billion and operating profit falling 15.0% to $117.9 million, while focusing on cost management and strategic investments [Business Overview](index=22&type=section&id=Business%20Overview) The company observed softening demand for staffing services in Q1 2023 due to increased economic uncertainty, with downside risks particularly high in Europe, and the strengthening U.S. dollar unfavorably impacting reported results - The business is cyclical and sensitive to macroeconomic conditions, with softening demand for staffing services observed in Q1 2023 due to increased economic uncertainty[103](index=103&type=chunk)[104](index=104&type=chunk) - Economic risks are particularly high in Europe, a significant portion of operations, while the Americas market also faces heightened risk from inflation and rising interest rates[104](index=104&type=chunk) - The strengthening U.S. dollar had a **-5.4% unfavorable impact on revenues** and an approximate **$0.14 per share unfavorable impact on diluted EPS** in Q1 2023[105](index=105&type=chunk) [Operating Results - Three Months Ended March 31, 2023 and 2022](index=24&type=section&id=Operating%20Results%20-%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022) Consolidated revenues for Q1 2023 decreased by 7.6% year-over-year, with gross profit margin improving by 80 basis points to 18.2% due to a favorable business mix, but operating profit margin declined by 20 basis points to 2.5% as expenses did not decrease proportionally Consolidated Operating Results Summary (in millions) | Metric | 2023 | 2022 | Variance | Constant Currency Variance | | :--- | :--- | :--- | :--- | :--- | | Revenues from services | $4,752.3 | $5,143.3 | (7.6)% | (2.2)% | | Gross profit | $863.1 | $897.1 | (3.8)% | 1.3% | | Operating profit | $117.9 | $138.7 | (15.0)% | (7.4)% | | Net earnings | $77.8 | $91.6 | (15.1)% | (7.4)% | | Net earnings per share – diluted | $1.51 | $1.68 | (10.4)% | (2.3)% | - Gross profit margin increased by **80 basis points**, primarily due to improved staffing/interim margins, a favorable business mix towards higher-margin outplacement services, and positive currency effects[116](index=116&type=chunk)[117](index=117&type=chunk) - Restructuring costs of **$6.6 million** in Q1 2023 unfavorably impacted diluted EPS by approximately **$0.10**, net of tax[120](index=120&type=chunk) [Segment Operating Results](index=26&type=section&id=Segment%20Operating%20Results) All geographic segments reported revenue declines on a reported basis, with Americas revenues falling 6.1% and Southern Europe 1.4% in constant currency, while APME grew 7.3%, and Operating Unit Profit (OUP) margins varied across regions - **Americas:** Revenues decreased **9.7%** (-6.1% constant currency), with the U.S. down **13.4%**, and OUP margin fell to **4.3%** from 5.8% due to lower permanent recruitment business and decreased operating leverage[122](index=122&type=chunk)[125](index=125&type=chunk) - **Southern Europe:** Revenues decreased **5.7%** (-1.4% constant currency), with France seeing a 1.9% reported revenue decline but a 2.5% increase in constant currency, and the segment's OUP margin remained flat at **4.3%**[127](index=127&type=chunk)[130](index=130&type=chunk) - **Northern Europe:** Revenues decreased **11.6%** (-3.9% constant currency), with the UK down 18.9% (-10.5% constant currency), and OUP margin slightly increased to **0.5%** from 0.3%, helped by the anniversary of the Russia business sale loss[131](index=131&type=chunk)[135](index=135&type=chunk) - **APME:** Revenues decreased **2.0%** but increased **7.3% in constant currency**, with Japan growing 12.7% in constant currency, and OUP margin improved to **3.5%** from 3.1% due to higher gross profit margin[136](index=136&type=chunk)[139](index=139&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $706.7 million in cash and significant credit facility availability, generating $124.6 million from operations, repurchasing $30.0 million of common stock, and declaring a semi-annual dividend of $1.47 per share, while remaining in compliance with all debt covenants - Cash provided by operating activities was **$124.6 million** in Q1 2023, up from $70.6 million in Q1 2022, mainly due to a decline in working capital needs as revenues decreased[149](index=149&type=chunk)[151](index=151&type=chunk) - As of March 31, 2023, the company had **$706.7 million in cash**, **$599.6 million available** under its revolving credit facility, and was in compliance with its debt covenants (Net Debt-to-EBITDA ratio of **0.96 to 1**)[157](index=157&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk) - During Q1 2023, the company repurchased **0.4 million shares for $30.0 million**, with 1.6 million shares remaining authorized for repurchase as of March 31, 2023[163](index=163&type=chunk) - On May 5, 2023, the Board of Directors declared a semi-annual dividend of **$1.47 per share**, an increase from $1.36 per share in the prior year[162](index=162&type=chunk) [Item 3 Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the market risk disclosures previously provided in the company's 2022 Annual Report on Form 10-K - There have been no material changes to the information on market risks affecting the company since the 2022 Annual Report on Form 10-K[169](index=169&type=chunk) [Item 4 Controls and Procedures](index=32&type=section&id=Item%204%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting identified during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[170](index=170&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[171](index=171&type=chunk) PART II OTHER INFORMATION [Item 1A Risk Factors](index=33&type=page&id=Item%201A%20Risk%20Factors) The company's operations continue to be subject to the risk factors previously disclosed in its 2022 Annual Report on Form 10-K - The company refers to the risk factors disclosed in the 2022 Annual Report on Form 10-K, indicating no new significant risk factors have emerged as of the filing date[174](index=174&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activity for Q1 2023, with 486,873 shares purchased in total, including 368,594 shares under the publicly announced plan at an average price of $81.39 per share, leaving 1.6 million shares authorized for repurchase Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Plan | Max Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | :--- | | Jan 1 - 31, 2023 | — | $— | — | 1,984,318 | | Feb 1 - 28, 2023 | 118,279 | $— | — | 1,984,318 | | Mar 1 - 31, 2023 | 368,594 | $81.39 | 368,594 | 1,615,724 | | **Total** | **486,873** | **$81.39** | **368,594** | **1,615,724** | - As of March 31, 2023, there were **1.6 million shares** remaining authorized for repurchase under the 2021 authorization[175](index=175&type=chunk) [Item 6 Exhibits](index=34&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The exhibits include required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Securities Exchange Act of 1934 and U.S.C. ss. 1350[180](index=180&type=chunk)[181](index=181&type=chunk)

ManpowerGroup Inc. (NYSE:MAN) Q1 2023 Earnings Conference Call April 20, 2023 8:30 AM ET Company Participants Jonas Prising - Chairman, Chief Executive Officer Jack McGinnis - Chief Financial Officer Conference Call Participants Mark Marcon - Baird Jeff Silber - BMO Capital Markets Kartik Mehta - Northcoast Research Stephanie Yee - JP Morgan George Tong - Goldman Sachs Ronan Kennedy - Barclays Jasper Bibb - Truist Securities Operator Welcome to ManpowerGroup’s first quarter earnings results conference call ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) ManpowerGroup is a global workforce solutions leader whose business is cyclical and largely dependent on European markets - ManpowerGroup operates a network of over 2,200 offices in approximately 75 countries and territories, serving a diverse client base from small businesses to large multinational corporations[12](index=12&type=chunk) - The company's business is sensitive to economic cycles, with staffing demand rising in growth periods and outplacement demand increasing in downturns[22](index=22&type=chunk)[23](index=23&type=chunk) - As of December 31, 2022, the company had approximately **30,900 full-time equivalent employees** and operated through **2,062 offices** globally[33](index=33&type=chunk)[37](index=37&type=chunk)[59](index=59&type=chunk) Core Brands and Services | Brand | Specialization | | :--- | :--- | | **Manpower** | Contingent staffing and permanent recruitment, focusing on office and industrial roles. Also offers Talent Based Outsourcing | | **Experis** | IT professional resourcing and project services, specializing in areas like Cloud, Cyber Security, and Digital Workspace | | **Talent Solutions** | Combines Recruitment Process Outsourcing (RPO), Managed Service Provider (MSP) via TAPFIN, and career management via Right Management to deliver data-driven workforce transformation solutions | [Segment Operations](index=6&type=section&id=Item%201.%20Business%23Operations) Operations are divided into four geographic segments, with Southern Europe being the largest by revenue, driven by industrial staffing - **France is the company's largest operation**, accounting for **56% of the Southern Europe segment's revenue** in 2022[37](index=37&type=chunk)[39](index=39&type=chunk) - In the Americas, the **United States represents 71% of the segment's revenue**, operating through a mix of 445 branch offices and 138 franchise offices[33](index=33&type=chunk) 2022 Revenue Mix by Staffing Type and Segment | Segment | Industrial Staff | Office Staff | Professional & Technical Staff | | :--- | :--- | :--- | :--- | | **Americas** | 29% | 17% | 54% | | **Southern Europe** | 72% | 14% | 14% | | **Northern Europe** | 38% | 22% | 40% | | **APME** | 8% | 56% | 36% | [Competition and Market Position](index=7&type=section&id=Item%201.%20Business%23Competition) The company competes in a fragmented industry against key rivals like The Adecco Group and Randstad, serving many large multinational clients - The largest publicly owned competitors specializing in recruitment services are **The Adecco Group and Randstad**[47](index=47&type=chunk) - Large national and multinational clients comprised approximately **60% of revenues in 2022**[48](index=48&type=chunk) [Human Capital Management](index=9&type=section&id=Item%201.%20Business%23Human%20Capital) The human capital strategy focuses on upskilling programs and aims for 50% gender diversity in global leadership by 2025 - The Manpower MyPath program has impacted over **200,000 lives** through 2022 and now represents **38% of the associate talent pool**[63](index=63&type=chunk) - The Experis Academy has graduated over **1,700 developers**, bridging IT skills gaps for more than **160 tech companies**[64](index=64&type=chunk) - The company has a DEIB goal to achieve **50% gender diversity** at the global leadership level by 2025; the Global Leadership Team is currently **33% women**[68](index=68&type=chunk)[69](index=69&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Key risks include sensitivity to economic conditions, intense competition, cybersecurity threats, and adverse government regulations - The business is highly sensitive to macroeconomic conditions, with **Europe representing 64% of revenue** and particularly susceptible to recession risks[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The company faces **significant cybersecurity risks**, as an independent assessment identified vulnerabilities that could facilitate a security incident[98](index=98&type=chunk) - **Intense competition in a tight labor market** makes it difficult to attract and retain qualified associates, especially those with critical IT skills[108](index=108&type=chunk) - Government regulations pose a significant risk, as exemplified by **new legislation in Mexico** that had a material adverse impact on the business[142](index=142&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - Not applicable[156](index=156&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) The company's operations are primarily conducted from leased premises, with no individually material owned properties - Most operations are conducted from leased premises, and the company does not anticipate difficulty in renewing leases or finding alternative sites[157](index=157&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation and legal matters handled in the ordinary course of business - The company is involved in litigation of a routine nature and various legal matters, which are being defended and handled in the ordinary course of business[158](index=158&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[159](index=159&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE under MAN, and it actively repurchases shares, with 2.0 million authorized as of year-end 2022 - The company's common stock is listed on the New York Stock Exchange under the symbol **MAN**[166](index=166&type=chunk) - As of December 31, 2022, **2.0 million shares** remained authorized for repurchase under the August 2021 authorization[169](index=169&type=chunk) Issuer Purchases of Equity Securities (Fourth Quarter 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Plan | | :--- | :--- | :--- | :--- | | Oct 1 - 31, 2022 | 376,067 | $66.48 | 376,067 | | Nov 1 - 30, 2022 | 479 | — | — | | Dec 1 - 31, 2022 | 875 | — | — | | **Total** | **377,421** | **$66.48** | **376,067** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenues decreased 4.3% to $19.8 billion in 2022 due to currency headwinds, though constant currency revenue grew 4.9% - Foreign currency exchange rates had a significant unfavorable impact in 2022, reducing revenues by **9.2%** and net earnings per share by approximately **$0.88**[181](index=181&type=chunk) - The company recorded a **$50.0 million goodwill impairment charge** related to its Netherlands reporting unit in the fourth quarter of 2022[187](index=187&type=chunk) - Gross profit margin improved by **160 basis points to 18.0%** in 2022, driven by a favorable business mix, improved staffing margins, and the Experis (ettain) acquisition[186](index=186&type=chunk)[193](index=193&type=chunk) Consolidated Results of Operations (2022 vs. 2021) | Metric (in millions, except per share) | 2022 | 2021 | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | **Revenues from services** | $19,827.5 | $20,724.4 | (4.3)% | 4.9% | | **Gross profit** | $3,572.4 | $3,407.5 | 4.8% | 13.8% | | **Operating profit** | $581.7 | $585.4 | (0.6)% | 11.7% | | **Net earnings** | $373.8 | $382.4 | (2.2)% | 9.9% | | **Net earnings per share - diluted** | $7.08 | $6.91 | 2.6% | 15.3% | [Segment Results](index=38&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Segment%20Results) The Americas segment grew due to an acquisition, while European segments declined on a reported basis due to currency effects - Revenue in the United States increased by **27.6% (6.5% organic)**, primarily driven by the Experis acquisition and strong demand in permanent recruitment[199](index=199&type=chunk) - France, the largest market in Southern Europe, experienced a revenue decrease of **7.5%** as reported, but an increase of **4.0%** in constant currency[203](index=203&type=chunk) 2022 Segment Revenue Performance (vs. 2021) | Segment | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :--- | :--- | :--- | :--- | | **Americas** | +15.8% | +18.1% | +4.5% | | **Southern Europe** | -8.7% | +2.0% | +1.7% | | **Northern Europe** | -13.3% | -2.5% | 0.0% | | **APME** | -3.8% | +9.0% | +9.0% | [Liquidity and Capital Resources](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) The company generated $423.3 million in operating cash, funding share repurchases and dividends, and maintains sufficient liquidity - Cash provided by operating activities was **$423.3 million** in 2022, compared to **$644.8 million** in 2021[219](index=219&type=chunk) - In 2022, the company repurchased **3.2 million shares for $270.0 million** and paid dividends totaling **$139.9 million**[223](index=223&type=chunk)[225](index=225&type=chunk) - On October 1, 2021, the company acquired ettain group for an aggregate cash consideration of **$930.9 million**[229](index=229&type=chunk) - In May 2022, the company entered into a new five-year, **$600.0 million revolving credit agreement**, which was undrawn as of December 31, 2022[239](index=239&type=chunk) [Application of Critical Accounting Policies](index=45&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies) A $50.0 million non-cash goodwill impairment charge was recognized for the Netherlands reporting unit in Q4 2022 - The annual goodwill impairment test in Q3 2022 indicated the fair value of the Netherlands reporting unit **approximated its carrying value**[258](index=258&type=chunk) - **Deteriorating macroeconomic conditions** and financial performance below expectations triggered an interim impairment assessment for the Netherlands unit in Q4 2022[260](index=260&type=chunk) - A non-cash goodwill impairment charge of **$50.0 million** was recognized for the Netherlands reporting unit, with the remaining goodwill of **$55.1 million** at risk for further impairment[262](index=262&type=chunk)[263](index=263&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to foreign currency risk, as 82% of revenues are generated outside the U.S., particularly in Euros - Approximately **82% of revenues** and profits are generated outside the United States, with **44% from European operations** with a Euro-functional currency[268](index=268&type=chunk) - In 2022, the strengthening U.S. dollar caused reported revenues from services to be **9.2% lower** than they would have been in constant currency[269](index=269&type=chunk) - As of December 31, 2022, the company had **$956.6 million in Euro-denominated notes**, which are designated as a hedge of its net investment in Euro-functional currency subsidiaries[274](index=274&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2022 Consolidated Statement of Operations Highlights (in millions) | Year Ended Dec 31 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Revenues from services** | $19,827.5 | $20,724.4 | $18,001.0 | | **Operating profit** | $581.7 | $585.4 | $187.6 | | **Net earnings** | $373.8 | $382.4 | $23.8 | Consolidated Balance Sheet Highlights (in millions) | As of Dec 31 | 2022 | 2021 | | :--- | :--- | :--- | | **Total Assets** | $9,130.4 | $9,828.9 | | **Total Liabilities** | $6,672.3 | $7,297.2 | | **Total Shareholders' Equity** | $2,458.1 | $2,531.7 | Consolidated Statement of Cash Flows Highlights (in millions) | Year Ended Dec 31 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Cash from Operating Activities** | $423.3 | $644.8 | $936.4 | | **Cash used in Investing Activities** | ($85.3) | ($987.0) | ($42.4) | | **Cash used in Financing Activities** | ($482.1) | ($283.7) | ($435.2) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=98&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable - Not applicable[489](index=489&type=chunk) [Controls and Procedures](index=98&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2022 - Based on an evaluation, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period[490](index=490&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2022, an assessment audited by Deloitte & Touche LLP[493](index=493&type=chunk)[494](index=494&type=chunk) [Other Information](index=99&type=section&id=Item%209B.%20Other%20Information) The company entered into new letter agreements with key executives in February 2023, outlining severance and post-employment benefits - The company entered into new letter agreements with key executives on **February 17, 2023**, outlining severance and post-employment benefits[497](index=497&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=100&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and governance is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2023[504](index=504&type=chunk) [Executive Compensation](index=100&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2023[503](index=503&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=101&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference, with 3.9 million securities available for issuance under equity plans - Information on security ownership is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2023[505](index=505&type=chunk) Equity Compensation Plan Information as of December 31, 2022 | Category | Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | **Equity compensation plans approved by security holders** | 2,034,090 | $89.04 | 3,896,515 | [Certain Relationships and Related Transactions, and Director Independence](index=101&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2023[508](index=508&type=chunk) [Principal Accounting Fees and Services](index=101&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees is incorporated by reference from the 2023 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2023[509](index=509&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=102&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section contains the index to financial statements and a list of all exhibits filed with the Form 10-K, including governance documents, debt agreements, and executive compensation plans[511](index=511&type=chunk)[516](index=516&type=chunk) Allowance for Doubtful Accounts Reconciliation (in millions) | Year | Beginning Balance | Provisions | Write-Offs | Translation & Other | Ending Balance | | :--- | :--- | :--- | :--- | :--- | :--- | | **2022** | $121.6 | $6.2 | ($12.4) | ($6.1) | $109.3 | | **2021** | $128.1 | $17.9 | ($17.7) | ($6.7) | $121.6 | | **2020** | $113.5 | $20.3 | ($17.8) | $12.1 | $128.1 | [Form 10-K Summary](index=105&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[521](index=521&type=chunk)

ManpowerGroup Inc. (NYSE:MAN) Q4 2022 Earnings Conference Call January 31, 2023 8:30 AM ET Company Participants Jonas Prising - Chairman, Chief Executive Officer Jack McGinnis - Chief Financial Officer Conference Call Participants Andrew Steinerman - JP Morgan Jeff Silber - BMO Capital Markets Ronan Kennedy - Barclays Mark Marcon - Baird Kartik Mehta - Northcoast Research Jasper Bibb - Truist Securities George Tong - Goldman Sachs Heather Balsky - Bank of America Operator Welcome to ManpowerGroup’s fourth ...

Financial Performance - ManpowerGroup's Q4 2022 revenue was $48 billion, a decrease of 11% as reported, or 1% in constant currency[24] - The gross profit margin for Q4 2022 was 182%, up 100 basis points year-over-year[24, 12] - Reported EBITA for Q4 2022 was $110 million, or $167 million as adjusted, with a margin of 23% (35% as adjusted)[24] - Reported EPS for Q4 2022 was $095, or $208 as adjusted[24] - Full year 2022 revenue reached $198 billion, a decrease of 4% as reported, but an increase of 5% in constant currency[53] - Full year 2022 EPS was $708, or $852 as adjusted[53] Debt and Credit Facilities - As of December 31, 2022, ManpowerGroup had total debt of $987 million and remaining available credit of $938 million[2] - The company has a revolving credit agreement of $600 million, with an option to increase availability by an additional $300 million[2, 16] - Uncommitted lines of credit and overdraft facilities totaled $3684 million[3] - The company's net Debt-to-EBITDA ratio was 101 to 1, and the fixed charge coverage ratio was 566 to 1 as of December 31, 2022[20] Segment Performance - Americas segment revenue for Q4 2022 was $12 billion, a decrease of 3% as reported and 0% in constant currency[93] - Southern Europe segment revenue for Q4 2022 was $21 billion, a decrease of 18% as reported, 5% in constant currency, and 3% organically[97, 118] - Northern Europe segment revenue for Q4 2022 was $973 million, a decrease of 18% as reported, 5% in constant currency, and 3% organically[118] - APME (Asia Pacific Middle East) segment revenue for Q4 2022 was $579 million, an increase of 8% in constant currency[102, 122] ESG Initiatives - ManpowerGroup reduced direct emissions (Scope 1 & 2) by 39%, progressing towards a goal of 60% reduction by 2030[7] - The company transformed almost 200,000 lives to date through Manpower MyPath[8] - ManpowerGroup aims to achieve 50% gender diversity at the global leadership level by 2025[8]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited consolidated financial statements for the period ended September 30, 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $8.6 billion, driven by lower cash and accounts receivable balances Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $5,421.8 | $6,422.7 | | Cash and cash equivalents | $527.5 | $847.8 | | Accounts receivable, net | $4,720.3 | $5,448.2 | | **Total assets** | **$8,556.9** | **$9,828.9** | | **Total current liabilities** | $4,450.0 | $5,780.5 | | Long-term debt | $883.0 | $565.7 | | **Total liabilities** | **$6,140.3** | **$7,297.2** | | **Total shareholders' equity** | **$2,416.6** | **$2,531.7** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2022 revenues declined to $4.8 billion, while operating profit and net earnings increased year-over-year Q3 and Nine Months Performance (in millions, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues from services | $4,800.9 | $5,140.6 | $15,018.3 | $15,342.1 | | Gross profit | $878.5 | $853.0 | $2,696.8 | $2,481.2 | | Operating profit | $161.5 | $150.5 | $480.9 | $418.8 | | Net earnings | $111.3 | $97.7 | $325.1 | $271.3 | | Net earnings per share – diluted | $2.13 | $1.77 | $6.10 | $4.90 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow for the nine-month period decreased to $289.2 million amid higher financing and investing outflows Nine Months Cash Flow Summary (in millions) | Cash Flow Activity | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Cash provided by operating activities | $289.2 | $382.9 | | Cash used in investing activities | ($65.3) | ($44.6) | | Cash used in financing activities | ($394.8) | ($226.8) | | **Change in cash and cash equivalents** | **($320.3)** | **$45.5** | | Cash and cash equivalents, end of period | $527.5 | $1,612.6 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Details key accounting policies, goodwill impairment risks, acquisitions, debt restructuring, and segment performance - The annual goodwill impairment test in Q3 2022 found **no impairment**, though the Netherlands reporting unit's fair value approximated its carrying value, indicating a **heightened risk** of future impairment[38](index=38&type=chunk)[39](index=39&type=chunk) - On October 1, 2021, the company acquired ettain group for an aggregate cash consideration of **$930.9 million** to accelerate its IT resourcing services strategy[55](index=55&type=chunk) - In May 2022, the company entered into a new five-year, **$600.0 million revolving credit facility** and issued **€400.0 million in 3.50% notes** due 2027[74](index=74&type=chunk)[77](index=77&type=chunk) Segment Revenues (Q3 2022 vs Q3 2021, in millions) | Segment | Q3 2022 Revenue | Q3 2021 Revenue | | :--- | :--- | :--- | | Americas | $1,239.8 | $997.6 | | Southern Europe | $2,039.8 | $2,382.6 | | Northern Europe | $954.1 | $1,166.6 | | APME | $586.9 | $611.2 | | **Consolidated** | **$4,800.9** | **$5,140.6** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes financial performance, highlighting macroeconomic sensitivity and significant unfavorable currency impacts in Q3 2022 [Operating Results](index=28&type=section&id=Operating%20Results) Q3 2022 reported revenues fell 6.6% but grew 5.4% in constant currency, with improved gross and operating margins - The strengthening of the U.S. dollar had a **12.0% unfavorable impact on revenues** and an approximately **$0.32 per share unfavorable impact** on diluted EPS in Q3 2022[122](index=122&type=chunk) - The **170 basis point increase in gross profit margin** was driven by improved staffing/interim margins, a better business mix, and the Experis acquisition[133](index=133&type=chunk) Q3 2022 vs Q3 2021 Performance Summary | Metric | Q3 2022 | Q3 2021 | Reported Variance | Constant Currency Variance | | :--- | :--- | :--- | :--- | :--- | | Revenues from services | $4,800.9M | $5,140.6M | (6.6)% | 5.4% | | Gross profit | $878.5M | $853.0M | 3.0% | 14.6% | | Gross profit margin | 18.3% | 16.6% | +170 bps | - | | Operating profit | $161.5M | $150.5M | 7.4% | 23.7% | | Operating profit margin | 3.4% | 2.9% | +50 bps | - | | Net earnings per share – diluted | $2.13 | $1.77 | 20.3% | 38.6% | [Segment Operating Results](index=33&type=section&id=Segment%20Operating%20Results) The Americas segment grew due to an acquisition, while European segments declined on a reported basis due to currency headwinds Q3 2022 Revenue Growth by Segment | Segment | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :--- | :--- | :--- | :--- | | Americas | 24.3% | 27.1% | 7.8% | | Southern Europe | (14.4)% | (0.7)% | (1.1)% | | Northern Europe | (18.2)% | (3.9)% | (1.2)% | | APME | (4.0)% | 12.0% | 12.0% | Q3 2022 vs Q3 2021 Operating Unit Profit (OUP) Margin | Segment | Q3 2022 OUP Margin | Q3 2021 OUP Margin | | :--- | :--- | :--- | | Americas | 5.7% | 4.1% | | Southern Europe | 4.9% | 4.6% | | Northern Europe | 1.3% | 1.4% | | APME | 4.0% | 3.7% | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased due to working capital needs, while capital was returned via share repurchases and dividends - Cash provided by operating activities **decreased to $289.2 million** for the nine months ended Sep 30, 2022, from $382.9 million in the prior year[181](index=181&type=chunk) - During the first nine months of 2022, the company repurchased **2.8 million shares** of common stock at a total cost of **$245.0 million**[196](index=196&type=chunk) - As of September 30, 2022, the company had **$527.5 million in cash** and cash equivalents, and **$599.6 million available** under its revolving credit facility[192](index=192&type=chunk)[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Confirms no material changes to market risk disclosures from the 2021 Annual Report on Form 10-K - There have been **no material changes** to the company's market risk exposures since the 2021 Annual Report on Form 10-K[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were **effective** at a reasonable assurance level[208](index=208&type=chunk) - **No changes in internal control** over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[209](index=209&type=chunk) PART II OTHER INFORMATION [Item 1A. Risk Factors](index=43&type=section&id=Item%201A%20Risk%20Factors) Confirms no material changes to the risk factors disclosed in the 2021 Annual Report and Q1 2022 Form 10-Q - The company's risk factors have **not materially changed** and are consistent with those disclosed in the 2021 Annual Report on Form 10-K and the Q1 2022 10-Q[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the repurchase of 1.15 million shares during Q3 2022, with 2.4 million shares remaining authorized - As of September 30, 2022, there were **2.4 million shares remaining authorized** for repurchase under the August 2021 plan[212](index=212&type=chunk) Q3 2022 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2022 | 326,001 | $76.69 | | August 2022 | 266,608 | $76.13 | | September 2022 | 554,493 | $72.14 | | **Total Q3 2022** | **1,147,102** | **$74.35** | [Item 5. Other Information](index=43&type=section&id=Item%205%20Other%20Information) Discloses the Audit Committee's approval of various non-audit services provided by Deloitte & Touche LLP - The Audit Committee approved non-audit services by Deloitte & Touche LLP in 2022, including tax return preparation, transfer pricing advice, and assistance with tax audits[215](index=215&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206%20Exhibits) Lists all exhibits filed with the Form 10-Q, including certifications and XBRL data files

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $4.8 billion, representing a 5% year-over-year increase in constant currency and a 2% increase in organic constant currency [11] - Adjusted EBITA was $176 million, reflecting a 21% growth in constant currency year-over-year [11][18] - Earnings per diluted share was $2.13 on a reported basis and $2.21 on an adjusted basis, with adjusted earnings per share increasing 32% year-over-year in constant currency [11] Business Line Data and Key Metrics Changes - Manpower brand reported 1% revenue growth on an organic constant currency basis [23] - Experis brand reported 5% revenue growth, while Talent Solutions brand reported 10% revenue growth [23] - RPO within Talent Solutions saw significant revenue growth, while MSP experienced a slight revenue decline [23][26] Market Data and Key Metrics Changes - The Americas segment comprised 26% of consolidated revenue, with revenue in the quarter at $1.2 billion, a 27% increase in constant currency [28] - Southern Europe revenue was $2 billion, representing a 1% decrease in organic constant currency [31] - Northern Europe segment revenue was $954 million, reflecting a 1% decline in organic constant currency [34] Company Strategy and Development Direction - The company is focusing on diversification, with higher-margin businesses like Experis and Talent Solutions now representing 44% of gross profit, up from 35% in 2019 [48] - Continued investment in technology and higher-margin offerings is expected to strengthen the company's competitive position [15][48] - The company aims to navigate economic uncertainty while maintaining operational flexibility and strategic growth [55] Management's Comments on Operating Environment and Future Outlook - Management noted that labor markets remain resilient despite economic headwinds, with low unemployment rates in Europe and strong job creation in the U.S. [12][13] - Risks to the global economy include elevated inflation and geopolitical tensions, which may impact employer confidence and talent demand [13][55] - The company expects a lower rate of revenue growth in Q4 compared to Q3, particularly in the U.S. [31][41] Other Important Information - Free cash flow for the nine months year-to-date was $233 million, with Q3 free cash flow at $254 million [37] - The company repurchased 1.14 million shares for $85 million during the quarter [38] - The balance sheet ended with cash of $527 million and total debt of $896 million [39] Q&A Session Summary Question: Will labor remain tight during a potential recession in 2023? - Management indicated that labor markets in the U.S. remain tight, with a potential softening expected but still above pre-pandemic levels [57][58] Question: What cost actions are being taken in response to slower market demand? - Management is balancing investments in growth areas while rightsizing the workforce in sectors experiencing softness, particularly in Northern Europe and automotive [63][65] Question: What are the leading indicators for 2023? - PMI is a good indicator, with current levels hovering around 50%, suggesting no immediate signs of a material slowdown [75][76] Question: What is the outlook for Southern and Northern Europe? - Southern Europe is expected to remain stable, while Northern Europe may see slight improvements despite current softness [81][86] Question: What factors could drive upside or downside to the stable outlook? - Upside factors include a cessation of hostilities in Ukraine and a drop in energy prices, while downside risks include continued conflict and inflation challenges [114][115]

PART I - FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1 – Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and shareholders' equity, along with detailed notes explaining accounting policies, recent standards, revenue recognition, share-based compensation, acquisitions, restructuring, income taxes, EPS, goodwill, debt, retirement plans, shareholders' equity, interest and other expenses, derivative instruments, leases, and segment data [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a slight decrease in total assets and total liabilities from December 31, 2021, to June 30, 2022, with cash and cash equivalents increasing, while accounts receivable and current liabilities generally decreased **Consolidated Balance Sheet Highlights (in millions):** | Item | June 30, 2022 | December 31, 2021 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $886.2 | $847.8 | $38.4 | 4.5% | | Accounts receivable, net | $5,343.9 | $5,448.2 | $(104.3) | -1.9% | | Total current assets | $6,401.9 | $6,422.7 | $(20.8) | -0.3% | | Total assets | $9,618.5 | $9,828.9 | $(210.4) | -2.1% | | Total current liabilities | $5,401.1 | $5,780.5 | $(379.4) | -6.6% | | Long-term debt | $942.2 | $565.7 | $376.5 | 66.5% | | Total shareholders' equity | $2,444.8 | $2,531.7 | $(86.9) | -3.4% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2022, revenues from services decreased year-over-year, but gross profit, operating profit, and net earnings all increased. For the six months ended June 30, 2022, revenues remained relatively flat, while all profit metrics saw significant increases **Consolidated Statements of Operations Highlights (in millions, except per share data):** | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | YoY Change | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | YoY Change | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Revenues from services | $5,074.1 | $5,277.1 | -3.8% | $10,217.4 | $10,201.5 | 0.2% | | Gross profit | $921.2 | $860.1 | 7.1% | $1,818.3 | $1,628.2 | 11.7% | | Operating profit | $180.7 | $169.9 | 6.3% | $319.4 | $268.3 | 19.0% | | Net earnings | $122.2 | $111.6 | 9.5% | $213.8 | $173.6 | 23.2% | | Net earnings per share – diluted | $2.29 | $2.02 | 13.4% | $3.97 | $3.13 | 26.8% | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for the three and six months ended June 30, 2022, decreased compared to the prior year, primarily due to significant foreign currency translation losses, partially offset by gains on derivative instruments **Consolidated Statements of Comprehensive Income (Loss) Highlights (in millions):** | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net earnings | $122.2 | $111.6 | $213.8 | $173.6 | | Foreign currency translation adjustments | $(122.1) | $28.3 | $(158.0) | $(68.2) | | Total other comprehensive (loss) gain | $(71.9) | $15.5 | $(82.1) | $(25.0) | | Comprehensive income | $50.3 | $127.1 | $131.7 | $148.6 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash provided by operating activities significantly decreased for the six months ended June 30, 2022, compared to the prior year, mainly due to changes in operating assets and liabilities. Cash used in investing activities increased, while cash provided by financing activities saw a substantial positive swing due to proceeds from long-term debt **Consolidated Statements of Cash Flows Highlights (in millions):** | Metric | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Cash provided by operating activities | $21.3 | $195.4 | | Cash used in investing activities | $(40.7) | $(30.8) | | Cash provided by (used in) financing activities | $143.8 | $(223.8) | | Effect of exchange rate changes on cash | $(86.0) | $(46.5) | | Change in cash and cash equivalents | $38.4 | $(105.7) | | Cash and cash equivalents, end of period | $886.2 | $1,461.4 | | Interest Paid | $18.1 | $20.4 | | Income taxes paid, net | $89.5 | $82.7 | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased from December 31, 2021, to June 30, 2022, primarily due to other comprehensive losses (driven by foreign currency translation) and share repurchases, partially offset by net earnings **Shareholders' Equity Changes (in millions):** | Item | Balance, Dec 31, 2021 | Balance, June 30, 2022 | Change | | :-------------------------------- | :-------------------- | :------------------- | :----- | | Total Shareholders' Equity | $2,531.7 | $2,444.8 | $(86.9) | **Key Activities (Six Months Ended June 30, 2022, in millions):** | Item | Amount | | :-------------------------- | :----- | | Net earnings | $213.8 | | Other comprehensive loss | $(82.1) | | Repurchases of common stock | $(160.0) | | Dividends paid | $(71.2) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, recent accounting standards, revenue recognition, share-based compensation, acquisitions and dispositions, restructuring costs, income taxes, net earnings per share, goodwill and other intangible assets, debt, retirement plans, shareholders' equity, interest and other expenses, derivative financial instruments, leases, and segment data [(1) Basis of Presentation and Accounting Policies](index=9&type=section&id=(1)%20Basis%20of%20Presentation%20and%20Accounting%20Policies) This note outlines the basis of financial statement presentation, key accounting policies for allowance for doubtful accounts and leases, and the methodology for goodwill impairment testing, highlighting a potential impairment risk for the Netherlands reporting unit **Allowance for Doubtful Accounts Rollforward (Six Months Ended June 30, 2022, in millions):** | Item | Amount | | :-------------------------- | :----- | | Balance, December 31, 2021 | $121.6 | | Provisions charged to earnings | $6.1 | | Write-offs | $(4.3) | | Translation adjustments | $(7.5) | | Balance, June 30, 2022 | $115.9 | - The Netherlands reporting unit, part of the Northern Europe segment, had a fair value exceeding its carrying value by approximately **5.5%** as of the third quarter of 2021. Management is closely monitoring its performance, as failure to meet operating targets could lead to goodwill impairment for the **$103.5 million** recorded goodwill[39](index=39&type=chunk) [(2) Recent Accounting Standards](index=10&type=section&id=(2)%20Recent%20Accounting%20Standards) The company adopted new FASB guidance on government assistance as of January 1, 2022, with no impact on financial statements. Guidance on contract modifications due to LIBOR transition also had no material impact. New guidance on business combinations, effective January 1, 2023, is not expected to have a material impact - FASB guidance on disclosures about government assistance (effective Jan 1, 2022) had **no impact** on Consolidated Financial Statements[41](index=41&type=chunk) - FASB guidance on accounting for contract modifications due to LIBOR transition (effective upon issuance, applicable through Dec 31, 2022) has not had any **material impact**[42](index=42&type=chunk) - New FASB guidance on business combinations (effective Jan 1, 2023) is **not expected to have a material impact**[44](index=44&type=chunk) [(3) Revenue Recognition](index=11&type=section&id=(3)%20Revenue%20Recognition) Revenue is recognized over time for certain client contracts, corresponding to the value provided. Deferred revenue decreased from $34.8 million at December 31, 2021, to $27.3 million at June 30, 2022. The note also disaggregates revenue by service type and timing across reportable segments **Deferred Revenue (in millions):** | Date | Amount | | :---------------- | :----- | | June 30, 2022 | $27.3 | | December 31, 2021 | $34.8 | **Revenue Disaggregation by Service Type (Three Months Ended June 30, in millions):** | Segment | 2022 Total | 2021 Total | | :---------------- | :--------- | :--------- | | Americas | $1,262.7 | $1,044.3 | | Southern Europe | $2,201.4 | $2,422.4 | | Northern Europe | $1,027.1 | $1,190.5 | | APME | $603.7 | $619.9 | | **Consolidated Total** | **$5,074.1** | **$5,277.1** | **Revenue Disaggregation by Timing of Recognition (Six Months Ended June 30, in millions):** | Segment | 2022 Services Transferred Over Time | 2022 Services Transferred at a Point in Time | 2022 Total | 2021 Services Transferred Over Time | 2021 Services Transferred at a Point in Time | 2021 Total | | :---------------- | :---------------------------------- | :--------------------------------------- | :--------- | :---------------------------------- | :--------------------------------------- | :--------- | | Americas | $2,435.5 | $78.4 | $2,513.9 | $2,007.0 | $40.2 | $2,047.2 | | Southern Europe | $4,312.9 | $82.4 | $4,395.3 | $4,516.1 | $66.6 | $4,582.7 | | Northern Europe | $2,045.9 | $75.7 | $2,121.6 | $2,266.9 | $57.4 | $2,324.3 | | APME | $1,177.6 | $44.3 | $1,221.9 | $1,206.2 | $41.1 | $1,247.3 | | **Consolidated Total** | **$9,971.9** | **$280.8** | **$10,217.4** | **$9,996.2** | **$205.3** | **$10,201.5** | [(4) Share-Based Compensation Plans](index=13&type=section&id=(4)%20Share-Based%20Compensation%20Plans) Share-based compensation expense increased for both the three and six months ended June 30, 2022, compared to the prior year, reflecting expenses related to various equity awards **Share-Based Compensation Expense (in millions):** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | $11.0 | $9.4 | | Six Months Ended June 30 | $21.6 | $16.9 | [(5) Acquisitions and Dispositions](index=13&type=section&id=(5)%20Acquisitions%20and%20Dispositions) Cash consideration for acquisitions decreased significantly in the first half of 2022 compared to 2021. The company disposed of its Russia business in January 2022, recognizing an $8.0 million net loss. The acquisition of ettain group in October 2021, intended to diversify into higher-value services, resulted in $515.0 million in goodwill and $360.0 million in customer relationship intangible assets **Cash Consideration for Acquisitions, Net of Cash Acquired (in millions):** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Six Months Ended June 30 | $1.4 | $13.3 | - Disposed of Russia business on January 17, 2022, for **$3.2 million** cash proceeds, recognizing a one-time net loss of **$8.0 million**[54](index=54&type=chunk) **ettain group Acquisition (October 1, 2021, in millions):** | Item | Fair Value | | :------------------------------------ | :--------- | | Goodwill | $515.0 | | Intangible assets (customer relationship) | $360.0 | | Total assets and liabilities acquired | $930.9 | | Carrying value of intangible assets (June 30, 2022) | $342.0 | | Carrying value of goodwill (June 30, 2022) | $515.0 | [(6) Restructuring Costs](index=14&type=section&id=(6)%20Restructuring%20Costs) No new restructuring costs were recorded in the first half of 2022 or 2021. Payments of $6.8 million were made from the restructuring reserve, which primarily covers severance and office closures, leaving $16.5 million remaining, expected to be paid by the end of 2023 **Restructuring Reserve Changes (Six Months Ended June 30, 2022, in millions):** | Item | Amount | | :-------------------------- | :----- | | Balance, December 31, 2021 | $23.3 | | Costs paid | $(6.8) | | Balance, June 30, 2022 | $16.5 | [(7) Income Taxes](index=14&type=section&id=(7)%20Income%20Taxes) The effective income tax rate decreased to 29.8% for Q2 2022 and 31.0% for H1 2022, favorably impacted by a reduction in the French corporate tax rate and a more beneficial mix of pre-tax earnings. Gross unrecognized tax benefits were $72.6 million as of June 30, 2022, with no significant changes expected in the next 12 months **Effective Income Tax Rates:** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | 29.8% | 33.2% | | Six Months Ended June 30 | 31.0% | 33.3% | - Gross unrecognized tax benefits, including interest and penalties, were **$72.6 million** as of June 30, 2022. If recognized, the entire amount would favorably affect the effective tax rate, except for **$6.0 million**[63](index=63&type=chunk) [(8) Net Earnings Per Share](index=15&type=section&id=(8)%20Net%20Earnings%20Per%20Share) Diluted net earnings per share increased to $2.29 for Q2 2022 and $3.97 for H1 2022, driven by higher net earnings and a decrease in weighted-average diluted shares outstanding due to share repurchases **Net Earnings Per Share (in millions, except per share data):** | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net earnings per share – basic | $2.32 | $2.05 | $4.02 | $3.17 | | Net earnings per share – diluted | $2.29 | $2.02 | $3.97 | $3.13 | | Weighted-average common shares outstanding – diluted | 53.4 | 55.4 | 53.8 | 55.5 | [(9) Goodwill and Other Intangible Assets](index=15&type=section&id=(9)%20Goodwill%20and%20Other%20Intangible%20Assets) Total goodwill decreased to $1,669.9 million as of June 30, 2022, from $1,722.2 million at December 31, 2021, primarily due to currency impact and post-closing acquisition adjustments. Finite-lived intangible assets also saw a slight decrease. Amortization expense for intangible assets is projected to be $18.2 million for the remainder of 2022 **Goodwill and Intangible Assets (in millions):** | Asset Type | June 30, 2022 (Net) | December 31, 2021 (Net) | | :-------------------------- | :------------------ | :-------------------- | | Goodwill | $1,669.9 | $1,722.2 | | Finite-lived intangible assets | $383.9 | $405.3 | | Indefinite-lived intangible assets | $177.0 | $178.3 | | **Total intangible assets** | **$560.9** | **$583.6** | **Changes in Goodwill by Segment (in millions, Dec 31, 2021 to June 30, 2022):** | Segment | Balance, Dec 31, 2021 | Acquisitions | Currency Impact | Balance, June 30, 2022 | | :---------------- | :-------------------- | :----------- | :-------------- | :------------------- | | Americas | $1,058.9 | $(4.6) | $(1.1) | $1,053.2 | | Southern Europe | $146.7 | — | $(10.6) | $136.1 | | Northern Europe | $313.7 | — | $(29.3) | $284.4 | | APME | $76.9 | — | $(6.7) | $70.2 | | Corporate | $126.0 | — | — | $126.0 | | **Total** | **$1,722.2** | **$(4.6)** | **$(47.7)** | **$1,669.9** | - Expected total consolidated amortization expense related to intangible assets for the remainder of 2022 is **$18.2 million**[68](index=68&type=chunk) [(10) Debt](index=16&type=section&id=(10)%20Debt) The company entered into a new $600.0 million revolving credit facility in May 2022, replacing the previous one and transitioning to SOFR as the base rate. In June 2022, €400.0 million of 3.50% notes due June 30, 2027, were issued to refinance existing notes, with proceeds used in July 2022 - New Credit Agreement for a **$600.0 million** five-year revolving credit facility entered into on May 27, 2022, using SOFR as the base rate index[74](index=74&type=chunk) - Issued **€400.0 million** aggregate principal amount of **3.50%** notes due June 30, 2027, on June 30, 2022, to repay existing **€400.0 million** notes due September 2022[77](index=77&type=chunk) [(11) Retirement Plans](index=17&type=section&id=(11)%20Retirement%20Plans) Total benefit cost for defined benefit pension plans decreased for both the three and six months ended June 30, 2022, compared to the prior year. Contributions to pension plans were $4.5 million and to retiree health care plans were $0.6 million for the six months ended June 30, 2022 **Defined Benefit Pension Plan Total Benefit Cost (in millions):** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | $4.0 | $5.4 | | Six Months Ended June 30 | $8.2 | $10.8 | - Contributions made to pension plans were **$4.5 million** and to retiree health care plan were **$0.6 million** for the six months ended June 30, 2022[78](index=78&type=chunk) [(12) Shareholders' Equity](index=17&type=section&id=(12)%20Shareholders'%20Equity) Accumulated other comprehensive loss increased to $(471.5) million at June 30, 2022, primarily due to foreign currency translation. The Board declared a semi-annual dividend of $1.36 per share in May 2022. The company repurchased 1.7 million shares for $160.0 million in the first half of 2022, with 3.5 million shares remaining authorized under the 2021 authorization **Accumulated Other Comprehensive Loss (in millions):** | Item | June 30, 2022 | December 31, 2021 | | :------------------------------------ | :------------ | :---------------- | | Foreign currency translation | $(338.8) | $(180.8) | | Translation gain (loss) on derivative instruments | $53.2 | $(18.4) | | Translation loss on long-term intercompany loans | $(132.1) | $(133.6) | | Gain on interest rate swap | $2.0 | — | | Defined benefit pension plans, net | $(55.6) | $(56.7) | | Retiree health care plan, net | $(0.2) | $0.1 | | **Accumulated other comprehensive loss** | **$(471.5)** | **$(389.4)** | - Semi-annual dividend declared: **$1.36 per share** on May 6, 2022 (vs. $1.26 in May 2021)[81](index=81&type=chunk) **Share Repurchases (Six Months Ended June 30):** | Year | Shares Repurchased (millions) | Total Cost (millions) | | :--- | :---------------------------- | :-------------------- | | 2022 | 1.7 | $160.0 | | 2021 | 1.5 | $150.1 | - As of June 30, 2022, **3.5 million shares** remained authorized for repurchase under the 2021 authorization [(13) Interest and Other Expenses, Net](index=18&type=section&id=(13)%20Interest%20and%20Other%20Expenses,%20Net) Interest and other expenses, net, increased significantly for both the three and six months ended June 30, 2022, primarily due to increased foreign exchange losses and higher interest expense **Interest and Other Expenses, Net (in millions):** | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest expense | $10.6 | $9.7 | $21.0 | $19.9 | | Interest income | $(2.8) | $(3.1) | $(5.6) | $(6.2) | | Foreign exchange loss | $3.3 | $0.6 | $5.1 | $3.1 | | Miscellaneous income, net | $(4.4) | $(4.4) | $(11.1) | $(8.6) | | **Interest and other expenses, net** | **$6.7** | **$2.8** | **$9.4** | **$8.2** | [(14) Derivative Financial Instruments and Fair Value Measurements](index=18&type=section&id=(14)%20Derivative%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) The company uses derivative instruments, including cross-currency swaps and forward contracts, to manage foreign currency exchange rate and interest rate risks through net investment hedges, cash flow hedges, and fair value hedges. Fair value measurements are primarily based on Level 2 inputs for derivatives and Level 1 for deferred compensation plan assets - Uses cross-currency swaps, forward contracts, and foreign currency denominated debt for net investment hedges to protect the value of net investments in foreign subsidiaries[86](index=86&type=chunk) - Uses cross-currency swaps and forward currency exchange contracts for cash flow hedges to manage foreign currency denominated debt and operational expenses[89](index=89&type=chunk)[91](index=91&type=chunk) - Entered into a forward starting interest rate swap in June 2022, accounted for as a cash flow hedge, resulting in a **$2.0 million gain** upon settlement[93](index=93&type=chunk) **Fair Value of Derivative Assets (in millions):** | Balance Sheet Location | June 30, 2022 | December 31, 2021 | | :-------------------------- | :------------ | :---------------- | | Accounts Receivable, net | $12.1 | $24.7 | **Fair Value of Derivative Liabilities (in millions):** | Balance Sheet Location | June 30, 2022 | December 31, 2021 | | :-------------------------- | :------------ | :---------------- | | Short-term borrowings and current maturities of long-term debt | $419.2 | $454.4 | | Long-term debt | $521.2 | $565.2 | | Accrued liabilities | $13.6 | $29.9 | | **Total instruments** | **$954.0** | **$1,049.5** | [(15) Leases](index=22&type=section&id=(15)%20Leases) Total lease expense decreased for both the three and six months ended June 30, 2022. Operating lease ROU assets and liabilities also decreased. The weighted average remaining lease term is 4.9 years, with a weighted average discount rate of 2.3% **Total Lease Expense (in millions):** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | $36.8 | $40.6 | | Six Months Ended June 30 | $75.6 | $82.5 | **Operating Lease Information (in millions, except years and %):** | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------ | :------------ | :---------------- | | Operating lease ROU assets | $314.0 | $373.4 | | Operating lease liabilities - current | $101.8 | $110.0 | | Operating lease liabilities - long-term | $222.2 | $275.8 | | **Total operating lease liabilities** | **$324.0** | **$385.8** | | Weighted Average Remaining Lease Term | 4.9 years | 5.0 years | | Weighted Average Discount Rate | 2.3% | 2.9% | [(16) Segment Data](index=23&type=section&id=(16)%20Segment%20Data) The company operates through four geographic segments: Americas, Southern Europe, Northern Europe, and APME. Revenues from services and operating unit profit (OUP) are disaggregated by these segments, with staffing and interim services forming the majority of revenues **Revenues from Services by Segment (Three Months Ended June 30, in millions):** | Segment | 2022 | 2021 | | :---------------- | :----- | :----- | | Americas | $1,262.7 | $1,044.3 | | Southern Europe | $2,201.4 | $2,422.4 | | Northern Europe | $1,027.1 | $1,190.5 | | APME | $603.7 | $619.9 | | **Consolidated Total** | **$5,074.1** | **$5,277.1** | **Operating Unit Profit (OUP) by Segment (Six Months Ended June 30, in millions):** | Segment | 2022 | 2021 | | :---------------- | :----- | :----- | | Americas | $153.7 | $100.1 | | Southern Europe | $206.9 | $188.7 | | Northern Europe | $14.1 | $22.7 | | APME | $41.5 | $41.1 | | Corporate expenses | $(77.8) | $(74.5) | | Intangible asset amortization expense | $(19.0) | $(9.8) | | **Operating profit** | **$319.4** | **$268.3** | [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources. It includes an overview of business conditions, detailed analysis of operating results for the three and six months ended June 30, 2022, segment-specific performance, and a reconciliation of non-GAAP financial measures [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary note regarding forward-looking statements, emphasizing that they are based on current assumptions and subject to risks and uncertainties, including the impacts of the COVID-19 pandemic, the Russia-Ukraine War, and changes in labor and tax legislation - Forward-looking statements are based on management's current assumptions and expectations and are subject to risks and uncertainties beyond control[115](index=115&type=chunk) - Key risk factors include impacts of the COVID-19 pandemic, volatile economic conditions (e.g., Russia-Ukraine War, sanctions, supply chain disruptions), changes in labor and tax legislation, and failure to implement strategic technology investments[115](index=115&type=chunk) [Business Overview](index=25&type=section&id=Business%20Overview) The business is cyclical and sensitive to macroeconomic conditions. Foreign currency exchange rates, particularly the strengthening dollar, had a significant unfavorable impact on reported revenues and diluted EPS in Q2 2022. The Americas segment saw revenue growth driven by the Experis acquisition, while European and APME segments experienced declines due to unfavorable exchange rates. Gross profit margin improved due to a favorable business mix and growth in higher-margin offerings - Business is cyclical and sensitive to macroeconomic conditions, with demand for services dependent on labor market strength and workforce flexibility trends[116](index=116&type=chunk) - In Q2 2022, the strengthening dollar had a **9.5% unfavorable impact** on revenues and approximately **$0.25 per share unfavorable impact** on diluted net earnings per share[117](index=117&type=chunk) **Q2 2022 Revenue Changes by Segment (YoY):** | Segment | Reported Change | | :-------------- | :-------------- | | Americas | +20.9% | | Southern Europe | -9.1% | | Northern Europe | -13.7% | | APME | -2.6% | - Gross profit margin improved in Q2 2022 due to a favorable change in business mix, growth in higher margin offerings (e.g., permanent recruitment up **34.4%**), and improved Manpower staffing margins, partially offset by lower revenues in Right Management[120](index=120&type=chunk) [Operating Results - Three Months Ended June 30, 2022 and 2021](index=27&type=section&id=Operating%20Results%20-%20Three%20Months%20Ended%20June%2030,%202022%20and%202021) For the three months ended June 30, 2022, revenues decreased by 3.8% (but increased 5.7% in constant currency). Gross profit increased by 7.1% (16.4% in constant currency), and net earnings increased by 9.5% (21.5% in constant currency). Diluted EPS rose by 13.4% to $2.29, despite a $0.25 per share unfavorable impact from foreign currency **Selected Consolidated Financial Data (Three Months Ended June 30, in millions, except per share data):** | Metric | 2022 | 2021 | Reported Variance | Constant Currency Variance | | :-------------------------- | :----- | :----- | :---------------- | :------------------------- | | Revenues from services | $5,074.1 | $5,277.1 | (3.8)% | 5.7% | | Gross profit | $921.2 | $860.1 | 7.1% | 16.4% | | Gross profit margin | 18.2% | 16.3% | +190 bps | | | Operating profit | $180.7 | $169.9 | 6.3% | 18.1% | | Operating profit margin | 3.6% | 3.2% | +40 bps | | | Net earnings | $122.2 | $111.6 | 9.5% | 21.5% | | Net earnings per share – diluted | $2.29 | $2.02 | 13.4% | 25.7% | | Effective income tax rate | 29.8% | 33.2% | -340 bps | | - Revenue decrease of **-3.8%** (**5.7% increase in constant currency**) was attributed to decreases in Southern Europe (**-9.1%**), Northern Europe (**-13.7%**), and APME (**-2.6%**), partially offset by a **43.7% increase** in the United States (**12.3% organic**)[125](index=125&type=chunk)[126](index=126&type=chunk) - Gross profit margin increased by **190 basis points** due to a **90 bps favorable business mix** (higher permanent recruitment), **30 bps** from improved staffing/interim margins, **30 bps** from Experis acquisition, **30 bps** from non-staffing Experis margin improvement, and **20 bps** from currency changes, partially offset by **10 bps unfavorable** Right Management mix[127](index=127&type=chunk)[128](index=128&type=chunk) - Net earnings per share - diluted was unfavorably impacted by approximately **$0.25 per share** due to foreign currency exchange rates and by approximately **$0.04 per share** (net of tax) from Experis acquisition integration costs[129](index=129&type=chunk) [Operating Results - Six Months Ended June 30, 2022 and 2021](index=29&type=section&id=Operating%20Results%20-%20Six%20Months%20Ended%20June%2030,%202022%20and%202021) For the six months ended June 30, 2022, revenues from services remained flat at 0.2% (but increased 7.7% in constant currency). Gross profit increased by 11.7% (19.2% in constant currency), and net earnings increased by 23.2% (33.9% in constant currency). Diluted EPS rose by 26.8% to $3.97, despite a $0.35 per share unfavorable impact from foreign currency **Selected Consolidated Financial Data (Six Months Ended June 30, in millions, except per share data):** | Metric | 2022 | 2021 | Reported Variance | Constant Currency Variance | | :-------------------------- | :----- | :----- | :---------------- | :------------------------- | | Revenues from services | $10,217.4 | $10,201.5 | 0.2% | 7.7% | | Gross profit | $1,818.3 | $1,628.2 | 11.7% | 19.2% | | Gross profit margin | 17.8% | 16.0% | +180 bps | | | Operating profit | $319.4 | $268.3 | 19.0% | 29.6% | | Operating profit margin | 3.1% | 2.6% | +50 bps | | | Net earnings | $213.8 | $173.6 | 23.2% | 33.9% | | Net earnings per share – diluted | $3.97 | $3.13 | 26.8% | 38.0% | | Effective income tax rate | 31.0% | 33.3% | -230 bps | | - Revenue increase of **0.2%** (**7.7% in constant currency**) was driven by a **44.9% increase** in the United States (**13.7% organic**), partially offset by decreases in Southern Europe (**-4.1%**), Northern Europe (**-8.7%**), and APME (**-2.0%**)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Gross profit margin increased by **180 basis points** due to a **90 bps favorable business mix** (higher permanent recruitment), **40 bps** from improved staffing/interim margins, **30 bps** from Experis acquisition, **30 bps** from non-staffing Experis margin improvement, and **10 bps** from currency changes, partially offset by **20 bps unfavorable** Right Management mix[134](index=134&type=chunk) - Net earnings per share - diluted was unfavorably impacted by approximately **$0.35 per share** due to foreign currency exchange rates, **$0.15 per share** from the Russia business disposition, and **$0.09 per share** (net of tax) from Experis acquisition integration costs[137](index=137&type=chunk) [Segment Operating Results](index=32&type=section&id=Segment%20Operating%20Results) This section details the operating performance of each geographic segment: Americas, Southern Europe, Northern Europe, and APME, highlighting revenue trends, gross profit margin changes, selling and administrative expenses, and Operating Unit Profit (OUP) margins for both the three and six months ended June 30, 2022 [Americas](index=32&type=section&id=Americas) The Americas segment experienced strong revenue growth in Q2 and H1 2022, primarily driven by the Experis acquisition and increased demand in the United States. However, Mexico saw a significant decline due to new labor legislation. Gross profit margins and OUP margins improved across the segment **Americas Revenue from Services (Three Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :-------------- | :---------- | :---------------- | :------------------------- | :--------------------------------- | | United States | $903.9 | 43.7% | 43.7% | 12.3% | | Other Americas | $358.8 | (13.6)% | (9.0)% | (9.0)% | | **Total Americas** | **$1,262.7** | **20.9%** | **22.7%** | **3.8%** | - Mexico revenue decreased **-60.9%** (**-60.8% in constant currency**) due to labor legislation[140](index=140&type=chunk)[170](index=170&type=chunk) **Americas Revenue from Services (Six Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :-------------- | :---------- | :---------------- | :------------------------- | :--------------------------------- | | United States | $1,793.3 | 44.9% | 44.9% | 13.7% | | Other Americas | $720.6 | (11.0)% | (7.5)% | (7.5)% | | **Total Americas** | **$2,513.9** | **22.8%** | **24.2%** | **5.3%** | - Mexico revenue decreased **-61.2%** (**-61.1% in constant currency**) due to labor legislation[141](index=141&type=chunk)[171](index=171&type=chunk) - Gross profit margin increased in both Q2 and H1 2022 due to increases in permanent recruitment, improved staffing/interim margins, the Experis acquisition, and higher-margin MSP and RPO offerings[142](index=142&type=chunk) **Americas OUP Margin:** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Second Quarter | 6.4% | 5.4% | | First Half | 6.1% | 4.9% | [Southern Europe](index=33&type=section&id=Southern%20Europe) Southern Europe experienced revenue decreases in Q2 and H1 2022 due to unfavorable currency exchange rates, particularly in France and Other Southern Europe. Italy showed constant currency growth. Gross profit margins and OUP margins generally improved, driven by permanent recruitment and staffing/interim margins **Southern Europe Revenue from Services (Three Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | | :-------------------- | :---------- | :---------------- | :------------------------- | | France | $1,238.2 | (8.1)% | 4.1% | | Italy | $454.3 | (3.2)% | 9.7% | | Other Southern Europe | $508.9 | (16.1)% | (7.8)% | | **Total Southern Europe** | **$2,201.4** | **(9.1)%** | **2.2%** | **Southern Europe Revenue from Services (Six Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | | :-------------------- | :---------- | :---------------- | :------------------------- | | France | $2,430.6 | (4.1)% | 5.8% | | Italy | $899.3 | 3.1% | 13.8% | | Other Southern Europe | $1,065.4 | (9.3)% | (2.7)% | | **Total Southern Europe** | **$4,395.3** | **(4.1)%** | **5.1%** | - Gross profit margin increased in both Q2 and H1 2022 due to increases in permanent recruitment business and staffing/interim margins[149](index=149&type=chunk) **Southern Europe OUP Margin:** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Second Quarter | 5.1% | 4.8% | | First Half | 4.7% | 4.1% | [Northern Europe](index=34&type=section&id=Northern%20Europe) Northern Europe experienced revenue decreases in Q2 and H1 2022, primarily due to unfavorable currency exchange rates and the disposition of the Russia business. Despite this, permanent recruitment business and Experis staffing services showed growth. OUP margin decreased in both periods **Northern Europe Revenue from Services (Three Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :-------------- | :---------- | :---------------- | :------------------------- | :--------------------------------- | | Northern Europe | $1,027.1 | (13.7)% | (2.4)% | 0.1% | | United Kingdom | | (15.4)% | (5.8)% | | | Nordics | | (4.1)% | 10.1% | | | Germany | | (19.0)% | (8.3)% | | | Netherlands | | (16.3)% | (5.2)% | | | Belgium | | (9.5)% | 2.4% | | **Northern Europe Revenue from Services (Six Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | Organic Constant Currency Variance | | :-------------- | :---------- | :---------------- | :------------------------- | :--------------------------------- | | Northern Europe | $2,121.6 | (8.7)% | (0.3)% | 2.0% | | United Kingdom | | (9.3)% | (3.1)% | | | Germany | | (14.6)% | (5.9)% | | | Netherlands | | (12.7)% | (3.8)% | | | Belgium | | (4.9)% | 4.9% | | | Nordics | | 1.6% | 12.8% | | - Gross profit margin increased in both Q2 and H1 2022 due to increases in staffing/interim margins, a direct cost adjustment, and growth in permanent recruitment business[156](index=156&type=chunk) **Northern Europe OUP Margin:** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Second Quarter | 1.1% | 1.5% | | First Half | 0.7% | 1.0% | [APME](index=35&type=section&id=APME) The APME segment experienced revenue decreases in Q2 and H1 2022, primarily due to unfavorable currency exchange rates and the exit of a low-margin client arrangement in Australia. Japan saw constant currency growth, driven by permanent recruitment. Gross profit margins improved, but OUP margins saw only slight increases **APME Revenue from Services (Three Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | | :---------- | :---------- | :---------------- | :------------------------- | | APME | $603.7 | (2.6)% | 9.7% | | Japan | | (5.2)% | 12.4% | | Australia | | (15.3)% | (8.6)% | **APME Revenue from Services (Six Months Ended June 30, in millions):** | Region | 2022 Amount | Reported Variance | Constant Currency Variance | | :---------- | :---------- | :---------------- | :------------------------- | | APME | $1,221.9 | (2.0)% | 7.8% | | Japan | | (1.4)% | 12.4% | | Australia | | (24.1)% | (18.6)% | - Gross profit margin increased in both Q2 and H1 2022 due to improved staffing/interim margins and growth in permanent recruitment business[162](index=162&type=chunk) **APME OUP Margin:** | Period | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Second Quarter | 3.7% | 3.6% | | First Half | 3.4% | 3.3% | [Financial Measures](index=36&type=section&id=Financial%20Measures) This section defines and reconciles non-GAAP financial measures, 'constant currency' and 'organic constant currency,' which are used to assess underlying business performance by removing the impact of foreign currency exchange rate changes, acquisitions, and dispositions - Constant currency removes the impact of foreign currency exchange rate changes to indicate actual growth or decline of operations[167](index=167&type=chunk) - Organic constant currency further removes the impact of acquisitions in the current period and dispositions from the prior period from the constant currency calculation to show the actual growth or decline of the ongoing business[168](index=168&type=chunk) **Consolidated Revenues from Services Reconciliation (Three Months Ended June 30, in millions):** | Metric | Reported Variance | Impact of Currency | Constant Currency Variance | Impact of Acquisitions and Dispositions (In Constant Currency) | Organic Constant Currency Variance | | :-------------------------- | :---------------- | :----------------- | :------------------------- | :----------------------------------------------------------- | :--------------------------------- | | Revenues from services | (3.8)% | (9.5)% | 5.7% | 3.2% | 2.5% | | Gross Profit | 7.1% | (9.3)% | 16.4% | 5.0% | 11.4% | | Selling and Administrative Expenses | 7.3% | (8.7)% | 16.0% | 4.2% | 11.8% | | Operating Profit | 6.3% | (11.8)% | 18.1% | 8.3% | 9.8% | **Consolidated Revenues from Services Reconciliation (Six Months Ended June 30, in millions):** | Metric | Reported Variance | Impact of Currency | Constant Currency Variance | Impact of Acquisitions and Dispositions (In Constant Currency) | Organic Constant Currency Variance | | :-------------------------- | :---------------- | :----------------- | :------------------------- | :----------------------------------------------------------- | :--------------------------------- | | Revenues from services | 0.2% | (7.5)% | 7.7% | 3.3% | 4.4% | | Gross Profit | 11.7% | (7.5)% | 19.2% | 5.4% | 13.8% | | Selling and Administrative Expenses | 10.2% | (6.9)% | 17.1% | 4.4% | 12.7% | | Operating Profit | 19.0% | (10.6)% | 29.6% | 10.0% | 19.6% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash provided by operating activities decreased significantly in H1 2022 due to increased working capital needs from revenue growth. Capital expenditures increased, and net debt proceeds were substantial due to new notes issuance. The company maintains strong liquidity with a new $600.0 million revolving credit facility and sufficient cash, while continuing share repurchases and dividend payments **Cash Provided by Operating Activities (Six Months Ended June 30, in millions):** | Year | Amount | | :--- | :----- | | 2022 | $21.3 | | 2021 | $195.4 | - Working capital needs increased in H1 2022 due to strong revenue growth, as accounts receivable collection cycles are longer than payroll payment cycles, leading to a decline in operating cash flows[174](index=174&type=chunk)[175](index=175&type=chunk) **Capital Expenditures (Six Months Ended June 30, in millions):** | Year | Amount | | :--- | :----- | | 2022 | $41.7 | | 2021 | $24.6 | **Net Debt Proceeds (Six Months Ended June 30, in millions):** | Year | Amount | | :--- | :----- | | 2022 | $384.7 | | 2021 | $1.2 | - Entered into a new **$600.0 million** revolving credit facility in May 2022, with **$549.6 million** available as of June 30, 2022. Also has access to **$318.2 million** in uncommitted subsidiary credit lines, with **$282.8 million** available[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Declared a semi-annual dividend of **$1.36 per share** in May 2022[188](index=188&type=chunk) - Repurchased **1.7 million shares** for **$160.0 million** in H1 2022, with **3.5 million shares** remaining authorized under the 2021 authorization[189](index=189&type=chunk) - Aggregate commitments totaled **$2,419.3 million** as of June 30, 2022, including debt, operating leases, and severance. Guarantees and stand-by letters of credit totaled **$805.1 million**[190](index=190&type=chunk)[191](index=191&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the market risk disclosures previously provided in the 2021 Annual Report on Form 10-K - No material changes to market risk disclosures as of the filing date[195](index=195&type=chunk) [Item 4 – Controls and Procedures](index=41&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022. No material changes to internal control over financial reporting were identified during the last fiscal quarter - Disclosure controls and procedures were **effective at the reasonable assurance level** as of June 30, 2022[196](index=196&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[197](index=197&type=chunk) PART II - OTHER INFORMATION This part includes disclosures on risk factors, equity security sales, audit committee approvals, compensatory arrangements, and a list of exhibits [Item 1A – Risk Factors](index=42&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) The company's operations remain subject to the risk factors previously disclosed in its 2021 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 - Company operations are subject to risk factors previously disclosed in the 2021 Annual Report on Form 10-K and Q1 2022 Form 10-Q[200](index=200&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board of Directors authorized the repurchase of 4.0 million shares in August 2021, in addition to a previous 6.0 million share authorization. During Q2 2022, the company repurchased 1.14 million shares at an average price of $87.60, with 3.5 million shares remaining authorized under the 2021 plan - Board authorized repurchase of **4.0 million shares** in August 2021, supplementing a **6.0 million share** authorization from August 2019[201](index=201&type=chunk) **Issuer Purchases of Equity Securities (Three Months Ended June 30, 2022):** | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Maximum Number of Shares That May Yet Be Purchased | | :----------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------- | :------------------------------------------ | | April 1 - 30, 2022 | 368,229 | $92.31 | 368,229 | 4,276,791 | | May 1 - 31, 2022 | 449,200 | $91.25 | 449,200 | 3,827,591 | | June 1 - 30, 2022 | 324,001 | $77.16 | 324,001 | 3,503,590 | | **Total** | **1,141,430** | **$87.60** | **1,141,430** | **3,503,590** | [Item 5 – Other Information](index=42&type=section&id=Item%205%20%E2%80%93%20Other%20Information) This section details the Audit Committee's approval of audit-related and non-audit services provided by Deloitte & Touche LLP and describes a new severance agreement for the Chief People and Culture Officer, Michelle Nettles [Audit Committee Approval of Audit-Related and Non-Audit Services](index=42&type=section&id=Audit%20Committee%20Approval%20of%20Audit-Related%20and%20Non-Audit%20Services) The Audit Committee approved various audit-related and non-audit services performed by Deloitte & Touche LLP, including tax return preparation/review, transfer pricing advice, and audit certifications - Audit Committee approved audit-related and non-audit services by Deloitte & Touche LLP, including tax services (preparation, review, consultation), transfer pricing advice, and audit certifications[204](index=204&type=chunk) [Compensatory Arrangements of Certain Officers](index=43&type=section&id=Compensatory%20Arrangements%20of%20Certain%20Officers) A new letter agreement was entered into with Michelle Nettles, Chief People and Culture Officer, on August 4, 2022, providing for severance and post-employment benefits, replacing a similar expiring agreement. The new agreement expires on August 4, 2025, or two years after a change of control - Michelle Nettles, Chief People and Culture Officer, entered into a new letter agreement on August 4, 2022, for severance and post-employment benefits, replacing a similar expiring agreement[205](index=205&type=chunk) [Item 6 – Exhibits](index=44&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the new Credit Agreement, Fiscal and Paying Agency Agreement, a letter agreement for an officer, and various certifications and XBRL documents - Key exhibits include the Credit Agreement (May 27, 2022), Fiscal and Paying Agency Agreement (June 30, 2022), Letter Agreement with Michelle S. Nettles (August 4, 2022), CEO and CFO certifications, and Inline XBRL documents[208](index=208&type=chunk)[210](index=210&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) The report is duly signed on behalf of ManpowerGroup Inc. by its Executive Vice President and Chief Financial Officer, John T. McGinnis, and Senior Vice President, Global Controller and Treasurer, Donald Mondano - Report signed by John T. McGinnis (Executive Vice President and Chief Financial Officer) and Donald Mondano (Senior Vice President, Global Controller and Treasurer) on August 5, 2022[213](index=213&type=chunk)