ManpowerGroup(MAN) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1 Financial Statements (unaudited) The unaudited financial statements for Q2 2025 reveal a significant downturn, reporting a net loss primarily due to substantial non-cash impairment charges Consolidated Balance Sheets Total assets slightly increased to $8.51 billion as of June 30, 2025, while rising liabilities led to a decline in shareholders' equity Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,505.3 | $8,201.0 | | Cash and cash equivalents | $289.8 | $509.4 | | Accounts receivable, net | $4,641.3 | $4,297.2 | | Goodwill | $1,549.0 | $1,563.4 | | Total Liabilities | $6,510.1 | $6,074.1 | | Short-term borrowings and current maturities of long-term debt | $815.4 | $23.4 | | Long-term debt | $470.3 | $929.4 | | Total Shareholders' Equity | $1,995.2 | $2,126.9 | Consolidated Statements of Operations The company reported a net loss of $67.1 million for Q2 2025, primarily due to an $88.7 million impairment charge Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues from services | $4,519.3 | $4,520.7 | | Gross profit | $763.7 | $785.9 | | Impairment charges | $88.7 | $— | | Operating (loss) profit | $(25.3) | $101.1 | | Net (loss) earnings | $(67.1) | $60.1 | | Net (loss) earnings per share – diluted | $(1.44) | $1.24 | Six Months 2025 vs 2024 Performance (in millions) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Revenues from services | $8,609.6 | $8,924.0 | | Gross profit | $1,462.0 | $1,549.6 | | Impairment charges | $88.7 | $— | | Operating profit | $2.9 | $167.0 | | Net (loss) earnings | $(61.5) | $99.8 | | Net (loss) earnings per share – diluted | $(1.32) | $2.05 | Consolidated Statements of Cash Flows Cash used in operating activities significantly increased to $342.8 million for H1 2025, driven by working capital needs Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(342.8) | $(21.9) | | Cash used in investing activities | $(34.0) | $(21.6) | | Cash provided by (used in) financing activities | $124.0 | $(38.6) | | Change in cash and cash equivalents | $(219.6) | $(112.4) | Notes to Consolidated Financial Statements Notes detail significant goodwill and intangible asset impairments, restructuring costs, and a negative effective tax rate - Recognized a non-cash goodwill impairment loss of $33.4 million for the United Kingdom reporting unit and $24.7 million for the Switzerland reporting unit[30] - Recognized a full impairment of $30.6 million related to the reacquired franchise right associated with the Switzerland business[31] - Recorded $30.2 million in restructuring costs during the six months ended June 30, 2025, primarily for severance and office closures[52] - The effective tax rate for Q2 2025 was -60.2%, driven by non-deductible impairment charges and losses on disposals[55] Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes challenging Q2 2025 results to macroeconomic uncertainties, leading to an operating loss from impairments and restructuring costs Business Overview and Operating Results The business environment remains mixed, with Q2 2025 revenues flat but a net loss primarily due to impairment and restructuring costs - The business environment is mixed, with employers remaining cautious in their workforce strategies due to macroeconomic and geopolitical uncertainties[112] Q2 2025 Key Financial Metrics (in millions) | Metric | 2025 | 2024 | Variance | Constant Currency Variance | | :--- | :--- | :--- | :--- | :--- | | Revenues from services | $4,519.3 | $4,520.7 | 0.0% | (3.5)% | | Operating (loss) profit | $(25.3) | $101.1 | (125.0)% | (127.9)% | | Net (loss) earnings | $(67.1) | $60.1 | (211.6)% | (208.2)% | | Net (loss) earnings per share – diluted | $(1.44) | $1.24 | (216.3)% | (212.8)% | - The decrease in operating profit was primarily driven by goodwill and intangible asset impairment charges of $88.7 million and restructuring costs of $14.4 million[120] Segment Operating Results Q2 2025 segment performance varied, with Americas and Southern Europe mixed, while Northern Europe and APME saw declines - Americas: Q2 revenue decreased 0.4% (+2.0% constant currency) U.S. revenue fell 3.3% due to lower demand for Experis interim services OUP margin decreased from 4.2% to 3.4%[133][139] - Southern Europe: Q2 revenue increased 2.4% (-2.8% constant currency) France revenue decreased 1.3%, while Italy grew 9.4% OUP margin decreased from 4.0% to 3.4%[141][147] - Northern Europe: Q2 revenue decreased 5.1% (-10.4% constant currency), with declines in the UK (-9.0%) and Germany (-18.5%) The segment reported an OUP loss, with the margin declining to -1.1% from -0.3%[149][154] - APME: Q2 revenue decreased 3.0% (-8.0% constant currency), impacted by the Korea disposition Japan revenue grew 15.7% OUP margin improved from 4.6% to 5.0%[156][162] Liquidity and Capital Resources The company maintains sufficient liquidity despite decreased cash and increased debt, with significant cash used in operating activities Liquidity and Capital Structure (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $289.8 | $509.4 | | Available liquidity | $853.4 | $1,259.0 | | Total debt | $1,285.7 | $952.8 | | Total shareholders' equity | $1,994.4 | $2,125.2 | | Debt to capitalization | 39.2% | 31.0% | - Cash used in operating activities was $342.8 million for the first six months of 2025, compared to $21.9 million in the prior year, mainly due to timing of collections and payments[172] - The company repurchased 0.7 million shares for $37.0 million during the six months ended June 30, 2025[184] Item 3 Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk disclosures have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures since the 2024 Annual Report on Form 10-K[193] Item 4 Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[194] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[195] PART II OTHER INFORMATION Item 1A Risk Factors The company's operations remain subject to previously disclosed risk factors, with no new significant risks identified - The company's operations continue to be subject to the risk factors disclosed in the 2024 Annual Report on Form 10-K[196] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased 233,073 shares at $52.03 per share, with 1.9 million remaining authorized Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 230,241 | $52.03 | | May 1 - 31, 2025 | 1,685 | — | | June 1 - 30, 2025 | 1,147 | — | | Total | 233,073 | $52.03 | - As of June 30, 2025, 1.9 million shares remained authorized for repurchase under the 2023 authorization[197] Item 5 Other Information The Audit Committee approved various non-audit services from Deloitte & Touche LLP, and no Rule 10b5-1 trading plans were adopted or terminated - The Audit Committee approved non-audit services from Deloitte & Touche LLP related to tax returns, transfer pricing, and sustainability program advice[199][200] - No director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[199] Item 6 Exhibits This section lists exhibits filed with the Form 10-Q, including a credit agreement amendment, CEO/CFO certifications, and XBRL data - Exhibits filed include Amendment No. 2 to the Credit Agreement, CEO/CFO certifications, and Inline XBRL documents[202]