ManpowerGroup(US:MAN)2022-04-19 15:42Financial Data and Key Metrics Changes - In Q1 2022, revenue was $5.1 billion, up 10% year-over-year in constant currency or 6% in organic constant currency [8][11] - EBITA for the quarter was $148 million, adjusted EBITA was $162 million, reflecting growth of 64% in constant currency year-over-year [9][11] - Reported EBITA margin was 2.9%, and adjusted EBITA margin was 3.1%, above the adjusted EBITA margin from Q1 2019 [11] - Earnings per diluted share was $1.68 on a reported basis and $1.88 on an adjusted basis, with adjusted EPS increasing 78% year-over-year in constant currency [11][20] Business Line Data and Key Metrics Changes - On an organic constant currency basis, the Manpower brand reported revenue growth of 5%, Experis brand reported 15% growth, and Talent Solutions brand reported 13% growth [22] - Gross profit margin was 17.4%, with contributions from various segments including a 90-basis-point improvement from permanent recruitment [24][27] - The Manpower brand comprised 57% of gross profit, Experis 28%, and Talent Solutions 15% [26] Market Data and Key Metrics Changes - The Americas segment comprised 24% of consolidated revenue, with revenue in the quarter at $1.3 billion, a 26% increase in constant currency [30] - U.S. revenue was $889 million, representing a 44% days-adjusted increase or 13% organically [31] - Southern Europe revenue comprised 43% of consolidated revenue, growing 8% in constant currency [38] - Revenue in Japan grew 14% in days-adjusted constant currency, leading the APME segment [46] Company Strategy and Development Direction - The company continues to execute its DDI strategy focusing on Diversification, Digitization, and Innovation [14] - The Experis IT resourcing, Talent Solutions, and Manpower permanent recruitment businesses had a strong quarter, improving the business mix [14] - The company is investing in technology to enhance client and candidate experiences and expanding its skilled talent pool through programs like Manpower MyPath [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted strong hiring intentions in major markets despite geopolitical uncertainties, with requests for skilled workers at record highs [12][13] - The company anticipates ongoing underlying improvement and revenue growth in the U.S. in the range of 46% to 50% year-over-year for Q2 [36] - Management expressed confidence in the growth opportunities despite challenges in specific sectors like automotive due to supply chain issues [12][13][96] Other Important Information - Free cash flow in Q1 was $52 million, down from $128 million in the prior year [49] - The company repurchased 578,000 shares for $60 million during the quarter [50] - The balance sheet ended with cash of $777 million and total debt of $1.06 billion, resulting in a net debt position of $287 million [50] Q&A Session Summary Question: Economic cycle outlook considering recent geopolitical events - Management observed extremely tight labor markets and strong demand for talent across various sectors, indicating potential for continued economic expansion [69][70] Question: Impact of Russia-Ukraine conflict on guidance - Most impacts observed were related to pandemic effects, with some disruption noted in the automotive sector [75][76] Question: Insights on France's economic situation amid elections - Management noted strong underlying demand in France, with expectations for continued recovery despite slight slowdowns in specific sectors [79][80] Question: Auto sector exposure in France and Germany - Auto sector represents about 5% of overall revenues, with Germany having a higher concentration at around 30% [84][85] Question: Intra-quarter trends across major regions - France and Germany experienced some slowdowns due to supply chain issues, while the UK remained stable with good margin performance [106][108] Question: Potential impacts of recent China lockdowns - Management indicated that any supply chain impacts from China lockdowns would likely be temporary and would not cancel demand [112][113] Question: Wage inflation trends in the U.S. - Management noted strong GP margin expansion in both Experis and Manpower, with indications that wage inflation may have peaked [119][120] Question: Temporary employment legislation in Spain - Proposed legislation is expected to have a neutral to positive impact on the business, providing opportunities in sectors previously less accessible [122][124]