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Experis and Talent Solutions soften COVID-19 impact on ManpowerGroup

ManpowerGroup has reported net losses of $1.10 per diluted share for the three months ended June 30, compared to net earnings of $2.11 per diluted share in the prior year period. 

Net losses in the quarter were $64.4 million compared to net earnings of $127.3 million a year earlier.  Revenues for the second quarter were $3.7 billion, a 30% decline. 

The current year quarter included special items consisting of goodwill and other impairment, and discrete tax items, which reduced earnings per share by $1.28. Excluding these items, adjusted earnings per diluted share was $0.18 for the period.

Financial results in the quarter were also impacted by the stronger US dollar. Earnings per share in the quarter were negatively impacted 2 cents by changes in foreign currencies compared to the prior year. On a constant currency basis, revenues decreased 28%.  Excluding the impact of the special items, on a constant currency basis, net earnings per diluted share decreased 91%.

ManpowerGroup reported that their positioning during the current downturn was aided by  their diversity of businesses, with Experis and Talent Solutions experiencing lower declines than the Manpower brand. A stable dividend was declared and paid during the second quarter.

Cash and cash equivalents at the end of the quarter equalled $1.4 billion, representing a $300 million increase from the preceding quarter, reflecting the company’s committed focus on collections and working capital management.  With this ongoing focus, Days Sales Outstanding improved year over year.  A $600 million revolving credit facility, which expires in 2023, remained unused during the quarter and, combined with the group’s existing cash position, provides significant liquidity. Free cash flow was very strong at $577 million in the six months year to date, representing an increase of $428 million from the year ago period excluding CICE receivable sales in 2019.

Jonas Prising, ManpowerGroup Chairman & CEO, said: "I am thankful and proud of our talented colleagues for providing the highest levels of support to our clients and candidates during this extremely challenging period. In this environment, we will continue to focus on operational excellence, including managing costs prudently to offset gross profit declines while continuing to invest in our transformation. This is how we will continue to progress our key strategic initiatives and position us for further success when we emerge from these crises.

"We anticipate diluted earnings per share in the third quarter will be  between $0.59 and $0.67, which includes an estimated unfavourable currency impact of 1 cent and an elevated effective tax rate due to the French Business Tax which will have an unfavourable impact of 7 cents. Our third quarter guidance reflects our assumptions as of today and does not anticipate any major rollbacks of economic reopening activities in any of our largest markets."

Net losses for the six months ended June 30, 2020 were $62.7 million, or net loss of $1.07 per diluted share compared to net earnings of $180.8 million, or net earnings of $2.98 per diluted share in the prior year. The year to date period included special items and restructuring costs which reduced earnings per share by $2.07. The prior year-to-date period included special items and restructuring costs which reduced earnings per share by 46 cents. Revenues for the six-month period were $8.4 billion, a decrease of 20% from the prior year or a decrease of 17% in constant currency. Earnings per share for the six-month period were negatively impacted 2 cents by changes in foreign currencies compared to the prior year, or 5 cents excluding the special items and restructuring costs. 

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