ManpowerGroup: Q1 2025 ManpowerGroup Inc Earnings Call

Jonas Prising; Chairman of the Board, Chief Executive Officer; ManpowerGroup Inc Jack McGinnis; Executive Vice President, Chief Financial Officer; ManpowerGroup Inc Andrew Steinerman; Analyst; J.P. Morgan Manav Patnaik; Analyst; Barclays Mark Marcon; Analyst; Robert W. Baird & Co. Incorporated Kartik Mehta; Analyst; Northcoast Research Josh Chan; Analyst; UBS Trevor Romeo; Analyst; William Blair & Company Tobey Sommer; Analyst; Truist Securities Stephanie Moore; Analyst; Jefferies George Tong; Analyst; Goldman Sachs & Company, Inc. Operator Welcome to Manpower Group's first quarter earnings results conference call. (Operator Instructions) This call is being recorded. (Operator Instructions) I would now like to turn the call over to Manpower Group's Chair and CEO Mr. Jonas Prising. Sir, you may begin. Jonas Prising Welcome. Thank you for joining us for our first quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis is with me today. For your convenience, we've included our prepared remarks within the investor relations section of our website at manpowergroup.com. I will start by going through some of the highlights of the quarter, and jack will go through the first quarter results and guidance for the second quarter of 2025. I will then share some concluding thoughts before we start our Q&A session. Jack will now cover the safe harbor language. Jack McGinnis Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements. Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures. Jonas Prising Thank you, Jack. This quarter, I spent time with many of our clients and leadership teams across our key markets in Europe, Latin America and Asia Pacific as well as here in North America. Broadly, the consensus is the quarter has been of two halves. We began the year with a sense of optimism for economic growth in the US particularly and a greater acknowledgment among EU policymakers that Europe needed to do more to remain competitive. The last several weeks have impacted the sense of confidence, and the mood is significantly more uncertain and cautious as a result of recent trade policy announcements in the US with ripple effects far beyond. At this stage, most of our clients are adopting a wait and see approach, and it is difficult to provide any concrete assessment of how significantly this might affect demand from our customers in our major markets around the world. As always, we're staying very close to our clients during this time and taking an industry and country-specific view as announced tariffs impact in different ways. We remain agile and are monitoring demand changes closely. At the same time, the benefits of a flexible workforce are highly visible during periods of increased uncertainty, and we know that those closest to their clients will win opportunities to deliver more flexible workforce solutions in the time of need. Our message to our organization and leadership teams in our 75-plus countries and territories around the world is clear, control, which you can control, stay close to our clients and candidates and build agility so we can act quickly to anticipate and respond to evolving client needs. There remain plenty of opportunities to win in the market and provide value to those we serve, and we are determined to be the partner of choice during unsettled times. Now to our results. In the first quarter, revenue was $4.1 billion, down 5% year over year in constant currency. Our reported EBITA for the quarter was $36 million. Adjusting for restructuring costs, EBITA was $52 million, representing a decrease of 32% in constant currency year over year. Reported EBITA margin was 0.9% and adjusted EBITDA margin was 1.3%. Earnings per diluted share was $0.12 on a reported basis, while earnings per diluted share was $0.44 on an adjusted basis. Adjusted earnings per share decreased 51% year over year in constant currency. In the first quarter, we saw a continuation of a challenging environment in Europe and North America, while demand for our services in LATAM and APME remain good. Staffing margin was solid, reflecting business mix changes and ongoing disciplined pricing. However, permanent recruitment softened further, and we saw reduced outplacement volumes, which impacted our margins. We took further cost actions to mitigate these trends, and we will continue to adjust as needed as the environment evolves. But we have seen a period of volatility relating to the tariff announcements and uncertainty is elevated right now, underlying economic indicators, including labor markets continue to be relatively stable. Based on what we see today, we expect employers to continue to cautiously look at hiring select talent particularly though with in-demand skills that enable their businesses to transform. Indeed, as AI accelerates, we expect to see a greater focus on skills development as organizations seek to guide their workforce to a period of transition and prepare them to work alongside AI. This is supported by our most recent Experis CIO report, which found that more than half of the companies are planning on upskilling existing talent with AI skills and one in three are hiring people with the ability to collaborate across functions to solve business challenges.