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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 21, 2020

 

MANPOWERGROUP INC.

(Exact name of registrant as specified in its charter)

 

Wisconsin		1-10686		39-1672779
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

100 Manpower Place
Milwaukee, Wisconsin		53212
(Address of principal executive offices)		(Zip Code)

 

Registrant's telephone number, including area code:  (414) 961-1000

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	MAN	New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

 

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Item 2.02 Results of Operations and Financial Condition

 

The information in this Item 2.02, including exhibit 99.1 attached herto, is furnished solely pursuant to Item 2.02 of Form 8-K. Consequently, such information is not deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. Further, the information in this Item 2.02, including exhibit 99.1, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933.

On April 21, 2020, we issued a press release announcing our results of operations for the three months ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 8.01 Other Events

Supplemental Risk Factor

In light of recent developments relating to the COVID-19 pandemic, the Company is supplementing the risk factors previously disclosed in Part I., Item 1A. of its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 21, 2020, to include the following risk factor:

Our business, results of operations and financial condition have been and may continue to be adversely impacted by the coronavirus pandemic, and future adverse impacts could be material and difficult to predict.

The global spread of the coronavirus (“COVID-19”), which was declared a global pandemic by the World Health Organization in March 2020, has created significant volatility, uncertainty and global macroeconomic disruption.  Our business, operations and financial results have been, and may continue to be, adversely impacted by the COVID-19 pandemic and by related government actions (including declared states of emergency and quarantine, “shelter in place” or similar orders), non-governmental agency recommendations and public perceptions, all of which have led to disruption in global economic and labor market conditions.  These effects have had a significant impact on our business, including reduced demand for our services, early terminations of client contracts and client hiring freezes, and a shift of a majority of our workforce to remote operations, all of which have contributed to a decline in revenues and other adverse impacts on our financial results.    Other potential impacts of the spread of COVID-19 include continued or expanded closures of our clients’ facilities, the possibility  our clients will not be able to pay for our services and solutions, or that they will attempt to defer payments owed to us, either of which could impact our liquidity, the possibility that the uncertain nature of the pandemic may not yield the increase in outplacement-related programs that we have historically observed during periods of economic downturn, and the possibility that various government-sponsored programs to provide economic relief will be inadequate.  Further, we may continue to experience adverse financial impacts if we cannot offset revenue declines with cost savings through expense-related initiatives, human capital management initiatives or otherwise.  As a result of these observed and potential developments, we expect our business, operations and financial results to continue to be negatively affected.  In particular, a number of our most important European markets, including France and Italy, have been especially impacted to date by COVID-19, and there is a risk that continued deterioration, or a slow eventual recovery, in those and other key markets, including the United States, will have an adverse effect on the labor markets of those jurisdictions and the related demand for our services.   

We are continuing to monitor and assess the effects of the COVID-19 pandemic but expect that our business, operations and financial results will continue to be adversely affected.  There are numerous uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the pandemic, the extent and duration of travel restrictions and business closures imposed by the governments of impacted countries, and the effects these and other factors have on underlying economic and labor market conditions. As a result, we cannot accurately predict the ultimate effects, which could be material, of the COVID-19 pandemic on our business, operations and financial results.

 

Item 9.01.

Exhibits

 

Exhibit No.		Description
99.1		Press Release dated April 21, 2020
99.2		Presentation materials for April 21, 2020 Conference Call
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

					MANPOWERGROUP INC.
Dated:		April 21, 2020			By:		/s/ John T. McGinnis
					Name:		John T. McGinnis
					Title:		Executive Vice President and Chief Financial Officer

 

 

 

Exhibit 99.1

 

 

 

ManpowerGroup Reports 1^st Quarter 2020 Results

 

MILWAUKEE, April 21, 2020 -- ManpowerGroup (NYSE: MAN) today reported net earnings of $0.03 per diluted share for the three months ended March 31, 2020 compared to $0.88 per diluted share in the prior year period.  Net earnings in the quarter were $1.7 million compared to $53.5 million a year earlier.  Revenues for the first quarter were $4.6 billion, an 8% decline from the prior year period.  

The current year quarter included restructuring costs, which reduced earnings per share by 68 cents, and a previously disclosed non-cash pension settlement charge, which reduced earnings per share by 11 cents.

Financial results in the quarter were also impacted by the stronger U.S. dollar relative to foreign currencies compared to the prior year period. Earnings per share in the quarter were not impacted by changes in foreign currencies compared to the prior year but were negatively impacted 3 cents excluding restructuring costs and pension settlement charges.  On a constant currency basis, revenues decreased 6% and net earnings per diluted share decreased 95%.  Excluding the impact of the restructuring costs and pension settlement charges, on a constant currency basis, net earnings per diluted share decreased 39%.

Cash and cash equivalents at the end of the quarter amounted to $1.1 billion, representing an increase from the preceding quarter. An ongoing focus on collections activity resulted in a slight improvement in Days Sales Outstanding compared to the prior year.  A $600 million revolving credit facility, which expires in 2023, remains unused and, combined with our existing cash position, provides significant liquidity. Free cash flow was very strong at $172 million in the quarter, representing an $80 million increase

 

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from the year ago period.

“The COVID-19 crisis has significantly disrupted the global economy, our clients and the demand for our services. The speed and magnitude of change in market conditions in the last few weeks of March was unlike anything we have seen in our over 70 year history.  Our organization moved swiftly to execute our business continuity plans and to provide necessary support to our people, our clients and our communities,” said Jonas Prising, ManpowerGroup Chairman & CEO.  “I want to thank our more than 28,000 employees for remaining steadfast in supporting our clients and associates through a very challenging environment.”

“We have a very experienced global management team that has gone through a number of recessions and we come into this crisis with clear strategic priorities and a strong balance sheet. I am very confident we will manage through this difficult period while continuing to advance key strategic initiatives. I believe this will allow us to emerge from this crisis better positioned to capture growth and market share. As we cannot forecast when governments in certain major markets will be lifting current work restrictions, we will not be providing guidance for our second quarter earnings.”

ManpowerGroup repurchased 871,000 shares of common stock for $64 million during the quarter.

In conjunction with its first quarter earnings release, ManpowerGroup will broadcast its conference call live over the Internet on April 21, 2020 at 7:30 a.m. CDT (8:30 a.m. EDT). Interested parties are invited to listen to the webcast and view the presentation by logging on to http://investor.manpowergroup.com/ in the section titled “Investor Relations.”

 

Supplemental financial information referenced in the conference call can be found at http://investor.manpowergroup.com/ .

 

About ManpowerGroup

 

ManpowerGroup® (NYSE: MAN), the leading global workforce solutions company, helps organizations transform in a fast-changing world of work by sourcing, assessing, developing and managing the talent that enables them to win. We develop innovative solutions for hundreds of thousands of organizations every year, providing them with skilled talent while finding meaningful, sustainable employment for millions of people across a wide range of industries and skills. Our expert family of brands – Manpower, Experis and Talent Solutions – creates substantially more value for candidates and clients across more than 75 countries and territories and has done so for over 70 years. We are recognized consistently for our diversity - as a best place to work for Women, Inclusion, Equality and Disability and in 2020 ManpowerGroup was named one of the World's Most Ethical Companies for the eleventh year - all confirming our position as the brand of choice for in-demand talent. 

 

Forward-Looking Statements

This news release contains statements, including statements regarding the anticipated financial and operational impacts of the COVID-19 pandemic and the Company’s efforts to respond to such impacts, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding the Company’s expected future results.  The Company’s actual results may differ materially from those described or contemplated in the forward-looking statements due to numerous factors.  These factors include those found in the Company’s reports filed with the SEC, including the information under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks and uncertainties arising from the COVID-19 global pandemic and related governmental actions that are discussed in the Company’s Periodic Report on Form 8-K filed on April 21, 2020, which information is incorporated herein by reference.

 

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ManpowerGroup

Results of Operations

(In millions, except per share data)

 

 

 

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ManpowerGroup

Operating Unit Results

(In millions)

 

 

 

 

 

 

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ManpowerGroup

Consolidated Balance Sheets

(In millions)

 

 

 

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ManpowerGroup

Consolidated Statements of Cash Flows

(In millions)

 

 

 

ManpowerGroup First Quarter Results | April 21, 2020 Exhibit 99.2

FORWARD-LOOKING STATEMENT This presentation contains statements, including statements regarding the anticipated financial and operational impacts of the COVID-19 pandemic and the Company’s efforts to respond to such impacts, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding the Company’s expected future results. The Company’s actual results may differ materially from those described or contemplated in the forward-looking statements due to numerous factors. These factors include those found in the Company’s reports filed with the SEC, including the information under the heading “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks and uncertainties arising from the COVID-19 global pandemic and related governmental actions that are discussed in the Company’s Periodic Report on Form 8-K filed on April 21, 2020, which information is incorporated herein by reference. The Company assumes no obligation to update or revise any forward-looking statements. We reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include a reconciliation of these measures, where appropriate, to GAAP on the Investor Relations section of our website at manpowergroup.com.

Consolidated Financial Highlights ManpowerGroup 2020 First Quarter Results As Reported As Adjusted(1) Q1 Financial Highlights 8% 8% Revenue $4.6B 6% CC 6% CC 30 bps 30 bps Gross Margin 15.7% 64% 41% Operating Profit $38M ($86M as adjusted) 63% CC 39% CC 130 bps 100 bps OP Margin 0.8% (1.9% as adjusted) 97% 41% EPS $0.03 ($0.82 as adjusted) 95% CC 39% CC As Adjusted figures exclude (a) $48.2M ($40.2 net of tax) of restructuring costs in Q1 2020, while Q1 2019 excludes $39.8M ($31.4 net of tax) of restructuring costs; and (b) the impact of a non-cash pension settlement expense of $10.2M ($6.3 net of tax) recorded in interest and other expenses below operating profit.

EPS Bridge – Q1 2020 vs. Q1 2019 ManpowerGroup 2020 First Quarter Results (1) (2) Includes a discrete tax benefit of $4.3 million in Q1 2020. French business tax component represents $9.0 million of tax expense in Q1 2020 ($11.4 million in Q1 2019) and is not derived based on pre-tax earnings but rather revenues of the French business Share repurchases made during Q1 2020 contributed 1 cent to the Q1 2020 EPS.

Consolidated Gross Margin Change ManpowerGroup 2020 First Quarter Results

Growth Business Line Gross Profit – Q1 2020(1) (1) Business line classifications can vary by entity and are subject to change as service requirements change. ManpowerGroup 2020 First Quarter Results █ Manpower █ Experis █ Talent Solutions █ ManpowerGroup – Total

SG&A Expense Bridge – Q1 YoY (in millions of USD) ManpowerGroup 2020 First Quarter Results This was unfavorably impacted 10 bps due to the effect of currency exchange rates on our business mix. In constant currency, SG&A excluding restructuring costs was 14.8% of Revenue.

Cash Flow Summary – Q1 ManpowerGroup 2020 First Quarter Results

Balance Sheet Highlights Total Debt (in millions of USD) Total Debt to Total Capitalization ManpowerGroup 2020 First Quarter Results Total Debt Net Debt Net (Cash)

Interest Rate Maturity Date Total Outstanding Remaining Available Euro Notes - €500M 1.809% Jun 2026 547 - Euro Notes - €400M 1.913% Sep 2022 440 - Revolving Credit Agreement 1.993% Jun 2023 - 599 Uncommitted lines and Other Various Various 56 270 Total Debt 1,043 869 Debt and Credit Facilities – March 31, 2020 (in millions of USD) (2) (1) The $600M agreement requires that we comply with a Leverage Ratio (net Debt-to-EBITDA) of not greater than 3.5 to 1 and a Fixed Charge Coverage Ratio of not less than 1.5 to 1, in addition to other customary restrictive covenants. As defined in the agreement, we had a net Debt-to-EBITDA ratio of 0.48 and a fixed charge coverage ratio of 4.69 as of March 31, 2020. (In the agreement, net debt is defined as total debt less cash in excess of $400M.) As of March 31, 2020, there were $0.5M of standby letters of credit issued under the agreement. Represents subsidiary uncommitted lines of credit & overdraft facilities, which total $326.3M. Total subsidiary borrowings are limited to $300M due to restrictions in our Revolving Credit Facility, with the exception of Q3 when subsidiary borrowings are limited to $600M. ManpowerGroup 2020 First Quarter Results

Operating Unit Profit (OUP) is the measure that we use to evaluate segment performance. OUP is equal to segment revenues less direct costs and branch and national headquarters operating costs. Americas Segment (22% of Revenue) ManpowerGroup 2020 First Quarter Results As Reported As Adjusted(1) Q1 Financial Highlights 2% 2% Revenue $1.0B 1% CC 1% CC 48% 29% OUP $17M 46% CC 26% CC 150 bps 110 bps OUP Margin 1.6% Excludes the impact of restructuring costs of $12.8M ($9.9 net of tax) in Q1 2020 and $5.1M in Q1 2019.

Revenue Growth - CC Revenue Growth % of Segment Revenue Americas – Q1 Revenue Growth YoY Average Daily Revenue Growth - CC ManpowerGroup 2020 First Quarter Results On an organic basis, revenue for the US decreased 5%. (ADR on an organic basis was -6%). (1)

Southern Europe Segment (42% of Revenue) ManpowerGroup 2020 First Quarter Results Excludes the impact of restructuring costs of $13.1M ($10.3 net of tax) in Q1 2020 and $5.4M in Q1 2019. As Reported As Adjusted(1) Q1 Financial Highlights 8% 8% Revenue $1.9B 5% CC 5% CC 39% 28% OUP $53M 37% CC 26% CC 140 bps 100 bps OUP Margin 2.7%

Southern Europe – Q1 Revenue Growth YoY Revenue Growth - CC Revenue Growth % of Segment Revenue Average Daily Revenue Growth - CC ManpowerGroup 2020 First Quarter Results

Northern Europe Segment (23% of Revenue) ManpowerGroup 2020 First Quarter Results Excludes the impact of restructuring costs of $19.5M ($18.1 net of tax) in Q1 2020 and $18.7M in Q1 2019 As Reported As Adjusted(1) Q1 Financial Highlights 11% 11% Revenue $1.1B 8% CC 8% CC N/A 74% OUP -$14M 72% CC 150 bps 120 bps OUP Margin -1.3%

Northern Europe – Q1 Revenue Growth YoY Revenue Growth - CC Revenue Growth % of Segment Revenue Average Daily Revenue Growth - CC ManpowerGroup 2020 First Quarter Results

APME Segment (13% of Revenue) ManpowerGroup 2020 First Quarter Results Excludes the impact of restructuring costs of $2.7M ($1.8 net of tax) in Q1 2020 and $4.4M in Q1 2019 As Reported As Adjusted(1) Q1 Financial Highlights 16% 16% Revenue $595M 14% CC 14% CC 18% 22% OUP $17M 17% CC 21% CC 0 bps 30 bps OUP Margin 2.9%

APME – Q1 Revenue Growth YoY Revenue Growth - CC Revenue Growth % of Segment Revenue Average Daily Revenue Growth - CC On an organic basis excluding Greater China, revenue for APME Other increased 4% or +7% in constant currency. (1) ManpowerGroup 2020 First Quarter Results

Our number one priority is to support our clients, candidates and employees through this difficult health and economic crisis. We have a very experienced global management team that has gone through a number of recessions and we come into this crisis with clear strategic priorities and a strong balance sheet. We have built a more diversified business since the last recession. A larger portion of our business is dedicated to Experis and Talent Solutions. We are focused on managing costs as efficiently as possible in the short-term while ensuring we continue to progress transformational actions which will allow us to accelerate our strategic priorities and emerge stronger when the economy shifts back to growth. Key Take Aways ManpowerGroup 2020 First Quarter Results