Hello and welcome to the ManpowerGroup First Quarter 2024 Earnings Call. At this time all participants are in listen-only mode. After the speakers’ remarks there will be a question-and-answer session. As a reminder, this call is being recorded. I would like to turn the call over to Jonas Prising, Chairman and CEO. Please go ahead.

Welcome and thank you for joining us for our First Quarter 2024 Conference Call. Our Chief Financial Officer, Jack McGinnis, is with me today. And for your convenience, we have included our prepared remarks within the Investor Relations section of our website at manpowergroup.com. I’ll start by going through some of the highlights of the first quarter, and then Jack will go through the results and guidance in more detail. And I’ll then share some concluding thoughts before we start our Q&A session. Jack will now cover the Safe Harbor language.

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.

Thanks, Jack. Last quarter, we stated that though the economy remains resilient in many markets, uncertainty around the outlook persists, leading employers to be cautious in their hiring, pausing non-critical spend and deferring projects until more clarity emerges. One quarter in, we see a continuation of this trend. Labor markets are cooling in North America and Europe yet remain strong. In our most recent ManpowerGroup Employment Outlook Survey, employers reported increased caution in their hiring due to economic uncertainty. At the same time, as they look beyond the current period of economic uncertainty, business leaders feel optimistic about the future, and they are clear that skilled talent is the cornerstone to success and are holding on to their existing workforces today. That's how demand remains strong for some skilled workers and talent shortages persist, despite a cooling broader environment. Our industry remains on the leading edge of labor market trends, and the impact of the softening environment has been felt here first. Demand for temporary staffing has been running at lower levels in most markets in North America and in Europe. We have however, seen continued stabilization in various key markets, most notably in the U.S., the U.K., but now also in some other European markets, albeit at low levels. Permanent recruitment activity also continues to trend at stable levels over the last three quarters. With that said, although stabilization is often an encouraging first step towards growth, at this point it is still too early to call out an inflection in improving demand. We continue to navigate the current environment with agility and dexterity, driving increased sales activities to generate demand and maintaining focus on strategic initiatives that position us to capture growth and greater productivity when market conditions improve. Turning to our financial results, in the first quarter revenue was $4.4 billion, down 5% year-over-year in constant currency, or down 6% as adjusted. Our reported EBITA for the first quarter was $74 million. Adjusting for our run-off Proservia business in Germany and a minor loss for Argentina related currency-translated losses, EBITA was $80 million, representing a decrease of 38% in constant currency year-over-year. Reported EBITA margin was 1.7%, and adjusted EBITA margin was 1.8%. Earnings per diluted share was $0.81 on a reported basis, while earnings per diluted share was $0.94 on an adjusted basis. Adjusted earnings per share decreased 39% year-over-year in constant currency. In the first quarter, I spent time with our teams in Europe, Asia Pacific, Latin America and North America. The global labor market is diverse, and disparities exist across regions, industries and demographic groups. While some sectors have experienced job losses and economic downturns, others have seen growth and expansion and this corresponds with the shifts we're seeing; demand in Latin America and Asia Pacific remains solid, while in North America and Europe, we continue to see subdued-demand for resourcing and except for outplacement, workforce solutions. At the same time, we expect the digital transformation across industries, the rise of AI and the strength of the green transition will create new opportunities as demand for specialist talent grows. Amid these shifts, the ability to build a workforce that can adapt at pace, as transformation accelerates is critical and we believe ManpowerGroup has a big role to play in filling these needs for our clients in the future. I will now turn it over to Jack to take you through the results in more detail.

Thanks, Jonas. Revenues in the first quarter came in at the mid-point of our constant currency guidance range. As adjusted, gross profit margin came in above our guidance range and was at the mid-point of our range on a reported basis. As adjusted, EBITA was $80 million, representing a 38% decrease in constant currency compared to the prior year period. As adjusted, EBITA margin was 1.8% and came in at the mid-point of our guidance range, representing 100 basis points of decline year-over-year. During the quarter, year-over-year foreign currency movements had an impact on our results. Foreign currency translation drove a 2% unfavorable impact to the U.S. dollar reported revenue trend compared to the constant currency decrease of 5%, or 6% as adjusted. Organic days adjusted constant currency revenue decreased 4% in the quarter, slightly better than our guidance. Turning to the EPS bridge on Slide 4, reported net earnings per share was $0.81, which included $0.13 related to the run-off of our Proservia managed services business in Germany and a minor non-cash foreign currency loss related to the translation of our hyperinflationary Argentina business. Excluding these items, adjusted EPS was $0.94. Walking from our guidance mid-point, our results included a stronger operational performance of $0.01, lower weighted average shares due to share repurchases in the quarter, which had a positive impact of $0.01, foreign currency impact that was $0.02 worse than our guidance, and a tax rate which had a positive impact of $0.04 and interest and other expenses had a negative impact of $0.03. Next, let's review our revenue by business-line. Year-over-year, on an organic constant currency basis, the Manpower brand declined by 3% in the quarter, the Experis brand declined by 11%, and the Talent Solutions brand had a revenue decline of 11%. Within Talent Solutions, our RPO business experienced a year-over-year revenue decline in-line with the trend from the fourth quarter. Our MSP business revenues were basically flat compared to the prior year period reflecting sequential improvement from the fourth quarter, while Right Management experienced solid year-over-year revenue growth on higher outplacement volumes in the quarter. Looking at our gross profit margin in detail. Our gross margin came in at 17.5% for the quarter after adjusting for the run-off of our Germany Proservia business. Staffing margin contributed a 50 basis point reduction due to mix shifts and lower volumes, while pricing remained solid. Permanent recruitment, including Talent Solutions RPO, contributed a 50 basis point GP margin reduction, as permanent hiring activity in the first quarter remained stable at lower levels consistent with recent quarter trends. Right Management career transition within Talent Solutions contributed 20 basis points of improvement as outplacement activity continued to be solid in the first quarter. Other items resulted in a 10 basis point margin increase. Moving onto our gross profit by business-line. During the quarter, the Manpower brand comprised 58% of gross profit, our Experis professional business comprised 25%, and Talent Solutions comprised 17%. During the quarter, our consolidated gross profit decreased by 9% on an organic constant currency basis year-over-year, representing a slight decrease from the 8% decrease in the fourth quarter. Our Manpower brand reported an organic gross profit decrease of 6% in constant currency year-over-year, representing a mix related additional decline from the 4% decline in the fourth quarter. Gross profit in our Experis brand decreased 16% in organic constant currency year-over-year, representing a slight additional decline from the 15% decrease in the fourth quarter, driven by continental Europe. Gross profit in Talent Solutions decreased 11% in organic constant currency year-over-year, representing an improved sequential trend from the 14% decline in the fourth quarter. Although RPO volumes were relatively stable from the fourth quarter, the year-over-year GP decrease improved slightly. MSP experienced an improved GP trend from the fourth quarter, while Right Management continued to experience solid outplacement activity. Reported SG&A expense in the quarter was $698 million. Excluding the run-off of our Germany Proservia business, SG&A was 5% lower year-over-year on a constant currency basis representing a further decrease from the 4% decline in the fourth quarter on an adjusted basis. This reflects organic headcount reductions of 10% year-over-year. Our digitization strategy focused on transforming back office functions will drive further cost efficiencies and our corporate expenses reflect this investment. These strategic investments are progressing nicely and are expected to drive medium-term and long-term productivity and efficiency enhancements across our technology and finance functions worldwide through shared-service centers, leveraging leading global technology platforms. The underlying year-over-year SG&A decreases largely consisted of operational costs of $32 million and currency changes of $9 million. Adjusted SG&A expenses, as a percentage of revenue represented 15.7% in constant currency in the first quarter. The Proservia Germany run-off expense represented $2 million. I'm pleased to note there were no restructuring charges during the quarter. The Americas segment comprised 23% of consolidated revenue. Revenue in the quarter was $1 billion, representing a decrease of 1% compared to the prior year period on a constant currency basis. OUP was $26 million and OUP margin was 2.5%. The U.S., is the largest country in the Americas segment, comprising 66% of segment revenues. Revenue in the U.S. was $680 million during the quarter, representing an 8% days adjusted decrease compared to the prior year. OUP for our U.S. business was $12 million in the quarter representing a decrease of 61% after adjusting the prior year for minor restructuring costs. OUP margin was 1.8%. Within the U.S., the Manpower brand comprised 22% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. decreased 13% during the quarter, which was stable from the decrease in the fourth quarter. The Experis brand in the U.S. comprised 45% of gross profit in the quarter. Within Experis in the U.S., IT skills comprised approximately 90% of revenues. Experis U.S. revenue decreased 6% during the quarter, an improvement from the 13% decline in the fourth quarter and reflects increased short duration healthcare IT project activity and other items benefiting the first quarter. Talent Solutions in the U.S. contributed 33% of gross profit and experienced revenue decline of 2% in the quarter, an improvement from the 14% decline in the fourth quarter. RPO revenue declines in the U.S. reflect relatively stable level of permanent hiring programs in the first quarter compared to the fourth quarter. The U.S. MSP business saw a slight revenue decline representing an improvement from the fourth quarter, while outplacement activity within our Right Management business drove strong year-over-year revenue increases. In the second quarter of 2024, we expect a slightly improved revenue decline for our overall U.S. business, as compared to the first quarter decline, as we continue to anniversary the more significant pull back in demand in the year ago period. Southern Europe revenue comprised 45% of consolidated revenue in the quarter. Revenue in Southern Europe was $2 billion, representing a 5% decrease in constant currency. OUP for our Southern Europe business was $70 million in the quarter and OUP margin was 3.5%. France revenue comprised 56% of the Southern Europe segment in the quarter and decreased 5% in days-adjusted constant currency. OUP for our France business was $33 million in the quarter representing a decrease of 27% on a constant currency basis. OUP margin was 3%. Activity to-date in April 2024 is consistent with trends experienced in the first quarter. We are estimating the year-over-year constant currency revenue trend in the second quarter for France to be consistent with the first quarter trend. Revenue in Italy equaled $404 million in the first quarter, reflecting a decrease of 6% on a days-adjusted constant currency basis. OUP equaled $27 million and OUP margin was 6.8%. We estimate that Italy will also have a slightly improved revenue trend in the second quarter compared to the first quarter in constant currency. Our Northern Europe segment comprised 20% of consolidated revenue in the quarter. Revenue of $870 million represented a 12% decline in constant currency. As adjusted to exclude the run-off Proservia Germany business, OUP was $6 million and OUP margin was 0.7%. Our largest market in the Northern Europe segment is the U.K., which represented 35% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 13% on a days-adjusted constant currency basis. This reflects a stable trend from the rate of decline in the fourth quarter on this same basis. We estimate a similar year-over-year revenue trend in the second quarter compared to the first quarter. In Germany, adjusted revenues decreased 8% in days-adjusted constant currency in the quarter. As previously reported, the wind down of our Proservia managed services business in Germany was substantially completed in the previous quarter and the final run-off of client activity will be completed in the second quarter of 2024. In the second quarter, we are expecting a slightly increased year-over-year revenue decline compared to the first quarter. The Asia Pacific Middle East segment comprises 12% of total company revenue. In the quarter, revenues equaled $535 million, representing a decrease of 4% in organic constant currency. OUP was $20 million and OUP margin was 3.7%. Our largest market in the APME segment is Japan, which represented 51% of segment revenues in the quarter. Revenue in Japan grew 10% on a days-adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the second quarter. I'll now turn to cash flow and balance sheet. In the first quarter, free cash flow was strong and represented $104 million during the quarter and compares to $111 million in the prior year. At quarter end, days sales outstanding decreased about 1.5 days to 55 days. During the first quarter, capital expenditures represented $12 million. During the first quarter, we repurchased 665,000 shares of stock for $50 million. As of March 31st, we have 3.9 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $605 million and total debt of $985 million. Net debt equaled $380 million at quarter-end. Our debt ratios at quarter-end reflect total gross debt to trailing twelve months Adjusted EBITDA of 1.98 and total debt to total capitalization at 31%. Our debt and credit facilities remained unchanged during the quarter as displayed in the appendix of the presentation. Next, I'll review our outlook for the second quarter of 2024. Based on trends in the first quarter and April activity to date, our forecast anticipates that the second quarter will continue to be challenging in North America and Europe. Our forecast for Q2 also anticipates ongoing stable but low levels of permanent recruitment activity. With that said, we are forecasting earnings per share for the second quarter to be in the range of $1.24 to $1.34, which excludes a forecasted unfavorable impact of $0.08, related to the final quarter impact of the run-off of the Proservia Germany business. The guidance range also includes an unfavorable foreign currency impact of $0.07 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide which includes the Argentine Peso, which is impactful. Our constant currency revenue guidance range is between a decrease of 2% and 6%, and at the midpoint is a 4% decrease. Although the impact of net dispositions is minor, there are slightly more working days in the second quarter this year contributing to about 0.5 percentage additional decrease on an organic days-adjusted constant currency basis and this still rounds to a 4% decrease at the mid-point. This represents a similar rate of decrease compared to the first quarter trend on this same basis. Excluding the Germany Proservia run-off business impact on the second quarter of 2024, Adjusted EBITA margin is projected to be down 20 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the second quarter will be 32.5% on an adjusted basis, which reflects the overall mix effect of lower earnings from lower tax geographies in the current environment. As usual, our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate our weighted average shares to be 48.7 million. Our guidance also does not include the impact of the non-cash hyperinflationary balance sheet related currency translation adjustment for our Argentina business and we will report that separately. I will now turn it back to Jonas.

Thanks, Jack. History shows that investing in operational improvements during economic uncertainty can lead to greater resilience and faster growth in more favorable conditions. Though the external environment remains dynamic, our commitment to digital transformation and executing our Diversification, Digitization and Innovation strategy remains steadfast. The continued diversification of our services and product offerings and our global footprint has enabled us to capture new opportunities to help offset softening demand in certain regions and verticals. In Q1 our Experis business saw increased demand in Healthcare IT in the U.S. and our Manpower business saw solid demand in automotive and transportation in various European markets. In Talent Solutions, our career transition business in Right Management performed well, while our TAPFIN MSP business delivered improved trends from the prior quarter. In our Manpower business, clients continue to focus on hiring specialist skills at the intersection of technology and production. We’re well equipped to meet this growing need. Through our Manpower MyPath program, our Experis Academies, and our worldwide network of dedicated Talent Agents and Recruiters, we mentor, coach and guide hundreds of thousands of people to upskill and move up in their careers. In my recent travels, I saw those dynamics play out in a very tight labor market like Japan, where the value of our upskilling services is a very important part of our value creation for our client companies and our ability to attract talent to the opportunities in the market. On digitization, we continue to make good progress in our technology roadmap and are proud to lead the industry through the deployment of PowerSuite, our global cloud-based platforms for front and back-office. In the first quarter, we reached a significant milestone with the opening of our Global Business Services center in Porto, Portugal, our regional finance center to serve all of Europe and a central component of our global strategy to standardize, centralize and transform finance service delivery. This follows our successful mature finance shared service center in Mexico City serving Latin America. For 75 years, ManpowerGroup has been committed to doing business the right way for our people, our clients, and the communities in which we operate. We know these high standards are valued by all who work with us. As AI advances, we are guided by our people-first approach. We have established a multi-functional Ethical AI Committee that helps us stay in front of AI-related risks while enabling us to innovate and pilot new approaches that create value for our people and our clients. In March, our ethical leadership was once again recognized by Ethisphere, as we were named a World's Most Ethical Company for the 15th time. And I would like to thank our teams around the world who live our standards, create value for our clients and candidates, and help propel our strong ethical culture each day. I would now like to open the line to Q&A, operator.

Thank you. And our first question comes from Jeff Silber with BMO Capital Markets. Your line is open.

Thanks so much. I was wondering if you could give us a little bit more color on intra-quarter trends. And I know it's early in April, but anything you can tell us about what's been going on in the current quarter would be great.

Sure, Jeff. This is Jack. I'd be happy to discuss that. I think, as we've mentioned in some of our larger markets, activity levels in April so far are pretty much aligned with what we saw in the first quarter. In France, for example, our guidance is in line with our first quarter results overall. We've also talked a lot about the U.S. in our prepared remarks, and there you can see the benefits of anniversary and lapping the prior-year declines. However, on an underlying basis, the results are stable when you look at the Manpower and Experis results as well. In April, that's the main point. There was a slight Easter impact from March to April in some markets, such as Italy and Northern Europe. Over the course of the first quarter, we observed stable trends in many of our markets. March was somewhat tricky due to the Easter timing this year compared to last year, but if you step back from that, I think we can say that we saw a lot of stable trends. We expected France to decline in the first quarter compared to the fourth quarter, and that was in line with our expectations as we monitored activity levels throughout the quarter. I believe we are ending the quarter in alignment with our overall first quarter results. That's a brief overview of our largest markets. Additionally, the U.K. has been stable for several quarters now, and as we look at activity levels for the second quarter, we are seeing a similar expectation.

All right, that's really helpful. If I could step back and maybe more of a macro question. It looks like in the U.S., the Fed is probably going to keep interest rates higher for longer, but if we look at the ECB, they seem to be closer to making cuts. If that does happen, how do you think that would impact your businesses in those different geographies?

Well, it's hard to say, Jeff. But of course, if the central banks are deciding to lower the interest rates. They're acknowledging that the cooling effects of the higher interest rates is coming to bear onto those economies. And I think, we are seeing that play out in Europe where economic activity is slowing down, labor markets are cooling, and they are cooling slightly faster than they are cooling here in the U.S. So the idea then of course with dropping interest rates would be to make sure that the economy lands softer or starts accelerating again. And when that happens, our business, of course, will start to see the effects of that in improving demand.

All right, great. Thanks for the color.

Thank you. Our next question comes from Trevor Romeo with William Blair. Your line is open.

Hi, good morning. Thanks so much for taking the questions. First one I had was just on the U.S. Experis business. Just thinking about the overall labor market for IT Talent. What are you seeing now as far as kind of the supply and demand or the tightness of that labor market? Has there been any kind of additional slack coming in as the downturn has continued? Just kind of trying to get a sense for how quickly that business could snap back once client confidence improves.

Thanks, Trevor. The market for IT skills in the U.S. remains strong, but it's not as tight as it was and of course not even close to as tight as it was immediately post-pandemic. What we're seeing is continued weakness on the enterprise sector, large tech companies, still being cautious in terms of their overall hiring and coming off a pandemic hiring boom. But convenience demand looks reasonable. It is still weak, but it's stronger than the demand that we see from enterprise tech clients or enterprise clients at large. And just as Jack just mentioned, what we've observed is a stabilization sequentially, which we take as an encouraging first sign. Companies are looking for more specialized skills. And we believe that as the outlook firms up and employers feel better about the economic outlook and see less uncertainty, that those trends are going to continue to improve.

Thanks, Jonas. That's helpful. For a follow-up, I'm curious about the level of competition in some of your major markets. With the current low demand, is the competitive environment generally rational, or are competitors attempting to gain market share by lowering their prices? Overall, do you feel like you're gaining, maintaining, or losing share in your key markets?

Overall, I think we would gauge ourselves as being with markets and competition remains intense but rational. I think, you can see this come through also in our staffing margin and our overall GP margins which are holding up well despite the headwinds that we're seeing in particular in Europe and in North America. So it is always a competitive environment but the underlying reason for that stability and the rational part is that labor markets continue to be strong. There's no doubt that labor markets are cooling both in Europe and in North America, but they're still tight from a historical perspective. And that means it's still not easy to find the talent that you need. You may be more judicious, more surgical in your hiring. You may be more cautious in terms of how many people you want to bring on. But employers are still looking for talent. And you can also see that in our talent shortage surveys that we do on a regular basis, that employers are still finding it difficult to find exact skill sets that they want, exactly when they want them. So overall, it's rational, and I think it remains competitive, but we can see pricing stability across all of our markets and that's reflected in our staffing and overall GP margins.

Great, Thank you very much.

Thank you. Our next question comes from Mark Marcon with Baird. Your line is open.

Hey, good morning and thanks for taking my questions. A few different questions. One really quick one. This term as a total percentage of GP, including RPO, where did that come in, Jack?

In the first quarter, it came in at 16.8% for us. We discussed this in the previous quarter when it had decreased slightly. In the first quarter, seasonally, it's typically a lower staffing quarter in terms of gross profit dollars. However, the permanent placements actually improved slightly from a dollar perspective, leading to a better mix reflected in the ratio of 16.8%.

Okay, great. And then just a couple of very short numbers questions, this with regards to Experis in terms of the trends, how much were the IT healthcare projects and particularly in the US and if we strip that out, how did things look and would you expect things to still be stable to improving if we strip out those IT staffing projects, unless those are sustainable and a new promising line of business.

Thanks Mark. I think on the US Experis business, yeah, we did call out that healthcare IT. We did see a good deal of work in the first quarter, I would attribute that to some of those, you know, those go-live works in the hospital system were deferred during 2023. So we did see a spurt of that activity in the first quarter. And we did call it out as a big project related because I wouldn't anticipate that that level of activity will continue in that specific space in future quarters here. A bit of that was considered a catch-up if you will. But what I would say, maybe broader to your point, is I think we are seeing generally relatively stable trends in the U.S. Experis business at lower levels of course, based on what we experienced last year. And I think, Jonas' point, I think when we look at enterprise tech, still very sluggish in terms of demand, but convenience holding up a bit better. So, as we step back and we look forward, I would expect the underlying stable trends that we talked about will continue. We're not seeing a big step up in enterprise, and we're seeing convenience kind of continuing at current levels. And as we go forward, you know, we start the anniversary, the second quarter of last year was, you know, the biggest decline of the year. And so we will anniversary that and that will help a bit on the year-over-year trend, as we go into the second quarter. So that's how I would say it at this point, kind of in-line with what Jonas said. No inflection point at this point, but we are seeing stability.

Right, and then, Jonas, if I could ask a couple of kind of bigger picture questions. One with regards to just kind of the US, predominantly the Manpower business, when we think about like what's happened with regards to higher wage rates, particularly in certain states that have come through, and then thinking about all the various gig opportunities that are out there that are available to individuals. What are you seeing just in terms of the quality of the people that you can place? And what is the productivity level? Or how are clients responding to these higher wage rates? What are your thoughts there?

So, Mark, I think what we're seeing in the Manpower business is clearly the headwinds from a manufacturing sector that's had a tough time now frankly, for a number of years. And we've seen that reflected in PMI. But from a demand perspective, what we see playing out in the U.S., is really still an effect of the pandemic and the post-pandemic. So the dislocation in the U.S., market during the COVID pandemic was much bigger than it was – case in any other place across the world. And so lots of workers left their workplaces, then they came back and employers were really faced with shortages that were scrambling to fill. In some cases, such as in the tech sector, they really engaged in a pandemic boom. But every category of employer was struggling really hard to find the talent that they needed to recover and then take advantage of the post-pandemic demand surge for products and services. What we're seeing now though is that employers are still holding on to their workforce. They're much more surgical in their hiring of temporary staff. And as an industry, we're at the leading edge of a cooling labor market. What's unusual in this cycle is the length between the decline in the temporary staffing industry and a more rapid cooling to a limited degree, we still believe, of the broader labor market. And we can just reflect on the very strong labor market numbers we saw at the end of March. But we still think that is going to play out. So employers are cautious now. They are still navigating an uncertain environment, high inflation. But in terms of wages, the labor markets are still so tight that employers understand they are having to pay those wages, which of course benefits workers that have real wage increases, which in turn continues to drive good consumption in the U.S., economy which also then may fuel some additional inflation but above all provides purchasing power to the consumers. So all-in-all, I would say we think this is playing out as we would normally expect during a cycle but with the post-pandemic anomaly of a slow motion move of a cooling labor market. But the overall trend with the evolution of technology is always moving towards a higher skilled workforce and expectations then of increasing productivity levels of that higher skilled workforce. And I think that's a general trend that we've seen over a number of years and now it's not really any different.

Great, Jonas, you've mentioned your AI initiatives. Can you provide a bit more detail on how, after nearly a year of exploring ChatGPT, you envision your operations becoming more efficient in the next two to three years? I'd like to understand this not only in terms of shared services but also in recruiting and placement matching.

Oh, that is actually one of the things we are quite excited about, because as you know, we've been on a multi-year journey of digital transformation, and although I'm certainly not an expert in AI, I'm learning as much as I can. And what I have learned is that you cannot apply AI unless you have a modern technology infrastructure. And we believe that we have a very modern technology infrastructure that we've implemented and continue to implement this year as well, that is able to leverage not only back office and shared-services efficiencies using automation for repetitive tasks. But also providing our recruiters and our salespeople with the best tools that they need to do their jobs better, as well as providing superior candidate experiences to the people that we're recruiting in Manpower, people we're recruiting in Experis, or in talent solutions. So we think the impact of AI can be quite substantial. I would say, it's early days yet, and despite everything that we read in the papers, the actual effects of AI are yet to manifest themselves in a business environment. As an anecdote, the highest level of recruitment of AI skills, counterintuitively maybe, but maybe not, is coming from the financial services sector, which of course is a massive user of technology and continuing to make significant investments. So AI will give us great opportunities and we think we in particular are extremely well-placed because we are the only company or industry that is leveraging global platforms across all of our major geographies, one instance platforms. So once we have AI applied to a particular geography, we can quickly transfer those learnings into other geographies because we're all operating in the same system.

Appreciate the answers. Thank you.

Thanks, Mark.

Thank you. Our next question comes from Josh Chan with UBS. Your line is open.

Hi. Good morning, Jonas and Jack. Thanks for taking my questions. You mentioned that there's no restructuring charge in the quarter, which I think is the first time in a while. And so is that timing related? Or should we read that to suggest that you're satisfied with your organizational structure for the first time in a number of quarters? Thank you.

Thanks, Josh. I'd be happy to elaborate on that. No, we weren't satisfied not to have restructuring charges. We take restructuring charges very seriously. They must involve sustainable permanent savings as part of the business case for those actions. Following 2023, we've discussed this extensively and have taken significant actions this year. At this point, I believe we have the right balance. As we evaluate activity levels, we've mentioned a lot about stability, and we're not observing any further dramatic declines in our major markets. Given this, I think we've made suitable adjustments based on the current trends, and we'll keep monitoring that moving forward. If the environment changes significantly, we will, of course, take action to protect our margins. However, we are very focused on being prepared for an upturn and feel we've made the right adjustments. We're also concentrating on ensuring we have the right sales capabilities in the current markets, and that will remain our focus going forward.

Perfect, yeah, that's encouraging. Thank you, Jack. And then I just wanted to ask about your confidence behind the improving rate of decline in the U.S. I guess, how much does that depend on Experis recognizing that there were some projects in Q1 perhaps but just wanted to get some color in terms of your confidence around trends continuing to get better in the U.S. Thank you.

Overall we think the market appears to be stabilizing not only in Experis, but across all of our brands. So the same for Manpower and in Talent Solutions, we've seen RPO stabilize at a lower level. We've seen our TAPFIN MSP business in Talent Solutions actually improved a bit. And of course, Right Management with our placement is tracking well, although not accelerating. So that gives us an idea that as an industry and from our perspective looking at where we're positioned that if things stay the way they are, the trends should remain stable, and that's what we've guided to in the second quarter.

Great. Thank you, Jonas, and thank you both for your time. Good luck in the second quarter.

Thanks.

Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open.

Hi, this is Princy for Manav. Thank you for taking my question, Jack and Jonas. You mentioned during the call that you're continuing to diversify your services and product offerings, and that this would help offset softening demand in certain areas. I would like to know which specific verticals and regions you are experiencing this softening demand in.

Princy, I understand your question about the areas you've mentioned where there's some strength helping to balance out broader weaknesses. In terms of sector weaknesses, manufacturing continues to be very sluggish, excluding automotive in Europe, where we have observed solid performance, particularly in Germany, France, and Italy. However, aside from automotive, manufacturing remains a significant area of concern. Additionally, we've seen ongoing sluggishness in enterprise tech, with cautious demand and no noticeable improvement. The financial sector, which was strong in the first half of 2023, has shown more cautious buying behavior for staffing services starting from the second half of last year into the first quarter, and this trend continues. On the positive side, aerospace has been strong for us, especially in France. Construction in certain markets has also been reasonably good, and we noted positive project-related activity in healthcare IT during the first quarter in the US.

Thank you. And I wanted to ask a follow-up. What kind of demand are you seeing currently for AI-related skills and roles? I know you mentioned that it’s still early innings.

I think I addressed the question about the demand for AI skills earlier. We are observing an increase in demand for these skills, but in the broader context, the volumes are still quite small. Interestingly, the financial services sector is the one that is actively posting the most job ads and orders for AI skill sets. While one might assume that this demand comes from the technology sector, it’s primarily driven by the financial services sector, which is operating large technology platforms and is in need of AI skills. However, I want to emphasize that even though these skills are hard to find and demand is growing quickly, the overall size of the demand remains small.

Thank you. Our next question comes from Tobey Sommer with Truist Securities. Your line is open.

Thanks. I wanted to ask you about your productivity improvements and investment initiatives and the impact on SG&A percentages, demand rebounds. Maybe you could think about it in the context of would you be able to achieve a different SG&A percentage at the recent peak in revenue in 2021, around $21 billion? Any change in complexion of those two pieces? Again, I'm thinking out several years when demand rebounds when we get back there.

Thank you for the question, Tobey. I'm glad to address it. We definitely anticipate seeing significant improvements in our efficiency ratio. Looking at SG&A as a percentage of gross profit or revenues, I'd say gross profit is likely the most relevant metric. When we consider pre-pandemic efficiency levels and our recent performance, we've witnessed a decline in leverage. However, based on our current initiatives, as we mentioned in our prepared remarks, we're making solid progress in our transformation programs. We've talked about the Shared Service Center and the Global Business Center we've recently opened in Porto, Portugal. These initiatives, alongside our cloud-enabled financial framework, will drive considerable efficiencies in our cost structure moving forward. This is in addition to the substantial advancements we've made with the front office PowerSuite implementations, which will become more impactful as recruiter productivity improves with returning volumes. When all these factors are combined, we expect a notable improvement in SG&A as a percentage of gross profit when these programs fully take effect as volumes return to previous levels. This should lead to a significant enhancement in those ratios, which will also be reflected in our EBITA margin, as we've discussed before. We anticipate a dual effect: a reduction in certain investment expenditures as these programs progress, paired with the realization of efficiencies, which will greatly enhance our EBITA. These elements are crucial for our strategy aimed at improving EBITA margins, and you will see this reflected in the ratios as these programs evolve.

Thanks. I was hoping you could comment on your capital deployment strategy, because we're a couple years into softening demand. And historically, when you kind of, as a management team, have gotten signs that the coast is clear and demand signals are improving, you typically deploy a little bit more capital at that time in the form of acquisitions. Is that still the playbook and what areas or criteria may you use to select acquisitions?

I appreciate your question, Tobey. Overall, our strategy remains unchanged. You are correct that we have been very cautious, but our acquisitions have primarily focused on the IT resourcing sector, which has proven beneficial for us, especially considering the acquisition we made in 2021 that is performing well. As Jonas mentioned, the convenience aspect of Experis in the US is outpacing the enterprise sector, so that shows continued potential for us moving forward. In the current market, it is true that conditions haven't been favorable for acquisitions. In the meantime, we have been returning excess cash through our share repurchase program, and maintaining our dividend is still a key focus for us. We plan to continue this approach. When it comes to acquisitions, we take great care and conduct thorough analyses, considering various factors, particularly cultural fit. Realistically, we would look to this area more as the market improves. That summarizes our current position.

Thank you.

Thank you. Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open.

Hi. Good morning. This is Stephanie Yee, filling in for Andrew. We wanted to ask about the declining temporary help figures in the U.S. that have been unusual for the past two years. What do you think the recovery will look like for Manpower U.S. and the staffing industry in the U.S. given this unique situation?

Thanks, Stephanie. We agree that the decline of temporary workers in the U.S. for 17 consecutive months, especially without a recession or a major economic downturn, is unprecedented. When you consider the prior six months of declining growth, it totals 23 months in our industry in the U.S. We believe there is a lag effect influenced by the pandemic and post-pandemic hiring, with employers holding onto their workforces and absorbing flexibility by reducing temporary staff use while increasing part-time work. They are taking every possible measure to enhance flexibility without significantly impacting permanent payrolls. However, assuming no severe recession, employers are likely to remain cautious until uncertainties clear up to some degree. At that point, we anticipate a strong return to using temporary staff, as it offers great flexibility across various industries, especially in uncertain times. Many of these workers, with different skill levels, tend to transition into permanent roles over time, and we're already seeing strong conversion rates. The rebound's strength is hard to predict since it depends on overall economic conditions and the speed of recovery. Currently, global growth is strongly influenced by U.S. economic growth, one of the highest worldwide, shaping the outlook for other economies. As conditions improve, particularly in the manufacturing sector and when tech companies resume delayed transformation projects, we expect positive developments for Manpower, Experis, and Talent Solutions. Right now, our industry is experiencing a cyclical downturn partly caused by pandemic-related anomalies. We anticipate that this will eventually stabilize, and it's encouraging to see signs of stabilization not only in the U.S. and U.K. but also in France and Italy, which we project will stabilize by our second quarter. This gives us hope for a recovery that will drive demand and improve numbers across all our brands.

Okay, great. I really appreciate the perspective. Thank you.

Thanks, Stephanie.

Thank you. Our next question comes from Stephanie Moore with Jefferies. Your line is open.

Hi, good morning. Thank you. This might be a good follow-up to the last question. I'm digging into that a bit further. Given your extensive knowledge of past cycles and your conversations with customers, I’m trying to be more specific. In your opinion, what needs to happen broadly to transition from this period of stabilization to a positive inflection? Are you suggesting that we need to see unemployment rise first and the economy take a step down, or could this cycle be different from previous ones? I’d love your thoughts on this.

It's already different, Stephanie. We have not observed the typical cooldown that usually follows our industry being at the forefront, followed by a slowdown in the wider labor markets. While we expect that to occur, we don't believe the cooling will be too pronounced, but enough to introduce some slack and initiate the growth cycle within our industry. Key factors that could trigger this change include a reduction in interest rates and a decrease in geopolitical tensions, both of which are critical. Currently, we perceive Europe as adhering more closely to a traditional cycle, with the economy cooling down. It's likely that the European Central Bank will lower interest rates, potentially even before the Federal Reserve does, which would signal an opportune time for stimulating economic growth in Europe. Given our significant business presence in Europe, we would view that as a positive indicator. While we cannot predict exactly when this might occur in either Europe or the US, we anticipate that is the direction we are headed. The turning point will likely be closely tied to reductions in interest rates and declining inflation levels. At present, inflation remains high and is moving in an unfavorable direction, which needs to stabilize before we can expect things to progress as we hope.

Got it. Thank you so much.

Thank you.

Thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open.

Hi, thanks. Good morning. You mentioned trends in France and Italy were beginning to stabilize, which is an improvement from past quarters. You touched on the auto sector, but can you elaborate a little bit more on what you're seeing in the labor markets in these countries and what's helping to drive that stabilization?

Yeah, the labor markets in both Italy and in France have cooled somewhat. The Italian economy is actually doing very well overall, and a lot of that comes from EU funds that are being channeled and deployed across Italy as part of the Recovery Act in Europe. And France has seen a cooling of the labor market, a cooling of economic growth. But I think since, we are an industry that is concurrent with economic trends that we've seen, you know, the step-downs that have occurred over a number of quarters, as we look at the economy and the labor markets overall that the trends within our industry should lead to a stabilization with continued headwinds. So let's remember that these are still markets that are well below where they were pre-pandemic, but that we are starting to see that stabilization as we have seen in the UK, in the US, now several more countries. Our two other big operations, France and Italy. We estimate will also stabilize into our second quarter. And that gives us the platform to hope for a recovery that will then manifest itself to increase demand and improve numbers for all of our brands.

Got it. That's helpful. And then I wanted to dive further into your productivity initiatives and cost cutting efforts. Can you talk a little bit more about where you are in your journey to achieve improved productivity and right size headcount?

I think, as you’ve observed, in an environment like this, we are reducing our debt, which is resulting in decreased productivity. We are carefully adjusting our SG&A and headcount, as we aim to alleviate the short-term impacts of the challenges we are facing, particularly in Europe and North America. At the same time, we want to ensure we have enough resources to be well-positioned for the rebound when it occurs. It is at that point that we will see productivity improvements positively impacting our bottom line. You can already see some improvement in our bottom line from the first quarter to the second quarter. As mentioned, the first quarter is typically weak due to the beginning of the year and adjustments to taxes in various countries, but it improves as we move into the second quarter. However, the significant improvement will come as our volumes, associates, and consultants for Experis increase, allowing us to leverage the investments we have made in technology and recover the productivity lost during the cyclical downturn.

Very helpful. Thank you.

Thanks, George.

Thank you. And our last question comes from Heather Balsky with Bank of America. Your line is open.

Hi, this is Emily Marzo on for Heather Balsky. I'm wondering if you could give any additional color into the pricing environment. I believe you called out the staffing had solid pricing. You've seen, but I'm wondering if you could give any additional color there.

Yeah, I would say really there isn't a whole lot of additional color to give. I think the headline really is pricing has been stable. It's been holding up. I think one of the previous questions was really asking along the same lines, despite volumes being at lower levels. There really hasn't been much of an impact on pricing. And I think that story remains the same. I think that really is the takeaway. And although our staffing margin has come down year-over-year, that's really just mix, just mix of the businesses that is having that effect. On an underlying basis, pricing remains strong and we think the market is quite rational.

Thank you.

Thank you. There are no further questions. Please proceed with any closing remarks.

Excellent. Thank you very much for attending our Q1 earnings call. We look forward to speaking with you again in July for our second quarter earnings call. Until then, thanks very much and we look forward to speaking with you again soon.

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.