Welcome to ManpowerGroup's Third Quarter Earnings Results Conference Call. You'll be put in listen-only mode until the question-and-answer time begins. This call is being recorded. If you care to drop off now, please do so. I would now like to turn the call over to ManpowerGroup's Chairman and CEO, Mr. Jonas Prising. Sir, you may begin.

Welcome and thank you for joining us for our third quarter 2024 conference call. Our Chief Financial Officer, Jack McGinnis, is with me today. For your convenience, we have 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, then Jack will go through the third quarter results and guidance for the fourth quarter of 2024. I will 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. I recently returned from visits with our teams and clients in Europe, including spending two days with Country Managers from across our key markets. And as market experts, each of them speaks with CEOs and business leaders every day. Central to our discussions was the broader economic environment and what we are hearing from our clients on-the-ground. Right now, we see a continuation of the cautious employer approach we've been talking about for some time, particularly in Europe and North America, while the situation is good in Latin America and Asia Pacific. In essence, there hasn't been a significant tone change in the conversations we've been having with employers over the past 12 months. They remain focused on managing the macro-economic and geopolitical challenges impacting their businesses. Most are optimistic yet cautious about market conditions improving, and they are largely maintaining their current workforce. Since the timing of any improvement is not certain, they are still hesitant to increase their spend and expand their workforce without a significant step change in economic outlook. Looking at labor markets broadly, we continue to see resilient top line trends with unemployment holding relatively steady in many places and little indication of widespread layoffs. In our Q3 earnings call last year, we spoke about our industry being at the leading edge, the first to feel the impact going into downturns, and the first to benefit from improving outlooks on the other side. While we're not seeing signals of significant improvements, we're also not seeing signs of a significantly weaker environment ahead. Our most recent ManpowerGroup Employment Outlook survey of 38,000 employers published in September found employers report cautious yet steady hiring intentions for the three months ahead, with many prioritizing, retaining, and attracting workers with specialized flexible skills and an adaptable mindset to adjust to the evolving requirements. We believe this growing demand for specialized and flexible skill sets will serve us well. Despite new hiring remaining at lower levels in many places, labor markets remain historically tight as demand and supply mismatches persist. Companies are seeking deeper pools of expert talent and new ways to skill and reskill talent, as well as increase mobility within their own organization, particularly as advances in AI transform roles and increase the value of soft skills. Now, turning to our results in the third quarter, revenue was $4.5 billion, down 2% year-over-year in constant currency. Our reported EBITA for the quarter was $79 million. Adjusting for restructuring, EBITA was $117 million, representing an increase of 2% in constant currency year-over-year. Reported EBITA margin was 1.7% and adjusted EBITA margin was 2.6%. Earnings per diluted share was $0.47 on a reported basis, while adjusted earnings per diluted share was $1.29; adjusted earnings per share decreased 8% year-over-year in constant currency. Regardless of the environment we find ourselves in, we are focused on maximizing the opportunity to deliver services today while being well positioned to capitalize more broadly when market conditions improve. The diversity of our geographic and client industry vertical mix from IT to Healthcare and Life Sciences, Industrials, Consumer Goods, and Public Sector is serving us well, and our data is enabling us to provide real-time assessments, which are experiencing headwinds and tailwinds by market. We currently see encouraging signs in Healthcare and Life Sciences and select pockets within Industrials, so we're stepping up our sales activity accordingly. We're also seeing improvement in the manpower sales pipeline for both a number of opportunities, and the pipeline size has grown throughout 2024. I will now turn it over to Jack to take you through the results in more detail.

Thanks, Jonas. Revenues in the Q3 came in at the midpoint of our constant currency guidance range. Gross profit margin came in at the low end of our guidance range. As adjusted EBITA was $117 million, representing a 2% increase in constant currency compared to the prior year period. The adjusted EBITA margin was 2.6% and came in at the high end of our guidance range, representing 10 basis points of improvement year-over-year. During the quarter, year-over-year foreign currency movements had an impact on our results. Foreign currency translation drove a 1% unfavorable impact to the U.S. dollar reported revenue trend in addition to the constant currency decrease of 2%. Organic days adjusted constant currency revenue also decreased 2% in the quarter, slightly better than our guidance. Turning to the EPS bridge, reported net earnings per share was $0.47; adjusted EPS was $1.29 and came in very close to the midpoint of our guidance range. Walking from our guidance midpoint of $1.30, our results included a stronger operational performance of $0.04, a lower weighted average share count due to share repurchases in the quarter, which had a positive impact of $0.01, a higher tax rate on country mix, which had a negative impact of $0.04, a foreign currency impact that was $0.02 better than our guidance, and interest and other expenses had a negative impact of $0.04. Restructuring costs and a discrete tax charge represented $0.82, resulting in the reported EPS of $0.47. Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand revenue trend was flat in the quarter. The Experis brand declined by 10%, and the Talent Solutions brand had a revenue increase of 7%. Within Talent Solutions, our RPO business experienced a year-over-year revenue decline, which was a slight improvement from the trend in the second quarter. Our MSP business revenues increased compared to the prior year, while Right Management experienced a year-over-year revenue growth on higher outplacement volumes in the quarter. I'll give more color on the trends from the previous quarter when I cover gross profit trends. Looking at our gross profit margin in detail, our gross margin came in at 17.3% for the quarter. Staffing margin contributed a 10-basis point reduction due to mix shifts and lower volumes while pricing remained solid. Permanent recruitment including Talent Solutions RPO contributed 20 basis point GP margin reduction as permanent hiring activity in the Q3 decreased year-over-year. Right management career transition within Talent Solutions contributed 10 basis points of improvement as outplacement activity was solid in the Q3. Other items resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 60% of gross profit, our Experis professional business comprised 24% and Talent Solutions comprised 16%. During the quarter, our consolidated gross profit decreased by 4% on an organic constant currency basis year-over-year, representing an improvement from the 6% decline in the second quarter. Our Manpower brand reported an organic gross profit decrease of 2% in constant currency year-over-year, an improvement from the 4% decline in the second quarter. Gross profit in our Experis brand decreased 12% in organic constant currency year-over-year, a decline from the 7% decrease in the second quarter, reflecting the continuation of a challenging professional staffing environment. Gross profit in Talent Solutions increased 9% in organic constant currency year-over-year, representing an improvement from the second quarter decrease of 11%. All brands within Talent Solutions achieved gross profit growth in the quarter as RPO and MSP volumes were slightly higher in the third quarter compared to the previous quarter, and right management volumes also increased sequentially, driven by increased activity in France and the U.K. Reported SG&A expense in the quarter was $711 million; excluding restructuring costs, SG&A as adjusted was down 5% year-over-year on a constant currency basis. The year-over-year SG&A decreases largely consisted of reductions in operational costs of $32 million. During the quarter, corporate expenses were reduced for incentive and certain other health plan trends, and we would expect corporate costs to return to prior quarter run rate trends next quarter. Underlying corporate costs continue to include our back-office transformation spend, and these programs are progressing well with expected medium and long-term efficiencies. Currency changes also contributed to a $7 million decrease. Adjusted SG&A expenses as a percentage of revenue represented 14.8% in constant currency in the quarter. Restructuring costs in the third quarter totaled $38 million. The Americas segment comprised 23% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 2% compared to the prior year period on a constant currency basis. As adjusted OUP was $41 million and OUP margin was 3.9%; restructuring charges of $5 million included the largest actions in the U.S. with modest amounts in Argentina and Canada. The U.S. is the largest country in the America segment, comprising 66% of segment revenues. Revenue in the U.S. was $697 million during the quarter, representing a 4% days-adjusted decrease compared to the prior year. This represents a slight additional decrease from the 2% decline in the second quarter as Manpower and talent solutions partially offset the non-recurrence of Experis Healthcare IT projects. As adjusted OUP for our U.S. business was $26 million in the quarter; as adjusted OUP margin was 3.7%. Within the U.S., the Manpower brand comprised 24% of gross profit during the quarter, revenue for the Manpower brand in the U.S. crossed back over to growth, increasing 1% days adjusted during the quarter, which was a step up from the slight decline in the second quarter. The Experis brand in the U.S. comprised 42% of gross profit in the quarter; within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenue decreased 11% on a day’s adjusted basis during the quarter compared to the 3% decline in the second quarter, due to the expected non-recurrence of healthcare IT go-live projects in the third quarter. Talent Solutions in the U.S. contributed 34% of gross profit and also crossed over to growth during the quarter with a revenue increase of 10%, an improvement from the 2% decline in the second quarter. RPO revenue increased in the U.S., reflecting the increased activity and select client programs. The U.S. MSP business executed well during the quarter, posting strong revenue increases; outplacement activity within our right management business leveled off year-over-year. In the fourth quarter of 2024, we expect the rate of revenue to be similar to the third quarter trend for our overall U.S. business. Southern Europe revenue comprised 46% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.1 billion, representing a 1% decrease in constant currency. As adjusted, OUP for our Southern Europe business was $81 million in the quarter and OUP margin was 3.9%. Restructuring charges of $5 million represented actions in France, Spain, and the regional head office. France revenue comprised 56% of the Southern Europe segment in the quarter and decreased 5% on a days adjusted constant currency basis. As adjusted, OUP for our French business was $44 million in the quarter. Adjusted OUP margin was 3.7%. The Olympics provided a modest boost in activity in the middle of the quarter, and the month of September experienced a slight further decrease in line with activity levels in the Q2. Activity to date in October is largely consistent with the trends experienced in September, and we are estimating a fourth quarter trend to reflect a slight further decline from the fourth quarter trend. Revenue in Italy equaled $419 million in the third quarter, reflecting a decrease of 1% on a day’s adjusted constant currency basis. OUP equaled $27 million, and OUP margin was 6.5%. We estimate that Italy will have a slightly improved revenue trend in the fourth quarter compared to the third quarter. Our Northern Europe segment comprised 19% of the consolidated revenue in the quarter. Revenue of $828 million represented an 11% decline in constant currency. As adjusted, OUP was flat. This was the most challenged part of our business subject to the lowest economic growth rates, with many markets operating a bench model, which creates higher financial and operational pressures than we see in other markets. The restructuring charges of $26 million represented $11 million in the Nordics, $9 million in Germany, with modest additional charges in the UK, the Netherlands, Belgium, and Regional Head Office. 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 12% on a day-adjusted constant currency basis. The UK market continues to be very challenging, and we expect the rate of revenue decline to worsen in the Q4 compared to the Q3 based on reduced seasonal holiday and lower public sector demand. In Germany, revenues decreased 16% in day-adjusted constant currency in the quarter. Germany manufacturing trends have been weak, driving further declines. In the Q4, we are expecting a similar to slightly worse year-over-year revenue decline compared to the Q3 trend. The Nordics continue to experience very difficult market conditions, with revenues decreasing 19% in day-adjusted constant currency in the quarter. Within the Nordics, Sweden is experiencing the largest declines based on a weak manufacturing and auto environment. The Swedish market was also impacted by the introduction of new temporary worker term limits beginning in October of 2024, where many more clients than we expected converted our Manpower temporary staff to their permanent payrolls ahead of this change. We believe temporary worker demand impacts from the shortened term limits to 2 years will normalize in the quarters ahead as it has in many other European markets that have instituted similar adjustments in the past. The Asia-Pacific, Middle East segment comprises 12% of our total company revenue. In the quarter, revenues equaled $563 million, representing an increase of 3% in organic constant currency. As adjusted, OUP was $25 million and OUP margin was 4.5%. Restructuring charges of $2 million relate to actions taken in our Australia business. Our largest market in the APME segment is Japan, which represented 52% of segment revenues in the quarter. Revenue in Japan grew 9% on a day-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 fourth quarter. As part of our ongoing strategy to optimize our mix of businesses and geo footprint, we have recently agreed to sell our South Korea business, which will operate as a Manpower franchise in the future. We expect this transaction to close at the end of October, which will be reflected in my guidance for the fourth quarter. I'll now turn to cash flow and balance sheet. In the third quarter, free cash flow represented $67 million and compares to $245 million in the prior year. One-time restructuring-related payments on the wind-down of our Germany Proservia business decreased our free cash flow during 2024. At quarter end, days sales outstanding decreased by about 2 days to 57 days. During the third quarter, capital expenditures represented $16 million. During the third quarter, we repurchased 415,000 shares of stock for $29 million. As of September 30th, we have 3.1 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $411 million and total debt of $1 billion. Net debt equaled $614 million at quarter end. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of 2.1 and total debt to total capitalization at 32%. Our debt and credit facility arrangements remain unchanged during the quarter as displayed in the appendix of the presentation. Next, I'll review our outlook for the fourth quarter of 2024. Based on trends in the third quarter and October activity to date, our forecast is cautious and anticipates that the fourth quarter will continue to be challenging in North America and Europe. Within Europe, Northern Europe continues to experience the most challenging conditions, and we anticipate lower seasonal holiday activity and extended year-end plant closures. As I mentioned, we expect the sale of our South Korea business to close at the end of October, and accordingly, our guidance only reflects one month of South Korea operations, and we have provided organic variances to show like-for-like revenue trends. With that said, we are forecasting earnings per share for the fourth quarter to be in the range of $0.98 to $1.08. The guidance range also includes an unfavorable foreign currency impact of $0.01 per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a decrease of 1% and 5%, and at the midpoint is a 3% decrease. The impact of the South Korea disposition is about 1% of the decrease, and there is about one more working day in the fourth quarter. In summary, our organic days adjusted constant currency revenue decrease represents 4% at the midpoint. This represents a slight decrease compared to the third quarter trend on this same basis. EBITA margin for the fourth quarter is projected to be down 30 basis points at the midpoint compared to the prior year. We estimate the effective tax rate for the fourth quarter will be 37.5%, which reflects the overall mix effect of lower earnings from lower tax geographies in the current environment, as well as the impact of valuation allowances and certain markets which will reverse in the future when those markets rebound. The Government of France very recently published the preliminary budget for 2025. Although the preliminary budget currently includes provisions that would increase our corporate tax rate in France temporarily in 2024 and 2025, we will wait to quantify this potential impact along with other possible provisions until the budget review by all the appropriate stakeholders in the French government is further along. In addition, as usual, our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate our weighted average shares to be 48.1 million. We will carve out the gain-loss impact on a sale of our South Korea business separately in our fourth quarter results. 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 also report that separately if it is a meaningful amount. I will now turn it back to Jonas.

Thank you, Jack. We are steadfast in being front of mind with our clients and our talented teams of experts across our strong and distinct brands, Manpower, Experis, and Talent Solutions, building deep relationships as specialist partners with the data, insight, solutions, and seamless execution to earn their loyalty and trust for the long term. We have expanded visibility with our clients this year with in-person and virtual touchpoints showing strong increases. And our data reveals we are improving our win rates quarter-on-quarter year-on-year as we continue building client loyalty. We know data analysis becomes insights that drive better outcomes for our clients, associates, and candidates. We are convinced the data-centric commercial muscle we are building is positioning us to win in the market. AI-enabled dashboards sourced from our global data platforms ensure our teams focus on the activities that create the most value for our clients and our prospects. As you've seen in our actions this quarter, while we've taken a surgical approach to analyzing demand signals across our verticals and client segments, we're also being laser-focused on how we manage costs. We strive to optimize profitability, ensure that we have the talent, innovation, and digital platforms to capture growth. We remain committed to our diversification, digitization, and innovation strategy and to find new ways of creating value for our clients and our candidates. Our Manpower brand is our history and our future. And we're intent on strengthening our positioning for candidates as an employer of choice, standing by their side to build skills and offer great opportunities throughout their career journey. That's why one of our priorities is finding new ways to meet our candidates where they are. We're delighted to have recently opened job hubs in several Walmart locations across the U.S., offering one-stop convenience and breaking down barriers for local job seekers. We're proud to have led the U.S. industry with this model and to continuously improve how we attract top talent and create exceptional opportunities for both job seekers and employers. We're also delighted to have again been honored with multiple leadership recognitions in Everest Group's 2024 PEAK Matrix Assessments, including Talent Solutions being named as Global Leader in Contingent Workforce Management for the 11th consecutive year, Experis as a leader in IT Contingent Talent and Strategic Solutions in both the U.S. and U.K., and Manpower as a leader in U.K. Business and Professionals Contingent Talent and Strategic Solutions. In closing, we are committed to creating shareholder value by building a sustainable company that takes care of all our stakeholders: employees, clients, candidates, and the communities in which we operate. We're proud of our ongoing commitment to people and the planet. And at New York Climate Week in September, we released our 4th annual Working to Change the World report, tracking our progress in building a skilled global workforce to leverage innovation and emerging technologies for a better, greener tomorrow. We cannot underestimate the impact on work or workers of the transformative changes taking place in AI and the global green transition. This report shares the many ways we're guiding both employers and workers through this moment of transformation, building partnerships with clients to address skills gaps and developing in-demand talent pools with our Manpower myPath and Experis Academy training programs. We know this work energizes our people, and we're pleased to have been named a Forbes World's Best Employer, recognizing our commitment to talent development. I would like to close by thanking our teams around the world for their considerable efforts to build the future of work and to our clients and candidates for trusting us to be their guides on this journey. Operator, please open the line for Q&A.

Our first question comes from Kartik Mehta with Northcoast Research.

Jack, maybe just your, I know you talked a little about the trends that were happening at least in September and maybe into October for some of the geographies. I'm just wondering as you looked at the entire quarter, what you saw in the business and if there was any change, even month-by-month?

Thanks for the question, Kartik. Yes, I would be happy to talk about what we saw during the course of the quarter. I'd say, maybe starting with France, as we talked about the prepared remarks. France, we did see that boost from the Olympics in the middle of the quarter, so that flattered their results a bit, and we anticipated that. As we moved into September, we did see a step down and we have them here in early October. Very similar rates, just saw the last weekly this morning as well. And so, basically as we ended about, we have them at about minus 6% from a revenue trend; that's what we've incorporated into the guide for the fourth quarter for France in line with recent activity in both September and October at this stage. I would say, if we go to the U.S., as I mentioned, the most part performed on an overall basis very well in line with our expectations. I would say it was pretty even over the course of the quarter, from a mid-single digit perspective as you saw kind of what we posted there in terms of percentage declines. And it was really good to see that Manpower and talent solutions in the U.S. actually helped offset some of the pressure we continue to see on the professional side. I would say that was pretty even on an overall basis over the course of the quarter in the U.S. And then in Italy, I'd say also similar story; Italy was came in slightly better than we anticipated. And if you look at the pace during the course of the quarter, sequential improvement from the previous second quarter into the third quarter, and I'd say that ran most of the quarter. I'd say August was a little bit better on a days-adjusted basis, but all in all, I think Italy coming in at that minus 1% days, adjusted very close to flat year-over-year. We anticipate Italy will continue that trend into the fourth quarter with slight improvement. Italy's been one of the more resilient markets in Europe. And that's certainly part of our outlook into Q4. And maybe lastly, in terms of the bigger countries, just the U.K. As we said, U.K. was difficult seeing some of the most pressure among our largest countries. And certainly, we talked about Northern Europe seeing some of the most significant pressure. That was pretty constant over the entire quarter running very close to that quarterly average that we talked about it minus 12% for the entire quarter, pretty constant the entire way July, August, September. And as I said, we expect that to step down a bit further based on the fact that we expect December, which is always a sensitive month when we look at the Q4, to be a little softer on the logistics side, transportation, as well as public sector demand pulling back a bit more in the Q4. So that's a bit of the puts and takes from the biggest markets.

That's really helpful, Jack. And you've done a good job in managing the SG&A cost, and it sounds like you're going to manage it even further. But as the business stands now, what do you think the incremental margins will be going forward compared to where they were considering some of the efficiency costs and some of the other processes you've been able to put in place?

Thanks, Kartik. I'd say you're right. We, as we said previously, we've been making adjustments. You saw us make some adjustments pretty significantly at the end of last year in 2023. And that was predicated on what we anticipated to be a softer first half of this year that certainly played out. And here we are now in the second half of this year with conditions continuing, right? And so we leaned in, and we made additional adjustments this quarter. You can see that in our restructuring charges. And that's all to preserve bottom line margin in this current environment, which is continuing. So what I would say is that will help us preserve margin as the environment continues in the demand appetite currently. But as we go forward, I think the real good news here is we're making really good progress advancing our transformation agenda. We've talked about that in the prepared remarks. And we see that on the front office side with the progress we've made with PowerSuite front office, and that's going to help recruiter efficiency that will come through more meaningfully when we have more operational leverage. And we're doing the same thing on the back office side with very good progress in the implementation of our PowerSuite back office. That will drive savings for us as we complete those migrations. So as I've talked about in the past, I would expect that to be in the range of 25 basis points improvements in our EBITA margin as we get through and complete those transformations on the back office side. And that will come through efficiencies as we move forward. When we get operational leverage back in the business, when we start to see the markets rebound, then of course, we'll start to get back to more historical EBITA margin ranges and then we'd add those savings to that level on top of that from the transformation.

Our next question comes from Trevor Romeo with William Blair.

Hi. Good morning. Thanks so much for taking the questions. First one I had was kind of just on Manpower brands versus Experis. Maybe seeing a little bit of a growing divergence in performance between the two. It looked like Manpower was kind of flat in the quarter; Experis was down, I think 10% globally year-over-year. Just what would you attribute the difference in demand trends between the two, is it just a question of kind of timing of when each one started to decline and each one's at a different point in the cycle now? Or are there other fundamental factors you'd call out there?

Good morning, Trevor. No, great question. If you think back during the pandemic, there was a big hiring bubble of IT and other professional resources, especially within the tech sector, but I would say was pretty broad increases in hiring. And as we are looking at an environment where many organizations are now looking to manage their costs based on the headwinds, economic headwinds, and maintain the workforces that they had, clearly the professional resourcing side is seeing more significant headwinds than we've seen in the Manpower business. And we've been very pleased with how Manpower has held up. Frankly, the cyclicality of what we're seeing today, we think can be explained by the post-pandemic anomalies that we saw both leading into during, and then afterwards as companies were adjusting their payrolls. Having said that though, I think the outlook for professional resourcing and the need in our case for IT skills will continue to be very strong over the medium to long term. Everything that you read about, everything that every organization talks about is to make investments in the digital space, and to do that, they need projects, they need resources with the skills they need, the solutions that we can provide in Experis. I think our outlook is very good in terms of what we see Experis being able to do for us and how it can perform. But right now, you can see that there is a bit of a gap between how Manpower and Experis is progressing. We think it's temporary, no pun intended.

Thanks, Jonas. That was helpful, and then just a quick follow-up on the South Korea divestiture. I was just curious, why you decided to sell that business and transition to the franchise model. And anything you could say about kind of the financial impact or the proceeds received from the sale would be helpful.

Trevor, asked with the strategic areas around our portfolio, and over the past years, you have seen us look at certain geographies where we feel they could be better served that managed within a franchise model in terms of their ability to drive growth at a faster rate and take market share at a faster rate. They tend to be markets that are more complex, lower-margin markets, maybe with a higher risk profile than we think is suitable for a company of our stature to manage directly as wholly owned subsidiaries. We've been pruning our portfolio of geographies and transitioning those operations and those markets into franchise models, which we think will make us more successful from a ManpowerGroup perspective, but also make the franchise holder more successful in terms of being able to unleash their abilities maybe with lower margins, gaining greater share at a faster pace than would be consistent with the targets that we have from a financial and operating margin perspective.

Yes, and Trevor, in terms of your question on the financial details, we'll disclose that after we close the transaction. As I said, we expect to close it at the end of this month, very beginning of next month. And we'll have more to say on that in the fourth quarter. But I would say for modeling purposes, think of it as running generally about $80 million a quarter. So as you think about the impact from a revenue trend perspective, and as I said, we have one month in the guide for the month of October. That would give you a pretty good idea. I think the main punchline for the fourth quarter is it doesn't have a significant impact in terms of the loss of those two months on our bottom line EPS. And we'll talk more about that after we close the transaction.

Our next question comes from Mark Marcon with Baird.

Hey, good morning and thanks for taking my questions, Jonas and Jack. Jonas, at the beginning of your commentary, you cited that conditions aren't really changing that much. And when we take a look particularly at Northern Europe, it doesn't look like things have changed. Well, they've changed, but they've gotten worse. I'm wondering, how are you thinking about what would be the catalyst to lead to improvement in the overall economic environment, but specifically in Northern Europe? And how long do you think that would take to come about? And if it doesn't come about anytime soon, are there additional steps that we could take to improve the profitability level there?

Thanks, Mark. As I mentioned in my prepared remarks, Northern Europe is our most challenged region and has been for quite some time. And as you've seen, we've taken significant actions to right the business and adjust what is the most challenging market conditions across the world. If you look at the economic growth outlook for Germany, it is the weakest economy in Europe. The Nordics are seeing significant economic headwinds, and mostly everybody in that region is seeing the pressures coming to bear. And that is of course, something that's reflected in the performance of our industry and specifically for our company as well. Having said that, we are confident that at some point when the market turns back, these are great places to be, and these are important markets for us to operate. They also happen to be markets where we primarily have bench models, and they are harder to manage in a downturn because the associates are part of our permanent payrolls. So it takes us some time to make and take the required actions to right-size the business when the demand drops. So we would never rule any further actions out in terms of what we need to do to adjust to the market conditions, but we also want to make sure that we maintain the strength in what we think are good markets in a more normalized environment. As you saw maybe this morning, Mark, the ECB once again for the second time in 5 weeks lowered their interest rates down to 3.25% by 25 basis points. So I think that is going to be positive from encouraging businesses to start to invest more. And I think as you look at the inflation rate that has come down as well. And we continue to monitor this closely. Last year, you heard us take action in Germany specifically and wind down our Proservia business, which is an important decision for us that puts us in a very good position as those markets improve.

Great. Aside from the rates coming down, are there any other factors you anticipate in the near future that could positively influence growth in Northern Europe?

I think a lot of it, Mark, depends on the macroeconomic circumstances. Of course, as we talked about in our prepared remarks, we've increased our sales activities, the industry verticals that are positive, where we are seeing increases in our pipeline. So we're doing everything that you would expect us to do, managing demand and increasing the pressure on demand to try and get some good results out of that, being very focused on our cost structure, and then keep on investing into the kind of digital transformation that Jack mentioned earlier that we think is going to improve our efficiency and productivity both from a recruiter and frontline perspective as well as from a back-office perspective. So those are the things that we can control that we are working on, and we are very, very determined to make sure that we get Northern Europe back to where it needs to be. This is certainly a pressure point for us as a company, but it is also a pressure point from an industry perspective. We can see the markets being tough for us and for mostly everyone in our industry as well.

Yes. We've certainly seen that. One last question, if I can squeeze one in. And Jack, I know you want to defer until the final rulings come out and all the interested parties comment. But as we take a look at the French tax proposals, how would you suggest investors think about based on the most likely scenarios? And what's been out in the press, how to think about tax rates as we look out?

Yes, thank you for the question. I'm a bit hesitant to discuss it because it's still very preliminary, especially given the current situation with the government. This is somewhat unprecedented; we're accustomed to a preliminary budget that is well along in parliament and typically undergoes minimal adjustments before finalization. We'll see how this progresses through the various parliamentary discussions. Regarding your question about the tax rate, investors should view it as the government has indicated, proposing a temporary increase in the tax rate, which would apply to the largest companies, including us due to the size of our French operations. This measure is expected to be in effect only for 2024 and 2025 and aims to address the current deficit. However, they remain committed to their long-term tax reform that has previously lowered the tax rate, meaning this is just a temporary measure. We'll have more updates on this by the end of the year. Furthermore, for 2024, the increase will be more substantial, while 2025 will see a lesser increase. We'll provide further details at year-end, but the key point is that it's temporary, and they are still focused on making France more competitive for corporations while pursuing their longer-term tax reforms.

Our next question comes from George Tong with Goldman Sachs.

Hi, thanks. Good morning. Can you talk about behavioral changes among employers that you're seeing in the temp space this cycle compared to prior cycles? It seems like temp staffing trends are lagging perm trends. I'm wondering if hiring managers are bypassing temp hiring this cycle and going straight to perm hiring.

Good morning, George. Looking at this, I would say it's now for the last 12 months roughly playing out as we would expect it to play out and as we have seen it play out in the past, with one important difference. And that is that employers have been holding on to their workforce for much longer with economic headwinds than we have seen in the past. And we think this comes from the pandemic experience of the difficulty of finding talent, and we can see that employers are being very surgical in their hiring at this stage. But I don't really see any difference in behavior preferring permanent hiring over temporary hiring. In fact, our temporary staffing business is doing much better than our permanent recruitment, both within the brands of Experis and Manpower, as well as in Talent Solutions RPO. So I wouldn't read any different; I don't see any difference in employer behavior, with the exception of they are holding on to their workforces; they are not ready to invest in new workforce from a temporary or contingent perspective to the degree that we saw, of course, in better economic times. But we fully expect them to revert back to tapping into those resources as the economic conditions improve in their respective industries, as we would expect our perm recruitment also to come back and be as strong as we've seen in the past, because certainly our ability as a business and within our brands of Manpower, Experis and Talent Solutions to satisfy permanent recruitment needs have really become much, much stronger, and it's a very important part of our business, and we'd expect that to come back in the same way once conditions improve as well.

Got it. That's helpful. And you talked earlier about taking additional cost actions based on the extended duration of the current operating environment. Can you elaborate a little bit more on where these cost actions are concentrated?

George, I'd be happy to do that. I think in line with the discussion we just had on Northern Europe, the biggest part of it is in Northern Europe. So of the total restructuring that we took of the $37.6 million, Germany was about $9 million, Sweden was about $7 million, Norway was just about $4 million. We did have a bit in France as well, much more modest. And in the U.S., we also had about $3.5 million as well. So I'd say those were some of the bigger moving pieces. But think about it in the way we talked about it. I think the most pressure right now is in some of the bench countries that kind of follows where we've taken some of the restructuring but also where we haven't seen demand pick up the way we were originally anticipating earlier in the year. So we've done some rightsizing to adjust that. We've been very focused on more of the overhead, the back office, the functions, the regional head offices. And as you heard Jonas say, trying to preserve sales strength. So we've been very careful in surgical, as you've heard based on our prepared comments.

Our next question comes from Manav Patnaik with Barclays.

This is Princy on behalf of Manav. I wanted to inquire about your prepared remarks regarding improvements in the Manpower sales pipeline. Could you provide more details on that? Is this mainly related to new clients? Any additional insights would be appreciated.

Yes, we see some very nice improvements in our pipeline, both for our existing customer base, but primarily on our new business and new client base. And this is the result of our increased focus over the last 12 months to really make sure that we are increasing our demand-generating activities that are being very focused on the industry verticals, that we think can be fruitful and that we're leveraging the technologies that we've implemented so that we spend our time on the opportunities that we think can yield better results and faster growth for us going forward. And that's why we're pleased to see that the pipeline is increasing. In an environment like this, having an increasing pipeline means the conversion rates and the monetization rate, the timing of that is extended because while we're winning more deals, the size of the deals tends to be smaller, and the speed to monetization tends to be slower. But regardless of that, having won these deals is going to be beneficial for us in the short term, but certainly also in the medium to long term when the market conditions improve, and those deals start to come to their full monetization potential and generate greater amounts of revenue growth for Manpower and as well as Experis and Talent Solutions.

Great. And can you speak a little bit to what you're seeing in terms of competitive dynamics?

Our industry has always been competitive. As we mentioned in our prepared remarks, pricing remains competitive but rational. The stability of our gross profit margins reflects this. The quarter-over-quarter changes we observed are mainly due to shifts in business and geographical mix, rather than pricing pressure. Demand for skilled talent continues to be strong, and our customers recognize the difficulty of finding individuals with the right skills. This situation is evident in the dynamics of our industry. While it will always be competitive, we are currently witnessing solid pricing and rational behavior.

Our next question comes from Josh Chan with UBS.

Hi, good morning, Jonas and Jack. Thanks for taking my questions. I wanted to ask about the conversations you're having with your customers. I think for a while now, we've heard that customers are being cautious because of high interest rates and global elections. But as you mentioned, the ECB has started to cut rates, the Fed has started to cut rates, elections are progressing, I guess, globally. So as all of these play out, how do you see demand being catalyzed in the upcoming quarters? Do you expect some resolution? Or do you expect kind of this continuous sluggishness to persist even though some of these events are kind of transpiring?

Well, as you heard from our outlook, we certainly think that this kind of environment that frankly we've seen now almost for the full year will continue into Q4. So when we're together again at year-end, we'll see if any of those items that you mentioned have started to move the needle. Ultimately, we do believe that those are exactly the kind of elements that will start to move the needle, give employers greater confidence that the worst is over, start looking ahead, starting to activate the projects and the developments that they've been planning for; the environment still maybe being a little bit uncertain means they will turn to contingent and flexible workforce first, accelerate the digital investments that they've done, which should show us some good improvement in demand for our Experis resources. So we think the actions that are being taken and where we are is clearly going to be improving. The question is when. And what we're saying is that we didn't see anything materially change in the third quarter, we don't expect to see anything materially change into the fourth quarter. And then when we get together again at the end of then we talk about our year-end results, we'll update that view and see if anything has changed then. But the kinds of actions that we're seeing on lower inflation, actions by central banks to lower interest rates to stimulate demand, I think are exactly the kind of, and getting past elections in many of the countries, solidify budgets and things like that to provide for greater certainty and create a more dynamic business environment.

Thanks for that color, Jonas. That certainly makes sense. I guess, as you think about your margin progression going from Q3 to Q4, I think typically Q3 and Q4 margins are relatively slower. But according to your guidance, there's a bigger step down this Q4 than what seems to be normal. Could you talk about what's driving that sequential margin decline?

Yes, this is Jack. I'm glad to address that. The key takeaway from our Q3 results in SG&A is that we experienced some favorable corporate costs, which I highlighted, including incentives and healthcare plan-related charges that were more favorable this quarter. We anticipate that Q4 will return to the run rate we experienced in earlier quarters for corporate expenses. This is part of why our EBITA in Q3 was slightly better than the midpoint of our guidance. The other factor is that December tends to be a sensitive month for the fourth quarter. If December is strong with holiday-related activity and we don't see extended plant closures that usually occur in a weaker environment, it could lead to a better outcome. However, we are not expecting that at this time. We foresee a continuation of some caution in the market, meaning that in December, some IT projects might be paused around the holidays for an extra week, and plants could also close for an additional week. This is a key point of consideration for us. We don't see this as a permanent change, but we do expect December to be somewhat softer. That’s why this year, sequentially, we are unable to maintain the same level of margin. It's a unique situation based on our current outlook for December.

Our next question comes from Jeff Silber with BMO Capital Markets.

This is Ryan on for Jeff. Just looking at the Talent Solutions business, it looks like it had a pretty notable change from 2Q, just on a year-over-year basis. I know you called out the right management in MSP driving some of the strength. But I was wondering if you could give any more color on some of the diverging trends between Talent Solutions and the other business lines.

Thanks for the question, Ryan. I think we are seeing some improving trends. It was great to see all three offerings experience growth in gross profits during the quarter, which is a positive development. Our remaining performance obligation is showing sequential improvement from the last quarter, and in the U.S., it's actually grown. We are noticing some promising activity in select programs. While it's not widespread yet, it’s a positive start. We'll see if this trend continues into the fourth quarter and if it expands to other programs. Our Managed Service Provider business has performed exceptionally well, showing significant growth in the quarter. This segment has been executing strongly and is experiencing continued higher growth as the year progresses. As mentioned, we saw remarkable performance in France and the U.K., which were major contributors. Overall, this is a good step in the right direction, and we will keep an eye on it moving forward.

Understood. And then can you talk a little bit more about the Walmart job hub? Just what the business rationale there? And what you expect from that partnership?

Sure, Ryan. No, we're excited about that. It's a very nice innovation. As we think about a market that is more candidate-restrained and as part of our innovation initiatives, we want to meet candidates in new ways and in different places. Of course, a lot of those encounters are going to be enabled by digital platforms, but they're also going to be in new physical spaces. And that's why we think this partnership with Walmart for us in the U.S. is a very, very exciting opportunity. We'll see how it evolves over time, but it's the kind of initiatives that we're taking as part of how we're navigating this environment, making sure that we invest in sales and create demand, making sure that we manage our costs appropriately, but still maintaining the strength and the investments into products and innovations that excite customers as well as excite our candidates and makes it easier for them to access meaningful and sustainable employment aligned with our purpose. And therefore, we're excited to monitor and see how this progresses and continue to drive this kind of innovation in the U.S. as well as in many other markets across the world.

Our next question comes from Tobey Sommer with Truist.

Thank you. I wanted to ask you what kind of growth the industry and the company could achieve if we get to some sort of recovery in recruiting, because this is a different scenario. In prior recoveries, there's generally been a recession or GDP that hasn't grown or other sort of more obvious telltale signs that aren't idiosyncratic to the industry. And following those periods, yourselves, Manpower and the industry have grown double digits at the top line. How do you envision this perhaps being different given that your customers are retaining permanent talent and might have more capacity headed into a rebound than is typical?

I don't think it's a matter of if the recovery will begin, but rather when it will start. Predicting the shape of the recovery is quite challenging. In regions like Latin America and Asia Pacific, we're seeing strong performance. However, the low economic growth and stagnation in the Eurozone clearly show that our industry is feeling the impacts of this current economic cycle, similar to past downturns. In the U.S., we see some contradictions. We have solid economic growth, yet our industry has been operating as if it has faced a recession for nearly two years. The first year of that was largely influenced by pandemic-related anomalies, leading companies to face headwinds and carefully monitor costs, especially regarding workforce reductions. Over the past year, we've noticed a cooling economy and labor market, with industry dynamics resembling past patterns. The current penetration rate of our industry in the U.S. indicates that there are significant growth opportunities ahead. What remains to be seen is the level of economic confidence in the manufacturing sector, which has struggled, with the PMI below 50 for 23 out of the last 24 months, briefly rising only at the start of this year before dropping again. Observing a turnaround in manufacturing will be crucial. Additionally, most of the employment growth and strength in the U.S. labor market has been tied to public sector hiring, including healthcare, while private sector hiring is lagging. Government spending and employment have been major contributors, particularly in health care, hospitality, and leisure sectors. However, manufacturing employment and other verticals that typically drive demand for our industry have been weaker than expected. We believe that there will be a rebound in demand for services in Manpower, Experis, and Talent Solutions, although predicting the timing and specifics of that recovery remains challenging.

Could you provide more insight into the differences in IT and tech exposure between your smaller and larger customers within the Experis business in the U.S., as well as any information you have about your exposure to managed services and project consulting-related work?

Sure. No, we have a very strong presence in IT resourcing as well as in solutions. And most of our customers are big enterprise users of those services. We continue to see pretty strong headwinds and low demand for larger enterprise clients. They're pausing projects; they are reallocating resources from traditional IT projects into AI spend, cyber spend; that's where the demand is still strong. But on a volume and on a scale basis, those are relatively small opportunities for Experis in terms of what moves the needle on the larger projects. So we are very strong on the solutions side. As we mentioned in our prepared notes, we can see a better performance from the convenience side of the business on Experis, but you are seeing headwinds there as well. Companies are a little bit more smaller companies a little bit more cautious in terms of starting the projects. But as you step back from all of that and think about what's happening with all corporations, large and small, the investments that they are thinking about doing and are executing today in terms of their plans for digital transformation means that in terms of demand outlook, the timing being uncertain; but in terms of it coming back and coming back strong, we feel really good about that. And our business is very well positioned to take advantage of the market coming back when it does. Thanks, everyone, for participating in the Q3 earnings call, and we look forward to speaking with you again when we discuss our year-end results in a few months. Thanks, everyone. Have a great rest of the week.

Thank you for your participation. You may now disconnect. Everyone, have a great day.