Princy Thomas

Princy Thomas of Barclays inquired about the full-year margin expectations for each business segment and asked for management's perspective on the potential benefits from the 45F employer childcare tax credit.

Answer

Chief Financial Officer Elizabeth Boland provided margin guidance, expecting 25-30% for backup care, approximately 125 basis points of expansion for full service, and high teens to 20% for Ed Advising. Chief Executive Officer Stephen Kramer noted that the increased 45F tax credit underscores the importance of employer-sponsored care and could be attractive for existing clients, but expressed caution about its impact on stimulating new client demand due to historical precedent.

Princy Thomas from Barclays asked for details on the underlying trends and outlook for the U.S. business, as well as typical seasonality expectations for Q3 and the second half of the year.

Answer

EVP & CFO Jack McGinnis detailed that the U.S. business performed better than expected, with strong growth in the Manpower brand (+9%) and Talent Solutions, offsetting a decline in Experis due to non-recurring projects. For seasonality, he noted that EBITDA margin typically improves from Q2 to Q3 and that free cash flow is usually negative in the first half of the year followed by strong performance in the second half.

Princy Thomas, on for Manav Patnaik, inquired about potential cost-saving measures if the macro environment remains weak and asked about the company's use cases and competitive positioning regarding Generative AI.

Answer

Chief Financial Officer John McGinnis responded that cost actions were taken in Q4, particularly in Northern Europe where FTEs were reduced by 15%, and that they continue to balance cuts with preserving sales capacity. Chief Executive Officer Jonas Prising added that while AI's impact is still early, ManpowerGroup is using it for recruiter productivity and to identify growth opportunities, emphasizing that human judgment remains a key differentiator.

Princy Thomas, on for Manav Patnaik, requested details on the improving Manpower sales pipeline and inquired about the current competitive landscape and pricing environment.

Answer

CEO Jonas Prising stated the sales pipeline is growing for both new and existing clients due to focused demand generation and technology leverage, though monetization is slower in the current climate. He characterized the competitive environment as rational, with stable pricing reflected in the company's gross profit margins.

Princy Thomas, on for Manav Patnaik, asked about the potential risk from Generative AI on finance and accounting temporary roles and whether client preferences for remote versus on-site work are shifting.

Answer

CEO M. Waddell stated that Gen AI currently has a minimal impact, asserting that prior technology shifts like ERP systems were far more significant. Regarding work arrangements, he noted that while demand for remote and hybrid options persists for higher-skilled roles, clients increasingly prefer on-site work for transactional and operational positions, often paying a premium to secure that talent.