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ManpowerGroup Inc. (MAN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue declined 5% reported (-3% CC) to $4.40B, with adjusted EPS of $1.02 and gross margin at 17.2%. Reported EPS was $0.47 including $0.55 of charges (restructuring, pension settlements, Austria sale) .
  • Mix (lower perm recruitment, Experis volume softness) and December bench under‑utilization pressured margins; GP margin landed at the low end of guidance and adjusted EBITA margin was 2.1% (reported 1.7%) .
  • Free cash flow was strong at $236M in Q4, DSO improved ~3 days to just under 52; MAN repurchased 0.55M shares for $34M; net debt fell to $443M .
  • Outlook: Q1 2025 EPS $0.47–$0.57 with 36% ETR and ~-$0.06 FX headwind; CC revenue -5% to -9%; GP margin 17.2%–17.4%; EBITA margin 1.4%–1.6%—reflecting seasonal step-down and fewer working days .
  • Potential catalysts: stabilization and growth in U.S. Manpower and Talent Solutions (MSP/RPO), continued strength in Japan/APME, cost actions in Northern Europe, and transformation benefits; risks include sustained macro weakness in Northern Europe and cautious enterprise IT demand .

What Went Well and What Went Wrong

  • What Went Well

    • U.S. Manpower crossed into growth in H2; Talent Solutions returned to YoY growth with double‑digit MSP and positive RPO trends; Japan grew 7% CC with solid margins .
    • Strong cash generation: Q4 free cash flow $236M; DSO down ~3 days to <52; continued buybacks ($34M in Q4) .
    • Management progressing on Diversification, Digitization & Innovation (DDI); PowerSuite + AI to drive recruiter productivity and data‑driven selling; “we are very well placed to take advantage of this evolution” .

  • What Went Wrong

    • Northern Europe remained the most challenged (UK -22% CC, Germany -24% CC YoY); segment posted an adjusted OUP loss (~$10M) despite restructuring .
    • Mix and volume pressure: GP margin 17.2% at low end; staffing margins saw ~30 bps reduction from mix/bench utilization; Experis volumes softer; perm remained subdued .
    • FX was a larger headwind than guided (EPS impact -$0.04 vs -$0.01 guided); Q1 2025 guide reflects seasonal/working‑days drag and higher tax mix (36% ETR) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$4.52 $4.53 $4.40
Diluted EPS (Reported)$1.24 $0.47 $0.47
Diluted EPS (Adjusted, non‑GAAP)$1.30 (ex‑Proservia) $1.29 (ex items) $1.02 (ex items)
Gross Profit Margin %17.4% 17.3% 17.2%
EBITA Margin % (Reported)2.4% 1.7% 1.7%
EBITA Margin % (Adjusted)2.5% 2.6% 2.1%

Segment revenue ($USD Billions)

SegmentQ2 2024Q3 2024Q4 2024
Americas$1.06 $1.05 $1.07
Southern Europe$2.10 $2.10 $2.04
Northern Europe$0.84 $0.83 $0.77
APME$0.54 $0.56 $0.52

Selected KPIs

KPIQ2 2024Q3 2024Q4 2024
Free Cash Flow ($M)-$150 (outflow) $67 $236
DSO (days)56 57 ~52 (↓ ~3 days)
Share Repurchase$27M; 371k shrs $29M; 415k shrs $34M; 552k shrs
Net Debt ($M)$630 $614 $443
Cash & Equivalents ($M)$468.9 $410.9 $509.4

Notes: Adjusted EPS excludes restructuring, pension settlements, and Austria disposition loss in Q4; Q3 adjusted excludes restructuring and discrete items; Q2 adjusted excludes Proservia run‑off .

Guidance Changes

Q1 2025 guidance (initiated)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (Diluted)Q1 2025N/A$0.47 – $0.57; FX -$0.06; ETR 36% Initiated
Revenue (CC YoY)Q1 2025N/A-5% to -9% (midpoint -7%) Initiated
Gross Profit MarginQ1 2025N/A17.2% – 17.4% Initiated
EBITA MarginQ1 2025N/A1.4% – 1.6% Initiated
Operating MarginQ1 2025N/A1.1% – 1.3% Initiated
ETRQ1 2025N/A36% Initiated

Segment outlook Q1 2025 (YoY): Americas down 2–6% reported (-3% to +1% CC); Southern Europe down 8–12% (CC -4% to -8%); Northern Europe down 16–20% (CC -12% to -16%); APME down 15–19% (CC -12% to -16%; OCC -1% to +3%) .

Recent dividend: Semi‑annual $1.54 declared Nov 8, 2024 (paid Dec 16, 2024) .

Q4 2024 vs Q3 guidance (color): Results were “slightly above” midpoint on CC revenue; GP margin low end; adjusted EPS near guidance midpoint .

Earnings Call Themes & Trends

TopicQ2’24 (prior)Q3’24 (prior)Q4’24 (current)Trend
AI/DigitizationPowerSuite + GenAI pilots, recruiter productivity focus Stable push; MSP/Right offset perm softness “Area of significant promise”; translating adoption to business impact; DDI strategy reiterated Building; execution progressing
Macro (US/Europe)Stabilization at lower levels; cautious employers No major tone change; Europe/US cautious Davos takeaways: optimism in US, urgency in EU competitiveness; labor hoarding persists; seasonal Q1 step‑down Still cautious; seasonal dip near term
Brand performanceExperis pressured; MSP up; Right up -Manpower flat, Experis -10% CC; Talent Solutions +7% GP Manpower -1% CC rev; Experis -6%; Talent Solutions +6% rev; MSP strong; RPO back to growth Talent Solutions improving; Experis stabilizing at low levels
Regional trendsJapan +9% CC; N. Europe weak N. Europe challenged; UK -12% CC; Germany -16% N. Europe still weakest (UK -22% CC; DE -24% CC); Japan +7% CC; APME +7% organic CC APME/Japan solid; N. Europe pressured
Regulatory/Legal—Sweden temp limits impact perm conversions France potential temporary corporate tax hike discussed; not in guidance -Watch France/Sweden; manageable
Portfolio actionsProservia run‑off completed Korea sale to franchise (close end Oct) -Austria sale/franchise; ongoing geo optimization Portfolio pruning continues
PricingRational/stable —Pricing still rational; GP mix the driver Stable

Management Commentary

  • “Our U.S. Manpower brand…has crossed over to growth in the second half of 2024. And similarly, our Talent Solutions business globally has also crossed over to growth…” .
  • “Adjusted EBITDA was $94 million…adjusted EBITDA margin was 2.1%…representing 40 basis points of decline year‑over‑year.” .
  • “We took additional cost actions during the quarter, primarily in some of our most challenged European markets.” .
  • On AI and digitization: “We are able to take our global infrastructure and technology platforms…to drive greater productivity…we’re extremely well placed to take advantage of this.” .
  • On Europe: “Northern Europe…is the most challenged part of our business…many markets operating a bench model which creates higher…pressures” .

Q&A Highlights

  • Seasonality and Q1 margin step‑down: sequential EBITA margin guide down ~60 bps from 2.1% to 1.5% typical of Q4→Q1; fewer working days and dispositions amplify revenue decline .
  • Cost actions/right‑sizing: concentrated in Northern Europe (Germany, Nordics, UK), with headcount down and further action contingent on trends; preserving sales capacity and transformation spend .
  • AI use cases and competitive dynamics: accelerating recruiter workflows and matching; early days but positioned well; pricing remains rational, margin mix the main swing factor .
  • Regional outlook: UK and Germany remain weak; Japan strong; APME slower seasonal start in Q1 after good Q4 seasonality .
  • Portfolio optimization: Korea and Austria franchised; continue evaluating geo footprint to balance growth potential and risk .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was not retrievable at this time due to an S&P Global API rate limit; therefore, we cannot quantify beat/miss vs consensus. Management indicated results were near the midpoint of their guidance on adjusted EPS and slightly above the midpoint on CC revenue, with GP margin at the low end of guidance .

Key Takeaways for Investors

  • Near‑term: expect a seasonal Q1 step‑down (fewer working days, FX headwind, elevated ETR), particularly in Europe; positioning accordingly with cost actions in Northern Europe while protecting sales capacity .
  • Mix matters: margin pressure reflects business/geo mix and December bench utilization, not price erosion; recovery in Experis volumes and perm would be accretive to margin .
  • Bright spots: Talent Solutions (MSP, RPO) momentum continued; U.S. Manpower and Japan provide resilience; APME underlying trends remain constructive .
  • Cash discipline: strong Q4 FCF, improved DSO, ongoing buybacks, and moderate leverage (gross debt/TTM adjusted EBITDA ~2.1x) support capital flexibility into 2025 .
  • Strategic transformation: DDI and PowerSuite/AI initiatives should yield medium‑term productivity and margin benefits as demand normalizes .
  • Watch items: macro in Northern Europe (UK/DE), France tax developments (not in guidance), Sweden temp limits normalization, enterprise IT demand trajectory .
  • Setup: stabilization at low levels with operating leverage to a demand upturn—especially in Experis and perm—while Talent Solutions provides counter‑cyclical ballast .
Non‑GAAP: Adjusted figures exclude specified restructuring, pension, disposition, and other items as detailed in the press release and presentation **[871763_20250130CG07771:1]** **[871763_0000950170-25-010803_man-ex99_2.htm:1]**-**[871763_0000950170-25-010803_man-ex99_2.htm:3]**.