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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the fiscal year ended December 31, 2023

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 1-10686

MANPOWERGROUP INC.

(Exact name of registrant as specified in its charter)

 

wisconsin

39-1672779

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

100 manpower place, milwaukee, wisconsin

53212

(Address of principal executive offices)

(Zip Code)

 

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

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

 

Title of each class

Trading Symbol(s)

Name of Exchange on which registered

Common Stock, $.01 par value

MAN

New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

The aggregate market value of the voting stock held by nonaffiliates of the registrant was $3,949,310,107 as of June 30, 2023. As of February 14, 2024, there were 48,240,538 of the registrant’s shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders to be held on May 3, 2024.

 

Auditor Firm Id:

34

Auditor Name:

Deloitte & Touche LLP

Auditor Location:

Milwaukee, WI

 


 

ManpowerGroup Inc.

Form 10-K

For the Fiscal Year Ended December 31, 2023

 

TABLE OF CONTENTS

 

Page

Number

PART I

 

Item 1

Business

3

Item 1A

Risk Factors

12

Item 1B

Unresolved Staff Comments

28

Item 1C

Cybersecurity

28

Item 2

Properties

29

Item 3

Legal Proceedings

29

Item 4

Mine Safety Disclosures

29

Executive Officers of ManpowerGroup

30

Other Information

31

 

PART II

 

Item 5

Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

32

Item 6

[Reserved]

33

Item 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

34

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

50

Item 8

Financial Statements and Supplementary Data

52

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

97

Item 9A

Controls and Procedures

97

Item 9B

Other Information

98

Item 9C

Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

98

 

 

 

PART III

 

Item 10

Directors, Executive Officers and Corporate Governance

99

Item 11

Executive Compensation

99

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

100

Item 13

Certain Relationships and Related Transactions, and Director Independence

100

Item 14

Principal Accounting Fees and Services

100

 

PART IV

 

Item 15

Exhibits and Financial Statement Schedules

101

Item 16

Form 10-K Summary

103

 

SIGNATURES

 

104

 

 

 

 

 

 

 


 

PART I

The terms “we,” “our,” “us,” "ManpowerGroup," or “the Company” refer to ManpowerGroup Inc. and its consolidated subsidiaries.

Item 1. Business

Introduction and History

ManpowerGroup Inc. is a global leader in innovative workforce solutions. Through our network of over 2,100 offices in approximately 75 countries and territories, we put millions of people to work each year with our global, multinational and local clients across all major industry segments. Our strong and connected brands provide solutions that drive organizations forward, accelerate individual success and help build more sustainable communities. We power the future of work.

By offering a comprehensive range of workforce solutions and services, we help companies improve strategy, quality, and efficiency, increase productivity and reduce costs across their workforce to achieve their business goals. ManpowerGroup’s offerings of innovative workforce solutions and services includes:

Recruitment and Assessment – By leveraging our trusted brands, industry knowledge and expertise, we identify the right talent in the right place to help our clients quickly access the people and skills they need when they need them. Through our industry-leading and AI-enabled assessments, we help people and organizations understand their strengths and potential, resulting in better job matches, higher retention and a stronger workforce.
Upskilling, Reskilling, Training and Development – Our global insights around evolving employer needs and our expertise in training and development help us prepare candidates and associates to succeed in today’s competitive marketplace. We offer an extensive portfolio of training courses and leadership development solutions that help clients maximize talent and optimize performance.
Career Management – We help individuals find meaningful work and manage their career journey through outplacement services and targeted skills development. By helping individuals and organizations manage workforce transitions and career changes, we unleash human potential.
Outsourcing – We provide clients with outsourcing services related to human resources functions primarily in the areas of large-scale recruiting and workforce-intensive initiatives that are outcome-based, thereby sharing in the risk and reward with our clients.
Workforce Consulting – We help clients create and transform their workforce strategy to achieve their business strategy, increase business agility and flexibility, and accelerate individuals' and business success.

Our expert family of global brands - Manpower, Experis and Talent Solutions - provide innovative workforce solutions across the globe for hundreds of thousands of organizations every year.

Manpower is a global leader in contingent staffing and permanent recruitment, providing strategic and operational flexibility to organizations and connecting people to meaningful work while helping them develop skills to stay employable. With our data driven insight into people’s motivation, skills adjacencies, and performance potential, we provide learning programs, on the job training and market based certifications for rapid reskilling and upskilling at scale.

Experis is a global leader in information technology (IT) professional resourcing and project services specializing in Enterprise Applications, Business Transformation, Cloud and Infrastructure, Digital Workspace and Cyber Security. As digital transformation and skills shortages continue in the technology field, Experis provides talent with the combination of in-demand technical skills together with the soft skills that are critical for business success.

3


 

Talent Solutions combines leading global offerings Recruitment Process Outsourcing (RPO), TAPFIN - Managed Service Provider (MSP) and Right Management to provide data-driven capabilities that help organizations with their workforce transformation. Talent Solutions helps organizations more effectively source, manage and develop talent at scale. From talent attraction and acquisition to upskilling, development and retention, we leverage our integrated HR tech stack PowerSuite to deliver workforce solutions across multiple countries at scale.

Our leadership position enables us to be a pathway to quality employment opportunities for people at all points in their career journey and we have connected people to meaningful work for 75 years. Governments and policy makers in the markets where we operate look to us to provide employment advice, opportunities and training to assist the unemployed in gaining the skills they need to enter the workforce, providing a bridge to employment and helping build more sustainable communities.

We, and our predecessors, have been in business since 1948 when we were incorporated as a Wisconsin corporation, and have had our shares listed on the New York Stock Exchange since 1967.

Our website address is www.manpowergroup.com. The Investor Relations section (investor.manpowergroup.com) provides our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. In addition, we also make available through our website:

our amended and restated articles of incorporation and amended and restated bylaws;
our ManpowerGroup code of business conduct and ethics;
our corporate governance guidelines;
our insider trading policy;
our anti-corruption policy;
the charters of the Audit, People, Culture & Compensation and Governance & Sustainability Committees of the Board of Directors;
our guidelines for selecting board candidates;
our categorical standards for relationships deemed not to impair independence of non-employee directors;
our independent auditors' services policy;
our executive officer stock ownership guidelines;
our outside director stock ownership guidelines; and
our regular updates on ESG (environmental, social, governance).

Documents available on the website are also available in print for any shareholder who requests them. Requests may be made by writing to Richard Buchband, Secretary, ManpowerGroup, 100 Manpower Place, Milwaukee, Wisconsin 53212. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Annual Report on Form 10-K.

Our Operations

Client demand for workforce solutions and services is dependent on the overall strength of the labor market and secular trends toward greater workforce flexibility within each of the segments where we operate. Improving economic growth typically results in increasing demand for labor, resulting in greater demand for our workforce solutions and staffing services while demand for our outplacement services typically declines. During periods of increasing demand, we are generally able to improve our profitability and operating leverage as our cost base can support some increase in business without a similar increase in selling and administrative expenses.

Correspondingly, during periods of weak economic growth or economic contraction, the demand for our staffing services typically declines, while demand for our outplacement services typically accelerates. When demand drops, our operating profit is typically impacted unfavorably as we experience a deleveraging of our selling and administrative expense base as expenses may not decline at the same pace as revenues. In periods of economic contraction, we may have more significant expense deleveraging, as we believe it is prudent not to reduce selling and administrative expenses to levels that could negatively impact the long-term potential of our branch network and brands.

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The nature of our operations is such that our most significant current asset is accounts receivable, with a days sales outstanding of 54 days as of December 31, 2023. Our most significant current liabilities are payroll related costs, which are generally paid either weekly or monthly. As the demand for our services increases, we generally see an increase in our working capital needs, as we continue to pay our associates on a weekly or monthly basis while the related accounts receivable is outstanding for much longer, which may result in a decline in operating cash flows.

Conversely, as the demand for our services declines, we generally experience a decrease in our working capital needs, as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivable balance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items. While this may result in an increase in our operating cash flows, longer payment terms and timing of payroll, tax and supplier related payments significantly impact our cash positions and cash flows each period. Any increase in operating cash flows from an economic slowdown would not be sustained in the event that a downturn continues for an extended period.

Due to our industry’s sensitivity to economic factors, the inherent difficulty in forecasting the direction and strength of the economy and the short-term nature of staffing assignments, it is difficult to forecast future demand for our services with certainty. As a result, we monitor a number of economic indicators, as well as recent business trends, to predict future revenue trends for each of the countries and territories where we operate. Based upon these anticipated trends, we determine what level of personnel and office investments are necessary to take full advantage of growth opportunities.

During the last several years, secular trends toward greater workforce flexibility have impacted the demand for our innovative workforce solutions and services around the world. As companies attempt to increase the variability of their cost base, the workforce solutions we provide help them to effectively address the fluctuating demand for their products or services. As the global economy continues to grow and adapt with new technology, we are helping clients manage their workforce transformation and ensure they have the right skills now and in the future. Whether it is through workforce assessments, targeted training or by creating longer-term development paths, we help organizations and candidates adapt their skills to changing workforce needs.

Our portfolio of recruitment services includes permanent, temporary and contract recruitment of professionals, as well as administrative, industrial and IT professional positions. These services are provided under our Manpower and Experis brands. We have provided services under our core Manpower brand for 75 years with a primary focus on the areas of office and industrial services and solutions. Our Talent Based Outsourcing offering within our Manpower brand includes outcome-based solutions such as management of financial and administrative processes, including call center and customer service activities.

We provide IT resourcing and services under our Experis brand. Our experience and expertise allow us to accurately assess candidates’ workplace potential and technical skills to match them to the needs of our clients. We plan to continue to build our Experis brand and attract the talent our clients need as skills shortages arise or continue.

Our Talent Solutions brand specializes in the delivery of customized workforce strategies and new solutions and creating added value that addresses our clients’ complex global workforce needs. Through our RPO offering, we manage customized, large-scale recruiting and workforce productivity initiatives for clients through exclusive outsourcing contracts. We can manage a single element or all of a client's permanent recruiting and hiring processes, from job profiling to on-boarding, globally or in a single location. MSP services include overall program management, reporting and tracking, supplier selection and management and order distribution. The MSP and RPO offerings both provide specialty expertise in contingent workforce management and broader administrative functions. Our Right Management offering includes our career management services that have historically been counter-cyclical to our staffing services, which helps to offset the impact of an economic downturn on our overall financial results.

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Americas

We provide services as Manpower, Experis and Talent Solutions through both branch and franchise offices. The Americas segment had 425 branch and 138 franchise offices as of December 31, 2023. In the United States, where we realized 67% of the Americas’ revenue, we had 286 branch and 131 franchise offices as of December 31, 2023, as well as on-site locations at clients with significant permanent, temporary and contract recruitment requirements. In Other Americas, the largest operations of which include Canada, Mexico and Argentina, we had 139 branch and 7 franchise offices as of December 31, 2023. We provide a number of central support services to our branches and franchises, which enable us to maintain consistent service quality throughout the region regardless of whether an office is a branch or franchise.

Our franchise agreements provide the franchisee with the right to use the Manpower® service mark in a specifically defined exclusive territory. In the United States, franchise fees generally range from 2% to 3% of franchisee sales. Our franchise agreements provide that in the event of a proposed sale of a franchise to a third party, we have the right to acquire the franchise at the same price and on the same terms as proposed by the third party. We have exercised this right in the past and may do so in the future if opportunities arise.

Our Manpower and Experis operations provide a variety of workforce solutions and services, including permanent, temporary and contract recruitment, assessment and selection, and training. Our Talent Solutions operations provide a variety of workforce solutions offerings including RPO, MSP and Right Management. During 2023 in this segment, approximately 91% of revenues were derived from our staffing/interim services, 4% from permanent recruitment services, 1% from outcome-based solutions and consulting and 4% from other services.

Southern Europe

We are a leading provider of permanent, temporary and contract recruitment, assessment and selection, training and outsourcing services throughout Europe. The Southern Europe segment had 1,139 branch offices as of December 31, 2023. Our largest operations in this segment are in France (57% of the segment revenue) and Italy (20% of the segment revenue).

We conduct our operations in France as a leading workforce solutions and service provider through 607 branch offices as Manpower, Experis and Talent Solutions, and 169 branch offices under the name Supplay as of December 31, 2023. The employment services market in France calls for a wide range of our services including permanent, temporary and contract recruitment, assessment and selection, and training. The temporary recruitment market is predominantly focused on recruitment for industrial positions. During 2023 in France, approximately 92% of revenues were derived from our staffing/interim services, 1% from permanent recruitment services, 6% from outcome-based solutions and consulting and 1% from other services.

In Italy, we are a leading workforce solutions and services provider. As of December 31, 2023, ManpowerGroup Italy conducted operations through a network of 205 branch offices. It provides a comprehensive suite of workforce solutions and services offered through Manpower, Experis or Talent Solutions, including permanent, temporary and contract recruitment, assessment and selection, training and outsourcing. During 2023 in Italy, approximately 93% of revenues were derived from our staffing/interim services, 3% from permanent recruitment services, 2% from outcome-based solutions and consulting and 2% from other services.

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Northern Europe

Our largest operations in Northern Europe are in the United Kingdom, the Nordics, Germany, the Netherlands and Belgium providing a comprehensive suite of workforce solutions and services through Manpower, Experis, and Talent Solutions. Collectively, we operate through 285 branch offices in this region.

In the United Kingdom, where we have the largest operation in this segment, we are a leading provider of workforce solutions and services. As of December 31, 2023, we conducted operations in the United Kingdom as Manpower, Experis and Talent Solutions through a network of 54 branch offices and also provided on-site services to clients who have significant permanent, temporary and contract recruitment requirements. In the United Kingdom, we also conduct operations as Brook Street Bureau PLC, or Brook Street. Its core business is secretarial, office and light industrial recruitment. Brook Street operates as a local network of branches and competes primarily with local or regional independents. Brook Street’s revenues are comprised of temporary and contract placements as well as permanent recruitment.

During 2023 in Northern Europe, approximately 84% of revenues were derived from our staffing/interim services, 4% from permanent recruitment services, 9% from outcome-based solutions and consulting and 3% from other services.

APME

We operate through 121 branch offices in the Asia Pacific Middle East (APME) region. The largest of these operations are located in Japan, India, Korea and Australia, all of which operate through branch offices. Our APME operations provide a variety of workforce solutions and services offered through Manpower, Experis and Talent Solutions, including permanent, temporary and contract recruitment, assessment and selection, training and outsourcing. During 2023 in this segment, approximately 77% of revenues were derived from our staffing/interim services, 5% from permanent recruitment services, 16% from outcome-based solutions and consulting and 2% from other services.

Competition

We compete in the employment services industry by offering a broad range of services, including permanent, temporary and contract recruitment, project-based workforce solutions, assessment and selection, training, career and talent management, managed service solutions, outsourcing, consulting and professional services.

Our industry is large and fragmented, comprised of thousands of firms employing millions of people and generating billions of United States dollars in annual revenues. In most areas, no single company has a dominant share of the employment services market. In addition to us, the largest publicly owned companies specializing in recruitment services are The Adecco Group and Randstad. We also compete against a variety of regional or specialized companies such as Recruit Holdings, Allegis Group, Kelly Services, Robert Half, Kforce, PageGroup, Korn/Ferry International and Alexander Mann. It is a highly competitive industry, reflecting several trends in the global marketplace such as the increasing demand for skilled people, employers’ desire for more flexible working models and consolidation among clients and in the employment services industry itself, as well as low entry costs for small firms wishing to compete in the industry, especially at the local level. We manage these trends by leveraging established strengths, including several of the employment services industry’s most recognized and respected brands; geographic diversification; size and service scope; an innovative product mix; recruiting and assessment expertise; and a strong client base. While staffing is an important aspect of our business, our strategy is focused on providing both the skilled employees our clients need and higher-value workforce management, outsourcing and consulting solutions.

Our client mix consists of both small- and medium-size businesses, and large national and multinational clients. Client relationships with small- and medium-size businesses are based on a local or regional relationship, and tend to rely less on longer-term contracts, and the competitors for this business are primarily locally-owned businesses. On the other hand, the large national and multinational clients, which comprised approximately 60% of our revenues in 2023, will frequently enter into non-exclusive arrangements with several firms, with the ultimate choice among them being left to local managers. As a result, employment services firms with a large network of offices compete most effectively for this business which generally has agreed-upon pricing or mark-up on services performed.

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Legal Regulations

The employment services industry is closely regulated in all of the major markets in which we operate, except the United States, the United Kingdom, Canada and Australia. Employment services firms are generally subject to one or more of the following types of government regulation:

regulation of the employer/employee relationship between the firm and its temporary and contract employees;
registration, licensing, record keeping and reporting requirements;
substantive limitations on the operations or the use of temporary and contract employees by clients; and
regulation that requires new or additional benefits and pay parity for our associates.

In many markets, the existence or absence of collective bargaining agreements with labor organizations has a significant impact on our operations and the ability of clients to use our services. In some markets, labor agreements are structured on an industry-wide, rather than company-by-company, basis. Changes in these collective bargaining agreements have occurred in the past and are expected to occur in the future and may have a material impact on the operations of employment services firms, including us.

In most countries, workforce solutions and services firms are considered the legal employers of temporary and contract workers. Therefore, laws regulating the employer/employee relationship, such as tax withholding or reporting, social security or retirement, health and other benefits, anti-discrimination and workers’ compensation, govern the firm.

In many countries, particularly in continental Europe and Asia, entry into the employment services market is restricted by the requirement to register with, or obtain licenses from, a government agency. In addition, a wide variety of ministerial requirements may be imposed, such as record keeping, written contracts and reporting. The United States, United Kingdom and Canada do not presently have any form of national registration or licensing requirement.

In addition to licensing or registration requirements, many countries impose substantive restrictions on the use of temporary and contract workers. Such restrictions include regulations affecting the types of work permitted, the maximum length of assignment, wage levels or reasons for which temporary and contract workers may be employed. In some countries, special taxes, fees or costs are imposed in connection with the use of temporary and contract workers. For example, temporary and contract workers in France are entitled to a 10% allowance for the uncertain duration of employment, which is eliminated if a full-time position is offered to them after assignment termination.

Our outplacement and consulting services generally are not subject to governmental regulation in the markets in which we operate.

In the United States, we are subject to various federal and state laws relating to franchising, principally the Federal Trade Commission’s Franchise Rules and analogous state laws which impact our agreements with our franchised operations. These laws and related rules and regulations impose specific disclosure requirements. Virtually all states also regulate the termination of franchises.

Changes in applicable laws or regulations have occurred in the past and are expected in the future to affect the extent to which workforce solutions and services firms may operate. These changes could impose additional costs, taxes, record keeping or reporting requirements; restrict the tasks to which contingent workers may be assigned; limit the duration of or otherwise impose restrictions on the nature of the relationship (with us or the client); or otherwise adversely affect the industry.

Trademarks

We maintain a number of registered trademarks, trade names and service marks in the United States and various other countries and territories. We believe that many of these marks and trade names, including ManpowerGroup®, Manpower®, Experis®, Right Management®, Brook Street®, Jefferson Wells®, Supplay®, PowerSuite® and MyPath® have significant value and are materially important to our business. In addition, we maintain other intangible property rights. The trademarks have been assigned an indefinite life based on our expectation of renewing the trademarks, as required, without material modifications and at a minimal cost, and our expectation of positive cash flows beyond the foreseeable future.

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Employees

We had approximately 27,900 full-time equivalent employees as of December 31, 2023. In addition, we recruit millions of permanent, temporary and contract workers on a worldwide basis each year on behalf of our clients.

As described above, in most jurisdictions, we, as the employer of our temporary and contract workers or as otherwise required by applicable law, are responsible for employment administration. This administration includes collection of withholding taxes, employer contributions for social security or its equivalent outside the United States, unemployment tax, workers’ compensation and fidelity and liability insurance, and other governmental requirements imposed on employers. In most jurisdictions where such benefits are not legally required, including the United States, we provide health and life insurance, paid holidays and paid vacations to qualifying temporary and contract employees.

Human Capital

 

We Are a Workforce Solutions and Human Capital Company.

 

Human capital management is at the core of our business. Our purpose is to provide meaningful and sustainable employment and is rooted in our values: People, Knowledge and Innovation. Our 27,900 employees, spanning approximately 75 countries, help improve the lives of more than 500,000 workers daily by providing guidance, advice, assessments, coaching, upskilling, reskilling and pathways to long-term sustainable employment. These efforts support local economies by increasing employability and opportunity for the millions of lives that we reach each year.

 

Through our ESG report Working to Change the World, we report progress on our People & Prosperity pillar, where we are focused on being Creators of Talent at Scale, championing diversity, equity, inclusion and belonging, and improving employability and prosperity. For 75 years, we have developed global insights on the issues and trends impacting organizations and individuals in today’s fast changing world of work. Our own research and solutions, coupled with partnerships with clients and Non-Governmental Organizations (e.g. World Economic Forum, World Employment Confederation and Junior Achievement, among others), enable us to advance the global discussion around the future of work and future for workers. These include the impact of digitization and generative AI, the green transition and shift in in-demand skills, exacerbating talent shortages, and the increased need for reskilling and upskilling. Our most recent annual Talent Shortage Survey reported that 75% of companies cannot find the skilled workers they need.

We Seek to Create Talent at Scale.

Our Manpower MyPath program is designed to deliver targeted upskilling at speed and scale to our Manpower associates in order to accelerate their employability at higher wage levels, while also growing the pool of in-demand talent for our clients. Through this program, Manpower recruiters provide personalized and data-driven guidance, development, training, and access to jobs especially in growth sectors including advanced manufacturing, information technology, supply chain and customer service. MyPath has impacted over 240,000 lives through 2023, and MyPath associates now represent 36% of our associate talent pool, across nearly 13,000 clients and 12 markets.

We are also targeting the creation of IT talent through our Experis Academy. This accelerated development program features custom-designed curricula to upskill people into specialized roles that can meet the demand for cloud, infrastructure, business transformation and digital workforces skills. Paired with coaching and soft skills training, upon completion most Academy graduates receive a permanent job offer from our clients. Through the end of 2023, we have graduated more than 1,900 developers while also bridging the skills gaps for more than 170 tech companies across 17 countries.

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We Are Focused on Championing DEIB (Diversity, Equity, Inclusion, Belonging), Strengthening Our Culture and Developing Our People.

 

Our Global Footprint

 

We have a global footprint, though our teams are managed locally: 30% of our people are in the Americas, 32% in Southern Europe, 21% in Northern Europe and 17% in Asia Pacific/Middle East.

 

Championing DEIB

 

We believe that all people deserve to feel safe, respected and able to thrive in the workplace. Our focus on DEIB encompasses four goals: (1) globally, support gender diversity at leadership levels; (2) locally, address a second dimension of diversity based on gaps or opportunities within a country; (3) culturally, foster an inclusive environment that supports our diverse workforce; and (4) societally, advance employment security for workers while promoting upskilling, well-being, flexibility and income opportunity.
 

 

We believe that diversity starts at the top. Our Board of Directors has exceeded 30% gender diversity for more than 10 years, is as of December 31, 2023, 17% racially diverse and 42% non-US born. Our Executive Leadership Team, which reports directly to the CEO, is 30% women, 40% racially diverse and 70% non-US born. Our Global Leadership Team, the top 95 leaders in the company, is 34% women.

 

Our gender parity aspiration is 50% at the global leadership level by 2025.

 

Gender diversity is our primary DEIB goal across all markets; in addition, our 17 largest markets have also established secondary diversity targets. These have been developed to reflect socio-economic challenges, cultural references and data privacy requirements specific to each of these countries. Examples include: First Nations representation in Australia, people with disabilities in Japan, young people in Mexico, LGBTQ+ in the Netherlands, age diversity in Spain, and racial and ethnic diversity in the US.

 

Championing DEIB in our workplaces also means that we prioritize people’s health and wellbeing and have committed to flexible work models across the globe to attract, engage and retain our people. In a number of markets, we have launched initiatives and trained our managers to promote greater awareness of mental wellbeing.

 

Developing our People

 

We believe our success in creating value for individuals and organizations around the world will depend on our ability to leverage the potential of our own people. We are investing in our people to support both our strategic ambitions and their personal goals.

 

In 2023, we continued to broaden and deepen our investment through our Leadership Development Programs, incorporating the 3 E’s of our development philosophy: Education, Exposure and Experience.
 

For our Future Leader Program (FLP) that targets individual contributors wanting to take on their first managerial role, 198 employees completed this program in 2023 - and a total of 832 employees have completed the program since its inception in 2019.
For our Accelerated Leadership Program (XLP) that targets current managers ready to move into bigger or more complex roles, 58 employees completed this program in 2023 - and a total of 90 employees have completed the program since it began in 2022.
For our Strategic Leadership Program (SLP) that focuses on senior leaders to prepare them to move into the Global Leadership team, 20 employees completed program in 2023 and a total of 42 employees have completed the program since it began in 2022.

 

Upon completion of these programs, the majority of our people have made positive leadership career moves.

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Strengthening our Culture

 

Encouraging active engagement among our workforce is important for nurturing a strong and inclusive culture. We believe regular pulse surveys offer valuable insights into employee sentiments, spanning various areas such as the effectiveness of our People & Culture strategy, leadership assessments, ethics, values, and developmental opportunities. In 2023, we furthered our Culture Matters initiative by refining and incorporating these behaviors into Our Standards. Our business strategy guides our actions for achieving our goals, and the behaviors in Our Standards—Clarity, Care, and Grow— illustrate how we execute these strategies. We believe our global leaders should provide clarity to our people and our clients, care about themselves and others through our people practices, and make decisions that grow our business and ourselves. Our core belief is that for ManpowerGroup to be successful, each of us needs to be accountable to delivering on these at all levels of our organization.

 

Additionally, we remain committed to innovation and in 2023, we introduced a new survey platform with expanded data analytics capabilities. Our first pulse survey targeted a small population of leaders within ManpowerGroup globally. With a response rate of approximately 70%, and over 200 comments, leaders provided insight into how they view the strength of our strategy.

 

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Item 1A. Risk Factors

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). Statements made in this report that are not statements of historical fact are forward-looking statements. In addition, from time to time, we and our representatives may make statements that are forward-looking. Forward-looking statements are based on management’s current assumptions and expectations and are subject to risks and uncertainties that are beyond our control. This section provides you with cautionary statements identifying, for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, important factors that could materially adversely affect our business, operational and financial results and cash flows. In addition, these factors could cause our actual results to differ materially from those contained in forward-looking statements made in this report or otherwise made by us or on our behalf. You can identify these forward-looking statements by forward-looking words such as “expect”, “anticipate”, “intend”, “plan”, “may”, “will”, “believe”, “seek”, “estimate”, and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements. We caution that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statements to reflect subsequent events or circumstances.

The following are some of the factors that could materially adversely affect our business, operational and financial results and cash flows or cause actual results to differ materially from estimates contained in our forward-looking statements. Risks in this section are grouped in the following categories: (1) Company and Operational Risks; (2) Strategic Risks; (3) Financial and Market Risks; and (4) Regulatory and Legal Risks. Many risks affect more than one category, and the risks are not in order of significance or probability of occurrence because they have been grouped by categories.

Company and Operational Risks

Volatile, negative or uncertain economic conditions;
Inability to timely operate our business or respond to the needs of our clients;
Competition in the worldwide employment services industry limiting our ability to maintain or increase market share or profitability;
Cyberattack or improper disclosure or loss of sensitive or confidential company, employee, associate or client data, including personal data;
Disruption, increased costs and reputational risk from outsourcing various aspects of our business;
A loss or reduction in revenues from one or more large clients;
Loss of key personnel;
Competition in labor markets limiting our ability to attract, train and retain the personnel necessary to meet our clients’ staffing needs;
Political unrest, natural disasters, health crises, infrastructure disruptions and other risks beyond our control;
Our ability to preserve our reputation in the marketplace;
Changes in client attitudes toward the use of our services or our industry; and
Limited ability to protect our thought leadership and other intellectual property.

 

Strategic Risks

Inability to effectively implement our business strategy or achieve our objectives;
Failure to keep pace with technological change and marketplace demand in the development and implementation of our services and solutions;
Our ESG strategy exposes us to business risks;
Costs or disruptions resulting from acquisitions we complete; and
Risks related to dispositions we may undertake via sales, franchises, joint ventures or other exit activities.

 

 

 

 

 

 

 

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Financial and Market Risks

Foreign currency fluctuations;
Inability to meet our liquidity or working capital needs;
Inability to maintain effective internal controls;
Material adverse effects on our operating flexibility resulting from our debt levels;
Failure to comply with restrictive covenants under our revolving credit facilities and other debt instruments;
Inability to obtain credit on terms acceptable to us or at all;
The performance of our subsidiaries and their ability to distribute cash to our parent company, ManpowerGroup, may vary;
Inability to secure guarantees or letters of credit on acceptable terms;
Changes in tax legislation; and
Fluctuation of our stock price.

 

Regulatory and Legal Risks

Challenges meeting contractual obligations if we or third parties fail to deliver on performance commitments;
Legal regulations in places we do business or the regulatory prohibition or restriction of employment services or the imposition of additional licensing or tax requirements;
Failure to comply with anti-corruption and bribery laws;
Legal claims, including employment-related claims, from clients or third parties;
Liability resulting from competition law;
Provisions under Wisconsin law and our articles of incorporation and bylaws could make the takeover of our Company more difficult; and
Other factors that may be disclosed below or from time to time in our SEC filings or otherwise.

Some or all of these factors may be beyond our control. We caution you that any forward-looking statement reflects only our belief at the time the statement is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.

RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the following factors which could materially adversely affect our business, financial condition, results of operations (including revenues and profitability) or stock price. Our business is also subject to general risks and uncertainties that may broadly affect companies. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also could materially adversely affect our business, financial condition, results of operations or stock price.

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Company and Operational Risks

Our results of operations have been and may in the future be materially adversely affected by volatile, negative, or uncertain economic conditions, including the risk of recession.

Our business is sensitive to changes in global macroeconomic conditions. We have at times experienced uncertainty and volatility in global economic conditions, including in rates of growth or decline in the markets we serve. Our operating countries and regions, which are increasingly interdependent, have experienced periods of volatile growth patterns or declines, and we expect that global conditions will continue to be characterized by instability and unpredictability. Such conditions have and may continue to cause our clients to reduce or defer their spending on new projects that require our solutions which could decrease demand for our various staffing services. If our business growth is slow, or if it contracts for an extended period of time, this could have a material adverse effect on our business and results of operations.

Our profitability is sensitive to decreases in demand. Based on current macroeconomic conditions, there is a significant risk that some of our most important markets will experience a recession, which would likely be accompanied by a decline in demand for our services. When demand drops or remains low, our operating profit is impacted unfavorably as we experience a deleveraging of our selling and administrative expense base as expenses do not decline as quickly as revenues. For example, our ability to achieve cost containment through reductions in our headcount may be impeded or slowed by applicable legal requirements to consult with employee representative bodies such as works councils. In periods of decline, we may not be able to reduce selling and administrative expenses without negatively impacting the long-term potential of our branch network and brands. Additionally, some clients may slow the rate at which they pay us, or become unable to pay their obligations and our cash flow and profitability may suffer.

Economic conditions in the countries and territories where we do business may be affected by recent or emerging events, such as the rise of populism, political volatility, civil violence and unrest, election results or other changes in ruling parties or governmental leadership, trade disputes, protectionism or changes in global trade policies, capital flows, the global refugee crisis, social justice movements, energy shortages or instability in the global energy market, global health crises including COVID-19, changes in immigration policy, the impact of supply chain challenges on our clients, changes in employment policy, rising interest rates, inflation, the impact of terrorist activity, or by other political or economic developments. In addition, there is a risk the current inflationary environment and efforts to combat inflation could have an impact on the countries and territories where we do business. We are particularly susceptible to changes in demand patterns and economic conditions in Europe, which represents two of our operating segments and 64% of our revenue.
 

There is a risk that economic conditions in European markets or elsewhere may continue to be negatively impacted by geopolitical events. In recent years these have included labor unrest, civil protest, heightened trade tensions, refugee crises, the ongoing conflict between Russia and Ukraine and, most recently, the ongoing conflict between Israel and Hamas. We cannot predict the potential consequences arising from these conflicts and the further escalation of geopolitical tensions globally, including whether they could have an effect on the global economy and on our business and results of operations. Geopolitical events could give rise to the imposition of further sanctions, regional or international expansion of current conflicts, instability in energy supplies, potential retaliatory action by governments, heightened cybersecurity threats, disruptions in the global supply chain, volatility in foreign exchange rates, and inflationary pressures. Any of these events or trends could have a material adverse effect on our business and operating results, particularly our European operations.

There is a risk that even when overall global economic conditions are positive, we could experience declines in all, or in portions, of our business. During past periods of recovery, we have experienced inconsistent results, with some geographical regions, or countries within a region, suffering declines or weakness in economic activity while others improve. Differing economic conditions and patterns of economic growth or contraction may affect demand for our solutions and services, and there is a risk that, even during times of strengthening global economic conditions, we may not experience uniform, or any, increases in demand for our solutions and services within the markets where our business is concentrated.

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Even without uncertainty and volatility, it is difficult for us to forecast future demand for our services due to the inherent difficulty in forecasting the direction and strength of economic cycles, and the short-term nature of many of our staffing assignments. When it is difficult for us to accurately forecast future demand, we may not be able to determine the optimal level of personnel and office investments necessary to profitably operate our business or take advantage of growth opportunities.
 

We may lack the speed, agility, and resiliency to effectively operate our business and respond to the needs of our clients.

There is a risk we may not be able to respond with sufficient speed and agility to the needs of our diverse clients, which span all industries and whose needs may change rapidly as their businesses and industries evolve. The size and breadth of our organization, comprising approximately 27,900 employees based out of over 2,100 offices in approximately 75 countries and territories, may make it difficult for us to effectively manage our resources, to maintain our corporate culture throughout the organization, to drive service improvements and to provide coordinated solutions to our clients who require our services in multiple locations. For example, client demands for uniform service across borders may be difficult to satisfy because of variation in local laws and customs. We see a trend in more multi-country and enterprise-level relationships, and we may have difficulty in profitably managing and delivering projects involving multiple countries. Also, our size and organizational structure may make it difficult to develop and implement new processes and tools across the enterprise in a consistent manner. If we are not effective at anticipating or meeting the widely ranging needs of our current and prospective clients, or our competitors are more agile or effective at doing so, our business and financial results could be materially adversely affected.

Our ability to perform at speed, and to meet client expectations, may also be adversely affected by limitations in our own information systems and those of our third-party vendors. We are increasingly dependent on these systems, which are subject to damage or interruption from multiple causes, including power outages, facility damage, computer and telecommunications failures, vandalism, malware, hacking and other malicious acts, catastrophic events and human error. If our information systems are damaged, fail to work properly, or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience reputational damage, loss of critical information, customer disruption, and interruptions or delays in our ability to perform essential functions and implement new and innovative services.


The worldwide employment services industry is highly competitive with limited barriers to entry in many markets, which could limit our ability to maintain or increase our market share or profitability.

The worldwide employment services industry is highly competitive with limited barriers to entry in many markets, and in recent years has undergone significant consolidation. We compete in markets throughout the world with full-service and specialized employment services agencies. Several of our global competitors have very substantial marketing and financial resources, and may be better positioned in certain markets. Portions of our industry may become increasingly commoditized, with the result that competition in key areas could become more focused on pricing. We expect that we will continue to experience pressure on price from competitors and clients. There is a risk that we will not compete effectively, including on price, which could limit our ability to maintain or increase our market share and could materially adversely affect our financial results. This may worsen as clients increasingly take advantage of low-cost alternatives including using their own in-house resources rather than engaging a third party. The increased availability and maturation of artificial intelligence (AI) tools may enable clients to use advanced automation capabilities in lieu of services provided by our employees, contractors and associates.

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We could incur liabilities or suffer reputational damage from a cyberattack or improper disclosure or loss of personal or confidential data, and our use of data is subject to complex and ever-changing privacy and cybersecurity legal requirements that could negatively impact our business or subject us to claims and/or fines for non-compliance.

In connection with the operation of our business, we store, process and transmit a large amount of data, including personnel and payment data, about our employees, clients, associates and candidates, a portion of which is personal data and/or confidential data. We expect our use of data to increase, including through the use of analytics, artificial intelligence (AI) and machine learning (ML). In engaging in these data-related activities, we rely on our own technology systems and software, and those of third-party vendors we use for a variety of processes, including, but not limited to cloud-based technology and systems, mobile technologies and social media. Unauthorized access to, disclosure, modification, use or loss of personal or confidential data may occur through various methods. These include, but are not limited to, ransomware, systems failure, employee negligence or malfeasance, fraud or misappropriation, or unauthorized access to or through our information systems, whether by our employees, vendors or third parties, including a cyberattack by hackers, members of organized crime and/or state-sponsored organizations, who may develop and deploy supply chain interruptions, social engineering attacks, viruses, worms or other malicious software programs, or obtain credentials to our systems through other unrelated cyberattacks.

An incident involving disclosure, system failure, data modification, loss or security breach could harm our reputation and subject us to significant monetary damages or losses, litigation, negative publicity, regulatory enforcement actions, fines, criminal prosecution, as well as liability under our contracts and laws that protect personal and/or confidential data, resulting in increased costs or loss of revenues. Cybersecurity threats continue to increase in frequency and sophistication, thereby increasing the difficulty of detecting and defending against them. In the past, we have experienced data security breaches resulting from unauthorized access to our systems and other fraudulent activities, such as social engineering, which to date have not had a material impact on our operations or financial results. We regularly engage an independent external security firm to assess our defenses to a potential cyberattack, and these assessments may uncover new or additional vulnerabilities and weaknesses that could lead to a compromise of our systems and/or a loss of personal data. In a recent evaluation, vulnerabilities were identified that could facilitate or contribute to a security incident involving personal data. The assessment firm was able to penetrate defensive protections adopted by us, as well as protections that we obtain from third party providers. We are prioritizing the resolution of security gaps that could lead to a loss of personal data or to other damage. Despite our efforts to identify and address vulnerabilities in our systems, vulnerabilities in software products used by us are disclosed by our software providers on a daily basis, and attackers grow continuously more sophisticated in their attack methods, which may additionally make use of AI technology, making it impossible to give assurance that our cybersecurity efforts will be successful.

There is a risk that our and our third-party vendors’ preventative security controls and practices will be inadequate to prevent unauthorized access to, disclosure of, or loss of personal and/or confidential data, or fraudulent activity, especially given that third party attacks have become more common. In the past, our data has been exposed due to data security breaches at our third party vendors, but to date none of these incidents have had a material impact on our operations or financial results. Any such future events, such as unauthorized access or fraudulent activity with our third parties could have a material adverse effect on our business and financial results.

More of our employees are working from their homes or other remote locations than before the COVID-19 pandemic, which makes it more difficult for us to monitor their activities, the security of their work locations, insider threats, and data exfiltration. This has increased the risk of security incidents, which could include unauthorized access to, disclosure of, or loss of personal and/or confidential data, as well as other types of fraudulent activity. Any such unauthorized access or fraudulent activity could have a material adverse effect on our business and financial results.

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The potential risk of security breaches, fraud and cyberattacks may increase as we continue to introduce services and offerings, whether mobile, cloud, or otherwise. Any additional services and offerings inevitably increase the potential for a cyberattack against us. Further, data privacy and cybersecurity are subject to frequently changing laws and regulations, including the European Union’s General Data Protection Regulation (the “GDPR”), the California Privacy Rights Act (the “CPRA”), and additional legislation in place, or expected to become effective, in various U.S. states and other countries. These laws and regulations are increasing in number, complexity, burden and potential financial penalties, and are often inconsistent among the various jurisdictions and countries in which we provide services. For example, the GDPR and the CPRA impose significant compliance obligations that add costs and operational burdens to our business with respect to our collection, use, storage and retention of personal data. Compliance with these obligations could reduce operational efficiency and increase our regulatory compliance costs, and failure to satisfy these requirements may lead to significant regulatory enforcement actions and/or large private litigation in the event of a security breach or other violation. Under the GDPR, the maximum fine can be up to 4% of a company’s global revenue, and there is no maximum penalty under the CPRA. In addition, our liability insurance might not be sufficient in scope or amount to cover us against claims and losses related to violations of data privacy and cybersecurity laws or security breaches, social engineering, cyberattacks and other related data disclosure, loss or breach.

We have outsourced aspects of our business, which could result in disruption, increased costs, and reputational risk.

We have increasingly outsourced, and may further outsource, important processes of our business to third party vendors, which exposes us to other risks, including increased costs, supply chain interruptions, potential disruptions to our business operations, and reputational risk. For example, we rely on third parties to host, manage and secure certain aspects of our data center information and technology infrastructure, to develop and maintain new technology for attracting, onboarding, managing, and analyzing our workforce, and to provide important back-office support. We have increasingly centralized our vendor profile so that we are reliant on a small number of vendors for highly critical corporate and technology functions. While we believe these third-party vendors provide greater efficiency and expertise, our dependence on a small number of vendors increases the risk that our business will be adversely affected if our vendors are unable to provide these services consistent with our needs. Similarly, our business continuity and our margins could be adversely affected if we needed to replace one of our critical vendors for performance or economic reasons.

Our operations also depend significantly upon these vendors’ and our ability to protect our data and to ensure the availability of our servers, software applications and websites. Despite our and our third-party vendors’ implementation of security measures, our systems remain susceptible to system failures, computer viruses, natural disasters, unauthorized access, cyberattacks and other similar incidents, any of which could result in disruptions to our operations. Our vendors have experienced data losses in the past, and we can expect such data incidents will occur in the future. A successful breach of the security of our technology systems, or those of our vendors, could result in the theft of confidential, personally identifiable, or other sensitive data, including data about our employees and/or associates, or our human resources operations, any of which could damage our reputation in the market. If we are not able to realize the savings associated with outsourcing services or if there is a disruption or security breach of our outsourced services that results in a loss or damage to our data, or in an inappropriate disclosure of confidential, personally identifiable, or sensitive data, our business and financial results could be materially adversely affected.

A loss or reduction in revenues from large client accounts could have a material adverse effect on our business.

Our client mix consists of both small- and medium-size businesses, which are based upon a local or regional relationship with our presence in each market, and large national and multinational clients. These large national and multinational clients will frequently enter into non-exclusive arrangements with several firms, and the client is generally able to terminate their contract with us on short notice without penalty. The deterioration of the financial condition or business prospects of one or more large national and/or multinational clients, or a change in their strategy around the use of our services, could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from them. A loss or reduction in revenues from our large national and multinational clients could have a material adverse effect on our business.

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If we lose our key personnel, then our business may suffer.

Our operations are dependent on the continued efforts of our officers and executive management and the performance and productivity of headquarters management and staff, our local managers and field personnel. Our ability to attract and retain business is significantly affected by local relationships and the quality of service rendered. If we were to lose key personnel who have acquired significant experience in managing our business or managing companies on a global basis or in key markets, it could have a significant impact on our operations.

Intense competition may limit our ability to attract, train and retain the qualified personnel necessary for us to meet our clients’ staffing needs.

Our business depends on our ability to attract and retain qualified associates who meet the requirements of our clients and possess skill sets and experience that match client needs. In many markets, we have recently experienced an unusually tight labor market, with historically low levels of unemployment, and there is a risk that we may be unable to meet our clients’ requirements in identifying an adequate number of associates. These labor shortages have been exacerbated by employees and potential employees leaving the labor market due to burn-out, resignation, early retirement, immigration challenges, workplace safety concerns, and childcare responsibilities. Workers have also impacted the labor market through increasing demands for change in employment conditions, such as demands for higher wages, remote work, and additional flexibility in work schedule. We must continually evaluate and upgrade our base of available qualified personnel through recruiting and training programs to keep pace with changing client needs and emerging technologies. This is especially acute for individuals with critical IT capabilities and other technology skills that are in high demand by many companies, as competition for such individuals with proven professional skills is intense, and we expect demand for such individuals to remain strong for the foreseeable future. Qualified personnel with relevant skills may not be available to us in sufficient numbers and on terms of employment acceptable to us. Additionally, our clients may look to us for assistance in identifying and integrating into their organizations’ workers from diverse backgrounds, and who may represent different generations, geographical regions, and skillsets. These needs may change due to business requirements, or in response to geopolitical and societal trends. There is a risk that we may not be able to identify workers with skills that match client demand, or that our training programs may not succeed in developing effective or adequate skills. If we fail to recruit, train and retain qualified associates who meet the needs of our clients, our reputation, business and financial results could be materially adversely affected.

Our global operations subject us to certain risks beyond our control.

With operations in approximately 75 countries and territories around the world, we are subject to numerous risks outside of our control, including risks arising from political unrest and other political events, regional and international hostilities and international responses to these hostilities, strikes and other worker unrest, natural disasters, the impact of global climate change, acts of war, including the ongoing conflicts between Russia and Ukraine as well as Israel and Hamas, terrorism, international conflict, severe weather conditions, pandemics, including COVID-19 and other global health emergencies, disruptions of infrastructure and utilities including energy, cyberattacks, and other events beyond our control.

Although it is not possible to predict such events or their consequences, these events could materially adversely affect our reputation, business and financial results.

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Our ability to attract and retain business and employees may depend on our reputation in the marketplace.

We believe our reputation, along with our brand equity in the ManpowerGroup name and our various other brands, are important corporate resources that help distinguish our services from those of competitors and also contribute to our efforts to recruit and retain talented employees. However, our corporate reputation is potentially susceptible to material damage by events such as disputes with clients, information technology security breaches, internal control deficiencies, delivery failures or compliance violations. Similarly, our reputation could be damaged by actions or statements of current or former clients, employees, competitors, vendors, franchisees and other third-party brand licensees, adversaries in legal proceedings, government regulators, as well as members of the investment community or the media. There is a risk that negative information about ManpowerGroup, even if based on rumor or misunderstanding, could materially adversely affect our business. Damage to our reputation could be difficult, expensive and time-consuming to repair, could make potential or existing clients reluctant to select us for new engagements, resulting in a loss of business, and could materially adversely affect our recruitment and retention efforts. Damage to our reputation and could also reduce the value and effectiveness of the ManpowerGroup name and our other brand names, and could reduce investor confidence in us, materially adversely affecting our share price.

Changes in sentiment toward the staffing industry could affect the marketplace for our services.

From time to time, the staffing industry has come under criticism from unions, works councils, regulatory agencies and other constituents that maintain that labor and employment protections, such as wage and benefits regulations, are subverted when clients use contingent staffing services. Our business is dependent on the continued acceptance of contingent staffing arrangements as a source of flexible labor for our clients. If attitudes or business practices in some locations change due to pressure from organized labor, political groups or regulatory agencies, it could have a material adverse effect on our business, results of operations and financial condition.

We have only a limited ability to protect our thought leadership and other intellectual property, which is important to our success.

Our success depends, in part, upon our ability to protect our proprietary methodologies and other intellectual property including the value of our brands. Existing laws of the various countries in which we provide services or solutions may offer only limited protection. We rely upon a combination of trade secrets, confidentiality, license and other contractual agreements, and copyright, and trademark laws to protect our intellectual property rights. We cannot be certain that the legal steps we are taking around the world are sufficient to protect our intellectual property rights and may not be adequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors, former employees or other third parties. In addition, our intellectual property rights may not prevent competitors from independently developing products, services and solutions similar to ours. Failure to adequately protect our intellectual property rights, or changes in law that diminish or remove our current legal protections could have a material adverse impact on our business and financial results.

In addition, we cannot be sure that our services and solutions do not infringe on the intellectual property rights of third parties, and these third parties could claim that we or our clients are infringing upon their intellectual property rights. These claims could harm our reputation, cause us to incur substantial costs or prevent us from offering some services or solutions in the future.
 

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Strategic Risks

We may be unable to effectively implement our business strategy, and there can be no assurance that we will achieve our objectives.

Our business strategy focuses on growing revenues while improving our operating profits. An important element of our strategy is our effort to diversify our revenues beyond our core staffing and employment services. This includes expanding our sales in higher margin professional resourcing, such as our Experis brand in IT recruitment. There is a risk that our growth strategy in Experis may be impeded due to the scarcity of talent in the IT field, which is particularly in demand, and which may restrict our ability to fulfill customer requirements. Similarly, another aspect of our strategy to expand beyond our core staffing and employment services is through the sale of innovative workforce solutions designed to achieve higher operating margins. Our higher-margin Right Management career management services have historically performed well in periods of downturn, and it is part of our business strategy that this counter-cyclical effect would help cushion our results in the event of a period of decline. However, in the event of a downturn, there can be no assurances that the margin contribution from Right Management would increase, or that it would significantly offset other declines we might experience in the business. Additionally, our workforce solutions are often unique, non-repeatable and tailored to a client’s needs, and present costs, risks and complexity that may be difficult to calculate. These solutions may be unprofitable if we are not able to accurately anticipate these costs and risks in our pricing for these solutions. For example, we may fail to structure and price our solutions in a manner that properly compensates us to create an adequate delivery model, to adequately manage new solutions, or to obtain adequate insurance coverage in amount or scope to cover potential risks arising from such solutions.

Our business strategy also includes continuing efforts to transform how we use personnel and technology to manage our financial administration and to enhance our delivery of services. These projects are complex, and may consume considerable financial and personnel resources. The goal of these transformation initiatives is to become a more agile and effective competitor, to reduce the cost of operating our business and to increase our operating profit and operating profit margin. However, as these efforts may consume considerable resources, they may put pressure on our operating results or ability to address other priorities. They may not be successful, may not be achieved within our timing and cost estimates, and may not ultimately reduce our operating costs or prevent the return of any costs that are eliminated. Additionally, reductions in personnel and other changes emerging from these projects could materially adversely affect our ability to effectively operate our business. If, for these or other reasons, we are not successful in implementing our business strategy or achieving the anticipated results of our transformation initiatives, our business, financial condition and results of operations could be materially adversely affected.

Our results of operations and ability to grow could be materially negatively affected if we cannot successfully keep pace with technological changes in the development and implementation of our services and solutions.

Our success depends on our ability to keep pace with rapid technological changes in the development and implementation of our services and solutions. For example, rapid changes in the functionality and potential uses of AI, machine learning and robotics are having a significant impact on some of the industries we serve. This technological disruption could also have significant and unforeseen consequences for the workforce services industry and for our business in particular, such as a reduced demand for our services or challenges to effective implementation of this technology. There is a risk that these, or other developments, could result in significant rapid disruption to our business model, and that we will be unprepared to compete effectively. This challenge is further complicated by rapidly evolving regulatory restrictions governing the permitted uses of artificial intelligence.

Additionally, our business is reliant on a variety of technologies, including those which support applicant on-boarding and tracking systems, order management, billing, payroll, and client data analytics. There is a risk we will not sufficiently invest in technology or industry developments, or evolve our business with the right strategic investments, or at sufficient speed and scale, to adapt to changes in our marketplace. Similarly, from time to time we make strategic commitments to particular technologies to recruit, manage or analyze our workforce or support our business, and there is a risk they will be unsuccessful. Additionally, there are risks and uncertainties associated with our use of AI technologies which could expose us to regulatory, legal, reputational or financial harm. These and similar risks could have a negative effect on our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage in the marketplace.

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Our environmental, social, and governance (ESG) commitments and disclosures may expose us to risks, legal liability, and increased costs.

Our business could be impacted in several ways by our corporate environmental, social and governance (ESG) initiatives, including our goals for sustainability, diversity, equity, and inclusion.

Our positions and disclosures on these matters, or failure to achieve our commitments, could harm our reputation or brand image. For example, we have made various commitments regarding the future reduction of our greenhouse gas emissions, and there is a risk we will be unsuccessful in making progress toward our goals or ultimately meeting them, which could have adverse reputational impacts. Reputational concerns could also cause us to examine our relationships with certain clients and vendors, and choose not to conduct business with certain partners, which could negatively affect our performance or operational efficiency.
Positions we take, or do not take, on politically sensitive social issues or other ESG matters may be unpopular with certain existing or potential clients and employees, which may impact our ability to attract and retain those clients and employees.
We may experience increased compliance burdens and costs in order to implement our initiatives, including those costs associated with any new legal or regulatory requirements (such as the EU Corporate Sustainability Reporting Directive), or voluntary standards and commitments, designed to mitigate climate change or address human capital management concerns.
Our ability to achieve our ESG commitments may be subject to numerous external factors outside of our control, including: (1) the availability and cost of low-carbon energy sources; (2) evolving regulatory requirements affecting ESG standards or disclosures; (3) the availability of vendors and other business partners that can meet our sustainability, diversity, and other standards; and (4) our ability to recruit, develop, and retain diverse talent.
Standard methodologies and frameworks, as well as our processes and controls, for measuring and reporting ESG matters across our operations are continuously evolving, including ESG-related disclosures that may be required by the SEC, European and other regulators; and such changing standards could result in significant revisions to our current goals, reported progress in achieving such goals, or our ability to achieve such goals in the future.


Our acquisition strategy may be unsuccessful and may introduce unexpected costs.

From time to time, we make acquisitions of other companies or operating assets, including a significant acquisition of ettain group, in 2021. These activities involve significant strategic and operational risks, including:

they may fail to achieve our strategic objectives or fail to meet our performance expectations, including as a result of challenges integrating the acquired company and assimilating their corporate culture;
over-valuation by us of any companies or assets that we acquire;
we may have difficulties integrating the operations, leadership, personnel, financial reporting, services or other functions of acquired companies;
we may experience disputes that arise with the sellers;
we may fail to effectively monitor compliance with corporate policies as well as regulatory requirements;
we may face unanticipated risks and liabilities in connection with the acquired company's operations;
we may obtain insufficient indemnification from the selling parties for liabilities incurred by the acquired companies prior to the acquisitions; and
acquisition transactions, and the integration of acquired entities, may result in a diversion of our management’s attention from other business concerns.

These risks could have a material adverse effect on our business because they may result in substantial costs to us and disrupt our business. The integration of prior acquisitions, as well as entry into future acquisition transactions, could materially adversely affect our business, financial condition, results of operations and liquidity. We could also incur impairment losses on goodwill and other intangible assets with an indefinite life or restructuring charges as a result of acquisitions we make.

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From time to time, we undertake dispositions via sales, franchises, joint ventures or other exit activities, and we may face risks related to such transactions.

Occasionally, we dispose of parts of our operations based on risk considerations and to optimize our global strategic and geographic footprint and overall efficiency. We have engaged in such dispositions in the past, including the dispositions of our businesses in the Philippines in September 2023 and Russia and Hungary in January and December 2022, respectively. We expect that we will continue to dispose of portions of our business that are not meeting our performance or strategic objectives. Among other alternatives, this could take the form of a closure of a business, the contribution of the business to a joint venture, or an exit by means of a sale to, or a franchise arrangement with, a third party. There are risks and costs associated with any exit activities, which could include difficulties in the separation of operations, services or personnel, the diversion of management attention, and the disruption of our business. Any such transactions may require regulatory or governmental approvals, which could impede the transaction. Divestitures may also involve continued financial involvement in, or liability with respect to, the divested businesses. As a result of divestiture transactions, we could incur severance charges for personnel and payments for lease and other commitments, charges from the impairment or write-off of assets, and other financial loss due to the transaction. Furthermore, there is the risk that we might lose customers, in particular multinational clients with operations in the exited countries or operations. Additionally, if we choose to enter into a franchise arrangement for a third party to operate our business in the exited region using our trademarks and other licensed assets, we face potential counterparty and reputational risks arising from the franchisee’s operation of the business. The reputational risks include the risk that marketplace participants, including clients, candidates and the media, may believe that we continue to control the operations of a divested or franchised business that operates utilizing our name or other trademarks.

Financial and Market Risks

Foreign currency fluctuations may have a material adverse effect on our operating results.

Although we report our results of operations in United States dollars, the majority of our revenues and expenses are denominated in currencies other than the United States dollar, and unfavorable fluctuations in foreign currency exchange rates could have a material adverse effect on our reported financial results. Highly inflationary economies of foreign countries can result in foreign currency devaluation, which may also negatively impact our reported financial results. This occurred in Argentina and is likely to continue while the country attempts to stabilize its currency exchange rate going forward.

During 2023, approximately 84% of our revenues were generated outside of the United States, the majority of which were generated in Europe. Furthermore, $1,002.6 million of our outstanding indebtedness as of December 31, 2023 was denominated in foreign currencies, including $988.2 million related to our Euro-denominated notes (€900.0 million). Increases or decreases in the value of the United States dollar against other major currencies, or the imposition of limitations on conversion of foreign currencies into United States dollars, could affect our revenues, operating profit and the value of balance sheet items denominated in foreign currencies. Our exposure to foreign currencies, in particular the Euro, could have a material adverse effect on our reported results and shareholders’ equity, however, such fluctuations generally do not affect our cash flow or result in actual economic gains or losses unless we repatriate funds. Furthermore, the volatility of currencies may make year-over-year comparability of our financial results difficult.

We seek to mitigate our exposure to foreign currency fluctuations by utilizing net investment hedges and, from time to time, foreign currency forward exchange contracts and cross-currency swaps. Our Euro-denominated notes are designated as a hedge of our net investment in subsidiaries with a Euro-functional currency as of December 31, 2023, to mitigate our Euro currency translation exposure. The effectiveness of this hedge in part depends on our ability to accurately forecast future cash flows, which is particularly difficult during periods of uncertain or uneven demand for our services and highly volatile exchange rates. Further, hedging activities may only offset a portion, or none at all, of the material adverse financial effects of unfavorable fluctuations in foreign exchange rates over the time the hedge is in place or effective.

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Our liquidity could be adversely impacted by economic conditions affecting our clients.

Our working capital is primarily in the form of trade receivables which generally increase as sales increase. One of the ways in which we measure our working capital is in terms of working capital as a percent of revenue with a focus on Days Sales Outstanding (“DSO”). During periods of decline or uncertainty, our clients may slow the rate at which they pay their vendors, or they may become unable to pay their obligations. In addition, some clients have begun to impose more challenging billing terms, which increases the length of time before we receive payment for services. If our clients become unable to pay amounts owed to us, or pay us more slowly, then our DSO will increase, and our cash flow, liquidity, and profitability may suffer.

Our results of operations and share price could be materially adversely affected if we are unable to maintain effective internal controls.

The accuracy of our financial reporting is dependent on the effectiveness of our internal controls. We are required to provide a report from management to our shareholders on our internal control over financial reporting that includes an assessment of the effectiveness of these controls. Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. Because of these inherent limitations, internal control over financial reporting might not prevent or detect all misstatements or fraud. If we cannot maintain and execute adequate internal control over financial reporting or implement required new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, fail to meet our public reporting requirements timely, be unable to properly report on our business and our results of operations, or be required to restate our financial statements. If any of these were to occur, the market price of our securities and our ability to obtain new business could be materially adversely affected.

Our debt levels could materially adversely affect our operating flexibility and put us at a competitive disadvantage.

As of December 31, 2023, we had $1,002.6 million of total debt. Our level of debt and the limitations imposed on us by our credit agreements could have important consequences for investors, including the following:

we may not be able to obtain additional debt financing for future working capital, capital expenditures, significant acquisition opportunities, or other corporate purposes or may have to pay more for such financing;
borrowings under our revolving credit facilities are at a variable interest rate, making us more vulnerable to increases in interest rates; and
we could be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions.

Our failure to comply with restrictive covenants under our revolving credit facilities and other debt instruments could trigger prepayment obligations.

Our failure to comply with the restrictive covenants under our revolving credit facilities and other debt instruments could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms, our results of operations and financial condition could be materially adversely affected by increased costs and rates.

The lenders under our and our subsidiaries’ credit facilities may be unwilling or unable to extend credit to us on acceptable terms or at all.

If our liquidity needs increase, we would expect to use our revolving credit facility, which is provided by a syndicate of banks. Each bank in the syndicate is responsible on a several, but not joint, basis for providing a portion of the loans under the facility. If any of the participants in the syndicate fails to satisfy its obligations to extend credit under the facility, the other participants refuse or are unable to assume its obligations and we are unable to find an alternative source of funding at comparable rates, our liquidity may be materially adversely affected, or our interest expense may increase substantially.

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Furthermore, a number of our subsidiaries maintain uncommitted lines of credit with various banks. Under the terms of these lines of credit, the bank is not obligated to make loans to the subsidiary or to make loans to the subsidiary at a particular interest rate. If any of these banks cancel these lines of credit or otherwise refuse to extend credit on acceptable terms, we may need to extend credit to those subsidiaries, or the liquidity of our subsidiaries may be materially adversely affected.

The performance of our subsidiaries and their ability to distribute cash to our parent company may vary, negatively affecting our ability to service our debt at the parent company level or in other subsidiaries.

Since we conduct a significant portion of our operations through our subsidiaries, our cash flow and our consequent ability to service our debt depends in part upon the earnings of our subsidiaries and the distribution of those earnings to our parent company, or upon loans or other payments of funds by those subsidiaries to our parent company or to other subsidiaries. The payment of such dividends and the making of such loans and advances by our subsidiaries may be subject to legal or contractual restrictions, depend upon the earnings of those subsidiaries and working capital requirements, and be subject to various business considerations, including the ability of such subsidiaries to pay such dividends or make such loans and advances.

Our inability to secure guarantees or letters of credit on acceptable terms may substantially increase our cost of doing business in various countries.

In a number of countries and territories in which we conduct business, we are obligated to provide guarantees or letters of credit to secure licenses, lease space or for insurance coverage. We typically receive these guarantees and letters of credit from a number of financial institutions around the world. In the event that we are unable to secure these arrangements from a bank, lender or other third party on acceptable terms, our liquidity may be materially adversely affected, there could be a disruption to our business or there could be a substantial increase in cost for our business.

We could be subject to changes in tax rates, adoption of new United States or international tax legislation or tax audits that could result in additional income tax liabilities.

We are subject to income and other taxes in the United States and international jurisdictions where we have operations. The tax bases and rates of these respective tax jurisdictions change from time to time due to economic and political conditions. Our effective income tax rate is affected by changes in earnings in countries with differing tax rates, changes in valuation of deferred tax assets and liabilities or changes in the respective tax laws. Our other taxes are impacted by changes in local tax laws or changes in our business.

In addition, tax accounting involves complex matters and requires our judgment to determine our worldwide provision for income and other taxes and tax assets and liabilities. These complex matters include transfer pricing and reporting related to intercompany transactions. We are routinely subject to tax examinations by the United States Internal Revenue Service and other tax authorities. Tax authorities have disagreed, and may disagree in the future, with our judgments. Many taxing authorities are taking increasingly aggressive positions opposing the judgments we make, including with respect to our intercompany transactions. We regularly assess the likely outcomes of our audits and tax proceedings to determine the appropriateness of our tax liabilities. However, our judgments might not be sustained as a result of these audits and tax proceedings, and the amounts ultimately paid could be materially different from the amounts previously recorded.

In addition, changes in tax laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect our tax position. A number of countries where we do business, including the United States and many countries in the European Union, have implemented, and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, agreed to enact Pillar Two, which introduces a global minimum effective tax rate whereby certain multinational groups are subject to a 15% minimum tax on income derived in low-tax jurisdictions. These rules become effective in some countries beginning in 2024. In the United States, various proposals to raise corporate income taxes are periodically considered such as the Inflation Reduction Act, which introduced a 15% Corporate Alternative Minimum Tax beginning in 2023. These proposed and enacted changes in tax laws, treaties or regulations, or their interpretation or enforcement, could have a material adverse impact on our current or future tax positions.

24


 

The price of our common stock may fluctuate significantly, which may result in losses for investors.

The market price for our common stock may be subject to significant volatility. For example, during 2023, the price of our common stock as reported on the New York Stock Exchange ranged from a high of $91.50 to a low of $67.09. Our stock price can fluctuate as a result of a variety of factors, including factors listed in these “Risk Factors” and others, many of which are beyond our control. These factors include:

changes in general economic conditions;
actual or anticipated variations in our quarterly operating results;
announcement of new services by us or our competitors;
announcements relating to strategic relationships or acquisitions;
changes in financial estimates or other statements by securities analysts; and
changes in investor sentiment regarding the company arising from these or other events, or the economy in general.

Regulatory and Legal Risks

Our performance on contracts may be materially adversely affected if we or third parties fail to deliver on commitments.

Our contracts are increasingly complex and, in most instances, require that we partner with other parties or subcontractors to provide the workforce solutions required by our clients. Our clients have become more sophisticated in their contractual negotiation process and more detailed in defining their operational requirements, including requirements to use the client's form of agreement. Our ability to deliver these solutions and provide the services required by our clients is dependent on our and our partners’ ability to meet our clients’ delivery requirements and schedules. If we or our partners fail to deliver services on time and in accordance with contractual performance obligations, then our ability to successfully complete our contracts may be affected, which may have a material and adverse impact on our client relations, revenues and profitability. Additionally, we may incur liability for the actions or omissions of our partners, subcontractors or vendors and we may face challenges or be unable to enforce these obligations against those partners.

Government regulations may result in prohibition or restriction of certain types of employment services or the imposition of additional licensing or tax requirements that may reduce our future earnings.

In many jurisdictions in which we operate, such as France, Italy, Germany, Japan and Mexico, the employment services industry is heavily regulated and scrutinized. For example, in 2021, new legislation was adopted in Mexico that affects many types of temporary placements under the country’s labor laws. The new law broadly prohibits the provision of our traditional temporary staffing services, only allowing outsourced worker assignments for special, deliverables-based projects outside of the client’s core business activity. This has had a material adverse impact on our business in Mexico. In Europe, governmental regulations in Germany restrict the length of contracts and the industries in which our associates may be used. In some countries, special taxes, fees or costs are imposed in connection with the use of our associates. Additionally, in some countries, trade unions have used the political process to target our industry in an effort to increase the regulatory burden and expense associated with offering or utilizing contingent workforce solutions. Moreover, many countries, including the Netherlands and Japan, have established regulations that require equal-pay for equal-work for temporary workers and fixed term employees. Furthermore, some countries are adopting more restrictive immigration regulations, which may lead to greater expense or inability to fulfill client demand, particularly in our cross-border Talent Solutions business. All of these continuously-evolving regulations could have a significant impact to our revenues, costs, and operating margins as we and customers adjust to these new regulations.

The countries and territories in which we operate may, among other things:

create additional regulations that prohibit or restrict the types of employment services or categories of job roles that we may provide;
expand governmental or regulatory scrutiny on the use of AI within the recruitment process;
require new or additional benefits be paid to our associates;
require pay parity for our associates or impose mandatory thresholds for employee diversity;
regulate the period of time for which we may or may not employ our workers, including maximum term limits or minimum time requirements for associates on assignment at our clients;
require us to obtain additional licensing to provide employment services; or
increase taxes, such as sales or value-added taxes.

25


 

Other types of future regulation may have a material adverse effect on our business and financial results by making it more difficult or expensive for us to continue to cost-effectively provide employment services, particularly if we cannot pass along increases in costs to our clients.

Failure to comply with antibribery and corruption laws could materially adversely affect our business.

We are additionally subject to numerous legal and regulatory requirements that prohibit bribery and corrupt acts. These include the Foreign Corrupt Practices Act and the UK Bribery Act 2010, as well as similar legislation in many of the countries and territories in which we operate. Our employees (but not our temporary associates) are required to participate in a global anticorruption compliance training program designed to ensure compliance with these laws and regulations. However, there are no assurances this program will be effective. In many countries where we operate, practices in the local business community may not conform to international business standards and could violate anticorruption law or regulations. Furthermore, we remain subject to the risk that one of our employees (or one of our associates on a temporary or contract-based assignment) could engage in business practices that are prohibited by our policies and these laws and regulations. Any such violations could materially adversely affect our business.

We may be exposed to legal claims, including employment-related claims that could materially adversely affect our business, financial condition and results of operations.

We are subject to a wide variety of potential litigation and other legal claims that arise in the ordinary course of our business. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some, or all of these legal disputes may result in materially adverse monetary damages, fines, penalties or injunctive relief against us.

For example, through our direct interaction with our clients’ businesses and facilities, including functions and systems that are sensitive or critical to their core businesses, we may be exposed to operational, regulatory, reputational and other risks specific to their business, including data security risks. These risks may be reduced through contractual provisions that limit damages or mitigate our responsibility for losses caused by our assigned workers; but these types of contractual protections are not always possible because we may perceive an important economic opportunity, because of the contracting practices of our industry competitors or because our personnel did not adequately follow our contracting guidelines. In addition, as we expand our services and solutions into new areas, we may be exposed to additional and evolving risks specific to these new areas.

We are in the business of employing people and placing them in the workplaces of other businesses. Risks relating to these activities could include possible claims of or relating to:

discrimination or harassment;
employee pay, including wage and hour requirements;
wrongful termination or retaliation;
actions or inactions of our workers, including matters for which we may have to indemnify a client;
laws governing employment screening and privacy;
classification of workers as employees or independent contractors;
employee unionization and collective bargaining activity, which we have recently experienced with certain small employee groups;
employment of undocumented or illegal workers;
issues relating to health and safety, including workers’ compensation;
employee benefits, including leave and healthcare coverage;
errors and omissions relating to the performance of professional roles such as IT professionals, accountants, engineers and the like; and
our workers’ misuse of proprietary information, misappropriation of funds, other criminal activity or torts or other similar claims.

26


 

We may incur fines and other losses or negative publicity with respect to the above risks. In addition, some or all of these claims may give rise to litigation, which could be time-consuming to our management team and costly and could have a negative impact on our business regardless of the merits of the claim. For example, in the past, we have devoted considerable time and expense to resolve several California-based “wage and hour” claims that asserted deficiencies in our payroll practices, and we are often sued by plaintiffs in various other employment-related matters, including those seeking class action status in the US. It is likely we will continue to experience similar claims in the future, which may increase in number as a result of remote working assignments as well as increasing employment regulation at the state and local level.

We cannot be certain our insurance will be sufficient in amount or scope to cover all claims that may be asserted against us. Should the ultimate judgments or settlements exceed our insurance coverage, they could have a material effect on our results of operations, financial position and cash flows. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future, that adequate replacement policies will be available on acceptable terms, if at all, or that the companies from which we have obtained insurance will be able to pay claims we make under such policies.

Our business exposes us to competition law risk.

We are subject to antitrust and competition law in the United States, the European Union, and many other regions in which we operate. Some of our business models may carry a heightened risk of regulatory inquiry under relevant competition laws. Although we have put in place safeguards designed to maintain compliance with applicable competition laws, there can be no assurance these protections will be adequate. Competition law authorities have investigated our business practices in the past in France and in other countries, and there continues to be a risk of such inquiries in the future. There is no assurance we would successfully defend against any such regulatory inquiries, and they could consume substantial amounts of our financial and managerial resources, remain outstanding for a significant duration, and result in adverse publicity, even if successfully resolved. An unfavorable outcome could result in liabilities that have a material adverse effect upon our business, financial condition or results of operations.

Wisconsin law and our articles of incorporation and bylaws contain provisions that could make the takeover of our company more difficult.

Certain provisions of Wisconsin law and our articles of incorporation and bylaws could have the effect of delaying or preventing a third party from acquiring us, even if a change in control would be beneficial to our shareholders. These provisions of our articles of incorporation and bylaws currently include:

permitting removal of directors only for cause;
providing that vacancies on the board of directors will be filled by the remaining directors then in office; and
requiring advance notice for shareholder proposals and director nominees.

In addition, the Wisconsin control share acquisition statute and Wisconsin’s “fair price” and “business combination” provisions, in addition to other provisions of Wisconsin law, limit the ability of an acquiring person to engage in certain transactions or to exercise the full voting power of acquired shares under certain circumstances. As a result, offers to acquire us, which may represent a premium over the available market price of our common stock, may be withdrawn or otherwise fail to be realized. The provisions described above could cause our stock price to decline.

27


 

Item 1B. Unresolved Staff Comments

Not applicable.

 

Item 1C. Cybersecurity

We have an enterprise-wide information security program designed to identify, protect, detect, and respond to and manage reasonably foreseeable cybersecurity risks and threats. To protect our information systems from cybersecurity threats, we use various security tools that help prevent, detect, escalate, investigate, and remediate identified risks and security incidents in a timely manner. We also maintain a third-party security program to identify, prioritize, assess, mitigate, and remediate third-party risks; however, we often rely on the third parties we use to implement security programs commensurate with their risk, and we cannot ensure in all circumstances that their efforts will be successful.

We regularly assess risks from cybersecurity and technology threats and monitor our information systems for potential vulnerabilities. We use a widely adopted risk quantification model to identify, measure and prioritize cybersecurity and technology risks and develop related security controls and safeguards. We conduct regular reviews and tests of our information security controls and leverage audits by our internal audit team, tabletop exercises, penetration and vulnerability testing, red team exercises, and other exercises to evaluate the effectiveness of our information security program and improve our security measures and planning. We also engage an independent industry recognized security service provider to conduct an annual red team assessment of our security controls, as well as third-party penetration testing of our information systems. The results of these assessments are reported to senior management and the Audit Committee of the Board of Directors.

Our systems periodically experience directed attacks intended to lead to interruptions and delays in our operations and the services we provide to clients as well as loss, misuse or theft of personal information (candidates, associates, vendors, clients and employees) and other data, confidential information or intellectual property, and we have experienced data exposures in the past. However, to date these incidents have not had a material impact on our services, information systems or business. Any significant disruption to our services or access to our systems could result in a loss of clients and adversely affect our business and results of operation. Further, a penetration of our information systems or a third-party’s information systems or other misappropriation or misuse of personal information could subject us to business, regulatory, litigation and reputation risk, which could have a negative effect on our business, financial condition, and results of operations. See Item 1A of Part I, “Risk Factors,” under the heading “We could incur liabilities or suffer reputational damage from a cyberattack or improper disclosure or loss of personal or confidential data, and our use of data is subject to complex and ever-changing privacy and cybersecurity legal requirements that could negatively impact our business or subject us to claims and/or fines for non-compliance,” which should be read in conjunction with the information above.

The Chief Information Security Officer (CISO) leads our global information security organization responsible for overseeing the Company’s information security program. Our CISO has over 25 years of industry experience, including serving in similar roles leading and overseeing cybersecurity programs at other public companies. Team members who support our information security program have relevant educational and industry experience, including holding similar positions at various technology companies. The global information security organization provides regular reports to senior management on various cybersecurity threats, assessments and findings.

The Audit Committee of the Board of Directors oversees our annual enterprise risk assessment, where we assess key risks within the company, including security and technology risks and cybersecurity threats. The Audit Committee of the Board of Directors oversees our cybersecurity risk and regularly receives reports from our CISO on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks, incidents and industry trends, and other areas of importance.

28


 

Item 2. Properties

We own properties at various locations worldwide, none of which are material. Most of our operations are conducted from leased premises and we do not anticipate any difficulty in renewing these leases or in finding alternative sites in the ordinary course of business.

We are involved in litigation of a routine nature and various legal matters, which are being defended and handled in the ordinary course of business.

Item 4. Mine Safety Disclosures

Not applicable.

29


 

EXECUTIVE OFFICERS OF MANPOWERGROUP

(as of February 16, 2024)

 

Name of Officer

 

Office

 

Jonas Prising

Age 59

 

Chairman of ManpowerGroup since December 2015. Chief Executive Officer of ManpowerGroup since May 2014. ManpowerGroup President from November 2012 to May 2014. Executive Vice President, President of ManpowerGroup - the Americas from January 2009 to October 2012. Executive Vice President, President – United States and Canadian Operations from January 2006 to December 2008. A director of ManpowerGroup since May 2014. An employee of ManpowerGroup since May 1999. A director of Kohl's Corporation since August 2015.

 

John T. McGinnis

Age 57

 

 

Executive Vice President, Chief Financial Officer of ManpowerGroup since February 2016. Global Controller of Morgan Stanley from January 2014 to February 2016. Chief Financial Officer, HSBC North America from July 2012 to January 2014. Chief Financial Officer, HSBC Bank USA from July 2010 to January 2014. An employee of ManpowerGroup since February 2016.

 

 

 

Michelle S. Nettles

Age 52

 

Executive Vice President, Chief People and Culture Officer since May 2022. Senior Vice President, Chief People and Culture Office from July 2019 to May 2022. Chief People and Diversity Officer of Molson Coors Brewing Company from October 2016 to July 2019. Chief Human Resources Officer of MillerCoors from October 2014 to October 2016. Prior thereto, held other positions at MillerCoors since 2009. An employee of ManpowerGroup since July 2019. A director of RXO, Inc. since November 2022.

 

Richard D. Buchband

Age 60

 

Senior Vice President, General Counsel and Secretary of ManpowerGroup since January 2013. Partner and Associate General Counsel for Accenture plc from 2006 to 2011. An employee of ManpowerGroup since January 2013.

 

30


 

OTHER INFORMATION

Audit Committee Approval of Audit-Related and Non-Audit Services

The Audit Committee of our Board of Directors has approved the following audit-related and non-audit services performed or to be performed for us by our independent registered public accounting firm, Deloitte & Touche LLP and Affiliates, in 2023:

(a)
preparation and/or review of tax returns, including sales and use tax, excise tax, income tax, local tax, property tax, and value added tax and consultation regarding appropriate handling of items on the United States and international tax returns;
(b)
advice and assistance with respect to transfer pricing matters, as well as communicating with various taxing authorities regarding the requirements associated with royalties and inter-company pricing, and tax audits; and
(c)
audit services with respect to certain procedures and certifications where required.

 

31


 

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Common Stock Listing and Trading

The Company's common stock is listed for trading on the New York Stock Exchange under the symbol MAN.

Shareholders of Record

As of February 14, 2024, the Company's common stock was held by approximately 2,500 record holders.

Dividend Policy

While we currently expect that future semi-annual dividends will continue to be paid, our dividend policy is subject to review and change at the discretion of our Board of Directors and may depend upon, among other factors, earnings, financial condition, and other requirements.

Issuer Purchases of Equity Securities

In August 2023 and August 2021, the Board of Directors authorized the repurchase of 5.0 million shares and 4.0 million shares of our common stock, respectively. We conduct share repurchases from time to time through a variety of methods, including open market purchases, block transactions, privately negotiated transactions or similar facilities. The following table shows the total number of shares repurchased during the fourth quarter of 2023. As of December 31, 2023, there were 4.6 million shares remaining authorized for repurchase under the 2023 authorization and no shares remaining authorized for repurchase under the 2021 authorization.

 

 

Total number of
shares purchased

 

 

Average
price paid
per share

 

 

Total number of
shares purchased
as part of publicly
announced plan or
programs

 

 

Maximum number
of shares that may
yet be purchased
under the plan or
programs

 

October 1 - 31, 2023

 

 

484,355

 

(1)

$

71.55

 

 

 

482,174

 

 

 

4,811,019

 

November 1 - 30, 2023

 

 

212,783

 

 

 

72.84

 

 

 

212,783

 

 

 

4,598,236

 

December 1 - 31, 2023

 

 

 

 

 

 

 

 

 

 

 

4,598,236

 

Total

 

 

697,138

 

 

$

71.95

 

 

 

694,957

 

 

 

4,598,236

 

(1) Includes 2,181 shares of common stock withheld by ManpowerGroup to satisfy tax withholding obligations on shares acquired by certain officers in settlement of restricted stock.

 

32


 

Performance Graph

Set forth below is a graph for the periods ending December 31, 2018-2023 comparing the cumulative total shareholder return on our common stock with the cumulative total return of companies in the Standard & Poor’s 400 Midcap Stock Index and the Standard & Poor’s 1500 Human Resources and Employment Services Sub-Industry Index. We are included in the Standard & Poor’s 1500 Human Resources and Employment Services Sub-Industry Index and we estimate that we constituted 2% of the total market capitalization of the companies included in the index. The graph assumes a $100 investment on December 31, 2018 in our common stock, the Standard & Poor’s 400 Midcap Stock Index and the Standard & Poor’s 1500 Human Resources and Employment Services Sub-Industry Index and assumes the reinvestment of all dividends.

 

img104802513_0.jpg 

 

December 31

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

2022

 

 

2023

 

ManpowerGroup

 

$

100

 

 

$

150

 

 

$

139

 

 

$

150

 

 

$

128

 

 

$

123

 

S&P 400 Midcap Stock Index

 

 

100

 

 

 

124

 

 

 

139

 

 

 

171

 

 

 

146

 

 

 

167

 

S&P 1500 Human Resources and Employment Services Sub-Industry Index

 

 

100

 

 

 

121

 

 

 

120

 

 

 

179

 

 

 

131

 

 

 

137

 

 

Item 6. [Reserved]

 

 

33


 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Measures — Constant Currency And Organic Constant Currency

Changes in our financial results include the impact of changes in foreign currency exchange rates, acquisitions and dispositions. We provide “constant currency” and “organic constant currency” calculations in this report to remove the impact of these items. We express year-over-year variances that are calculated in constant currency and organic constant currency as a percentage.

When we use the term “constant currency,” it means that we have translated financial data for a period into United States dollars using the same foreign currency exchange rates that we used to translate financial data for the previous period. We believe that this calculation is a useful measure, indicating the actual growth of our operations. We use constant currency results in our analysis of subsidiary or segment performance, including Argentina which operates in a hyperinflationary economy. We also use constant currency when analyzing our performance against that of our competitors. Substantially all of our subsidiaries derive revenues and incur expenses within a single country and, consequently, do not generally incur currency risks in connection with the conduct of their normal business operations. Changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash flow unless earnings are repatriated.

When we use the term “organic constant currency,” it means that we have further removed the impact of acquisitions in the current period and dispositions from the prior period from our constant currency calculation. We believe that this calculation is useful because it allows us to show the actual growth of our ongoing business.

The constant currency and organic constant currency financial measures are used to supplement those measures that are in accordance with United States Generally Accepted Accounting Principles (“GAAP”). These Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate such financial results differently. These Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to measures presented in accordance with GAAP.

Constant currency and organic constant currency percent variances, along with a reconciliation of these amounts to certain of our reported results, are included in the Financial Measures section found in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Results of Operations - For Years of Operation Ending December 31, 2023 and 2022

The financial discussion that follows focuses on 2023 results compared to 2022. For a discussion of 2022 results compared to 2021, see the company’s Annual Report on Form 10-K for the year ended December 31, 2022.

During 2023, revenues decreased -4.6% compared to 2022. Our 2023 results reflected the negative impact of economic uncertainty, particularly in Europe and North America, as we saw decreased demand for our staffing and permanent recruitment services, partially offset by increased demand for our Talent Solutions outplacement services. As Europe represents a significant portion of our operations, we continue to monitor economic conditions in our Southern Europe and Northern Europe segments. The Americas market also experienced a challenging operating environment during 2023, driven primarily by elevated inflation and the United States' sensitivity to higher interest rates. As a result of these factors, we expect the business environment will continue to be challenging for us in future periods, especially in North America and Europe, with many companies delaying hiring decisions or reducing their demand for contingent labor. The current economic risks are driven by increasing geopolitical tensions and slowing economic growth in many parts of the world. Compounding the challenging business environment, the attack in Israel on October 7, 2023 and the subsequent hostilities in Gaza could negatively impact our operations in Israel, which represents 4.1% of our revenues in the Southern Europe region and 1.8% of our ManpowerGroup revenues. These evolving events could put further pressure on our results and may increase geopolitical risk and business caution more globally.

During 2023, the United States dollar was generally stable, on average, relative to the currencies in most of our markets, and overall had a slight unfavorable impact on our reported results. The changes in the foreign currency exchange rates had a -0.6% unfavorable impact on revenues from services and an approximately $0.14 per share unfavorable impact on net earnings per share – diluted in 2023. Substantially all of our subsidiaries derive revenues from services and incur expenses within the same local currency and generally do not have cross-currency transactions, and therefore, changes in foreign currency exchange rates primarily impact reported earnings and not our actual cash flow unless earnings are repatriated. To understand the performance of our underlying business, we utilize constant currency or organic constant currency variances for our consolidated and segment results.

34


 

During 2023, we experienced the following quarterly changes to our consolidated revenues compared to 2022: a -7.6% decrease in revenue in the first quarter due to softening demand for staffing services due to increased economic uncertainty, partially offset by an increase in demand for our Talent Solutions outplacement services; a revenue decrease of -4.3% in the second quarter due to the continued softening demand for staffing services, partially offset by an increase in demand for our Talent Solutions outplacement services; a revenue decrease of -2.6% in the third quarter due to the continued softening demand for staffing services, partially offset by an increase in demand for our Talent Solutions outplacement services; and ending the year with a -3.7% revenue decrease in the fourth quarter of 2023 due to the continuing decrease in demand for our staffing services, partially offset by an increase in demand for our Talent Solutions outplacement services.

During 2023 compared to 2022, most of our markets experienced revenue decreases due to softening demand for our staffing and permanent recruitment services and the strengthening of the dollar in certain markets, partially offset by increased demand for our Talent Solutions outplacement services. We experienced a -10.6% revenue decrease in the Americas primarily driven by decreased demand across our staffing and permanent recruitment services, partially offset by increased demand for our outplacement services. We experienced a -0.2% revenue decrease in Southern Europe, primarily due to decreased demand for our Manpower staffing services, partially offset by the favorable impact of currency exchange rates. We experienced a revenue decrease of -7.4% in Northern Europe primarily driven by decreased demand across our staffing/interim and permanent recruitment services, partially offset by increased demand for our Talent Solutions outplacement services. We experienced a -2.7% revenue decrease in APME primarily due to the unfavorable impact of changes in currency exchange rates and decreased activity in our RPO permanent recruitment business driven by the non-recurrence of a government contract mid-year and Experis interim services, partially offset by increased demand for our Manpower staffing services.

From a brand perspective, we experienced a revenue decrease in Manpower, Experis and Talent Solutions during 2023 compared to 2022. The revenue decrease in our Manpower brand was due to decreased demand for our staffing services and the unfavorable impact of currency exchange rates, partially offset by increased demand for our outcome-based solutions services. In our Experis brand, the revenue decrease was primarily due to decreased demand for our interim services. The revenue decrease in our Talent Solutions brand, which includes Recruitment Process Outsourcing (RPO), TAPFIN - Managed Service Provider (MSP) and our Right Management offerings, was driven primarily by decreased activity in our RPO permanent recruitment business, partially offset by increased demand for our Right Management outplacement services.

In 2023 our gross profit margin decreased 20 basis points compared to 2022 primarily due to decreases in our higher-margin permanent recruitment business as permanent hiring demand continued to soften and experienced reduced levels from the significant activity in the prior year period and decreased activity in our higher margin Experis solutions business. The decrease was partially offset by a change in business mix as our higher-margin Right Management outplacement business represented a higher percentage of the revenue mix and improvements in staffing/interim margins.

In 2023 our operating profit decreased -56.0% while our operating profit margin decreased 150 basis points compared to 2022. Excluding the effects of currency exchange rates, restructuring costs of $149.2 million in 2023 and $3.6 million in 2022, goodwill impairment charges of $55.1 million in 2023 and $50.0 million in 2022, both of which were related to our Netherlands reporting unit, $2.2 million in software impairment charges in 2023, $14.7 million in acquisition integration costs incurred in 2022, and a $10.5 million loss on the disposition of subsidiaries in 2022, our operating profit decreased -28.5%. Excluding the impact of the items previously listed, our operating profit margin decreased 80 basis points compared to 2022. The operating profit margin decreased primarily due to selling and administrative expenses decreasing at a lesser rate than revenues and the overall decrease in our gross profit margin, as noted above.

During the year we initiated significant restructuring actions on businesses heavily impacted by the continuing decline in activity. With these actions, we expect our overall cost structure to decline. We expect to continue to monitor expenses closely to maintain the benefit of our efforts to optimize our organizational cost structures. At the same time, we plan to invest appropriately to enable the business to grow in the future and enhance our productivity, technology and digital capabilities. We are focused on managing costs as efficiently as possible in the short term while continuing to progress transformational actions aligned with our strategic priorities.

35


 

Consolidated Results - 2023 compared to 2022

The following table presents selected consolidated financial data for 2023 as compared to 2022.

(in millions, except per share data)

 

2023

 

 

2022

 

 

Reported
Variance

 

 

Variance in
Constant
Currency

 

 

Variance in
Organic
Constant
Currency

 

Revenues from services

 

$

18,914.5

 

 

$

19,827.5

 

 

 

(4.6

)%

 

 

(4.0

)%

 

 

(4.0

)%

Cost of services

 

 

15,556.5

 

 

 

16,255.1

 

 

 

(4.3

)

 

 

(3.7

)

 

 

 

Gross profit

 

 

3,358.0

 

 

 

3,572.4

 

 

 

(6.0

)

 

 

(5.5

)

 

 

(5.7

)

Gross profit margin

 

 

17.8

%

 

 

18.0

%

 

 

 

 

 

 

 

 

 

Selling and administrative expenses, excluding goodwill impairment charges

 

 

3,047.1

 

 

 

2,940.7

 

 

 

3.6

 

 

 

3.8

 

 

 

 

Goodwill impairment charges

 

 

55.1

 

 

 

50.0

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

 

3,102.2

 

 

 

2,990.7

 

 

 

3.7

 

 

 

3.8

 

 

 

3.7

 

Selling and administrative expenses as a % of revenues

 

 

16.4

%

 

 

15.1

%

 

 

 

 

 

 

 

 

 

Operating profit

 

 

255.8

 

 

 

581.7

 

 

 

(56.0

)

 

 

(53.3

)

 

 

(53.8

)

Operating profit margin

 

 

1.4

%

 

 

2.9

%

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

45.5

 

 

 

29.0

 

 

 

 

 

 

 

 

 

 

Other expenses (income), net

 

 

4.4

 

 

 

(4.4

)

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

 

205.9

 

 

 

557.1

 

 

 

(63.0

)

 

 

(60.0

)

 

 

 

Provision for income taxes

 

 

117.1

 

 

 

183.3

 

 

 

(36.1

)

 

 

 

 

 

 

Effective income tax rate

 

 

56.9

%

 

 

32.9

%

 

 

 

 

 

 

 

 

 

Net earnings

 

$

88.8

 

 

$

373.8

 

 

 

(76.3

)

 

 

(74.3

)

 

 

 

Net earnings per share - diluted

 

$

1.76

 

 

$

7.08

 

 

 

(75.1

)

 

 

(73.1

)

 

 

 

Weighted average shares - diluted

 

 

50.4

 

 

 

52.8

 

 

 

(4.5

)%

 

 

 

 

 

 

 

36


 

The year-over-year decrease in revenues from services of -4.6% (-4.0% in constant currency) was attributed to:

a revenue decrease in the Americas of -10.6% (-6.8% in constant currency) primarily due to the decreased demand of $246.4 million for our Manpower and Experis staffing/interim services, decreased activity of $59.1 million in our RPO permanent recruitment business and a decrease of $17.5 million in our MSP business as we exited lower margin arrangements, partially offset by the increase in demand of $29.9 million for our Talent Solutions outplacement services. The United States, our largest market in the Americas, experienced a revenue decrease of -15.4% primarily driven by decreased demand of $443.8 million for our Manpower and Experis staffing/interim services, decreased activity of $57.1 million in our RPO permanent recruitment business and a decrease of $18.1 million in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand of $27.7 million for our Talent Solutions outplacement services;
a revenue decrease in Southern Europe of -0.2% (-2.4% in constant currency and -2.6% in organic constant currency) which was primarily due to decreased demand of $230.8 million for our Manpower staffing services, partially offset by the $185.9 million favorable impact of changes in currency exchange rates and a $31.4 million increase in demand for our Talent Solutions outplacement services. France, the largest market in Southern Europe, experienced a revenue increase of 1.7% (-1.0% in constant currency and decrease of -1.5% in organic constant currency), which was primarily due to $129.7 million favorable impact of foreign currency exchange rates and an increase in demand of $31.0 million for our Talent Solutions outplacement services, partially offset by decreased demand of $83.8 million for our Manpower staffing services. Italy, our second-largest market in Southern Europe, experienced a revenue increase of 0.1% (-2.5% in constant currency), which was primarily due to the $43.8 million favorable impact of foreign currency exchange rates, increased demand of $5.5 million for our consulting services, primarily driven by Experis, and increased demand of $2.6 million for our Manpower permanent recruitment services. The increase in Italy was partially offset by the decrease in demand of $51.8 million for our Manpower and Experis staffing/interim services;
a revenue decrease in Northern Europe of -7.4% (-7.3% in constant currency and -7.2% in organic constant currency), which was primarily due to decreased demand of $295.6 million for our Manpower and Experis staffing/interim services and decreased demand of $25.8 million in our permanent recruitment business, partially offset by increased demand of $7.5 million for our Experis outcome-based solutions and consulting services, increased demand of $6.7 million for our Talent Solutions outplacement services and increased demand of $4.8 million within our MSP business. Within Northern Europe, we experienced revenue decreases in the United Kingdom of $190.1 million, the Nordics of $150.4 million, and the Netherlands of $20.2 million, which represented revenue decreases of -12.7%, -15.8% and -5.0%, respectively (-13.0%, -9.8% and -7.4%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany of $28.2 million and Belgium of $18.8 million, which represented revenue increases of 5.3% and 6.2%, respectively (2.6% and 3.1%, respectively, in constant currency); and
a revenue decrease in APME of -2.7% (increase of 1.9% in constant currency and 2.3% in organic constant currency) primarily due to the $110.8 million unfavorable impact of foreign currency exchange rates, decreased activity of $32.7 million in our RPO permanent recruitment business driven by the non-recurrence of a government contract mid-year and decreased demand of $25.2 million for our Experis interim services, partially offset by increased demand of $86.7 million for our Manpower staffing services, particularly in Japan, increased demand of $13.1 million for our Manpower outcome-based solutions services and increased demand of $9.0 million for our Talent Solutions outplacement services.

 

37


 

The year-over-year 20 basis point decrease in gross profit margin was primarily attributed to:

a 50 basis point unfavorable impact due to decreases in permanent recruitment, including Talent Solutions RPO, as permanent hiring demand continued to soften and experienced reduced levels from the significant activity in the prior year period; and
a 10 basis point unfavorable impact due to decreases in our staffing/interim margins driven by our Experis businesses; partially offset by
a 30 basis point favorable impact from a change in business mix as the higher-margin Right Management outplacement business represented a higher percentage of the revenue mix; and
a 10 basis point favorable impact from changes in currency exchange rates.

The 3.7% increase in selling and administrative expenses in the year ended December 31, 2023 (3.8% in constant currency; 3.7% in organic constant currency) was primarily attributed to:

an increase in restructuring costs to $149.2 million incurred in the year ended December 31, 2023 from $3.6 million in the year ended December 31, 2022;
a $45.3 million, or 5.1% increase (5.4% in constant currency and 4.9% in organic constant currency) in non-personnel costs, due to a $13.0 million increase in consulting and outside services costs associated with our technology and back-office transformation initiatives, an $11.1 million increase in software amortization and software maintenance related costs and a $9.2 million increase in costs related to office leases; and
an increase in our goodwill impairment charge to $55.1 million incurred in the year ended December 31, 2023 from $50.0 million incurred in the year ended December 31, 2022, both of which were related to our Netherlands reporting unit; partially offset by
a $59.1 million, or -3.2% decrease (-2.9% in constant currency) in personnel costs due to a $52.2 million decrease in bonuses and sales commissions costs;
the nonrecurrence of $14.7 million in acquisition integration costs incurred in the year ended December 31, 2022;
the $10.5 million loss on the disposition of subsidiaries in the year ended December 31, 2022; and
a $2.7 million, or 0.1% decrease due to the impact of changes in currency exchange rates.

Selling and administrative expenses as a percent of revenues increased 130 basis points in the year ended December 31, 2023 compared to the year ended December 31, 2022 due primarily to:

a 70 basis point unfavorable impact as a result of the increase in restructuring costs in the year ended December 31, 2023 compared to the year ended December 31, 2022;
a 50 basis point unfavorable impact as non-personnel costs increased due to investments in consulting and outside services and software maintenance costs related to various transformation initiatives, as well as an increase in office lease costs;
a 10 basis point unfavorable impact as personnel costs decreased at a lesser rate than revenues; and
a 10 basis point unfavorable impact from changes in currency exchange rates; partially offset by
a 10 basis point favorable impact due to the nonrecurrence of acquisition integration costs and the disposition of subsidiaries in the year ended December 31, 2022.

 

38


 

Interest and other expenses, net is comprised of interest, foreign exchange gains and losses and other miscellaneous non-operating income and expenses, including those associated with noncontrolling interests. Interest expense, net was $45.5 million in 2023 compared to $29.0 million in 2022 primarily due to the higher interest cost on pension obligations and a higher interest rate Euro note following the refinancing mid 2022. Miscellaneous income, net was $17.4 million in 2023 compared to $16.3 million in 2022. Foreign exchange loss, net was $21.8 million in 2023 compared to $11.9 million in 2022 primarily due to non-cash currency translation loss related to our Argentina business. Argentina is required to be treated as a hyperinflationary economy for accounting purposes and the non-cash currency translation losses reflected the devaluation of the Argentine peso in 2023. This is a non-cash accounting charge as our Argentina business operates in their local currency.

We recorded income tax expense at an effective rate of 56.9% for 2023, as compared to an effective rate of 32.9% for 2022. The 2023 rate was higher than the 2022 rate primarily due to a lower level of pre-tax earnings with a less beneficial mix driven by restructuring costs in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances. The 56.9% effective tax rate for 2023 was higher than the United States Federal statutory rate of 21% primarily due to restructuring costs in certain countries for which we did not recognize a corresponding tax benefit due to valuation allowances, the Netherlands non-deductible goodwill impairment charge, the French business tax and the overall mix of earnings.

Net earnings per share - diluted was $1.76 in 2023 compared to $7.08 in 2022. Restructuring costs recorded in 2023 and 2022 negatively impacted net earnings per share - diluted by approximately $2.74 and $0.05 per share, net of tax, in 2023 and 2022, respectively. Foreign currency exchange rates in 2023 unfavorably impacted net earnings per share - diluted by approximately $0.14 per share, net of tax, in 2023. Goodwill and other impairment charges recorded in 2023 and 2022 negatively impacted net earnings per share - diluted by approximately $1.13 and $0.93 per share, net of tax, in 2023 and 2022, respectively. The pension settlement expense recorded in 2023 and 2022 negatively impacted net earnings per share - diluted by approximately $0.12 and $0.05, net of tax, in 2023 and 2022, respectively. Non-cash currency translation losses related to our Argentina business in 2023 unfavorably impacted net earnings per share - diluted by approximately $0.26, net of tax, in 2023. The loss from the disposition of subsidiaries recorded in 2023 and 2022 negatively impacted net earnings per share - diluted by approximately $0.03 and $0.19 per share, net of tax, in 2023 and 2022, respectively. The acquisition transaction and integration costs recorded in 2022 negatively impacted net earnings per share - diluted by approximately $0.22, net of tax, in 2022.

Weighted average shares - diluted decreased to 50.4 million in 2023 from 52.8 million in 2022. This decrease was due to the impact of share repurchases completed in 2023, partially offset by grants of share-based awards.

Segment Results

We evaluate performance based on operating unit profit (“OUP”), which is equal to segment revenues less direct costs and branch and national headquarters operating costs. This profit measure does not include goodwill and intangible asset impairment charges or amortization of intangible assets related to acquisitions, corporate expenses, interest and other income and expense amounts or income taxes.

Americas

In the Americas, revenues from services decreased -10.6% (-6.8% in constant currency) in 2023 compared to 2022. In the United States, revenues from services decreased -15.4% in 2023 compared to 2022, primarily driven by decreased demand of $443.8 million for our Manpower and Experis staffing/interim services, decreased activity of $57.1 million in our RPO permanent recruitment business and a decrease of $18.1 million in our MSP business as we exited lower margin arrangements, partially offset by an increase in demand of $27.7 million for our Talent Solutions outplacement services. In Other Americas, revenues from services increased 1.2% (14.2% in constant currency) in 2023 compared to 2022 primarily due to increased demand of $211.3 million for our Manpower staffing services, partially offset by the $187.3 million unfavorable impact of foreign currency exchange rates and decreased demand of $13.9 million for our Experis interim services. The increase in revenues from services in Other Americas was driven by revenue increases in Mexico and Argentina of $35.3 million, or 17.2%, and $19.4 million, or 11.6%, respectively (3.2% and 139.8%, respectively, in constant currency), partially offset by a revenue decrease in Canada of $61.2 million, or -14.7% (-11.3% in constant currency). The constant currency increase in Other Americas was primarily due to inflation in Argentina.

39


 

Gross profit margin decreased 80 basis points in 2023 compared to 2022 primarily due to decreased activity in our permanent recruitment business, particularly Talent Solutions RPO, which contributed 130 basis points to the decrease and decreased margins in our staffing and interim services, particularly within Experis, which contributed 50 basis points to the decrease. These contributions were partially offset by increased demand in our higher-margin Right Management outplacement business, which had a 60 basis point offsetting impact and the favorable impact of currency exchange rates, which had a 40 basis point offsetting impact.

Selling and administrative expenses decreased -4.7% (-3.2% in constant currency) in 2023 compared to 2022, primarily due to a $32.4 million decrease in bonuses and sales commissions as a result of decreased profitability in certain key markets, a $14.6 million decrease in salaries from a reduction in headcount and zero acquisition integration costs in 2023 compared to acquisition integration costs of $14.7 million in 2022. The decreases were partially offset by $11.5 million in restructuring costs incurred in 2023 compared to $1.7 million in 2022. The restructuring charges in the 2023 were primarily related to headcount reductions in the United States, Mexico and Canada.

Operating Unit Profit (“OUP”) decreased -41.4% (-37.5% in constant currency). This decrease was primarily due to decreased profitability in the United States business of $118.8 million, which includes the decreased demand for our Manpower and Experis staffing/interim services and decreased activity in our RPO permanent recruitment business, as noted above. The decreased profitability in the United States was partially offset by decreased selling and administrative expenses, particularly bonuses and sales commissions and salaries, as noted above. OUP margin in the Americas decreased to 3.8% in 2023 from 5.7% in 2022, respectively. In the United States, OUP margin decreased to 3.4% in 2023 from 6.3% in 2022 primarily due to a decrease in gross profit margin as we saw decreased demand for our Manpower and Experis staffing/interim services and decreased activity in our RPO permanent recruitment business. The decrease was also due to an increase in our selling and administrative expenses as a percent of revenue as we reduced costs slower than the decline in gross profit and incurred higher levels of restructuring charges as compared to the previous year. Other Americas OUP margin increased to 4.5% in 2023 from 4.4% in 2022 primarily due to an increase in our gross profit margin, specifically in our Manpower staffing services, partially offset by an increase in our selling and administrative expenses as a percent of revenue as we saw restructuring in both Canada and Mexico.

Southern Europe

In Southern Europe, revenues from services decreased -0.2% (-2.4% in constant currency and -2.6% in organic constant currency) in 2023 compared to 2022. In France, revenues from services increased 1.7% (-1.0% in constant currency and -1.5% in organic constant currency) in 2023 compared 2022. In Italy, revenues from services increased 0.1% (-2.5% in constant currency) in 2023 compared to 2022. The increase in France is primarily due to the $129.7 million favorable impact of foreign currency exchange rates and an increase in demand of $31.0 million for our Talent Solutions outplacement services, partially offset by decreased demand of $83.8 million for our Manpower staffing services. The increase in Italy was primarily due to the $43.8 million favorable impact of foreign currency exchange rates, increased demand of $5.5 million for our consulting services, primarily driven by Experis, and increased demand of $2.6 million for our Manpower permanent recruitment services. The increase in Italy was partially offset by the decrease in demand of $51.8 million for our Manpower and Experis staffing/interim services. In Other Southern Europe, revenues from services decreased -5.1% (-5.7% in constant currency) in 2023 compared to 2022, primarily due to decreased demand of $105.1 million for our Manpower and Experis staffing/interim services. The decrease in Other Southern Europe was driven by revenue decreases in Spain and Switzerland of $42.6 million, or -7.9% and $14.9 million, or -3.0%, respectively (-10.4% and -8.7%, respectively, in constant currency).

Gross profit margin increased 20 basis points in 2023 compared to 2022. The increases were primarily due to increased demand in our higher-margin Right Management outplacement business, which contributed 20 basis points to the increase and increased demand in our permanent recruitment business, particularly within Manpower, which contributed 5 basis points to the increase. These contributions were partially offset by decreased activity in our higher margin Manpower staffing services, which had a 5 basis point offsetting impact.

Selling and administrative expenses increased 8.5% (6.3% in constant currency and 5.5% in organic constant currency) during 2023 compared to 2022 primarily due to the $19.2 million unfavorable impact of currency exchange rates, an $18.6 million increase in salary-related costs and $13.6 million in restructuring costs incurred in 2023 compared to $0.9 million in 2022, partially offset by a $1.0 million decrease in bad debt expense and a $0.9 million decrease in bonuses and sales commissions as a result of decreased profitability in certain key markets. The restructuring charges in 2023 were primarily related to headcount reductions in Spain of $6.2 million, as well as $3.2 million in the regional head office, $2.5 million in France and $1.6 million in Italy.

40


 

OUP in Southern Europe decreased -13.4% (-15.2% in constant currency). This decrease was primarily due to decreased profitability in the France reporting unit of $38.4 million and increased selling and administrative expense, as noted above. OUP margin in Southern Europe decreased to 4.2% in 2023 from 4.8% in 2022. In France, the OUP margin was 3.9% in 2023 compared to 4.7% in 2022. The decrease in France was primarily due to an increase in salary related costs and restructuring charges, as noted above, which had a significant impact on the overall increase in selling and administrative expenses as a percent of revenue. In Italy, the OUP margin increased to 7.3% in 2023 from 7.2% in 2022 primarily due to an increase in the gross profit margin, partially offset by restructuring charges, as noted above, which had a significant impact on the overall increase in selling and administrative expenses as a percent of revenue. In Other Southern Europe, the OUP margin decreased to 2.3% in 2023 from 3.1% in 2022 primarily due to an increase in our selling and administrative expenses as a percent of revenue as we incurred restructuring charges related to Spain and the regional head office, as noted above.

Northern Europe

In Northern Europe, the largest country operations include the United Kingdom, the Nordics, Germany, the Netherlands and Belgium (comprising 35%, 21%, 15%, 10% and 9%, respectively, of Northern Europe’s revenues). In the Northern Europe region, revenues from services decreased -7.4% (-7.3% in constant currency and -7.2% in organic constant currency) in 2023 compared to 2022. We experienced revenue decreases in the United Kingdom of $190.1 million, the Nordics of $150.4 million, and the Netherlands of $20.2 million, which represented revenue decreases of -12.7%, -15.8% and -5.0%, respectively (-13.0%, -9.8% and -7.4%, respectively, in constant currency). These decreases were partially offset by revenue increases in Germany of $28.2 million and Belgium of $18.8 million, which represented revenue increases of 5.3% and 6.2%, respectively (2.6% and 3.1%, respectively, in constant currency). The revenue decrease in Northern Europe was primarily due to decreased demand of $295.6 million for our Manpower and Experis staffing/interim services and decreased demand of $25.8 million for our permanent recruitment services, partially offset by the increased demand of $6.7 million for our Talent Solutions outplacement services and increased demand of $4.8 million within our MSP business.

Gross profit margin decreased by 10 basis points in 2023 compared to 2022 primarily due to decreases in our staffing/interim margins, which contributed 30 basis points to the decrease and decreased demand in our permanent recruitment business, particularly in Manpower and Experis, which contributed 30 basis points to the decrease. These contributions were partially offset by a shift in business mix towards our higher-margin Talent Solutions outplacement and MSP services, which had a 20 basis point offsetting impact and improvements in our consulting solutions margins, which had a 30 basis point offsetting impact.

Selling and administrative expenses increased 15.8% (15.1% in constant currency and 15.2% in organic constant currency) in 2023 compared to 2022. The increase is primarily due to $120.4 million in restructuring costs incurred in 2023 compared to $0.8 million in 2022 and the $4.5 million unfavorable impact of currency exchange rates, partially offset by the $15.6 million decrease in bonuses and sales commissions as a result of decreased profitability in certain markets and the disposition of our Russia business of $9.7 million incurred in 2022. The restructuring charges in 2023 were primarily related to headcount reductions and professional and other fees in Germany of $91.7 million as we wind down our Proservia operations in the country and headcount reductions in the Nordics of $14.3 million, as well as $5.2 million in the Netherlands, $5.0 million in the United Kingdom and $3.9 million in Belgium.

OUP in Northern Europe decreased -375.0% (-363.8% in constant currency), which represents a -3.1% OUP margin, a decrease from 1.0% in 2022. This OUP decrease was primarily driven by a decrease in profitability of our bench model countries, notably Germany, the Nordics and the Netherlands, which experienced decreases of $88.2 million, $39.7 million and $9.1 million, respectively, and the $120.4 million in restructuring costs, as noted above, which had a significant impact on the overall increase in selling and administrative expenses as a percent of revenue.

APME

Revenues from services decreased -2.7% (increase of 1.9% in constant currency and 2.3% in organic constant currency) in 2023 compared to 2022. In Japan, revenues from services increased 3.9% (11.4% in constant currency) due to increased demand of $117.1 million for our Manpower and Experis staffing/interim services and increased demand of $4.0 million for our Talent Solutions outplacement services, partially offset by the $81.8 million unfavorable impact of foreign currency exchange rates. In Australia, revenues from services decreased -25.0% (-21.3% in constant currency), primarily due to decreased demand of $46.4 million for our Experis interim services, decreased activity of $30.4 million in our RPO permanent recruitment business driven by the non-recurrence of a government contract mid-year and the $10.7 million unfavorable impact of currency exchange rates, partially offset by increased demand of $20.0 million for our Manpower staffing services and increased demand of $3.3 million for our Talent Solutions outplacement services.

41


 

Gross profit margin decreased 20 basis points in 2023 compared to 2022 primarily due to decreased activity in our permanent recruitment business, particularly Talent Solutions RPO, which contributed 120 basis points to the decrease. This contribution was partially offset by improvement in our staffing/interim margins, which had a 60 basis point offsetting impact, and increased demand in our higher-margin Right Management outplacement services, which had a 40 basis point offsetting impact.

 

Selling and administrative expenses decreased -6.9% (-2.4% in constant currency and -2.1% in organic constant currency) in 2023 compared 2022. The decrease is primarily due to the $14.2 million favorable impact of currency exchange rates, a $6.0 million decrease in office lease related costs and a $5.8 million decrease in salary related costs from a reduction in headcount, partially offset by $3.3 million in restructuring costs incurred in 2023 compared to $0.1 million in 2022. The restructuring charges in 2023 were related to headcount reductions in Australia.

OUP in APME increased 5.6% (11.6% in constant currency) which represents a 4.0% OUP margin, an increase from 3.7% in 2022. This OUP increase was primarily driven by increased profitability in the Japan reporting unit of $7.3 million, partially offset by decreased profitability in the Australia reporting unit of $2.3 million primarily due to the non-recurrence of a government contract mid-year.

 

 

42


 

Financial Measures

Constant Currency And Organic Constant Currency Reconciliation

Certain constant currency and organic constant currency percent variances are discussed throughout this report. A reconciliation of these Non-GAAP percent variances to the percent variances calculated based on our annual GAAP financial results is provided below. (See Constant Currency and Organic Constant Currency on page 34 for information.)

 

Amounts represent 2023
Percentages represent 2023 compared
to 2022

 

Reported
 Amount
(in millions)

 

 

Reported
 Variance

 

 

Impact of
Currency

 

 

Variance in
Constant
Currency

 

 

Impact of
Acquisitions
and
Dispositions
(in Constant
Currency)

 

 

Organic
 Constant
 Currency
 Variance

 

Revenues from Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

2,961.6

 

 

 

(15.4

)%

 

 

 

 

 

(15.4

)%

 

 

 

 

 

(15.4

)%

Other Americas

 

 

1,453.2

 

 

 

1.2

 

 

 

(13.0

)

 

 

14.2

 

 

 

 

 

 

14.2

 

 

 

4,414.8

 

 

 

(10.6

)