SEC Filing | ManpowerGroup Inc.

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man-10q_20190930.htm

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended:

September 30, 2019

☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from: ______to______

Commission file number: 1-10686

MANPOWERGROUP INC.

(Exact name of registrant as specified in its charter)


	Wisconsin	39-1672779
	(State or other jurisdiction of incorporation)	(IRS 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 each exchange on which registered

Common Stock, $.01 par value	MAN	New York Stock Exchange

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

		Shares Outstanding
Class		at October 30, 2019
Common Stock, $.01 par value		58,961,515

ManpowerGroup Inc.

INDEX

		Page Number
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)
	Consolidated Balance Sheets	3-4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Shareholders' Equity	7-8
	Notes to Consolidated Financial Statements	9-25
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26-42
Item 3	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4	Controls and Procedures	42

PART II	OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 5	Other Information	43
Item 6	Exhibits	44

SIGNATURES		45

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements (unaudited)

ManpowerGroup Inc.

Consolidated Balance Sheets (Unaudited)

(in millions)

ASSETS


	September 30, 2019		December 31, 2018
Current Assets:
Cash and cash equivalents	$	807.1	$	591.9
Accounts receivable, less allowance for doubtful accounts of $115.3 and $115.7 respectively		5,122.1		5,276.1
Prepaid expenses and other assets		145.6		129.1
Total current assets		6,074.8		5,997.1

Other Assets:
Goodwill		1,231.8		1,297.1
Intangible assets, less accumulated amortization of $380.2 and $367.7 respectively		272.9		246.3
Operating lease right-of-use asset		415.6		—
Other assets		618.1		826.7
Total other assets		2,538.4		2,370.1

Property and Equipment:
Land, buildings, leasehold improvements and equipment		596.7		613.6
Less: accumulated depreciation and amortization		456.7		461.0
Net property and equipment		140.0		152.6
Total assets	$	8,753.2	$	8,519.8

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ManpowerGroup Inc.

Consolidated Balance Sheets (Unaudited)

(in millions, except share and per share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY


	September 30, 2019			December 31, 2018
Current Liabilities:
Accounts payable	$	2,322.6		$	2,266.7
Employee compensation payable		203.8			209.7
Accrued liabilities		471.0			411.0
Accrued payroll taxes and insurance		571.2			729.8
Value added taxes payable		495.7			508.6
Short-term borrowings and current maturities of long-term debt		47.0			50.1
Total current liabilities		4,111.3			4,175.9

Other Liabilities:
Long-term debt		983.2			1,025.3
Long-term operating lease liability		314.1			—
Other long-term liabilities		628.5			620.1
Total other liabilities		1,925.8			1,645.4

Shareholders’ Equity:
ManpowerGroup shareholders' equity
Preferred stock, $0.01 par value, authorized 25,000,000 shares, none issued		—			—
Common stock, $0.01 par value, authorized 125,000,000 shares, issued 117,177,349 and 116,795,899 shares, respectively		1.2			1.2
Capital in excess of par value		3,361.0			3,337.5
Retained earnings		3,419.4			3,157.7
Accumulated other comprehensive loss		(452.5	)		(399.8	)
Treasury stock at cost, 57,939,712 and 56,044,485 shares, respectively		(3,631.0	)		(3,471.7	)
Total ManpowerGroup shareholders’ equity		2,698.1			2,624.9
Noncontrolling interests		18.0			73.6
Total shareholders’ equity		2,716.1			2,698.5
Total liabilities and shareholders’ equity	$	8,753.2		$	8,519.8

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ManpowerGroup Inc.

Consolidated Statements of Operations (Unaudited)

(in millions, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019			2018
Revenues from services	$	5,248.9	$	5,418.7	$	15,666.9		$	16,598.0
Cost of services		4,408.6		4,528.1		13,151.4			13,899.3
Gross profit		840.3		890.6		2,515.5			2,698.7
Selling and administrative expenses, excluding goodwill impairment charge		623.3		673.9		1,998.2			2,119.9
Goodwill impairment charge		-		-		64.0			-
Selling and administrative expenses		623.3		673.9		2,062.2			2,119.9
Operating profit		217.0		216.7		453.3			578.8
Interest and other expenses (income), net		12.2		11.8		(46.1	)		38.4
Earnings before income taxes		204.8		204.9		499.4			540.4
Provision for income taxes		58.7		46.9		172.5			142.0
Net earnings	$	146.1	$	158.0	$	326.9		$	398.4
Net earnings per share – basic	$	2.44	$	2.45	$	5.43		$	6.08
Net earnings per share – diluted	$	2.42	$	2.43	$	5.40		$	6.03
Weighted average shares – basic		59.9		64.5		60.2			65.6
Weighted average shares – diluted		60.3		65.0		60.6			66.1

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ManpowerGroup Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(in millions)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net earnings	$	146.1		$	158.0		$	326.9		$	398.4
Other comprehensive loss:
Foreign currency translation adjustments		(76.1	)		(19.8	)		(73.8	)		(112.4	)
Translation adjustments on derivative instruments, net of income taxes of $9.6, $1.7, $11.6 and $7.5, respectively		36.9			5.6			43.2			25.7
Reclassification of currency translation adjustment to income related to disposition of Manpower Switzerland partially held equity interest (see Note 5)	-			-				(32.5	)	-
Reclassification of currency translation adjustment to income related to disposition of ManpowerGroup Greater China Limited partially held equity interest (see Note 5)		6.2		-				6.2		-
Translation adjustments of long-term intercompany loans		(3.2	)		(3.2	)		3.6			(3.3	)
Defined benefit pension plans and retiree health care plan, net of income taxes of $0.1, $0.0, $0.2 and $0.1, respectively		0.2			0.1			0.6			0.3
Total other comprehensive loss		(36.0	)		(17.3	)		(52.7	)		(89.7	)
Comprehensive income	$	110.1		$	140.7		$	274.2		$	308.7

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

ManpowerGroup Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in millions)

	Nine Months Ended
	September 30,
	2019			2018
Cash Flows from Operating Activities:
Net earnings	$	326.9		$	398.4
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		57.1			64.8
Non-cash gain on disposition of previously held equity interest		(80.4	)	-
Non-cash gain on disposition of previously held controlling interest		(30.4	)	-
Non-cash lease expense		112.0		-
Non-cash goodwill impairment charge		64.0		-
Deferred income taxes		7.8			(9.5	)
Provision for doubtful accounts		16.9			15.5
Share-based compensation		18.8			19.5
Changes in operating assets and liabilities, excluding the impact of acquisitions:
Accounts receivable		(60.9	)		(140.8	)
Other assets		103.7			31.8
Other liabilities		(40.1	)		(77.7	)
Cash provided by operating activities		495.4			302.0

Cash Flows from Investing Activities:
Capital expenditures		(36.2	)		(39.8	)
Acquisitions of businesses, net of cash acquired		86.1			(8.2	)
Impact to cash resulting from deconsolidation of subsidiaries		(57.9	)	-
Proceeds from the sale of subsidiaries, investments and property and equipment		8.0			7.8
Cash used in investing activities		-			(40.2	)

Cash Flows from Financing Activities:
Net change in short-term borrowings		(2.0	)		(5.0	)
Proceeds from long-term debt		9.0			583.3
Repayments of long-term debt		(0.7	)		(408.3	)
Payments for debt issuance costs	-				(2.4	)
Payments of contingent consideration for acquisitions		(22.8	)		(18.6	)
Proceeds from share-based awards		6.3			4.7
Payments to noncontrolling interests		(2.1	)		(1.9	)
Other share-based award transactions		(7.3	)		(17.3	)
Repurchases of common stock		(152.0	)		(299.2	)