MILWAUKEE, April 21, 2020 /PRNewswire/ -- ManpowerGroup (NYSE: MAN) today reported net earnings of $0.03 per diluted share for the three months ended March 31, 2020 compared to $0.88 per diluted share in the prior year period. Net earnings in the quarter were $1.7 million compared to $53.5 million a year earlier. Revenues for the first quarter were $4.6 billion, an 8% decline from the prior year period.
The current year quarter included restructuring costs, which reduced earnings per share by 68 cents, and a previously disclosed non-cash pension settlement charge, which reduced earnings per share by 11 cents.
Financial results in the quarter were also impacted by the stronger U.S. dollar relative to foreign currencies compared to the prior year period. Earnings per share in the quarter were not impacted by changes in foreign currencies compared to the prior year but were negatively impacted 3 cents excluding restructuring costs and pension settlement charges. On a constant currency basis, revenues decreased 6% and net earnings per diluted share decreased 95%. Excluding the impact of the restructuring costs and pension settlement charges, on a constant currency basis, net earnings per diluted share decreased 39%.
Cash and cash equivalents at the end of the quarter amounted to $1.1 billion, representing an increase from the preceding quarter. An ongoing focus on collections activity resulted in a slight improvement in Days Sales Outstanding compared to the prior year. A $600 million revolving credit facility, which expires in 2023, remains unused and, combined with our existing cash position, provides significant liquidity. Free cash flow was very strong at $172 million in the quarter, representing an $80 million increase from the year ago period.
"The COVID-19 crisis has significantly disrupted the global economy, our clients and the demand for our services. The speed and magnitude of change in market conditions in the last few weeks of March was unlike anything we have seen in our over 70 year history. Our organization moved swiftly to execute our business continuity plans and to provide necessary support to our people, our clients and our communities," said Jonas Prising, ManpowerGroup Chairman & CEO. "I want to thank our more than 28,000 employees for remaining steadfast in supporting our clients and associates through a very challenging environment."
"We have a very experienced global management team that has gone through a number of recessions and we come into this crisis with clear strategic priorities and a strong balance sheet. I am very confident we will manage through this difficult period while continuing to advance key strategic initiatives. I believe this will allow us to emerge from this crisis better positioned to capture growth and market share. As we cannot forecast when governments in certain major markets will be lifting current work restrictions, we will not be providing guidance for our second quarter earnings."
ManpowerGroup repurchased 871,000 shares of common stock for $64 million during the quarter.
In conjunction with its first quarter earnings release, ManpowerGroup will broadcast its conference call live over the Internet on April 21, 2020 at 7:30 a.m. CDT (8:30 a.m. EDT). Interested parties are invited to listen to the webcast and view the presentation by logging on to http://investor.manpowergroup.com/ in the section titled "Investor Relations."
ManpowerGroup® (NYSE: MAN), the leading global workforce solutions company, helps organizations transform in a fast-changing world of work by sourcing, assessing, developing and managing the talent that enables them to win. We develop innovative solutions for hundreds of thousands of organizations every year, providing them with skilled talent while finding meaningful, sustainable employment for millions of people across a wide range of industries and skills. Our expert family of brands – Manpower, Experis and Talent Solutions – creates substantial value for candidates and clients across more than 75 countries and territories and has done so for over 70 years. We are recognized consistently for our diversity - as a best place to work for Women, Inclusion, Equality and Disability and in 2020 ManpowerGroup was named one of the World's Most Ethical Companies for the eleventh year - all confirming our position as the brand of choice for in-demand talent.
This news release contains statements, including statements regarding the anticipated financial and operational impacts of the COVID-19 pandemic and the Company's efforts to respond to such impacts, that are forward-looking in nature and, accordingly, are subject to risks and uncertainties regarding the Company's expected future results. The Company's actual results may differ materially from those described or contemplated in the forward-looking statements due to numerous factors. These factors include those found in the Company's reports filed with the SEC, including the information under the heading "Risk Factors" in its Annual Report on Form 10-K for the year ended December 31, 2019, as well as the risks and uncertainties arising from the COVID-19 global pandemic and related governmental actions that are discussed in the Company's Periodic Report on Form 8-K filed on April 21, 2020, which information is incorporated herein by reference.
Results of Operations
(In millions, except per share data)
Three Months Ended March 31
Revenues from services (a)
Cost of services
Selling and administrative expenses
Interest and other expenses
Earnings before income taxes
Provision for income taxes
Net earnings per share - basic
Net earnings per share - diluted
Weighted average shares - basic
Weighted average shares - diluted
(a) Revenues from services include fees received from our franchise offices of $3.3 million and $5.6 million for the three months ended March 31, 2020 and 2019, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $82.3 million and $243.0 million for the three months ended March 31, 2020 and 2019, respectively.
Operating Unit Results
Three Months Ended March 31
Revenues from Services:
United States (a)
Other Southern Europe
Operating Unit Profit:
Other Southern Europe
Intangible asset amortization expense
Interest and other expenses (b)
Earnings before income taxes
(a) In the United States, revenues from services include fees received from our franchise offices of $3.0 million and $3.6 million for the three months ended March 31, 2020 and 2019, respectively. These fees are primarily based on revenues generated by the franchise offices, which were $76.5 million and $156.9 million for the three months ended March 31 2020 and 2019, respectively.
(b) The components of interest and other expenses were:
Foreign exchange loss
Consolidated Balance Sheets
Cash and cash equivalents
Accounts receivable, net
Prepaid expenses and other assets
Total current assets
Intangible assets, net
Operating lease right-of-use asset
Total other assets
Property and equipment:
Land, buildings, leasehold improvements and equipment
Less: accumulated depreciation and amortization
Net property and equipment
LIABILITIES AND SHAREHOLDERS' EQUITY
Employee compensation payable
Accrued payroll taxes and insurance
Value added taxes payable
Short-term borrowings and current maturities of long-term debt
Total current liabilities
Long-term operating lease liability
Other long-term liabilities
Total other liabilities
ManpowerGroup shareholders' equity
Capital in excess of par value
Accumulated other comprehensive loss
Treasury stock, at cost
Total ManpowerGroup shareholders' equity
Total shareholders' equity
Total liabilities and shareholders' equity
Consolidated Statements of Cash Flows
Three Months Ended
Cash Flows from Operating Activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Provision for doubtful accounts
Changes in operating assets and liabilities, excluding the impact of acquisitions:
Cash provided by operating activities
Cash Flows from Investing Activities:
Proceeds from the sale of subsidiaries, investments, property and equipment
Cash used in investing activities
Cash Flows from Financing Activities:
Net change in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Payments of contingent consideration for acquisitions