ManpowerGroup Aktie

Welcome to ManpowerGroup's First Quarter Earnings Results Conference Call. [Operator Instructions]. As a reminder, this call is being recorded. If you care to drop off now, please do so.

I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our first quarter 2026 conference call. our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today.

For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com. I'll begin with a brief overview of the quarter, including how we're seeing conditions evolve across our markets, and then I'll share a few updates on how we're positioning Manpower Group to win in any environment. Becky will then provide an update on how we are driving commercial excellence and the opportunities for capturing with the eye, followed by Jack who will walk through the detailed financial results and our guidance for the second quarter of 2026. I'll close with a few comments before we open the line for Q&A.

And Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. Our Q1 results reflect disciplined execution and continued stabilization of revenue trends across key markets. In the first quarter, we delivered reported revenues of $4.5 billion representing an organic constant currency growth of 3%. System-wide revenue, which includes our expanding franchise revenue base, was $5 billion. Adjusted EBITDA margin of 1.4% reflects improving demand trends as well as P&L leverage.

We're also encouraged that top line growth exceeded our expectations, reflecting strong execution of our commercial initiatives. We are expanding our new business pipeline, increasing client engagement and continue to win in the areas where growth is strongest and most resilient.

At the same time, the manufacturing environment is strengthening, particularly across Europe. Taken together, this is enabling us to drive continued momentum across the portfolio with strong manpower performance among key markets, including France, U.S. and Italy. We're also seeing stable underlying trends in Experis and solid performance in talent solutions, Papin MSP and Right Management, even as RPO remains more challenged.

Our diversified portfolio, global scale and specialized brand expertise continue to position us well to win in the marketplace. As we move down the P&L, we have continued our relentless focus on driving operating leverage. During Q1, we reduced SG&A as adjusted by 4% in constant currency, while delivering continued top line growth reflecting the impact of our ongoing efficiency efforts, something I'll share more detail on shortly.

Finally, we're closely monitoring developments related to the conflict in the Middle East. While it is still too early to assess if there will be a broader impact, like many global companies, we have become accustomed to navigating a fast-changing environment that includes geopolitical developments, alongside economic and labor market shifts. In the meantime, we have been focused on staying close to our clients and their evolving needs while managing the business with discipline.

Against this backdrop, we're encouraged by the developing short-term momentum and equally excited by the long-term market opportunity. This is supported by improving business confidence in the U.S. as evidenced by the increase in CEO confidence reported by the conference board, rising manufacturing PMLA in the U.S. and Europe and strong business resilience.

As conditions improve, we expect sustainable organic revenue growth to build progressively. Our intent is to be the architects of our own future and to proactively take actions that will position Manpower Group to lead the industry, win in any environment and drive long-term value creation. We are transforming our business model to drive growth and expand margins over time.

As part of this commitment, we are announcing a transformation initiative that will reimagine how we operate and deliver value to our clients and candidates and provide significant cost optimization. Over the past year, we have been doing significant planning to launch this work, and we are pleased to share more details with you today.

We have made targeted investments in automation and AI and build a modern global technology infrastructure, including our PowerSuite platform, which now serves as the backbone of our digitization strategy. With nearly 90% of our global business operating on this platform, we have created a unified technology stack with access to global data across all of our global businesses, enabling us to operate at the unique data scale, strengthen our insights and be better partners to our clients.

As a result of these investments, we are launching a strategic global transformation program that we expect will deliver in permanent cost savings in 2028. There are 2 major components to our plan. The first, which I've talked about before, is the complete redesign of our back office operation, which is progressing well. The second is taking best practices and key learnings from our back-office transformation and executing a similar program for the front office. These redesign processes will be industry-leading and enable us to execute more effectively and move faster to fill roles.

In addition to reducing our cost structure, this transformation will improve both client and candidate experience, positioning our brands to win in market share and better serve clients in a highly fragmented marketplace. We have begun this work in North America, redesigning end-to-end processes, embedding automation and AI where it simplifies work, creating best-in-class local world blueprints before extending globally.

The goal is clear: Connect more people to work by selling more orders to drive growth while structurally lowering our cost to serve. I am also pleased to announce that we have recently hired a dedicated Chief Enterprise Transformation Officer who has joined our executive leadership team to drive the execution of this plan across the enterprise.

At the same time, we continue to thoughtfully review our global portfolio to ensure that we have the right mix of businesses and brands across key markets. Prioritizing investments in core, higher return opportunities while evaluating opportunities to divest noncore assets to strengthen our financial position and support our long-term growth and margin ambitions.

Ultimately, these actions will accelerate our path back to our historical margin profile and create a structural cost basis to expand margins further over time.

Now before I hand it over to Becky, let me just say one more time how excited we are about the transformation underway to improve efficiency, reduce costs and create capacity to invest in growth. Core elements of this transformation is building new capabilities that align with where the market is heading. And this includes evolving how we bring innovative service to market, particularly with AI.

We're also encouraged by the immense opportunities AI is creating as it enables us to shape the future of our industry, including how it is influencing client behavior and how they buy more for solutions. This shift creates a meaningful opportunity for us to evolve our business model so that AI becomes a sustainable tailwind by operating in new ways and developing new products for our clients.

And with that context, let me turn it over to Becky to go deeper into our commercial initiatives and how we are leveraging AI.

Thank you, Jonas. Last quarter, I shared that my remit is focused on driving commercial excellence strengthening and expanding our core capabilities and accelerating AI across the business. Today, I am pleased to share more on how we are embedding AI as a growth multiplier and we'll highlight where AI is already driving measurable value in 3 areas: unlocking effective commercial scale, creating new ways to deliver a best-in-class talent experience and finally, monetizing new human plus agentic solutions for our clients through strategic AI partnerships.

Let me start with how we are embedding AI into our processes to unlock effective commercial scale. The teams can focus on coverage where sales conversion and revenue impact are the highest. We expect this incremental revenue to increase significantly as we scale. Second, let me share how we are creating a differentiated talent experience. One that is critical to attracting and retaining the skilled associates and consultants our clients value most.

To strengthen our talent experience, we recently announced an expansion of our PowerSuite technology platform to include our partnership with hubert.ai to deliver AI-powered screening and interview experiences. In the past 6 months, we've completed over 25,000 AI-led interviews and reduced screening time by 67%. The Automating early-stage interviews helps improve fill rates and time to hire and freeze our recruiters and talent agents to focus on higher-value relationship-driven work.

At the same time, we are achieving 87% candidate satisfaction as more than half of this activity takes place outside of traditional working hours, meeting talent when and where works for them. These responsible, transparent AI capabilities now support markets, representing 40% of our global revenue with plans to scale to 70% by year-end.

And third, monetization. I am delighted to share how we are bringing AI capabilities to market and creating a future where people can build more impactful careers and where companies can achieve greater profitable growth. Human plus agentic workforces are not a future concept. They are already here. In March, we announced a breakthrough partnership with Sound hold AI, a global leader in voice and conversational AI. Our Experis U.S. business is already helping companies across industries to review and redesign workflows and accelerate the adoption of AI and intelligent automation.

This is the lead offering in our Accelerate AI services suite built on a simple and powerful premise that humans and agents can deliver more when working side by side. This partnership expands our presence in the human plus AI space, which is central to our strategy. We are starting in the U.S. to drive scale and market leadership and plans expand globally.

Finally, we know we capture the impact of AI by ensuring that our teams are equipped to use it. We are pleased that tens of thousands of our employees around the world. have completed AI fundamentals training and over 80% of our workforce is already using AI in their workflows.

Our approach is simple. Automate which should be automated, augment what should stay human and create entirely new ways to deliver workforce solutions to our clients. We are in progress to capture the full value of these initiatives and we expect AI to become an increasingly meaningful driver of growth, productivity and differentiation over time. We look forward to continuing to update you on our strategic progress and how we will move at pace.

I will now turn it back over to Jack.

Thanks, Becky. I'll quickly first touch on the headline quarterly results, and I'm excited to give more details on our expanded transformation savings, Jonas announced at the beginning of the call. In the first quarter, we delivered reported revenues of $4.5 billion. System-wide revenue, including franchises was $5 billion.

Our first quarter revenue results represented constant currency growth of 3%. The U.S. dollar reported revenues after adjusting for currency impacts, came in at the top of our constant currency guidance range. I will talk more about the revenue trend drivers in the business and geographic segment summaries.

Gross profit margin came in below the low end of our guidance range, driven by lower bench utilization in Europe and mix shifts impacting staffing margin, while permanent recruitment came in as expected with sequential improvement. As adjusted, EBITDA was $61 million, representing a 5% increase in constant currency compared to the prior year period.

As adjusted, EBITDA margin was 1.4%, up 10 basis points year-over-year and came in at the midpoint of our guidance range. Organic days adjusted constant currency revenue increased 3% in the quarter, which was favorable to our midpoint guidance range of 1% growth.

Coming back to our transformation programs that Jonas referenced, we are excited to announce our path to expected savings of $200 million in 2028. We have previously discussed the implementation of our leading cloud-enabled power suite front and back-office technology platforms. These platforms are now being complemented with best-in-class end-to-end processes.

We started with back office processes and are flipping to run rate savings in IT and finance costs during 2026, which build through 2028, representing 25% of the total cost savings. The strategic transformation will expand to the rest of the world in 2027 to drive expected net savings in 2028. The front office transformation, like the back office will include standardized processes, infused with leading automation and Agentic AI across all major businesses driving significant structural savings.

We will continue to break out restructuring and strategic transformation program charges as we progress the program. We expect the ongoing 2026 run rate of these charges to be lower than the first quarter amount and estimate a range of $10 million to $15 million on average per quarter through the end of the year.

Moving to the EPS bridge. Reported earnings per share for the quarter was $0.05. Adjusted EPS was $0.51 and came in just above our guidance midpoint. Walking from our guidance midpoint of $0.50. Our results included a slightly lower operational performance of $0.02 and a slightly lower tax rate, which had a positive $0.01 impact. A foreign currency impact, it was $0.01 worse and improved interest and other expenses, which was $0.03 better than our guidance. Restructuring costs and strategic transformation program costs represented $0.46.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had strong growth of 6% in the quarter, up sequentially from the 5% growth in the fourth quarter. The Experis brand declined by 9%, an expected decrease from the 6% decline in the fourth quarter, largely driven by the timing of health care IT projects in the U.S.

The Talent Solutions brand declined by 1%, an improvement from the fourth quarter decline of 4%. Within Talent Solutions, our RPO business continues to experience a sluggish permanent hiring environment, but did see sequential revenue trend improvement. Our MSP business saw continued revenue growth and Right Management also grew during the quarter.

Looking at our gross profit margin in detail, our gross margin came in at 16% for the quarter. Staffing margin contributed a 70 basis point reduction due to mix shifts in bench utilization in the first quarter. Permanent recruitment activity resulted in a 20 basis point decline. Other services resulted in a 20 basis point margin decrease.

Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 21%, and Talent Solutions comprised 17%. During the quarter, our consolidated gross profit decreased by 3% on an organic constant currency basis year-over-year, stable from the 3% decline in the fourth quarter.

Our Manpower brand was flat in organic constant currency gross profit year-over-year relatively stable considering rounding from the 1% growth in the fourth quarter year-over-year trend. Gross profit in our Experis brand decreased 11% in organic constant currency year-over-year a decline from the 5% decrease in the fourth quarter, largely driven by the timing of health care IT projects in the U.S.

Gross profit in Talent Solutions declined 5% in organic constant currency year-over-year, which was an improvement from the 12% decrease in the fourth quarter. The improvement in trend was driven by RPO as the rate of decline narrowed significantly. MSP rends also improved from the fourth quarter and Right Management had solid gross profit growth in the quarter on increased outplacement activity.

Reported SG&A expense in the quarter was $695 million. as adjusted, was down 4% on a constant currency basis. The year-over-year constant currency SG&A decreases largely consisted of reductions in operational costs of $23 million. Dispositions were very minor and represented a decrease of $1 million, while currency changes contributed to a $38 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 15% in constant currency in the first quarter. Adjustments representing restructuring and strategic transformation program charges were $26 million. Balancing gross profit trends with strong cost actions while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities.

The Americas segment comprised 25% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 4% year-over-year on a constant currency basis. As adjusted, OUP was $26 million and OUP margin was 2.3%. Restructuring charges of $7 million largely represented actions in the U.S.

The U.S. is the largest country in the Americas segment, comprising 59% of segment revenues. Revenue in the U.S. was $655 million during the quarter, representing a 5% days adjusted decrease compared to the prior year. as adjusted for our U.S. business was $9 million in the quarter. OUP margin as adjusted was 1.3%. Within the U.S., the Manpower brand comprised 26% of gross profit during the quarter.

Revenue for the Manpower brand in the U.S. increased 5% on a days adjusted basis during the quarter, which represented strong market performance with 7 consecutive quarters of growth and a slight change from the 7% increase in the fourth quarter as we anniversary strong growth in the prior year.

The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenue decreased 15% on a days adjusted basis during the quarter, down from the 10% decline in the fourth quarter as the business anniversaried strong health care IT projects in the prior year. Excluding the impact of health care IT project volumes in the prior year, Experis U.S. revenue decreased 9% on a days adjusted basis during the quarter, largely in line with the fourth quarter trend.

Talent Solutions in the U.S. contributed 35% of gross profit and saw a 2% decrease in revenue year-over-year in the quarter compared to a 2% increase in the fourth quarter, driven by lower sequential MSP activity. This was partially offset by strong growth in Right Management outplacement activity and improving RPO year-over-year trends. We expect the U.S. business to flip to low single-digit percentage revenue growth in the second quarter on an improved Experis revenue trend.

Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.1 billion, representing 3% growth in constant currency during the first quarter. As adjusted OUP for our Southern Europe business was $58 million in the quarter, and OUP margin was 2.8%. Restructuring charges of $4 million represented actions in France.

France revenue equaled $1.1 billion and comprised 51% of the Southern Europe segment in the quarter and was flat on a constant currency basis. As adjusted, OUP for our France business was $21 million in the quarter. Adjusted OUP margin was 2%. France revenue trends improved during the first quarter, and we expect a similar rate of revenue trend of flat to slight growth in the second quarter.

Revenue in Italy equaled $475 million in the first quarter, reflecting an increase of 8% on a days adjusted constant currency basis. OUP as adjusted equaled $29 million and OUP margin was 6%. Our Italy business is executing well, and we estimate mid-single-digit percentage revenue growth in the second quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue up $790 million represented a 1% decline in organic constant currency.

As adjusted, OUP was negative $3 million in the quarter. This represents year-over-year OUP improvement during the last 2 quarters reflecting cost actions taken to date. The restructuring charges of $5 million primarily represent actions in the Nordics and the U.K.

Our largest market in the Northern Europe segment is the U.K. which represents 34% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 2% on a days adjusted constant currency basis, representing ongoing stabilization. The remaining countries in the region progressed as expected with largely stable to improving revenue trends.

The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $510 million, representing an increase of 8% in constant currency. As adjusted, OUP was $22 million and OUP margin was 4.3%. Our largest market in the APME segment is Japan, which represented 57% of segment revenues in the quarter. Revenue in Japan grew 4% on a days adjusted constant currency basis.

We remain pleased with the consistent performance of our Japan business, and we expect continued solid revenue growth in the second quarter.

I'll now turn to cash flow and balance sheet. In the first quarter, free cash flow represented an outflow of $135 million compared to an outflow of $167 million in the prior year. The cash outflow was negatively impacted by the end of the first quarter payment timing involving our MSP business and to a lesser extent, some isolated working capital utilization, and we expect these items to reverse in the second quarter.

We expect free cash flow to be negative in the first half of 2026, which will be offset by strong free cash flow during the second half. At quarter end, days sales outstanding was 59 days, up 4 days from the prior year reflecting enterprise mix shifts and isolated quarter end timing on certain receivables. During the first quarter, capital expenditures represented $9 million, and we did not repurchase any shares.

Our balance sheet ended the quarter with cash of $225 million and total debt of $1.1 billion. Net debt equaled $922 million at quarter end, an increase from year-end, reflecting first quarter seasonality. Our adjusted debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $2.86 and total debt to total capitalization at 36%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the second quarter of 2026. Our forecast anticipates a continuation of existing trends, with that said, we are forecasting earnings per share for the second quarter to be in the range of $0.91 to $1.01. Guidance range also includes favorable foreign currency impact of $0.05 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide.

Our constant currency revenue guidance range is between a 1% increase and a 5% increase, and at the midpoint is a 3% increase. Considering business days are equal year-over-year and the impact of dispositions is very small. Our organic days adjusted constant currency revenue increase also represents 3% growth at the midpoint.

EBITDA margin for the second quarter is projected to be up 10 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the second quarter will be 43%. I will continue to carve out any restructuring and global strategic transformation program costs incurred, and they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be 47.7 million.

I will now turn it back to Jonas.

Thanks, Jack. In closing, as the market continues to stabilize, we're operating well, staying focused and executing with discipline. Our team remains hyper-focused on delivering for the now while a dedicated group advances our transformation initiatives to position us for future opportunities.

I look forward to keeping you updated on our continued execution as we build on the progress we've made and capture the momentum ahead. As always, thank you to our talented team for their relentless focus and to our candidates and clients for your continued trust.

Operator, please open the line for questions.

[Operator Instructions]. Our first question comes from Andrew Steinerman with JPMorgan.

So it's good to be back to growth here and thinking about the guide of organic constant currency, same-day basis of 3%, it's pretty similar to the first quarter. So would you call Manpower business in a recovery mode, like leaning towards acceleration here? Would you more call it at a point of a stable growth?

Good morning, Andrew. Yes. No, I think we're very pleased with the improving momentum in the Manpower business. You saw an acceleration between Q4 into Q1. We're now anniversary-ing strong growth again. And as Jack said, we've had 7 quarters of growth in manpower in the U.S., 4 quarters globally. So it's really nice to see the manpower business performing better and with momentum. And it's great to notice that despite all of the uncertainty and the volatility in the markets, the underlying economic activity is resilient, yet uncertain, and that is, as we know, a good opportunity for us to provide our services and workforce solutions to our clients under the Manpower brand.

Can I just ask a follow-up to that unit. So obviously, moving forward in the still uncertain environment leans towards flexible labor solutions. One of the things I heard about when I presented at the Staffing Industry Analyst Conference is that companies are unsure of their medium-term plans for their workforce because of AI. And that might lean currently towards more flexible solutions as that's figured out. Do you think that's just a theory -- or do you think that's happening in the marketplace and kind of part of the growth leaning forward for manpower?

From Manpower, that would not really be a factor because it's very resilient to any AI impact, and I'm sure we'll talk later on around the impact in other areas and the opportunities above all that we see with AI. I think it's basically an uncertainty related to the economic environment and outlook. Employers are getting buffeted by geopolitical events, tariffs, wars that are ongoing or started, and that clearly drives employer hesitation. So in our mind, the client hesitation is more related to those events than any particular concerns or possible impact of AI into their workforce.

Our next question comes from Jeff Silber with BMO.

Wanted to shift gears and focus on some of the transformation savings that you talked about. Is it possible to give us a bit more color either by geographic regions where we might see more of those transformation services and also the timing by geographic regions? Are there certain regions we're going to see it ahead of others.

Thanks, Jeff. Yes, let me just before I hand it over to Jack to provide some more of the details, maybe take a step back and provide a bit of context around this global strategic transformation program. As we've talked about over a number of quarters, we've been investing very heavily in a digitization strategy that impacts all of our operations. So we're deploying global applications across our operations.

We have also engaged in a significant back office transformation program and based on those investments and the experience and capabilities that we're accumulating, and as Becky mentioned in the prepared remarks, the increased confidence that we see in the role that AI can play in improving our operations and delivering better services and solutions to our clients and candidates we have been planning for a year now to really broaden this transformation program to also include our front office and really redesign our processes in a way that leads the industry and enables us to do things and drive our business in a very different way in the future. But so maybe, Jack, you could now give a little bit more detail around the announcement we made this morning.

Yes. And specific to your question, Jeff, on geography impact. So I think the way I talk about it, as you see, this is both the back office program, which we progressed nicely and as Jonas said, building on that, moving that to the front office processes. So you see in the chart that we provided on Slide 7 that the initial savings are coming through the back office.

So that majority of the savings is coming from the European region, where we started a lot of our back office processes first. And that's both finance and IT coming through in terms of the standardization and centralization we've seen there on the technology, of course, that we've been talking about for quite some time. And as we move forward now with the front office, we're actually starting in North America. And so as you see the geography impact and you see the green in that bar chart, moving to front office savings, you'll see North America come through first in 2027.

We're doing all that work now in 2026, and it's launched very well, and we're very excited about the progress so far. And then as we go to the rest of the world in 2027 following that blueprint from North America, you'll see more broader savings in the rest of the regions coming through in 2028. So and that's on the front office side.

On the back office side, as I mentioned, starting in Europe, we're actually in the process of doing North America and wrapping up North America on the back office process now. And so that will contribute to some of those additional savings on the blue component of that bar chart into 2027.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, if you just look at the gross margin trends, you talked about maybe the impact staffing it's having on it. And I'm wondering how much of that is just mix? Is it just enterprise demand versus SMB demand that you've seen in the past? Or is pricing having an impact now?

Yes. Thanks, Kartik. So let me talk to that. I guess what I'd take you back to is the second half of 2025. And at that time, we were seeing enterprise mix shift continue to have an average and have an impact on the overall staffing margin. And when we show the staffing margin walk, year-over-year, you can see that having an impact.

And as we went from the third quarter to the fourth quarter, we actually saw that stabilize the level of staffing margin decrease from the enterprise mix kind of held steady and the issue at that time was more perm. Perm was coming in softer and was driving a bit of that GP margin decrease -- further decrease year-over-year. And so as we walk into the first quarter here, I think the story is perm actually has stabilized. Perm actually came in a little bit better sequentially than the fourth quarter. So that really wasn't the driver getting back to the staffing, really what happened in the first quarter.

And the first quarter is traditionally when you will start to see maybe some of the bench impacts from the bench countries, and that's where absenteeism and sickness has a bit of a role. And we saw an outsized impact on that in the first quarter. So that went against us on the staffing line that drove roughly somewhere 10 to 20 bps of additional headwind. And as Jonas said, our growth was very strong. So that growth is predominantly enterprise. And so that growth came in a bit stronger and drove a little bit more pressure on just the averaging of the mix shift. But I'd say that's really what's happening, and that's what we're seeing right now.

Enterprise continues to be the strongest part of the demand. And that's how I'd characterize what we're seeing. I do -- as you do see in my guide going from Q1 to Q2, we do see it strengthening. And that is after we removed the drag associated with the bench issues in the first quarter, which are traditionally more of a winter phenomenon as we move into the second quarter.

So Jack, just to make sure. So you don't think it's a structural issue right now. It's just more of a timing issue and maybe seasonality issue because of the bench countries..

That's correct. That's correct, Kartik. At this point, pricing is always very competitive. But at this point, we continue to think pricing is rational. It's predominantly a mix shift with enterprise being the strongest demand at the current time.

Our next question comes from Mark Marcon with Baird.

Early in your remarks, you talked about the strengthening that you're seeing in Europe. I'm wondering if you could just provide a little bit more color and also what you're hearing from your European colleagues with regards to any concerns around the impact of the war and whether you think that continued that strengthening can continue? And then I've got a follow-up on the restructuring.

Good morning Mark, yes. No, we've been very encouraged with the improvement that we've seen in a number of or countries in Europe. And largely, you could say that Southern Europe continues to be very strong in a number of markets. You've seen our results in Italy, again, the market-leading very strong growth. It's our third biggest market globally. So we're very pleased with that, but also other countries and very pleased also to see France come back to flat. And Northern Europe continued to improve. Still a lot of work to do for us in Northern Europe, but we're encouraged with the progress that we're making.

And I think as you see our guide into the second quarter, you see we expect that improvement to continue. And a lot of that is underpinned by what we briefly mentioned earlier, which is this economic resilience, the labor market resilience, the improvement in PMIs in all of our major markets today, PMI is above the expansionary levels, so above 50%, which has been a long time coming, and we can see that.

So despite the uncertainty that despite the volatility that companies are experiencing, they have become adapt to be agile in this environment. They are interested and believe that this volatility and these uncertainties will subside and they need to continue to move their business forward. And we're very pleased to see that they're doing that with us to a greater degree in the first quarter as well and looking good also into the second quarter.

As it relates to the events in the Middle East this time, it's really too early to assess if there will be a broader impact. Today, we don't see an effect on customers, and we've been really encouraged by the resilience and adaptation to the rapidly changing environment more broadly. So companies have gotten used to a volatile environment, and they are looking past the noise to the signals, what they need to achieve as a business and they are moving forward.

So, so far, as you can tell from our guide, we're not seeing and including any other effects, which, of course, we're monitoring. And should anything happen, of course, we will take the actions that you've seen us take in the past. We have an experienced management team. We are used to managing in this environment. And as you can see from our results, we're executing with discipline and adjusting to any changes that we see happen. But you had a follow-up question for Jack.

Yes, over for you. In terms of just the restructuring, you mentioned the charges that you're anticipating through the end of this year. Would those do you foresee further restructuring charges going into '27 and '28. How should investors think about the cash flow impacts of those restructuring charges and the timing of those.

And then as it relates to the savings, from a timing perspective, would -- when we talk about the $200 million, would that basically be kind of a run rate savings toward the end of '28? Or could we expect all of those savings to actually hit in '28? And what percentage of that would you actually expect to drop down to the EBITA line as opposed to being, potentially being redeployed for other uses?

Mark, that is definitely a Jack question. You managed to work in 5 questions into that swap. So Jack...

No, thanks for the question, Mark. And so obviously, this is a big program for us. So I understand the questions on the charges. So the way I would answer it is, if you look at that split that I provided for 2026, yes, there is severance in the restructuring in the mix. A part of it and a big part of it is the program transformation costs, right, as well.

So as we look at the rest of 2026, it's basically 1/3 restructuring and 2/3 program. And as I mentioned, that's lower than the run rate in the first quarter. The first quarter, we had a bit more restructuring that included Europe, of course, and some other things. As you think ahead to 2027 I would say, in terms of the program costs, that will continue, maybe even be a bit slightly higher restructuring at this stage is a little too early to tell.

And I'll give further guidance on that as we get through 2026. There's a couple of different variables there. So if the environment stays very static and stable as it is today, then you should expect restructuring will increase. If we start to see some good recovery trends, then it could be very different as we redeploy people into higher growth processes, so that will -- that could reduce restructuring as we go to the rest of the world after 2026.

So a bit too early, but with all of that kind of getting at the heart of your question, we're managing this very carefully based on cash and resources and we will continue to do that. So we continue to be very focused on improved free cash flow for the full year, and we're going to balance that, as I said in the prepared remarks, the ongoing cost reduction savings are going a long way to fund these activities, and that's going to continue to be our playbook as we go forward. So a very careful balance.

I guess, getting to the heart of the question, like we would -- let's say we're in a constant run rate by the end of 28 with these programs being put in place, how should investors think about like what's a reasonable EBITDA margin target for Obviously, you're not giving guidance. But just if we're just taking a look at this program, how -- theoretically, how should we think about it?

Yes. And good point. I meant to answer that part of the question as well, Mark. So thanks for the reminder. So to answer your question, we anticipate the full $200 million coming in, in 2028. So not run rate in the fourth quarter of 28% for the full year based on the work we're doing this year and next year. That will flip to a $200 million run rate savings in 2028.

And as I mentioned, a little too early to anticipate if there's additional restructuring that runs into 2028. We'll give updates on that in the future. But as we think about the impact of the program, that is what we anticipate to be the benefit to the cost structure. So in terms of the guide on, I guess, the financial target that we continue to be firmly committed to the 4.5% to 5%. As we've said in the past, you can do the math on this, but if you just apply the $200 million to where we've been in the last 4 quarters on a run rate basis, basically, that adds 110 basis points to our EBITDA margin in isolation.

So right away, running -- if I look at last year, we're running at about 2% adjusted EBITDA margin at 110 basis points. So that, just in this environment, in this current environment, if we get operational leverage on a stronger recovery, our track record shows that if we start to get a strong recovery, we get very, very good additional operational leverage and we saw that going from '20 to '21 where our EBITDA margin expanded 90 basis points and then expanded another 40 basis points the year after as the recovery to coal. So that is -- that's the operational leverage additional part of it. But in isolation, this will go a long way into accelerating our path towards that EBITDA margin commitment.

Our next question comes from George Tong with Goldman Sachs.

I wanted to touch on the manufacturing environment specifically. You highlighted how manufacturing is strengthening, particularly across Europe. Can you provide country-specific details on the manufacturing landscape and drivers of the improvement in those countries?

Thanks, George. Yes, as you heard me say earlier, you can see the manufacturing environment improving across both the U.S. and Europe by looking at the PMI, and we've really seen that be a positive evolution over the last 3 months or so.

So I think that gives you an idea that there are different sectors, of course, that are stronger than others, one sector that we feel very good about is the aerospace and defense where we have a very strong position in Europe, and we expect that this is going to grow in terms of the share of our business with the increased spending on defense. So you can see a number of areas that are doing better. There are a number of industries that are struggling a bit, like automotive, logistics has been a bit weak in some of the markets across Europe. But more broadly speaking, the economy is resilient.

The labor markets are resilient, and PMI from a manufacturing perspective is improving both in Europe and in the United States.

George, you asked about it at a little bit so maybe -- I'll give really take some color on the geography. So if I just look at our manpower business, which obviously, is very tied to manufacturing. As we talked about, the U.S. was up 5% and in the quarter, actually a bit impacted by weather, extreme weather in the quarter, probably was about a 1% drag, so it would have been about 6%. So the punch line, there's continued strong progress, momentum on manufacturing sector.

France, as we mentioned, moved this predominantly Manpower business moved to flat Italy, very strong manufacturing concentration, up 8%. And Spain, very, very strong growth. You see the double-digit growth that we had in Spain as well. So I'd say pretty broad-based, as Jonas said, from a geography standpoint as well. And that's what's really contributing to that global Manpower business, 6% growth in the quarter overall.

Our next question comes from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. If not mistaken, you referenced $200 million of incremental revenue in France from AI-powered sales -- how scalable is this globally and which markets represent the next largest opportunity? And then beyond that top line contribution, how is AI changing win rates, pricing discipline customer lifetime values. And when can we expect to see this reflected in margins?

Thanks, Ronan, this is Becky, and I'll take that for you. First, to France specifically, -- so we launched an AI-powered sales targeting engine that basically says what's happening in the market in real time, where do we have strength and our capabilities. We match the 2, and that's what has demonstrated our revenue growth there. We will scale to 50% roughly of our markets by year-end.

So you'll see that sequence come out as we have future earnings calls.

To your next question around how AI overall, as you heard in my prepared remarks, we are very active in that space in 2 parts. One, internally applying it to our processes, as you heard me talk about with very new strategic partnerships in the AI space with Hubert.AI embedded in our power suite and our recruiting processes, sales targeting, but also how we apply AI externally to create net new products. And so the SoundHound partnership I talked about that's focused on Experis in the U.S. is really breakthrough in our industry.

So we're leveraging the fact I mentioned on the last earnings call that we have limited exposure to coders, which is a place that has been impacted. We are shifting that limited exposure to a tailwind for AI in our business by bringing agents and humans together to deliver value for our clients. And so we're active on a 2-part view with AI in our business and for our clients for new products.

That's very helpful, Becky. And then may I confirm the element of question on expectations for margin implications.

Yes. Thank you, Ronan, I mean to answer that for you. Yes, it's early, Ronan, and so early days for us. We're very encouraged, one, by our capabilities to bring these tools in quickly to form strategic partnerships in the AI space. We're encouraged by the margin potential that our early deals have shown, but early days, and we expect us to be able to scale, and I'll keep you updated as it does.

Our next question comes from Tobey Sommer with Truist.

I wanted to ask you a relative question on your AI targeting tool as well as your systems investments and reimagining. Where do you think this puts you in terms of market share and, let's say, the lead on reimagining versus others after 3 or 4 years of declining market there are probably a lot of boards and management teams in front of a whiteboard trying to reimagine and where do you think you are relative to their visions of the future and actions?

Well, thanks, Tobey. So as we talked about, we started this journey of creating a global data infrastructure really clearing our technological debt and replacing it with modern cloud-based SaaS platforms that we have now deployed globally, covering 90% of our revenues and 80% of our back office transformation. That is unique in our industry at our scale because we're doing this on single platforms. We have a global data lake that is covering 100 billion data points, and all of our applications are putting the data into the same data lake. And that has opened up this opportunity for us to really think about our business and how we run our business in a very different way.

We have built experience and capability, of course, going through the back office transformation and reengineering processes there. as Becky will talk more about in a minute, how we're now starting to see AI has a bigger impact, both in terms of how we interact with clients, how we interact with the talent the kind of insights that we can now bring to our clients that provides added value is what's really, really exciting to us.

And that's what's given us the confidence to say that this is something that we think can really reshape our industry can drive faster and higher fill rates and also drive further efficiencies.

So Becky, if you take it from there.

Yes. Thanks, Tobey. So I lasted a little bit on how you asked the question about white boards because I spent a lot of time on whiteboards lately. Reimagining how this business can run in a totally different way. So the question is, how do we do what we do in a totally different way and add more value to our candidates and our talent and our clients. And so we are looking at AI as a growth and productivity multiplier. Like we need that 2-party equation, we're looking to automate what we can and should and keep human what we know our clients and our candidates want to keep human with a very heavy dose of governance on top of it to make sure that we meet the needs and demands of our clients and our candidates. And so we're encouraged.

You asked about where we are in leadership. Obviously, we're not privy to what everyone is doing, but we feel very good that we are moving with speed in months versus years, and we've been doing this for a horizon.

And then if I could ask, if you feel like you're in a good spot relative to speed and sort of the pace in which you're executing against your own vision, who's losing if you, in fact, are winning?

Yes. So I would say, again, I don't quite know how to answer that question directly because what we focus on is our winning versus other people losing and winning to us is actually delivering more value to our clients and keeping our candidates central to our efforts. At the same time, making sure our employees are prepared for this new horizon. So you heard me say in our prepared remarks, we've invested significantly internally in time and of our people to make sure they're trained on using AI tools you've not heard a number from us on 80% of our workforce is now using AI on a regular basis. And so I would say to us, that feels like winning.

Our next question comes from Trevor Romeo with William Blair.

Just one quick one for me. I was wondering if you could talk about whether you're seeing erosion get overall...

Trevor, sorry, we could not hear any of that question. Could you please repeat the question? You were breaking up.

No, we can't hear you.

Sorry -- is that here?

A little better.

Hopefully, this is better. I was trying to ask about the overall environment for Experis in the U.S., it sounds like you're expecting things to get that really professional....

Yes. So Trevor, this is Becky. Unfortunately, you dropped out again after a very strong few words. But I believe you're asking about the environment for Experis in the U.S., and so I'll answer that, and you might try to move to a better place that we can hear you better.

For Experis in the U.S., first, let me take a step back on the question that's top of mind, which is impact of AI on that business. So overall, for AI, we feel continued encouragement by the resilience of our manpower business, as you heard both Jack and Jonas refer to in the face of a lot of AI conversations. -- for our tech clients, they are cautious on AI spend. They're being careful about where -- are on their project spend.

They're being careful about where they're investing their money and thoughtful and cautious and a little slow to say yes. But for Experis specifically to your question, we've been very encouraged. We have seen our pipeline grow specifically in health care, in life sciences over the quarter. So we exit the quarter with a robust pipeline we have seen our clients turn to us for advisory.

And again, as mentioned, when we talked about the partnership with SoundHound, we're turning AI into a tailwind for us. So we are actually in a product now. We are selling a product that is agents plus humans. And so that is the future that we see for experience here in the U.S.

Right. I think that was basically the spirit of my question. Hopefully, you can hear me better now. Maybe just -- maybe just a very quickly follow-up. It sounds like you're expecting the U.S. to go back to positive year-over-year. Are you also expecting experience to go back to positive year-over-year? Or would that still be slightly down in Q2?

Trevor, great question. So you're right. In the guide, I have the U.S. I said, going to positive growth. And so that is definitely part of the Americas revenue growth that we're seeing. Experis, we see getting very close to flattish, so revenue trend in Q2 overall.

And as I mentioned, what's really happening there is you see the health care project work, those go-lives. I've created a lot of bumpiness year-over-year, that pretty much works its way through as we go into the second quarter. And as I mentioned, on an underlying basis, the business actually has been quite stable. So we start to anniversary some of that and move closer to a flattish type result in Q2. So we have seen some good stability in the business.

Looking at the weeklies, we're encouraged by some of the consultant headcount increases and we're taking that into Q2.

Our next question comes from Josh Chan with UBS.

So on the savings, could you just give more color in terms of what is actually being saved to result in the dollar savings? And then relatedly, kind of conceptually, why would the savings be higher in the front office and the back office.

Yes. So happy to talk about that. I think if you think about the savings, it's going to really follow a lot of what we've already done on the back office. So -- what -- the way to think about it, Josh, is if we had separate streams and workflow activities in every major business in terms of some of the historical back-office processes, and then we move into global business service centers, like we've talked about with our Porto center in Europe for our European locations.

What we're able to do is centralize a lot of work into those hubs, and that is reducing a lot of the infrastructure that we need in country. And that's going to continue to be that model on the back office applied to the front office processes. So on the back office, it's been the finance and IT related functions that have improved their efficiency as a result of this centralization and standardization.

And on the front office side, it's going to be recruiting. It's going to be sales. It's going to be service delivery. And when you look at the size of those functions, they're bigger. I mean it's 1 of the biggest parts of the business, right, as we think about the front office opportunity. So that's what's going to drive it. And so you're going to hear us talk a lot more about, you've heard us talk a lot about our back office, global business service centers. You're going to hear us talk more and more.

That's going to be a really critical important part of our centralization of the standardization going forward, and that's going to benefit our efficiency in our major businesses going forward. So -- that's the way to think about it. It's continuing what we've already done on the back office through similar themes and applying that to big populations of the front office.

And then of course, underlying all of that, as you heard from Jonas and Becky will be automation. Automation is a key element to all of this. and the opportunity of genic AI being infused in that is going to be a real efficiency driver on top of that. So all of that is how we get to those significant front office costs that you've seen broken out.

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Jonas Prising, for closing remarks.

Thanks, Michelle, and thanks, everyone, for participating in our earnings call this morning. We look forward to speaking with you again at our Q2 earnings call in July. And until then, thanks very much. Look forward to speaking with all of you again soon.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Welcome to ManpowerGroup's Fourth Quarter Earnings Results Conference Call. [Operator Instructions] This call is being recorded. If you care to drop off now, please do so.

I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our fourth quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today. For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com.

I'll begin with a brief overview of the quarter and the full year, including how we're seeing conditions evolve across markets and what that means for our execution. Becky will ground us in the broader environment, what we're hearing directly from the market and how we're evaluating those insights as we position the business. Jack will then walk through the detailed financial results and our guidance for the first quarter of 2026. I'll post with a few comments before we open the line for Q&A.

Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements.

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. Let me begin by saying we're pleased with our fourth quarter results, which marked a clear shift to stabilization led by enterprise demand and supported by disciplined execution and a continued commitment to cost optimization. In the fourth quarter, we delivered reported revenues of $4.7 billion, which represented organic constant currency growth of 2%.

System-wide revenue, which includes our expanding franchise revenue base, was $5.1 billion. Adjusted EBITDA margin of 2.1% reflects improving demand trends across core markets, as well as P&L leverage. Though we faced strong headwinds during the first half of 2025, reflected in our full year results, we are encouraged by our fourth quarter performance, which demonstrated sequential improvement through year-end. As we move through the fourth quarter, revenue trends strengthened in several key markets. Clients remain deliberate in their hiring given the macro backdrop, yet engagement levels are steady and activity is becoming more consistent.

Importantly, while we're not yet calling a broad-based recovery, we are seeing clear sequential improvement in key demand indicators, including Manpower associates on assignment in key markets such as the U.S. and France, which are performing better than expected, with France, in particular, showing resilience despite ongoing political and budget uncertainty.

Markets such as Italy and Spain stabilized earlier and began to inflect with Italy standing out as a clear outperformer on both growth and margin. These trends reinforce our view that the shape of the recovery can be different by market with some inflecting earlier and others requiring longer periods of stabilization first.

Against this backdrop, our priorities remain clear: execute with rigor, maintain cost discipline and leverage our digitization advantage to position the business to generate operating leverage as demand improves. We are working to ensure that we're structurally stronger, more efficient, agile and better positioned to capture share.

To that end, our diversified multi-brand portfolio continues to perform well in a selective demand environment and plays a critical role in earnings durability. Manpower addresses in-demand, AI resilient skills at scale, supporting clients from entry level to specialized roles in growth sectors and has grown for three consecutive quarters with 6 quarters in the U.S.

Experis, our brand providing specialized technology, talent and services that maximize returns on digital, cloud, AI and data investments has seen the rate of decline narrowing and sequential improvement through the second half of the year. Talent Solutions delivers scaled enterprise offerings. Including TAPFIN MSP, Right management, outplacement and consulting, which saw growth in the quarter. Perm recruitment across brands, including our Talent Solutions RPO offering continues to face a challenging environment.

As demand stabilizes, this breadth of our portfolio and geographic footprint positions us to improve win rates, capture share and generate stronger incremental margins. We are pleased with our progress, but a long way from being satisfied, and we will continue to focus on improving the current trajectory.

On that point, let me provide an update on our cost discipline and operating leverage. Cost discipline remains a core leadership priority across our operations. Over the last 3 years, we have taken decisive actions to structurally reduce costs and align capacity with demand. These actions include permanent changes to our operating model in our back office and technology infrastructure, as well as targeted adjustments to current market conditions.

Our efforts were further on display during the fourth quarter as we delivered a 4% constant currency reduction in SG&A, while driving organic growth. This reflects both structural cost reductions and tighter discretionary spend. Further, we accelerated cost actions across corporate functions in select geographies, sharpened capacity alignment and reduced overheads.

These actions are translating into improved profitability across the portfolio. For instance, for the first time in 5 quarters, we delivered positive operating profit in our Northern European business this quarter. A region where we've been highly focused on rightsizing the cost base.

Importantly, we have more opportunity to enhance our cost structure across our global business. Jack will provide additional details on these efforts including ongoing optimization actions, particularly in North America as part of our broader transformation program.

Before that, let me turn it over to Becky to expand on the work we are doing to capture critical market insights that are evolving our business model in line with changing customer needs and candidate behaviors.

Thanks, Jonas. Glad to be with you all this morning. My remit for ManpowerGroup is focused on three areas: driving commercial excellence, evolving our core capabilities to better serve the business and infusing AI in the organization for today and tomorrow.

In recent months, we have embarked on a comprehensive process to evaluate our strategy and priorities as AI accelerates and client and candidate needs change. As part of this work, we've engaged a wide set of experts inside and outside our industry, including our clients and candidates, to conduct independent research and rigorous analysis across both technology and human behavior, while we are still early in this process. This work is servicing two clear macro themes around how clients and candidates want to engage with us.

First, flexibility, candidates are increasingly looking to curate flexible engagement models for when, where and how they contribute to work. Our clients are also seeking flexibility to attract talent and to remain agile in the changing landscape.

The second theme is how AI will shape workforce composition. Our clients are asking tough questions, how could I get work done in the future? What are the new paths between humans and technology. They are increasingly seeking our advisory capabilities on new ways to get work done beyond the traditional models, advancing the paths of temp and perm, alongside newer models of flexibility like gig and freelance and they are seeking guidance on the newest path to work, leveraging AI in combination with humans for productivity and for growth.

From this research and our continuous connections with clients across every industry, the intersection of AI and workforce readiness is an urgent priority and unlocking productivity gains and growth will depend on combining technology adoption with workforce transformation. This was reinforced once again by our engagement with clients and prospects at the World Economic Forum in Davos last week, where we showcased insight and research around what we are calling the human edge, where empathy, imagination and resilience are elevated by technology and where human potential meet digital intelligence.

Ultimately, these insights give us enhanced visibility on where client demand and growth will be, enabling us to make critical decisions now. on where to play and how to win. Though we're in the early stages of this process, we are encouraged at the opportunity ahead to further differentiate our offerings.

I look forward to continuing to update you on this critically important initiative.

Thank you, Becky. As you heard, the environment for AI and automation continues to unfold. Since 2019, we have been executing against a clear technology road map centered on PowerSuite, our end-to-end operating system and best-in-class technology stack.

Today, PowerSuite operates across nearly 90% of our business, creating integrated global technology rails and a proprietary data assets spanning more than 70 countries. This foundation enables faster innovation and allows us to convert technology adoption into productivity gains more quickly than in the past. Last quarter, we shared how we are increasingly moving from AI use cases to scaled commercial impact.

Our integrated AI recruited toolkit is now scaled to more than 12 markets. Streamlining content creation, talent search, communication and workflow automation. This is improving recruited precision and productivity, while enhancing the candidate experience to faster, smarter matching and real-time insights resulting in a 7% increase in placement rates. This is not just about productivity. It is about commercial excellence. Positioning us to increase revenue, win clients and deliver a superior experience to our clients and candidates.

For instance, we are scaling the use of agentic AI coding assistance across Experis in the U.S. to deliver faster, higher quality and more cost-efficient solutions for clients. This helps our clients accelerate delivery, improve product quality and reduce operating costs, while enabling us to strengthen our value proposition and win higher-margin work.

More broadly, we are moving from experimentation to disciplined, governed deployment of AI turning proprietary data, embedded technology and human expertise into faster delivery, higher win rates and durable differentiation. And as part of this commitment, we're upskilling our 25,000 employees and embedding AI more deeply across the organization to drive productivity, support higher-margin growth and ensure that these gains translate into a leaner, more efficient cost structure.

Pleased that we're able to deliver sequential improvement in revenue growth and profitability improvement through 2025 finishing Q4 with momentum that reflects our stronger execution in our core markets and profitability improvements from our cost actions. Assuming current trends continue, and as we anniversary the tariff-related headwinds, we believe 2026 has the potential to represent an important inflection point for the business, with a path towards sustainable organic growth and margin expansion. At the same time, we remain agile and continue to monitor geopolitical developments. While uncertainty exists, our focus remains on supporting clients and executing in this evolving environment.

And with that, I'll now turn it over to Jack to walk through the fourth quarter and full year financial results in more detail.

Thanks, Jonas. In the fourth quarter, we delivered reported revenues of $4.7 billion. System-wide revenue was $5.1 billion. Our fourth quarter revenue results represented organic constant currency growth of 2%. U.S. dollar reported revenues in the fourth quarter were impacted by foreign currency translation and after adjusting for currency impacts, came in above the midpoint of our constant currency guidance range.

Our revenue trends demonstrate the continuation of largely stable activity levels across North America and Europe overall, with improving trends in France and ongoing strength in Italy. Gross profit margin came in just below our guidance range driven by lower permanent recruitment in Europe, while staffing margin came in as expected and consistent with the previous quarter year-over-year trend.

As adjusted, EBITDA was $100 million. Representing a 2% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1%, equal to the prior year and came in at the midpoint of our guidance range. Foreign currency translation drove a favorable impact to the 7% U.S. dollar reported revenue increase from the constant currency increase of 1%. Organic days adjusted constant currency revenue increased 2% in the quarter, which was favorable to our midpoint guidance of flat.

Turning to the full year results for a few moments. Reported earnings per share for the year was a negative $0.29. As adjusted, earnings per share was $2.97 and represented a constant currency decrease of 38%. Reported revenues for the year decreased 2% in constant currency to $18 billion, and system-wide revenues were $19.5 billion. Reported EBITDA was $270 million.

As adjusted, EBITDA was $337 million, which represented a 20% constant currency decrease year-over-year. Transitioning to the EPS bridge, reported earnings per share for the quarter was $0.64. Adjusted EPS was $0.92 and came in $0.09 above our guidance midpoint. Walking from our guidance midpoint of $0.83, our results included improved operational performance, representing a positive impact of $0.06 and improved interest and other expenses, which was $0.03 favorable. Restructuring costs and other represented $0.28.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 5% in the quarter. A sequential improvement from the 3% growth in the third quarter. The Experis brand declined by 6%, an improvement from the 7% decline in the third quarter, and the Town Solutions brand declined by 4% and an improvement from the third quarter decline of 8%. Within Talent Solutions, our RPO business experienced lower demand, notably in select ongoing client programs in the U.S. year-over-year.

Our MSP business saw continued revenue growth, and Right Management saw slight growth year-over-year. Looking at our gross profit margin in detail, our gross margin came in at 16.3% for the quarter. Staffing margin contributed a 40 basis point reduction due to mix shifts towards enterprise accounts, which was stable from the third quarter trend. Permanent recruitment activity was softer than expected in Europe and the lower contribution resulted in a 30 basis point decline. Other services resulted in a 20 basis point margin decrease.

Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 22% and Town Solutions comprised 16%. During the quarter, our consolidated gross profit decreased by 3% on an organic constant currency basis year-over-year, representing an improvement from the 4% decline in the third quarter.

Our Manpower brand increased 1% in organic constant currency gross profit year-over-year, an improvement from the flat third quarter year-over-year trend. Gross profit in our Experis brand decreased 5% in organic constant currency year-over-year, an improvement from the 10% decrease in the third quarter. Gross profit in Talent Solutions declined 12% in organic constant currency year-over-year, which was an improvement from the 13% decrease in the third quarter.

Right Management gross profit improved from the third quarter on increased outplacement activity. MSP experienced similar activity levels from the third quarter and RPO experienced slightly lower activity from the third quarter. Reported SG&A expense in the quarter was $686 million. SG&A as adjusted was down 4% on a constant currency basis and 3% on an organic constant currency basis.

The year-over-year organic constant currency SG&A decreases largely consisted of reductions in operational costs of $22 million. Corporate costs have increased sequentially from the third quarter and include incremental investments in our transformation initiatives. These initiatives include our back-office transformation programs and are progressing well, and now also include our front office transformation program, which is being planned for our North America business. These programs are enabling industry-leading end-to-end processes and further efficiencies associated with our leading PowerSuite front and back-office technology platform.

Going forward, I will carve out any incremental expenses associated with the new front office transformation program, which we will fund to the greatest degree possible through ongoing strong cost management as we remain focused on expanding EBITDA margin year-over-year in 2026. Dispositions represented a decrease of $3 million, while currency changes contributed to a $29 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 14.4% in constant currency in the fourth quarter. Adjustments represented restructuring of $13 million. Balancing gross profit trends with strong cost actions, while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities. The Americas segment comprised 24% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 5% year-over-year on a constant currency basis.

As adjusted, OUP was $39 million and OUP margin was 3.4%. Restructuring charges of $1 million largely represented actions in Peru. The U.S. is the largest country in the Americas segment, comprising 60% of segment revenues. Revenue in the U.S. was $682 million during the quarter, representing a 1% days adjusted decrease compared to the prior year, which was stronger than anticipated, driven by Experis and Talent Solutions MSP business. This represents a flat revenue trend sequentially from the third quarter. OUP as adjusted for our U.S. business was $15 million in the quarter. OUP margin as adjusted was 2.2%.

Within the U.S., the Manpower brand comprised 27% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 7% on a days adjusted basis during the quarter, which represented strong market performance with 6 consecutive quarters of growth and a relatively stable trend from the 8% increase in the third quarter. The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprised approximately 90% of revenues. Experis U.S. revenue decreased 10% on a days adjusted basis during the quarter, broadly stable from the 9% decline in the third quarter.

Town Solutions in the U.S. contributed 34% of gross profit and saw a 2% increase in revenue year-over-year in the quarter, an increase from the flat result in the third quarter driven by a well-executed MSP business, which again posted strong double-digit revenue increases year-over-year and slight growth in Right Management outplacement activity. This was partially offset by lower RPO activity and the anniversary of select client programs in the second half of 2024.

In the first quarter of 2026, we anniversary a very strong health care IT project volumes in Experis and expect the overall U.S. business to have an increased rate of revenue decline compared to the fourth quarter. If we exclude health care IT project volumes from both periods, the U.S. year-over-year revenue trend in Q1 will be largely in line with the Q4 trend.

Our Experis health care IT project volume timing can be uneven. And although we do not anticipate comparable volumes in Q1 of 2026, we have a very strong pipeline that is expected to benefit the second and third quarters of 2026. Southern Europe revenue comprised 48% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.2 billion and following 13 consecutive quarters of revenue declines, flipped to 1% growth in constant currency during the fourth quarter.

As adjusted, OUP for our Southern Europe business was $77 million in the quarter and OUP margin was 3.4%. Restructuring charges of $6 million represented actions in Spain and France. France revenue equaled $1.2 billion and comprised 62% of the Southern Europe segment in the quarter and decreased 3% on a days adjusted constant currency basis. As adjusted, OUP for our France business was $28 million in the quarter, adjusted OUP margin was 2.4%. France revenue trends improved during the fourth quarter. This represents four consecutive months of revenue trend improvement, and we expect a similar sequential rate of revenue trend improvement into the first quarter.

Revenue in Italy equaled $486 million in the fourth quarter, reflecting an increase of 7% on a days adjusted constant currency basis. OUP, as adjusted, equaled $33 million and OUP margin was 6.7%. Our Italy business is performing very well, and we estimate a similar constant currency revenue growth trend in the first quarter as compared to the fourth quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue of $819 million represented a 1% decline in constant currency.

As adjusted, OUP was $5 million in the quarter. This represents sequential OUP improvement during the last 3 quarters reflecting cost actions taken to date. The restructuring charges of $6 million primarily represented actions in the Netherlands and Germany. Our largest market in the Northern Europe segment is the U.K., which represented 32% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 3% on a days adjusted constant currency basis, representing significant sequential improvement. We expect the rate of revenue decline in the U.K. to improve into the first quarter compared to the fourth quarter.

The Nordics revenues flipped to growth during the fourth quarter, representing an increase of 2% in days adjusted constant currency. In Germany, revenues decreased 22% on a days adjusted constant currency basis in the quarter. Germany remains a very difficult market, but we are expecting an improvement in the rate of year-over-year revenue decline in the first quarter compared to the fourth quarter trend. The Asia Pacific Middle East segment comprises 11% of total company revenue.

In the quarter, revenues equaled $520 million, representing an increase of 6% in organic constant currency. OUP was $28 million and OUP margin was 5.3%. Our largest market in the APME segment is Japan, which represented 58% of segment revenues in the quarter. Revenue in Japan grew 7% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the first quarter.

I'll now turn to cash flow and balance sheet. In full year 2025, free cash flow equaled an outflow of $161 million compared to an inflow of $258 million in the prior year. As we discussed in prior quarters, 2025 cash flows were impacted by timing of items that benefited 2024, which have not been repeated in 2025. In the fourth quarter, we drove a strong finish to the year with a free cash flow result of $168 million, which was not significantly impacted by timing items.

At year-end, days sales outstanding increased to 55 days, up from 52 days in the prior year as enterprise client mix has increased. During the fourth quarter, capital expenditures represented $11 million and we did not repurchase any shares. Our balance sheet reflects continued actions to strengthen our liquidity and overall balance sheet composition. Our year-end reporting amounts reflect the successful refinance of our EUR 500 million note in December 2025, resulting in the payoff of the previous EUR 500 million note shortly after year-end in January of 2026.

Adjusting to exclude the temporary increase from the new euro note and offsetting cash, we ended the quarter with cash of $284 million and total debt of $1.1 billion. Net debt equaled $806 million at December 31. Our adjusted debt ratios at year-end reflect total gross debt to trailing 12 months adjusted EBITDA of $2.7 million and a total debt to total capitalization at 35%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the first quarter of 2026. Our forecast anticipates a continuation of existing trends. When considering our guidance for the first quarter, it is also important to note there's always a meaningful sequential seasonal decrease in earnings from the fourth quarter to the first quarter.

With that said, we are forecasting earnings per share for the first quarter to be in the range of $0.45 to $0.55. The guidance range also includes a favorable foreign currency impact of $0.06 per share, and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a 1% decrease and a 3% increase, and at the midpoint is a 1% increase.

Considering business day variances are very slight and the impact of dispositions is very small, our organic days adjusted constant currency revenue increase also represents 1% growth at the midpoint. EBITDA margin for the first quarter is projected to be up 10 basis points at the midpoint compared to the prior year. Although the government of France has not yet enacted the 2026 budget, the current proposal includes the corporate tax surcharge being extended into 2026. As a result, our 2026 tax guidance incorporates a similar level of surcharge, and we estimate a full year global tax rate of 45%.

In addition, the U.S. workers' opportunity tax credit, WOTC, in the U.S. has not been renewed for 2026 at this time, and this benefit has not been included in our 2026 estimate. If WOTC is enacted in the U.S. and retroactively applied to the beginning of the year, we estimate it would reduce our full year rate to within a range of 43.5% to 44%. We estimate that the effective tax rate for the first quarter will be 43%.

As I mentioned earlier, I will carve out any restructuring and related front-office incremental transformation expenses incurred in Q1 and as they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be $47.3 million.

I will now turn it back to Jonas.

Thank you, Jack. In closing, we are confident that we have the right strategy, capabilities and team in place to execute in this environment with improving consistency across our major markets and early signs of inflection becoming increasingly evident.

Our cost discipline, diversified portfolio and scale digital and AI platform gives us a clear leverage as demand stabilizes with improving productivity and margin potential over time. Thank you to our talented team. for your relentless commitment and to our candidates and clients for your continued trust in ManpowerGroup.

And that concludes our prepared remarks. And as we go into our Q&A session, I'd like to ask if you could limit your question to one, so we can make sure everyone has the opportunity to ask a question this morning. And with that, I'll ask our operator, Michelle, to start our Q&A session.

[Operator Instructions] And our first question comes from Mark Marcon with Baird.

Jonas and Jack, it's great to see that there are some early signs of an inflection here. Jonas, I'd like to go back to some of your earlier comments just on a broad base with regards to the productivity and not just productivity but also excellence initiatives that you have with some of your technology.

As PowerSuite is fully implemented and as you implement AI, I'm wondering if you could discuss a little bit from a longer-term perspective, what your aspirations are in terms of where the margins could ultimately end up going if we end up having kind of a nontraditional more moderate recovery in the markets as opposed to the types of cyclical rebounds that we've seen more traditionally back in the '90s, early outs post GFC.

Just because it seems like employment on the whole is going to be a little bit more limited in terms of growth. So I'm wondering if we have a moderate recovery, what should investors expect over the next 2 to 4 years with regards to where we could potentially go from a margin perspective?

And as you've heard from my prepared remarks, we're pleased to see that we're seeing the sign -- the early signs of an inflection coming through. But to your specific question about our PowerSuite and investments over the last couple of years, they've really put us in a really, really good position for us to think about ways to evolve our business and optimize our processes and improve our customer, our client and our candidate experience regardless of what the market does and how quickly it comes back.

So as you heard from Becky's prepared remarks, we're really thinking about this around productivity and growth. And we're encouraged by the early signs that we're seeing. And you heard me talk about a number of examples in terms of AI enablement around Experis and how we are improving the candidate experience and process as well. And we are really encouraged by what we're seeing.

But as we said, it's early days yet, but our entire focus is around controlling what we can control and whether that's a faster recovery or a slower recovery, we're going to be driving growth, and we're going to be driving productivity. We will always be a people business. We are a people business today. but we are going to be an AI-enabled global people business, and that's the path that we're on, and we are very encouraged by the results that we're seeing so far. But maybe, Jack, you can talk a bit about what investors should expect from a longer-term perspective on margin.

Yes. Happy to add some additional color there. I think, Mark, to Jonas' point. I think on the technology implementations, as you mentioned in the prepared remarks, on the front office side, we're now 87% complete on front office revenues, global revenues running through, and on the back office, we're at 75%. So we just had Italy go live as we ended the year. So we're in a really good place. A lot of the heavy lifting has been done on the technology implementation. And now we're very focused on centralization and standardization and that is going to drive structural cost efficiency going forward.

And as I mentioned, on the back office, we expect that in the second half of this year. So even in a modest recovery scenario, you should expect EBITDA margin improvement year-over-year over the next 4 years in that scenario when we see continued improvement year-over-year.

And as I mentioned, we're really excited about extending the work we're doing on the back office. Now to starting additional work on the front office, and that's going to drive it even further in terms of margin expansion opportunities going forward.

Any sort of goal or target that you would have just under a moderate recovery? I know it's early days, but just trying to get a realistic sense in terms of -- at one point, we were targeting 4.5%. Is it realistic to assume, hey, we could -- we should be able to get to 3%. I'm just wondering how you're thinking about it.

Yes. No, I would say, first off, we're absolutely still committed to the 4.5% to 5%, Mark. And you're right, we've delevered pretty significantly in the recent period here. So we're starting from a lower point. But from that lower point, we're very optimistic. We have an opportunity to expand margin meaningfully from this point over the next few years here to get back to the 4.5% to 5% over time.

And it is going to be a measure of how much operational leverage comes in through the environment that will help. But even without that, we're going to have really good opportunity to continue to climb progressively forward towards that 4.5% over the next couple of years.

Our next question comes from Andrew Steinerman with JPMorgan.

This one's probably a little tougher. So when you talk about a path towards sustainable organic revenue growth, could you give us a sense of what level of sustainable organic revenue growth is likely once the staffing market starts to improve? And then kind of an add-on to that question, we've been hearing a notable chatter from the staffing industry operators talking about an increased interest in flexible workers once such a recovery takes hold because labor uncertainty will remain? Do you have a view on that thesis?

So thanks, Andrew. Yes. No, to predict when and how the market is going to be improving overall, I think is difficult. But as you can tell, we've been improving our performance in the U.S., for instance, in a tough market with 6 quarters of continuous growth for the Manpower brand.

You've seen a number of our countries despite reasonably stable, but not growing labor markets performed very well, such as Italy and Spain, not to mention Japan that has 45 quarters of consistent growth. So I'd say that just as Jack just mentioned in his conversation with Mark, that we're going to control what we can control, make sure that we drive the efficiencies we need to do in markets where we are facing headwinds. We will be very focused on rightsizing the business and adjusting capacity to the existing demand.

In markets where we see the opportunity, we're investing in demand-generating activities and we'll keep on working very, very hard on driving growth to capture share, as well as driving the productivity initiatives that you have seen us execute on in a number of markets and over a number of quarters. And we're encouraged by the inflection points that we've seen and the improvement in trends in France and in the U.S., particularly and the earlier ones, it's too early for us to call a broad-based recovery is in motion. But certainly, over the last couple of quarters, we've had some positive signs. And as you can tell from our guide, we expect those trends to continue into the first quarter.

On the second part of your question around flexibility, maybe Becky, you could give some insights in what you've heard from clients and some of the work that we've been doing. So, over to you.

Thanks, Andrew. It's a timely question because we're just off of 2 weeks in Europe, spending time with our markets as well as spending time with our clients and partners at the World Economic Forum. And just as you said, the chatter around flexibility is increasing.

And for us, that's good for our business because it's one of the prime core propositions that we offer is flexibility. And so we're seeing that in the short term, as well as over the long term. All the research I've done around the strategy indicates that candidates want more flexibility and clients want more flexibility. And so we anticipate this is good for today. It's also going to be good for us in the future. So the chatter is starting. We're not seeing all that flow through in volume yet, but it starts with conversation.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, I think you said enterprise demand is helping at least stabilize the revenue. And I'm wondering enterprise revenue grows, what that means for margins, maybe even cash conversion and kind of what you think about revenue durability for the business?

Sure, Kartik. Happy to talk about that. So you're right. And that has been the trend we've seen in the second half of the year. The enterprise client have been the lion's share of the demand, and we've seen the mix impact on the GP margin. Now with that being said, most of that has worked its way through. If you look at the third quarter, that's really when we signaled the shift weighted in a bit more. And from the third quarter to the fourth quarter, it's really been quite stable.

So you see in the GP margin bridge on the staffing side, it's down that same 40 basis points year-over-year from Q3 again in Q4. So that is signaling that a lot of that enterprise shift has worked its way through. And I'd say with that, pricing remains very rational. That indicates that we are -- it's always competitive, but pricing is not changing and that is not having the impact.

It's really just that averaging impact on the enterprise client. With that being said, you mentioned a couple of other things. What impact is that going to have on the balance sheet and cash flow. And I would say, that is part of the equation. We did see DSO tick up a bit. We do know enterprise clients traditionally have a bit longer payment terms on average.

And that's -- again, I'd say that's worked its way through in the numbers. With that being said, we're very focused on that. We have actions in place to continue to mitigate that and we expect ongoing progress in that in 2026. And then lastly, I'd say the other part of the enterprise component is that does create some timing in terms of the cash flows. And we saw that with perhaps some lighter cash flow in the third quarter year-over-year. But a really good fourth quarter cash flow results as a lot of those enterprise client payment terms came in during the fourth quarter, really driving a pretty strong fourth quarter free cash flow result for us on an overall basis.

So, it's all part of the balancing equation between enterprise and nonenterprise on an overall basis. We have actions in place to mitigate that -- the DSO that I mentioned, and we do expect ongoing improvement as we go forward here in 2026.

Our next question comes from Trevor Romeo with William Blair.

I wanted to, I guess, focus on some of the commentary on near-term demand. I think you noted some improvement throughout the quarter in some of your key markets. So I was just wondering if you could maybe provide some more color or Jack, if you could maybe quantify how the revenue trends progressed on a monthly basis in maybe France, Italy, U.S., maybe in the U.K. And any color on what you're seeing so far in January, if you have it.

Thanks, Trevor. I'd be happy to add a little color there. I'd say, generally, we're seeing positive momentum in a lot of our large markets. And maybe to your point, starting with France, improvement over the last 4 months, sequentially month-over-month. So we ended September on a days adjusted basis at minus 4, improved slightly into October, moved to minus 3 in November and ended December minus 2. So very good progress sequentially.

And as we sit here in January, we're seeing ongoing progress here, and that aligns with the guide that I gave for the first quarter. So that is ongoing quarter-over-quarter improvement in France, and that's great to see for us. And so that's our biggest country, and that's a big driver. I would say if we look at the U.S. We've been very -- we've discussed the trends in manpower very frequently this year, very strong we're performing really, really well.

So they've been running plus 7%, plus 8% in the second half of the year. We take that momentum into the first quarter. I think on the U.S. overall, on an underlying basis, very stable from Q4 to Q1. I say underlying because we know the health care go-lives in the Experis business, as I mentioned in the prepared remarks, can be a bit lumpy.

But if you normalize for that, the U.S. is trending on a stable position into Q1. And then Italy, as we mentioned, as Jonas mentioned, performing very, very strong. And I'd say on those trends, Italy, very strong sequential quarter trends as we end the year here.

And I'd say we saw that generally, December is always a little bit of a tricky month just based on the holidays and so forth. But I'd say on an overall basis, Italy is continuing to see very strong momentum, particularly here in January. So moving -- we're at that plus 7% as adjusted in Q4, and we feel really good, as I mentioned, for a similar trend into Q1. So I'd say those are the biggest countries and some of the momentum. But as I mentioned, I'd say generally moving in line with positive trends as we start 2026.

Our next question comes from Jeff Silber with BMO Capital Markets.

Jonas, I think in one of the answers to the previous questions, you talked about being able to control what you can control. I'm just curious, are you expanding your workforce in any regions? Or because of the technology you put in, you're still able to have some excess capacity?

Yes, we are expanding -- more so thinking about this from a regional perspective, we're thinking about it from a country perspective. And there are definitely countries where we're expanding our teams, and it's mostly in demand-driving roles. So when you think about the growth that we're seeing in Japan, if we're thinking about the growth we're seeing in Italy, We're leaning into and we're expanding our team members there, especially in demand-driving roles.

And we continue to bring great tools through the PowerSuite to our recruiters. And we are seeing, as I mentioned in my prepared remarks, some notable productivity improvement, for instance, in our candidate screening capabilities. And one of the huge advantages that we believe we are uniquely positioned to take advantage of is our global scale of PowerSuite.

So we have a global technology infrastructure modern and a global data asset that we are leveraging for faster expansion of recruiter tools that drive better productivity and enhance the client and candidate experience. So the answer to that is yes. We adjust capacity to demand and in some cases, in some countries, that means we're leaning into demand-generating roles and in others, we are pulling back so that we ensure we protect our ability to deliver the bottom line margins that we're targeting.

Our next question comes from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. Could you please reconfirm -- I know you talked about what you're seeing associates on assignments in key markets, the positive trends in the U.S. and France, et cetera.

Could you please reconfirm other leading indicators to be mindful of that give insight to potential depth and breadth of the demand dynamics? And then what we could or should potentially look for to see to enable to call a broad-based recovery, whether that's new assignment starts and priority verticals or even fundamental client conversations, what we could look for, for that broad-based recovery confirmation.

Thanks, Ronan. Well, there are a number of indicators that we look at from a demand perspective, and you can take anything from the conversations that Becky referenced we are hearing more clients express a desire to start to think about through our various brands about projects that they have held back and are now getting closer to activating.

As Becky said, we're not seeing the activation yet, but the number of conversations with clients and employers seems to indicate that they are looking forward with greater confidence and that their plans are getting closer to being executed. So we then look at, of course, the flow of demand in terms of RFPs and RFIs that would come our way.

And clearly, what we've been very successful at is targeting the verticals, the industry verticals that we feel good about for growth at this point versus others that we are noticed that we see -- have headwinds. So we feel, for instance, that the aerospace and defense sector could give us some tremendous opportunity across Europe. We have strong positions in a number of our very strong countries, such as the France, the U.K., Sweden and Italy. So we're very well positioned there. We feel good about that opportunity.

So that's how we're sort of thinking about both looking at the moves within industry sectors, as well as the client conversations within those sectors or verticals and then in other areas as well. And frankly, we'll know the broad-based recovery when you see these inflection points coming through in lots of our countries. But as we mentioned in our prepared remarks, we've been very encouraged by the overall trend in a number of our important markets. We continue to perform very well in Asia Pacific, as well as in Latin America.

In fact, Asia Pacific broke an all-time profitability record in 2025. Latin America continues to perform very well. We have market-leading positions in 13 countries in that important region. So we're encouraged by what we're seeing, but we're not fully there yet from a broad-based recovery. But we are controlling what we can control, driving growth where we see demand and adjusting our cost to and capacity to demand in markets that remain more difficult.

I appreciate it. And as a follow-up to you having spent 2 weeks in Europe around the World Economic Forum, are there any implications of potential political sentiment shift from Europe towards the U.S. or any shifts in trade alliances as a result of U.S. ambitions in the continent and the general approach that was taken at Davos. Could these developments have implications for some of the momentum you are seeing in Europe? Or the shape of recovery inflection or general time required for stabilization where it hasn't come yet.

We clearly are living in a turbulent environment, but I have to say from what we're seeing from our clients and from our business, at this point, this is not impacting our business. And to Becky's earlier point on flexibility, if anything, employers are becoming more confident about the future against the backdrop of greater turbulence, flexibility is key for them to find the right talent and be able to adjust with various kinds of skill sets.

So we actually think this so far has not really impacted our business based on the trends that we're seeing and we're now used as employers and organizations to a more fluctuating geopolitical environment and companies at some point have to decide to manage through it and get on with the business of doing business. And that's what we're seeing, I think, in a lot of our countries.

Appreciate it. May I just sneak in one more. Can I ask your broad high-level characterization of the labor and hiring markets. I think previously, it was frozen. Is it showing now? Or how would you characterize it?

I would say that the labor market is stabilizing and we think the broader labor market, if you're referring to the U.S., is heading to stabilization.

And our next question comes from Josh Chan with UBS.

I just have a 2-part question on margins. So for SG&A leverage, it seems like your momentum is picking up quite nicely there. So could you talk to what's driving that in the last 2 quarters and where SG&A leverage could potentially go?

And then, I guess, number two, is on the gross margin line, a lot of this call has been about stabilization, but that's sort of the one line that has not yet stabilized. So do you have any thoughts on whether gross margin will stabilize as the demand environment does the same?

Okay. Thanks, Josh. I think on the SG&A, it's pretty straightforward, and thank you for your comments there. So we are very proud of the actions we've taken and the results we're seeing in the SG&A coming down 4% in constant currency in the fourth quarter.

And to your point, that's an improvement from the 2% constant currency decline in the third quarter. So we've done a lot of work. We've taken a lot of actions earlier in the year, and we're seeing the benefits of that hard work coming through in the run rate now. And that is going into our continued trajectory into Q1, as well as we continue to see the benefit of those actions.

And we've talked previously about the restructuring we've taken. A lot of that in Northern Europe. And as we mentioned on the call, and you saw in our results, Northern Europe flipped to a profit in the quarter. So based on the work we've done earlier in the year, we are actually helping to improve the -- seeing the benefits of those actions helping to improve the profitability of Northern Europe as we end the year.

So, that -- those are the main items that are driving that. And as Jonas said, we continue to focus on what we can control. And in this environment, particularly in the markets that continue to be more stable and in parts of the business that are still recovering. We're holding the line on cost, and that's coming through in the run rate.

Your question on GP margin, I would say, really, to your point, it has come down over the course of the year, but that's that enterprise element that we've talked about. And as enterprise demand continues to be the biggest part of demand in the current environment, that's averaged in. And to my earlier point, a lot of that has worked its way through, Josh.

So you see that on the on the staffing margin progression from Q3 to Q4 being pretty stable year-over-year. But the bigger part of the story on an overall basis is perm. Perm is lower, and perm will come back in the future, but it's at historically low levels of a percentage of total GP for us right now. And that's depressing the GP margin on an overall basis. So when perm starts to rebound, we'll see an opportunity for GP margin to increase. And we also will see opportunities for that as the higher-margin businesses inflect in the future and start to average in at a higher percentage of the mix as well.

So -- and convenience will come back going forward as well. So we have some really good opportunities as right now, enterprise is the strongest part of demand, and that's been holding very steady. But as the other components start to come back and they usually follow enterprise, enterprise usually leads that will be opportunities for us to increase GP margin in the future.

Our next question comes from Andrew Grobler with BNP Paribas.

Just one for me around technology with Experis still down quite sharply in the U.S., what are you seeing in those end markets? I noted one of your competitors was talking about improvement in late '25 and into this year. Is that something that you are also seeing? And if so, what can we expect through the remainder of this year?

Yes, we are -- as we mentioned in our prepared remarks, we've seen sequential improvements in Experis, although still experiencing headwinds, we're encouraged by that. I would say that in conversations with our clients, they've been very focused on a number of areas and specifically within the technology sector, the very strong hiring that occurred during the pandemic caused a hiring bubble, and they've been working their way through that, and they've been focused on projects primarily related to AI.

But in our conversations with our clients, we are hearing that their pent-up project demand is getting closer to being executed. We haven't seen this come through yet, but we're encouraged by those conversations and we would expect to see that the sequential improvements that we've seen in Experis continue, we would characterize it as stable into Q1.

But overall, our clients are telling us that we want to proceed with the other technology investments and the projects that we need to do. And overall, I would say we've seen a very nice evolution around data and infrastructure projects where we were having to shift a bit into those areas and then with our tools that are starting to give us confidence both consulting with our clients on how they can access AI and use AI in their own work and how we are providing solutions to our clients that resonate.

We are faster efficient, better quality, more cost effective, which is also differentiating us. So Long term, we feel very good about the trajectory that we have in Experis, acknowledging the headwinds, acknowledging that we still have a lot of work to do, but we think that we'll continue to see the progress going forward.

Our next question comes from Tobey Summer with Truist.

I wanted to ask you a follow-up question on your comments about the 4.5% EBITDA margin goal longer term and that commitment. Could you talk to us in broad strokes, whether it's about top line, gross margins or mix that might be required from the higher margin sources of revenue. How much do those have to rebound? Do they have to go back to prior -- prior peaks? Or is it sort of more normalized levels to think about that long-term EBITDA margin goal?

Yes, Toby, I'd be happy to talk to that. So I think the way to think about it, and that is definitely part of the equation, right? So if you look at where we're ending 2025, so at 2.1% margin, our previous peak was 4.1%, and if we look at the mix of the businesses, what we've seen with the 5% Manpower growth in the quarter, Manpower certainly has been averaging in as a bigger part of the GP mix.

And as the environment continues to recover, that will start to change. We'll start to see Experis and Talent Solutions start to average back in at a higher contribution that in itself is going to be a positive, and we were just talking a little bit about this on the GP margin. That in itself will be a very positive impact on the overall consolidated GP margin.

And we do expect that to happen. As Jonas said, we don't know the exact timing of that, those parts permanent and professional have been more sluggish. But we are starting to see some signs that on the stabilization, there's opportunities for improvement here as we walk into 2026. So we will need that to happen. That will be important as we look at the overall GP margin component as getting back to where we were from a mix perspective, and that will be quite significant.

And then just forget aside from just the brands, as we mentioned, just even within all the brands as we see convenience come back, that will be a positive for the GP margin. So that's definitely part of the equation. As I mentioned previously, I think all the work we're doing structurally on costs are a big part of the equation.

So as we see EBITDA -- as we see that GP margin improvement fall down to the EBITDA line, combined with the cost improvement, those two items together will be big drivers for that EBITDA margin progression to the 4.5%. And as I said, hey, if the recovery is stronger, and we start to see professional and RPO and perm come back stronger, it will be faster.

We'll see more help on the GP line. We'll get more operational leverage. But even in a modest recovery as those sectors come back, that will be positive for both GP and EBITDA margin. So it's really just a question of the pace of when those other sectors start to come back. But it is encouraging that we're seeing manpower now growing at 5% as we end 2025. And so that's a very good initial sign.

Our next question comes from [ Harold Antor ] with Jefferies.

This is Harold on for Stephanie Moore. I guess just on AI, just real quick. I guess, could you provide your long-term views on the impact of blue collar versus white collar staffing? And then I guess, are you hearing clients talk about the need to hire people who can use AI? Are they focused on just training their current staff to use the technology? And I guess the last thing is, do you expect to see long-term pricing to be pressured in the future as clients request to share the productivity benefits gain from AI?

All right, Harold. We'll try and cover that's four questions in one. So here comes. So what -- first of all, let's be clear that we think that AI has tremendous opportunity for growth. and productivity improvement generally, but specifically to our business. And that's what we are preparing for, and that's what we have been preparing for as we are creating more growth opportunities in terms of addressing how we're setting ourselves up for growth.

In the research that Becky has done, we've looked at some of the AI resiliency, and I mentioned this in my prepared remarks that there are a lot of skill sets that we have in manpower that appear to be more resilient and that we're seeing in the other skill sets, white collar emergence of some greater use of AI and frankly, mostly enhancing human capabilities as opposed to replacing them. But I think from a usage perspective, Becky, as we look at what we talk to our clients about and how they see it in terms of where they're using AI, I think that could be great color. And then also, maybe, talk a little bit about the work that we have done on Sophie AI and how that is resonating with our clients as well.

Yes. Thanks, Jonas. First, I would say I've spent a lot of time focused on AI over the last few months trying to understand what it can do today, but maybe more importantly, what it will grow up into tomorrow. And it is true that AI will impact most jobs, most skills inside most jobs. The difference, it will be to varying degrees. And I think that was part of your question.

What we found is that for blue collar industrial manufacturing roles, they appear to be more resilient over the horizon, where the disruption is happening more in the white collar software developers and coders as we've already seen in demand. Keep in mind, though, that in the U.S., software developers are still the #3 job in demand in our country. So even though it's impacted, it's still a huge in-demand role.

We've also seen impact in call center professionals and the good news for our business is we have limited exposure there. So we have an opportunity to actually find opportunity in this changing landscape. And a highlight of that is what Jonas mentioned with Experis and us getting into these coding assistance to provide value and that's incremental growth pocket for us as a company, small, early days, but we think that's an opportunity.

In terms of Sophie, Jonas mentioned Sophie. Sophie AI, just to remind everyone, is our proprietary AI ecosystem. So it's built on our PowerSuite foundation. It's why that foundation is so important, and it's designed to integrate human expertise, our proprietary data, as well as leading-edge AI models.

And probably one specific example that I'm encouraged by is a pilot we're doing around workforce insights so that we're providing real-time AI agents available 24/7 to give accurate labor market insights. It's 10x faster than anything we could do with humans alone. So it is augmented, augmenting humans, it's 99% accurate, and it has self-correcting capabilities. if something is off, it will alert us. And so those are the kind of actions we're taking to find profitable growth opportunities in the changing landscape.

And then to your last part of the question, Harold, you asked about we're seeing an impact on this from a pricing perspective and taking a share. And whilst it is early days, most of our enhanced AI capabilities are coming through with higher value offerings and differentiated innovation. So we're actually seeing opportunities for us to deliver higher value work and actually maintaining, if not increasing, our margin opportunities on those offerings.

So, so far, we have not seen this and the indications are positive to the reverse, but this may change as time goes on.

Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Jonas Prising, for closing remarks.

Thanks, Michelle, and thanks, everyone, for joining us this morning for our Q4 earnings call. We look forward to speaking with all of you again on our Q1 earnings call sometime later in April. Until then, Stay warm, greetings from the frozen Tundra in Milwaukee. We look forward to speaking with you on our next call. Thanks, everyone.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Welcome to ManpowerGroup's Third Quarter Earnings Results Conference Call. [Operator Instructions].

This call is being recorded. If you can drop off now, please do so. I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Welcome, and thank you for joining us for our third quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis is with me today. For your convenience, we have included our prepared remarks within the Investor Relations section of our website at manpowergroup.com. I will start by going through some of the highlights of the quarter, then Jack will go through the third quarter results and guidance for the fourth quarter of 2025. I will then share some concluding thoughts before we start our Q&A session. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements. .

Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures. When we last reported earnings in July, we characterized the environment as one of continued uncertainty yet growing resilience. With employers hiring very cautiously and labor markets holding steady against the backdrop of geopolitical complexity and economic softening. Since then, these dynamics have largely persisted Geopolitical tensions remain elevated, the rate to invest in AI continues at pace and employers are adapting to the fluctuating policy environment and cautious consumer sentiment in Europe and North America.

Globally, conditions remain mixed. Strong momentum across Latin America and APME, offset by softer trends in Europe and North America where activity levels remain well below historical peaks yet stable over recent quarters. While hiring remains cautious, we continue to see gradual broad-based signs of stabilization. Our most recent ManpowerGroup Employment Outlook Survey covering over 40,000 employers across 42 countries reinforces this view. Hiring outlooks remained relatively steady year-over-year with ongoing stabilization and 45% of employers planning to maintain current workforce levels, the highest since early 2022, and as organizations balance capturing growth opportunities with mitigating economic uncertainty. Turning to our results.

After 11 consecutive quarters of organic constant currency revenue declines we crossed back over to growth during the third quarter. The stabilization of demand in recent quarters in North America and Europe, despite ongoing tariff uncertainty has been a key factor in the revenue trend improvements. We're encouraged by this progress as well as a continuation of revenue growth in our largest brand, manpower, with strength in North America, Latin America, Italy, Spain, Belgium, Poland and APME to name a few. Within Experis, we're beginning to see early signs of stabilization in professional and IT hiring. Win rates have improved modestly, and we have secured new enterprise programs in sectors such as financial services and life sciences. Our ongoing modernization of the Experis offering, including enhanced consultant development and tighter integration of our PowerSuite AI tools is supporting margin improvement and future growth as client demand recovers. The trends in talent solutions are also improving for our managed service provider offering, where win rates and demand stabilization is driving strong revenue growth. helping offset some weakness in recruitment process outsourcing and right management as labor markets remain somewhat frozen in terms of hiring and workforce reductions. Overall, for the quarter, reported revenue was $4.6 billion, down 2% year-over-year in constant currency.

System-wide revenue, which includes our expanding franchise revenue base was $4.9 billion. Our reported EBITDA for the quarter was $74 million. Adjusting for restructuring costs, EBITDA was $96 million, representing a decrease of 22% in constant currency year-over-year. Reported EBITDA margin was 1.6%, and adjusted EBITDA margin was 2.1%. Earnings per diluted share was $0.38 on a reported basis, while earnings per diluted share was $0.83 on an adjusted basis. Adjusted earnings per share decreased 39% year-over-year in constant currency. As we look to the fourth quarter, we're closely monitoring several leading indicators of demand, including activity among our largest enterprise clients, new assignment starts and priority verticals such as logistics and manufacturing and year-end seasonal patterns. These metrics are helping us assess the depth and breadth of stabilization across our markets and inform our expectations as we plan for 2026.

Looking closely at these indicators, we believe our demand in Europe and North America is holding steady and are confident that we're well positioned for future growth. Our AI-enabled data insights are increasingly instrumental in tracking, anticipating and predicting client demand. This real-time intelligence enables our teams to pivot quickly to sectors and regions where growth opportunities are emerging. Our enterprise pipeline continues to expand with most of the demand in this environment concentrated among global enterprise clients. Although decision time lines across major markets remain extended. As a leadership team, we remain laser-focused on managing the current environment while positioning our business for future growth. We continue to take decisive actions to contain costs drive efficiencies at scale and simplify our organization while accelerating the strategic initiatives that will strengthen our capabilities, expand our margins and deliver long-term shareholder value.

I'll now hand it over to Jack for more details on the quarter's financial results.

Thanks, Jonas. U.S. dollar reported revenues in the third quarter were impacted by foreign currency translation. And after adjusting for currency impacts, came in at the midpoint of our constant currency guidance range. Our revenue trends demonstrate the continuation of largely stable activity levels across North America and Europe. Our revenue from franchise offices are significant and are included within system-wide revenues, which equaled $4.9 billion for the quarter. Gross profit margin came in below our guidance range, driven by shifts within staffing, reflecting an increased mix of enterprise accounts, lower permanent recruitment and lower outplacement. As adjusted, EBITDA was $96 million, representing a 22% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1% and and came in at the midpoint of our guidance range, representing a 50 basis points decline year-over-year. Foreign currency translation drove a favorable impact to the 2% U.S. dollar reported revenue increase from the constant currency decrease of 2%. Organic days adjusted constant currency revenue increased 0.5% in the quarter, which was slightly favorable to the midpoint guidance of flat.

Turning to the EPS bridge. Reported earnings per share was $0.38. Adjusted EPS was $0.83 and came in [indiscernible] above our guidance midpoint. Walking from our guidance midpoint of $0.82. Our results included improved operational performance, representing a positive impact of $0.02 and a slightly higher tax rate, which had a negative impact of $0.01. The Restructuring costs and other represented $0.45 bringing reported earnings per share to $0.38. Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 3% in the quarter. The Experis brand declined by 7% and the Talent Solutions brand declined by 8%, within Town Solutions, our RPO business experienced lower demand in select ongoing client programs year-over-year. Our MSP business continued the strong revenue growth performance while Right Management experienced declining year-over-year revenues as outplacement activity continued to slow. Looking at our gross profit margin in detail. Our gross margin came in at 16.6% for the quarter. Staffing margin contributed a 40 basis point reduction due to mix shifts towards enterprise accounts. Permanent recruitment activity was softer than expected, and the lower contribution resulted in a 20 basis point decline. Lower career transition outplacement activity within Right Management resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 63% of gross profit, our Experis Professional business comprised 21%, and Town Solutions comprised 16%.

During the quarter, our consolidated gross profit decreased by 4% on an organic constant currency basis year-over-year. representing a slight improvement from the 5% decline in the second quarter. Our Manpower brand reported flat organic constant currency gross profit year-over-year, equal to the second quarter year-over-year trend. Gross profit in our Experis brand decreased 10% in organic constant currency year-over-year, an improvement from the 14% decrease in the second quarter. Gross profit in Talent Solutions declined 13% in organic constant currency year-over-year. a decline from the flat result in the second quarter. MSP and RPO experienced similar activity levels from the second quarter, but RPO declined year-over-year as they anniversaried large growth in the third quarter a year ago in select client programs. Right Management gross profit decreased on lower outplacement activity.

Reported SG&A expense in the quarter was $702 million. as adjusted, was down 2% on a constant currency basis and 1% on an organic constant currency basis. The year-over-year organic constant currency SG&A decreases largely consisted of reductions in operational costs of $5 million, partly driven by previous restructuring actions Corporate costs continue to include our back-office transformation spend, and these programs are progressing well with expected medium-term efficiencies. Dispositions represented a decrease of $8 million while currency changes contributed to a $20 million increase.

Adjusted SG&A expenses as a percentage of revenue represented 14.8% in constant currency in the third quarter. Adjustments represented restructuring of $21 million. balancing gross profit trends with strong cost actions to enhance EBITDA margin is 1 of our highest priorities, and we continue to analyze all aspects of our cost base for additional ongoing efficiency improvements. The Americas segment comprised 24% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 6% year-over-year on a constant currency basis. As adjusted, OUP was $43 million, and OUP margin was 3.9%. Restructuring charges of $5 million primarily represented actions in the U.S. The U.S. is the largest country in the Americas segment, comprising 63% of segment revenues. Revenue in the U.S. was $691 million during the quarter, representing a 1% days adjusted decrease compared to the prior year. This represents an improvement from the 3% decrease in the second quarter. OUP as adjusted for our U.S. business was $24 million in the quarter. OUP margin as adjusted was 3.5%.

Within the U.S., the Manpower brand comprised 28% of gross profit during the quarter. Revenue for Empower brand in the U.S. increased 8% on a days adjusted basis during the quarter, which represented strong market performance and a slight decrease from the 9% increase in the second quarter. The Experis brand in the U.S. comprised 39% of gross profit in the quarter. Within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenue decreased 9% on a days adjusted basis during the quarter, an improvement from the 14% decline in the second quarter. Town Solutions in the U.S. contributed 33% of gross profit and saw a flat revenue trend year-over-year in the quarter, a decrease from the 13% increase in the second quarter driven by lower RPO activity from select ongoing client programs and lower right management outplacement activity.

The MSP business executed well during the quarter, again, posting strong double-digit revenue increases year-over-year. In the fourth quarter of 2025, we expect the overall U.S. business to have a similar to slightly further revenue decline compared to the third quarter, largely due to higher seasonal Experis health care projects in the prior year period. Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.2 billion, representing a 1% decrease in organic constant currency.

As adjusted, OUP for our Southern Europe business was $70 million in the quarter, and OUP margin was 3.2%. And restructuring charges of $4 million represented actions in Spain and France. France revenue equaled $1.2 billion and comprised 53% of the Southern Europe segment in the quarter and decreased 5% on a days adjusted constant currency basis. As adjusted, OUP for our France business was $31 million in the quarter.

Adjusted OUP margin was 2.7%. France revenue trends improved slightly during the course of the third quarter despite the government uncertainty in September, and we expect a slightly improved rate of revenue decline into the fourth quarter, reflecting the third quarter exit rate. Revenue in Italy equaled $463 million in the third quarter reflecting an increase of 4% on a days adjusted constant currency basis. OUP as adjusted equaled $27 million and OUP margin was 5.8%.

Our Italy business is performing well, and we estimate a slightly improved constant currency revenue growth trend in the fourth quarter compared to the third quarter. Our Northern Europe segment comprised 18% of consolidated revenue in the quarter. Revenue of $817 million represented a 6% decline in constant currency.

As adjusted, OUP equaled a $1 million loss. This represents an improvement from the $6 million loss in the second quarter and reflects the impact of cost reduction actions. The restructuring charges of $14 million primarily represented actions in Germany and the U.K. Our largest market in the Northern Europe segment is the U.K. which represented 32% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 13% on a days adjusted constant currency basis. We expect the rate of revenue decline in the U.K. to improve into the fourth quarter compared to the third quarter. In Germany, revenues decreased 23% on a days adjusted constant currency basis in the quarter. Germany automotive manufacturing trends continue to be weak.

In the fourth quarter, we are expecting a similar year-over-year revenue decline compared to the third quarter trend. The Nordics continue to experience difficult market conditions with revenues decreasing 4% in days adjusted constant currency in the quarter. The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $521 million, representing an increase of 8% in organic constant currency, [indiscernible] was $27 million and OUP margin was 5.1%. Our largest market in the APME segment is Japan, which represented 60% of segment revenues in the quarter. Revenue in Japan grew 6% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the fourth quarter.

I'll now turn to cash flow and balance sheet. In the third quarter, free cash flow was $45 million compared to $67 million in the prior year. following a trend of declining earnings and large outflows for tax and technology license payments through the first half of the year, free cash flow was positive during the third quarter. Earnings have also been stabilizing in recent quarters which will improve the trend of free cash flow going forward. The fourth quarter is typically a strong quarter for free cash flow as we look ahead. At quarter end, days sales outstanding increased 1.5 days to 59 days as enterprise client mix has increased. During the third quarter, capital expenditures represented $15 million. During the third quarter, we did not repurchase any shares.

And at September 30, we have 2 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $275 million and total debt of $1.2 billion. Net debt equaled $941 million at September 30, reflecting an improvement from June 30. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $3.1 million and a total debt to total capitalization at 38%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation.

Next, I'll review our outlook for the fourth quarter of 2025. Based on trends in the third quarter and October activity to date, our forecast anticipates ongoing stability in the majority of our markets and a continuation of existing trends. With that said, we are forecasting earnings per share for the fourth quarter to be in the range of $0.78 to $0.88. The guidance range also includes a favorable foreign currency impact of $0.08 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our constant currency revenue guidance range is between a 2% decrease and a 2% increase and at the midpoint is a flat revenue trend. Business days are stable year-over-year and considering the impact of dispositions, our organic days adjusted constant currency revenue increase represents slight growth, which rounds down to a flat revenue trend at the midpoint. EBITDA margin for the fourth quarter is projected to be flat at the midpoint compared to the prior year. We estimate that the effective tax rate for the fourth quarter will be 46.5%. In addition, as usual, our guidance does not incorporate restructuring charges or additional share repurchases, and we estimate our weighted average shares to be $47.1 million.

I will now turn it back to Jonas.

Thanks, Jack. In parallel with our disciplined cost control, we continue to advance our digitization and standardization agenda across both the back and front office. We are pleased with the strong progress of our global business services initiatives, which are streamlining operations, aligning processes and improving speed and quality while reducing costs. I recently visited our new hub in Porto, Portugal, where our finance and technology team, a standardized and centralized back-office functions across Europe. These advancements are providing a blueprint for how we will continue to evolve our operating model standardizing our processes and leveraging our scale advantage across countries and regions. We're now preparing to apply the same disciplined approach to the front office optimizing recruitment and sales processes on our global Power suite front office platform to identify similar opportunities for client and candidate service excellence, process standardization and productivity gains. .

By simplifying workflows and integrating technology, we're empowering our teams and building a business that will be leaner, more agile and well positioned for long-term growth. We are confident that our combination of operational rigor, strategic investment and disciplined execution will ensure Manpower Group continues to strengthen our value to clients and candidates in a fast-changing external environment. This confidence in our value reinforced by the consistent recognition of 3 strong and distinct brands received for their market leadership and capabilities. Last quarter, Everest Group recognized Manpower, Experis and Talent Solutions as industry leaders across multiple categories, reflecting the strength of our strategy, technology and people. Each recognition highlights Sofie AI, our enterprise-wide AI platform we introduced last quarter, where our AR solutions are being developed refined and incorporated into our operational workflows to further enhance our capabilities and help clients make smarter, faster talent decisions. We are now increasingly moving from AI use cases to scaled commercial impact. In our largest market, Sofie AI is now driving measurable gains with approximately 30% of new client revenue derived from AI rated probability. We also see that when prospects are identified as high probability by AI the potential value is notably higher than prospects identified by human insight alone. With this new technology deployed across 14 key markets and scaling further, we expect to see significant value realization across our global footprint. The RPO and MSP, several recent client wins directly cite our AI-powered insights as differentiators in their selection process. These proof points reinforce how our technology investments are enhancing client outcomes.

And as we look ahead, we do so with cautious optimism. While near-term conditions remain challenging in North America and Europe, our teams continue to execute our current priorities with discipline, serving our clients, supporting millions of associates and meaning for work and building the foundation for future profitable growth.

I want to close by thanking our people around the world for their unwavering dedication and commitment to helping our clients win and our associates succeed. Operator, who leaves open the line for our Q&A.

[Operator Instructions] Our first question comes from Andrew Steinerman with JPMorgan.

My first question is about when business confidence improves. So this is like beyond what you just guided for fourth quarter, $25 million would you expect kind of more of an early cycle pickup in flexible staffing volumes? And then also, Jack, if you could just comment on the gross margins that you talked about in the prepared remarks. Like is it this kind of an odd time where we're seeing softer outplacement and softer perm at the same time?

Andrew, and yes, no, it is a bit of a strange time in many labor markets in Europe and North America. As you heard me characterize it in our call, it's like a frozen labor market. There's very little hiring going on, and there's very little workforce reductions going on. And we see that, of course, reflected in both our perm and RPO numbers as well as in the right management business also. But what's been very encouraging to us, though, is that despite this and despite PMI still being below 50 in many of our major markets, we're starting to see a distinct stabilization and growth in manpower, which is what we would hope to see when the markets bottom out. And to your question, if employer confidence returns, we are hopeful that, that then would mean that we see a return to industry dynamics where we expect to see better manpower growth and the rest of the brands also benefiting from that improved environment. .

Our next question comes from Kartik Mehta with Norcos Research.

Maybe, Jack, if you just talk about the trends you saw in the quarter. And I guess I'm wondering if the quarter was even throughout or if you saw any volatility because of kind of what's happening in the economy.

Sure, Kartik, I'd be happy to talk to that. So I think -- if we look across our major markets, probably starting with the biggest 1 being France, in line with what I referenced in my prepared remarks, we actually saw improvement in the trend during the course of the third quarter in France, where you see on an overall basis, the revenue at that minus 5%. But as we exit it, it was minus 4%. So we did see it start to improve in the month of September.

You actually saw that in some of the industry data that was published as well. and that's a positive sign. And I would say as we look at October data, it continues to hold in that space as well. So a slightly improving trend from where we started the third quarter here into the fourth quarter. And I'd say, similar with Italy as well, I think Italy, we saw an improving trend in the month of September as well as we went through the course of the quarter. And as we look to the fourth quarter, we would expect that rate of revenue growth to improve in Italy as we go forward. And then I'd say in the U.S., I'd say there was probably a little more stable. I think there's a little bit more volatility in the U.S. just due to some of the year-over-year we had -- as I've talked about previously, we had some very large RPO volumes from select projects from select clients in the year ago period that completed.

So that created a little bit of volatility in the year-over-year. But overall basis, I'd say the U.S. the manpower business grew very steadily during the entire quarter. And I'd say the Experis business was more stable-ish in terms of activity levels during the quarter. I'd say those big ones that I referred to, and it kind of reflect what we saw on an overall basis in terms of the overall revenue trends.

And if we could just go back to the gross margin issue. As you look at the fourth quarter and kind of look at gross margin, are you seeing any price pressure? Or is there any mix issue that is impacting gross profit. And beyond the mix of I realized perm is still kind of in a recessionary standpoint. But just beyond that, is there anything as that you'd say is impacting the gross profit margin.

No. I'd say, Kartik, when we look at the staffing margin, it's primarily mix shift towards enterprise clients. And in this environment, enterprise clients continue to be the bigger part of the spend and the demand, and that's averaging in. And that's been a trend we've been seeing over the course of the year. So what that means is the larger enterprise mix is putting pressure on the consolidated margin as they continue to average in. We would expect that to start to reverse when convenience comes back and that market starts to come back. But in the current environment, it's the enterprise clients that are spending the most and have the greatest demand. And that's the main driver of what's happening on the staffing side.

Pricing is always competitive, but we have not seen any dramatic changes in pricing on an overall basis. And to your point, in terms of the rest of the GD margin, yes, we did acknowledge that Perm came in a bit softer than we expected that put a little more pressure on the GP margin this quarter. And our placement volumes, as we talked about previously was a bit lower as well, which was the other piece of the of the GP margin bridge year-over-year. But I would say it's primarily driven by mix shift.

And just one last question, Jonas. As you talk to customers, and I'm not sure how you measure this, but are you sensing any more or less amount of uncertainty? Because it seems like uncertainty has been kind of the word for the whole year. And I'm wondering, as you speak with them if there's any level of difference in your opinion?

I would say that the clients that we speak with are increasingly resilient to the fluctuating policy environment. So they're considering this not to be a bug, but rather a feature. And as they then plan for their businesses to be successful, they are moving their businesses forward and thinking about the investments that they need to make. Now as the year has gone on, even though there are a lot of oscillations, the environment in terms of tariffs appears to be gradually settling down.

And as I say this, I'm sure that, that will change this afternoon. But most -- many of the major countries and regions now have trade agreements that companies can project into 2026. And we would expect that to continue continue towards the end of this year and the beginning of next year. So the operating environment in terms of visibility for many employers should improve coming into 2026. I should also note that from an economic perspective, as economists look at 2026, the expectations at this point at least, is for an improved economic environment, both in Europe as well as in North America, with Asia Pacific and our -- in Latin America continuing on the current good path, so there's reasons to be optimistic, but of course, we're managing the business as we see it today and to give guidance into the quarter, but employers are, I think, getting more and more resilient to the noise and are really trying to understand the signal of where this is heading. And as the year goes on, there's more stability in that outlook, I believe.

Our next question comes from Manav Patnaik Barclays.

This is Ronnie Kennedy on for Manav. This was touched on to a certain extent in responses to both Andrew and Cars questions. But could I reconfirm the leading indicators of demand that you are seeing that is informing the assessment, the stabilization beyond, I think, largest enterprise clients with the new assignment starts -- anything to note in respective regions and/or brands there from those leading indicators.

Well, as we mentioned in our prepared remarks, if you look at APME in Latin America, we continue to see good growth. So the notion of stabilization really mostly applies to some of the markets in Europe as well as the U.S. and Canada. And yes, those are the indicators, amongst others that we look at -- we also look at the trends that we've now seen over a number of quarters with markets firming up. And despite a labor market that in some sense is a bit frozen between permanent hiring and workforce reductions. What is clear if you look at our performance from a Manpower brand perspective that we're starting to see demand coming through and giving us growth opportunities. And over time, as the market and the demand improves, we would expect to see the same trends play out also in our other brands.

Appreciate it. And then a follow-up question, Jon, is on the SoFi II implementation. I think you indicated there are measurable results, 30% new client revenue. deployment across 4 key markets. Can you just help us think about how -- what the current global coverage is the time line for deployment as I think you move from back office enhancement to front office? And then any other metrics to note or improved KPIs, whether it's producing time, higher revenue, time to fill, et cetera, and how we should think about implementation and benefits?

Well, first of all, let me say that we believe that AI could have a really positive impact on our business. And as you know, we've spoken over quite some time now over -- to our significant investment into our digital core. So by the end of this year, 90% of our revenues will be covered by a common global front office platform. 60% of our back-office transactions will be handled by a global platform moving to 80% or 90% towards the end of the year. So all of that says that we now have a global digital core that gives us the opportunity to leverage our scale by standardizing processes, centralizing across countries and regions in completely different ways.

It also gives us the opportunity, of course, to deploy AI in a scalable way as we have been doing in a number of instances. Like many companies, we've been working with use cases and really trying to understand where the opportunities lie. And I'd say we are still in the early innings of exploring what it can be -- but the example that I cited in our prepared remarks really shows the strength of what can happen when you apply AI into your lead generation and prospecting database. Now we have the opportunity to really combine human insight with AI-generated insights, and the results that we're seeing in terms of the improvement in win rates as well as in value generation are very, very promising. So whilst I can't give you a time line for a global rollout on AI I would say that we feel very good about our digital core and being able to deploy AI and more efficient processes enabled by AI across our network and across our global operations.

Very comprehensive certainly appreciate it. Matt just sneaking a quick follow-up. Can you -- you talked about AI enabling realtime AI intelligence enabling quick pivots to sectors and regions for growth opportunities? Can you highlight some examples of that where you have pivoted or even potentially exited based on that data.

I think it's really around the pipeline management that Jonas was referring to, where we've seen significant impact in terms of probability-weighted assessment of our revenue opportunities, Ronan. And so when we look at that, that impacts across all industries. I wouldn't say it's 1 specific vertical that has benefited from AI. I'd say it's multiple verticals, verticals that we deliver into. And it's been a big benefit to the way we focus our sales teams focus their time on opportunities I think in this environment, we've talked a lot about in the past about delayed decisions by clients. So having that type of technology has been a big improvement for us to make sure we're focusing our time on the best opportunities, and that's been working quite well. But I wouldn't say it's a specific industry. It's very broad across all of our industries.

And as I mentioned in my prepared remarks, you can see that our Sofie AI platform has really helped us distinguish ourselves in the markets in terms of the accolades and the recognitions we've received. And we're very pleased with that initial recognition, but of course, we're counting on continuing to deploy this and applying commercial scale everywhere where we operate over time. .

Our next question comes from Mark Marcon with Robert W. Baird.

Wondering with -- I don't want to harp on the gross margin, but I just want to understand it a little bit better. On the enterprise side within Connie's on a like-for-like basis, are the gross margins holding steady? Like if we take a look at your most important markets like France, Italy, U.K. and the U.S.

Mark, I would say that just as Jack explained, most of the changes that we would see within country are really the same as we see on a consolidated basis -- consolidated basis, which is it's -- on a country basis is also related to business mix. So enterprise in the markets where that's growing, we can see -- growing more than the convenience side that's where we -- that's where we're seeing the business mix shift. And this is not unusual for us to think -- to see this effect in markets that are challenged. .

And I would also concur with Jack that pricing is always competitive, but that we're not seeing any major moves in any particular market of scale either. So it's really business mix at this point. And as you look at the labor markets and being frozen, what's important to note, though, is that they're solid labor markets, both in Europe and in North America. So unemployment, whilst the markets have been softening a bit here in the U.S., for instance, unemployment is still at a reasonably and historically low level. And the same is true for Europe. So finding and accessing talent when companies are looking for talent might be slightly easier today, but it is still a challenge in many areas and for distinct and specialized skill sets. So we've really seen the business mix shift being the main driver of the staffing margin, not any price competition.

Yes. And I would just add, Mark, it's not broad brush in every market. We improved staffing margin in Japan in the third quarter year-over-year. as we anniversary a very difficult environment in the Nordics from a year ago, we improved staffing margin there as well. We improved staffing margin in Canada. But as Jon has said, in the markets where we have very large enterprise client bases, we have seen a shift on the mix. So as enterprise becomes a bigger part of the pie, that's averaging in and putting pressure on in those other large markets. And of course, that would include France and the U.S. and Italy.

Are there things that you could do to to stimulate the convenience side of the market? I mean, like within the U.S., when we take a look at small business employment relative to large enterprise employment, on a macro scale, it doesn't seem like there's a huge difference, although I imagine that small businesses are a little bit more concerned about managing costs. But I'm wondering, are there things that you can do in order to tilt things a little bit on the convenience side.

Well, our efforts around building stronger pipelines enabled by technology, and I mentioned earlier, help getting AI to target prospect lists, both for enterprise as well for convenience clients should help us get some traction, but what's not unusual at times like this is that enterprise demand is just higher because they have greater ability to absorb the uncertainty, and their caution is balanced across multiple geographies and multiple businesses as well. So we continue to believe that the convenience market is strong. we believe we have great opportunities to continue to improve our positioning and market share also in that market. But what we're seeing right now at this point in the cycle in Europe and in North America, is that enterprise demand is slightly higher than what we're seeing from the convenience. But those things, once employer confidence shifts can change quite quickly. So we expect to see the margin business mix to rebalance the way it has done in the past.

And I would just add, Mark, we do have significant convenience initiatives in place in markets like Italy and in France, that's one of the reasons we believe Italy is leading the market. Currently, our business. Our growth is -- yes, there's a lot of enterprise growth, but there's very good convenience growth in our Italy business. .

And it's a key initiative in U.S. Manpower and Experis as well. But we see significant growth in convenience in markets like Italy. And those initiatives are happening in all of our largest markets. It's just having a much bigger impact at the moment in Italy.

Great. And then can I just ask about RPO. It sounds like you're starting to see some wins from Sophie. Are those new wins, those new RPO wins enough to offset the frozen market? Or would you expect RPO to continue to primarily be driven by the macro?

I think it can help us drive better win rates, but what's clear is that both the size of the deals in the market today and the extended time of implementation means that we are anticipating RPO to still be feeling the headwinds at least looking towards the near term. The fact that companies are less interested in hiring permanently means that from RPO, which is a recruitment process outsourcing offering, essentially an outsourced perm hiring engine to bring in lots of talent into organizations. The companies are slower to act on those kinds of initiatives. And when they're planning for those initiatives, the time line for implementation tends to be longer and the initial volumes tend to be lower. .

So we think the RPO business model as well as the value that it presents for clients remains extremely strong. And especially if you think about the future where we are going to be demographically constrained, taking our RPO operations into any company looking to find talent at scale across geographies and nations is going to be extremely valuable. But right now, what we're seeing is that companies are less focused on that, so that's why we're expecting it to continue to face some headwinds in the near term. .

Okay. Can I speak one more in, please. Jonas, I just want to -- you've got a great perspective with regards to what's going on internationally, particularly in Europe. We all see what's going on in France from a political perspective. How is that impacting decision-makers on ground? Is it -- are businesses feeling any less certain about stability just given the turmoil that we're seeing from a political perspective over there?

Yes. Thanks, Mark. I just came back from France last week and spent quite some time with our teams and being in various markets as well. And clearly, the political turmoil in France is not helpful to the sentiment of employers. Having said that though, if you look at the various elements of the prolictical factions, no one disagrees that France needs to go through a budget process that helps reduce the deficit. So the degrees of how much that would relate to. So that's where the pensions lie.

As you might have seen this morning, the government has survived 2 no-confidence votes, and we would expect that to continue. But what's coming next is the discussion around the actual budget, which needs to be concluded before the end of the year. And so there's still a lot of uncertainty in terms of what's going to happen.

But from a company perspective, what our clients are doing is looking at their business and navigating through this environment, responding to the demand that they're seeing in various markets. And as Jack alluded to and as you've seen from our numbers, French PMI has improved. The outlook for Europe has improved somewhat into 2026 as well. So companies are preparing and that's what we're also seeing in our business that we're navigating this and companies are resilient, and they need to take care of their business first and what's very important to their business is to find the right talent to execute their plans. And in a labor market that is regulated as France, our offerings are extremely attractive to fuel those talent investments in environments like these. So to conclude, the environment in France right now with the political uncertainty is not helpful for sure. But at the same time, most of our clients are very pragmatic and they're responding to the demand that they are seeing.

And in turn, that gives us the opportunity to provide talent into their operations and make sure that they are successful.

Our next question comes from Trevor Romeo with William Blair.

If I could maybe just follow up very quickly on that last question with France. Just quickly, is there any change to your expectations or your confidence level at this point that the additional business tax from this year won't recur beyond 2025 at this point based on everything that's going on there?

Trevor, this is Jack. I'd say it's too early to tell. Candidly, at this stage. There were some discussions just this week on that. But we're monitoring the situation. I'll give a better update on that at year-end. As Jonas said, once the budget is presented and passed. I think at this stage, there is -- there has been some discussion within the French budget of perhaps continuing the surcharge, but at a lower level than the current year. into 1 additional year into 2026.

But as I said, it's too early to tell. So I think from this perspective, we would expect our effective tax rate to decrease next year. as the surcharge comes down, we'll see where it ends up as the budget continues to be debated and discussed within Parliament. But I'd say at this stage, it's a bit too early to give any firm guidance on that, Trevor.

Okay. That is helpful. And then I guess maybe kind of a broader question. I think for several quarters now of the Manpower brand outperforming Experis. So from kind of a macro perspective, I guess, what do you think are the drivers of blue collar staffing outperforming white collar staffing is AI playing a role there? Is it kind of more labor boarding in those white-collar areas and the frozen labor markets you talked about us. Anything you could say on that topic?

Well, we've been very pleased to see how Manpower has rebounded into growth for a number of quarters now and projected to do so again into the fourth quarter. But that evolution, of course, is tied to a number of different things. You've seen PMI start to improve. I talked about the resilience of employers that are getting used to a more fluctuating environment and have to run their business and make the talent investments going forward. .

So I think those are things that we are looking at. And of course, we've also been able to pivot to areas that are growing faster and targeting industry verticals that we feel are going to give us more opportunity for growth. If you think about Experis, clearly, it's unusual from an industry perspective, our own industry perspective to see that there is that disconnect. But really, there's been a lot of things that have been different in this post-pandemic era. And what we believe is happening from our experience perspective is that companies are really focused in investing into the AI boom, and they are really moving much lower on the traditional IT project. And that's what we think is happening and impacting the demand for many of our big clients. They have shifted their priorities into AI investments, and whilst we are participating in those skill sets as well, the volumes that we have in different areas is really something that is being impacted at this point in time.

Now we believe demand more traditional digital project is going to come back with many of those same clients, but we think it's a moment in time, and that's why you're seeing this difference between white collar staffing. In our case, our Experis business as well as our Manpower business that is moving forward and is doing very well.

Our next question comes from George Tong with Goldman Sachs.

Going back to your comments on labor markets being frozen in terms of hiring in more ports reductions, can you parse out which markets are more frozen than others? And in which markets you're starting to see some filing?

I would say the industry verticals, George, that we see are starting to pick up a bit. are related to financial services in some markets, logistics, some of that is seasonality. That's coming back. There's a lot of activity also in the defense sector, especially in Europe that we feel could be very beneficial to us. On the flip side, we are still seeing sluggishness around auto that we've talked about. Construction is still sluggish in many parts of Europe as well, where we are in that business. So we can see a number of sectors that are more sluggish than others. .

But I would say that the nature of how employers are holding on to their workforce, we believe is really the memory of the post-pandemic surge in demand for talent that had been dislocated in various countries. And employers are very keen not to relive their experience. They believe the workforces they have in place today are largely the workforces they will need going forward, and they're holding on to their workforce to a greater degree today than we have experienced in past economic slowdowns and periods of uncertainty of this kind because we think employers are informed and cautioned by that experience. And as long as they believe in a recovery and they will hold on to their workforces longer.

And I think that's what we're seeing, especially here in the U.S. That's what the mindset is. Now the good news on that part is, of course, that once they are seeing tangible signs of an improvement in economic outlook and maybe also greater certainty from a policy perspective, they're ready to move forward bringing talent back on so that they can meet the growing demand. And of course, that's what we are preparing for and working with them on being ready to capture the future growth opportunities as things improve for them.

Got it. That's helpful. You talked about accelerated initiatives to remove structural costs from the organization. which regions are seeing the most amount of restructuring and head count reductions?

Yes. Thanks for that question, George. I'd say in the third quarter, we continue to be very focused on Northern Europe. Germany was at the top of the list in terms of the restructuring of $11 million. But also we did some work in Spain, the U.K. and the U.S. as well. But I would say if you just -- if I just step back and look at 2025 overall, the most impact and most of the actions have been around Northern Europe. And we see that in the improvement in the trend from Q2 to Q3. So that minus $6 million moving to minus $1 million is actually showing the results of a lot of the hard work we've been doing in Northern Europe. We have more work to do to be clear, but we are making progress. As we go forward, I think as we talked about in the prepared remarks, we are looking at structural costs everywhere in the organization. So as Jon has talked about, we have a lot going on in the back office.

He referred to our global business service center in Europe that is driving reduced cost going forward for us. And we're looking very, very closely at the front office and elements of all of our largest businesses, where there could be other opportunities to do similar things in terms of standardization and centralization.

And that continues to be an opportunity for us that you'll hear us talk about in the future.

Our next question comes from Stephanie Moore with Jefferies.

Just some follow-up question. You talked a lot this morning about just the technology advancements and investments, whether it's AI or others that you've made over really the last several years here. when the underlying environment unfreezes or starts to be a bit more constructive do you believe that your technology advancements will enable you to capture some of that market growth or just that recovery with effectively less people and ultimately kind of seeing greater operating leverage and greater torque to the model than impact upswing.

Thanks, Stephanie. Yes. And the investments we are making, first of all, I believe, positions us very uniquely in our industry with our scale, having 90% of our revenues flow through a common global front office platform mobile apps that are being deployed across many of our countries addressing both our associates, so the people that are working for us and are candidates, people that are playing for jobs. And then combining that with our back-office technologies also at a global level, gives us an opportunity to standardize, centralize and reimagine our processes in a completely different way. And clearly, what we're aiming to do is to leverage our scale not only across countries but across regions as well. And when we look at our operations in Latin America, all 15 countries in which we operate and lead the market in across that region are handled from a back office perspective centrally. .

Our payrolling is handled centrally. And you've seen the progress that we have made across Latin America over time. We're very pleased with that performance. and the improved productivity that we're seeing there. And we aim to drive similar kinds of effects, both from a growth perspective, being able to deliver faster to our clients at a higher quality, but also working on streamlining our processes in the back office and in the middle office so that we can gain productivity and efficiency there as well.

And on top of all of that, of course, the impact of AI and what we can do through further automation, enabled by AI or just automation is, of course, another aspect that we're looking at very, very closely.

Our next question comes from Josh Chan with UBS.

Jack, just 2 quick ones here. So I wanted to ask about SG&A leverage because in Q4, you're guiding to some margin compression on the gross margin line, but not much EBIT margin compression. So that obviously implies improving SG&A leverage. And I was just wondering what's driving that and whether you think you're at a point where SG&A can start potentially levering positively?

Thanks, Josh. No, you're absolutely right. The guy does anticipate that SG&A will be a big part of the equation in terms of falling gross profit dollars down to the EBITDA line. So with that guide, you basically see a relatively stable level of EBITDA from Q3 into Q4. And we talked about crossing over to organic growth. Well, that's a big step to hold our margin flat year-over-year. It's been a while since we were able to do that. And with all the actions we've taken, we're starting to bend the curve on SG&A as well, and that's going to have a meaningful impact in the fourth quarter, and you can see that incorporated into the guide. So you're absolutely right that -- that is going to be a bigger impact in the overall equation in terms of holding that EBITDA.

But I would say in terms of the GP, with that guide, it is just a modest change from Q3. So it's really just that effect that we've talked about with perm being a little bit softer, while we have a bit more enterprise in the mix. So just about 10 basis points sequentially as that continues to average in. But that's really the main impact there. But you're right. On SG&A, that is going to start to have a big impact on the EBITDA line. And that really is a reflection of all the work that we've talked about over the course of the year with the actions we've taken. And I talked about Northern Europe. That's 1 example of it, but we're seeing it in other markets as well in terms of improvement in bottom line profitability.

Great. That's good to see. And then I guess, Jack, I wonder if there's a way for you to ballpark for us how good free cash flow could be in Q4? And maybe relatedly, could you talk about sort of the negative free cash flow in the first half and whether -- how unusual that is as we kind of think about what a normal cash flow should be kind of going forward?

Yes. No, sure, Josh. As I talked about last call, we had a big outflow in the first half of the year. And part of that was due to our very large market-leading MSP program. That does create some timing issues. We saw that at the end of last year into the first quarter of this year, where we had some very significant prepayments from some very large MSP clients at the very end of quarter and those payables went out at the very beginning of the following quarter. Usually, it's neutral, but sometimes if there's large prepayments that could create a little bit of volatility from a quarter-over-quarter.

And we did see that flatter in the fourth quarter. We had a very strong free cash flow in the fourth quarter last year. It was flattered somewhat by that. But even putting that aside, it was still a very, very strong free cash flow for us in the fourth quarter of last year. but that did depress the first quarter outflow. We typically, as I've mentioned, over the last 4 years, we've had negative outflows in the first half of the year and very strong positive free cash flows in the second half of the year. And we started that here in the third quarter. The fourth quarter typically is a very strong free cash flow, and we would expect that to be the case again this year where the fourth quarter will be a strong free cash flow at this stage. So that's what I would to add a little more color. The other item in the first quarter outside of the MSP program was we did have some very large onetime payments. We had the Tax Act from 2017 that had multiyear transition payments go out. We had the last 1 of those in the first quarter, which is 1 of the biggest payments, so that goes away going forward. And as I mentioned, a lot of our technology license costs are all loaded into the first half of the year, and we don't have that in the second half of the year. So that's why typically the second half is much stronger, and that would be the outlook. The last point I'd make is now here we are about 3/4 of stabilized EBITDA, that is going to work into more favorable free cash flow trends as we go forward. Now that trailing 12 months EBITDA is stabilizing here with the guide for 9 months as we finish and that will be a positive impact because 1 of the other factors, of course, is trailing 12 months EBITDA had been decreasing with the downturn that we talked about that 11 quarters. And now that's shifting and we stabilized. So that will be a positive factor in terms of free cash flow as we go forward as well.

Our next question comes from Tobey Summer with Truist.

I wanted to ask a question about gross margin. If we do see employers sort of become a little bit more forward leaning and optimistic, how would the social costs that typically reinflate gross margin after a period of decline perform in this context where unemployment rates didn't really rise a ton.

The changes that we've seen in the gross margin so far, Tobey, are all related to business mix. And to your point, there hasn't been a real decline in employment that's significant. And so whatever social burdens are carried today, and I'm sure that you're referring mostly here to the U.S. we would expect to carry on and be stable into the future because there's no need to re-up those burdens to a level that had been depleted, and that's what we would expect to see. So from that perspective, we don't think that social costs will have a major impact, barring changing legislations, of course, but just from an employment perspective, driving changes in social costs and aside from any pension-related costs in other countries that might go up or not. We don't really expect that to be a main factor in driving our gross profit margin differences. But of course, what we are very keenly focused on is when employers feel more confident in the economy that we will see permanent pruitment go up to more normalized levels, and that will have an overall very positive effect on our gross profit overall.

Understood. And from an IT perspective internally within the firm, you've been pushing process improvement, global standardization, et cetera. Where do you think you sit from a competitive perspective? Because globally for the largest enterprise customers, you compete with a relatively narrow set of firms, are you ahead on par, trailing? Where do you see yourself competitively from that perspective?

Well, of course, it's hard to say, Toby. But I don't know that many of our competitors, national or other or global certainly, have 90% of their revenues flowing through 1 common office platform. We also have an extensive data lake that captures all of the data of our actions through our various digital channels. So I think we're very, very well positioned from a competitive perspective. But we're also clear that this is a race and that it's all about enabling the company to shift the value to where it matters most, which is the human interactions with our clients, our candidates and our associates and render all the transactional activity as efficient as possible through automation, leveraging AI when appropriate and making our processes as efficient as possible. The true value that we create is in the last mile delivery with our clients and our associates, and that's what we're aiming firmly towards making sure that, that moment of truth is where we spend most of our time and that we enable our organization to be as efficient and as productive as we can, leveraging this global platform to the greatest degree possible. .

Thank you. That concludes our earnings call. And I'll hand it over to Jonas to end the call.

Thank you very much, Michel, and thanks, everyone, for participating in today's earnings call. We look forward to speaking with you again on our Q4 call in January. Thanks, everyone. Have a great rest of the week. .

Thank you for your participation. You may now disconnect. Good day.

Welcome to ManpowerGroup's Second Quarter Earnings Results Conference Call. [Operator Instructions]. I would now like to turn the call over to ManpowerGroup's Chair and CEO, Ms. Jonas Prising, Sir, you may begin.

Welcome, and thank you for joining us for our second quarter 2025 conference call. Our Chief Financial Officer, Jack McGinnis is with me today. For your convenience, we have included our prepared remarks within the Investor Relations section of our website at manpowergroup.com. I will start by going through some of the highlights of the quarter. Then Jack will go through the second quarter results and guidance for the third quarter of 2025. I will then share some concluding thoughts before we start our Q&A session. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, which are subject to known and unknown risks and uncertainties. These statements are based on management's current expectations or beliefs. Actual results might differ materially from those projected in the forward-looking statements. We assume no obligation to update or revise any forward-looking statements. Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

When we last reported our Q1 results in April, we spoke at a time of heightened uncertainty, particularly surrounding trade negotiations and their potential impact on the global economy. At that point, many organizations were choosing to pause or slow hiring plans as they waited for greater clarity. Since then, we've seen some of this uncertainty begin to ease. Employers facing not only macroeconomic complexity but also continued geopolitical tensions are proving resilient. What might once have been seen as Black [indiscernible] moments [indiscernible] with greater pragmatism and pace.

Our most recent Lampa Group employment outlook [indiscernible] more than 40,000 employees across 42 countries also supports this view. The global hiring outlook is holding steady up very slightly year-over-year and just 1 point lower than last quarter.

The picture continues to be mixed globally, though, with Latin America and Asia Pacific labor markets performing well, while we see cooling yet resilient hiring intent in North America. In Europe, employers continue to be more cautious, particularly in Northern Europe, reflecting its great exposure to economic and geopolitical headwinds.

Turning to our results. We are pleased to see encouraging signs of stabilization in the U.S. and parts of Europe and a return to revenue growth in our Manpower and Talent Solutions brand this quarter. [indiscernible] revenue, which includes our expanding franchise revenue base was $4.9 billion. Reported revenue was $4.5 billion, down 3% year-over-year in constant currency.

Our reported EBITDA for the quarter was $72 million. Adjusting for restructuring costs, EBITDA was $89 million, representing a decrease of 25% in constant currency year-over-year. Reported EBITDA margin was 1.6%, and adjusted EBITDA margin was 2.0%. Earnings per basic share was a negative $1.44 on a reported basis while earnings per diluted share was $0.78 on an adjusted basis.

Adjusted earnings per share decreased 43% year-over-year in constant currency. The diversity of our vertical mix consumer goods, technology and industrials is proving to be a strength in the current environment. Leveraging our proprietary data, we continuously assess real-time market dynamics to identify and act on growth opportunities. We're seeing solid momentum in consumer goods across both the U.S. and Europe, alongside encouraging signals in aerospace and defense. At the same time, we're taking swift, targeted actions to protect and optimize performance in sectors experiencing headwinds, such as automotive, ensuring we remain focused on profitable growth and long-term resilience. We know client demand is reactive to many factors, and we are staying closely connected to our clients, anticipating their evolving needs and ensuring we remain the strategic workforce partner of choice as technology formation accelerates.

We continue to build a strong enterprise sales pipeline, simplify our organization and manage costs with discipline by prioritizing growth engines that would deliver the greatest value.

I'll now turn it over to Jack to take you through the results in more detail.

Thanks, Jonas. U.S. dollar reported revenues in the second quarter were impacted by foreign currency translation and after adjusting for currency impacts [indiscernible] the high end of our constant currency guidance range. Although conditions remain challenging in certain markets, our revenue trends demonstrate we continue to perform well in the revenues from franchise offices are significant and are included within system-wide revenues, which equaled $4.9 billion for the quarter. Gross profit margin came below the low end of our guidance range, driven by shifts within staffing reflecting an increased mix of enterprise accounts. .

As adjusted, EBITDA was $89 million, representing a 25% decrease in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2% and came in at the high end of our guidance range, representing 50 basis points of decline year-over-year. Foreign currency translation drove a favorable impact to the flat U.S. dollar-reported revenue trend from the constant currency decrease of 3.5%. [indiscernible] adjusted constant currency revenue decreased 1% in the quarter, which was favorable to our midpoint guidance of an increase of 2%.

Turning to the EPS bridge. Reported losses per share was $1.44. Adjusted EPS was [ 78 ] and came in $0.08 above our guidance midpoint. Walking from our guidance point of $0.70, our results included a stronger operational performance of $0.04, slightly lower weighted average shares due to share repurchases in the quarter, which had a positive impact of $0.01. A foreign currency impact that was $0.01 favorable to our guidance and interest and other expenses, which was $0.02 favorable. Restructuring costs and disposition losses represented $0.43 and noncash goodwill and intangible impairment charges represented $1.79, bringing reported losses per share to $1.44.

Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had growth of 1% in the quarter. The Experience brand declined by 9% and Talent Solutions brand had growth of 1%. Within Town Solutions, our RPO business experienced a slight year-over-year revenue decrease. Our MSP business reported strong revenue increase compared to the prior year. Our right management experienced a year-on-year mid-single-digit percentage revenue decline in the quarter [indiscernible] outplacement exit continued to slow. Looking at our gross profit margin in detail, our gross margin came in at 16.9% for the quarter. Staffing margin contributed 30 basis point reduction due to mix shifts towards enterprise accounts. Permanent recruitment was relatively stable at lower levels and contributed a 10 basis point reduction.

Other items resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 62% of gross profit. Our Experis Professional business comprised 22% and Talent Solutions comprised 16%. During the quarter, our consolidated gross profit decreased by 5% on an organic constant currency basis year-over-year, representing a slight improvement from the 6% decline in the first quarter. Our Manpower brand reported flat organic constant currency gross profit year-over-year, an improvement from the 2% decrease in the first quarter. Gross profit in our Experis brand decreased 14% in organic constant currency year-over-year, a step down from the 11% decrease in the first quarter, driven by the nonrecurrence of health care technology projects.

Gross profit in Talent Solutions was flat in organic constant currency year-over-year, representing an improvement from the first quarter decrease of 5%. MSP and RPO experienced similar activity levels from the first quarter while Right Management gross profit increased slightly. Reported SG&A expense in the quarter was $789 million. SG&A as adjusted was down 3% year-over-year on a constant currency basis and down 2% on an organic constant currency basis. The year-over-year SG&A decreases largely consisted of reductions in operational costs of $10 million. Corporate costs continue to include our back-office transformation spend, and these programs are progressing well with expected medium- and long-term efficiencies. Dispositions represented a decrease of $8 million while currency changes contributed to a $19 million increase. Adjusted SG&A expenses as a percentage of revenue represented 15.2% in constant currency in the second quarter.

Adjustments represented restructuring and disposition losses of $17 million. The goodwill and intangible impairment relates to Switzerland and the U.K., which experienced further market declines in recent quarters. Balancing gross profit trends with strong cost actions to enhance EBITDA margin is one of our highest priorities, and we continue to analyze all aspects of our cost base for additional ongoing efficiency improvements. The Americas segment comprised 23% of consolidated revenue. Revenue in the quarter was $1.1 billion, representing an increase of 2% year-over-year on a constant currency basis. was $36 million, and OUP margin was 3.4%. The U.S. is the largest country in the orca segment, comprising 64% of segment revenues.

Revenue in the U.S. was $674 million during the quarter, representing a 3% days adjusted decrease compared to the prior year. This represents a decline from the 2% increase in the first quarter as I will explain in the brand commentary. OUP for our U.S. business was $20 million in the quarter. OUP margin was 2.9%. Within the U.S., the Manpower brand comprised 26% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 9% on a days adjusted basis during the quarter, which represented strong market performance and an improvement from the 7% increase in the first quarter. The Experis brand in the U.S. comprised 41% of gross profit in the quarter.

Within Experis in the U.S., IT skills comprise approximately 90% of revenues. Experis U.S. revenues decreased 14% as expected on a days adjusted basis during the quarter, down from the 2% decline in the first quarter based on nonrecurrence of health care technology projects. As the health care technology project significantly impacted the U.S. Q1 and Q2 trend. The 6-month trend of a decrease of 8% is more indicative of the underlying business activity. Town Solutions in the U.S. contributed 33% of gross profit and saw a revenue increase of 13% in the quarter, an improvement from the 3% increase in the first quarter, driven by RPO and Right Management.

RPO experienced solid revenue growth in the U.S. during the quarter. Both the U.S. MSP and Right Management businesses executed well during the quarter, posting strong double-digit revenue increases year-over-year. In the third quarter of 2025, we expect the overall U.S. business to have a slightly improved low single-digit percentage revenue decline compared to the second quarter. Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.1 billion, representing a 2% decrease in organic constant currency. As adjusted, for the Southern Europe business was $75 million in the quarter and OUP margin was 3.5%. Restructuring charges of $2 million represented actions in France. France revenue comprised 53% of the Southern Europe segment in the quarter and decreased 6% on a days adjusted constant currency basis.

As adjusted, OUP for our France business was $34 million in the quarter. Adjusted OUP margin was 3%. France revenue trends came in slightly better than expected during the second quarter, and we expect stable activity trends into the third quarter, representing a slightly improved rate of revenue decline. Revenue in Italy equaled $476 million in the second quarter, reflecting an increase of 4% on a days adjusted constant currency basis. OUP equaled $32 million and OUP margin was 6.7%.

Our Italy business is performing well, and we estimate a similar to slightly improved constant currency revenue growth trend in the third quarter compared to the second quarter. Our Northern Europe segment comprised 18% of consolidated revenue in the quarter. Revenue of $794 million represented a 10% decline in constant currency. As adjusted, OUP equaled a $6 million loss. The restructuring target of $12 million represented actions in the Nordics, the Netherlands and Germany. Our largest market in Northern Europe segment is the U.K., which represented 33% of segment revenues in the quarter. During the quarter, U.K. revenues decreased 13% on a days adjusted constant currency basis.

The U.K. market continues to be challenging, and we expect the rate of revenue decline to improve into the third quarter compared to the second quarter. In Germany, revenues decreased 22% on a days adjusted constant currency basis in the quarter. Germany automotive manufacturing trends continued to be weak. In the third quarter, we are expecting a slightly improved year-over-year revenue decline compared to the second quarter trend. The Nordics continued to experience difficult market conditions with revenues decreasing 9% in days adjusted constant currency in the quarter.

The Asia Pacific Middle East segment comprises 12% of total company revenue. In the quarter, revenues equaled $525 million, representing an increase of 8% in organic constant currency. Adjusted OUP was $27 million and adjusted OUP margin was 5.1%. Our largest market in the APME segment is Japan, which represented 61% of segment revenues in the quarter. Revenue in Japan grew 7% on a days adjusted constant currency basis. We remain very pleased with the consistent performance of our Japan business, and we expect continued strong revenue growth in the third quarter. I'll now turn to cash flow and balance sheet.

In the second quarter, free cash flow represented an outflow of $207 million compared to an outflow of $150 million in the prior year. As in the prior year, timing of payables impacted the level of outflow in the second quarter. Outflows of free cash flow in the first half of the year are typically followed by strong free cash flow in the second half. Free cash flow in the first half of 2025 included outflows for a large tax transition payment technology prepayments and the impacts of timing of MSP program payments, which typically are not large factors in the second half of the year.

At quarter end, days sales outstanding increased by about a day to 56 days. During the second quarter, capital expenditures represented $18 million. During the second quarter, we repurchased 230,000 shares of stock for $12 million. As of June 30, we have 2 million shares remaining for repurchase under the share program approved in August of 2023. Our balance sheet ended the quarter with cash of $290 million and total debt of $1.29 billion. Net debt equaled $996 million at quarter end. Our net debt levels peak at June 30 and historically improved in the second half of the year.

Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $3.2 million and total debt to total capitalization at 39%. Our debt and credit facility arrangements and related updates are included in the appendix of the presentation. Next, I'll review our outlook for the third quarter of 2025.

Based on trends in the second quarter and July activity to date, our forecast anticipates ongoing stability in the majority of our markets and a continuation of existing trends. With that said, we are forecasting earnings per share for the third quarter to be in the range of $0.77 to $0.87. The guidance range also includes a favorable foreign currency impact of $0.03 per share and our [indiscernible] currency translation rate estimates are disclosed at the bottom ofthe guidance slide. Our constant currency revenue guidance range is between a and 4% decrease and at the midpoint is a 2% decrease. Considering the impact of a slight increase in business days and dispositions. Our organic days adjusted constant currency revenue increase represents a flat revenue trend at the midpoint. EBITDA margin for the third quarter is projected to be down 50 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the full year on an adjusted basis to continue to be 46.5%, and the third quarter will be slightly higher at 48%. This incorporates the previously disclosed French tax change for the 1-year period of 2025. In addition, as usual, our guidance does not incorporate restructuring charges or additional share repurchases, and and we estimate our weighted average shares to be $47 million.

I will now turn it back to Jonas.

Thank you, Jack. We know from our clients that companies are navigating the here and now while also investing in the mid- to long term. Gen AI continues to emerge as a powerful catalyst with an eye on productivity games as well as the opportunity to unleash human potential, allowing people to focus on more value-added tasks. At this stage, most organizations are focused on driving adoption and exploring possibilities. And outside of some specific areas, we are not seeing any structural impact to labor markets at this time. Yet the lag from exploration to impact has the potential to be shorter than any tech advancement in history.

Our research underscores this stage of development, too. 58% of employers are now investing in AI, but only 26% believe their workforce is ready to use it. This proprietary data is sourced from our work Intelligence lab launched in May. An innovative new platform that brings together our real-time labor market insights and predictive research to deliver deep workforce intelligence, enabling our advisory and consulting services for our clients across sectors.

We showcased this data and our human's first digital always perspective at VivaTech. The world's leading tech conference held in Paris in June, where we joined tech leaders and policymakers alongside more than 200 clients and prospects. It is clear that the AI rate in this gap represents a significant opportunity for us. companies to find new talent and augmenting their skills to be AI ready. We continue to execute our diversification, digitization and innovation strategy at pace. At the core of this is accelerating the adoption of new technologies to better support the evolving needs of both our clients and candidates all positioning us to drive greater productivity and unlock more profitable, sustainable growth in the quarters ahead. For over 5 years, we have been investing in and building our digital core PowerSuite.

PowerSuite is our foundational tech stack that we believe is unrivaled on a global scale in the industry and has enabled the pace of our digital transformation and the rapid development and deployment of our AI capability. As an example, the strength of PowerSuite is enabling the build-out of Sofie AI, our enterprise-wide AI platform, where our AI solutions are being developed refined and incorporated into our operational workflows to further enhance our capabilities. Soffe is already being deployed by our Talent Solutions brand and we are moving quickly to scale so we can continue to take AI infused products, solutions and insights into the market across our strong and distinct brands, supporting our clients wherever they are in their transformation journey. Our commitment to transformation extends beyond the technology. It is embedded in how we operate as a responsible, sustainable business and it's being recognized.

In the second quarter, we were proud to receive multiple global accolades. We received Forbes America's #1 rating as the best temp staffing firm. Talent Solutions was again recognized by Everest Group as a global leader in RPO and and were also named to Times world's most sustainable companies for the 15th consecutive year. Congratulations, and thank you to all our teams for these honors, which are evidence of the trust placed in us by our clients, candidates and stakeholders around the world.

Operator, please open the line for our Q&A.

[Operator Instructions] Our first question comes from Jeff Silber with BMO Capital Markets.

This is Ryan on for Jeff. You called out in the press release you remain focused on market share gains. I was just wondering who you're gaining share from? And what is your share gain strategy there? .

Thanks, Ryan. Yes. No, we've been very pleased to see the progress in how we are competing. We've built a very strong pipeline. And with the available data, we are now able to target our fast-growing industry verticals in a much more precise way. So we are very quickly able to determine which industry verticals are moving forward and are growing, which are lagging a bit, and we talked about that in our prepared remarks. And we're very pleased with the outcomes of what we're seeing there. We're also able to deploy AI in what we call our sales targeting engine, which is now able to much better identify leads that are highly likely to generate orders and higher revenue to the tune of 50% higher revenue than when we do this through human intervention only.

So it's really augmenting human capabilities with the eye. And all of this said, in many of our major markets, we are competing very well from a revenue perspective. And you could also see that in our performance in the second quarter as it relates to where we ended up compared to our initial guide as we look ahead into the second quarter.

Great. I appreciate that. And then just for my follow-up, you sold a couple of businesses and removing them the franchise models during the quarter. I imagine those were relatively small in the broader P&L. I was just wondering if you see yourself moving anything else selectively to a franchise model down the road? Or do you think there are any other geographies where it might make sense.

This is something that we've been working on for a number of years, and we've talked about this in the past. There are some markets big and small, in some cases, where we really feel a more local approach might be beneficial to grow faster with our brands, it doesn't have to be a wholly owned subsidiary that executes on that strategy. So yes, you saw us move out of some smaller markets this quarter. We've had some bigger markets in prior quarters, and we're constantly looking at both existing markets but also new markets in new parts of the world where we think this model could be really beneficial to help us deploy our brands and serve our clients as we look at where the demographic labor market growth is the strongest.

Our next question comes from Manav Patni with Barclays. .

This is Princy Thomas on for Manav. Just wanted to see if you could talk about U.S. trends and moving pieces, what the true underlying organic growth would be and what you're seeing for outlook?

Sure, Princy. Thanks for the question. This is Jack. I'd be happy to talk about the U.S. trends. So you can see on an overall basis, the U.S. business came in at minus 3% for the quarter. actually slightly better than what we expected when we gave the guide. We did know that a lot of that Experis health care technology project work was not going to recur back into the second quarter. So that incorporated that, and we still did a bit better. That was the over performance, I would say, was driven by the Manpower brand which came in at plus 9% in the quarter. So very strong performance.

Jonas talked about our market trends earlier. Manpower U.S. is clearly one of the businesses where we do believe we're leading the market. And I'd say the Experis business, as expected, you heard me talk about the minus 14% in the quarter was really a reflection of the very large go-live work we had in the year ago period. But if you average -- if you look at the first 6 months overall year-over-year, we're running about minus 8%, pretty much in line with what you're seeing in the professional staffing industry in the U.S. as it continues to be a bit sluggish.

We do anticipate that, that's going to improve sequentially into the third quarter a bit as well. So I'd say those are the main trends in terms of Talent Solutions, we saw good growth in Talent Solutions in the quarter as well in the U.S. And so I'd say all account solutions and manpower really both had very good positive growth. and Talent Solutions was pretty significant double-digit growth as well on an overall basis in the U.S.

And as a follow-up, can you remind us of seasonality expectations for 3Q and for the second half of the year typically and how that stacks up compared to the first 2 weeks of July?

Yes. So I'd say in terms of seasonality from Q2 to Q3, we typically do see a bit of an improvement in margin and EBITDA margin sequentially. And you can see in my guide, we have margin improving 10 basis points from the 2.0 we just posted to the $2.1 billion -- and I'd say that has generally happened in recent years, not every year, if we're in a period where we're seeing significant declines.

And of course, then maybe that's not the case. But this year, as we continue to see some momentum, and you saw my organic days adjusted guide for flat for the third quarter. So with that, moving from negative to flat, we are seeing a little momentum, which is helping keep that plus 10 basis points from 2Q to 3Q. So I'd say that's one thing to consider. Of course, we always have holidays that impact the August period in some of our European markets, but nothing is really different this year in that regard. I think the only other thing in terms of seasonality, and I covered this in my prepared remarks, is when you think about free cash flow. So we do see negative free cash flow typically in the first half of the year over the last 4 years. and that's followed by typically very strong free cash flow in the second half of the year. So that would be the other consideration as you think about seasonality.

Our next question comes from Mark Marcon with Robert W. Baird.

First question has to do just with Northern Europe. You mentioned Jonas in the early part of your comments that in Europe, employers continue to be more cautious, reflecting the greater exposure to economic and geopolitical headwinds I'm wondering what do you think it will take to see some improvement in terms of the revenue trends in Northern Europe? Number one. And number two, how should we think about the profitability? And what are your long-term aspirations for profitability in Northern Europe? .

Thanks, Mark. Yes. And I think as you correctly point out, and we also talk about in the prepared remarks, it's really Northern Europe that is having a very tough time. And if you look at the economic performance of some of the main engines, notably Germany, which is in a recessionary environment and you look at many of the other countries that are also struggling with headwinds, although that is really what's driving the performance of our industry and the operations that we have in those markets. Now we believe that this continues to be areas where demand eventually will come back.

And to have that happen, it will help when the economic environment improves. And when some of the geopolitical uncertainties that are largely impacting some of those markets heavier than what we've seen in Southern Europe, such as energy costs and others they start to subside if there is a resolution to the war in Ukraine. So those are some of the elements that from an external factor, we think, could help Northern Europe improve. But as you've seen over time, and we have taken significant actions to rightsize our business in Northern Europe, and taken some very significant restructuring actions to make sure that we are rightsizing the business to the demand as we see it today and in the near term.

Longer term, we still feel good about Northern Europe and the ability for those markets to come back. One of the areas that make Northern Europe stick out from a profitability perspective is that most of these markets are using a bench model as part of the legislative environment that we are operating in from a staffing perspective. And that's different from what we have from a legislative framework in Southern Europe. So we continue to improve our positioning in the short term and preparing for better times in the long term. And in the meantime, we're taking the actions that we need both to drive greater pipeline growth as well as to make sure that we have the appropriate cost structures for the environment that we're anticipating.

Does that mean -- Go ahead, Jack.

Sorry, Mark, I was just going to add just a little bit more color on -- in terms of the restructuring we took this quarter. So you've seen us take significant actions in Northern Europe, and we took additional actions this quarter. The majority of the restructuring was focused on Northern Europe. We do expect to start to see an improvement in that profitability trend as we go forward based on the savings we're going to be getting from those restructuring actions.

So I did want to mention that. I think to your point on the longer-term margin, I think the reality is based on what Jonas mentioned with the regulatory model in many of the countries and the large enterprise market in the U.K. is in periods where it's stable to slightly downward pressure. We'll see Northern Europe be below the average for the company. But with that being said, when Northern Europe grows, Northern Europe definitely has the opportunity to be in line with the company overall profitability average, and it's about getting them back and positioned to be in a position for growth for the future. So that's what we continue to work on. and just wanted to add that additional flavor.

Great. And then in France, can you talk a little bit about the competitive dynamics I was looking at the constant currency revenue trends and comparing that to the PRISM data, and I was just wondering if there's any commentary there. And it sounds like you're expecting things to improve slightly. I was wondering now that it seems like tariffs are at least getting -- people are getting used to it, should we see some further improvement in France?

Yes. Mark, I think it's a very good point. My god does incorporate some sequential improvement in that rate of decline. And to your point, we've seen that from Q1 to Q2, pretty big improvement from a constant currency perspective coming in at minus 6%. And as we said in our prepared remarks, slightly better than we expected.

So the way I would characterize it is it's largely stabilized now as we exit the quarter. I think the run rate we see in our guide for Q3 is stable trends through the third quarter. And with that, we will walk into a slightly improved rate of decline. But I would agree with your comments regarding the business environment overall. And as long as it continues to stay relatively stable, I think that's the trend we would expect to continue to see going forward.

Our next question comes from Andrew Steinerman with JPMorgan. .

I want to hop back to the Manpower brand in the U.S. that sort of 9% days adjusted growth acceleration from 7% in the first quarter. I have a few questions on that. One, the Manpower brand is both light industrial and Clerico. Could you just tell us if there's a divergence between how light industrial and Clerico did in the second quarter? The second question is with the acceleration of the Manpower brand, do you think that marketplace is picking up? Or do you think that this is just share gains from Manpower. And if it is share gains, how did that get accomplished? .

Thanks, Andrew. Yes, I'd say that we're seeing the ability to fulfill and create demand to be a little bit stronger on the manufacturing side. I think you could look at PMI in the U.S. and you can see the gradual improvement we've seen there as well. But in terms of the share gains, I think a lot of this is down to our ability to target the industry verticals and the opportunities in a much more granular and accurate way in real time, a lot of that driven by access to data that we now have in the U.S. as well as globally, thanks to the power suite ability to really predict where demand should be stronger, and that is part of it. I do sense though that the market appears to be improving and market demand is stable to slightly more positive, which we, of course, see is a very positive indicator of a market that is slowly healing from what has been a long period of tough market headwinds.

So the team is doing a great job. We are taking share but we also sense that the market is starting to improve.

Our next question comes from Andy Grobler with BNP.

A couple from me, if I may. Firstly, just going back to Northern Europe where conditions are fairly very tough. There is some fiscal spending coming in Germany at some stage. Are you seeing any change in sentiment or kind of longer-term planning from your larger clients in Germany? And then secondly, on a slightly different topic, there's been lots of changes in kind of back office and front office systems. Are you still on track for those to complete and to begin to see improvements both in cost and efficiency through 2026.

Yes. Thanks, Andy. I'd say in conversations with clients in Germany, they largely still have a defensive posture in terms of the economic conditions that they are seeing, they would say that they are optimistic on the outlook yet waiting to see these increased funds and the investments into various sectors come through with the expectation that they're not really going to see any material change during 2025, but they're hoping to see a better operating environment in 2026. So -- and beyond. And that is sort of the sentiment from a German employer perspective. So they, amongst all employers in Europe are one of the most conservative and cautious employer base that we speak with because they are fully aware of the difficulties that are cyclical in nature, structural in terms of all of the former growth engines of Germany that are now stuttering, be it automotive, be it their export engine to China, and are expecting to see an improved environment, but are not really seeing it in the near term. And of course, that's reflected in how we are seeing the market evolve as well in our own performance. And Jack, maybe you could give some comments around the progress on our transformation efforts.

Yes. No, I'd be happy to. Andy, thanks for the question. I think the short answer is yes. We are tracking very well. I think particularly on the back office transformation project now on PowerSuite back office, we have almost 65% of our revenues going through that platform. And as we've talked about before, that's really enabling us to make some real progress in our shared service centers and our global business centers.

So we have 10 countries now moved in, more in flight. So we're definitely tracking to crossing over in the second half of 26%, as we've talked about. So we feel really good about the progress we've been making on the transformation.

And on the front, Andy, we have now 90% of our revenues running through the PowerSuite front office with the same global platform. We have over 40 website. So 70%, 80% of our website traffic is now also being managed through 1 global platform. So we are making excellent progress overall with our core technology stack. And we're very excited about what that opportunity could give us today as well as into the future.

Our next question comes from Kartik Mehta with Northcoast Research.

Jack, maybe just to get your thoughts on how the quarter trended if you saw any differences as the quarter progressed?

Thanks, Kartik. I'd say it's -- the second quarter is always from a trend perspective, influenced by holidays in the month of May, which kind of trend tends to make that a little a little different just when you see the holiday impact from a days adjusted basis. But with that being said, when we look at some of our major markets, I'd say, U.S. once you adjust for the go-live volatility year-over-year, as I mentioned, we had a lot of go-live activity I'd say we saw kind of steady -- very steady trends.

And when I'd say, improving during the course of the quarter for the manpower business, which is really good to see. Otherwise, I'd say relatively steady I'd say France, similar, I'd say, relatively steady, a bit of progress as we move through the quarter. And as we look at July activity, I think, as I mentioned before, we see stability into the third quarter. And then I'd say the third biggest business for us, Italy, very strong continued progress during the course of the quarter. So we saw an improvement in the rate of growth as we exit. And we expect Italy to continue to be very strong in the third quarter. And we believe we are leading the market in Italy today based on those growth trends in the first half of this year. So I'd say those -- in terms of the big ones, I'd say that's kind of the trends we've seen over the course of the quarter.

I know you've talked a lot about Northern Europe and U.K., and I'm wondering, is there any structural issue that you're witnessing in the country for temporary staffing as to why maybe the results haven't been as good as they have been in the past? Or is this just a reflection of where the economy is and once the economy improves, the business should improve. .

Yes. Thanks, Kartik. We still believe that this is largely due to the economic cycle. And so it's a cyclical evolution. Now any cycle that has been going on for a long time, of course, ultimately, we'll also have elements of structural change in demand because companies are hiring different and new skills. So we still, at this point, I think this is a minor issue from that regional perspective. This is all to do with a very tough operating environment due to economic and geopolitical headwinds and that is also then impacting the countries that have the bench model.

And with the bench model, just as Jack talked about earlier comes the drawback that when headwinds are hitting those markets in our operations, we deleverage much faster and harder in those markets than we do in other parts of the world. So we would expect those markets to come back once the economy turns around. And in the meantime, of course, we are from our business perspective, taking all the actions that we need to shore up both top line in areas where we can see growth as well as manage the costs so that we are bringing them back to profitability. And just as Jack said, with our latest actions here, we are anticipating an improvement in our performance into the third quarter also in this region.

Our next question comes from Trevor Romeo with William Blair.

Trevor. We can't really hear you. So can you try again?

Sorry, Jonas, can you hear me now? .

That's better.

Okay. Sorry about that. Appreciate you taking the I think just on the German fiscal [indiscernible]. I wonder more broadly about Europe with the defense and infrastructure spending in it, natal agreement. I think your direct expense exposure to defense is pretty low. But I guess I just wanted to ask for your thoughts on what the flow-through could be to industrial, manufacturing, other verticals? Any way to think about what that it could be like and how long that could take to materialize?

Yes. Thanks, Trevor. So overall, broadly speaking, the investment in defense and infrastructure into Europe, we feel will have a good effect into the broader economy as well. So not only in those industry verticals but also into manufacturing where we, of course, have a very strong presence. And actually, in defense, we have a very strong presence in Europe, in particular, in France and in Italy and Israel and other parts, we are very strongly represented. It is in the lower single-digit revenue numbers as far as our global exposure is concerned. But for Europe, we see our ability to really benefit from these investments and have a material impact to us in Europe when the funds come through to be promising. And that's what the teams are working on. So we think these are great industry verticals for us. We're positioning our teams to ensure that we are taking share and continue to be very well represented in those in those sectors going forward.

But there is a delay in terms of when the funds will actually start to flow through in manufacturing activity that will be noticeable. But when we look at how our business, for instance, in Sweden is seeing an increase in demand, how we're seeing an increase in demand in France, we can start to see the beginnings of something which we think will be a great opportunity for our teams.

Great. And then for a follow-up, just ask back U.S. manufacturing. How are you thinking about the opportunity for reshoring, I guess, 3 months out from the tariff rollout. Just curious if you're hearing any clients kind of saying that they're increasing confidence or maybe starting to want to increase manufacturing activity more in the U.S.

Well, I think, Trevor, more broadly, what company clients are telling us that they're -- or what we're seeing in their behavior as well is that they're starting to sift through the noise from the signal and the trend that they believe is underlying these tariff negotiations. And we talked about that in our prepared remarks that clients are taking a much more pragmatic approach, they believe that tariffs will eventually be settled and negotiated in a way that is not going to materially impact the economy. And as part of that, they are looking at the best place to conduct their business, and the U.S. is considered to be a very positive business environment. So they are many of them thinking about expanding their manufacturing base here in the U.S., which, of course, from our perspective, could be very beneficial here in the U.S. and from the Manpower business perspective as well. Now the kinds of jobs that are coming back and the volume of jobs is yet to be determined because, of course, the jobs that are being brought in, in many cases, are skilled jobs that are leveraging automated manufacturing processes. So in terms of the number of jobs that are coming in, that still remains to be seen. But generally speaking, companies are talking about investing in the U.S. and adding manufacturing capacity, and we feel that's going to be very beneficial to our Manpower business and to our Experis business as well as our Talent Solutions business here in the U.S. as well.

Our next question comes from George Tong with Goldman Sachs.

You talked about -- I talked about taking significant actions to rightsize the business in the U.K. from a cost perspective. Are these cost takeouts focused on frontline revenue generators or the more back office overhead functions?

George, I'd be happy to talk to that. And actually, this quarter was really more focused on France, Netherlands, Germany. So really Netherlands, Nordics and Germany within Northern Europe. U.K. was a focus last quarter as well. But to your question, regardless, it's been a mix, candidly. I think there has been parts of the business where we've needed to rightsize producers to the current demand environment. We've been doing that very carefully, particularly when it comes to any sales professionals.

We've been extremely cautious. But the reality is where demand has been down. We have adjusted some recruiter levels in some of those key markets. We are doing a lot in terms of overall back office in those markets as well. You can see that in our national head office. So outside of the business, all the real support functions, we've done some pretty significant cost actions to make those businesses more efficient and you'll see that come through as we talked about in terms of some of the Northern Europe trends overall as we go into the next quarter. But I'd say it continues to be a balance, and we've been very careful on the producer side.

Got it. That's helpful. And then with respect to AI, you mentioned not seeing any structural impact to the labor markets at this time, but that the lag from exploration to impact could be shorter than other tech advancements. In the business, where would you expect to see impact if there were to be 1 in percentage of revenue could be affected? .

Well, right now, George, what we're doing as many other companies are doing is exploring really the possibilities of how we can augment human capability. And the results so far have been very, very encouraging. I mentioned earlier our sales targeting engine, which we're deploying across Europe right now. It improves our accuracy and determining which prospects are likely to give better revenue opportunities and higher likelihood of generating an order that's been very helpful. We've deployed through our Sofie AI technology, the ability to have a virtual recruiter assistant that automates the candidate screening, shortlist and ranks the candidates through a chatbot interview, providing great user experiences for the candidates. More than half of the candidates are fulfilling their candidate interview requirements of working hours in their own time and we see great productivity improvements there as well to the tune of 2 to 3x more effective time used by our producers.

And then we have our own assistant in terms of generating and enhancing job description candidate submittals and things like that, that is really deployed across the world today. And what we're seeing are point-to-point improvements in recruiter tasks. But just as you're seeing with many other companies, whilst we see excellent opportunities in specific tasks that recruiters do the impact really to have full effect on productivity needs to come through process transformation and leveraging agent AI and automating various. And I would say we're in the early process of that, now that we're really seeing some very good progress on the individual tasks and what the impact can be. The last thing I would say though, George, is that we're really starting to see tangible impact in terms of leveraging our data. And we have a database of tens of billions of data points that we're starting to generate insights for our clients and our candidates and our own internal sales and recruitment team members so that we can generate much better outcomes for our clients. And we're early on in that journey, but we are very encouraged by the progress that we're seeing and the reaction that we're getting from clients, especially in an environment that's moving very, very quickly.

George, I would just add to your point on -- in terms of impact on revenues and so forth from AI still very early days. I think as Jonas has talked about, we do know that coating at very basic levels is more exposed. I think the important thing for us is we do not run a bench in terms of those skill sets. So the key for us is pivoting our recruiters to recruit the IT skills that are in demand from our clients. And I would say that's not an overly significant part of our revenues today to begin with. But as we move forward, I think that is going to be the way we look at recruiting for technology skills going forward.

That's helpful. And just a quick follow-up there. Would you see the clerical part of your business as potentially exposed, so administrative support or clerical from a white collar perspective? And how big of the business is that? .

George, largely, our view is that AI will augment human capability and clerical roles have evolved over decades and become more productive with the help of technology tools like at the time the PC. The advent of the PC from a typewriter and Microsoft tools that really improve productivity in terms of XL and other things. So we would see this much in the same light. The key from our business perspective is to understand where are we today, where are the skills of the future, what are our client needs and then be sure that we pivot in terms of being able to provide and create those skills so that we can help the companies navigate this rapidly changing environment. as well as helping people find meaningful and sustainable employment in the areas that are growing faster. So this is what our business is all about. We are now being helped with data and insights to a degree in scale that we've never seen before. And just as we said in our prepared remarks, this is a very, very promising evolution for our business, and we think there are some great opportunities for us going forward in this area as well.

Our next question comes from Stephanie Moore with Jefferies.

I was hoping you could talk a bit about how perm activity trended as actually the quarter progressed, if there were any meaningful changes particularly in the U.S., just given ongoing tariff conversations. And then the same thing, what your expectations are for perm as you look to the third quarter.

Thanks, Stephanie, and I'd be happy to take that. So the way I would say is perm was relatively stable overall on a consolidated basis. I think if you look at our revenues in GP for perm, slightly higher in Q2 than it was in Q1. And I think as we exited Q1, I was asked, what do we think the mix of perm will be in terms of total GP for Q2, and I said about 15.5. And we came in right in that range. We actually came in at 15.3% of our GP. And we see that 15.5% market is relatively stable. Now these trends that we've seen, as we talked about last quarter, we saw a bit of an adjustment in Q1. But now that that's done, it actually has been quite stable. In terms of key markets, to your question on the U.S. U.S. actually saw kind of flattish perm on an overall basis, very, very slight growth.

So that's a sign of stabilization as well. And I'd say in Europe, kind of in line with what we expected. We've seen stable levels, and that's still walking into a slight year-over-year decline in many of those markets. But I think the key point is from activity levels, relatively stable. So a bit of the reset was in Q1, slightly lower. And from that level, we've actually seen it be quite stable. And as we look at we're kind of projecting more of the same. We're not anticipating that it's going to change dramatically. But we are anticipating stability at these lower levels into the third quarter, and that's what you see in our guidance.

Our next question comes from Josh Chan with UBS.

I guess my first question is on your tone. It sounds like you feel better about the trajectory of the business. I guess, at the same time, the macro clarity probably hasn't improved very much. So I'm trying to triangulate, see if you can reconcile those 2? And where you see the trajectory going from here kind of after this stabilization period that you call.

Well, thanks, Josh. And yes, as you can tell, whenever we can think of a moment and in our guide of a flat organic days adjusted outlook that is a change from what we've had to guide to for quite some time now. So we are feeling better about this. But mostly, it is based on what we're hearing from our clients. And we've talked in the past about how important employer confidence is in terms of their hiring intentions. And from our internal data, we can tell that clients are looking through the noise and are more interested in the signals of what is changing. I also believe that they are getting used to an environment of high levels of noise and new noise on a very regular basis, but that, that doesn't necessarily translate into a reality in the market. So therefore, their confidence into the future appears to be stabilizing. And of course, stabilization as long as things stay the same and no actual major changes are occurring is, of course, followed by a period of, hopefully, some more positive even environment. And we then look at markets like the U.S., where we're starting to see that occur in manpower.

We're driving a lot of that broadly speaking, we're seeing it in manpower. We're seeing it in Talent Solutions. We have strong performance in parts of Southern Europe, like Italy, and Spain. We see Asia Pacific as well as LatAm continuing to have a strong environment. It gives us a sense -- an increased sense of optimism that we could be heading in the right direction. And to be clear, we're not calling the inflection point.

We think that's a full errand. We'll see what the market does. But I think you can tell from what we're hearing from our clients their level of confidence is improving, and that's the reason and the underlying foundational element as to why we're believing the market is stabilizing in many cases at lower levels, but that's a starting point. That's the foundation for future opportunities of growth, we hope into the future.

That's great color. And then my follow-up quickly on free cash flow. I know, Jack, that free cash flow is usually negative in the first half. But I guess could you talk to the magnitude of activity in this first half? And relatedly, do you expect to recoup some of that in the second half? Or do we expect the second half to be relatively normal, so to speak?

Yes. No, thanks for the question, Josh. Yes, when you look at the second quarter, particularly, second quarter has had very large outflows over the last 4 years. And every year, I think over the last 3 years, it's been somewhere in the range of 150 to what you see here in the current quarter, just above $200. So that has been post pandemic, a little bit of the trend that we have been seeing with larger outflows in the second quarter. I think this year, as we talked about last quarter, the first quarter was influenced a bit by the timing of the MSP program. We have 1 of the largest MSP programs in the world. and that does cause some volatility specifically, and we saw that from Q4 into Q1. With all that being said, we had very strong free cash flow in the second half of last year, we would expect similar dynamics again this year. I think the MSP program usually works itself out over the course of the year. So we'd expect to see that in the second half work itself out as well. So that's the way I would think about free cash flow in the second half. .

And that question comes from Tobey Summer with Truist.

This is Tyler Bersch on for Toby. Can you discuss the implications of the seat fire for the end of the Russia, Ukraine or and any other events in Europe that we -- that could be sources of upside for you?

Well, thanks, Tyler. I think it's hard to tell exactly what the consequences would be. But of course, having a war going on in Europe is causing great consternation and uncertainty for employers. It is also having negative economic impacts in terms of the price of the energy and the ability thus of manufacturing to absorb those costs. So we think a ceasefire on the European continent and in particular, on Ukraine would be very beneficial in terms of providing greater confidence for employers in terms of how the European economy can start to show a bit more momentum. .

Got it. And then just 1 final one. On the recent cuts to the dividend, what would be conditions that could raise [indiscernible] to the dividend being raised again. .

Yes. On that, I think we talked a little bit about this in the past as well. So the dividend was reset as we announced back in May to the current environment. But we're very proud of our track record of increases in the dividend in a stable to improving environment. So really, that's it. I think as we see the environment improve then you should expect we would lean in and start to increase the dividend again, like we have in the past, and it's really just a matter of time as we continue to see that play out.

But as Jonas said, one step at a time, we're guiding to flat currently. And if we continue to see positive momentum going forward, you should expect that would be the case in terms of dividend plans as well.

Thank you. I'd like to turn the call back over to Jonas Prising, for any closing remarks.

Thanks, everyone, for participating in this earnings call. We hope you continue to enjoy a nice summer, wherever you are, and I look forward to speaking with you again on our next earnings call. Thanks, everyone.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.