ManpowerGroup Inc. (MAN) Q1 2012 Earnings Report, Transcript and Summary

Welcome, thank you very much for standing by. At this time, all participants are in a listen-only mode. (Operator Instructions) Now, I’d like to turn the meeting over to Mr. Jeff Joerres. Sir, you may begin.

Good morning and welcome to the First Quarter 2012 Conference Call. With me this morning is Mike Van Handel, our Chief Financial Officer. I’ll go through the high level results for the quarter. Mike will then spend time on the segment detail as well as the balance sheet and our outlook for the second quarter. Before I move into the call, I’d like to have Mike read the Safe Harbor language.

Hi, good morning, everyone. This conference call includes forward-looking statements, which are subject to risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements can be found in the company's Annual Report on Form 10-K and in the other Securities and Exchange Commission filings of the company, which information is incorporated herein by reference.

Thanks Mike. The first quarter was much better than what we had anticipated. It was primarily driven by the higher than anticipated revenue line. Going into the quarter, we were seeing some crepitation, as we continue to, but it turned out to be much less than anticipated. We were anticipating constant currency revenue growth of zero to 2%, and we achieved 3% for the quarter. Revenue growth in U.S. dollars was flat but also above expectation as our guidance called for a contraction between 1% and 3%. The higher than anticipated revenue was achieved across the board as the Americas, Southern Europe, Northern Europe, Asia-Pacific and Right Management, all exceeded expectations. We expected to earn between $0.30 and $0.38 with a negative impact of $0.02 per currency. In fact, we earned $0.50 with a negative impact of $0.02 per currency. Given the choppy economic environment, our success in the first quarter attribute to the team as well as the lot of hard work that had taken place prior to the quarter. It’s also important to note, as you can see that, while our growth is below normal levels for this time of the recovery, we were able to achieve or leverage given even modest increase in revenue. Our operating earnings increased 14% in constant currency with our earnings per share increasing 21% over the last year in constant currency. We were able to maintain a much better hold on gross margin and continued our path towards diversifying our business and differentiating ourselves within the brands under ManpowerGroup. With that overview, I’d like to turn over to Mike to discuss the details.

Okay, thanks Jeff. I will follow my typical format with some overall comments on the quarter followed by discussion of each of our operating segments, a review of our cash flow and balance sheet, and finally our outlook for the second quarter of 2012. As Jeff mentioned, the first quarter was a strong start to the year. Revenue growth exceeded expectations up 3% in constant currency. Revenue benefited approximately 1% from acquisitions and about 1% due to an extra billing day compared to the prior year in some of our countries. Earnings per share of $0.50 exceeded the midpoint of our guidance by $0.16 per share, which was all driven by superior operational performance. Our SG&A expense was in line with expectations despite the stronger revenue growth, and as a result the incremental gross profit and the additional revenue growth fell straight to the bottom line. This resulted in an operating profit margin of 1.8% which was 30 basis points better than expectations and 10 basis points better than prior year. Our reported tax rate of 51% was slightly below expectations, which was simply due to the fact that the French business tax component of our provision was not impacted by higher pretax earnings. The underlying effect of income tax rate excluding the French business tax was 38%, which was right in line with expectations. The currency impact on the quarter was a negative $0.02 right in line with the expectations. While the year was slightly stronger than expected, the overall earnings per share impact fell in line with expectations as more euro based earnings were generated than anticipated. Our gross profit margin came in above as expected at 16.6%. This is 30 basis points below the prior-year and primarily relates to a lower staffing gross profit margin impact of…

Thanks Mike. The first quarter was a solid quarter, we were able to achieve better than expected revenue growth. And while it was a modest revenue growth, we showed good operating leverage, first quarter was an important quarter for us to get behind. We were able to continue and expand many of our programs that are leading to our revenue and profitability growth. The areas of differentiation, diversification, the efficiency and productivity are key to our overall performance. Each of those areas we’ve done quite well at. Differentiation is extremely important, and we are clearly seeing this payoff. Our branding strategy with the parent brand ManpowerGroup, Manpower Experis, Right Management and ManpowerGroup Solutions continue to get more visibility and distinction within the industry. The thought leadership as well as positions that we’ve taken across the world is bringing us leads and we believe we’ll continue to do so. That coupled with our increased ability in our sales function and global footprint will continue to enhance our differentiation. Under diversification, we continue to grow our solutions business. And what we believe is much faster than market, our growth in solutions gross profit was 18% in constant currency, which included nearly 30 additional RPO wins as well as expansion in our Borderless Talent Solutions as we are seeing more clients interested in cross border RPO work as the talent mismatch accentuates the need for such a service. Additionally, our Talent Based Outsourcing, which is the outcome-based pricing solutions business, continues to grow. That alone grew at 16%, and our pipeline is very solid. So we would continue to anticipate good growth in the second quarter. Our Recruitment Process Outsourcing business also saw a strong revenue growth of 27% increase in constant currency as our clients continue to shift more of their recruiting…

Thank you. So we’ll now begin the question-and-answer session. (Operator Instructions) Our first request now is from Sara Gubins of Bank of America Merrill Lynch. Your line is open ma’am. Sara Gubins – Bank of America Merrill Lynch: Hi, thanks. Good morning. You mentioned seeing some stabilization in France in terms of declines in March and April so far, the guidance for the second quarter of course suggests a continued deceleration in your markets. And so I’m just wondering what you’re seeing in other key markets in April, and maybe how much turned out as well?

When we talk about stabilization, what we’re really seeing is that, some of the markets have gone down and you can go almost in all of them with maybe a few exceptions. But what we saw in drops in some of the November, December timeframe; really just kind of stayed the same. I mean we had some choppy weeks in there, where a few weeks were maybe a little bit weaker; and then it would come back a little bit more. So when we’re talking about stabilization, we’re really looking – if you look at the euro zone, and there are some differences with the Netherlands, maybe it’s dropping off a little bit more in Sweden as Mike mentioned, dropping off a little bit more. But even that, it’s not dramatically. So as we unfold and as we talked about in the last conference call, we really didn’t see it is dropping off the cliff in Europe, and in fact as we look at the first quarter, there really wasn’t, it was pretty much just stabilized at a lower level. There are some events whether they’d be elections or consumer confidence things that could drop that, but at this point we’re really looking at from almost all markets in Spain, we actually grew a little. So when we talk about stabilize, we’re talking about stabilized at a lower level as you can see from the forecast end of the second quarter, without really a lot of turmoil happening other than – the turmoil of what might be happening at the bank level. Sara Gubins – Bank of America Merrill Lynch: Okay, great. And then separately, last year you closed 2% of your southern European offices while northern Europe was pretty much flat. Would you consider closing additional offices in Europe in light of demand trends?

It’s a good question. What we had done last year and as we have done some in the previous was we really looked mostly at consolidation, and in fact there are some strategies that we have and that will still be rolled out in southern Europe as well as northern Europe, or we may have multiple offices relatively close in a city center. We’re looking at possibly consolidating those, so we’re not closing offices as much as consolidation, and we are doing a few of those in northern Europe. Frankly, it is more driven on better service, better management and of course, we’ll get a little bit of benefit from a reduced real estate. But we really feel as though running a three to four person office is harder in the cities to larger cities than running a nine or ten person office, we have much more flexibility and much more actual energy in some of those offices. So you’ll see that in places like Berlin, we’ve already done that in Netherlands, we’re looking at a few other places in northern Europe.

So maybe, just a little bit. Two things, maybe first just little bit more color on your question related to trends, and maybe put a little bit more color on France. So we did see some decline in demand in France in the first quarter. If you look at by month on an average daily basis, January was pretty flat on prior year for us, then February went down a bit to about down about 5% or so year-on-year. And then March came back up to down about 3% year-on-year. February, there was a cold weather snap in Europe you may recall, I think that impacted the numbers a little bit. So that could be a reason why February dipped. And then we look to April, we’re seeing pretty much the same as what we saw in March, and our view and our guidance was for the second quarter to be down between 3% and 5%. So pretty much still looking at that same trajectory – maybe getting a touch later, but not – I think that’s pretty much inline with what we’ve been seeing overall, just a little bit of color there. The second point which I made in my call notes, but I just want to maybe reemphasize that I caught your note earlier today. Just in terms of the out performance relative to expectations, I really would characterize it as all operations. Our tax rate overall was lower than what we expected, it came in at 51% versus 56%, but the reason for that is because the French business tax now was classified in our tax provision. Now it’s $17.4 million in the quarter and about as expected, and as our pre-tax amount moves that business tax does not and that has a unusual impact, it impacts at effective rate if you will. And if you actually take that business tax out, our tax rate came in at 37.7% and we are forecasting an underlying rate of 38%. So just to make sure we are clear in terms of how we communicate that. We would see really the 16% of performance above our midpoint of guidance is being operational in nature even though part of it looks like it shows up on the tax line. Sara Gubins – Bank of America Merrill Lynch: Okay. Thanks a lot.

Thank you.

Our next now from Tim McHugh of William Blair. And your line is open. Timothy Mchugh – William Blair & Company, L.L.C.: Yes, thanks. Just wanted to ask, you mentioned in the UK that you have had a large key account program that helped you during the last year. Is that significant and should we model or think about it, to the later half of this year as a growth likely to slow there or is there enough momentum going on in the UK that you can continue to kind of outperform the market there?

Maybe just a little bit stronger probably in the mid single-digits. So I think overall, my sense would be that, we’re still outperforming the UK market, our market data is little bit hard to combine in the UK but my senses were we’re still outperforming despite that account and that account has added a little bit on the top which has been good, but I think I don’t want to lose sight of the fact, I think the UK organization really has done a nice job performing across-the-board and getting new business and really delivering good profit performance on the business they have been giving. So I think it's a – things are moving well in the UK now. Timothy Mchugh – William Blair & Company, L.L.C.: Okay. And then just in the U.S. the profit margin, you said that the gross margin for the Manpower, traditional Manpower business was up, so the margin they’re being down year-over-year. Was that just negative leverage from some of the key accounts that you talked about that pull some work in the large projects that’s stopped or are there any other factor hitting the U.S. margin there?

Yeah, I think what you are seeing there really is just the delivering with the contraction on the top line. We were able to pull our SG&A cost down a little bit but not to the same level that we were able, that revenue and GP drop, so it’s effectively some delevering that’s coming through. And the first quarter numbers are fairly small, so the percentages tend to look a little bit bigger. So no real secrets rather than some delevering that came through.

And I think you’ll see that increase in profitability as you move into the second quarter because it’s a larger quarter and you get to get actually more leverage out of the expense action that we’re taking. And by the improved gross margin which our goal is to take that improved gross margin EBIT to drop to bottom line.

Well, we are on that topic. I’d say the same thing in the French market, we’ve, yeah I think our team has done quite a nice job working around pricing and managing the GP well. And overall in the French market our GP margin was up a little bit on prior year. So that was a good success there but topline was a little bit weakened and we had the acquisitions coming through which added a little bit to the SG&A line. So effectively we did see some delivering, if you will the organic business contracted and while we did take some of that expense out, not enough to, that we still are seeing some delevering in the first quarter in the French market as well, despite what I think was some pretty good performance on the GP line where we did see some improvement there. Timothy Mchugh – William Blair & Company, L.L.C.: Great, right thank you.

Thank you. Our next now from Andrew Steinerman of JPMorgan. Your line is open. Andrew Steinerman – JPMorgan: Hi, Mike and Jeff. Mike would you say GP lines in fact you meant gross margins or gross profit dollars? And I think you’re outperforming other market in terms of revenue growth, I remember last quarter, you thought you would look to potentially purge account in France in order to take price discipline. Did that happen and so how are you outperforming the market and having gross margin trends, say well at the same time?

Sure, I’ll take the first part of that. Andrew, I must say, our gross profit margin was up slightly year-on-year, gross profit dollars would as well be, but I think the point what I was trying to say was the gross profit margin percent was up year-on-year. I’ll let Jeff comment on the second part of your question.

Yeah. On the second part, it is about 18 to 24 months of work within the network that you are starting to see and it’s really in three different areas where we would be getting that growth. And we have the present data, so we feel pretty confident that we are outperforming the market which in the market that is that large with large players it’s difficult to do, those three areas are focused. We really been able to focus our branch offices on who to be approaching, who to sell to, and what are the appropriate margins and what are the indicators of that we’re doing well on that, we’ve done a lot better on that. Secondly, the SMB market is growing better than the key account market and we’ve had a very concerted effort on the SMB market and that is now starting to come through, it takes a long time. I took us almost a full 18 month before we can certainly see the traction in the SMB. And then I mentioned a little about this last quarter but it’s even more so now and that is in the French market where you may have three or four companies that are sharing the business. And what we’re starting to see and I really want to emphasize at this point is we talked about efficiencies and growth and all those others. And frankly a lot of industry players have forgotten, it’s still about the quality match and now it’s coming back to hurt them. Without the quality match and doing things for low price, lower than what we would be doing. We are taking business from other large competitors, who are being if you will ask to leave the account because they are just not matching in a quality way. All throughout that process we’ve been able to take about €80 million and take that business away. So similar with U.S., we are taking business out on the bottom end and still being able to outgrow the market. So it’s our goal to do that in the U.S., we are on that path but you’re seeing a little bit of a balance issue in the U.S., where at least right now in France between us delivering good quality SMB, we have been able to eliminate on an annualized basis about $80 million worth of business, I'm sorry €80 million worth of business. Andrew Steinerman – JPMorgan: That’s awesome, Jeff, you did mention. Is there any need, has M&A been purged against France similar to the U.S. to stay price disciplined?

Well, we’re being selectively, we have unfortunately had to walk away from some what we would have thought, we could have delivered some really good service to them but market is competitive, we are seeing the market become very competitive as Mike mentioned from the, and as the second group or the second tier, the mid sized regional are extremely competitive. Interestingly enough there has been about 100 offices opened this year alone in France all by mid-size players. So market is competitive, we’re going to continue to see the competition in pricing. However, with that GP percent improvement our SMB focus and our quality focus we feel as that we are going to be able to maintain in industry lead for a bit here. Andrew Steinerman – JPMorgan: Nice job, thanks.

Thanks.

Thank you. Jeff Silber, BMO Capital. Your line is open now. Jeffrey Silber – BMO Capital Markets: Thanks, so much. Just wanted to continue the discussion on France, Jeff in your remarks you just alluded to start of the elections and it looks like we may have a change in party. If the socialist do takeover, do you see any major regulatory changes coming? Thanks.

Yeah, thanks Jeff. Yeah, we talked about that when we were together in France. And there is a view of what a socialist means that maybe outside of – France is a little different. And no doubt history would say that possibly the other party, Sarkozy party would be a little bit better for us, but frankly it’s hard to tell right now. When you look at some of the issues or platforms that Holland has been and on is, there are some positive things for us like maybe stopping some overtime and which would give us additional business. Increasing the allocation to the training fund maybe taxing some short-term contracts other than it's been in the staffing business. So right now we’re looking at it, it is both candidates have some puts and calls if you will and puts and takes on what might be positive or negative. But at this point, we could almost call it a push. I would also say that the rhetoric, like in all countries, have been ramped up a lot. So those are hard to discern between what is said pre-election and what is actually done post-election, so we will have to wait. But right now it wouldn’t spell at all a disaster for us; in fact there could be some positives on those sites, Sarkozy and some other things like looking at the social VAT which would be redirecting the tax off from the work and helping us and may be some competitive agreements and he to is interested in increasing the training fund. So there is some puts and takes and right now we are relatively sanguine on which one would win or lose. Jeffrey Silber – BMO Capital Markets: Okay, that’s helpful. You also talked a little bit about the pricing pressure specifically in Italy and your Dutch market. I'm wondering you can see this creeping into other markets, where you are seeing trends unfortunately move in the wrong direction?

Northern Europe in general maybe feeling a little bit more pressure on pricing or maybe they haven't had that before. But as Mike mentioned, our German operation was able to increase their gross profit percent. So we are still able to do that, but the Dutch market never really came out of the downturn and as a result I think that there is some more intensity in some of the pricing, so that's a pretty tough market. In Italy, the major players other than the locally domiciled players have actually been fairly disciplined. And we also have a good solutions business and permanent recruitment business and our Experis business is doing well there. So there is a good mix, but I would say pricing pressures are there but at this point other than maybe the Dutch market in a few key regions within certain countries it’s competitive but not ridiculous. Not like what we were seeing in 2009. Jeffrey Silber – BMO Capital Markets: Okay, great that's helpful. Thanks so much.

Thank you. Mark Marcon of R.W. Baird. Your line is open now. Mark Marcon – Robert W. Baird & Co., Inc.: Good morning and congratulations on the good results. I’m wondering if you can talk a little bit more about the gross margin trends more broadly given your changing mix with solutions and Experis becoming bigger, as well as France and the U.S. in terms of core temp stabilizing. How should we think about gross profit longer-term and then I've got a follow-up with regards to SG&A?

Sure, Mark. I think when you step back and look at the gross margins, couple of things that I think showed positive, one of the positive is, we’ve got stable with the right management side, so that's no longer dragging overall. So I think now we’re at a point of building on where we are and moving things from here. And when you look at what we are doing on the solution side that is higher gross margin business. And right now the solutions and specialty side of our business is 35% of the overall mix. As we continue to drive that, I do see opportunity for further enhancement of gross margin going forward. The other thing that we’ve talked a little bit about is just the opportunity for firm recruitment in this market. We are really reaching peak levels of perm recruitment already peek historical levels. And we still – we are obviously still in the early innings from a labor market recovery standpoint. So we see that as really a good opportunity, clients are thinking about using us differently and using us, using more of our services on that side than we ever had before rather than building them in-house. And we ourselves have built out the capability over the last, if you go back to the 2004, ’05, ‘06 period that's really when we built up the capability for perm recruitments. So we’ve got that capability now that we haven't had in the last cycle and of course the French market is now open for perm recruitment which happened in 2005. So I think there are a number of positives on that front, when you look at the core staffing side, I think that we will remain a bitty choppy for a while, I think we’re going…

Yeah. So from a restructuring standpoint, so it did take a $20.5 million charge in the fourth quarter primarily related our realignment of the professional business with Elan and Experis in Europe and then also related a plan we introduced with Right Management. The Right Management plan, we still expect further restructuring charges to probably land either in the second quarter or third quarter, but that plan is going quite well. We did say $30 million for the year; we did get $8 million in the first quarter. So my guess is we will be a little bit above that $30 million, but also I’d say that most of the changes we made are fully online already. So it’s not like it’s ramping dramatically from where we are in the first quarter, but obviously you can do the straight math on that and say we will probably top up a little bit ahead of that $30 million. Beyond some of the reorganization and realignment work, we are always driving overall initiatives with in the organization to drive productivity across our field network, so they can handle more volumes and deliver better service to our clients. So that’s a never ending process. There is never one silver bullet on that. That’s a long list of initiatives that we are driving and tracking on a monthly and quarterly basis with the operations and a lot of that has to do with standardizing processes, but also introducing new technology and centralizing and using more shared service across all of our processes. So I think good opportunity there, and of course with top line growth, you get the scale advantage as well. So I see that’s coming on and – but I’ve been quite pleased with is the fact that we’ve been able really keep a tight hold on cost and when you see our revenue and GP coming through the incremental margin that’s coming to the bottom line is quite nice. So with that said, there is a lot of those we’ve been working on are really showing themselves now because we are not required to add-on that cost quite as quickly as what we normally might be able to. So we’ve got somethings that maybe haven’t fully exposed themselves yet, but that will as top line start to pick up. Mark Marcon – Robert W. Baird & Co., Inc.: Great. Can I ask one more, just with regard to the last quarter, you basically – Jeff you mentioned that you were looking at a few opportunities in terms of some big account wins that could potentially come down from some RFPs, any progress report there?

Yes. Those are of sizable nature and as a result, they take a little bit longer to work through the line pipeline, but although those are still there and in fact we’ve added a few more to the pipeline. And what I was referring to last time was that our Solutions business was moving along nicely and those really are in the areas of the Solution business. So it’s very good for us, because what we’ve been able to see is that we are really not competing with the same companies because our offering is a bit different. So they take a little bit longer, but we are still quite optimistic that our win ratio should be pretty good on those because of the work that we’ve been able to do in Solutions. So those large Solution wins are still in the pipeline and we are hoping to realize those yet this year. Mark Marcon – Robert W. Baird & Co., Inc.: Great. Thank you.

Thank you. Our next request now, from Paul Ginocchio of Deutsche Bank. Your line is open sir. Paul Ginocchio – Deutsche Bank Securities: Thanks. Hi, just getting back to the U.S., you talked about shedding some contracts. Can you quantify that? And then also looking at Experis, if you could sort of, I don’t know, clean it up for some these larger contracts, can you talk about what’s going on there? It looks like you are underperforming in market. I just want to get a little more color. Thanks.

Sure. When we had talked about was last time was somewhere in the neighborhood, I think we said last quarter some $50 million, maybe a little bit more that we had taken out of the U.S. particular out of the Manpower side. And then it’s a little bit harder to quantify the new business opportunities coming in that we normally would be much, I shouldn’t say much more aggressive, we might be a bit more aggressive on. And we have decided through a really good analysis of pro forma P&L before we even go into the bit process, we continue to update the pro forma P&L. And at certain times we decide to write a very nice letter saying we really want your business, but not at this level, because we think that you are not going to be receiving the quality. So I think that’s throttling some of our growth in U.S. And as I mentioned, also we want to be able to find that balance. That balance isn’t easy to find about what you pursue all the way to the end where it’s a brass knuckle fight in the alley at the end. And then what are the one that you say, no, we’re just not going to go down that path and we might be being a little too selective at this point, but I think it’s a good organizational behavior to do that. On the Experis side, I’d say that the market is not an easy market to determine if we are underperforming. But your statement is very logical one and I can – I too can see how you’d say that. And I have said that more than once inside the organization. But when you really break it down, and we’ve spend a lot of…

Yeah. We came in at 13.5% in the quarter. So we are up 60 basis points over the prior year. Paul Ginocchio – Deutsche Bank Securities: Thank you.

Thank you. And it’s now Thomas Allen of Morgan Stanley. Your line is open. Thomas Allen – Morgan Stanley: Yes. Going back to Europe a little, I wanted to talk about Germany and Italy. In Germany, you’ve been making some changes over the past couple of years to improve profitability, do you think you can trend up to top-line growth now, now that you’ve made those changes in Italy. It seem like you did pretty well in this quarter. How should we think about that market going forward about what you said about the pricing impact? And then how should we think about the labor reforms going on there? Thank you.

In Germany, you are right. The team has really done a nice job on – and continues to work to be done on what would be the back office and getting some profitability. And in fact we increased our profitability substantially again year-on-year in Germany though our top line was basically flat or zero. So we are now moving more in an external facing way. And again, we have a good team there. So I’m confidant in that. And we made a conscious decision, which was let’s get our house in order, then let’s go to the outside, so now we are going to the outside and we feel with the propositions we have, we are going to do well though. It takes a little while. So my sense is that in second quarter you will see a little bit more of the same and then you will start to see some of the growth coming out into third and fourth quarter. Now we also are seeing, in general the market in Germany is going down a bit. So it’s not just our performance against the market, the market in general for temporary staffing is just trimming down a little. Some of that has to do with the very low unemployment rates and it’s very hard to find people. So that’s a little bit of a governor on that. Italy, we think that we will continue to see some pricing pressure. The team there is doing extremely well. There are lots of labour reform conversation. There are something called Article 18, which is an extremely robust discussion and has a lot of courage associated right now. Article 18 really has two major components to it. One is to reduce the restriction for entry of people into companies particularly where you would see the big push in there would be the entrepreneurial federation or what we would more classically call the SMB, to try to get that small and medium sized business to be able to bring employees on in a much faster way without all of the restrictions and then of course the notion of exit flexibility. There has been several iterations with the government and hearings and Article 18 looks like it has a very good chance of moving nicely through, of course, with some real angst with it. But there is a commitment to by middle of the year that this has a change of being moved through. There are some parts in there that could be more positive than negative for the staffing industry, but it’s too early to tell if those walk through. Thomas Allen – Morgan Stanley: Okay. Thank you.

Okay.

Thank you. Kevin McVeigh, Macquarie. Your line is open. Kevin McVeigh – Macquarie Research Equities: Great. Thanks. Jeff or Mike, any thoughts on kind of the length of assignments, in terms of as contracts come back up, are they being kind of expanded or just any thoughts on that would be helpful?

Great question, Kevin. In fact one of the challenges that we would be having right now, to be very honest, in Experis U.S. is that the assignments are shorter. And as a result, you do a lot more work potential for the same amount, which is what is impacting some of our recruiter productive. Also, assignments tend to be shorter in small and medium size businesses, which is where some of the growth is right now. I think it’s really just the function of the uncertainty in companies. As we talked about, we think overall that is actually in general tends to be a positive secular trend for us, as companies are using more project based and by definition they are shorter and therefore using more of us. The assignments in France, Italy, the UK, for the most part in Manpower as well, they tend to have shorten slightly just as companies are looking at their visibility and wanting to ensure that they keep themselves as agile as possible. So we think as the uncertainty starts to lift, which would be throughout this year that those assignment lengths will probably go back to more of a normalized timeframe. Kevin McVeigh – Macquarie Research Equities: Got it. Then without being a kind of too theoretical, does that help from a pricing perspective, Jeff? Because if you got a shorter duration when the price resets does that help recapture some margin that may have kind of gone out to sea during the downturn?

Well, on the SMB business, you have a chance to do that. But frankly, to be real honest, what it does is it does it puts more pressure on efficiency and productive because you are generating that many more interviews, that many more paychecks, that many more invoices, that many more customer reports. So it puts a little stress on the efficiency part of the business, but you definitely have the opportunity there, more conversations about price and how labor markets are tighter in some cases. So now that that rolls off, the next one is going to have to be at a little bit higher. So we clearly are using that as an opportunity. Kevin McVeigh – Macquarie Research Equities: Super, thanks. Great job.

Last question.

Our last question now, from Gary Bisbee of Barclays Capital. Sir, your line is open now. Gary Bisbee – Barclays Capital: Hi, just another question on the U.S. Experis business. Can you give us a sense how concentrated that is in the large customer versus the SMB market? And what’s the current mix today of IT versus finance and accounting or engineering or other?

Mike, why don’t you take that one.

Sure, sure. Yeah, when you look at from a large account mix versus SMB, we are looking right now at about a 60/40 spilt, where 60% being the larger accounts, maybe its 65% something like that. So we’ve got more work to do around SMB. Our historical Manpower professional business that moved over to Experis that was more the large account business and COMSYS brought some very good SMB business, but we want to move that mix to a little bit more SMB. So we are working hard on that. When it gets to the verticals, right now, we are more IT focused. About 70%, just under 70% is on the IT vertical. Then engineering has just over 10%, finance has just over 10% and then healthcare and other professional skills would be the remaining 10%. So that’s how it breaks out. Gary Bisbee – Barclays Capital: Great. And then just as a follow-up. Can you give us an example of maybe what a typical RPO contract would look like or if there are wide range of them what the range of things you are doing at, I feel like a lot of people are seeing they are doing RPO, but it seems like there is an awful lot of different things going on there. Where is your business now?

Yeah. I’m glad you asked that, because we take pride in the fact that when we talk about RPO, it’s real RPO. And what we mean by that is, RPO is a managed co-sourced in some – in most instances recruitment function. So that mean in order for us to say RPO, our 30 wins in the RPO in this quarter, you have to be part of building the job description, working with the managers, the hiring managers, doing the interviewing, doing the onboarding, all of the reporting out as if you were the HR staff. And then there is volume procurement – volume recruitment, which many organizations say, well, the company gave us a mandate for a 100, so that’s an RPO. That’s in our recruitment. We do not that count that in an RPO win. RPO wins, in almost all cases have a monthly fee with them and they have staff on sight. We have a very strict definition in order to count RPO because we think RPO should be priced appropriately. And if you mix volume, permanent recruitment with RPO, you are actually doing the entire industry a disservice and you are degrading your own service, because those are two separate ways. Now in fact for the same account, we might be doing RPO, volume procurement, and add volume recruitment and ad hoc recruitment. But those are all designated in our accounting systems and our GL very differently and are priced differently. Gary Bisbee – Barclays Capital: And then just one last one on that point, is this an offering that’s more attractive to a large company like in and overseas market where they might have a smaller staff, or are you seeing these all over the place? Are they doing them in the US, for example, where they would presumably have a scale to do this in-house, but they have decided you are offering them a better or more efficient solution?

Yes. It’s a good question. It’s across-the-board. The fact is that they may have the scale, but they lack agility then. So what this is just another form of creating good flexibility. So theoretically, if you have 100% recruiters in your company and now you’ve hit a little soft patch, what you say is we don’t need to hire anybody. Well, you’ve got 100 recruiters twiddling their thumbs. What they want to do is to give us the 100 recruiters and then they can flex up and down or maybe half of those recruiters, so they can flex up and down. When that company may not be hiring, another company is hiring and we can turn some of that -- those recruiting staffs to be working on another organization. Also what we are seeing is large organizations that have large networks want to have a better discipline of hiring. So if you have one plant site, yes, we do that; but if you have 30 or 40 or 50 locations, we typically can drive more discipline and better hirers through that. Also what I’d say is that the Asian market and the emerging market is one our leading RPO markets. Part of it is, we got a great team; second part of it is, they are lacking that as a core competency and know that we have it. So they are leapfrogging what we are seeing in Europe and in the U.S. and going right to kind of state of the art recruiting techniques by using us in those markets. So probably half of those wins, a little bit more than half the wins, last year, we racked up about 130 RPO wins, this first quarter about 30. You’d see half or a little more half than half of those sitting in the Asian market. Gary Bisbee – Barclays Capital: Thank you.

All right. Thank you.

Thank you everyone for your participation. Conference now is concluded. All lines may please disconnect.