ManpowerGroup Inc. (MAN) Q3 2015 Earnings Report, Transcript and Summary

Welcome to the ManpowerGroup's Third Quarter Earnings Results Conference Call. All participants will be able to listen only until the question-and-answer session begins. This call is being recorded. If you have any objections, you may disconnect at this time. Now, I'll turn the meeting over to your host, CEO, Jonas Prising. Sir, you may begin. Jonas Prising - Chief Executive Officer & Director: Good morning and welcome to the third quarter 2015 conference call. With me is our Chief Financial Officer, Mike Van Handel. I will start our call by going through some of the highlights for the third quarter and then Mike will go through the details of each segment, the relevant balance sheet items, cash flow as well as forward-looking items for the fourth quarter. Then, I'll be back for some additional thoughts before our Q&A session. But before we go any further into our call, Mike will now read the Safe Harbor language. Mike Van Handel - Executive Vice President & Chief Financial Officer: Good morning, everyone. This conference call includes forward-looking statements, 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. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements can be found on 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. Any forward-looking statement in today's call speaks only as of the date of which it is made and we assume no obligation to update or revise any forward-looking statements. During our call today, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors and include a reconciliation of those measures, where appropriate, to GAAP on the Investor Relations section of our website at manpowergroup.com. Jonas Prising - Chief Executive Officer & Director: Our third quarter performance was good in an uneven external environment. Revenue was slightly softer than anticipated, while gross margin performance aided by permanent recruitment in our Solutions business was at the high end of our expectations, and with good cost management, this resulted in good earnings growth. Our revenues were $5 billion in the third quarter, up 6% from prior year in constant currency. We managed this revenue and gross profit growth in a disciplined way and had nice flow-through resulting in good leverage with our operating profit increasing to $206 million, an increase of 13% in constant currency, and an operating margin increase of 20 basis points compared to the same time period last year. This resulted in our earnings per share coming in at $1.61, the same as last year in U.S. dollars, but 16% above last year in constant currency, a good performance. We had anticipated that the market conditions in Europe and elsewhere would be somewhat patchy and that is an effect what we saw in our business during the quarter. We saw parts of the U.S. economy soften further, notably in the manufacturing sector. Europe is a region where some countries seem to be well on their way to recovery, while others are still struggling to get traction. Emerging markets were generally strong in the quarter, but countries with significant exposure to commodity markets or the Chinese market are starting to feel more sluggish. We believe that parts of the global market are experiencing softening market conditions for a variety of reasons, and that the strength of the global recovery will continue to be uneven, particularly in some countries in Asia, Latin America and Europe. Our belief is that Europe overall, though, is still early in its economic cycle. And although it may be choppy over the near term in some markets, we should still be able to see good growth opportunities there as we move through the economic cycle. And this is also true for the U.S. market. Despite softer manufacturing environment, there will be opportunities and those are the ones we're focused on. This is certainly not an ideal situation, in terms of overall global economic growth, but having said that, we believe this environment can still present us with good opportunities for profitable growth by helping our clients navigate this uncertain environment. Having just been in Asia, Europe and North America and meeting many of our clients, I'm pleased to let you know that, as they experience the rapidly changing environment, they are more interested in workforce flexibility and solutions to their talent challenges. ManpowerGroup is a strong and trusted partner that can help guide them through this market volatility, which should present us with good opportunities for growth going forward. From what we hear from our clients right now, I believe we are in a soft patch with economic growth expectations coming down in a number of markets, but, in many cases, still progressing compared to the prior year both in terms of economic growth and an improving labor market. And at this time, we don't see any signs of a broad-based global deceleration and downturn. We will continue to look at opportunities with that lens and not be shortsighted in terms of adding sales people and recruiters in the markets where we see growth opportunities. That said, we remain focused on generating profitable revenue growth with disciplined pricing and strong productivity management so we can drive operational performance improvement, even if global market conditions continue to be patchy and uneven and markets improve only at a modest pace in the short-term. Mike and I will provide some more details on thoughts and our view of the market as we go though the rest of the call. As always, thanks to our entire ManpowerGroup team for delivering good results again this quarter, and our focus is now on finishing the year strong and preparing to drive our progress into next year as well. And with that, I would like to turn it over to Mike for some additional information and detail on the segments. Mike Van Handel - Executive Vice President & Chief Financial Officer: Thanks, Jonas. As Jonas mentioned, our operating profit growth in the quarter was solid, up 12.7% in constant currency on revenue growth of 5.8%. Our operating profit margin was up 30 basis points in constant currency as we continue to focus on driving expanded margins in line with the path we laid out to achieve our 4% EBITDA margin objective. Our earnings per share of $1.61 exceeded the midpoint of our guidance by $0.07 per share. $0.03 of this over-performance was operational, $0.03 was due to a lower share count as a result of share repurchases, $0.01 was due to a slightly lower than forecasted tax rate, $0.01 was due to lower other expense, and there was a negative $0.01 impact from currency. The FX impact on earnings per share was a negative $0.25 in the quarter, compared to forecast of $0.24. Revenues were negatively impacted 14% by FX compared to a forecast of 13%. The operational outperformance was primarily driven by a higher gross profit margin and strong expense management. Also contributing to the operational outperformance was the acquisition of 7S in Germany, which closed in early September and was planned for late September. 7S added 0.7% to our revenue growth rate in the quarter, but was neutral from an operating profit standpoint after considering closing costs and amortization of intangibles. Our gross profit margin came in at the higher end of our guidance range at 17.1%, 40 basis points up from the prior year. About 20 basis points of this improvement was driven by strong growth in permanent recruitment fees in the quarter, which were up 14.6% over the prior year in constant currency. Another 20 basis points of improvement simply comes from the FX impact on changes in business mix. While growth rates in permanent recruitment have moderated slightly with increasingly more difficult prior year comparables, we continue to view the market as being healthy with good growth opportunity. I'll touch on this in more detail during my segment reviews. Now, let's review our gross profit by business line. The gross profit was comprised of 64% from the Manpower brand, 20% from Experis, 11% from ManpowerGroup Solutions and 5% from Right Management. In line with our overall professional and solution diversification strategy, ManpowerGroup Solutions and Experis had the highest growth rate in the quarter. Our higher margin, higher value ManpowerGroup Solutions business includes our global market-leading RPO and MSP offerings and Proservia. During the quarter, gross margin improved by 17% in constant currency and, combined with good expense management resulted in a strong profit contribution, up 25% in constant currency. Within Experis, approximately 60% of our gross profit is comprised of IT skills, with the balance including engineering, finance and other specialty skills. Our Experis gross profit growth was 12% in constant currency in the quarter, which is driven by continued solid demand for IT skills across several markets. Similar to last quarter, our Manpower brand achieved 4% constant currency gross profit growth in the quarter. Within Manpower, 60% of the gross profit is derived from industrial skills and 40% from office and clerical skills. In the quarter, we saw gross profit growth of 3% in constant currency from industrial skills, slightly softer than the 5% growth we saw last quarter. Gross profit from office and clerical skills was flat compared to the prior year with slight improvement over the prior quarter. Within Right Management, we provide clear transition in our placement services along with talent management services. Right Management achieved 7% constant currency gross profit growth with expanding margins. I will discuss Right later in my segment review. SG&A in the quarter was $646 million, a decline of 6.9% in U.S. dollars, an increase of 5.3% in constant currency. If we exclude the SG&A costs related to the 7S acquisition, our SG&A increased 3.9% in constant currency during the quarter. Most of this growth relates to additional head count in our growth markets necessary to capture those opportunities. We remain keenly focused on driving productivity throughout our field network on an organic basis. In constant currency, our SG&A, as a percentage of revenue, improved by 10 basis points, reflecting positive leverage in a lower revenue growth environment. Now, let's turn to the operational performance of our segments. The Americas comprised 23% of company revenues with revenue of $1.1 billion and OUP of $59 million. OUP growth was solid, up 9% in constant currency and revenue growth up 3%. OUP margin expanded 40 basis points to 5.2% primarily as a result of gross margin expansion. The gross margin expansion was driven by strong price discipline, as well as strong growth in permanent recruitment, which was up 14% in constant currency. Revenue growth in the quarter softened slightly from what we saw in the previous quarter. As U.S. revenue trends weakened, while revenue trends in other Americas improved, primarily driven by improving growth in Mexico and Argentina. The U.S. is the largest operation within the Americas representing about two thirds of segment revenue. Revenues in the U.S. were down 4% compared to the prior year, reflecting softer demand for many of our larger key accounts, particularly in the light industrial area. As you are well aware, the manufacturing and export area of the economy has been weakening. And we certainly have felt the impact of this from our clients in this market. Despite the contraction on the top line, the U.S. had a very good OUP performance, delivering $46 million, up 9% over prior year for an OUP margin of 5.9%, up 70 basis points over the prior year. This margin expansion was driven by an improved gross profit margin, as well as highly effective management of SG&A costs, which were flat year-on-year. The gross margin expansion was a result of improved pricing as well as effective management of healthcare costs, workers compensation and unemployment costs. Permanent recruitment was also additive to the gross margin and was up 16% year-over-year. While we continue to see a healthy recruitment market in the U.S., the pace of hiring appears to have moderated somewhat from what we saw in the first half of the year. Within the U.S., our Manpower brand comprised 44% of gross profit. Manpower revenue was down 6% in the quarter compared to the prior year. Our industrial segment was a primary contributor to the weaker revenue growth as our industrial revenue was down 9% in the quarter. Our Experis brand comprises 39% of U.S. gross profit and saw revenue contract by 2% year-on-year. This is a slight improvement from the 3% decline we saw on the first half of the year. Our ManpowerGroup Solutions continues to do quite well in the U.S. market as our clients are requesting more sophisticated workforce solutions providing them with agility. Our ManpowerGroup Solutions had gross profit growth of 12%. Profitability was also strong as expenses were well-managed. Our Mexico operation had a very good quarter with revenue growth improving to 15% in constant currency. We saw revenue growth and profit growth across all of our brand offerings in Mexico, resulting in a strong profit performance. Our business in Argentina continues on the path to recovery with revenue growth of 50% in constant currency and billable hour growth expanding from 8% last quarter to 15% this quarter. While the market has been difficult in Argentina for number of quarters, we are now starting to experience a return to volume growth. Revenue growth in other Americas – revenue growth in other markets in the Americas was solid, up 9% in constant currency primarily driven by very nice growth in Central America and Peru. Not surprisingly, revenue in Brazil has contracted compared to the prior year, as demand for our services has weakened in the recessionary environment. Our Southern Europe segment, which represents 37% of company revenue, had a very good performance in the quarter. Revenues were up 8% in constant currency to $1.8 billion and OUP reached $100 million, an increase of 13% in constant currency. OUP margin was up 30 basis points as a result of an improved gross margin coming from strong price discipline in our staffing business and good growth in permanent recruitment of 17% in constant currency. Our largest operation in Southern Europe is France, which represents 68% of segment revenue. Revenues in France improved 2% in constant currency to $1.2 billion and OUP was up 6% in constant currency to $75 million in the quarter. OUP margin improved 20 basis points to 6% primarily driven by expansion in gross margin. We have maintained very strong price discipline in France in the face of a more competitive pricing environment. As expected, the market has priced in more of the responsibility tax subsidies as we have made our ways through the year. As we have noted in previous calls, revenue growth in France has been choppy. That said, the revenue trend improved as we made our way through the quarter. While July and August were fairly flat against difficult prior year comparables, September was quite good, accelerating to 6%. We saw this improved growth rate continue into the first few weeks of October. Revenue in Italy was very strong in the quarter, up 31% in constant currency to $324 million. We continue to see the early signs of a cyclical recovery in Italy as well as a strong secular push towards flexible workforce solutions. We also benefited from our contract with the Milano Expo, where we have been appointed the human resources premium partner. The Expo winds down at the end of October, so we will also have a revenue contribution from the Expo for a portion of the fourth quarter. OUP in Italy was $18 million, an improvement of 42% in constant currency over the prior year and OUP margin expansion of 40 basis points to 5.4%. This margin expansion was driven by higher gross margin and SG&A leverage. Permanent recruitment continued to be strong in the quarter, up 37% in constant currency. Revenue in Spain also continues to be strong, up 29% in constant currency. OUP was up 68% in constant currency on stable gross margins and good SG&A leverage. While the year-on-year growth rate remains very healthy, we are starting to see it moderate as you would expect as the base gets larger. This is the seventh consecutive quarter of organic constant currency growth north of 20% in Spain. Our Northern Europe segment comprise 28% of revenue in the quarter and was up 3% in constant currency to $1.4 billion. OUP was down 3% in constant currency to $50 million. OUP margin was down 10 basis points to 3.7% as a result of the de-levering impact from a few of the contracting markets. Similar to the first half of the year, we are seeing a mix of performances across the Northern Europe segment. Revenue growth in the UK was up 1% in constant currency. As I called out last quarter, the growth rate in the UK declined this quarter, primarily as a result of lower demand under one of our large client contracts. In addition to this, we did see a softening in demand in the UK market during the quarter, especially from some of our large clients in the public services sector. While the UK market for staffing services appears to be fairly stable at the moment, we do expect contraction in our fourth quarter UK revenue growth as this large client contract winds down further. Growth in permanent recruitment moderated somewhat, but remains healthy up 20% year-over-year in constant currency. Revenue growth in the Nordics was up 1% in constant currency, our two main countries in the Nordics are Sweden and Norway. During the quarter, the Swedish market continued its path of recovery with revenue growth up 11% in constant currency, which drove strong OUP growth and margin expansion. The Norwegian market, on the other hand, is struggling given its dependence on the oil economy. Our Norway growth rate was down 7% in constant currency with the decline in OUP margin as a result of severe price pressure and SG&A deleveraging. Revenue growth in Germany was up 27% in constant currency. This includes revenue from the 7S acquisition, which closed in early September. On an organic basis, revenue in Germany was very good up 8% in constant currency. Revenue in the Netherlands and Belgium contracted slightly in constant currency. As we discussed on previous calls, we have maintained strong price discipline in the Netherlands resulting in the loss of few large accounts at the end of last year. We are seeing improving opportunities in the Dutch market. And as we anniversary these lost accounts at the end of this year, we expect to be back to growth next year. Other markets in Northern Europe were mixed with good growth in Poland being offset by revenue declines in Austria and Russia. Our Asia Pacific Middle East segment had a strong quarter with revenues up 12% in constant currency to $570 million, and OUP up 27% in constant currency to $24 million. OUP margin expanded 50 basis points to 4.2% as a result of improved gross margin and good SG&A expense leveraging. Revenue growth was helped by the previously announced Greythorn acquisition in Australia that closed in the second quarter. This acquisition added about 7% to the segment revenue growth rate, but did not impact OUP margin. Revenue growth in Japan was 1% in constant currency, slightly softer than what we saw in the first half of the year. While trends seem to be slowly improving earlier in the year, growth appears to have paused with the slowdown in exports to China. Revenues in Australia were up 23% in constant currency, if we include the Greythorn acquisition. On an organic basis, revenues were down 2% in constant currency, as we continue to see weakness in the Australian economy reflected in the demand for our services. Revenue in other markets in Asia Pacific Middle East improved to 15% in constant currency. This was driven by good growth in several markets including China, India, Korea, Taiwan, and Malaysia. As we move into the fourth quarter, we expect these strong growth rates to moderate as these markets begin to feel the impact of the China slowdown. Revenue at Right Management was up 1% in constant currency to $67 million. OUP was up 75% in constant currency to $11 million for an OUP margin of 16%. This strong performance was primarily driven by good performance in career management, where we were able to capitalize on good opportunities in the U.S. market. Our career management business was up 4% in constant currency, while talent management was down 5%. Gross margin improved in both career management and talent management, which contributed to the OUP margin expansion. Next, I'd like to discuss our balance sheet and cash flow. Free cash flow, defined as cash from operations less capital expenditures, was $250 million for the first nine months of the year and $231 million in the third quarter. This includes the sale of the 2014 French CIC tax credit in July for $130 million. Our cash flow also improved due to reduction in days sales outstanding, which was one day lower in the third quarter compared to the prior year. Cash used for acquisitions for the nine months of the year was $241 million, which includes the acquisition of 7S in September of this year. Also during the quarter, we repurchased 3.8 million shares of common stock for $336 million, bringing our year-to-date share repurchases to 6 million shares for $523 million. This concludes our share repurchase program under the 2012 authorization. We intend to request a new authorization for share repurchases from our board of directors later this month as we continue to see share repurchases along with our dividend policy as an effective way to return cash to shareholders. In September of this year, we issued €400 million notes with a seven-year term and effective fixed interest rate of 1.9%. As of quarter end, our total debt balances stepped up to $879 million and our net debt balance was $226 million. With this additional borrowing, our total debt to capitalization increases to 25%, which is more in line with historic levels. Additionally, our ratio of total debt-to-EBITDA on a trailing 12-month basis remains very comfortable at just over one time. In addition to the €400 million note we recently issued, we also have a €350 million note maturing in June of 2018 and also €45 million drawn on other smaller lines, bringing our total borrowings to $879 million. We continue to maintain our $600 million revolving credit facility, which was unused at the end of the quarter. In September of this year, we extended the term of this facility another two years to September of 2020. Finally, I'd like to give you our thoughts on the fourth quarter. We see the current staffing environment as patchy. with some markets like France improving, while other markets like the U.S. slowing down in certain segments. With that, we believe that the revenue growth in the fourth quarter should range between 6% and 8% in constant currency, which translates into a reduction of between 1% and 3% in U.S. dollars, based upon where exchange rates are today. We expect the revenue growth in the fourth quarter to be slightly stronger than that of the third quarter, but this primarily relates to the growth from acquisitions that we closed late in the third quarter in Canada and Germany. On an organic basis, we expect revenue growth in the fourth quarter to be a touch softer than that of the third quarter in constant currency. In the Americas, we expect growth to range between 3% and 5% in constant currency, while in Southern Europe, we expect it to improve to between 8% and 10% in constant currency. Northern Europe will be aided by the 7S acquisition, and as a result, we expect revenue growth between 5% and 7% in constant currency. In Asia Pacific and Right Management, we expect fourth quarter growth to be similar to that of the third quarter in constant currency, ranging from 11% to 13% in Asia Pacific Middle East and 0% to 2% at Right Management. We expect gross profit margin to range between 17% and 17.2%, a slight improvement over the prior year on continued strength in permanent recruitment fees. We expect our operating profit margin to range between 3.7% and 3.9% and our tax rate at 36.5%. This will result in earnings per share in the range of $1.47 to $1.55 per share, which assumes a weighted average share count of 75 million shares. As is always the case, this earnings guidance does not consider any further share repurchases or non-recurring items which may occur in the fourth quarter. As you begin to look out to 2016, especially the first quarter, there are a few factors to consider. First off, the major headwind we have experienced all this year from currency will go away in the first quarter if exchange rates remain where they are today, as the average euro exchange rate in the first quarter of last year was $1.12, which is very close to where we are right now. The three acquisitions that closed in 2015, Greythorn in June and 7S and Veritaaq in September, will be additive to year-on-year revenue growth of about 3% in the first half of next year and slightly less than 2% for the full year. While they will also be additive to operating profit, I do not expect them to have a meaningful impact on the operating profit margin after considering amortization costs. Impacting the gross margin will be the requirement to provide healthcare costs for our associates in France beginning January of 2016. While we typically look to pass on such cost increases through increased pricing, this may be difficult, given the competitive market conditions in France. This cost increase will be somewhat mitigated by an increase in the family welfare subsidy, which is scheduled to take effect in April of next year. With these two elements combined, I expect to see some downward pressure on staffing gross margins in France in 2016, and especially in the first quarter, as we will have the cost increase related to healthcare and not the reduced subsidy from the family welfare. As we look forward, we remain committed to reaching our EBITDA margin target of 4%. Based upon fourth-quarter guidance, we expect to close out 2015 around 3.8%. This sets us up well for 2016, if we are able to get a slight acceleration in market growth from where we are today. With that, I'd like to turn the call back to Jonas. Jonas Prising - Chief Executive Officer & Director: Thanks, Mike. The third quarter was a good quarter for us. With good execution in a choppy environment, we delivered good top and bottom line growth in constant currency. As you can tell from a near-term outlook, this is not an environment of accelerating economic growth, but as I mentioned earlier in the call, we also do not see this as the beginning of a more sustained global downturn. I'm not an economist, but based on where we see the U.S. and in particular Europe, our view is that both those regions could be seeing better growth in 2016 compared to 2015, notwithstanding some softness and choppiness in parts of those economies. Companies, I speak with, all intend to build their organizations to be more agile and to be able to deliver value in shorter time frames as they adjust to cycles or disruptive changes within an industry or a specific geography. The unrivaled global breath and national coverage in 80 countries of our Manpower business will continue to give us great opportunities for temporary as well as permanent workforce solutions as it gives organizations greater flexibility to meet their opportunities and challenges. And we saw some great examples of this during the quarter in Italy, Spain, Mexico and Sweden. We are also seeing strong performance not only in some bigger developed markets, but also some very strong performance in terms of double-digit revenue growth in countries like Peru, India, China and Poland. And that's exciting to see since we have such a strong footprint in emerging markets. This is also the kind of economic environment where organizations large and small want to focus on their core business and leave non-core activities with us, as a workforce solutions leader. One of the reasons we continue to see such great performance in our Solutions business was strong double-digit growth in RPO, MSP as well as in Proservia. Companies are increasing their investment in and use of technology to drive productivity and meet their evolving client demands. But yet the rapidly changing technology space means they will want to use workforce solutions that provides skill sets that match the need for the new technologies and not be trapped in inverted workforce pyramids that better serves the yesterday's technology needs, and that is precisely what our Experis business is there to help them with, providing higher skill talent or project for permanent positions or specific talent solutions in developed as well as emerging markets. And finally, the need to attract, retain and develop top talent is of course of upmost concern to most organizations and that is where Right Management's career expertise can add significant value to organizations and their employees as well. All this said, I believe we are seeing a structural evolution where just in time access to talent will be of the upmost importance, and as such, a secular growth opportunity for us on top of the cyclical growth we should expect when economies that are struggling right now get back on track. Our clients are increasingly looking for workforce solutions that can help them across multiple operations, have seamless delivery across brands and countries and combine offerings in a way that help them adjust to whatever the market conditions maybe like and we intend to be their preferred partner in this journey. Our unrivaled global footprint with market leading coverage of emerging markets, our strong global brands that can be combined to form unique and innovative workforce solutions and our particular strength in the Solutions business with RPO, MSP and Proservia IT end user talent based solutions, make me very optimistic that we're well positioned for continued success as the leading global workforce solutions company. A great example of a unique workforce solutions is our all encompassing support of the Milano Expo in Italy, which is a great example of how we can bring all of our businesses and brands together to solve large scale people and process intensive projects, a tremendous success for our Italian business which could not have been possible without the support of all of our brands and our geographic footprint. So, in summarizing the third quarter results, we're pleased to see their efforts in driving disciplined revenue growth are continuing to show progress. And we will remain committed to seizing growth opportunities aligned with our strategies also in the future, achieving good leverage on that growth and continuing to build a diversified business. The balance of pursuing good revenue growth opportunities with disciplined pricing and strong cost vigilance will be very important as the overall global situation is still evolving and uncertain. Hence, I anticipate that we could be buffeted by some volatility and that some markets may pause for some time before picking up steam again. Our aim is to improve our performance even under those uncertain conditions with our strong experienced management team committed to driving profitable growth. We will adjust as needed, so we can continue building on the progress we've made so far in the year. And with that, we come to the end of our prepared remarks and I would ask the operator to start our Q&A session.

Thank you. Your first question comes from Anj Singh of Credit Suisse. Please go ahead with your question. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Hi. Thanks for taking my questions. I was hoping, first, on France, if you could talk a little bit more about what's driving the strength there. Is it rather broad based? Or are you finding any particular segments that are picking up and driving that trend? Jonas Prising - Chief Executive Officer & Director: Thanks for the question. We're seeing some nice recovery in the French market in September after little bit more lackluster in August. And it isn't – we can see that the manufacturing is coming back and if you followed the French PMI, you saw that that's actually moved up a little bit as well. So we think that's an improving sector. The services sector is stable. So I think it's indicative of a slightly improving environment. And of course, as the market improves slightly, there is a need for a workforce and we are the preferred provider of that workforce given that the recovery is still pretty fragile and choppy also in France. So I think that's what you're seeing occur in France. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Okay. Got it. And one for Mike on the French operating margins. Could you quantify how much the subsidy accounts for and in the increased healthcare costs, what would they net to? Do you have a sense on the likelihood of passing on these costs? I'm just trying to get a sense of whether it's a matter of when or if considering the environment in France of passing on these costs? Thanks. Mike Van Handel - Executive Vice President & Chief Financial Officer: Right. Anj, so you're talking about the cost increase on the healthcare for next year in France related to healthcare for our associates. And the market estimates overall, I think, are in the range of 40 basis points to 50 basis points overall on market revenue. Of course, we've got our own associates and associate profile, it's somewhat predicated on – there is an eligibility requirement in terms of number of hours worked, in terms of who applies. But overall for the market, that's it and we're still doing our own scenario planning to come up with our own specific numbers. And so that's effective January 1. As I did mention in my prepared remarks, we also have a further increase in the subsidy related to family welfare and that is effective on April 1 right now. And so, that as well will be beneficial and will perhaps not fully offset the impact of the healthcare when it does come in, but that'll have a favorable impact for sure in terms of what that looks like. And for us, cost increases such as these – our fundamental view is that these cost increases should be passed on in price, it's a cost of doing business, but then there of course are the market realities and it's always hard to judge what those market realities are like until we – until the time comes and so we will see what the market – how the market performs at that time. But our going in view would be that, we'd be trying to pass those costs on. But as I said, just given the other subsidy benefits coming in France, that may be difficult to do in this environment. Anjaneya K. Singh - Credit Suisse Securities (USA) LLC (Broker): Okay. Got it. Thanks a lot.

Thank you. Next question, Jeff Silber of BMO Capital Markets. Go ahead.

Thanks so much. Just wanted to shift over to the U.S. for a second. Can you tell us a little bit about your intra-quarter trends, specifically in the light industrial areas? Mike Van Handel - Executive Vice President & Chief Financial Officer: Sure, sure, Jeff, we can. So overall, we did see manufacturing get a little bit weaker as we've made our way through the quarter. So September was the weaker overall. Things seem relatively stable from where we were in September into October. So it doesn't seem to be stepping down further necessarily. But certainly we did see a little bit more weakening on the industrial side as we made our way through the quarter.

And any impact on the non-industrial side? I'm just curious, how that side of your U.S. business is doing. Mike Van Handel - Executive Vice President & Chief Financial Officer: Yeah, the non-industrial side, I think there – things seem to be stable, you look at overall office and clerical, things are still progressing well on the Experis and IT side, we're still seeing good opportunity in the market there. Permanent recruitment across the business is still healthy. It was not quite as strong in Q3 in the U.S. as it was in the second quarter but still we saw 16% growth in perm, in the U.S. in Q3. So still very healthy from that perspective as well.

And then just a quick numbers question. Can you possibly quantify the impact of the Milano Expo work you mentioned? Mike Van Handel - Executive Vice President & Chief Financial Officer: Yes, well, you know we haven't identified that specifically, just as it relates to specific client, but I think if you look at our overall Italy growth, without Expo in there, we've seen growth earlier in the year in the 20% range in constant currency and that's accelerated a little bit in the third quarter towards the mid-20%s.

Okay. Great. Thanks so much.

Thank you. Our next question comes from Gary Bisbee of RBC Capital Markets. Your line is open.

Hi. Good morning. I guess just the bigger picture question on perm, which has been really pretty terrific all year in most of the markets you're in. How have you been investing into head count in the last couple of quarters? And what does that sort of indicate as a likely trend over the next few quarters? I mean, comps there are getting more difficult, I guess I'm just trying to assess how much that will impact your growth relative to the investments you've been making. Thank you. Jonas Prising - Chief Executive Officer & Director: Yeah. Thanks, Gary. Yeah. No, we've seen some terrific perm growth. And we think the perm growth comes from two sources. I mean, first of all, there is a cyclical effect of more people being hired and therefore we participate in that through our RPO organization across our brands with permanent recruitment as well as temp to perm conversions. But then we also believe that the investments that we've made not only this year, but in years in past, are starting to pay off from the perspective that clients are seeing us as a provider of permanent recruitment and staffing flexibility. So, in a number of markets where you wouldn't really expect to see such great perm numbers, we are really starting to see this play out such as Italy, also increasingly in France and a number of other countries. As it relates to the question on recruiters, yes, we continue to add in those markets, but of course we do that in very thoughtful and deliberate way, weighing the growth opportunities we still see there. But possibly the rate in some of those markets notably the UK, that's probably not the market where we'll be adding at a rapid pace as we've been doing in the past. So we're always investing in the recruiters when we see the growth opportunities. We still think there are good growth opportunities in a number of markets and that's where we're focused on.

Great. And then just a follow-up, in a bunch of the markets, you seem to be growing more slowly than the total industry data. And I realize there is mix issues, U.S. industrial and you've talked about a few of the others, the UK, the one big client issue, et cetera. But how should we think about the mix of the company overall today as it relates to the ability to grow above or in line or below in your major markets? Do you think these are more short-term factors? Or could we have – if we have this sluggish recovery continue, are there several markets where your mix is just likely to lead you to underperform over the next few quarters? Thank you. Jonas Prising - Chief Executive Officer & Director: We've actually outperformed in a number of very big markets. So UK, we've been leading the market for the better part of two years and then France we've been leading the market for more than two years despite a very concentrated market. There are a number of examples of that. I think what you're seeing is the effect of being in 80 countries, you're always going to have some markets that take a pause, you should add to that also a very determined effort on our part to make sure that we drive higher value offerings, apply great pricing discipline across the board, across all of our brands. So there are some markets that we've talked about before where we deliberately decide to pass on some opportunities or you don't think are going to be providing value to us as an organization. We spoke about that the Netherlands on our last call. You know that we've been very disciplined in the U.S. as well as we move our margins higher, as we move our bill rates higher, and that's played out for us in a very good way actually, because although the top line may not have been moving in line with the market, our GP line has been moving with and above market and therefore we've been able to generate some good profit growth as well. So I don't think there is anything structural here. We could see some markets move in one direction and other markets move in another. We perform well in a number of those. So I think it's just a reflection of – it's a choppy uneven environment, quite volatile and the things go on and then they go off and then they go back on again. But our overall outlook though is this is still making progress, although it's somewhat choppy and uneven.

Great. Thank you.

Thank you. Our next question comes from Mark Marcon of R.W. Baird. Your line is open. Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker): Good morning. With regards to France, just in terms of like the choppiness that you've observed over that the course of the last couple of quarters, is there any sort of pattern in terms of specific industries that are turning on and then kind of turning off, so if we take a look at like the Q1 and Q2 progression with regards to the CC growth rate and then the overall Q3 and now here in September, we're actually seeing a nice level of acceleration. Is there anything that you would point to that would say here's what's causing that choppiness? Jonas Prising - Chief Executive Officer & Director: When you look at France and where they are in their economic recovery, you're looking at a country that's seen very little growth and still labor markets that have very high unemployment and actually unemployment is still moving up. So I think it's less indicative of any particular trend than just being a reflection of where France is as a country, which is at the very, very beginning of a cyclical recovery. And just as we experienced in the U.S. at the beginning of our recovery a number of years ago, you'll have some fits and starts and stops as you go through this. I know that economists now predict that the economy will be a little bit better in 2016, although that growth rate, of course, is going to still be very slow. So I think France is moving in the right direction. It's just happening at a very slow pace and with that comes this kind of uneven recovery. Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker): Great. And then, with regards to the legislative environment, we talked about a couple of things that were very specific to the staffing industry, but how would you characterize the overall environment over there in terms of becoming a little bit more business friendly and potentially stimulating some investment? Jonas Prising - Chief Executive Officer & Director: Well, I think you can look at this from two perspectives. The French government would say that more – there has been more done to modernize and restructure the labor market over the last – this mandate period over the last three years in France than the preceding 40 years. And I think from an external perspective, you'd look at the French market and you would – labor market -- and you would say, wow, they still have a lot of things to do to become more flexible and more competitive as a labor market. And I think both of those statements may well be true. So a lot of things have happened, and by and large the initiatives that the French government has been driving have been to render the French labor market more competitive, lower the cost of labor, make – provide some more flexibility, moving towards this notion of flexicurity (46:06), which is really – the effects of that is exactly what Mike talked about earlier, to take healthcare costs and provide those training that is being provided at the same time as opening up certain segments and timeframes in terms of flexibility and more certainty should you wish to separate yourself from a workforce. So I think the French labor market is actually becoming more adaptive and trying to become more competitive. But in relative terms to what other countries have done well earlier and what other countries are actually doing now, of course, this is still to be taken within the French context. Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker): Great. And then, just one follow-up just with regards to September and October in terms of the year-over-year growth. Was the comparison period easier or about the same? Mike Van Handel - Executive Vice President & Chief Financial Officer: In September relative to October or you're talking September relative to other months within the third quarter, Mark? Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker): Within the third quarter. Mike Van Handel - Executive Vice President & Chief Financial Officer: Yeah. Within the third quarter, September – particularly in France, the comparable is little bit easier. We went up against – we had a very good July in France last year. So we are up against the tough comparable there. But we were up against an easier comparable, but even with that, sequentially, business improved quite nicely going August to September. As you've heard me say in the past, it's always important for us to see exactly how that September builds off of the vacation periods. So that has – I think that is encouraging that it has come up and, as Jonas said, the PMI has been improving the last couple of months and now it's up above 50. So I think there are some good signs. I'll always caution it a little bit with its – it's been a bit patchy in France, but I think right now, things at least look like they're moving in the right direction. Mark S. Marcon - Robert W. Baird & Co., Inc. (Broker): Great to hear. Thank you.

Thank you. Your next question comes from George Tong of Piper Jaffray. Your line is open. George K. F. Tong - Piper Jaffray & Co (Broker): Hi. Thanks. Good morning. Can you discuss how the sluggish environment in China will translate into growth trends in the APME segment and potentially impact other regions indirectly at Manpower? Jonas Prising - Chief Executive Officer & Director: Sure, George. So, as it relates to the Chinese market, long-term, we believe this is going to be a very good market, an important market based on their population, the demographics, the amount of skilled workforce that will – that is coming online. And as you've seen, parts of the Chinese economy are clearly slowing down, notably manufacturing, whereas there are other parts of the Chinese economy that is doing quite well, notably the tech sector as well as the services sector. So more than 50% of the Chinese economy today is a services based economy. But it's going through a transformation and as such the growth rate is slowing down. The near-term impact, of course, you can see that in the Pacific Rim countries that depend a lot on them. Mike mentioned in his prepared remarks of Japan. Japan is exporting a lot to China. They're clearing feeling it. South Korea is clearly feeling it. Then there are other markets in Southeast Asia that are feeling it or starting to feel it. If you're also in the commodities business and you're a commodity dependent country like Australia, like Brazil and you have a lot of business with China, you're clearly seeing the impact of that there as well. So those will be the countries that are going to be seeing the biggest impact and as many of you know, the U.S. exposure to the Chinese – direct exposure to the Chinese market from that perspective is actually quite small. So all-in-all, as it relates to the Chinese market, as you heard Mike say earlier, we actually saw some very nice performance, because we're positioning, especially under the Experis brand, we've seen some very nice growth. And I believe, we had 50% growth under the – perm growth in Experis in the third quarter in China. So there's still good opportunities in China, but the slowdown is certainly going to have an effect on commodity based countries, as well as those in the Pacific Rim especially in the near geography region. George K. F. Tong - Piper Jaffray & Co (Broker): Got it. That's helpful. You indicated that emerging markets were relatively strong in the quarter. How does volatility in the emerging markets present potential risk to growth in those regions? Jonas Prising - Chief Executive Officer & Director: Well, you have a number of countries that performed very well. You've heard us talk about Argentina that's coming back to volume growth and as you might know there are some elections coming later on, so the outlook for Argentina should be improving. It was great to see Mexico improving. So there are different drivers in different emerging markets and when we talk about an uneven global recovery and an uneven situation in parts of Latin America and Asia Pacific, it's exactly that, because you can be performing very well and you have countries that are growing very nicely such as India. China of course is slowing down, but let's not forget that China is still growing at a very high rate compared to their absolute size. So slowdown yet, but still looking at good growth. And then you have countries that are very dependent on either China and/or commodities that are clearly going to feel it. So, yeah, there is always a risk of slowdown, but I think it's not correct to pull all the countries across one measure and say emerging markets are going to be facing difficult times, because we clearly don't see that in our own operations, not to say that it can't change. But right now, based on what Mexico is doing for instance, we think Mexico is going to be extremely well placed to compete in the global market and the same thing for India. And those will have other good affects for other emerging markets as well. So I think the characterization is uneven and some countries will go up, but some countries will still be able to demonstrate some good growth. George K. F. Tong - Piper Jaffray & Co (Broker): Got it. And then lastly on the topic of margins, what levels of revenue growth do we need to see for sustained margin expansion? And are there any efficiency initiatives that you can layer on to drive further margin improvement? Thanks. Mike Van Handel - Executive Vice President & Chief Financial Officer: Yeah. I think – I mean there are number of things that we're always doing to drive margins. Certainly, business mix is one of them, when you look at what we're trying to do with expanding on our Solutions and our Professional business. So that is always a focus as well as the perm recruitment is a focus. And then just day-to-day, we're relentlessly driving productivity throughout our field organizations. So that's something that we're always working on. I think when you look to overall leveraging and getting leverage off of growth opportunities, I think when you hit mid-single digit constant currency growth, we're – historically, over the last few quarters, you'd see we're picking up a little bit of leverage. I think that becomes more difficult as you have growth below that. And, of course, one of the challenges with all of that is you've got markets again that are uneven, some growing faster we can easily get leverage. Other markets might be contracting and might be more difficult. So it's easier to talk about generalities. But there is a lot that goes on underneath the covers. And you really need to look at it on a business-by-business basis. So, while I sometimes generalize, there is a lot that goes into that. George K. F. Tong - Piper Jaffray & Co (Broker): Thank you.

Thank you. Next question comes from Kevin McVeigh of Macquarie. Your line is open. Mr. McVeigh, your line is now open. Kevin McVeigh - Macquarie Capital (USA), Inc.: Hi. Can you hear me? Sorry about that. Mike Van Handel - Executive Vice President & Chief Financial Officer: We can hear you. We can now, Kevin. Kevin McVeigh - Macquarie Capital (USA), Inc.: Sorry about that. Hey. Jonas Prising - Chief Executive Officer & Director: We can't hear you, Kevin. Mike Van Handel - Executive Vice President & Chief Financial Officer: Sorry, Kevin. I think, we've got a bad connection. We have to the next caller. You may want to dial back in and let's see, if we can come back to you. Kevin McVeigh - Macquarie Capital (USA), Inc.: Can you hear me now, Mike? Can you hear me now? Mike Van Handel - Executive Vice President & Chief Financial Officer: All right. A little bit, yes. Won't you give it a try? Kevin McVeigh - Macquarie Capital (USA), Inc.: Sorry about that, I'm on the road. Hey, just real quick. It seems like you're expecting greater growth in 2016 in the U.S. and Europe despite the kind of soft patch we're in. Can you just give us a sense of what gives you that type of confidence, anything you're seeing or things we can monitor as we start to kind of come out of the soft patch, if you would? Jonas Prising - Chief Executive Officer & Director: Well, I think, what I said in my prepared remarks is this then (54:56). What the – the economic outlook by economists is that Europe is expected to improve in terms of economic growth. And for the U.S., it's expected to – some expect it to be a little bit better, others expect it to be about the same, others expect it to be a little bit lower from an economic growth perspective. So our outlook as far as we can tell from a macro perspective isn't worse looking into 2016, although growth rates and expectations might have come back. So I think that's one big important reminder. But then, of course, as an addition to that, we look at a market, we look at all of the changes and the market dynamics that are happening and we chart our own course. So we have very deliberately built strength in perm, we've built very good strength within Experis to make sure we have technology skills available that our clients are looking for. We built the flexibility within Manpower, both in terms of delivery models, as well as our ability to be the provider of an agile workforce solutions for them. And then of course all of the activities that companies are doing that they no longer consider core, they work with us on ManpowerGroup Solutions. So the external environment is one thing and then we chart our course and our strategies of course with our belief of what clients are going to be looking for in the future. So that is sort of the – our outlook and how we plan to drive the business when we see the environment. Kevin McVeigh - Macquarie Capital (USA), Inc.: Got it. Thank you. I'll hop off. Thank you. Mike Van Handel - Executive Vice President & Chief Financial Officer: Thanks, Kevin.

Thank you. Next question comes from Tobey Sommer of SunTrust. Your line is open.

At this point with a couple of years of the Affordable Care Act behind us in the U.S., what do you think the impact has been on demand in your business as well as the expense side and is there much of an expectation for a change going forward? Jonas Prising - Chief Executive Officer & Director: Well, I think that certainly there has been an impact in terms of costs and that tax increase is something that we've been able to manage, we consider it to be part of a cost of doing business and as such, we've been able to pass this on to our clients. In term of the industry dynamics, if you recall, a number of years ago, there is a lot of discussion, how the Healthcare Act would increase the number of companies that, that would revert to temporary staffing and I don't think that we've seen that happened certainly not in the client segments that we serve, maybe in some of the smaller countries, but stepping back – smaller companies. Stepping back though, I think that there is somewhat of a trend of increased legislation in the U.S. and that could be a factor that would drive some organizations to revert to or to reserve to a greater use of temporary staffing, should that trend continue. But the magnitude of that change, should that occur, is quite difficult to estimate.

Thank you. Just a follow-up, in terms of your IT staffing business in the U.S., was there any discernible kind of change in buying behavior among large customers in particular kind of financial institutions? Thanks. Jonas Prising - Chief Executive Officer & Director: No. Overall I would say quarter-over-quarter was relatively stable. There is still good demand there and I think we're managing our own business well in terms of the bill rates and making sure we get higher value positions. We increased our margins by 50 basis points on the IT side in the U.S. So we're making some good progress. Having said that, I think there is more opportunity for us in the U.S. that we're not participating in yet. So while we're on the right track, we're not satisfied, but the speed of the progress that we're making to make sure that we deliver services to the opportunity that exists in this market. So I wouldn't – we did not see any significant shifts quarter-over-quarter as far as the client demand was concerned.

Thank you. We'll stay tuned. Jonas Prising - Chief Executive Officer & Director: Okay. And this will be the last question. Mike Van Handel - Executive Vice President & Chief Financial Officer: One last question, operator.

Yes. Next question is Tim McHugh of William Blair. Your line is open. Timothy McHugh - William Blair & Co. LLC: Yes. Thanks, guys. Just wondering if you could elaborate more on the UK, I guess, and how that progressed and, I guess, the comment about the large customer there that was the headwind is. I guess, is that kind of a one-time lap or do you see volumes continue to go down and just any additional color on how to think about the UK going forward? Mike Van Handel - Executive Vice President & Chief Financial Officer: Sure, Tim. Yeah. I mean I think overall the UK, we see as a healthy market and certainly growth in the second half appears to come down a little bit compared to what we saw in the first half. In particular, across some of our larger clients, we're seeing a little bit less demand. But overall, I would say the market is still seeing some growth overall. Perm recruitment still is quite good there. We had 20% growth in perm recruitment in the UK market overall. So that was quite positive. And as we did say, yes, we do have one larger client contract that has brought a lot of the business, continues to bring a lot of business, but it is winding down and that will impact us for the next couple of quarters overall in the UK and we'll have some impact in terms of revenue growth for us in the UK, but ex-that, I think the market overall is still good and there's still opportunity for us there. Timothy McHugh - William Blair & Co. LLC: Okay. Thanks. And then just another question, as we think about you mentioned you're looking for another authorization of the buyback, you're obviously were aggressive this quarter. You've also done some M&A, I guess, how do we think about your balance going forward from here between buybacks and M&A? Mike Van Handel - Executive Vice President & Chief Financial Officer: Right. Well, I think, take those completely separately, of course, even though they both impact cash flow. I think from an M&A standpoint our strategy has not changed, we did talk about that on the last call. Fundamentally, we are driving organic growth but we do look for M&A to accelerate some of our strategies around Solutions and Professional business and you've seen recently a little bit more activity there, but that's more of timing I think than a change in trend or a change in strategy overall. So I'd start there. In terms of share repurchase, we still see share repurchase as a good avenue to give cash back to shareholders. Obviously, you saw we are fairly aggressive in the third quarter, when we look at the business and where we are in the cycle, we've got a lot of confidence in terms of how we're positioned and the opportunities ahead and as well as a very strong balance sheet that we think can be leveraged a little bit more affectively from a cost to capital standpoint. So we're driving those elements and we would expect to continue considering share repurchases going forward. Timothy McHugh - William Blair & Co. LLC: Okay. Thank you. Jonas Prising - Chief Executive Officer & Director: All right. So, thanks, everyone. And with that, we come to the end of our earnings call for the third quarter of 2015 and we look forward to speaking with you again in the next quarter. Thanks, everyone.