ManpowerGroup (MAN) Q2 Earnings Beat Estimates, Decline YoY

ManpowerGroup Inc. MAN reported mixed second-quarter 2020 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Quarterly-adjusted earnings of 18 cents per share beat the consensus mark by 38.5% but declined more than 100% year over year. Revenues of $3.74 billion missed the consensus mark by 1.5% and declined 30.4% year over year on a reported basis and 28% on a constant-currency basis. Declines in both top and bottom lines reflect impact of the coronavirus-related reduction in hiring activity.

The stock has depreciated 20.4% over the past year, compared with the 31.5% decline of the industry it belongs to.

Let’s delve deeper into the numbers.

Segmental Revenues

Revenues from America totaled $836.6 million, down 21.7% year over year on a reported basis and 16.7% on a constant-currency basis. In the United States, revenues came in at $515.9 million, down 21%, both on reported and constant-currency basis. In the Other Americas subgroup, revenues of $320.7 million decreased 22.8% on a reported basis and 10% on a constant-currency basis. Americas contributed 23% of total revenues.

Revenues from Southern Europe were down 38.6% on a reported basis and 37.7% on a constant-currency basis to $1.5 billion. Revenues from France came in at $736 million, down 48.4% on a reported basis and 47.5% on a constant-currency basis. Revenues from Italy were $268.5 million, down 31.9% on a reported basis and 30.7% on a constant-currency basis. The Other Southern Europe subsegment generated revenues of $466.3 million, down 18.9% on a reported basis and 18.2% on a constant-currency basis. Southern Europe contributed 39% of total revenues.

Northern Europe revenues slid 27.5% on a reported basis and 24.2% on a constant-currency basis to $865.7 billion. The segment accounted for 23% of total revenues in the quarter.

APME revenues totaled $569.1 million, down 20.6% on a reported basis and 19.1% on a constant-currency basis. The segment contributed 15% of total revenues.

Operating Performance

Gross profit in the quarter was $576.7 million, down 33.8% year over year on a reported basis and 31.9% on a constant-currency basis. Gross profit margin came in at 15.7%, down 30 basis points (bps) year over year.

The company incurred operating loss of $50 million in the quarter against operating profit of $130.8 million in the year ago quarter.

Balance Sheet and Cash Flow

ManpowerGroup exited the second quarter with cash and cash equivalents balance of $1.4 billion compared with the prior quarter’s $1.1 billion. Long-term debt at the end of the quarter was $1.01 billion, compared with the $995.6 million witnessed in the preceding quarter.

The company generated $415.1 million of cash from operating activities, and Capex was $9.8 million in the quarter. It paid dividends of $63.8 million in the quarter.

Q3 Guidance

The company expects revenues to be down 18% to 20% on a constant-currency basis. Earnings per share is anticipated to be in the range of $0.59 to $0.67, the midpoint (63 cents) of which is lower the Zacks Consensus Estimate of 64 cents

ManpowerGroup currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2020 earnings of key players like S&P Global SPGI, Avis Budget Group CAR and Waste Management WM. While S&P Global and Avis Budget Group are slated to release their results on Jul 28, Waste Management is scheduled to release the same on Jul 30.

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