ManpowerGroup Management Discusses Q4 2013 Results - Earnings Call Transcript

Jan.30.14 | About: ManpowerGroup Inc. (MAN)

ManpowerGroup (NYSE:MAN)

Q4 2013 Earnings Call

January 30, 2014 8:30 am ET

Executives

Jeffrey A. Joerres - Chairman and Chief Executive Officer

Michael J. Van Handel - Chief Financial Officer, Chief Accounting Officer and Executive Vice President

Analysts

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

Hamzah Mazari - Crédit Suisse AG, Research Division

Sara Gubins - BofA Merrill Lynch, Research Division

Paul Ginocchio - Deutsche Bank AG, Research Division

Gary E. Bisbee - RBC Capital Markets, LLC, Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

Jeffrey M. Silber - BMO Capital Markets U.S.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Operator

Welcome to the ManpowerGroup fourth quarter and year end earnings conference call. [Operator Instructions] Now I will turn the meeting over to your host, Mr. Jeff Joerres. Sir, you may begin.

Jeffrey A. Joerres

Good morning, and welcome to the fourth quarter 2013 conference call, as well as full year. With me is our Chief Financial Officer, Mike Van Handel. I'll go through the high-level results for the quarter and full year. Mike will then spend some time going through the details of the segments as well as forward-looking guidance for the quarter and any implications at all for the balance sheet, cash flow, as well as restructuring that occurred during the fourth quarter.

Before we move into the call, I'd like to have Mike read the Safe Harbor language.

Michael J. Van Handel

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 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.

Any forward-looking statement in today's call speaks only as of the date at which it was 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. We include a reconciliation of those measures, where appropriate, to GAAP on the Investor Relations section of our website at manpowergroup.com.

Jeffrey A. Joerres

Thanks, Mike. The fourth quarter was another strong quarter for us. We entered the quarter with good momentum from driving efficiency and productivity, and slight upward trends in revenue. Both revenue and the effects of efficiency and productivity came in at the higher end of our estimates. While we continue to experience cautiousness among our clients throughout the world, there is no doubt that we are seeing a modestly more positive environment on the revenue line in all of our major geographies. We were able to exceed our expectations in profitability, primarily because of the slightly better revenue performance and solid expense management.

In the United States dollars, our revenue came in at $5.3 billion for the quarter and slightly over $20 billion for the full year. On a quarterly basis, our revenue increased 1%, the first time in 7 quarters that we have experienced a positive growth. We achieved a gross profit margin of 16.9%, slightly above forecast, due to some additional CICE credits, which Mike will discuss in a minute.

We had strong cost controls over our costs, which resulted in an operating profit before restructuring of $194 million, an increase of 46% in constant currency and a 3.7% operating margin, up 120 basis points. Our earnings per share came in at $1.25, or $1.49 before restructuring charges, up 64% in constant currency.

For the full year, our operating earnings before restructuring were $601 million, an increase of 29% in reported U.S. dollars and constant currency. Our operating profit margin showed strong expansion of 70 basis points to 3%. Earnings per share on a reported basis was $3.62, up 47% in U.S. dollars and constant currency, and before restructuring, was $4.44, up 51% in U.S. dollars and constant currency.

We executed extremely well in the fourth quarter, which gives us confidence as we move into 2014. We are still quite cautious regarding revenue expansion. However, the trends are pointing more positively in most of our major geographies.

Now, for additional information regarding the segments, I'd like to turn it over to Mike.

Michael J. Van Handel

As Jeff mentioned, we had a strong earnings performance in the fourth quarter with earnings per share coming in at $1.25, including restructuring costs, or $1.49 before restructuring costs. Earnings guidance was $1.18 to $1.26 before restructuring charges, and therefore, we exceeded the midpoint of our guidance by $0.27.

I'd like to take a few minutes to unpack the factors that pushed us above the midpoint of our guidance range.

First, operationally, our results were $0.17, better than forecast, partially as a result of stronger-than-expected revenue growth in Europe and strong expense control. Consolidated revenues increased 1% in constant currency, which is at the high end of our guidance range. We were able to leverage this additional revenue and related gross profit down to the bottom line, resulting in strong operating profit margin expansion of 120 basis points to 3.7% before restructuring. In addition, the quarter also benefited from more than expected CICE income tax credits. This was due to the accrual of an additional month of CICE, based upon the timing of month-end payrolls and reassessment of required reserve amounts.

Our income tax rate was also lower than expected in the quarter, coming in at 34.6% compared to our forecasted range of 38% to 39%. That added $0.07 to our earnings. Foreign currency ended up being $0.01 favorable compared to an expected unfavorable impact of $0.01, thus, helping the quarter by $0.02 over our guidance. And lastly, weighted average shares were lower than forecasted, which also added $0.01.

Restructuring charges came in at $26.5 million in the quarter, quite a bit above the $12 million to $17 million forecast. As we reached the final quarter of our cost recalibration plan, we made one last push to ensure that we identified all cost savings opportunities.

Over the last quarter, the restructuring charges impacted each of the operating regions, with the Americas incurring $6.6 million; Southern Europe, $2.7 million; Northern Europe, $10.2 million; Asia Pacific Middle East, $2.3 million; and Right Management, $4.7 million. These restructuring charges weigh down the OUP margin performance of each of the segments, and therefore, I will later review the segment performance, prior to the restructuring charges.

On a full year basis, restructuring charges were $89.4 million, or $65.3 million after income taxes, an impact of $0.82 per share. Our gross profit margin came in slightly stronger than expected at 16.9%. This was primarily due to the additional CICE credits I mentioned earlier, which added about 30 basis points to our fourth quarter gross margin. Excluding this impact, Manpower staffing gross margin was up 10 basis points over the prior year. This improvement was primarily driven by Southern Europe, which had the benefit from the CICE tax credits this year, in France, and a stronger gross profit margin in Italy. This was offset by slight declines in the Americas and Asia Pacific Middle East.

Manpower Staffing gross margins in Northern Europe were stable with the prior year. During the quarter, we did not see any significant changes in the market pricing. While pricing pressure continues in many markets, we remain disciplined and are selective on new opportunities.

Our Experis interim gross margin was stable in the quarter with gains in the Americas and Asia Pacific Middle East, offset by margin declines in Southern Europe and Northern Europe.

Permanent recruitment softened in the quarter, down 7.3% in constant currency compared to the prior year. This was slightly weaker than what we saw in the third quarter, which was down 4.6%. This weakening trend was primarily due to the Americas region, which I will discuss later in my segment review. The decline in permanent fees had a negative impact of 10 basis points on overall gross margin compared to the prior year. The gross margin on our account-based outsourcing business was also down in the quarter, impacting our overall gross profit margin by 10 basis points.

Now let's take a look at gross profit by business line. Our Manpower brand gross profit, which is comprised of traditional staffing and recruitment services in the office and the industrial verticals, comprised 68% of gross profit in the quarter. Manpower's gross profit was up 4% in the quarter, driven by growth in Southern Europe and Northern Europe, offset by slight declines in the Americas and Asia Pacific Middle East.

Our Experis brand comprised 17% of gross profit in the quarter. Approximately 70% of our Experis business is IT, with the balance in engineering, accounting and other professional services. Similar to last quarter, our Experis gross profit margin was down 4% in constant currency. The primary contributor to this decline was Northern Europe, which was down 7% in constant currency. While we have seen improving trends in the U.K. in the quarter, these have been offset by weaknesses in Sweden and the Netherlands.

Our ManpowerGroup Solutions business was 9% of gross profit in the quarter, and consists of recruitment process outsourcing, MSP, Talent Based Outsourcing, Borderless Talent Solutions and Strategic Workforce Consulting. Our gross profit was down 8% in the quarter on a revenue increase of 1%. Our market-leading MSP business had a very good quarter, with gross profit up 7%.

Our RPO gross profit declined 7% to constant currency, primarily as a result of weaker demand in the Asia Pacific Middle East segment.

Talent Based Outsourcing also contributed to the decline in gross profit as a result of the lower gross margin I discussed earlier. Our Right Management business comprised 6% of gross profit in the quarter, and declined by 1% in constant currency, which I will discuss later in my segment review.

Our SG&A expense in the quarter was down $720 million or $693 million before restructuring charges. This is a reduction of $54 million in constant currency, or 7%. Much of this expense reduction was driven by our cost recalibration plan, which resulted in significant productivity gains, as SG&A expense as a percentage of revenue dropped to 13.2% from 14.3% the prior year, down 110 basis points in the quarter.

On a full year basis, our SG&A expense was $2,855,000,000, including the $89.4 million of restructuring charges, or $2,765,000,000 before restructuring costs. This represents a reduction in SG&A expense of $214 million, or 7% in constant currency for the year. Of this $214 million, $152 million is directly attributable to our cost recalibration under our simplification plan. This overall savings resulted in significant productivity gains, as SG&A expense as a percentage of revenue improved to 13.7% from 14.4%, a 70-basis-point improvement for the year.

Now that we have concluded the year, let's step back and take a look at the results of our cost recalibration under our simplification plan. As a reminder, we introduced our simplification plan in the fourth quarter of 2012. Simplification plan focused on recalibrating our costs in 4 specific areas: organization, programs, technology and delivery. The focus of this program was not about cost cutting, but rather about doing our business in a different way to simplify organization and processes, so we can focus on what is most important, which is selling high-value employment solutions to our clients. This is a recalibration of our costs, meaning that we do not expect these costs to come back when volumes increase.

So where did we end up on under the program? We initially targeted savings in our 2013 P&L of $80 million, and the final result is a savings of $152 million. We planned to reduce our SG&A run rate by $125 million, and we exceeded that target, exiting this year with a run rate reduction of $192 million. Said another way; of the $192 million of annual cost reduction, we recognized $152 million in 2013, and the $40 million balance will be recognized as a reduction in the 2014 earnings segment.

We have estimated 2013 restructuring charges between $50 million and $60 million, but incurred $89 million, as we were able to identify more recalibration opportunities than anticipated. This brings our total restructuring charges under the program to $116 million, as we incurred $27 million of restructuring in the fourth quarter of 2012 related to the plan.

This concludes the primary elements of our simplification plan.

As we look to the next few years, we will continue to evolve and enhance our delivery channels and drive greater productivity and efficiency through our virtual and physical offerings. These more efficient delivery channels will allow for further productivity gains, enable us to drive higher incremental margins on new revenue growth as we drive for our 4% EBITDA target.

Now let's turn to the operating performance of our segments. Revenue in the Americas was in line with forecast at $1.1 billion, an increase of 1% in constant currency, or a decline of 2% in U.S. dollars. OUP in the quarter was $39 million, or $46 million before restructuring charges. This represents a strong operating profit growth of 29% in constant currency and an operating margin expansion of 90 basis points.

Staffing gross margin in the Americas was stable compared to the prior year, but the overall gross margin declined slightly due to a 5% constant currency decline and permanent recruitment fees.

SG&A expense was down for the prior year due to the cost recalibration plan and was the primary contributor to the OUP margin expansion.

Now let's turn to the U.S. market, which comprises 2/3 of the Americas segment revenues. The U.S. revenues came right in as forecasted at $751 million, which was flat with the prior year. Our U.S. OUP showed very strong growth in the quarter, up 38% over the prior year, or $31 million before restructuring charges. Our U.S. management team continues to keenly focus on price discipline, which resulted in an improvement in staffing gross profit margin of 10 basis points over the prior year. Our overall U.S. gross profit margin was slightly down from the prior year, as permanent recruitment fees were down 3% in the quarter. While we experienced softening of the permanent recruitment trends in October and November, growth rebounded in December, which was up 9% year-over-year.

Our SG&A expense in the quarter was down 10%, which was the primary contributor to the expanded operating profit margins.

Turning to the brands in the U.S, our Manpower business represents 57% of U.S. revenues. Manpower trends in the U.S. continue to improve, as revenue grew 1% in the fourth quarter compared to a 1% decline in the third quarter. Manpower's revenue growth continues to be masked by the fact that we had one large-client project in the prior year that was completed in January of 2013. Without this client, growth would have been up 4% in the quarter, with strong growth in our national accounts of nearly 12% and SMB growth of 3%. These good revenue gains are partially offset by some declines in our large global accounts. The decline in global accounts is in many cases due to pricing pressure on contracts that came up for rebidding, where we opted not to participate.

Our Experis business represents 36% of U.S. revenues, and was down 4% from the prior year. Within Experis, we continue to focus on price discipline and trading out lower-margin business for higher-margin business. This has resulted in an improvement in our interim gross profit margin of 70 basis points. While our pricing strategy has had some impact on Experis IT revenue growth, we have seen improved revenue trends in both finance and engineering, which were both up 8% in the quarter.

Our ManpowerGroup Solutions business represents 7% of U.S. revenues and had a very good performance in the quarter, with revenue up 9% and business line contribution up 29%. This strong performance was driven by strong growth in both our RPO and MSP business lines.

Overall demand for our services in Mexico remains fairly soft. However, revenue growth did improve to 1% in constant currency. Our staffing margins in Mexico improved slightly in the quarter, and SG&A expenses were well managed under the recalibration plan, coming in 10% below prior year, resulting in an OUP improvement of 18% and margin expansion of 70 basis points.

Consistent with the last few quarters, volumes in Argentina are down compared to the prior year while revenues are up due to the high inflation. In the quarter, we saw a constant currency revenue growth of 13%. That combined with gross margin expansion and good cost control resulted in OUP almost double that of the prior year.

Southern Europe had a very strong performance in the quarter, with revenue growth reaching 3% in constant currency, and revenues of $1.9 billion. OUP in the quarter came in at $94 million, before restructuring, which reflects an 83% improvement in constant currency, and an OUP margin expansion of 210 basis points to 4.9%, before restructuring. During the quarter, Southern Europe improved its gross profit margin and did an excellent job reducing costs under our recalibration plan, resulting in an SG&A reduction of 9% before restructuring.

Our largest operation within Southern Europe is France, which comprises 73% of revenue. French revenues improved steadily in the quarter, and were up 1% year-over-year. This is the first time we have seen growth in France since the fourth quarter of 2011. Our OUP in France came in at $70 million, an increase of 80% over the prior year in constant currency. SG&A expenses were well controlled, down 7% over the prior year, as we continue to streamline our operation and drive efficiencies. Our gross profit margin expansion was also a strong contributor to the results of the quarter, which is primarily attributable to the CICE payroll tax credits.

Revenue in Italy came in at $282 million, which was flat in constant currency. While the economy remains a challenge in Italy, we continue to find good revenue opportunities, allowing us to maintain a stable top line. Our OUP before restructuring came in at $90 million in the quarter for an increase of 89% in constant currency. This good profit performance was primarily due to an expanding gross margin as a result of strong growth in permanent recruitment and solutions business, as well as strong SG&A expense reduction.

Our business in Spain represents 5% of segment revenues, and had an exceptional performance in the quarter. Revenues were up 24% in constant currency, or 15% on an organic basis. This is a nice acceleration from the 3% organic constant currency growth we saw in the third quarter. Along with this growth, staffing gross margins were stable and SG&A expense was flat, resulting in significant OUP growth and OUP margin expansion of 150 basis points.

Revenue trends in Northern Europe continued to improve in the fourth quarter and came in above our forecast at $1.5 billion, an increase of 1% in constant currency. OUP before restructuring was $56 million, an increase of 21% in constant currency. OUP margins before restructuring expanded 60 basis points to 3.7%.

Our gross margin in the quarter was down slightly from the prior year as a result of a 9% decline in permanent recruitment fees. Permanent recruitment continues to be soft across most markets in Northern Europe, with the notable exception being the U.K, which saw 11% growth in the quarter. SG&A expenses were rigorously managed, and were down 5% in constant currency before restructuring. Within Northern Europe, our Manpower brand comprises 75% of revenue; Experis, 21% and ManpowerGroup Solutions, 4%.

Revenue in our Manpower business improved slightly by 1% in constant currency, while Experis was flat and our ManpowerGroup Solutions' Talent Based Outsourcing business was down 7%. Experis revenue trends in Northern Europe continue to improve primarily as a result of the U.K. market, which saw strong growth of 11% in the quarter.

Our U.K. business represents 32% of the Northern Europe segment. Market conditions in the U.K. continued to gradually improve in the fourth quarter, as we saw increasing demand for our services. Revenue in the quarter was up 2% on a constant currency basis, but this includes the impact of a large client project that was completed earlier this year. Removing the impact of this client from the prior year, underlying U.K. revenue growth was 8% in constant currency.

Our Nordic region represents 22% of Northern Europe segment. Revenue trends in the fourth quarter remained stable with the third quarter, with overall revenues down 2% in constant currency or 6% on an organic constant currency basis. Overall market demand in the Nordics remains weak, and we continue to see aggressive price competition from some of our smaller competitors.

Our Germany business represents 12% of the Northern Europe segment. Germany revenues continue to show improvement from the third quarter, up 3% in constant currency or 7% in constant currency on an average daily basis. Overall, profitability improved in Germany as a result of an expanding gross profit margin, with better utilization and strong SG&A expense reduction.

The Netherlands represents 10% of Northern Europe revenue in the quarter, was down 1% in constant currency, following flat average daily growth in the third quarter. As is typical of recoveries, we are seeing some choppiness in the revenue growth line in the Dutch market. Profitability in The Netherlands was very strong, up 67% in constant currency, on expanding gross profit margins and strong SG&A expense reduction.

Our Belgium operation also had a strong performance in the quarter. Revenues were up 1% in constant currency and OUP was up 45%, due to strong SG&A expense management.

Our Asia Pacific Middle East business represents 11% of total company revenue, and was down 5% in constant currency to $590 million. Our OUP in the region was $19 million before restructuring charges, a decline of 27% in constant currency. The profit decline this year is somewhat magnified by the fact that in the prior year, we had provisional release of $4 million related to a contract termination. Our gross margin in this segment was slightly below the prior year, as we continue to see pricing pressure in some markets, and we had a decline in permanent recruitment fees of 8% in constant currency.

SG&A expenses were well managed, while we experienced some operating de-leveraging due to 5% revenue decline.

Within Asia Pacific Middle East, our Japan operation represents 38% of segment revenues. Revenue in Japan was down 6% in constant currency, and was impacted by the run-off of a large client contract that began to wind down earlier this year. Adjusting for this contract, revenues were down 1% in constant currency, slightly weaker than the 1% growth we saw in the third quarter. While we are seeing soft demand for staffing services, our permanent recruitment and solutions business continues to make strong gains.

Our Australia business represents 25% of the segment, and revenues were down 4% in constant currency in the quarter. While demand for our services remained soft in Australia, overall trends are fairly stable, and the year-on-year revenue contraction rate continues to improve.

Our other markets in Asia had a combined revenue decline of 5% in constant currency. The growth environment in this region continues to be mixed with good growth in India, Korea and Malaysia, but contracting growth in China and Hong Kong. The decline in China is partially due to the change in staffing regulations earlier this year, which among other things, restricts the amount of usage by our clients and assignment length. Overall, profitability was down slightly in China, but the OUP margin improved, as we exit relatively low-margin business under the new regulations.

Final segment is Right Management, which came in on forecast with revenues of $82 million, down 2% in constant currency. Within Right, 2/3 of our business is career management, which was down 4% in constant currency in the quarter. And the other 1/3 is the talent management, which was flat with the prior year. Talent management slightly improved over the last few quarters, as we are seeing early signs that companies are slightly more willing to invest in discretionary areas.

Right was able to deliver very strong OUP growth of 28%, before restructuring charges, as they continue to streamline their delivery model. OUP, before restructuring, came in at $11 million for a margin of 13.6%, up 330 basis points from the prior year.

Now let's take a look at our cash flow and balance sheet. Free cash flow, defined as cash from operations, less capital expenditures, was very strong in the quarter at $274 million. This was partially aided by the sale of a large portion of the CICE tax credit that we earned in 2013 to a financial institution. On a full year basis, our free cash flow was $352 million, an increase of 35% over the prior year. Our accounts receivable day sales outstanding was fairly stable throughout the year, and we finished the year up half a day over the prior year.

Capital usage remains a primary focus of the organization, and is well embedded in the incentive plans for our leaders throughout the world. While we continue to see pressure on payment terms, particularly from larger clients, we have fully factored these costs into our client profitability analysis, as we assess individual client returns.

Capital expenditures for the year came in at $45 million, a significant decline from the $72 million in the prior year. This lower investment is appropriate, as we continue to evolve our branch network and delivery channels.

Balance sheet is very strong at year end with total cash of $738 million and total debt of $518 million, bringing our net cash position to $220 million. Our borrowings were in line with the prior quarter at $516 million, and our total debt to capitalization in the quarter improved slightly to 15%.

Our credit facilities at the end of the year were similar to the third quarter. We had $481 million outstanding under a fixed-term EUR 350 million Euro Note that matures in June of 2018 and $35 million outstanding under various country credit lines. We also have a $600 million revolving credit agreement, which we did not utilize during the quarter.

Finally, let's take a look at our guidance for the first quarter of 2014. Overall, we expect strong earnings growth on a continuation of the modest revenue growth that we saw in the fourth quarter. On a consolidated basis, we expect revenue growth to range between flat to up to 2% over the prior year. We expect similar revenue growth in constant currency, as the blended average currency rate this year is similar to last year.

From an operating segment perspective, we expect constant currency revenue growth to range between 1% and 3% for the Americas, Southern Europe and Northern Europe. We expect year-over-year revenue declines between 4% and 6% in Asia Pacific Middle East and between 1% and 3% at Right Management.

We are forecasting our gross profit margin to range between 16.4% and 16.6%, and our operating profit margin to range between 2.1% and 2.3%. We are estimating our income tax rate to be 44%, resulting in earnings per share between $0.62 and $0.70 per share.

At this point, we expect the impact from changes in currency rates between years to be neutral to earnings per share on a net basis. As you compare our first quarter forecast earnings for the prior year, keep in mind that the first quarter of 2013 included $0.32 of restructuring charges. Also keep in mind that the income tax rate in the first quarter of last year was unusually low, as the WOTC tax credit for 2012 was recognized in the first quarter of 2013. This added $0.09 to earnings per share in the first quarter of 2013.

With that, I'll turn the discussion back to Jeff.

Jeffrey A. Joerres

Thanks, Mike. The fourth quarter 2013 was a solid quarter for us, with operating profit increasing 46% and net earnings up 68%, both before restructuring. In fact, it was a good year for us given the environment. We executed extremely well and set ourselves up nicely for 2014. The recalibration and simplification of the business has set us up nicely for stronger operating leverage than we have had in the past. The well-managed and strong execution momentum is coupled with a very soft breeze at our back, something that we have not felt for some time.

As we discussed in previous quarters, our ability to create more operating leverage based on a smaller revenue growth is an objective we've been shooting for. Given our cost base, we do believe that the recalibration has achieved a lower operating leverage point for us. We are still in a challenging revenue environment, as 2013 came in 2% below 2012. We do believe, as you can see from our revenue guidance that Mike shared with you, that revenue growth will remain slightly positive for the first quarter. The magnitude of that uptick, as well as we go through 2014, is very difficult to predict. But there are many signs that would say that we should be able to have a slow revenue growth throughout the year, but definitely revenue growth.

Within the quarter and the year, we had some keep performances. Our Dutch operation did extremely well in 2013, gaining market share and expanding profitability by 44%. This is also true in Belgium where we have been able to, not only gain market share, but diversify our business and also increase profitability by 26%.

Brook Street in the U.K. and Spain also did very well, given the economic environment. Three of the largest of the 5 geographies, France, the U.S. and Italy, all did better, with the U.S. improving profitability by 40%, and also starting to experience revenue growth in Manpower. But we're yet to see satisfactory revenue growth in Experis. France had a very good year aided by CICE however. Even without CICE, we did well, as we were able to manage cost quite affectively and continue to gain market share throughout the year.

Our gross margin in the core staffing continues to be a challenge. We anticipated the challenge, and as a result, through recalibration, ratcheted back much of our cost and are able to obtain business at lower gross margins, while still achieving higher net profits on that business. A major area of focus in gross margin improvement is mix of business through solutions and outcome-based pricing. We continue to do quite well in this area, as clients are looking for a package solution in many cases.

And our RPO business and MSP offerings are top in the industry. We added 21 additional engagements in the quarter in RPO, and therefore, we continue to plant a tremendous amount of seeds in the RPO area.

ManpowerGroup has been recognized for the third consecutive year by Everest Group Research Recruitment Process Outsourcing Report as the leader in their peak metrics. Also for the first time, Everest has put out a top performer list for managed service provider, and we surpassed the competition in each of the evaluation categories and emerged as the clear industry leader in this area, both extremely important to us as we look to the future of what our clients and prospects are looking for.

Throughout the year and the quarter, we continued to drive simplification in our business. The mantra started at the beginning of the year, which was "To simplify, to sell and win." The 4 areas of simplification: organization, programs, delivery and technology, have all been worked on with great progress being made in each of the areas. We have more to do in the areas of delivery and a slight more to do in technology, and we will continue to work on them throughout 2014.

In 2013 we have -- we've made sizable investments in Manpower delivery channels, Experis and cross-border capabilities, Recruitment Process Outsourcing and MSP offerings, as well as our sales leadership and sales force.

All of this is pointing to better momentum as we move into 2014. Last year at this time of the conference call, I talked about stabilization and that the patient had stabilized but was not off the recovery table yet. I do believe that it's fair to say that we could upgrade the patient status. The labor market is clearly off the table and walking, albeit, gingerly. That doesn't mean that we are about to experience any robust recovery on a global basis, but we are seeing an environment in which confidence is starting to take hold. As we move into 2014, we will continue to exercise our muscle in the area of recalibration where possible, but also, in the areas of delivery and technology. We will be focused on disciplined growth as growth is an important part of our 2014 strategic initiatives. We are looking forward to 2014 with confidence and momentum. With that, I would like to open it up for questions.

Question-and-Answer Session

Operator

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

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

My first question has to do with the new growth in France. Do you think that's a market rate of growth? Or do you think Manpower has started to take share in the fourth quarter compared to my estimate that they've been more like a peer performer to the group throughout the early part of 2013?

Jeffrey A. Joerres

Well, France has some unique characteristics as you know and the prism data comes out and it tends to be a very good proxy because of the way the industry is structured there. Based on the prism data in the most recent December and what we've seen in the fourth quarter is we most likely have been taking a bit market share. The industry itself is still a bit muted and had a little bit of a slower December, and I think that's across the board the way Christmas fell was a confusing time for us in the industry because of that Wednesday. So I would say, we're taking a little bit. Also, as you know, while that has leveled out, somewhat in '13, if you go back to '11 and '12, we've been taking market share in those years as well. So I think the team is performing well and we're quite focused on disciplined growth there.

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

And is there growth in France in early 2014?

Jeffrey A. Joerres

Andrew, I think, as you look at where we are in 2014, I'd say we -- a little bit slower start in the French marketplace starting off the year. So as our guidance -- as you look to our guidance in the first quarter, we're looking for about the same type of growth, about 1% in constant currency in the first quarter similar to what we experienced in the fourth quarter. I would say that January isn't in yet, but we've got a pretty good look on January. I would say right now January would look to be flat to slightly down, but the overall atmosphere, I think, in the marketplace is certainly stabilized. And I think there is a little bit of optimism, even though there is also caution in the marketplace, no doubt. But sort of looking for that to continue on a growth path here, but we're also looking it to be a fairly modest growth path, if you will.

Andrew C. Steinerman - JP Morgan Chase & Co, Research Division

And then just to round out France, Mike could you just make a quick CICE comment about 2014.

Michael J. Van Handel

Right. So the CICE tax credits increased from 4% of eligible wages up to 6% of eligible wages in 2014. So there is an increase in the amount of credits that are available. And we will take the same view in '14 that we did in '13, which effectively, these credits are intended for the employer and to be reinvented to some extent in programs to help employment. And so that's our view as we enter into 2014, and that's how we're going to approach the marketplace.

Operator

The next question comes from Mr. Hamzah Mazari.

Hamzah Mazari - Crédit Suisse AG, Research Division

Just a question on the Q1 guidance. Are you seeing any further deceleration in Asia Pacific? Or is that just a large client winding down? Any color on the weakness in Right Management? I assume the higher tax rate you guys have at Q1 is just a mix of where you guys are earning income.

Michael J. Van Handel

Yes. So couple of things. In terms of Asia Pacific, I would say -- I don't see any further deceleration. It is primarily the impact of a client that we had winding down in the Japan market, that's a fairly large part of that. And then I would say, the operating results overall in that part of the world are a little bit mixed. We're seeing some growth in some of the markets and some softness in some of the other markets. But I certainly wouldn't characterize it as increased deceleration overall.

Jeffrey A. Joerres

And as Mike mentioned in his prepared remarks, we're going through the change in the Chinese labor law, which is affecting the revenue. But actually, it was revenue that was a little bit difficult revenue for us to swallow to begin with because it was a pretty low gross margin. So as that shifts around, it does some things with that top line that are a little misleading. So in the core part of China, what we're seeing is that it's a relatively stable market. Current recruitment is still moving in the right direction. Our perm recruitment is a little bit off because we've lost a few key performers to opening up their own companies which is just part of the factor of doing business in China. So I would think overall -- in Australia, we have felt a little pressure in Australia, but it's not a major market. But if we go to the other markets in there, it's pretty strong.

Michael J. Van Handel

And second question on Right Management. Right Management, from a revenue perspective, pretty much came in as expected in the fourth quarter. Remember, you've got 2 pieces of business in there. You've got the outplacement business, which is counter-cyclical. And that's down a little bit on prior year as would be expected as the economies are starting to show some signs of improvement. And then the talent management -- so that's 70% of the business -- the talent management piece is 30%. And that's a little bit more discretionary spend than we -- we've actually seen that -- while that is still down slightly year-on-year, the contraction has smoothed out a little bit and we're starting to see a little bit more opportunity there. So overall, I think Right had a good performance in the quarter. They managed expenses extremely well and overall good profitability from that perspective.

Jeffrey A. Joerres

And the revenue, in the case of Right also, we're seeing that in total numbers, our numbers are pretty solid if not going up. But the size of the packages that our companies, our clients are engaging with us are a little bit down. Part of that is just a natural thing that we had anticipated. We're moving much more to the Internet. So you get really a mix of how they're using us in the career management. So you might be looking at outside world and seeing some pretty good size downsizing in companies. We're participating in that, but the package numbers are a little bit down, so revenue's down slightly.

Hamzah Mazari - Crédit Suisse AG, Research Division

That's very helpful. Just a follow-up question, and I'll turn it over. Within Experis, you spoke of getting rid of some low margin business. Where are you within that process? Is this late innings within that process? Is this just a function of your book of business? Or is there some execution issue?

Jeffrey A. Joerres

Okay. So we've got 2 questions in there, because I'll have Mike handle the first quarter tax question that you asked also. But on the Experis side, we are anniversary-ing some of those accounts that weren't necessarily low margin. They were large accounts of ours that projects had anniversary-ed. They were coming off. Most of that is now coming due for us. In other words we are anniversary-ing that. So that was a big part of it. We continue to remain disciplined, but also we've got some execution things that we have to work on within Experis, particularly in the productivity of recruiters and making sure we have the right match of the recruiters with the amount of orders out there. The amount of orders out there seeing fairly robust. Our pipeline is good. So we've got to step up our execution. So we -- I would say that we are a little -- we're off a little on our execution but I'm confident in the direction that the team is making. Mike, you want to cover the quarter and the tax for the Q1?

Michael J. Van Handel

Yes. So first quarter tax rate, the overall guidance was 44%, which -- it's certainly higher than prior year because we had some unusual WOTC Tax Credits come through in the quarter. But also, if you look at that 44% relative to on a full year basis last year, our tax rate was just under 4 -- just a hair under 40%. So a little bit higher. And that really has to do with the seasonality and the amount of pretax earnings of that comes into the first quarter. So there's some items that, for instance, the business tax in France has a disproportionate impact of the effective rate in Q1 just because pretax earnings is less in Q1. So that's where we get to a little bit higher rate. As I look out for the year right now and it's a little bit hard given how mix can change and tax planning can impact it. But right now, I would anticipate the overall tax rate for 2014 to be in that 40% range overall, right around where it was last year. So again, a lot of moving parts there but that's how I'm thinking about it right now, and the 44% in Q1 is in that context.

Operator

Next question comes from Ms. Sara Gubins.

Sara Gubins - BofA Merrill Lynch, Research Division

You mentioned that France is slightly down a little bit in the beginning of the year. Are you seeing similar trends in other major markets? Or is there a lot of variation around that?

Michael J. Van Handel

Yes. I would say there's a fair amount of variation around that. I would say some markets are getting a little bit slower start; other markets are doing a little bit better. I think the U.S. market is showing some incrementally better signs overall in the marketplace. Some impacting in some areas due to the cold weather within the U.S. market, but putting that aside, I would say overall the U.S. market's doing a little bit better. And I would say in many of the markets, the tone is a little bit better even though maybe the starting point is coming on a little bit slower. But overall, I think things are still continuing in a favorable way as we get into the first part of this year.

Sara Gubins - BofA Merrill Lynch, Research Division

Okay. And then following up on some of the earlier CICE discussion, how much of the CICE benefit is in the first quarter gross margin? Or I guess how much is that contributing to the first quarter gross margin?

Michael J. Van Handel

As we look at the first quarter gross margin, we would expect -- there was some benefit in last year, we'd expect some incremental benefit this year. As I mentioned earlier, the overall amount of CICE is about 50% more. And so we would expect -- we do have some additional benefit coming through on the gross margin in the first quarter over and above what was recognized in 2013.

Jeffrey A. Joerres

Yes. And it wouldn't be the entire amount because you're being cautious about what's happening with some pricing. And so it's starting to now mature to the point where between pricing in small-, medium-sized business. And what we're doing to try to improve the employment market with some of those dollars, it's not completely mathematical.

Sara Gubins - BofA Merrill Lynch, Research Division

Okay. And then do you have an expectation of further cost reduction related charges in 2014?

Jeffrey A. Joerres

We're going to take very seriously as we have -- and you've seen this year, I'm extremely proud of the team and that's the extended team across all of the network of what we were able to do in 2013. When we look at 2014, there are some things, particularly in the delivery area that we're going to continue to work on. Delivery is really the sacred part of the business, so we're going to do that very slowly and methodically to make sure that we are making the market itself where we are introducing some of these new delivery -- multi-delivery channel strategies. So that will involve some consolidation at some level. Some of the countries, it will just flow right through expense. Other countries where we might do it on a larger scale, there might be a little restructuring. And then there's a tiny bit left potentially in technology, particularly at the local level. So we've really tried very hard to get 2013 restructuring as kind of the endgame, but I think it would be probably trivializing what might happen in '14 as we're able to sink our teeth into some new opportunities but it would be nowhere near as big.

Sara Gubins - BofA Merrill Lynch, Research Division

Right. And then just last question. Like is there anything that's unusual around the number of days per quarter in 2014 that we should think about as we model?

Michael J. Van Handel

No, nothing, someone just [indiscernible] I've got that. In the first quarter, some markets have 1 more day, some don't. So overall, we've got less than, I think, it's about 0.4 additional days in Q1 on a weighted average basis. So it has a slight impact on overall revenue growth incremental. As I look to Q2, we've got about a half a day less, and Q3 is about the same as prior year, and Q4 is just slightly below prior year. So it's pretty consistent across. No major shifts this year compared to the prior year.

Jeffrey A. Joerres

Except I hope Christmas on Thursday is better than Christmas on Wednesday.

Operator

Next question comes from Mr. Paul Ginocchio.

Paul Ginocchio - Deutsche Bank AG, Research Division

Not to belabor the point, but just, Jeff, your outlook around 2014 didn't include the word guarded yet you included it in your press release. Is that just because of the slow start in France? Is that why you said guarded? Any other reason?

Jeffrey A. Joerres

Paul, come on, now. You're making me sound like the Fed reserve with forward guidance and using words a certain way. But, I will say that I worked on that word for a long time. And to be real honest with you, if you look at what we had stated in our prepared remarks for the call, we used the word cautious in many areas. And I really felt cautious was not only overused in press releases, but was maybe signaling kind of what it felt like before and it's not. So we are feeling a bit more optimism, but we're going to be guarded about that optimism. We're not going to get ahead of our skis on it. So the word was very much selected for a reason and we looked at guarded being a better word than cautious because cautiousness is what was used during all of this downturn stuff and connoted something different than what we wanted in that word guarded.

Paul Ginocchio - Deutsche Bank AG, Research Division

And then just -- I think I understand your growth relative to the market in Italy -- I mean, in the U.S. because of the contract in the U.K. because of the contract in Germany, I guess, because of the same-day issue or fewer days. But in Italy, it does seem like you're going substantially less than market. Can you just address that?

Jeffrey A. Joerres

I'm not sure if we are. I think there are some competitive local players there. But when we come up against the major competitors, we kind of go up and down a little bit more fast just from quarter to quarter. It's not like you would see in France, where it goes over a 1 or 2 year or 18 months. So no. We feel very good about our market there. Also, if you compare what we are doing on the top line compared to what we are doing on the bottom line, you can see that we're also being appropriately selective, while being competitive because our bottom line has improved very nicely in Italy in this difficult time.

Paul Ginocchio - Deutsche Bank AG, Research Division

And then just one quick one for Mike. In the U.K. and Japan, when do we start -- when do these contract's no longer become a drag or start to subside? Which quarters?

Michael J. Van Handel

Yes. In the U.K., we end up going out through into the third quarter is where you start in. And Japan, there was kind of a gradual fading off, if you will. So we're going to somewhat feel it through the year, but certainly less in the second half of the year.

Jeffrey A. Joerres

Yes. And that was an account that moved over to a different way of doing business and more of an outsourcing arrangement based on some of the labor law that was put in place 2 years ago.

Operator

Next question comes from Mr. Gary Bisbee.

Gary E. Bisbee - RBC Capital Markets, LLC, Research Division

So first question on -- I just want to get a sense how you're thinking about variable costs within SG&A. The bridge for the year you had at $214 million decrease, and you said $152 million of that was the structural cost savings. Revenue for the year fell 2%. If revenue grew 2%, would it be a reasonable assumption that the $62 million variable piece, the difference between the $214 million and the $152 million would come back in 2014? Or is it not quite that simple?

Michael J. Van Handel

Yes. It's probably isn't that simple because there are so many different components to that. I think, certainly, there's some capacity in the network and we could see some growth and holdback from an SG&A standpoint with that growth. And I would certainly like to leverage that 2% growth. I'd like to leverage as much of that, if not all of that, down to the bottom line. Now there's some practical aspects to that in that if things like merit increases and things like that coming through. But I think we'd be able to get a fair amount of leverage coming through on that 2%. And the other thing to remember is, so we took out a total of $192 million on a run-rate basis. And so, $152 million actually hit the P&L in '13, so we've got $40 million of that, that will help us out next year in '14 as well.

Jeffrey A. Joerres

And what we're trying to do is in the delivery strategy, is to work to replace the productivity, increase the productivity down at the branch level so what has been reduced because of the lower volumes, we'd like not to bring back at the same rate because we're replacing it with a different way of doing business. But that's -- we're not counting a lot on that because we're going to do that carefully so we don't hurt our revenue line, but that's the ultimate strategy, is to replace it so that it doesn't come back at the same rate.

Gary E. Bisbee - RBC Capital Markets, LLC, Research Division

All right. And then the follow-up question. On the solutions business, there's been an awful lot of optimism and yet the business hasn't recently grown that much, I think because the Talent Based Outsourcing has kept -- has offset the strength of the other segments there. Can you just give us a sense what is the outlook for that? And really, what's the driver of the Talent Based Outsourcing? Is that just a different way of doing temp? Where you take some of the risk and it's project-based and so that would be macro drivers like the rest of the business? Or how do we think about that?

Jeffrey A. Joerres

Yes. you're right on. So if you were to parse out RPO and MSP, those are both growing at very good rates in the low single-digit to low -- I'm sorry, high-single digit to low double-digit. It's the TBO business, the Talent Based Outsourcing, which is a wrapper of more outcome-based pricing of the core business. So as volumes for clients go down, that business is shrinking because it really has large numbers in it. And also if you look at it, Mike, you can help me out, but I still believe it's about 60% of that line item. So it's a big part of our Solutions business. Now it's gone down a little where we were maybe as high as 65% because it has shrunk a little. So absolutely. It's much more of a macro trend. We haven't lost those accounts. Companies still want to do business that way. And that will -- we have every confidence that it kind of comes back as the core staffing business comes back.

Michael J. Van Handel

So I'll maybe just to make one minor adjustment to that on the RPO side. We did see -- I've got the advantage of the numbers right in front of me. We did see a little bit of a decline this quarter in RPO year-on-year and that probably has to do with a large RPO business that was down in Australia. We saw a little bit of a decline, but overall, that business is very solid and performing well.

Operator

Your next question comes from Mr. Tim McHugh.

Timothy McHugh - William Blair & Company L.L.C., Research Division

One of the comments earlier, you said about the extra month of the payroll credit and then the CICE credit in France was -- is that a catch up from -- in other words, you didn't accrue as many months earlier in the year? Where does that come from, I guess, is that a pull forward from something that otherwise would've been in Q1 here?

Michael J. Van Handel

Yes. That's a good question, Tim. So effectively, the December payroll gets paid in January, and that effectively what we're doing is we're accruing the credits related to that December payroll in December. And that's the appropriate accounting guidance we got on that, which effectively gets us 4 months in the last quarter here, is what happens.

Timothy McHugh - William Blair & Company L.L.C., Research Division

Does that mean you only have 2 months in the first quarter?

Michael J. Van Handel

Well, we did have 3 months in the first quarter, overall. It was -- it wasn't clear at the end of last year December that we should have -- it wasn't following the legislation. So we basically didn't accrue at the end of last year for the December '12 payroll until it was actually -- the legislation came across. So effectively, what we've got is we're going to have 13 months really came in 2013. And as we now get into 2014, the first quarter of '14, we'll have 3 months in the first quarter of 2014.

Timothy McHugh - William Blair & Company L.L.C., Research Division

And then I guess the only question I had is just the cash balance, I know you had strong cash flow this year and is starting to build up. I guess where is your thought process at this point relative to acquisitions versus repurchases?

Jeffrey A. Joerres

Well, we're going to stay very consistent. We are interested in acquisitions, but they have to be very good acquisitions and they fit within us. So we continue to do what we can to look in the market, but we're not going to be overly eager just because we have a cash balance to do something on the acquisition front. When we look at any share buyback, we have an authorization and we think that it would be prudent to offset kind of -- any kind of sort of equity that is creating some dilution, so we would look at that. And then just continue to look at the market as it rolls out. But while that cash balance is there, Mike and I keep looking at each other and saying, “All right, we don't want to be overly eager. We know we're a cyclical company, so we're going to be methodical about that cash and not get overly concerned about it building up just slightly.”

Operator

Your next question comes from Mr. Jeff Silber.

Jeffrey M. Silber - BMO Capital Markets U.S.

Given where the company is on the its recalibration, I was wondering if you can tell us, going forward, what the incremental margins are on your business, if they differ dramatically by the different solutions that you offer?

Michael J. Van Handel

Jeff, good question. It really goes back to what we talked about in February when we had our Investor Day and what we expect on incremental margins. And as you know better than anyone, and I'm sure other others on your call know that, the more revenue growth we have, the better the incremental margins are going to be overall. And the way we had looked at it and the way we laid it out in February, we said in order to get to our overall 4% target, we need about $3 billion more of revenue on where we were in 2012. And on that $3 billion of revenue, we think we can get incremental margins that would be on the order of low double-digit incremental margins effectively. So very good leverage on that incremental revenue. So when it comes down to on a quarter-by-quarter basis or year basis, it's a little bit tougher to say exactly what's 3% growth, what's the incremental margin going to be. But certainly, that is a key part of the story. A key part of what we're trying to drive is managing that overall growth. And I think as you look at the different business lines, it depends a little bit upon business line, it depends a little bit upon geography as well because some geographies we have little bit more capacity within those geographies and across business lines as well. So it's probably a tough answer to generalize and I think I'd prefer not to generalize and try to get it down because there's so much of that goes into that.

Jeffrey A. Joerres

Suffice it to say, we're better off than what we were in 2012.

Michael J. Van Handel

Absolutely. The cost structure, the leverage point is much lower. And I think we've done some work around the delivery model to help drive that efficiency. We've got more work to do there to drive more productivity that we can get more volume through the network in our virtual offerings. So I think that's to come.

Jeffrey M. Silber - BMO Capital Markets U.S.

Okay, great. Maybe on my follow up, I can pinpoint you a little bit closer on numbers. Can you give us what you're looking for in terms of capital spending guidance for the year? And are there any office openings planned across the world?

Michael J. Van Handel

Sure, from a capital expenditure standpoint, certainly this year was quite a bit down. Overall, we came in at about, I think, the number was about $42 million in overall capital expenditures for the year -- or maybe it was $45 million. Something in that ballpark. So quite a bit down from the year before, which was is in the low $70 million range. And I would suggest starting the year out that we'd be thinking somewhere in that $50 million to $55 million range. There will be opportunities to open offices overall in some of the markets and some of the newer markets. But I would suggest that on a full year basis, I would expect we will exit the year with less offices as we again continue to look at our overall delivery model, and driving efficiency and productivity. And really technology just allows us to be more efficient from an office footprint standpoint. So net basis, down although I do think there will be some opportunity for opening some new offices. And, of course, there's always the ongoing refurbishment to make sure that the offices we have are in first-class condition.

Operator

Last question comes from Mr. Mark Marcon.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

With regards to Jeff's previous question, you mentioned the 4% EBITDA target. You've clearly done more this year -- over-delivered with regards to the simplification. What are the implications for the incremental margins relative to what you were talking about back in February when the restructuring was a little bit lower?

Michael J. Van Handel

Yes. So when we look at the overall plan back in February, we were looking at 70 basis points coming out of restructuring, or I should say 60 basis points. And we're going to be a little bit over 90 basis points, close to 100 basis points. Let's say, from that perspective, we're clearly well on our way. Overall, we're looking for our overall gross margin to be up by about 30 basis points in that plan, primarily driven by perm growth and better mix of business, including our more Solutions business. And then the underlying staffing gross margin, fairly stable. And I'd say what we've seen is a little bit more than anticipated pressure, continued pressure on the underlying staffing gross margin. I do still think there is very good opportunity on the perm side and on the solution side. So I think when I look at both of those pieces together, I think we're in good position overall to make sure that we meet the goal there, and then the last piece was just delivering productivity on that incremental revenue of 70 basis points. And I think that is still -- as I look at where we are and look at how we can drive a good productivity on new revenue, I think that is intact at this point.

Jeffrey A. Joerres

So we would need, based on that waterfall chart we put in place in February, you need a little less than the $3 billion in revenue. But it really depends also on where it comes from and some of the margins that Mike talked about on gross margin.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

Speaking of the perm and the gross margin improvement, you have gone from significant headwinds to, as you characterize it, a slight breeze to the back. When would you expect that to fully translate to the perm side?

Jeffrey A. Joerres

The market is a little bit harder to read than what it's been in past recoveries because I think we're on the 5th year of this recovery and I'm not quite sure it's the recovery yet. So the perm cycle versus the temporary cycle seems to be much more intermixed than it's been before. There's not a cadence in which we've seen before. Also we are so much larger as an industry and definitely as a company in the perm business. So I believe that 2014 could have a pretty good year in perm in the U.S. because U.S. has a little bit more buoyancy in the labor market. I still think that perm in Europe might be a bit difficult because, because unless something comes out, that frees up a little bit more confidence, I think we are still going to be under some -- an environment where it'll be hard to get at, but it will be there. We don't see it going down, but it's not going to throw us into a 30, 40 basis points improvement in our gross margin line because of perm. We just don't see it coming.

Michael J. Van Handel

I'd also just emphasize Mark, I think that's one of the things as we talk about perm opportunity, as you're aware, we really built out the capability for perm recruitment back in the 2005, 2006 era. In fact, perm recruitment came into the marketplace in France in 2005. So as we look at it, we think there is very good opportunity. The secular trends are very strong. Clients are looking for us to provide that type of service, much more so than they have in the past. So it is, as you suggest, it's a bit of what's waiting -- wait and see for the economies, particularly what's still meandering is Europe. And, I think, when that starts to turn, I do think there's good opportunity there for us.

Mark S. Marcon - Robert W. Baird & Co. Incorporated, Research Division

And Jeff you talk to lots of CEOs of global companies and you travel quite a bit, are you seeing any sort of initial signs of concern around what -- the well-publicized issues in some emerging markets?

Jeffrey A. Joerres

It's interesting, I've had the opportunity -- I've just come back from Davos, the World Economic Forum, where you get to meet a lot of CEOs. There was talk about it, but yet, everybody felt -- they're talking about it as if there's going to be some concern because there is some concern. But no one's really feeling it in any dramatic way at this point. So I would say it's kind of stay tuned. I mean, there's a lot of confusion that always happens at the end of the year and at the beginning of the year because of the seasonality of that. So I would say that there are some winners and maybe not as much winners that are happening in China, but that was happening before. So overall, the Japanese economy and what's happening with some of their policies seem to be adding some energy to it. So I would say that there's optimism, but yet everybody is looking at some of the data, and going, okay we're going to be careful in this environment. And we believe that, that's a pretty good environment for us because they're going to be careful and they'll be using us instead.

Jeffrey A. Joerres

Thank you, everyone. We appreciate it.

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