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Manpower's CEO Discusses Q1 2012 Results - Earnings Call Transcript

As Jeff mentioned, the first quarter was a strong start to the year. Revenue growth exceeded expectations up 3% in constant currency. Revenue benefited approximately 1% from acquisitions and about 1% due to an extra billing day compared to the prior year in some of our countries. Earnings per share of $0.50 exceeded the midpoint of our guidance by $0.16 per share, which was all driven by superior operational performance.

Our SG&A expense was in line with expectations despite the stronger revenue growth, and as a result the incremental gross profit and the additional revenue growth fell straight to the bottom line. This resulted in an operating profit margin of 1.8% which was 30 basis points better than expectations and 10 basis points better than prior year. Our reported tax rate of 51% was slightly below expectations, which was simply due to the fact that the French business tax component of our provision was not impacted by higher pretax earnings. The underlying effect of income tax rate excluding the French business tax was 38%, which was right in line with expectations.

The currency impact on the quarter was a negative $0.02 right in line with the expectations. While the year was slightly stronger than expected, the overall earnings per share impact fell in line with expectations as more euro based earnings were generated than anticipated.

Our gross profit margin came in above as expected at 16.6%. This is 30 basis points below the prior-year and primarily relates to a lower staffing gross profit margin impact of 20 basis points. Staffing gross margins are stable in most markets, but margins have been negatively impacted by slightly higher unbillable bench times and stronger growth from a few lower gross margin key accounts.

We have also experienced some price pressure in the contracting Italian and Dutch markets. Additionally, our gross margin was impacted about 10 basis points from our China acquisition last year, which will anniversary this month.

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