ManpowerGroup Inc. (MAN) Earnings Call Transcript & Summary

Welcome to ManpowerGroup's Second Quarter Earnings Results Conference Call. [Operator Instructions] This call is being recorded. If you care to drop off now, please do so. I would now like to turn the call over to ManpowerGroup's Chair and CEO, Mr. Jonas Prising. Sir, you may begin.

Good morning, and thank you for joining us for our second quarter 2026 conference call. Our Chief Financial Officer, Jack McGinnis; and our President and Chief Strategy Officer, Becky Frankiewicz, are both with me today. For your convenience, our prepared remarks are available in the Investor Relations section of our website at manpowergroup.com. I'll begin with a brief overview of the quarter, including how we're seeing conditions evolve across our markets, and then I'll share a few updates on our transformation as well as our longer-term objectives. Becky will then provide an update on client momentum and the opportunities we're capturing with AI, followed by Jack, who will walk through the detailed financial results and our guidance for the third quarter of 2026. I'll close with a few comments before we open the line for Q&A. Jack will now cover the safe harbor language.

Good morning, everyone. This conference call includes forward-looking statements, including statements concerning economic and geopolitical uncertainty, 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. We assume no obligation to update or revise any forward-looking statements. Slide 2 of our earnings release presentation further identifies forward-looking statements made in this call and factors that may cause our actual results to differ materially and information regarding reconciliation of non-GAAP measures.

Thanks, Jack. During the second quarter, we delivered strong results with revenues ahead of expectations, underscored by growing client demand and accelerated delivery of our strategy. Our reported revenues were $4.9 billion, representing constant currency growth of 6%. System-wide revenue, which includes our expanding franchise revenue base was $5.3 billion. Adjusted EBITDA margin of 2.1% reflects improving demand trends and operating leverage. These results reflect good execution across our brands and markets, continued cost discipline and improving demand. We continue to leverage our scale and global footprint and focus commercial efforts on verticals where demand is strongest and where we have a clear opportunity to win and capture market share. We are encouraged by our performance across our brands. Specifically, within Manpower, demand indicators have strengthened and the brand delivered its fifth consecutive quarter of growth, with revenue up 8% in constant currency. We are seeing positive momentum across key verticals, including manufacturing, automotive, aerospace, logistics and retail. In the U.S., Manpower performance in Q2 was particularly strong. driven by accelerated sales activity and a robust pipeline that continues to build. We're also seeing a meaningful improvement in Northern Europe, which is profitable this quarter and represents a significant and broad-based year-over-year improvement. While there's still more progress to make, the actions that we have taken are driving improved performance. Experis, our technology resourcing and Services business delivered encouraging improvement driven by sustained demand for specialized capabilities in cloud migration, application development, data and AI. Our partnership approach and human plus agent offerings are addressing new market needs, all contributing to a pipeline of higher-value opportunities with clients seeking both agility and deep technical expertise. We expect continued improvement in Q3. Lastly, in Talent Solutions, we delivered sequential improvement and are encouraged by the strength of the pipeline. We've sharpened our strategic focus and strengthened how our teams, capabilities and expertise come together globally. This alignment enables us to reduce complexity, accelerate innovation and deliver stronger client outcomes. Across the portfolio, we continue to actively shape our business towards higher value opportunities where capabilities are most differentiated. Our experienced leadership team remains focused on executing against today's demand, while positioning the company for the opportunities we anticipate tomorrow, and we remain disciplined in our approach to pricing and client selection, supporting stronger returns over time. Before I hand it over to Becky, I'd like to share a few high-level updates on our transformation. First, at the beginning of the year, we told you this was going to be a pivotal moment in our transformation, and we are delivering on that commitment. Specifically, we said we would optimize our current cost base and align capacity with client demand. Last quarter, we launched our expanded global strategic transformation program. expected to deliver $200 million in permitting cost savings in 2028. This program will create a more efficient cost structure, while positioning our brands to capture market share. We have a clear path to deliver these savings, and we are making strong progress. Second, we committed to using the same discipline to review our portfolio to ensure we have the right asset base. As a result, the sale of Jefferson Wells U.S. business was completed during the second quarter. A concrete example of prioritizing investment and management attention behind the core higher return opportunities where we see the greatest potential to create value. Taken together, our transformational cost out and portfolio optimization actions have put us in a better position to generate operating leverage as demand continues to improve. Looking ahead, we're committed to delivering at pace. Our first priority is to execute and continue to drive momentum across the business, including the strong performance from Manpower and tangilent improvement across Experis and Talent Solutions. This requires focusing our commercial initiatives on the regions and verticals that will drive the greatest demand. We will equally stay focused on our longer-term ambition to position ManpowerGroup for durable, profitable growth through the cycle. This includes sequencing the global rollout of the cost transformation program and deliver our $200 million cost target on schedule, continuing to redesign our front office sales and recruitment processes to enhance productivity and leveraging AI to create sustainable commercial opportunities to accelerate growth. I will now turn it over to Becky to go deeper on how we're enhancing productivity and commercializing our AI capabilities.

Thanks, Jonas. As Jonas just shared, we are focused on accelerating how we leverage AI in 2 key areas: to enhance effectiveness within our own organization and to create commercial opportunities that become growth multipliers. First, as I discussed last quarter, AI-centric enhancements were critical to our ability to accelerate our go-to-market strategy, identify the highest value opportunities and capture incremental revenue. We continue to scale our AI-powered sales targeting engine, and we are encouraged by how it is influencing organic growth by pinpointing the highest probability opportunities so our teams can focus their efforts where sales conversion and revenue impact are the highest. We are leveraging this tool in many of our largest markets and are on track to scale to almost 70% of revenues by year-end. The other half of the effectiveness equation is creating a differentiated talent experience, critical to attracting and retaining the skilled associates and consultants our clients value most. We are continuing to advance our AI-powered screening and interview experiences to meet talent where and when it works for them. We are on track to scale to 70% of revenues by year-end, improving fill rates and accelerating time to hire. As it relates to new commercial opportunities, we are leveraging AI as a growth multiplier and are focused on anticipating fast-moving client buying behavior and responding at speed. Over the last few weeks, I've been meeting with many of our clients across Europe and around the world. We continue to hear that organizations across industries are focused on how AI can be deployed responsibly to add capability and improve business outcomes. This is creating a new set of opportunities for ManpowerGroup, and we are capturing these opportunities with a partnership approach that we believe is a new value creation lever. By building new go-to-market alliances with industry leaders that bring complementary expertise, we are creating net new revenue streams that expand our addressable market and accelerate speed-to-solution in an efficient and cost-effective way. We believe the next decade of AI adoption will be defined by partnerships that combine technology, talent and workforce expertise, and we are intentional on building these relationships now. Last quarter, you heard me discuss our partnership with SoundHound AI, the global leader in voice and conversational AI. Since then, we have continued to build momentum and have begun converting opportunities into customer engagements. We are seeing increased traction within our health care clients as organizations look to deploy conversational AI to improve both customer and employee experiences. And we are making good progress expanding these opportunities beyond the U.S. Last week, we expanded our partnership capabilities with the launch of Accelerate workflow built with IBM Watsonx orchestrate. IBM provides the trusted underlying AI technology, while Experis helps clients to unlock value: designing the workflow, implementing the solution, providing the talent and helping to govern and manage the deployment over time. Unlike traditional AI consulting approaches, Experis brings together technology implementation, workforce transformation and specialized AI talent paired with our depth of human capabilities to help organizations move beyond AI pilots and into scalable execution. These projects are particularly attractive because they combine high-value consulting, AI implementation and ongoing managed services. Our competitive advantage is no longer defined by technology alone. It comes from orchestrating an ecosystem of strategic partners and combining technology, talent and services into integrated solutions that accelerate customer outcomes. We are seeing encouraging pipeline momentum as this partnership strategy continues to scale. As we continue to strengthen relationships with organizations such as SoundHound AI, IBM, Accenture, SAP and Microsoft, among others, we are broadening our capability, creating new routes to market and positioning the business for future growth. I look forward to updating you on our progress in future quarters. I will now turn it over to Jack.

Thanks, Becky. In the second quarter, we delivered reported revenues of $4.9 billion. System-wide revenue, including franchises, was $5.3 billion. Our second quarter revenue results represented constant currency growth of 6%. The U.S. dollar reported revenues after adjusting for currency impacts came in above our constant currency guidance range. Gross profit margin came in within our guidance range and considering the impact of the U.S. Jefferson Wells disposition was organically very close to the midpoint of our guidance. As adjusted, EBITDA was $103 million, representing a 15% increase in constant currency compared to the prior year period. As adjusted, EBITDA margin was 2.1%, up 10 basis points year-over-year and came in at the midpoint of our guidance range. Organic days adjusted constant currency revenue increased 6% in the quarter, which was well above our midpoint guidance range of 3% growth, driven by our Manpower business. Turning to the EPS bridge. Reported earnings per share for the quarter was $1.13. Adjusted EPS was $0.99 and came in above our guidance midpoint. Walking from our guidance midpoint of $0.96, our results included a better operational performance of $0.04 and a foreign currency impact that was $0.01 worse. Restructuring costs and strategic transformation program costs represented $0.23 and the gain on sale of Jefferson Wells U.S. business and liquidation of a discontinued business represented a $0.37 positive impact. Next, let's review our revenue by business line. Year-over-year, on an organic constant currency basis, the Manpower brand had a very strong growth of 8% in the quarter, up sequentially from the 6% growth in the first quarter. The Experis brand declined by 2%, an improvement from the 9% decline in the first quarter. The Talent Solutions brand was flat year-over-year, an improvement from the first quarter decline of 1%. Within Talent Solutions, our RPO business continued its sequential revenue trend improvement from Q1, with stable revenue levels from the previous quarter. Our MSP business saw continued solid revenue growth, while Right Management declined slightly during the quarter. Looking at our gross profit margin in detail, our gross margin came in at 16.1% for the quarter. Staffing margin improved sequentially from the first quarter and on a year-over-year basis represented a 60 basis point reduction, primarily due to mix shifts in the second quarter. This is an improvement from the 70 basis point decline in the first quarter. The staffing margin decrease was also impacted by the sale of the higher-margin U.S. Jefferson Wells business early in the quarter. And considering this was very close to the midpoint of our guidance. Permanent recruitment activity resulted in a 10 basis point decline. Other services resulted in a 10 basis point margin decrease. Moving on to our gross profit by business line. During the quarter, the Manpower brand comprised 65% of gross profit, our Experis Professional business comprised 19%, and Talent Solutions comprised 16%. During the quarter, our consolidated gross profit grew by 1% on an organic constant currency basis year-over-year, an improvement from the 3% decline in the first quarter. Our Manpower brand grew 5% in organic constant currency gross profit year-over-year, an improvement from the flat first quarter year-over-year trend. Gross profit in our Experis brand decreased 6% in organic constant currency year-over-year, an improvement from the 11% decrease in the first quarter. Gross profit in Talent Solutions declined 4% in organic constant currency year-over-year, which was an improvement from the 5% decrease in the first quarter. The improvement in trend was driven by RPO, while MSP trends also improved from the first quarter. Right Management had gross profit declines in the quarter on decreased outplacement activity. Reported SG&A expense in the quarter was $668 million. as adjusted, was down 1% on a constant currency basis. The year-over-year constant currency decreases largely consisted of reductions in operational costs of $5 million. Dispositions represented a decrease of $4 million, while currency changes contributed to a $10 million increase. Adjusted SG&A expenses as a percentage of revenue represented 14.1% in constant currency in the second quarter. Adjustments represented restructuring and strategic transformation program charges of $14 million, which were more than offset by a gain on sale of Jefferson Wells U.S. business of $30 million. Balancing gross profit growth with strong cost controls while funding ongoing transformation to enhance EBITDA margin in both the short and long term remains one of our highest priorities. We continue to estimate restructuring and strategic transformation program charges to range from $10 million to $15 million on average per quarter through the end of the year. The Americas segment comprised 25% of consolidated revenue. Revenue in the quarter was $1.2 billion, representing an increase of 14% year-over-year on an organic constant currency basis. As adjusted, OUP was $45 million and OUP margin was 3.7%. Restructuring charges of $3 million represented actions in the U.S. and Mexico. The U.S. is the largest country in the Americas segment, comprising 59% of segment revenues. Revenue in the U.S. was $714 million during the quarter, representing an 8% organic days adjusted increase compared to the prior year. as adjusted for our U.S. business was $24 million in the quarter. OUP margin as adjusted was 3.3%. Within the U.S., the Manpower brand comprised 29% of gross profit during the quarter. Revenue for the Manpower brand in the U.S. increased 16% on a days adjusted basis during the quarter, which represented strong market performance with 8 consecutive quarters of growth and a significant step up from the 5% increase in the first quarter. The Experis brand in the U.S. comprised 38% of gross profit in the quarter. Within Experis in the U.S., substantially all the revenues represent IT resourcing and services. Experis U.S. revenue was flat on an organic days adjusted basis during the quarter, an improvement from the 15% decline in the first quarter as the business anniversaried strong health care IT projects in the prior year. Excluding the impact of health care IT project volumes in the second quarter, Experis U.S. revenue decreased 3% on a days adjusted basis during the quarter, an improvement from the first quarter trend. The Experis U.S. business expects a continued improvement in revenue trend into the third quarter. Talent Solutions in the U.S. contributed 33% of gross profit and saw a 6% increase in revenue year-over-year in the quarter, reflecting an increased rate of growth from the first quarter. driven by strong growth in both RPO and MSP during the second quarter. This was partially offset by declines in Right Management on lower outplacement activity in the quarter. Overall, the U.S. had strong organic revenue growth in the second quarter, and we expect a similar rate of growth in the third quarter. Southern Europe revenue comprised 47% of consolidated revenue in the quarter. Revenue in Southern Europe was $2.3 billion, representing 4% growth in constant currency during the second quarter. As adjusted, OUP for our Southern Europe business was $79 million in the quarter, and OUP margin was 3.4%. Restructuring charges of $4 million represented actions taken largely in France and Italy. France revenue equaled $1.2 billion and comprised 51% of the Southern Europe segment in the quarter and was flat on a constant currency basis. As adjusted, OUP for our France business was $31 million in the quarter. Adjusted OUP margin was 2.6%. France revenue trends were stable during the second quarter, and we expect a similar rate of revenue trend of flat to slight growth in the third quarter. Revenue in Italy equaled $522 million in the second quarter reflecting an increase of 6% on a days adjusted constant currency basis. OUP as adjusted equaled $35 million and OUP margin was 6.7%. The -- our Italy business is executing well and leads in the market. We estimate low to mid-single-digit percentage revenue growth in the third quarter. Our Northern Europe segment comprised 17% of consolidated revenue in the quarter. Revenue of $825 million represented a 2% increase in organic constant currency. OUP was $2 million in the quarter. This represents year-over-year OUP improvement during the last 3 quarters reflecting the outcome of the significant actions taken in previous quarters. Our largest market in Northern Europe segment is the U.K., which represented 33% of segment revenues in the quarter. During the quarter, the U.K. crossed back over to growth with revenues increasing 2% on a days adjusted constant currency basis. The remaining countries in the region progressed as expected, with largely stable-to-improving revenue trends. The Asia Pacific Middle East segment comprises 11% of total company revenue. In the quarter, revenues equaled $519 million, representing an increase of 5% in constant currency. OUP was $24 million and OUP margin was 4.6%. Our largest market in the APME segment is Japan, which represented 57% of segment revenues in the quarter. Revenue in Japan grew 4% on a days adjusted constant currency basis, and we expect a similar level of revenue growth in the third quarter. I'll now turn to cash flow and balance sheet. In the second quarter, free cash flow represented an outflow of $9 million compared to an outflow of $207 million in the prior year. On a year-to-date basis, this represents significant year-over-year improvement in the trend, and we expect strong free cash flow during the second half. At quarter end, days sales outstanding was 56 days, flat from the prior year. During the second quarter, capital expenditures represented $6 million, and we did not repurchase any shares. Our balance sheet ended the quarter with cash of $181 million and total debt of $1.04 billion. Net debt equaled $863 million at quarter end and improved sequentially as we allocated capital from business sales to pay down our revolver, which typically peaks in usage at June 30. Our debt ratios at quarter end reflect total gross debt to trailing 12 months adjusted EBITDA of $2.5 million and total debt to total capitalization at 33%. Detail of our debt and credit facility arrangements are included in the appendix of the presentation. Next, I'll review our outlook for the third quarter of 2026. We are forecasting earnings per share for the third quarter to be in the range of $0.96 to $1.06. The guidance range also includes an unfavorable foreign currency impact of $0.02 per share and our foreign currency translation rate estimates are disclosed at the bottom of the guidance slide. Our organic days adjusted constant currency revenue guidance shows a continuation of the 6% growth achieved in the second quarter again into the third quarter at the midpoint. On a constant currency basis, which is impacted by the second quarter business disposition, the range is between a 3% increase and a 7% increase at the midpoint is a 5% increase. Business days and the impact of dispositions adjust our organic days adjusted constant currency revenue growth estimate to 6% at the midpoint. We anticipate stable underlying staffing margin into the third quarter and estimated GP margin of 16% at the midpoint which includes a full quarter impact of the higher-margin U.S. business disposition and the current business mix. EBITDA margin for the third quarter is projected to be up 10 basis points at the midpoint compared to the prior year. We estimate that the effective tax rate for the third quarter will be 44%. I will continue to carve out any restructuring and global strategic transformation program costs as they are not included in the underlying guidance. In addition, we estimate our weighted average shares to be $47.9 million. I will now turn it back to Jonas.

Thanks, Jack. In closing, I'm highly encouraged by our performance in the second quarter. Our commercial execution, coupled with strengthening market demand yielded a meaningful step change in organic growth. Taken together with a prudent approach to cost management, we are driving improved operating leverage and profitability. Looking ahead, I'm confident that we have set the foundation to be able to sustain this momentum in the back half of the year. As always, thank you to our talented team for their relentless focus and to our candidates and clients for your continued partnership. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Mark Marcon with Baird.

Really encouraging to see the improvement both in terms of the cost discipline as well as the revenue trends. I was wondering, broadly speaking, in some of your most important markets, specifically, if we take a look at the U.S. and France. Can you give us a sense for how the quarter ended up progressing did you see improvement building as the quarter unfolded? Or did things kind of -- or were they generally stable throughout the quarter? I'm just wondering what the exit rates were.

Okay. Mark, thanks. This is Jack. I'd be happy to talk about the trends during the quarter in our largest market. So -- maybe starting with the U.S., to your point, we saw strong strength in revenue trend building over the course of the quarter. And as I mentioned in our prepared remarks, Manpower grew at 16% in the second quarter, so very strong growth. And that marks 5 quarters of Manpower brand overall growth. But in the U.S., that's 8 quarters. So strong growth in commercial staffing continuing in the U.S. And it was great to see Experis cross back to flat in the quarter as well. And we said that last call that we expected that to happen, and it did happen. So we're seeing some improved momentum on the Experis side as well. And I'd say, France was very stable over the course of the quarter overall. So you saw France come in at flat. You may have seen some of the -- I think you commented on the industry data when it comes out, Mark. And you would have seen that, that was very stable. And our revenue trends moved pretty much in line with that stability as well. So that was really good to see. And I'd say for Italy, pretty much a pretty even revenue trend over the course of the quarter, started maybe a tad bit stronger, but still strong, solid growth as we exited the quarter. And maybe the last one, the fourth biggest business for us would be Japan. And Japan was very steady, pretty even during the entire quarter.

Great. Part of the reason for the question is, was this, no ill effects from Iran so far that you can discern. That's -- that was part of that question. And then I was wondering for Jonas or Becky, you talked a lot about the advanced AI powered screening and the interview experiences. Are you actually seeing improvement with regards to fill rates and a decrease in terms of time to hire? Are you tracking those metrics? And is that really discernible?

Yes. Mark, it's Becky. Yes. So to answer your question, we are now in our ninth month of using some early-in-the-funnel interview tools, and we're seeing a 67% decrease in our time to fill. And so that has been material for us, one for our speed, but also for our ability to delight our candidates, which is important in a talent-constrained market. And so we're feeling it's still early for us. We're going to hit 70% of our revenues in terms of scale by the end of the year. But we're feeling good about the progress on that front.

That's great to hear. It's got tons of questions, but I'll jump back in the queue in respect to everybody else.

Our next question comes from Jeff Silber with BMO Capital Markets.

I still apologize. I'm in transit, so it's a little measly here. But I just was wondering if you could comment on the general tone of business from your clients, how that's been changing over the course of the year? And what are the expectations for the back half?

This is Becky. As you heard me in my prepared remarks, I was able to spend a tremendous amount of time in this quarter with our clients. And I'd say we're hearing a couple of things. One, they continue to be very resilient in the face of the changing landscape, whether it's geopolitical or economically or demographically. But in these times of uncertainty, customers are increasingly seeking flexible workforce solutions. And as you know, that's where we shine. That's where our business excels, and you're seeing that as we posted our results, particularly in Manpower and the improvement in Experis. Aside of that, when you talk to them about AI, they're really not struggling anymore to access AI technology. I mean that's becoming available. They're really struggling to get benefit. And again, that's where we're coming in. You heard me talk about our strategic partnerships mostly on the Experis side, but that's our proof point that AI can be a growth and a profit multiplier for us because we're leveraging it with our customers and to improve the candidate experience.

Our next question comes from Andy Grobler with BNP Paribas.

Can I just ask about gross margin, the decline in the temp margin through the quarter. Can you just talk through the extent to which that is mix and whether there's any price impact? And also on that, this kind of early cycle decline is pretty normal. When would you think that's going to trough out and we can start to see gross margin stabilize and improve?

Thanks for the question, Andy. This is Jack. I'll take that one. So yes, to your point on gross profit margin trends and as we've laid out in the slide, I guess maybe I'll start with staffing. So I'd say very close to our expectations. You heard me carve out the disposition of the Jefferson Wells sale that we absorbed that, and that was about 5 basis points during the course of the quarter. We were very close to the midpoint, considering that. And what I would say is if you look at Q1, we were down 70 basis points year-over-year. That improved into Q2 to down 60 basis points. And actually, our GP margin improved sequentially. It was 16.0% in Q1, and it rose to 16.1% in Q2. And that's absorbing the JW disposition and also absorbing the significant additional growth above expectations, which was largely driven by Manpower Enterprise. So I think that's a very good signal that pricing is rational, continues to be very stable. As you heard Jonas in the prepared remarks talk about how disciplined we've been on pricing and that continues. So underlying staffing margin quite stable, considering all of that and also considering the additional growth that we had during the course of the quarter. We saw perm improve as well quarter-over-quarter. That was a 20 basis point drag in the first quarter, year-over-year improved to 10. We actually saw crossover to flat in the second quarter overall. So that was a big positive. And to your point, as we go forward and we look at mix, we have seen in this early part of this recovery that enterprise -- commercial staffing enterprise has been leading it. A lot of that mix has worked its way through. If you look at the first 9 months of the year here with my guide for Q3, you see a pretty stable gross profit margin, about 16.0% to 16.1% during the first 9 months of the year, and that's showing underlying stability in our staffing margin and the mix shift as well. As we go forward, as convenience starts to resume, and we're seeing some early signs that's starting to happen in the U.S., that will be a benefit for Manpower margin. But also, as we know, Experis and Perm have been lagging. And as those come back, we'll see some additional strength in GP margin going forward as well. So that's what we would expect. I think that's what we're starting to see early on here, and that would be the outlook, Andy.

Great. Just one housekeeping follow-up. Just on the JW impact, in Q2. What would you expect that to be?

Yes. It's about 10 basis points.

Our next question comes from George Tong with Goldman Sachs.

You've now delivered 5 consecutive quarters of growth in manpower and are seeing improving trends in Experis and Talent Solutions. To what extent does that performance reflect a recovery in underlying staffing demand versus company-specific actions? And how do you expect the relative contribution of market growth and share gains to evolve over the next year?

Thanks, George. We feel -- we think we're executing very well in our Manpower business and as ManpowerGroup overall. We think we're leading the market in many markets. When I look at the strong growth that we're having in the U.S. at 16% for Manpower; double-digit growth in countries like Spain, Canada, Poland, a lot of countries in Latin America; and then high single-digit growth in the U.K. and Italy, along with improving trends in Northern Europe. We believe we're executing and competing very well in those markets. As Jack has just mentioned to Andy, we're also very pleased to see the continued progress of Experis and Talent Solutions as well as perm. So I think we have -- it's really been executing well. And part of the explanation of that, you heard Becky talk about in her prepared remarks, our ability to target the industry verticals that are growing and shifting in an agile way to where the opportunity sits, both in terms of verticals, in terms of geographies, that's really a capability we have been honing over the last couple of years, and I think that's starting to come through in a very nice way.

Got it. That's helpful. And then can you provide some additional detail on the timing of the $200 million in permanent cost savings from the transformation program? Specifically, how much of the benefit you expect to be realized in the second half of this year versus 2027 and 2028? And which functions or geographies you expect to contribute most to the savings?

George, this is Jack. I'd be happy to talk to that. So as Jon has talked about in his prepared remarks, we're tracking very well on the transformation, on the strategic transformation for the front office that we launched at the beginning of the year. As you think about the benefits from that and going back, I'd say, generally, everything is pretty much still in line with what we announced last quarter as we laid out the multiyear progression. What that means is we'll see the back office moving to profits this year. That was $20 million. I would say that is pretty even over the course of the year, probably a tad better in the second half of the year. And then the overall transformation program moves to $80 million with the front office kicking in next year. I'd say think of that as -- at this stage, I'd say, think of that as more weighted towards the second to the fourth quarters of '27. We'll give a further update on that, of course, as we get to the end of the year. And then in 2028, that's when we expect the $200 million to come through for the full calendar year. And we'll talk more about that in the future. But I'd say on an overall basis, when we look at the cost for the program, pretty much in line exactly as I guided to last quarter. We said we expected that would be $10 million to $15 million in the quarter. We came in at about $13 million this quarter. And that guidance still is the same trend for the rest of the year from a cost perspective for Q3 and Q4.

Our next question comes from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. I think for several quarters, you had described improving trends as gradual stabilization. Understandably, the commentary this morning is confident and constructive. And if I'm not mistaken, Jack did just say early part of the recovery. Can we just ask for your holistic assessment as to where we are? Is it stabilization moving on to recovery? Your assessment of that, please?