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Robert W. Baird Conference February 25, 2009. Tim Payne CEO.

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Presentation on theme: "Robert W. Baird Conference February 25, 2009. Tim Payne CEO."— Presentation transcript:

1 Robert W. Baird Conference February 25, 2009

2 Tim Payne CEO

3 3 Forward-Looking Statements All information presented that is not historical should be considered forward-looking statements that are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors, including but not limited to the specific factors discussed in the Company’s periodic filings with the SEC. Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements expressed or implied by such forward-looking statements may vary materially from those expressed or implied in this presentation. Forward-looking statements are not guarantees of performance and the Company undertakes no obligation to update publicly any of the information presented in light of new information or future events.

4 4 Today’s Topics MPS Group Overview Current Professional Hiring Environment Financial Position Discussion

5 5 MPS Group One of the world’s largest providers of white-collar staffing services Contract Permanent Placement 2008 Revenue 2.2 billion $115.4 million in operating income (before SFAS 142 charge) 224 offices in 12 countries

6 6 Geographic Expansion Shanghai United States 58.5% United Kingdom 33.9% Canada 1.8% Europe 4.8% Australia 0.8% Asia 0.2% Percentages based on 2008 revenue

7 7 Brand Strategy

8 8 Mix of Services Percentages based on 2008 revenue Information Technology Accounting Engineering Legal Healthcare

9 9 Why White Collar Staffing? Bureau of Labor Statistics Early 2008 1970 1975 1980 1985 1990 1995 2000 2005 2007

10 Current Professional Hiring Environment

11 11 Professional Hiring Environment Current recession dates to December 2007 Professional hiring remained fairly strong through first half of 2008 Not true for blue collar / administrative September 2008 financial crisis created a “shock to the system” Resulting in poor professional hiring conditions for remainder of 2008

12 12 Temp Employment: YOY Change MPS Group grew until October 2008 Recession began December 2007

13 13 The Hiring Cycle Strong Economy Temping demand high as skilled workers in shortage Strong Economy Temping demand high as skilled workers in shortage Improving Economy With huge backlog, hesitant to hire FTE’s, companies turn to temping companies Improving Economy With huge backlog, hesitant to hire FTE’s, companies turn to temping companies Early Recession Temping cut as companies cut costs Early Recession Temping cut as companies cut costs Bull Economy Temping slows as focus switches to “perm” resources Bull Economy Temping slows as focus switches to “perm” resources Strong Economy Bull Economy Dec. 2007 2006 2003 - 2004 - 2005

14 14 Shed Happens We know clients will shed temporary workers during downturns We have an operating model that adjusts simultaneous with shedding Variable cost model Changes made after last recession

15 15 Last Time Around Year 2000Today Mix of Revenue 60% IT revenue 43% IT revenue in 4Q08 Geographic Coverage 75% US revenue 62% US revenue in 4Q08 Financial Strength Net debt position $83 million Net cash - 12/31/08 Bench Businesses 16% Revenue from “bench” 5% Revenue from “bench”

16 16 Company Position Today High demand professional specialties Diverse service offerings Variable cost business model Strong balance sheet Experienced management team

17 17 Investment Considerations Long term supply of and demand for white collar talent Anticipated duration of current recession Secular trend toward greater use of temporary white collar talent Historical behavior of employment- related stocks in an improving economy

18 Tyra Tutor SVP – Corporate Development

19 Financial Position

20 20 Full-Year Revenue $’s in billions

21 21 Full-Year Operating Income $’s in millions * = Before non-cash charge

22 22 FAS 142: Goodwill Write-down Each fourth quarter the goodwill valuation is reviewed With declining valuations for our peer group and uncertain economic conditions, fourth- quarter review resulted in goodwill impairment charge Charge was non-cash and does not impact availability of borrowings from credit facility Goodwill balance at 12/31/08 was $282 million

23 23 2008 Revenue & Margins Segment ($’s in millions) 2008 Revenue 2008 Gross Margin 2008 Operating Margin* NA Professional$72730.7%9.0% NA Information Technology$61431.0%6.9% International Professional$55329.8%4.7% International IT$32917.7%3.9% MPS Group Consolidated$2,22228.7%5.2% * = Before non-cash charge

24 24 Fourth Quarter 2008 Results On February 5th, we released 4Q08 results Earnings per share was at high-end of management’s October guidance Revenue was below guidance due to volatile, negative valuation of the British pound Generated $49 million in operating cash flow

25 25 4Q2008 Revenue & Margins Segment 4Q2008 Year-Over-Year Revenue Change 4Q2008 Operating Margin* NA Professional-4.6%8.2% NA Information Technology-12.0%6.2% International Professional-26.4%1.8% International IT-18.9%4.4% MPS Group Consolidated-14.5%4.0% * = Before non-cash charge

26 26 Variable Cost Business Model Temporary Staffing Expense of a temporary employee ends simultaneously with an assignment end Variable compensation (commissions and bonuses) reduced Permanent Placement Fees Variable compensation reduced

27 27 Balance Sheet Highlights-12/31/08 Cash$90,566 Accounts receivable282,093 Other current assets24,198 Goodwill, net293,275 Other long-term assets105,760 Total assets$795,892 Current liabilities$173,147 Long-term notes payable7,313 Other liabilities23,962 Stockholders’ equity591,470 Total liabilities & equity$795,892 Working capital$223,710

28 28 Cash Flow From Operations 20082007200620052004200320022001 Cash flow from operations $134$132$107$92$51$65$112$174 $’s in millions Strong cash flow from operations Have $250 million credit facility, which contains favorable borrowing terms and expires Nov. 2011 $7 million drawn on line as of 12/31/08

29 29 Working Capital When operations slow, cash flow typically accelerates We pay temporary employees weekly and receive payment from clients about seven weeks later As we slow, the cost of temporary employees stops immediately, but we continue to collect the receivables Favorable income tax deduction In the U.S., our previous acquisitions provide a $50 million tax deduction through 2011, making our cash taxes less than the tax provision Cost reduction measures in place

30 30 Cash Flow Trends 20082007200620052004200320022001 Cash flow from operations $134$132$107$92$51$65$112$174 $’s in millions

31 31 First Quarter 2009 Guidance First quarter revenue and EPS guidance was provided on February 5, 2009 EPS $0.02 to $0.07 Revenue $410 to $450 million If 1Q09 revenue is at mid-point of guidance (assume $425 million), the year-over-year revenue decrease is approximately 25% Using the same assumption, but on a constant currency basis, revenue decrease is approximately 15%

32 32 Financial Summary Strong cash position Strong cash flow, even in downturn Line of credit in place Expense control Variable cost business model Cost reduction measures in place

33 Discussion

34 Reg. G Reconciliations Non-GAAP to GAAP

35 35 2008 Operating Income/Margin NA Prof. NA IT Int’l Prof. Int’l IT MPS Group MPS Group (in millions) Operating income/margin before goodwill impairment charge 9.0%6.9%4.7%3.9%5.2%$115.4 Goodwill impairment charge 6.9%33.4%17.1%9.1%17.1%$379.3 Operating income/margin 2.1%-26.5%-12.4%-5.2%-11.9%-$263.9

36 36 4Q2008 Operating Margin NA Prof. NA IT Int’l Prof. Int’l IT MPS Group Operating margin before goodwill impairment charge 8.2%6.2%1.8%4.4%4.0% Goodwill impairment charge 29.6%144.6%85.9%44.8%17.1% Operating margin-21.4%-138.4%-84.1%-40.4%-73.8%

37 37 U.S. Unemployment Rate Overall Rate at 7.6% Where we focus

38 38 2008 Revenue & Gross Margin Professional NA Businesses ($’s in millions) 2008 Revenue 2008 Gross Margin Engineering Staffing$31825.2% Legal$18334.9% Healthcare$12728.4% Accounting$9744.3%


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