Revenue of $622
Million
Adjusted EBITDA of $72 million
First Quarter Results in line with
Management Expectations
Reaffirms 2023 Full Year
Guidance
Announces Share Repurchase Agreement for
over 23.3 million Class A Shares in Stagwell Inc.
Aggregate Class A and Class C Shares
reduced 8% to 267 million
NEW
YORK, May 9, 2023 /PRNewswire/ -- (NASDAQ:
STGW) – Stagwell Inc. ("Stagwell") today announced
financial results in line with internal expectations for the three
months ended March 31, 2023.
Announces Share Repurchase Agreement for
over 23.3 million Class A Shares in Stagwell Inc.
FIRST QUARTER RESULTS:
- Revenue and EBITDA in line with management expectations
- Revenue of $622 million, a
decrease of 3% versus the prior year period.
- First quarter net revenue of $522
million, a decrease of 1% versus the prior period.
- Organic net revenue decline of 3%, and excluding advocacy of
1%, versus the prior year period.
- On a two-year growth stack basis, organic net revenue growth of
21%
- First quarter net income attributable to Stagwell Inc. Common
Shareholders of $0.4 million versus
$13 million in the prior year
period.
- First quarter Adjusted EBITDA of $72
million, a decrease of 29% versus the prior year
period.
- First quarter Adjusted Earnings Per Share for Stagwell Inc.
Common Shareholders of $0.13 versus
$0.22 in the prior year period.
- Net bew business wins of $53
million in the quarter and $212
million for the trailing twelve months.
"Stagwell is stronger than ever today with the removal of an
overhang on the stock and Q1 results in line with management's
expectations, allowing us to reaffirm guidance for another year of
significant growth," said Mark Penn,
Chairman and CEO of Stagwell Inc. "This quarter is compared to Q1
2022 which had 24% of organic growth compared to 14% for the year.
We expect to return to double-digit growth in the later quarters,
especially given strong new business wins within the quarter and
after the close. We are moving forward with the Stagwell Marketing
Cloud and all investors are invited to try our generative A.I.
product at www.PRProphet.ai."
"We have additionally announced entry into a definitive
agreement, approved unanimously by Stagwell's independent and
disinterested directors who were advised by outside counsel and
advisers, to repurchase approximately 23.3 million shares of
Stagwell Inc. Class A Stock from AlpInvest," Penn added. "I believe
this purchase will help create value for shareholders in the
marketplace given our undervalued stock."
Frank Lanuto, Chief Financial
Officer, commented: "Coming off a record Q1 performance in 2022,
the Company posted first quarter results in a challenging
environment that were in line with management expectations. We are
beginning to see positive signs, including strong new business
wins, and improving client conditions, which give us confidence
about the outlook for the remainder of the year."
Financial Outlook
2023 financial guidance is as follows:
- Organic Net Revenue growth of 7.5% – 10%
- Organic Net Revenue growth ex-Advocacy of 10% – 14%
- Adjusted EBITDA of $450 million –
$490 million
- Free Cash Flow Conversion of 50% – 60%
- Adjusted EPS of $0.90 –
$1.05
- Guidance assumes no impact from foreign exchange, acquisitions
or dispositions.
* The Company has
excluded a quantitative reconciliation with respect to the
Company's 2023 guidance under the "unreasonable efforts" exception
in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial
Measures" below for additional information.
|
Stock Repurchase Program
In the first quarter, the Company repurchased approximately 2.6
million shares of Class A Common Stock at an average price of
$6.91 per share for an aggregate
value of approximately $18 million.
The remaining value of shares permitted to be repurchased was
approximately $180 million as of
March 31, 2023.
Stock Repurchase Transaction
On May 9, 2023, Stagwell Inc.
agreed to repurchase approximately 23.3 million shares from
AlpInvest Partners at a share price of $6.43 which is a total value of approximately
$150 million. As announced
separately, Stagwell Media LP, a shareholder in Stagwell Inc., and
AlpInvest are engaged in advanced negotiations to redeem
AlpInvest's remaining interests in Stagwell Media LP., subject to
final documentation. Upon completion of these transactions,
AlpInvest Partners will no longer be an investor in Stagwell
Inc.
Conference Call
Management will host a video webcast and conference call on
Tuesday, May 9, 2023, at 8:30 a.m.
(ET) to discuss results for Stagwell Inc. for the three
months ended March 31, 2023. The
video webcast will be accessible at https://stgw.io/Q12023Earnings.
An investor presentation has been posted on our website at
www.stagwellglobal.com and may be referred to during the conference
call.
A recording of the conference call will be accessible one hour
after the call and available for ninety days at
www.stagwellglobal.com.
Stagwell Inc.
Stagwell is the challenger network built to transform marketing.
We deliver scaled creative performance for the world's most
ambitious brands, connecting culture-moving creativity with
leading-edge technology to harmonize the art and science of
marketing. Led by entrepreneurs, our 13,000+ specialists in
34+ countries are unified under a single purpose: to drive
effectiveness and improve business results for their clients. Join
us at www.stagwellglobal.com.
Contacts
For Investors:
Ben
Allanson
Ir@stagwellglobal.com
For Press:
Beth
Sidhu
Pr@stagwellglobal.com
Non-GAAP Financial Measures
In addition to its reported results, Stagwell Inc. has included
in this earnings release certain financial results that the
Securities and Exchange Commission (SEC) defines as "non-GAAP
Financial Measures." Management believes that such non-GAAP
financial measures, when read in conjunction with the Company's
reported results, can provide useful supplemental information for
investors analyzing period to period comparisons of the Company's
results. Such non-GAAP financial measures include the
following:
(1) Organic Revenue: "Organic revenue growth" and "organic
revenue decline" refer to the positive or negative results,
respectively, of subtracting both the foreign exchange and
acquisition (disposition) components from total revenue growth. The
acquisition (disposition) component is calculated by aggregating
prior period revenue for any acquired businesses, less the prior
period revenue of any businesses that were disposed of during the
current period. The organic revenue growth (decline) component
reflects the constant currency impact of (a) the change in revenue
of the partner firms that the Company has held throughout each of
the comparable periods presented, and (b) "non-GAAP acquisitions
(dispositions), net". Non-GAAP acquisitions (dispositions), net
consists of (i) for acquisitions during the current year, the
revenue effect from such acquisition as if the acquisition had been
owned during the equivalent period in the prior year and (ii) for
acquisitions during the previous year, the revenue effect from such
acquisitions as if they had been owned during that entire year (or
same period as the current reportable period), taking into account
their respective pre-acquisition revenues for the applicable
periods, and (iii) for dispositions, the revenue effect from such
disposition as if they had been disposed of during the equivalent
period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new
wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: defined as Net income excluding
non-operating income or expense to achieve operating income, plus
depreciation and amortization, stock-based compensation, deferred
acquisition consideration adjustments, and other items. Other items
include restructuring costs, acquisition-related expenses, and
non-recurring items.
(4) Adjusted Diluted EPS is defined as (i) Net income (loss)
attributable to Stagwell Inc. common shareholders, plus net income
attributable to Class C shareholders, excluding amortization
expense, impairment and other losses, stock-based compensation,
deferred acquisition consideration adjustments, discrete tax items,
and other items, divided by (ii) (a) the per weighted average
number of common shares outstanding plus (b) the weighted average
number of Class C shares outstanding, (if dilutive). Other items
includes restructuring costs, acquisition-related expenses, and
non-recurring items, and subject to the anti-dilution rules.
(5) Free Cash Flow: defined as Adjusted EBITDA less capital
expenditures, change in net working capital, cash taxes, interest,
and distributions to minority interests, but excludes contingent
M&A payments.
(6) Financial Guidance: The Company provides guidance on a
non-GAAP basis as it cannot predict certain elements which are
included in reported GAAP results.
Included in this earnings release are tables reconciling
reported Stagwell Inc. results to arrive at certain of these
non-GAAP financial measures.
This document contains forward-looking statements. within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The Company's
representatives may also make forward-looking statements orally or
in writing from time to time. Statements in this document that are
not historical facts, including, statements about the Company's
beliefs and expectations, future financial performance and future
prospects, business and economic trends, potential acquisitions,
and estimates of amounts for redeemable noncontrolling interests
and deferred acquisition consideration, constitute forward-looking
statements. Forward-looking statements, which are generally denoted
by words such as "anticipate," "assume," "believe," "continue,"
"could," "create," "estimate," "expect," "focus," "forecast,"
"foresee," "future," "guidance," "intend," "look," "may,"
"opportunity," "outlook," "plan," "possible," "potential,"
"predict," "project," "should," "target," "will," "would" or the
negative of such terms or other variations thereof and terms of
similar substance used in connection with any discussion of current
plans, estimates and projections are subject to change based on a
number of factors, including those outlined in this
section.
Forward-looking statements in this document are based on
certain key expectations and assumptions made by the Company.
Although the management of the Company believes that the
expectations and assumptions on which such forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because the Company can
give no assurance that they will prove to be correct. The material
assumptions upon which such forward-looking statements are based
include, among others, assumptions with respect to general
business, economic and market conditions, the competitive
environment, anticipated and unanticipated tax consequences and
anticipated and unanticipated costs. These forward-looking
statements are based on current plans, estimates and projections,
and are subject to change based on a number of factors, including
those outlined in this section. These forward-looking statements
are subject to various risks and uncertainties, many of which are
outside the Company's control. Therefore, you should not place
undue reliance on such statements. Forward-looking statements speak
only as of the date they are made, and the Company undertakes no
obligation to update publicly any of them in light of new
information or future events, if any.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those contained in any
forward-looking statements. Such risk factors include, but are not
limited to, the following:
- risks associated with international, national and regional
unfavorable economic conditions that could affect the Company or
its clients;
- the continued impact of the coronavirus pandemic
("COVID-19"), and evolving strains of COVID-19 on the economy and
demand for the Company's services, which may precipitate or
exacerbate other risks and uncertainties;
- inflation and actions taken by central banks to counter
inflation;
- the Company's ability to attract new clients and retain
existing clients;
- the impact of a reduction in client spending and changes in
client advertising, marketing and corporate communications
requirements;
- financial failure of the Company's clients;
- the Company's ability to retain and attract key
employees;
- the Company's ability to compete in the markets in which it
operates;
- the Company's ability to achieve its cost saving
initiatives;
- the Company's implementation of strategic
initiatives;
- the Company's ability to remain in compliance with its debt
agreements and the Company's ability to finance its contingent
payment obligations when due and payable, including but not limited
to those relating to redeemable noncontrolling interests and
deferred acquisition consideration;
- the Company's ability to manage its growth effectively,
including the successful completion and integration of acquisitions
that complement and expand the Company's business
capabilities;
- the Company's ability to develop products incorporating new
technologies, including augmented reality, artificial intelligence,
and virtual reality, and realize benefits from such
products;
- an inability to realize expected benefits of the combination
of the Company's business with the business of MDC;
- adverse tax consequences in connection with the Transactions
for the Company, its operations and its shareholders, that may
differ from the expectations of the Company, including that future
changes in tax law, potential increases to corporate tax rates in
the United States and
disagreements with the tax authorities on the Company's
determination of value and computations of its attributes may
result in increased tax costs;
- the occurrence of material Canadian federal income tax
(including material "emigration tax") as a result of the
Transactions;
- the Company's unremediated material weaknesses in internal
control over financial reporting and its ability to establish and
maintain an effective system of internal control over financial
reporting;
- the Company's ability to protect client data from security
incidents or cyberattacks;
- economic disruptions resulting from war and other
geopolitical tensions (such as the ongoing military conflict
between Russia and Ukraine), terrorist activities and natural
disasters;
- stock price volatility; and
- foreign currency fluctuations.
Investors should carefully consider these risk factors, other
risk factors described herein, and the additional risk factors
outlined in more detail in our 2022 Form 10-K, filed with the
Securities and Exchange Commission (the "SEC") on March 6, 2023, and accessible on the SEC's
website at www.sec.gov, under the caption "Risk Factors," and in
the Company's other SEC filings.
SCHEDULE
1
STAGWELL
INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands,
except per share amounts)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2023
|
|
2022
|
Revenue
|
|
$
622,444
|
|
$
642,903
|
Operating
Expenses
|
|
|
|
|
Cost of
services
|
|
413,898
|
|
411,970
|
Office and general
expenses
|
|
158,836
|
|
144,512
|
Depreciation and
amortization
|
|
33,477
|
|
31,204
|
Impairment and other
losses
|
|
—
|
|
557
|
|
|
606,211
|
|
588,243
|
Operating
Income
|
|
16,233
|
|
54,660
|
Other income
(expenses):
|
|
|
|
|
Interest expense,
net
|
|
(18,189)
|
|
(18,729)
|
Foreign exchange,
net
|
|
(670)
|
|
(306)
|
Other, net
|
|
220
|
|
156
|
|
|
(18,639)
|
|
(18,879)
|
Income (loss) before
income taxes and equity in earnings of non-consolidated
affiliates
|
|
(2,406)
|
|
35,781
|
Income tax
expense
|
|
2,384
|
|
3,189
|
Income (loss) before
equity in earnings of non-consolidated affiliates
|
|
(4,790)
|
|
32,592
|
Equity in income (loss)
of non-consolidated affiliates
|
|
(227)
|
|
1,030
|
Net income
(loss)
|
|
(5,017)
|
|
33,622
|
Net (income) loss
attributable to noncontrolling and redeemable noncontrolling
interests
|
|
5,460
|
|
(20,947)
|
Net income
attributable to Stagwell Inc. common shareholders
|
|
$
443
|
|
$
12,675
|
Income (loss) Per
Common Share:
|
|
|
|
|
Basic
|
|
$
0.00
|
|
$
0.10
|
Diluted
|
|
$
(0.01)
|
|
$
0.10
|
Weighted Average Number
of Common Shares Outstanding:
|
|
|
|
|
Basic
|
|
125,199
|
|
122,285
|
Diluted
|
|
289,806
|
|
297,484
|
SCHEDULE
2
STAGWELL
INC.
UNAUDITED COMPONENTS
OF NET REVENUE CHANGE
(amounts in
thousands)
|
|
|
|
|
Net Revenue -
Components of Change
|
|
|
|
|
|
Change
|
|
Three
Months
Ended
March 31, 2022
|
|
Foreign
Currency
|
|
Net
Acquisitions
(Divestitures)
|
|
Organic
|
|
Total Change
|
|
Three
Months
Ended
March 31, 2023
|
|
Organic
|
|
Total
|
|
|
|
|
|
|
Integrated Agencies
Network
|
$
303,666
|
|
$
(2,793)
|
|
$
2,465
|
|
$
(10,434)
|
|
$
(10,762)
|
|
$
292,904
|
|
(3.4) %
|
|
(3.5) %
|
Brand Performance
Network
|
155,482
|
|
(4,118)
|
|
5,911
|
|
5,659
|
|
7,452
|
|
162,934
|
|
3.6 %
|
|
4.8 %
|
Communications
Network
|
64,379
|
|
(281)
|
|
1,069
|
|
$
(12,195)
|
|
(11,407)
|
|
52,972
|
|
(18.9) %
|
|
(17.7) %
|
All Other
|
3,110
|
|
(157)
|
|
9,038
|
|
861
|
|
9,742
|
|
12,852
|
|
27.7 %
|
|
313.2 %
|
|
$
526,637
|
|
$
(7,349)
|
|
$
18,483
|
|
$
(16,109)
|
|
$
(4,975)
|
|
$
521,662
|
|
(3.1) %
|
|
(0.9) %
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 have been recast to reflect the
reclassification of certain reporting units (Brands) between
operating segments.
|
SCHEDULE
3
STAGWELL
INC.
UNAUDITED SEGMENT
OPERATING RESULTS
(amounts in
thousands)
|
|
For the Three Months
Ended March 31, 2023
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$
292,904
|
|
$
162,934
|
|
$
52,972
|
|
$
12,852
|
|
$
—
|
|
$ 521,662
|
Billable
costs
|
36,888
|
|
50,406
|
|
13,488
|
|
—
|
|
—
|
|
100,782
|
Revenue
|
329,792
|
|
213,340
|
|
66,460
|
|
12,852
|
|
—
|
|
622,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
36,888
|
|
50,406
|
|
13,488
|
|
—
|
|
—
|
|
100,782
|
Staff costs
|
187,693
|
|
104,596
|
|
40,077
|
|
10,487
|
|
6,824
|
|
349,677
|
Administrative
costs
|
29,166
|
|
23,082
|
|
8,756
|
|
3,195
|
|
3,977
|
|
68,176
|
Unbillable and other
costs, net
|
16,660
|
|
11,835
|
|
126
|
|
2,975
|
|
(9)
|
|
31,587
|
Adjusted EBITDA
(1)
|
59,385
|
|
23,421
|
|
4,013
|
|
(3,805)
|
|
(10,792)
|
|
72,222
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
8,198
|
|
657
|
|
507
|
|
32
|
|
2,610
|
|
12,004
|
Depreciation and
amortization
|
18,643
|
|
8,244
|
|
2,713
|
|
1,948
|
|
1,929
|
|
33,477
|
Deferred acquisition
consideration
|
5,991
|
|
(1,179)
|
|
539
|
|
(1,263)
|
|
—
|
|
4,088
|
Other items,
net (1)
|
3,025
|
|
1,992
|
|
605
|
|
—
|
|
798
|
|
6,420
|
Operating income
(loss)
|
$ 23,528
|
|
$
13,707
|
|
$
(351)
|
|
$
(4,522)
|
|
$
(16,129)
|
|
$
16,233
|
|
|
(1)
|
See Non-GAAP Financial
Measures section above for the definition of Adjusted EBITDA and
Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 have been recast to reflect the
reclassification of certain reporting units (Brands) between
operating segments.
|
SCHEDULE
4
STAGWELL
INC.
UNAUDITED SEGMENT
OPERATING RESULTS
(amounts in
thousands)
|
|
For the Three Months
Ended March 31, 2022
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$
303,666
|
|
$
155,482
|
|
$
64,379
|
|
$ 3,110
|
|
$
—
|
|
$ 526,637
|
Billable
costs
|
45,085
|
|
42,305
|
|
28,876
|
|
—
|
|
—
|
|
116,266
|
Revenue
|
348,751
|
|
197,787
|
|
93,255
|
|
3,110
|
|
—
|
|
642,903
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
45,085
|
|
42,305
|
|
28,876
|
|
—
|
|
—
|
|
116,266
|
Staff costs
|
192,096
|
|
96,024
|
|
40,826
|
|
2,536
|
|
9,156
|
|
340,638
|
Administrative
costs
|
25,609
|
|
17,040
|
|
7,068
|
|
695
|
|
5,882
|
|
56,294
|
Unbillable and other
costs, net
|
17,073
|
|
11,170
|
|
47
|
|
3
|
|
—
|
|
28,293
|
Adjusted EBITDA
(1)
|
68,888
|
|
31,248
|
|
16,438
|
|
(124)
|
|
(15,038)
|
|
101,412
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
5,073
|
|
1,260
|
|
(243)
|
|
8
|
|
1,923
|
|
8,021
|
Depreciation and
amortization
|
18,860
|
|
8,196
|
|
2,560
|
|
501
|
|
1,087
|
|
31,204
|
Deferred acquisition
consideration
|
(1,325)
|
|
2,132
|
|
1,090
|
|
—
|
|
—
|
|
1,897
|
Impairment and other
losses
|
—
|
|
557
|
|
—
|
|
—
|
|
—
|
|
557
|
Other items,
net (1)
|
764
|
|
1,061
|
|
72
|
|
—
|
|
3,176
|
|
5,073
|
Operating income
(loss)
|
$ 45,516
|
|
$
18,042
|
|
$
12,959
|
|
$
(633)
|
|
$
(21,224)
|
|
$
54,660
|
|
|
(1)
|
See Non-GAAP Financial
Measures section above for the definition of Adjusted EBITDA and
Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 have been recast to reflect the
reclassification of certain reporting units (Brands) between
operating segments.
|
SCHEDULE
5
STAGWELL
INC.
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
(amounts in thousands,
except per share amounts)
|
|
For the Three Months
Ended March 31, 2023
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
443
|
|
$
18,623
|
|
$
19,066
|
Net income (loss)
attributable to Class C shareholders
|
|
(3,165)
|
|
23,104
|
|
19,939
|
Net income (loss) -
Diluted EPS
|
|
(2,722)
|
|
41,727
|
|
39,005
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
128,897
|
|
|
|
128,897
|
Weighted average number
of common Class C shares outstanding
|
|
160,909
|
|
|
|
160,909
|
Weighted average
number of shares outstanding
|
|
289,806
|
|
|
|
289,806
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
(0.01)
|
|
|
|
$
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net
Income(1)
|
|
|
Pre-Tax
|
|
Tax
|
|
Net
|
Amortization
|
|
$
26,732
|
|
$
(5,346)
|
|
$
21,386
|
Stock-based
compensation
|
|
12,004
|
|
(2,401)
|
|
9,603
|
Deferred acquisition
consideration
|
|
4,088
|
|
(818)
|
|
3,270
|
Other items,
net
|
|
6,420
|
|
(1,283)
|
|
5,137
|
Tax
adjustments
|
|
—
|
|
2,331
|
|
2,331
|
Total
add-backs
|
|
$
49,244
|
|
$
(7,517)
|
|
$
41,727
|
|
|
(1)
|
Adjusted Diluted EPS is
defined within the Non-GAAP Financial Measures section of the
Executive Summary.
|
SCHEDULE
5
STAGWELL
INC.
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
(amounts in thousands,
except per share amounts)
|
|
For the Three Months
Ended, March 31, 2022
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
12,675
|
|
$
15,865
|
|
$
28,540
|
Net income attributable
to Class C shareholders
|
|
17,721
|
|
20,100
|
|
37,821
|
Net income - Diluted
EPS
|
|
30,396
|
|
35,965
|
|
66,361
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
297,484
|
|
|
|
297,484
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
0.10
|
|
|
|
$
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net
Income(1)
|
|
|
Pre-Tax
|
|
Tax
|
|
Net
|
Amortization
|
|
$
24,904
|
|
$
(4,981)
|
|
$
19,923
|
Stock-based
compensation
|
|
8,021
|
|
(1,604)
|
|
6,417
|
Deferred acquisition
consideration
|
|
1,897
|
|
(379)
|
|
1,518
|
Other items, net
(1)
|
|
5,073
|
|
(985)
|
|
4,088
|
Tax
adjustments
|
|
—
|
|
3,573
|
|
3,573
|
Total
add-backs
|
|
$
39,895
|
|
$
(4,376)
|
|
$
35,519
|
|
|
(1)
|
Adjusted Diluted EPS is
defined within the Non-GAAP Financial Measures section of the
Executive Summary.
|
SCHEDULE
6
STAGWELL
INC.
UNAUDITED
CONSOLIDATED BALANCE SHEETS
(amounts in
thousands)
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
138,529
|
|
$
220,589
|
Accounts receivable,
net
|
659,068
|
|
645,846
|
Expenditures billable
to clients
|
97,590
|
|
93,077
|
Other current
assets
|
77,930
|
|
71,443
|
Total Current
Assets
|
973,117
|
|
1,030,955
|
Fixed assets,
net
|
94,839
|
|
98,878
|
Right-of-use assets -
operating leases
|
260,763
|
|
273,567
|
Goodwill
|
1,569,532
|
|
1,566,956
|
Other intangible
assets, net
|
888,455
|
|
907,529
|
Other assets
|
114,227
|
|
115,447
|
Total Assets
|
$
3,900,933
|
|
$
3,993,332
|
LIABILITIES, RNCI,
AND SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
308,759
|
|
$
357,253
|
Accrued
media
|
283,578
|
|
240,506
|
Accruals and other
liabilities
|
152,937
|
|
248,477
|
Advance
billings
|
334,933
|
|
337,034
|
Current portion of
lease liabilities - operating leases
|
75,939
|
|
76,349
|
Current portion of
deferred acquisition consideration
|
94,039
|
|
90,183
|
Total Current
Liabilities
|
1,250,185
|
|
1,349,802
|
Long-term
debt
|
1,235,281
|
|
1,184,707
|
Long-term portion of
deferred acquisition consideration
|
71,645
|
|
71,140
|
Long-term lease
liabilities - operating leases
|
278,978
|
|
294,049
|
Deferred tax
liabilities, net
|
43,023
|
|
40,109
|
Other
liabilities
|
70,371
|
|
69,780
|
Total
Liabilities
|
2,949,483
|
|
3,009,587
|
Redeemable
Noncontrolling Interests
|
32,517
|
|
39,111
|
Commitments,
Contingencies and Guarantees
|
|
|
|
Shareholders'
Equity
|
|
|
|
Common shares - Class
A & B
|
130
|
|
132
|
Common shares - Class
C
|
2
|
|
2
|
Paid-in
capital
|
469,891
|
|
491,899
|
Retained
earnings
|
30,324
|
|
29,445
|
Accumulated other
comprehensive loss
|
(13,253)
|
|
(38,941)
|
Stagwell Inc.
Shareholders' Equity
|
487,094
|
|
482,537
|
Noncontrolling
interests
|
431,839
|
|
462,097
|
Total Shareholders'
Equity
|
918,933
|
|
944,634
|
Total Liabilities,
Redeemable Noncontrolling Interests and Shareholders'
Equity
|
$
3,900,933
|
|
$
3,993,332
|
SCHEDULE
7
STAGWELL
INC.
UNAUDITED SUMMARY
CASH FLOW DATA
(amounts in
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
(5,017)
|
|
$
33,622
|
Adjustments to
reconcile net income to cash used in operating
activities:
|
|
|
|
Stock-based
compensation
|
12,004
|
|
8,021
|
Depreciation and
amortization
|
33,477
|
|
31,204
|
Impairment and other
losses
|
—
|
|
557
|
Deferred income
taxes
|
3,809
|
|
(1,350)
|
Adjustment to deferred
acquisition consideration
|
4,088
|
|
1,897
|
Other, net
|
(1,550)
|
|
(2,647)
|
Changes in working
capital:
|
|
|
|
Accounts
receivable
|
(12,425)
|
|
(70,039)
|
Expenditures billable
to clients
|
(4,173)
|
|
11,996
|
Other assets
|
(5,986)
|
|
(6,100)
|
Accounts
payable
|
(51,670)
|
|
(32,386)
|
Accrued expenses and
other liabilities
|
(54,684)
|
|
(5,592)
|
Advance
billings
|
(2,986)
|
|
(17,760)
|
Net cash used in
operating activities
|
(85,113)
|
|
(48,577)
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(3,435)
|
|
(4,760)
|
Acquisitions, net of
cash acquired
|
(220)
|
|
(935)
|
Capitalized
software
|
(6,735)
|
|
(1,778)
|
Other
|
(425)
|
|
(816)
|
Net cash used in
investing activities
|
(10,815)
|
|
(8,289)
|
Cash flows from
financing activities:
|
|
|
|
Repayment of borrowings
under revolving credit facility
|
(426,500)
|
|
(209,500)
|
Proceeds from
borrowings under revolving credit facility
|
476,500
|
|
239,000
|
Shares acquired and
cancelled
|
(8,263)
|
|
(14,926)
|
Distributions to
noncontrolling interests
|
(10,948)
|
|
(6,464)
|
Payment of deferred
consideration
|
—
|
|
(1,581)
|
Repurchase of Common
Stock
|
(17,866)
|
|
—
|
Net cash provided by
financing activities
|
12,923
|
|
6,529
|
Effect of exchange rate
changes on cash and cash equivalents
|
945
|
|
1,481
|
Net decrease in cash
and cash equivalents
|
(82,060)
|
|
(48,856)
|
Cash and cash
equivalents at beginning of period
|
220,589
|
|
184,009
|
Cash and cash
equivalents at end of period
|
$
138,529
|
|
$
135,153
|
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SOURCE Stagwell Inc.