- Total revenue, including billable expenses, was $2.52
billion
- Revenue before billable expenses (“net revenue”) was
$2.18 billion, a decrease of 2.3% from a year ago, with organic
decrease of 0.2%
- Net income was $126.0 million as reported
- Adjusted EBITA before restructuring charges was $210.8
million with 9.7% margin on net revenue, in seasonally small first
quarter
- Diluted EPS was $0.33 as reported and was $0.38 as
adjusted
- Company confirms it is on track to achieve its 2023
organic revenue growth target of 2% - 4% and to further expand
full-year margin to 16.7%
Philippe Krakowsky, CEO of IPG:
“In our first quarter, the services and capabilities that have
led our substantial multi-year growth, notably media, healthcare
and data-informed practices, continued to perform well, with strong
growth that was offset by certain areas of softness, notably among
marketers in the technology sector. The result was a slight decline
in first quarter organic revenue.
“Financial results in the quarter are consistent with our
internal forecast of pacing for the full year, both overall and
across each of our operating segments. Since the start of the year,
we have won a number of the industry's most competitive account
reviews, encompassing a diverse set of services and client sectors,
which increasingly benefits our outlook as we move further into the
year. During the quarter, we also demonstrated ongoing strong
expense discipline.
“We continue to expect full-year organic growth at the midpoint
of our range of 2% - 4%, with fully adjusted EBITA margin of 16.7%.
The caliber of our people and our offerings, coupled with strong
operating discipline and financial fundamentals, position us well
to continue to deliver for our clients and stakeholders, and to
further enhance shareholder value.”
Summary
Revenue
- First quarter 2023
total revenue, which includes billable expenses, was $2.52 billion,
compared $2.57 billion in the first quarter of 2022.
- First
quarter 2023 revenue before billable expenses ("net
revenue") was $2.18 billion, a decrease of 2.3% from the first
quarter of 2022.
- First quarter 2023
organic decrease of net revenue was 0.2% from the first quarter of
2022, compared to an organic increase of 11.5% during the first
quarter of 2022.
Operating Results
- Operating income in the first quarter of 2023 was $188.3
million compared to $245.7 million in 2022.
- Adjusted EBITA before restructuring charges was $210.8 million
in the first quarter of 2023, compared to $273.6 million for the
same period in 2022.
- 9.7% margin on adjusted EBITA before restructuring charges on
revenue before billable expenses decreased in the first quarter of
2023 compared to 12.3% in the first quarter of 2022. However,
margin on adjusted EBITA before restructuring charges remains
higher than the comparable quarter prior to the onset of the
COVID-19 pandemic.
- Refer to reconciliations in the appendix within this press
release for further detail.
Net Results
- Income tax provision in the first quarter of 2023 was $33.8
million on income before income taxes of $166.0 million.
- First quarter 2023 net income available to IPG common
stockholders was $126.0 million, resulting in earnings of $0.33 per
basic share and diluted share compared to earnings of $0.40 per
basic and diluted share for the same period in 2022. Adjusted
earnings were $0.38 per diluted share, compared to adjusted
earnings of $0.47 per diluted share a year ago. First quarter 2023
adjusted earnings excludes after-tax amortization of acquired
intangibles of $16.7 million, after-tax restructuring charges of
$1.3 million and an after-tax loss of $2.9 million on the sales of
businesses.
- Refer to reconciliations in the appendix within this press
release for further detail.
Operating Results
RevenueRevenue before billable expenses of
$2.18 billion in the first quarter of 2023 decreased 2.3% compared
with the same period in 2022. Compared to the first quarter of
2022, the effect of foreign currency translation was negative 2.3%,
the impact of net acquisitions was positive 0.2%, and the resulting
organic decrease of net revenue was 0.2%.
Operating ExpensesFor the first quarter of
2023, total operating expenses, excluding billable expenses,
increased 0.4%.
For the first quarter of 2023, staff cost ratio, which is total
salaries and related expenses as a percentage of revenue before
billable expenses, increased to 72.5% compared to 70.2% for the
same period in 2022. Total salaries and related expenses in the
first quarter of 2023 were $1.58 billion, an increase of 0.8% from
a year ago. The increase was primarily due to an increase in base
salaries, benefits and tax as well as an increase in severance
expense, partially offset by decreases in performance-based
employee compensation expense and temporary help expense.
For the first quarter of 2023, office and other direct expenses
as a percentage of revenue before billable expenses increased to
15.2% compared to 14.5% for the same period in 2022. Office and
other direct expenses were $330.3 million in the first quarter of
2023, an increase of 2.1% from a year ago, primarily due to
increases in travel and entertainment expenses.
Selling, general and administrative ("SG&A") expenses were
$12.9 million in the first quarter of 2023, a decrease of 33.2%
from a year ago, primarily due to a decrease in performance-based
incentive compensation expense within SG&A.
Depreciation and amortization expense decreased by 1.9% during
the first quarter of 2023.
Restructuring charges in the first quarter of 2023 were $1.6
million, consisting of adjustments to our 2022 and 2020
restructuring actions.
Non-Operating Results and TaxNet interest
expense decreased by $14.0 million to $15.6 million in the first
quarter of 2023 from a year ago, primarily attributable to higher
interest rates on net deposits, partially offset by lower net cash
balances.
Other expense, net was $6.7 million in the first quarter of
2023, which primarily consisted of losses on the sales of certain
small, non-strategic businesses.
The income tax provision in the first quarter of 2023 was $33.8
million on income before income taxes of $166.0 million. This
compares to an income tax provision of $49.1 million for the first
quarter of 2022 on income before income taxes of $209.9
million.
Balance SheetAt March 31, 2023, cash and cash
equivalents totaled $1.68 billion, compared to $2.55 billion at
December 31, 2022 and $2.40 billion on March 31, 2022. Total debt
was $2.90 billion at March 31, 2023, compared to $2.92 billion at
December 31, 2022.
Share Repurchase ProgramDuring the first
quarter of 2023, the Company repurchased 2.2 million shares of its
common stock at an aggregate cost of $77.8 million and an average
price of $35.50 per share, including fees.
Common Stock DividendDuring the first quarter
of 2023, the Company declared and paid a common stock cash dividend
of $0.310 per share, for a total of $123.2 million.
For further information regarding the Company's financial
results as well as certain non-GAAP measures including organic
revenue before billable expenses change, adjusted EBITA, adjusted
EBITA before restructuring charges and adjusted earnings per
diluted share, and the reconciliations thereof, please refer to the
appendix within this press release and our Investor Presentation
filed on Form 8-K herewith and available on our website,
www.interpublic.com.
# # #
About InterpublicInterpublic (NYSE: IPG) (www.interpublic.com)
is a values-based, data-fueled, and creatively-driven provider of
marketing solutions. Home to some of the world’s best-known and
most innovative communications specialists, IPG global brands
include Acxiom, Craft, FCB, FutureBrand, Golin, Huge, Initiative,
IPG Health, Jack Morton, Kinesso, MAGNA, Matterkind, McCann,
Mediabrands, Mediahub, Momentum, MRM, MullenLowe Group, Octagon,
R/GA, UM, Weber Shandwick and more. IPG is an S&P 500 company
with total revenue of $10.93 billion in 2022.
# # #
Contact InformationTom Cunningham (Press) (212) 704-1326
Jerry Leshne (Analysts, Investors) (212) 704-1439
Cautionary Statement
This release contains forward-looking statements. Statements in
this report that are not historical facts, including statements
regarding guidance, goals, intentions, and expectations as to
future plans, trends, events, or future results of operations or
financial position, constitute forward-looking statements.
Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties, which
could cause our actual results and outcomes to differ materially
from those reflected in the forward-looking statements, and are
subject to change based on a number of factors, including those
outlined under item 1A, Risk Factors, in our most recent Annual
Report on Form 10-K and our quarterly reports on Form 10-Q and our
other filings with the Securities and Exchange Commission ("SEC").
Forward-looking statements speak only as of the date they are made,
and we undertake no obligation to update publicly any of them in
light of new information or future events.
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 statement. Such factors include, but are not
limited to, the following:
- the effects of a challenging economy on the demand for our
advertising and marketing services, on our clients’ financial
condition and on our business or financial condition;
- our ability to attract new clients and retain existing
clients;
- our ability to retain and attract key employees;
- the impacts of the COVID-19 pandemic, including potential
developments like the emergence of more transmissible or virulent
coronavirus variants, and associated mitigation measures, such as
restrictions on businesses, social activities and travel, on the
economy, our clients and demand for our services;
- risks associated with the effects of global, national and
regional economic and political conditions, including counterparty
risks and fluctuations in interest rates, inflation rates and
currency exchange rates;
- the economic or business impact of military or political
conflict in key markets;
- risks associated with assumptions we make in connection with
our critical accounting estimates, including changes in assumptions
associated with any effects of a challenging economy;
- potential adverse effects if we are required to recognize
impairment charges or other adverse accounting-related
developments;
- developments from changes in the regulatory and legal
environment for advertising and marketing services companies around
the world, including laws and regulations related to data
protection and consumer privacy; and
- the impact on our operations of general or directed
cybersecurity events.
Investors should carefully consider the
foregoing factors and the other risks and uncertainties that may
affect our business, including those outlined in more detail under
Item 1A, Risk Factors, in our most recent Annual Report on Form
10-K and our quarterly reports on Form 10-Q and our other SEC
filings. Investors are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date they
are made. We undertake no obligation to update or revise publicly
any of them in light of new information, future events, or
otherwise.
APPENDIX
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND
SUBSIDIARIESCONSOLIDATED SUMMARY OF EARNINGSFIRST QUARTER REPORT
2023 AND 2022(Amounts in Millions except Per Share
Data)(UNAUDITED) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
|
Fav. (Unfav.)% Variance |
Revenue: |
|
|
|
|
|
|
Revenue before
Billable Expenses |
$2,176.9 |
|
$2,227.2 |
|
(2.3) % |
|
Billable
Expenses |
344.1 |
|
341.3 |
|
0.8 % |
Total
Revenue |
2,521.0 |
|
2,568.5 |
|
(1.8) % |
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
Salaries and
Related Expenses |
1,577.3 |
|
1,564.4 |
|
(0.8) % |
|
Office and Other
Direct Expenses |
330.3 |
|
323.4 |
|
(2.1) % |
|
Billable
Expenses |
344.1 |
|
341.3 |
|
(0.8) % |
|
Cost of Services |
2,251.7 |
|
2,229.1 |
|
(1.0) % |
|
Selling, General
and Administrative Expenses |
12.9 |
|
19.3 |
|
33.2 % |
|
Depreciation and
Amortization |
66.5 |
|
67.8 |
|
1.9 % |
|
Restructuring
Charges |
1.6 |
|
6.6 |
|
75.8 % |
Total
Operating Expenses |
2,332.7 |
|
2,322.8 |
|
(0.4) % |
Operating Income |
188.3 |
|
245.7 |
|
(23.4) % |
|
|
|
|
|
|
|
Expenses and Other Income: |
|
|
|
|
|
|
Interest
Expense |
(55.8) |
|
(39.4) |
|
|
|
Interest
Income |
40.2 |
|
9.8 |
|
|
|
Other Expense,
Net |
(6.7) |
|
(6.2) |
|
|
Total
(Expenses) and Other Income |
(22.3) |
|
(35.8) |
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
166.0 |
|
209.9 |
|
|
|
Provision for
Income Taxes |
33.8 |
|
49.1 |
|
|
Income of Consolidated Companies |
132.2 |
|
160.8 |
|
|
|
Equity in Net
(Loss) Income of Unconsolidated Affiliates |
(0.1) |
|
0.1 |
|
|
Net Income |
132.1 |
|
160.9 |
|
|
|
Net Income
Attributable to Non-controlling Interests |
(6.1) |
|
(1.5) |
|
|
Net Income Available to IPG Common
Stockholders |
$126.0 |
|
$159.4 |
|
|
|
|
|
|
|
|
Earnings Per Share Available to IPG Common
Stockholders: |
|
|
|
|
|
Basic |
$0.33 |
|
$0.40 |
|
|
Diluted |
$0.33 |
|
$0.40 |
|
|
|
|
|
|
|
|
Weighted-Average Number of Common Shares Outstanding: |
|
|
|
|
|
Basic |
385.8 |
|
394.5 |
|
|
Diluted |
387.4 |
|
398.4 |
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$0.310 |
|
$0.290 |
|
|
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIESU.S. GAAP
RECONCILIATION OF NON-GAAP ADJUSTED RESULTS(Amounts in Millions
except Per Share Data)(UNAUDITED) |
|
Three Months Ended March 31, 2023 |
|
As Reported |
|
Amortization of Acquired Intangibles |
|
Restructuring Charges |
|
Net Losses on Sales of Businesses1 |
|
Adjusted Results
(Non-GAAP) |
Operating
Income and Adjusted EBITA before Restructuring
Charges2 |
$188.3 |
|
$(20.9) |
|
$(1.6) |
|
|
|
$210.8 |
|
|
|
|
|
|
|
|
|
|
Total (Expenses) and Other Income3 |
(22.3) |
|
|
|
|
|
$(4.2) |
|
(18.1) |
Income
Before Income Taxes |
166.0 |
|
(20.9) |
|
(1.6) |
|
(4.2) |
|
192.7 |
Provision for Income Taxes |
33.8 |
|
4.2 |
|
0.3 |
|
1.3 |
|
39.6 |
Equity in Net Loss of Unconsolidated Affiliates |
(0.1) |
|
|
|
|
|
|
|
(0.1) |
Net Income Attributable to Non-controlling Interests |
(6.1) |
|
|
|
|
|
|
|
(6.1) |
Net
Income Available to IPG Common Stockholders |
$126.0 |
|
$(16.7) |
|
$(1.3) |
|
$(2.9) |
|
$146.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Number of Common Shares Outstanding -
Basic |
385.8 |
|
|
|
|
|
|
|
385.8 |
Dilutive effect of stock options and restricted shares |
1.6 |
|
|
|
|
|
|
|
1.6 |
Weighted-Average Number of Common Shares Outstanding -
Diluted |
387.4 |
|
|
|
|
|
|
|
387.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per Share Available to IPG Common Stockholders4: |
|
|
|
|
|
|
|
|
|
Basic |
$0.33 |
|
$(0.04) |
|
$(0.00) |
|
$(0.01) |
|
$0.38 |
Diluted |
$0.33 |
|
$(0.04) |
|
$(0.00) |
|
$(0.01) |
|
$0.38 |
|
|
|
|
|
|
|
|
|
|
1
Primarily relates to losses on complete dispositions of businesses
and the classification of certain assets as held for sale. |
2
Refer to non-GAAP reconciliation of Adjusted EBITA before
Restructuring Charges on page A3 in the appendix. |
3
Consists of non-operating expenses including interest expense,
interest income and other expense, net. |
4
Earnings per share amounts calculated on an unrounded basis. |
Note: Management believes the resulting comparisons provide useful
supplemental data that, while not a substitute for GAAP measures,
allow for greater transparency in the review of our financial and
operational performance. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP
RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions)
(UNAUDITED) |
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
|
|
|
Revenue
Before Billable Expenses |
$2,176.9 |
|
$2,227.2 |
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation: |
|
|
|
Net
Income Available to IPG Common Stockholders |
$126.0 |
|
$159.4 |
|
|
|
|
Add Back: |
|
|
|
Provision for Income Taxes |
33.8 |
|
49.1 |
Subtract: |
|
|
|
Total (Expenses) and Other Income |
(22.3) |
|
(35.8) |
Equity in Net (Loss) Income of Unconsolidated Affiliates |
(0.1) |
|
0.1 |
Net Income Attributable to Non-controlling Interests |
(6.1) |
|
(1.5) |
Operating
Income |
188.3 |
|
245.7 |
|
|
|
|
Add Back: |
|
|
|
Amortization of Acquired Intangibles |
20.9 |
|
21.3 |
|
|
|
|
Adjusted
EBITA |
$209.2 |
|
$267.0 |
Adjusted EBITA
Margin on Revenue before Billable Expenses % |
9.6 % |
|
12.0 % |
|
|
|
|
Restructuring Charges1 |
1.6 |
|
6.6 |
|
|
|
|
Adjusted
EBITA before Restructuring Charges |
$210.8 |
|
$273.6 |
Adjusted EBITA
before Restructuring Charges Margin on Revenue before Billable
Expenses % |
9.7 % |
|
12.3 % |
|
|
|
|
1 Net
restructuring charges were $1.6 million for the first quarter of
2023, which represent adjustments to our 2022 and 2020
restructuring actions. Net restructuring charges of $6.6 million
for the first quarter of 2022 represent adjustments to our
restructuring actions taken in 2020. |
Note:
Management believes the resulting comparisons provide useful
supplemental data that, while not a substitute for GAAP measures,
allow for greater transparency in the review of our financial and
operational performance. |
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIESU.S. GAAP
RECONCILIATION OF NON-GAAP ADJUSTED RESULTS(Amounts in Millions
except Per Share Data)(UNAUDITED) |
|
Three Months Ended March 31, 2022 |
|
As Reported |
|
Amortization of Acquired Intangibles |
|
Restructuring Charges1 |
|
Net Losses on Sales of Businesses2 |
|
Adjusted Results
(Non-GAAP) |
Operating
Income and Adjusted EBITA before Restructuring
Charges3 |
$245.7 |
|
$(21.3) |
|
$(6.6) |
|
|
|
$273.6 |
|
|
|
|
|
|
|
|
|
|
Total (Expenses) and Other Income4 |
(35.8) |
|
|
|
|
|
$(6.4) |
|
(29.4) |
Income
Before Income Taxes |
209.9 |
|
(21.3) |
|
(6.6) |
|
(6.4) |
|
244.2 |
Provision for Income Taxes |
49.1 |
|
4.2 |
|
1.6 |
|
0.0 |
|
54.9 |
Equity in Net Income of Unconsolidated Affiliates |
0.1 |
|
|
|
|
|
|
|
0.1 |
Net Income Attributable to Non-controlling Interests |
(1.5) |
|
|
|
|
|
|
|
(1.5) |
Net
Income Available to IPG Common Stockholders |
$159.4 |
|
$(17.1) |
|
$(5.0) |
|
$(6.4) |
|
$187.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Number of Common Shares Outstanding -
Basic |
394.5 |
|
|
|
|
|
|
|
394.5 |
Dilutive effect of stock options and restricted shares |
3.9 |
|
|
|
|
|
|
|
3.9 |
Weighted-Average Number of Common Shares Outstanding -
Diluted |
398.4 |
|
|
|
|
|
|
|
398.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per Share Available to IPG Common Stockholders5: |
|
|
|
|
|
|
|
|
|
Basic |
$0.40 |
|
$(0.04) |
|
$(0.01) |
|
$(0.02) |
|
$0.48 |
Diluted |
$0.40 |
|
$(0.04) |
|
$(0.01) |
|
$(0.02) |
|
$0.47 |
|
|
|
|
|
|
|
|
|
|
1
Net restructuring charges of $6.6 million for the first quarter of
2022 represent adjustments to our restructuring actions taken in
2020. |
2
Includes losses on complete dispositions of businesses and the
classification of certain assets as held for sale. |
3
Refer to non-GAAP reconciliation of Adjusted EBITA before
Restructuring Charges on page A3 in the appendix. |
4
Consists of non-operating expenses including interest expense,
interest income and other expense, net. |
5
Earnings per share amounts calculated on an unrounded basis. |
Note: Management believes the resulting comparisons provide useful
supplemental data that, while not a substitute for GAAP measures,
allow for greater transparency in the review of our financial and
operational performance. |
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