Interpublic Announces First Quarter 2018 Results
- First quarter net revenue increase of 5.9% and organic net revenue increase of 3.6%; U.S. organic net revenue growth was 4.3%
- Operating income increase of 12% to
$38.8 million , compared to$34.7 million a year ago, in seasonally small first quarter - Diluted earnings per share of
$(0.04) was$0.03 as adjusted for sales of certain small, non-strategic businesses during the quarter, compared to$0.06 per basic and diluted share in the prior year period, with the comparison negatively impacted due to a higher adjusted tax rate - Management confirms that the company remains on track to achieve 2018 financial targets
Summary
Revenue
- First quarter 2018 net revenue increased 5.9% to
$1.77 billion , compared to$1.68 billion in the first quarter of 2017, with an organic net revenue increase of 3.6% compared to the prior-year period. This was comprised of an organic net increase of 4.3% in the U.S. and 2.6% internationally. - First quarter 2018 total revenue increased 5.1% to
$2.17 billion , compared to$2.06 billion in the first quarter of 2017.
Operating Results
- Operating income in the first quarter of 2018 was
$38.8 million , compared to$34.7 million in 2017. - Operating margin on net revenue was 2.2% for the first quarter of 2018, compared to 2.1% in 2017.
Net Results
- Income tax provision in the first quarter of 2018 was
$12.7 million on loss before income taxes of$1.5 million . - First quarter 2018 net loss available to IPG common stockholders was
$14.1 million , resulting in loss of$0.04 per basic and diluted share, and earnings of$0.03 per diluted share as adjusted for a non-operating loss of$24.0 million on the sales of businesses in "Other (Expense) Income, Net." This compares to net income available to IPG common stockholders a year ago of$24.7 million , resulting in earnings of$0.06 per basic and diluted share. - As a reminder, 2017 results are as previously restated for the adoption of ASC 606.
"Against challenging comparisons, we reported another quarter of solid revenue and operating profit growth, with notably strong growth in the U.S. at 4.3%. Contributions to our performance came from a range of our agencies and marketing disciplines, including media, our three global creative networks, as well as digital, sports and experiential marketing," said
Operating Results
Revenue
Net revenue of
Total revenue of
Operating Expenses
Total operating expenses, excluding billable expenses, increased 5.8% in the first quarter of 2018 from a year ago, compared with net revenue growth of 5.9%.
During the first quarter of 2018, salaries and related expenses were
During the first quarter of 2018, office and other direct expenses were
During the first quarter of 2018, selling, general and administrative expenses were
During the first quarter of 2018, depreciation and amortization was
Non-Operating Results and Tax
Net interest expense of
The income tax provision in the first quarter of 2018 was
Balance Sheet
At
Share Repurchase Program and Common Stock Dividend
During the first quarter of 2018, the company repurchased 2.4 million shares of its common stock at an aggregate cost of
During the first quarter of 2018, the company declared and paid a common stock cash dividend of
For more information concerning the company's financial results, please refer to the accompanying slide presentation available on our website, www.interpublic.com.
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About Interpublic
Interpublic is one of the world's leading organizations of advertising agencies and marketing services companies. Major global brands include Craft, FCB (
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Contact Information
(Press)
(212) 704-1326
(Analysts, Investors)
(212) 704-1439
Cautionary Statement
This release contains forward-looking statements. Statements in this release that are not historical facts, including statements about management's beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, 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. 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:
- potential effects of a challenging economy, for example, 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;
- risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy;
- potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
- risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and
- developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K.
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS FIRST QUARTER REPORT 2018 AND 2017 (Amounts in Millions except Per Share Data) (UNAUDITED) |
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| Three months ended March 31, | |||||||||||||||||||||||
| 2018 | 2017 | Fav. (Unfav.) % Variance |
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| Revenue: | |||||||||||||||||||||||
| Net Revenue | $ | 1,774.0 | $ | 1,675.3 | 5.9 | % | |||||||||||||||||
| Billable Expenses | 395.1 | 388.5 | 1.7 | % | |||||||||||||||||||
| Total Revenue | 2,169.1 | 2,063.8 | 5.1 | % | |||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||
| Salaries and Related Expenses | 1,330.3 | 1,251.7 | (6.3) | % | |||||||||||||||||||
| Office and Other Direct Expenses | 323.8 | 312.7 | (3.5) | % | |||||||||||||||||||
| Billable Expenses | 395.1 | 388.5 | (1.7) | % | |||||||||||||||||||
| Cost of Services | 2,049.2 | 1,952.9 | (4.9) | % | |||||||||||||||||||
| Selling, General and Administrative Expenses | 35.1 | 35.2 | 0.3 | % | |||||||||||||||||||
| Depreciation and Amortization | 46.0 | 41.0 | (12.2) | % | |||||||||||||||||||
| Total Operating Expenses | 2,130.3 | 2,029.1 | (5.0) | % | |||||||||||||||||||
| Operating Income | 38.8 | 34.7 | 11.8 | % | |||||||||||||||||||
| Operating Margin on Net Revenue % | 2.2 | % | 2.1 | % | |||||||||||||||||||
| Operating Margin on Total Revenue % | 1.8 | % | 1.7 | % | |||||||||||||||||||
| Expenses and Other Income: | |||||||||||||||||||||||
| Interest Expense | (19.9) | (20.9) | |||||||||||||||||||||
| Interest Income | 4.0 | 5.2 | |||||||||||||||||||||
| Other (Expense) Income, Net | (24.4) | 0.8 | |||||||||||||||||||||
| Total (Expenses) and Other Income | (40.3) | (14.9) | |||||||||||||||||||||
| (Loss) Income Before Income Taxes | (1.5) | 19.8 | |||||||||||||||||||||
| Provision for (Benefit of) Income Taxes | 12.7 | (0.3) | |||||||||||||||||||||
| (Loss) Income of Consolidated Companies | (14.2) | 20.1 | |||||||||||||||||||||
| Equity in Net (Loss) Income of Unconsolidated Affiliates | (1.9) | 1.2 | |||||||||||||||||||||
| Net (Loss) Income | (16.1) | 21.3 | |||||||||||||||||||||
| Net Loss Attributable to Noncontrolling Interests | 2.0 | 3.4 | |||||||||||||||||||||
| Net (Loss) Income Available to IPG Common Stockholders | $ | (14.1) | $ | 24.7 | |||||||||||||||||||
| (Loss) Earnings Per Share Available to IPG Common Stockholders: | |||||||||||||||||||||||
| Basic | $ | (0.04) | $ | 0.06 | |||||||||||||||||||
| Diluted | $ | (0.04) | $ | 0.06 | |||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding: | |||||||||||||||||||||||
| Basic | 383.4 | 391.7 | |||||||||||||||||||||
| Diluted | 383.4 | 399.3 | |||||||||||||||||||||
| Dividends Declared Per Common Share | $ | 0.21 | $ | 0.18 | |||||||||||||||||||
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) |
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| Three Months Ended March 31, 2018 |
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| As Reported | Net Losses on Sales of Businesses 1 | Adjusted Results | |||||||||||||||||||||
| (Loss) Income Before Income Taxes | $ | (1.5) | $ | (24.4) | $ | 22.9 | |||||||||||||||||
| Provision for Income Taxes | 12.7 | (0.4) | 13.1 | ||||||||||||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (1.9) | (1.9) | |||||||||||||||||||||
| Net Loss Attributable to Noncontrolling Interests | 2.0 | 2.0 | |||||||||||||||||||||
| Net (Loss) Income Available to IPG Common Stockholders | $ | (14.1) | $ | (24.0) | $ | 9.9 | |||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 383.4 | 383.4 | |||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | N/A | 5.2 | |||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 383.4 | 388.6 | |||||||||||||||||||||
| Earnings Per Share Available to IPG Common Stockholders: | |||||||||||||||||||||||
| Basic | $ | (0.04) | $ | (0.06) | $ | 0.03 | |||||||||||||||||
| Diluted | $ | (0.04) | $ | (0.06) | $ | 0.03 | |||||||||||||||||
| 1 Includes losses on complete dispositions of businesses and the classification of certain assets held for sale. |
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| 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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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
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