UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 21, 2021
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 21, 2021 , The Interpublic Group of Companies, Inc. (i) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its results for the third quarter and first nine months of 2021, (ii) held a conference call to discuss the foregoing results and (iii) posted an investor presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated by reference herein, on its website in connection with the conference call.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1: Press release dated October 21, 2021 (furnished pursuant to Item 2.02)
Exhibit 99.2: Investor presentation dated October 21, 2021 (furnished pursuant to Item 2.02)
Exhibit 104: Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included as Exhibit 101).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE INTERPUBLIC GROUP OF COMPANIES, INC. | |||||
| Date: October 21, 2021 | By: /s/ Andrew Bonzani | ||||
| Name: Andrew Bonzani Title: Executive Vice President, General Counsel | |||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE | New York, NY (October 21, 2021) | |||||||
Interpublic Announces Third Quarter and First Nine Months 2021 Results
• Third quarter net revenue was $2.26 billion, an increase of 15.7% from a year ago, with organic growth of 15.0%
• Net income was $239.9 million, with adjusted EBITA before restructuring charges of $369.5 million and margin of 16.3% on net revenue
• Third quarter diluted EPS was $0.60 as reported, and $0.63 as adjusted compared with $0.53 a year ago
• Company upgrades expectation for FY 2021 financial performance to organic growth of approximately 11.0% and adjusted EBITA margin of approximately 16.8%, based on continued progress on public health and sustained macro recovery
Philippe Krakowsky, CEO of IPG:
“We are pleased with our third quarter performance, which was highlighted by strong revenue growth in all world regions and across our operating segments, and driven by broad-based contributions across our agencies and client sectors. Given 15.0% organic revenue growth from a year ago, our two-year organic increase on that important metric was 10.7% relative to the third quarter of 2019, which demonstrates the strength and relevance of our evolving offerings. The quarter was similarly highlighted by margin expansion compared to last year and well ahead of the third quarter of 2019. These remarkable results are thanks to our people, across all of Interpublic, who have continued to show a high level of dedication and support – to our clients and to one another. The combination of our exceptionally talented people, and a balanced portfolio of capabilities and expertise, continues to set a high competitive standard.”
“The strategic steps we have taken over the long-term position us as a high value business partner that helps marketers thrive in the digital economy. By combining the power of creativity with the benefits of data and technology, we can create integrated solutions that are precise and accountable, solving business issues and driving growth for clients across a range of industry sectors. A culture that values diversity, corporate responsibility, and a transparent and ethical approach to the deployment of data further differentiates IPG.”
“With the level of performance we are showing through nine months, we are pleased to increase our financial objectives for the full year. Based on expectations of a reasonably steady course of improvement in the public health situation and attendant global economic recovery, we expect that we can deliver organic growth for the year of approximately 11%. With growth at that level, we expect to achieve adjusted EBITA margin of approximately 16.8%. As such, we see significant opportunity to create further value for all of our stakeholders.”
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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Summary
Revenue
•Third quarter 2021 net revenue of $2.26 billion increased by 15.7% compared to $1.95 billion in the third quarter of 2020. During the quarter, our organic net revenue increase was 15.0%, which was comprised of an organic net revenue increase of 14.7% in the U.S. and an increase of 15.4% internationally. Third quarter 2021 total revenue, which includes billable expenses, of $2.54 billion, increased by 19.6% compared to $2.13 billion in 2020.
•First nine months 2021 net revenue of $6.56 billion increased by 13.5% compared to $5.78 billion in the first nine months of 2020. During the quarter, our organic net revenue increase was 12.0%, which was comprised of an organic net revenue increase of 10.4% in the U.S. and an increase of 15.2% internationally. First nine months 2021 total revenue, which includes billable expenses, of $7.31 billion increased by 12.3% compared to $6.51 billion in 2020.
Operating Results
•Operating income in the third quarter of 2021 increased to $351.5 million, compared to $248.6 million in 2020. Adjusted EBITA before restructuring charges increased to $369.5 million in the third quarter of 2021, compared to adjusted EBITA before restructuring charges of $317.2 million for the same period in 2020. Adjusted EBITA before restructuring charges margin on net revenue increased to 16.3%, compared to 16.2% in 2020.
•Restructuring charges of $(3.5) million and $(2.4) million for the three and nine months ended September 30, 2021, respectively, consist of adjustments to the Company's restructuring actions taken during 2020 to lower its operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business; there were no new restructuring actions in 2021. Restructuring charges were $47.3 million and $159.9 million for the three and nine months ended September 30, 2020, respectively.
•Operating income in the first nine months of 2021 increased to $978.9 million, compared to $365.0 million in 2020. Adjusted EBITA before restructuring charges increased to $1,041.2 million in the first nine months of 2021, compared to adjusted EBITA before restructuring charges of $589.3 million for the same period in 2020. Adjusted EBITA before restructuring charges margin on net revenue increased to 15.9%, compared to 10.2% in 2020.
•Refer to reconciliations on page 12 for further detail.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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Net Results
•Income tax provision in the third quarter of 2021 was $73.9 million on income before income taxes of $318.3 million.
•Third quarter 2021 net income available to IPG common stockholders was $239.9 million, resulting in earnings of $0.61 per basic share and $0.60 per diluted share, compared to earnings of $0.72 and $0.71 per basic and diluted share, respectively, for the same period in 2020. Adjusted earnings were $0.63 per diluted share, compared to adjusted earnings of $0.53 per diluted share a year ago. Third quarter 2021 adjusted earnings excludes after-tax amortization of acquired intangibles of $17.3 million, after-tax restructuring charges of $(3.5) million and an after-tax gain of $1.7 million on the sales of businesses.
•Income tax provision in the first nine months of 2021 was $184.4 million on income before income taxes of $788.8 million.
•First nine months of 2021 net income available to IPG common stockholders was $594.9 million, resulting in earnings of $1.51 per basic share and $1.49 per diluted share, compared to earnings of $0.61 per basic and diluted share for the same period in 2020. Adjusted earnings were $1.78 per diluted share, compared to adjusted earnings of $0.87 per diluted share a year ago. First nine months 2021 adjusted earnings excludes after-tax amortization of acquired intangibles of $52.1 million, after-tax restructuring charges of $(2.7) million, an after-tax loss of $10.8 million on the sales of businesses and an after-tax loss of $55.5 million on the early extinguishment of debt.
•Refer to reconciliations on pages 10 through 14 for further detail.
Operating Results
Revenue
Net revenue of $2.26 billion in the third quarter of 2021 increased 15.7% compared with the same period in 2020. During the quarter, the effect of foreign currency translation was positive 1.1%, the impact of net dispositions was negative 0.4%, and the resulting organic net revenue increase was 15.0%. Total revenue, which includes billable expenses, increased to $2.54 billion in the third quarter of 2021, compared to $2.13 billion in 2020.
Net revenue of $6.56 billion in the first nine months of 2021 increased 13.5% compared with the same period in 2020. During the first nine months of 2021, the effect of foreign currency translation was positive 1.9%, the impact of net dispositions was negative 0.4%, and the resulting organic net revenue increase was 12.0%. Total revenue, which includes billable expenses, increased to $7.31 billion in the first nine months of 2021, compared to $6.51 billion in 2020.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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Operating Expenses
For the third quarter of 2021, total operating expenses, excluding billable expenses, increased by 12.0%, compared to the net revenue increase of 15.7% from the same period a year ago. For the first nine months of 2021, total operating expenses, excluding billable expenses, increased by 3.0% compared to the net revenue increase of 13.5% from the same period a year ago.
Staff cost ratio, which is total salaries and related expenses as a percentage of net revenue, increased to 66.8% in the third quarter of 2021 from 65.0% in the same period in 2020, and decreased to 66.9% in the first nine months of 2021 from 69.2% in the same period in 2020. Salaries and related expenses increased 19.0% to $1.51 billion during the third quarter of 2021, compared to $1.27 billion for the same period in 2020. Salaries and related expenses increased 9.8% to $4.39 billion during the first nine months of 2021, compared to $4.00 billion for the same period in 2020. The increase in staff cost ratio as a percentage of net revenue in the third quarter was primarily driven by increased performance-based employee incentive compensation expense and increased temporary labor expense supporting our revenue growth, which is partially offset by leverage in base salaries, benefits and payroll tax expenses. The decrease in staff cost ratio as a percentage of net revenue in the first nine months of 2021 was primarily driven by leverage in base salaries, benefits and tax that includes the benefit of initiatives taken during 2020.
Office and other direct expenses decreased as a percentage of net revenue to 13.3% during the third quarter of 2021, compared to 15.8% a year ago, and decreased as a percentage of net revenue to 13.6% during the first nine months of 2021, compared to 17.4% a year ago. In the third quarter of 2021, office and other direct expenses were $300.9 million, a decrease of 2.3% compared to the same period in 2020. In the first nine months of 2021, office and other direct expenses were $894.8 million, a decrease of 10.8% compared to the same period in 2020. The change for the third quarter was mainly due to lower bad debt expense and a reduction in the year-over-year change in contingent acquisition obligations, as well as savings on occupancy expense as a result of real estate restructuring actions taken in 2020. The change for the first nine months was mainly due to factors similar to those noted for the third quarter of 2021 in addition to a decrease in travel and entertainment expenses.
Selling, general and administrative expenses increased as a percentage of net revenue to 1.4% during the third quarter of 2021, compared to 0.5% during the same period in 2020, and increased as a percentage of net revenue to 1.4% during the first nine months of 2021, compared to 0.6% during the same period in 2020. The change for the third quarter was primarily due to increases in performance-based incentive compensation expense and employee insurance expense. The change for the first nine months was mainly due to factors similar to those noted for the third quarter of 2021, in addition to an increase in base salaries
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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as the prior year benefited from temporary cost saving actions that have since unwound as well as higher other office and other direct expenses.
Depreciation and amortization as a percentage of net revenue decreased to 3.1% during the third quarter of 2021, compared to 3.6% a year ago, and decreased to 3.2% during the first nine months of 2021, compared to 3.8% a year ago. During the third quarter of 2021, depreciation and amortization was $69.4 million, a decrease of 2.3% compared to the same period in 2020. During the first nine months of 2021, depreciation and amortization was $208.7 million, a decrease of 3.8% compared to the same period in 2020.
Restructuring charges in the third quarter of 2021 were $(3.5) million and were $(2.4) million in the first nine months of 2021, consisting of adjustments to the Company's restructuring actions taken during 2020 to lower its operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business; there were no new restructuring actions in 2021. Restructuring charges were $47.3 million and $159.9 million for the three and nine months ended September 30, 2020, respectively.
Non-Operating Results and Tax
Net interest expense decreased by $9.2 million to $35.5 million in the third quarter of 2021 from a year ago, and decreased by $9.5 million to $113.2 million in the first nine months of 2021 from a year ago.
Other income, net was $2.3 million in the third quarter of 2021 and other expense, net was $76.9 million in the first nine months of 2021, which included a pre-tax loss of $74.0 million related to the early extinguishment of debt from the first quarter of 2021.
The income tax provision in the third quarter of 2021 was $73.9 million on income before income taxes of $318.3 million. This compares to an income tax benefit of $86.3 million for the third quarter of 2020 on income before income taxes of $192.6 million.
The income tax provision in the first nine months of 2021 was $184.4 million on income before income taxes of $788.8 million. This compares to an income tax benefit of $50.1 million for the first nine months of 2020 on income before income taxes of $187.7 million.
Balance Sheet
At September 30, 2021, cash and cash equivalents totaled $2.49 billion, compared to $2.51 billion at December 31, 2020 and $1.63 billion on September 30, 2020. Total debt was $3.45 billion at September 30, 2021, compared to $3.47 billion at December 31, 2020.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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Common Stock Dividend
During the third quarter of 2021, the Company declared and paid a common stock cash dividend of $0.270 per share, for a total of $106.2 million.
For further information regarding the Company's financial results as well as certain non-GAAP measures including organic net revenue change, adjusted EBITA, adjusted EBITA before restructuring charges and adjusted earnings per diluted share, and the reconciliations thereof, please refer to pages 10 to 14 and our Investor Presentation filed on Form 8-K herewith and available on our website, www.interpublic.com.
# # #
About Interpublic
Interpublic (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, Jack Morton, Kinesso, MAGNA, Matterkind, McCann, Mediahub, Momentum, MRM, MullenLowe Group, Octagon, R/GA, UM, Weber Shandwick and more. IPG is an S&P 500 company with net revenue of $8.06 billion in 2020.
# # #
Contact Information
Tom Cunningham
(Press)
(212) 704-1326
Jerry Leshne
(Analysts, Investors)
(212) 704-1439
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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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 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;
◦the impacts of the COVID-19 pandemic and the measures to contain its spread, including social distancing efforts and restrictions on businesses, social activities and travel, any failure to realize anticipated benefits from the rollout of COVID-19 vaccination campaigns and the resulting impact on the economy, our clients and demand for our services, which may precipitate or exacerbate other risks and uncertainties;
◦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;
◦developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world, including laws and regulations related to data protection and consumer privacy; and
◦failure to fully realize the anticipated benefits of our 2020 restructuring actions and other cost-savings initiatives.
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 and our quarterly reports on Form 10-Q and our other SEC filings.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS THIRD QUARTER REPORT 2021 AND 2020 (Amounts in Millions except Per Share Data) (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||
| 2021 | 2020 | Fav. (Unfav.) % Variance | ||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Net Revenue | $ | 2,261.7 | $ | 1,954.6 | 15.7 | % | ||||||||||||||
| Billable Expenses | 280.3 | 170.9 | 64.0 | % | ||||||||||||||||
| Total Revenue | 2,542.0 | 2,125.5 | 19.6 | % | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Salaries and Related Expenses | 1,511.2 | 1,269.9 | (19.0) | % | ||||||||||||||||
| Office and Other Direct Expenses | 300.9 | 307.9 | 2.3 | % | ||||||||||||||||
| Billable Expenses | 280.3 | 170.9 | (64.0) | % | ||||||||||||||||
| Cost of Services | 2,092.4 | 1,748.7 | (19.7) | % | ||||||||||||||||
| Selling, General and Administrative Expenses | 32.2 | 9.9 | >(100)% | |||||||||||||||||
| Depreciation and Amortization | 69.4 | 71.0 | 2.3 | % | ||||||||||||||||
| Restructuring Charges | (3.5) | 47.3 | >100% | |||||||||||||||||
| Total Operating Expenses | 2,190.5 | 1,876.9 | (16.7) | % | ||||||||||||||||
| Operating Income | 351.5 | 248.6 | 41.4 | % | ||||||||||||||||
| Expenses and Other Income: | ||||||||||||||||||||
| Interest Expense | (42.9) | (50.8) | ||||||||||||||||||
| Interest Income | 7.4 | 6.1 | ||||||||||||||||||
| Other Income (Expense), Net | 2.3 | (11.3) | ||||||||||||||||||
| Total (Expenses) and Other Income | (33.2) | (56.0) | ||||||||||||||||||
| Income Before Income Taxes | 318.3 | 192.6 | ||||||||||||||||||
| Provision for (Benefit of) Income Taxes | 73.9 | (86.3) | ||||||||||||||||||
| Income of Consolidated Companies | 244.4 | 278.9 | ||||||||||||||||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.2 | (0.4) | ||||||||||||||||||
| Net Income | 244.6 | 278.5 | ||||||||||||||||||
| Net (Income) Loss Attributable to Non-controlling Interests | (4.7) | 1.2 | ||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 239.9 | $ | 279.7 | ||||||||||||||||
Earnings Per Share Available to IPG Common Stockholders: | ||||||||||||||||||||
Basic | $ | 0.61 | $ | 0.72 | ||||||||||||||||
Diluted | $ | 0.60 | $ | 0.71 | ||||||||||||||||
Weighted-Average Number of Common Shares Outstanding: | ||||||||||||||||||||
Basic | 393.5 | 389.6 | ||||||||||||||||||
Diluted | 399.8 | 393.9 | ||||||||||||||||||
| Dividends Declared Per Common Share | $ | 0.270 | $ | 0.255 | ||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS THIRD QUARTER REPORT 2021 AND 2020 (Amounts in Millions except Per Share Data) (UNAUDITED) | ||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2021 | 2020 | Fav. (Unfav.) % Variance | ||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Net Revenue | $ | 6,559.0 | $ | 5,780.1 | 13.5 | % | ||||||||||||||
| Billable Expenses | 749.6 | 730.9 | 2.6 | % | ||||||||||||||||
| Total Revenue | 7,308.6 | 6,511.0 | 12.3 | % | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Salaries and Related Expenses | 4,389.2 | 3,998.8 | (9.8) | % | ||||||||||||||||
| Office and Other Direct Expenses | 894.8 | 1,003.1 | 10.8 | % | ||||||||||||||||
| Billable Expenses | 749.6 | 730.9 | (2.6) | % | ||||||||||||||||
| Cost of Services | 6,033.6 | 5,732.8 | (5.2) | % | ||||||||||||||||
| Selling, General and Administrative Expenses | 89.8 | 36.4 | >(100)% | |||||||||||||||||
| Depreciation and Amortization | 208.7 | 216.9 | 3.8 | % | ||||||||||||||||
| Restructuring Charges | (2.4) | 159.9 | >100% | |||||||||||||||||
| Total Operating Expenses | 6,329.7 | 6,146.0 | (3.0) | % | ||||||||||||||||
| Operating Income | 978.9 | 365.0 | >100% | |||||||||||||||||
| Expenses and Other Income: | ||||||||||||||||||||
| Interest Expense | (135.1) | (145.4) | ||||||||||||||||||
| Interest Income | 21.9 | 22.7 | ||||||||||||||||||
| Other Expense, Net | (76.9) | (54.6) | ||||||||||||||||||
| Total (Expenses) and Other Income | (190.1) | (177.3) | ||||||||||||||||||
| Income Before Income Taxes | 788.8 | 187.7 | ||||||||||||||||||
| Provision for (Benefit of) Income Taxes | 184.4 | (50.1) | ||||||||||||||||||
| Income of Consolidated Companies | 604.4 | 237.8 | ||||||||||||||||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.4 | (0.6) | ||||||||||||||||||
| Net Income | 604.8 | 237.2 | ||||||||||||||||||
| Net (Income) Loss Attributable to Non-controlling Interests | (9.9) | 1.6 | ||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 594.9 | $ | 238.8 | ||||||||||||||||
Earnings Per Share Available to IPG Common Stockholders: | ||||||||||||||||||||
Basic | $ | 1.51 | $ | 0.61 | ||||||||||||||||
Diluted | $ | 1.49 | $ | 0.61 | ||||||||||||||||
Weighted-Average Number of Common Shares Outstanding: | ||||||||||||||||||||
Basic | 392.8 | 388.9 | ||||||||||||||||||
Diluted | 398.3 | 392.6 | ||||||||||||||||||
| Dividends Declared Per Common Share | $ | 0.810 | $ | 0.765 | ||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| 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 | $ | 351.5 | $ | (21.5) | $ | 3.5 | $ | 369.5 | |||||||||||||||||||||
Total (Expenses) and Other Income4 | (33.2) | $ | 1.7 | (34.9) | |||||||||||||||||||||||||
| Income Before Income Taxes | 318.3 | (21.5) | 3.5 | 1.7 | 334.6 | ||||||||||||||||||||||||
| Provision for Income Taxes | 73.9 | 4.2 | 0.0 | 0.0 | 78.1 | ||||||||||||||||||||||||
| Equity in Net Income of Unconsolidated Affiliates | 0.2 | 0.2 | |||||||||||||||||||||||||||
| Net Income Attributable to Non-controlling Interests | (4.7) | (4.7) | |||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 239.9 | $ | (17.3) | $ | 3.5 | $ | 1.7 | $ | 252.0 | |||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 393.5 | 393.5 | |||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 6.3 | 6.3 | |||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 399.8 | 399.8 | |||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders5: | |||||||||||||||||||||||||||||
| Basic | $ | 0.61 | $ | (0.04) | $ | 0.01 | $ | 0.00 | $ | 0.64 | |||||||||||||||||||
| Diluted | $ | 0.60 | $ | (0.04) | $ | 0.01 | $ | 0.00 | $ | 0.63 | |||||||||||||||||||
1 Restructuring charges of $(3.5) million in the third quarter of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||||||||||||||||||||
2 Primarily includes a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest, partially offset by 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 12. | |||||||||||||||||||||||||||||
4 Consists of non-operating expenses including interest expense, net and other expense, net. | |||||||||||||||||||||||||||||
5 Earnings per share may not add due to rounding. | |||||||||||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
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| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges1 | Net Losses on Sales of Businesses2 | Loss on Early Extinguishment of Debt3 | Adjusted Results (Non-GAAP) | ||||||||||||||||||||||||||||||
Operating Income and Adjusted EBITA before Restructuring Charges4 | $ | 978.9 | $ | (64.7) | $ | 2.4 | $ | 1,041.2 | |||||||||||||||||||||||||||
Total (Expenses) and Other Income5 | (190.1) | $ | (12.5) | $ | (74.0) | (103.6) | |||||||||||||||||||||||||||||
| Income Before Income Taxes | 788.8 | (64.7) | 2.4 | (12.5) | (74.0) | 937.6 | |||||||||||||||||||||||||||||
| Provision for Income Taxes | 184.4 | 12.6 | 0.3 | 1.7 | 18.5 | 217.5 | |||||||||||||||||||||||||||||
| Equity in Net Income of Unconsolidated Affiliates | 0.4 | 0.4 | |||||||||||||||||||||||||||||||||
| Net Income Attributable to Non-controlling Interests | (9.9) | (9.9) | |||||||||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 594.9 | $ | (52.1) | $ | 2.7 | $ | (10.8) | $ | (55.5) | $ | 710.6 | |||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 392.8 | 392.8 | |||||||||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 5.5 | 5.5 | |||||||||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 398.3 | 398.3 | |||||||||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders6: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 1.51 | $ | (0.13) | $ | 0.01 | $ | (0.03) | $ | (0.14) | $ | 1.81 | |||||||||||||||||||||||
| Diluted | $ | 1.49 | $ | (0.13) | $ | 0.01 | $ | (0.03) | $ | (0.14) | $ | 1.78 | |||||||||||||||||||||||
1 Restructuring charges of $(2.4) million in the first nine months of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||||||||||||||||||||||||||
2 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale, partially offset by a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest. | |||||||||||||||||||||||||||||||||||
3 Consists of a loss incurred in the first quarter of 2021 related to the early extinguishment of our 4.000% unsecured senior notes due 2022, 3.750% unsecured senior notes due 2023 and half of our 4.200% unsecured senior notes due 2024. | |||||||||||||||||||||||||||||||||||
4 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 12. | |||||||||||||||||||||||||||||||||||
5 Consists of non-operating expenses including interest expense, net and other expense, net. | |||||||||||||||||||||||||||||||||||
6 Earnings per share may not add due to rounding. | |||||||||||||||||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
11
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions) (UNAUDITED) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net Revenue | $ | 2,261.7 | $ | 1,954.6 | $ | 6,559.0 | $ | 5,780.1 | |||||||||||||||
| Non-GAAP Reconciliation: | |||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 239.9 | $ | 279.7 | $ | 594.9 | $ | 238.8 | |||||||||||||||
| Add Back: | |||||||||||||||||||||||
| Provision for (Benefit of) Income Taxes | 73.9 | (86.3) | 184.4 | (50.1) | |||||||||||||||||||
| Subtract: | |||||||||||||||||||||||
| Total (Expenses) and Other Income | (33.2) | (56.0) | (190.1) | (177.3) | |||||||||||||||||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.2 | (0.4) | 0.4 | (0.6) | |||||||||||||||||||
| Net (Income) Loss Attributable to Non-controlling Interests | (4.7) | 1.2 | (9.9) | 1.6 | |||||||||||||||||||
| Operating Income | 351.5 | 248.6 | 978.9 | 365.0 | |||||||||||||||||||
| Add Back: | |||||||||||||||||||||||
| Amortization of Acquired Intangibles | 21.5 | 21.3 | 64.7 | 64.4 | |||||||||||||||||||
| Adjusted EBITA | $ | 373.0 | $ | 269.9 | $ | 1,043.6 | $ | 429.4 | |||||||||||||||
| Adjusted EBITA Margin on Net Revenue % | 16.5 | % | 13.8 | % | 15.9 | % | 7.4 | % | |||||||||||||||
Restructuring Charges1 | (3.5) | 47.3 | (2.4) | 159.9 | |||||||||||||||||||
| Adjusted EBITA before Restructuring Charges | $ | 369.5 | $ | 317.2 | $ | 1,041.2 | $ | 589.3 | |||||||||||||||
| Adjusted EBITA before Restructuring Charges Margin on Net Revenue % | 16.3 | % | 16.2 | % | 15.9 | % | 10.2 | % | |||||||||||||||
1 Restructuring charges of $(3.5) million and $(2.4) million in the third quarter and first nine months of 2021, respectively, were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||||||||||||||
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. | |||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
12
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges | Net Losses on Sales of Businesses1 | Net Impact of Discrete Tax Items2 | Adjusted Results (Non-GAAP) | ||||||||||||||||||||||||||||||
Operating Income and Adjusted EBITA before Restructuring Charges3 | $ | 248.6 | $ | (21.3) | $ | (47.3) | $ | 317.2 | |||||||||||||||||||||||||||
Total (Expenses) and Other Income4 | (56.0) | $ | (8.6) | (47.4) | |||||||||||||||||||||||||||||||
| Income Before Income Taxes | 192.6 | (21.3) | (47.3) | (8.6) | 269.8 | ||||||||||||||||||||||||||||||
| (Benefit of) Provision for Income Taxes | (86.3) | 4.3 | 10.8 | 2.1 | $ | 132.6 | 63.5 | ||||||||||||||||||||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.4) | (0.4) | |||||||||||||||||||||||||||||||||
| Net Loss Attributable to Non-controlling Interests | 1.2 | 1.2 | |||||||||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 279.7 | $ | (17.0) | $ | (36.5) | $ | (6.5) | $ | 132.6 | $ | 207.1 | |||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 389.6 | 389.6 | |||||||||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 4.3 | 4.3 | |||||||||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 393.9 | 393.9 | |||||||||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders5: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.72 | $ | (0.04) | $ | (0.09) | $ | (0.02) | $ | 0.34 | $ | 0.53 | |||||||||||||||||||||||
| Diluted | $ | 0.71 | $ | (0.04) | $ | (0.09) | $ | (0.02) | $ | 0.34 | $ | 0.53 | |||||||||||||||||||||||
1 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||||||||||||||||||||||||||||
2 Includes a tax benefit of $136.2 related to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016 partially offset by $3.6 of tax expense related to the estimated costs associated with our change in our APB 23 assertion for certain foreign subsidiaries. | |||||||||||||||||||||||||||||||||||
3 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 12. | |||||||||||||||||||||||||||||||||||
4 Consists of non-operating expenses including interest expense, net and other expense, net. | |||||||||||||||||||||||||||||||||||
5 Earnings per share may not add due to rounding. | |||||||||||||||||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
13
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges | Net Losses on Sales of Businesses1 | Net Impact of Discrete Tax Items2 | Adjusted Results (Non-GAAP) | ||||||||||||||||||||||||||||||
Operating Income and Adjusted EBITA before Restructuring Charges3 | $ | 365.0 | $ | (64.4) | $ | (159.9) | $ | 589.3 | |||||||||||||||||||||||||||
Total (Expenses) and Other Income4 | (177.3) | $ | (51.8) | (125.5) | |||||||||||||||||||||||||||||||
| Income Before Income Taxes | 187.7 | (64.4) | (159.9) | (51.8) | 463.8 | ||||||||||||||||||||||||||||||
| (Benefit of) Provision for Income Taxes | (50.1) | 12.7 | 36.2 | 3.0 | $ | 122.6 | 124.4 | ||||||||||||||||||||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.6) | (0.6) | |||||||||||||||||||||||||||||||||
| Net Loss Attributable to Non-controlling Interests | 1.6 | 1.6 | |||||||||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 238.8 | $ | (51.7) | $ | (123.7) | $ | (48.8) | $ | 122.6 | $ | 340.4 | |||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 388.9 | 388.9 | |||||||||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 3.7 | 3.7 | |||||||||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 392.6 | 392.6 | |||||||||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders5: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.61 | $ | (0.13) | $ | (0.32) | $ | (0.13) | $ | 0.32 | $ | 0.88 | |||||||||||||||||||||||
| Diluted | $ | 0.61 | $ | (0.13) | $ | (0.32) | $ | (0.12) | $ | 0.31 | $ | 0.87 | |||||||||||||||||||||||
1 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||||||||||||||||||||||||||||
2 Includes a tax benefit of $136.2 related to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016 partially offset by $13.6 of tax expense related to the estimated costs associated with our change in our APB 23 assertion for certain foreign subsidiaries. | |||||||||||||||||||||||||||||||||||
3 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 12. | |||||||||||||||||||||||||||||||||||
4 Consists of non-operating expenses including interest expense, net and other expense, net. | |||||||||||||||||||||||||||||||||||
5 Earnings per share may not add due to rounding. | |||||||||||||||||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
14
Interpublic Group October 21, 2021 THIRD QUARTER 2021 EARNINGS CONFERENCE CALL
2Interpublic Group of Companies, Inc. Overview — Third Quarter 2021 Organic change of net revenue, adjusted EBITA before Restructuring Charges and adjusted diluted EPS are non-GAAP measures. Management believes these metrics 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. See our non-GAAP reconciliations of organic net revenue change on pages 18-19 and adjusted results on pages 20-24. • Net revenue growth was 15.7% and organic growth was 15.0% ◦ U.S. organic growth was 14.7% ◦ International organic growth was 15.4% ◦ Two-year compound organic growth was 10.7% • Net income as reported was $239.9 million • Adjusted EBITA before Restructuring Charges was $369.5 million, a 16.3% margin on net revenue • Diluted EPS was $0.60 as reported, and adjusted diluted EPS was $0.63 • Following the quarter, on October 1st, paid $500 million senior note maturity from cash on hand
3Interpublic Group of Companies, Inc. Three Months Ended September 30, 2021 2020 Net Revenue $ 2,261.7 $ 1,954.6 Billable Expenses 280.3 170.9 Total Revenue 2,542.0 2,125.5 Salaries and Related Expenses 1,511.2 1,269.9 Office and Other Direct Expenses 300.9 307.9 Billable Expenses 280.3 170.9 Cost of Services 2,092.4 1,748.7 Selling, General and Administrative Expenses 32.2 9.9 Depreciation and Amortization 69.4 71.0 Restructuring Charges (3.5) 47.3 Total Operating Expenses 2,190.5 1,876.9 Operating Income 351.5 248.6 Interest Expense, net (35.5) (44.7) Other Income (Expense), net 2.3 (11.3) Income Before Income Taxes 318.3 192.6 Provision for (Benefit of) Income Taxes (1) 73.9 (86.3) Equity in Net Income (Loss) of Unconsolidated Affiliates 0.2 (0.4) Net Income 244.6 278.5 Net (Income) Loss Attributable to Non-controlling Interests (4.7) 1.2 Net Income Available to IPG Common Stockholders $ 239.9 $ 279.7 Earnings per Share Available to IPG Common Stockholders - Basic $ 0.61 $ 0.72 Earnings per Share Available to IPG Common Stockholders - Diluted $ 0.60 $ 0.71 Weighted-Average Number of Common Shares Outstanding - Basic 393.5 389.6 Weighted-Average Number of Common Shares Outstanding - Diluted 399.8 393.9 Dividends Declared per Common Share $ 0.270 $ 0.255 ($ in Millions, except per share amounts) Operating Performance (1) Includes an income tax benefit of $136.2 in the third quarter of 2020 in relation to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016.
4Interpublic Group of Companies, Inc. Three Months Ended Nine Months Ended $ % Change $ % Change September 30, 2020 $ 1,954.6 $ 5,780.1 Foreign currency 22.4 1.1% 109.8 1.9% Net acquisitions/(divestitures) (7.6) (0.4%) (27.0) (0.4%) Organic 292.3 15.0% 696.1 12.0% Total change 307.1 15.7% 778.9 13.5% September 30, 2021 $ 2,261.7 $ 6,559.0 Three Months Ended September 30, Nine Months Ended September 30, Change Change 2021 2020 Organic Total 2021 2020 Organic Total IAN $ 1,942.7 $ 1,685.5 14.4% 15.3% $ 5,631.3 $ 4,935.7 12.6% 14.1% DXTRA $ 319.0 $ 269.1 18.6% 18.5% $ 927.7 $ 844.4 9.0% 9.9% See reconciliation of segment organic net revenue change on pages 18 and 19. ($ in Millions) Net Revenue
5Interpublic Group of Companies, Inc. Organic Net Revenue Change by Region “All Other Markets” includes Canada, Africa and the Middle East. Circle proportions represent consolidated net revenue distribution. See reconciliation of organic net revenue change, including total net revenue change, on page 18. Three Months Ended September 30, 2021 +14.7% United States +13.3% United Kingdom +11.8% Continental Europe +20.3% Latin America +17.4% Asia Pacific +15.4% International +15.0% Worldwide +17.1% All Other Markets
6Interpublic Group of Companies, Inc. Operating Expenses % of Net Revenue (1) Excludes amortization of acquired intangibles. Three Months Ended September 30 (1)
7Interpublic Group of Companies, Inc. Three Months Ended September 30, 2021 As Reported Amortization of Acquired Intangibles Restructuring Charges (1) Net Losses on Sales of Businesses (2) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges $ 351.5 $ (21.5) $ 3.5 $ 369.5 Total (Expenses) and Other Income (4) (33.2) $ 1.7 (34.9) Income Before Income Taxes 318.3 (21.5) 3.5 1.7 334.6 Provision for Income Taxes 73.9 4.2 0.0 0.0 78.1 Equity in Net Income of Unconsolidated Affiliates 0.2 0.2 Net Income Attributable to Non-controlling Interests (4.7) (4.7) DILUTED EPS COMPONENTS: Net Income Available to IPG Common Stockholders $ 239.9 $ (17.3) $ 3.5 $ 1.7 $ 252.0 Weighted-Average Number of Common Shares Outstanding 399.8 399.8 Earnings per Share Available to IPG Common Stockholders (5) $ 0.60 $ (0.04) $ 0.01 $ 0.00 $ 0.63 ($ in Millions, except per share amounts) (1) Restructuring charges of ($3.5) in the third quarter of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (2) Primarily includes a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest, partially offset by losses on complete dispositions of businesses and the classification of certain assets as held of sale. (3) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 22. (4) Consists of non-operating expenses including interest expense, net and other expense, net. (5) Earnings per share may not add due to rounding. See full non-GAAP reconciliation of adjusted diluted earnings per share on page 20. Adjusted Diluted Earnings Per Share (3)
8Interpublic Group of Companies, Inc. Three Months Ended September 30, 2021 2020 Net Income $ 244.6 $ 278.5 OPERATING ACTIVITIES: Depreciation & amortization 86.1 94.9 Net losses on sales of businesses 4.4 8.6 Deferred taxes (12.0) 11.7 Other non-cash items (5.8) 19.5 Non-cash restructuring charges (1.3) 28.1 Change in working capital, net 79.6 376.8 Change in other non-current assets & liabilities (5.4) (128.8) Net cash provided by Operating Activities 390.2 689.3 INVESTING ACTIVITIES: Capital expenditures (61.3) (40.1) Deconsolidation of a subsidiary (16.3) — Net proceeds from investments 3.9 3.9 Other investing activities 1.7 (3.0) Net cash used in Investing Activities (72.0) (39.2) FINANCING ACTIVITIES: Common stock dividends (106.2) (99.4) Net decrease in short-term borrowings (25.2) (0.6) Acquisition-related payments (15.7) (8.3) Distributions to noncontrolling interests (2.1) (4.3) Tax payments for employee shares withheld (1.0) (0.4) Other financing activities (3.1) (2.4) Net cash used in Financing Activities (153.3) (115.4) Currency effect (12.4) 8.6 Net increase in cash, cash equivalents and restricted cash $ 152.5 $ 543.3 ($ in Millions) Cash Flow
9Interpublic Group of Companies, Inc. September 30, 2021 December 31, 2020 September 30, 2020 CURRENT ASSETS: Cash and cash equivalents $ 2,490.0 $ 2,509.0 $ 1,628.0 Accounts receivable, net 4,042.5 4,646.4 3,297.4 Accounts receivable, billable to clients 2,150.4 1,820.7 1,817.2 Assets held for sale 3.5 0.8 20.0 Other current assets 446.5 390.7 521.7 Total current assets $ 9,132.9 $ 9,367.6 $ 7,284.3 CURRENT LIABILITIES: Accounts payable $ 6,844.2 $ 7,269.7 $ 5,105.9 Accrued liabilities 760.4 832.4 644.7 Contract liabilities 622.2 657.8 611.3 Short-term borrowings 44.1 48.0 46.3 Current portion of long-term debt 500.4 502.5 506.6 Current portion of operating leases 270.1 268.5 263.6 Liabilities held for sale 7.6 1.6 49.5 Total current liabilities $ 9,049.0 $ 9,580.5 $ 7,227.9 ($ in Millions) Balance Sheet — Current Portion
10Interpublic Group of Companies, Inc. Short-Term Debt Senior Notes - Current Senior Notes 3.750% 4.650% 5.400%2.400%4.200% Total Debt = $3.5 billion ($ in Millions) Debt Maturity Schedule 4.750% (1) $500 Senior Notes due October 1, 2021 were repaid on maturity with cash on hand. 3.375% ... ... (1)
11Interpublic Group of Companies, Inc. Summary • Strong first nine months of 2021 • Foundation for sustained growth and value creation ◦ Quality of our agency offerings and talent ◦ Data capabilities at scale ◦ Strong creative and innovative marketing & media solutions ◦ Integrated digital and digital specialists ◦ Evolving higher-value offerings ◦ "Open architecture" agency collaboration • Effective expense management is an ongoing priority • Financial strength a continued source of value creation
12Interpublic Group of Companies, Inc. Appendix
13Interpublic Group of Companies, Inc. Nine Months Ended September 30, 2021 2020 Net Revenue $ 6,559.0 $ 5,780.1 Billable Expenses 749.6 730.9 Total Revenue 7,308.6 6,511.0 Salaries and Related Expenses 4,389.2 3,998.8 Office and Other Direct Expenses 894.8 1,003.1 Billable Expenses 749.6 730.9 Cost of Services 6,033.6 5,732.8 Selling, General and Administrative Expenses 89.8 36.4 Depreciation and Amortization 208.7 216.9 Restructuring Charges (2.4) 159.9 Total Operating Expenses 6,329.7 6,146.0 Operating Income 978.9 365.0 Interest Expense, net (113.2) (122.7) Other Expense, net (1) (76.9) (54.6) Income Before Income Taxes 788.8 187.7 Provision for (Benefit of) Income Taxes (2) 184.4 (50.1) Equity in Net Income (Loss) of Unconsolidated Affiliates 0.4 (0.6) Net Income 604.8 237.2 Net (Income) Loss Attributable to Non-controlling Interests (9.9) 1.6 Net Income Available to IPG Common Stockholders $ 594.9 $ 238.8 Earnings per Share Available to IPG Common Stockholders - Basic $ 1.51 $ 0.61 Earnings per Share Available to IPG Common Stockholders - Diluted $ 1.49 $ 0.61 Weighted-Average Number of Common Shares Outstanding - Basic 392.8 388.9 Weighted-Average Number of Common Shares Outstanding - Diluted 398.3 392.6 Dividends Declared per Common Share $ 0.810 $ 0.765 ($ in Millions, except per share amounts) Operating Performance (1) Includes a loss of $74.0 on early extinguishment of debt in the first quarter of 2021. (2) Includes an income tax benefit of $136.2 in the third quarter of 2020 in relation to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016.
14Interpublic Group of Companies, Inc. Organic Net Revenue Change by Region “All Other Markets” includes Canada, Africa and the Middle East. Circle proportions represent consolidated net revenue distribution. See reconciliation of organic net revenue change, including total net revenue change, on page 19. Nine Months Ended September 30, 2021 +10.4% United States +11.5% United Kingdom +17.3% Continental Europe +22.9% Latin America +11.7% Asia Pacific +15.2% International +12.0% Worldwide +17.9% All Other Markets
15Interpublic Group of Companies, Inc. Operating Expenses % of Net Revenue (1) Excludes amortization of acquired intangibles. . Nine Months Ended September 30 (1)
16Interpublic Group of Companies, Inc. Nine Months Ended September 30, 2021 2020 Net Income $ 604.8 $ 237.2 OPERATING ACTIVITIES: Depreciation & amortization 271.4 281.9 Loss on early extinguishment of debt 74.0 — Deferred taxes 34.6 (9.4) Net losses on sales of businesses 18.6 51.8 Non-cash restructuring charges (2.2) 95.7 Other non-cash items (2.2) 70.5 Change in working capital, net (315.7) (259.7) Change in other non-current assets & liabilities (74.7) (142.9) Net cash provided by Operating Activities 608.6 325.1 INVESTING ACTIVITIES: Capital expenditures (123.4) (112.0) Deconsolidation of a subsidiary (16.3) — Acquisitions, net of cash acquired — (2.5) Net proceeds from investments 32.7 5.6 Other investing activities (8.1) (23.6) Net cash used in Investing Activities (115.1) (132.5) FINANCING ACTIVITIES: Early extinguishment of long-term debt (1,066.8) — Common stock dividends (321.4) (298.6) Acquisition-related payments (28.0) (40.6) Tax payments for employee shares withheld (25.0) (22.2) Net (decrease) increase in short-term borrowings (9.4) 1.9 Distributions to noncontrolling interests (9.0) (13.7) Proceeds from long-term debt 998.1 646.2 Exercise of stock options 8.0 0.0 Other financing activities (14.3) (10.7) Net cash (used in) provided by Financing Activities (467.8) 262.3 Currency effect (40.3) (20.3) Net (decrease) increase in cash, cash equivalents and restricted cash $ (14.6) $ 434.6 ($ in Millions) Cash Flow
17Interpublic Group of Companies, Inc. 2021 Q1 Q2 Q3 Q4 YTD 2021 Depreciation and amortization (1) $ 47.6 $ 48.5 $ 47.9 $ 144.0 Amortization of acquired intangibles 21.6 21.6 21.5 64.7 Amortization of restricted stock and other non-cash compensation 20.3 21.9 15.7 57.9 Net amortization of bond discounts and deferred financing costs 2.7 1.1 1.0 4.8 2020 Q1 Q2 Q3 Q4 FY 2020 Depreciation and amortization (1) $ 51.5 $ 51.3 $ 49.7 $ 52.2 $ 204.7 Amortization of acquired intangibles 21.3 21.8 21.3 21.5 85.9 Amortization of restricted stock and other non-cash compensation 23.2 12.6 20.6 10.6 67.0 Net amortization of bond discounts and deferred financing costs 2.3 3.0 3.3 2.8 11.4 ($ in Millions) (1) Excludes amortization of acquired intangibles. Depreciation and Amortization
18Interpublic Group of Companies, Inc. Components of Change Change Three Months Ended September 30, 2020 Foreign Currency Net Acquisitions/ (Divestitures) Organic Three Months Ended September 30, 2021 Organic Total SEGMENT: IAN $ 1,685.5 $ 18.5 $ (3.6) $ 242.3 $ 1,942.7 14.4% 15.3% DXTRA 269.1 3.9 (4.0) 50.0 319.0 18.6% 18.5% Total $ 1,954.6 $ 22.4 $ (7.6) $ 292.3 $ 2,261.7 15.0% 15.7% GEOGRAPHIC: United States $ 1,273.4 $ — $ (1.4) $ 187.3 $ 1,459.3 14.7% 14.6% International 681.2 22.4 (6.2) 105.0 802.4 15.4% 17.8% United Kingdom 162.0 11.6 0.0 21.5 195.1 13.3% 20.4% Continental Europe 158.0 2.2 (0.8) 18.7 178.1 11.8% 12.7% Asia Pacific 166.0 3.0 (5.9) 28.9 192.0 17.4% 15.7% Latin America 78.5 (0.4) 2.3 15.9 96.3 20.3% 22.7% All Other Markets 116.7 6.0 (1.8) 20.0 140.9 17.1% 20.7% Worldwide $ 1,954.6 $ 22.4 $ (7.6) $ 292.3 $ 2,261.7 15.0% 15.7% ($ in Millions) Reconciliation of Organic Net Revenue
19Interpublic Group of Companies, Inc. Components of Change Change Nine Months Ended September 30, 2020 Foreign Currency Net Acquisitions/ (Divestitures) Organic Nine Months Ended September 30, 2021 Organic Total SEGMENT: IAN $ 4,935.7 $ 89.9 $ (14.7) $ 620.4 $ 5,631.3 12.6% 14.1% DXTRA 844.4 19.9 (12.3) 75.7 927.7 9.0% 9.9% Total $ 5,780.1 $ 109.8 $ (27.0) $ 696.1 $ 6,559.0 12.0% 13.5% GEOGRAPHIC: United States $ 3,820.6 $ — $ (13.6) $ 397.6 $ 4,204.6 10.4% 10.1% International 1,959.5 109.8 (13.4) 298.5 2,354.4 15.2% 20.2% United Kingdom 474.9 43.1 0.9 54.8 573.7 11.5% 20.8% Continental Europe 453.7 29.9 (2.7) 78.5 559.4 17.3% 23.3% Asia Pacific 487.4 23.6 (14.2) 56.8 553.6 11.7% 13.6% Latin America 220.1 (6.3) 4.4 50.4 268.6 22.9% 22.0% All Other Markets 323.4 19.5 (1.8) 58.0 399.1 17.9% 23.4% Worldwide $ 5,780.1 $ 109.8 $ (27.0) $ 696.1 $ 6,559.0 12.0% 13.5% ($ in Millions) Reconciliation of Organic Net Revenue
20Interpublic Group of Companies, Inc. Three Months Ended September 30, 2021 As Reported Amortization of Acquired Intangibles Restructuring Charges (2) Net Losses on Sales of Businesses (3) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges $ 351.5 $ (21.5) $ 3.5 $ 369.5 Total (Expenses) and Other Income (5) (33.2) $ 1.7 (34.9) Income Before Income Taxes 318.3 (21.5) 3.5 1.7 334.6 Provision for Income Taxes 73.9 4.2 0.0 0.0 78.1 Equity in Net Income of Unconsolidated Affiliates 0.2 0.2 Net Income Attributable to Non-controlling Interests (4.7) (4.7) Net Income Available to IPG Common Stockholders $ 239.9 $ (17.3) $ 3.5 $ 1.7 $ 252.0 Weighted-Average Number of Common Shares Outstanding - Basic 393.5 393.5 Dilutive effect of stock options and restricted shares 6.3 6.3 Weighted-Average Number of Common Shares Outstanding - Diluted 399.8 399.8 Earnings per Share Available to IPG Common Stockholders (6): Basic $ 0.61 $ (0.04) $ 0.01 $ 0.00 $ 0.64 Diluted $ 0.60 $ (0.04) $ 0.01 $ 0.00 $ 0.63 ($ in Millions, except per share amounts) (1) The table reconciles our reported results to our adjusted non-GAAP results. 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. (2) Restructuring charges of ($3.5) in the third quarter of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (3) Primarily includes a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest, partially offset by losses on complete dispositions of businesses and the classification of certain assets as held for sale. (4) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 22. (5) Consists of non-operating expenses including interest expense, net and other expense, net. (6) Earnings per share may not add due to rounding. Reconciliation of Adjusted Results (1) (4)
21Interpublic Group of Companies, Inc. Nine Months Ended September 30, 2021 As Reported Amortization of Acquired Intangibles Restructuring Charges (2) Net Losses on Sales of Businesses (3) Loss on Early Extinguishment of Debt (4) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges $ 978.9 $ (64.7) $ 2.4 $ 1,041.2 Total (Expenses) and Other Income (6) (190.1) $ (12.5) $ (74.0) (103.6) Income Before Income Taxes 788.8 (64.7) 2.4 (12.5) (74.0) 937.6 Provision for Income Taxes 184.4 12.6 0.3 1.7 18.5 217.5 Equity in Net Income of Unconsolidated Affiliates 0.4 0.4 Net Income Attributable to Non-controlling Interests (9.9) (9.9) Net Income Available to IPG Common Stockholders $ 594.9 $ (52.1) $ 2.7 $ (10.8) $ (55.5) $ 710.6 Weighted-Average Number of Common Shares Outstanding - Basic 392.8 392.8 Dilutive effect of stock options and restricted shares 5.5 5.5 Weighted-Average Number of Common Shares Outstanding - Diluted 398.3 398.3 Earnings per Share Available to IPG Common Stockholders (7): Basic $ 1.51 $ (0.13) $ 0.01 $ (0.03) $ (0.14) $ 1.81 Diluted $ 1.49 $ (0.13) $ 0.01 $ (0.03) $ (0.14) $ 1.78 ($ in Millions, except per share amounts) (1) The table reconciles our reported results to our adjusted non-GAAP results. 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. (2) Restructuring charges of ($2.4) in the first nine months of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (3) Includes losses on compete dispositions of businesses and the classification of certain assets as held for sale, partially offset by a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest. (4) Consists of a loss related to the early extinguishment of our 4.000% unsecured senior notes due 2022, 3.750% unsecured senior notes due 2023 and half of our 4.200% unsecured senior notes due 2024. (5) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on slide 22. (6) Consists of non-operating expenses including interest expense, net and other expense, net. (7) Earnings per share may not add due to rounding. (5) Reconciliation of Adjusted Results (1)
22Interpublic Group of Companies, Inc. Reconciliation of Adjusted EBITA Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net Revenue $ 2,261.7 $ 1,954.6 $ 6,559.0 $ 5,780.1 Non-GAAP Reconciliation: Net Income Available to IPG Common Stockholders $ 239.9 $ 279.7 $ 594.9 $ 238.8 Add Back: Provision for (Benefit of) Income Taxes 73.9 (86.3) 184.4 (50.1) Subtract: Total (Expenses) and Other Income (2) (33.2) (56.0) (190.1) (177.3) Equity in Net Income (Loss) of Unconsolidated Affiliates 0.2 (0.4) 0.4 (0.6) Net (Income) Loss Attributable to Non-controlling Interests (4.7) 1.2 (9.9) 1.6 Operating Income $ 351.5 $ 248.6 $ 978.9 $ 365.0 Add Back: Amortization of Acquired Intangibles 21.5 21.3 64.7 64.4 Adjusted EBITA $ 373.0 $ 269.9 $ 1,043.6 $ 429.4 Adjusted EBITA Margin on Net Revenue % 16.5 % 13.8 % 15.9 % 7.4 % Restructuring Charges $ (3.5) $ 47.3 $ (2.4) $ 159.9 Adjusted EBITA before Restructuring Charges $ 369.5 $ 317.2 $ 1,041.2 $ 589.3 Adjusted EBITA before Restructuring Charges Margin on Net Revenue % 16.3 % 16.2 % 15.9 % 10.2 % (1) ($ in Millions) (1) The table reconciles our reported results to our adjusted non-GAAP results. 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. (2) Includes a loss of $74.0 on early extinguishment of debt in the first quarter of 2021 and a non-cash gain in the third quarter of 2021 related to the deconsolidation of a previously consolidated subsidiary in which we maintain an equity interest. (3) Restructuring charges of ($3.5) and ($2.4) in the third quarter and first nine months of 2021, respectively, were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (3)
23Interpublic Group of Companies, Inc. Three Months Ended September 30, 2020 As Reported Amortization of Acquired Intangibles Restructuring Charges Net Losses on Sales of Businesses Net Impact of Discrete Tax Items (2) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges (3) $ 248.6 $ (21.3) $ (47.3) $ 317.2 Total (Expenses) and Other Income (4) (56.0) $ (8.6) (47.4) Income Before Income Taxes 192.6 (21.3) (47.3) (8.6) 269.8 (Benefit of) Provision for Income Taxes (86.3) 4.3 10.8 2.1 $ 132.6 63.5 Equity in Net Loss of Unconsolidated Affiliates (0.4) (0.4) Net Loss Attributable to Non-controlling Interests 1.2 1.2 Net Income Available to IPG Common Stockholders $ 279.7 $ (17.0) (36.5) $ (6.5) $ 132.6 $ 207.1 Weighted-Average Number of Common Shares Outstanding - Basic 389.6 389.6 Dilutive effect of stock options and restricted shares 4.3 4.3 Weighted-Average Number of Common Shares Outstanding - Diluted 393.9 393.9 Earnings per Share Available to IPG Common Stockholders (5): Basic $ 0.72 $ (0.04) $ (0.09) $ (0.02) $ 0.34 $ 0.53 Diluted $ 0.71 $ (0.04) $ (0.09) $ (0.02) $ 0.34 $ 0.53 ($ in Millions, except per share amounts) (1) The table reconciles our reported results to our adjusted non-GAAP results. 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. (2) Includes a tax benefit of $136.2 related to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016 partially offset by $3.6 of tax expense related to the estimated costs associated with our change in our APB 23 assertion for certain foreign subsidiaries. (3) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 22. (4) Consists of non-operating expenses including interest expense, net and other expense, net. (5) Earnings per share may not add due to rounding. Reconciliation of Adjusted Results (1)
24Interpublic Group of Companies, Inc. Nine Months Ended September 30, 2020 As Reported Amortization of Acquired Intangibles Restructuring Charges Net Losses on Sales of Businesses Net Impact of Discrete Tax Items (2) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges (3) $ 365.0 $ (64.4) $ (159.9) $ 589.3 Total (Expenses) and Other Income (4) (177.3) $ (51.8) (125.5) Income Before Income Taxes 187.7 (64.4) (159.9) (51.8) 463.8 (Benefit of) Provision for Income Taxes (50.1) 12.7 36.2 3.0 $ 122.6 124.4 Equity in Net Loss of Unconsolidated Affiliates (0.6) (0.6) Net Loss Attributable to Non-controlling Interests 1.6 1.6 Net Income Available to IPG Common Stockholders $ 238.8 $ (51.7) $ (123.7) $ (48.8) $ 122.6 $ 340.4 Weighted-Average Number of Common Shares Outstanding - Basic 388.9 388.9 Dilutive effect of stock options and restricted shares 3.7 3.7 Weighted-Average Number of Common Shares Outstanding - Diluted 392.6 392.6 Earnings per Share Available to IPG Common Stockholders (5): Basic $ 0.61 $ (0.13) $ (0.32) $ (0.13) $ 0.32 $ 0.88 Diluted $ 0.61 $ (0.13) $ (0.32) $ (0.12) $ 0.31 $ 0.87 ($ in Millions, except per share amounts) (1) The table reconciles our reported results to our adjusted non-GAAP results. 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. (2) Includes a tax benefit of $136.2 related to the finalization and settlement of the U.S. Federal income tax audit for years 2006 through 2016 partially offset by $13.6 of tax expense related to the estimated costs associated with our change in our APB 23 assertion for certain foreign subsidiaries. (3) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on slide 22. (4) Consists of non-operating expenses including interest expense, net and other expense, net. (5) Earnings per share may not add due to rounding. Reconciliation of Adjusted Results (1)
25Interpublic Group of Companies, Inc. Metrics Update
26Interpublic Group of Companies, Inc. Metrics Update CATEGORY: SALARIES & RELATED OFFICE & OTHER DIRECT FINANCIAL (% of net revenue) (% of net revenue) METRIC: Trailing Twelve Months Trailing Twelve Months Available Liquidity Base, Benefits & Tax Occupancy Expense Credit Facility Covenant Incentive Expense All Other Office and Other Direct Expenses Severance Expense Temporary Help
27Interpublic Group of Companies, Inc. Salaries & Related Expenses % of Net Revenue, Trailing Twelve Months
28Interpublic Group of Companies, Inc. Salaries & Related Expenses (% of Net Revenue) “All Other Salaries & Related,” not shown, was 1.3% for both the three months ended September 30, 2021 and 2020, and 1.3% and 1.2% for the nine months ended September 30, 2021 and 2020, respectively. Three and Nine Months Ended September 30 2021 2020
29Interpublic Group of Companies, Inc. Office & Other Direct Expenses % of Net Revenue, Trailing Twelve Months
30Interpublic Group of Companies, Inc. Office & Other Direct Expenses (% of Net Revenue) “All Other” primarily includes client service costs, non-pass through production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses. Three and Nine Months Ended September 30 2021 2020
31Interpublic Group of Companies, Inc. ($ in Millions) Available Liquidity Cash, Cash Equivalents + Available Committed Credit Facilities Available Committed Credit FacilityCash and Cash Equivalents 364-Day Credit Facility (1) The 364-day revolving credit facility matured in March 2021. (1)
32Interpublic Group of Companies, Inc. Financial Covenant Four Quarters Ended September 30, 2021 Leverage Ratio (not greater than) (2) (3) 3.50x Actual Leverage Ratio 2.01x CREDIT AGREEMENT EBITDA RECONCILIATION: Four Quarters Ended September 30, 2021 Net Income Available to IPG Common Stockholders $ 707.2 + Non-Operating Adjustments (4) 495.1 Operating Income $ 1,202.3 + Depreciation and Amortization 387.1 + Other Non-cash Charges Reducing Operating Income 131.6 Credit Agreement EBITDA (2): $ 1,721.0 ($ in Millions) Credit Facility Covenant (1) (1) The leverage ratio financial covenant applies to our committed corporate credit facility, amended and restated as of November 1, 2019 ( the "Credit Agreement"). (2) The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement) for the four quarters then ended. (3) Pursuant to Amendment No. 1 to the Credit Agreement, our maximum leverage ratio covenant decreased from 4.25x to 3.50x as of the quarter ended September 30, 2021. (4) Includes adjustments of the following items from our consolidated statement of operations: provision for income taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, and net (income) loss attributable to non-controlling interests.
33Interpublic Group of Companies, Inc. This investor presentation contains forward-looking statements. Statements in this investor presentation 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 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; ▪ the impacts of the COVID-19 pandemic and, the measures to contain its spread, including social distancing efforts and restrictions on businesses, social activities and travel, any failure to realize anticipated benefits from the rollout of COVID-19 vaccination campaigns and the resulting impact on the economy, our clients and demand for our services, which may precipitate or exacerbate other risks and uncertainties; ▪ 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; ▪ developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world, including laws and regulations related to data protection and consumer privacy; and ▪ failure to fully realize the anticipated benefits of our 2020 restructuring actions and other cost-saving initiatives. 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 and our quarterly reports on Form 10-Q and our other SEC filings. Cautionary Statement