Interpublic Announces First Quarter 2021 Results
Interpublic Group (IPG) reported a net revenue of $2.03 billion for Q1 2021, marking a 2.8% increase from Q1 2020. Organic net revenue growth was 1.9%, with a 6.3% rise internationally. Net income reached $91.7 million or $0.23 per share, up from $0.01 in the previous year. Adjusted EBITA before restructuring was $265.9 million, representing a margin of 13.1%. Management forecasts a full-year organic growth of 5.0% to 6.0% and an adjusted EBITA margin of approximately 15.5%.
- Net revenue increased by 2.8% to $2.03 billion for Q1 2021.
- Net income rose to $91.7 million from $0.01 million in Q1 2020.
- First quarter diluted EPS was $0.23, increased from $0.01 over the last year.
- Adjusted EBITA margin improved to 13.1% from 4.9% in 2020.
- Management expects organic growth of 5.0% to 6.0% for full-year 2021.
- Organic net revenue growth of 1.9% was impacted by a slight decrease of 0.2% in the U.S.
- Total revenue decreased to $2.26 billion from $2.36 billion in 2020.
New York, April 28, 2021 (GLOBE NEWSWIRE) --
- Reported net revenue of
$2.03 billion , an increase of2.8% from a year ago, with organic net revenue growth of1.9% - Net income was
$91.7 million as reported with first-quarter adjusted EBITA before restructuring of$265.9 million - First quarter diluted EPS was
$0.23 as reported, and was$0.45 as adjusted compared with$0.11 as adjusted in the first quarter of 2020 - Management highlights strategic and operating strengths, exceptional talent base, deep creative, data, martech and adtech capabilities
- With tone of business and visibility improved, and sustained public health and macro recovery, Company says it is positioned to deliver full-year 2021 organic growth of
5.0% to6.0% and adjusted EBITA margin of approximately15.5%
Philippe Krakowsky, CEO of IPG:
“We are pleased with results this quarter. Our strong start to the year reflects the quality of our talent, across the organization, and underscores the successful evolution of our offerings at a time of accelerating, transformational change. Our ability to create marketing and media solutions that bring together outstanding creativity with the benefits of technology, and an ethical approach to data management, positions us to address higher-order business opportunities. This combination was a key driver of growth during Q1. Further, our return to growth coupled with the benefits of strategic restructuring actions taken last year, and certain variable expenses that remain at very low levels, led to outstanding margin performance this quarter.”
“Supporting clients is a constant for us. We therefore remain focused on meeting their needs for integrated and collaborative teams that bring a range of expertise to bear to build brands and deliver business outcomes. Given that the pandemic is still with us, across the world, another top priority remains ensuring the health and well-being of our people. This includes a focus on equity and inclusion, as well as a long-term commitment across the ESG spectrum, including responsible data stewardship, digital media and brand safety practices.”
“Building on a strong start to the year, and predicated on the assumption that there will continue to be a reasonably steady course of global economic recovery, we believe that we can deliver organic growth for the full year in the range of
Summary
Revenue
- First quarter 2021 net revenue of
$2.03 billion increased by2.8% compared to$1.97 billion in the first quarter of 2020. During the quarter, our organic net revenue increase was1.9% , which was comprised of a slight organic net revenue decrease of0.2% in the U.S. and an increase of6.3% internationally. First quarter 2021 total revenue, which includes billable expenses, was$2.26 billion , compared to$2.36 billion in 2020.
Operating Results
- Operating income in the first quarter of 2021 was
$243.0 million , compared to$75.9 million in 2020. Adjusted EBITA before restructuring charges was$265.9 million in the first quarter of 2021, compared to adjusted EBITA of$97.2 million for the same period in 2020. Adjusted EBITA before restructuring charges margin on net revenue was13.1% , compared to adjusted EBITA margin of4.9% in 2020. - Restructuring charges of
$1.3 million consist of adjustments to the Company's restructuring actions taken during 2020; there were no new restructuring actions in 2021. - Refer to reconciliations on page 9 for further detail.
Net Results
- Income tax provision in the first quarter of 2021 was
$23.8 million on income before income taxes of$116.4 million . - First quarter 2021 net income available to IPG common stockholders was
$91.7 million , resulting in earnings of$0.23 per basic and diluted share, compared to$0.01 per basic and diluted share for the same period in 2020. Adjusted earnings were$0.45 per diluted share, compared to adjusted earnings of$0.11 per diluted share a year ago. First quarter 2021 adjusted earnings excludes after-tax amortization of acquired intangibles of$17.4 million , after-tax restructuring charges of$1.0 million , an after-tax loss of$11.8 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 8 through 10 for further detail.
Operating Results
Revenue
Net revenue of
Operating Expenses
For the first quarter of 2021, total operating expenses, excluding billable expenses, decreased by
Staff cost ratio, which is total salaries and related expenses as a percentage of net revenue, decreased to
Office and other direct expenses decreased as a percentage of net revenue to
Selling, general and administrative expenses slightly increased as a percentage of net revenue to
Depreciation and amortization as a percentage of net revenue decreased to
Restructuring charges in the first quarter of 2021 were
Non-Operating Results and Tax
Net interest expense increased by
Other expense, net was
The income tax provision in the first quarter of 2021 was
Balance Sheet
At March 31, 2021, cash and cash equivalents totaled
Common Stock Dividend
During the first quarter of 2021, the Company declared and paid a common stock cash dividend of
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 8 to 10 and our Investor Presentation filed on Form 8-K herewith and available on our website, www.interpublic.com.
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About Interpublic
Interpublic is values-based, data-fueled, and creatively-driven. Major global brands include Acxiom, Craft, FCB (Foote, Cone & Belding), FutureBrand, Golin, Huge, Initiative, Jack Morton, Kinesso, MAGNA, Matterkind, McCann, Mediahub, Momentum, MRM, MullenLowe Group, Octagon, R/GA, UM and Weber Shandwick. Other leading brands include Avrett Free Ginsberg, Campbell Ewald, Carmichael Lynch, Deutsch, Hill Holliday, ID Media and The Martin Agency. For more information, please visit www.interpublic.com.
# # #
Contact Information
Tom Cunningham
(Press)
(212) 704-1326
Jerry Leshne
(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 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 novel coronavirus (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.
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS FIRST QUARTER REPORT 2021 AND 2020 (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | Fav. (Unfav.) % Variance | |||||||||
| Revenue: | |||||||||||
| Net Revenue | $ | 2,027.7 | $ | 1,972.1 | 2.8 | % | |||||
| Billable Expenses | 229.3 | 387.7 | (40.9) | % | |||||||
| Total Revenue | 2,257.0 | 2,359.8 | (4.4) | % | |||||||
| Operating Expenses: | |||||||||||
| Salaries and Related Expenses | 1,393.1 | 1,422.8 | 2.1 | % | |||||||
| Office and Other Direct Expenses | 292.9 | 378.2 | 22.6 | % | |||||||
| Billable Expenses | 229.3 | 387.7 | 40.9 | % | |||||||
| Cost of Services | 1,915.3 | 2,188.7 | 12.5 | % | |||||||
| Selling, General and Administrative Expenses | 28.2 | 22.4 | (25.9) | % | |||||||
| Depreciation and Amortization | 69.2 | 72.8 | 4.9 | % | |||||||
| Restructuring Charges | 1.3 | 0.0 | >(100)% | ||||||||
| Total Operating Expenses | 2,014.0 | 2,283.9 | 11.8 | % | |||||||
| Operating Income | 243.0 | 75.9 | > | ||||||||
| Expenses and Other Income: | |||||||||||
| Interest Expense | (49.6) | (44.8) | |||||||||
| Interest Income | 6.9 | 10.7 | |||||||||
| Other Expense, Net | (83.9) | (21.8) | |||||||||
| Total (Expenses) and Other Income | (126.6) | (55.9) | |||||||||
| Income Before Income Taxes | 116.4 | 20.0 | |||||||||
| Provision for Income Taxes | 23.8 | 17.2 | |||||||||
| Income of Consolidated Companies | 92.6 | 2.8 | |||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.2) | (0.2) | |||||||||
| Net Income | 92.4 | 2.6 | |||||||||
| Net (Income) Loss Attributable to Noncontrolling Interests | (0.7) | 2.1 | |||||||||
| Net Income Available to IPG Common Stockholders | $ | 91.7 | $ | 4.7 | |||||||
| Earnings Per Share Available to IPG Common Stockholders: | |||||||||||
| Basic | $ | 0.23 | $ | 0.01 | |||||||
| Diluted | $ | 0.23 | $ | 0.01 | |||||||
| Weighted-Average Number of Common Shares Outstanding: | |||||||||||
| Basic | 391.5 | 387.7 | |||||||||
| Diluted | 396.0 | 391.7 | |||||||||
| Dividends Declared Per Common Share | $ | 0.270 | $ | 0.255 | |||||||
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 March 31, 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 | $ | 243.0 | $ | (21.6) | $ | (1.3) | $ | 265.9 | |||||||||||||||
| Total (Expenses) and Other Income5 | (126.6) | $ | (12.5) | $ | (74.0) | (40.1) | |||||||||||||||||
| Income Before Income Taxes | 116.4 | (21.6) | (1.3) | (12.5) | (74.0) | 225.8 | |||||||||||||||||
| Provision for Income Taxes | 23.8 | 4.2 | 0.3 | 0.7 | 18.5 | 47.5 | |||||||||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.2) | (0.2) | |||||||||||||||||||||
| Net Income Attributable to Noncontrolling Interests | (0.7) | (0.7) | |||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 91.7 | $ | (17.4) | $ | (1.0) | $ | (11.8) | $ | (55.5) | $ | 177.4 | |||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 391.5 | 391.5 | |||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 4.5 | 4.5 | |||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 396.0 | 396.0 | |||||||||||||||||||||
| Earnings per Share Available to IPG Common Stockholders6: | |||||||||||||||||||||||
| Basic | $ | 0.23 | $ | (0.04) | $ | 0.00 | $ | (0.03) | $ | (0.14) | $ | 0.45 | |||||||||||
| Diluted | $ | 0.23 | $ | (0.04) | $ | 0.00 | $ | (0.03) | $ | (0.14) | $ | 0.45 | |||||||||||
| 1 Restructuring charges of | |||||||||||||||||||||||
| 2 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||||||||||||||||
| 3 Consists of a loss related to the early extinguishment of our | |||||||||||||||||||||||
| 4 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 9. | |||||||||||||||||||||||
| 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. | |||||||||||||||||||||||
| 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, | |||||||
| 2021 | 2020 | ||||||
| Net Revenue | $ | 2,027.7 | $ | 1,972.1 | |||
| Non-GAAP Reconciliation: | |||||||
| Net Income Available to IPG Common Stockholders | $ | 91.7 | $ | 4.7 | |||
| Add Back: | |||||||
| Provision for Income Taxes | 23.8 | 17.2 | |||||
| Subtract: | |||||||
| Total (Expenses) and Other Income | (126.6) | (55.9) | |||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.2) | (0.2) | |||||
| Net (Income) Loss Attributable to Noncontrolling Interests | (0.7) | 2.1 | |||||
| Operating Income | 243.0 | 75.9 | |||||
| Add Back: | |||||||
| Amortization of Acquired Intangibles | 21.6 | 21.3 | |||||
| Adjusted EBITA | $ | 264.6 | $ | 97.2 | |||
| Adjusted EBITA Margin on Net Revenue % | 13.0 | % | 4.9 | % | |||
| Restructuring Charges1 | 1.3 | N/A | |||||
| Adjusted EBITA before Restructuring Charges | $ | 265.9 | N/A | ||||
| Adjusted EBITA before Restructuring Charges Margin on Net Revenue % | 13.1 | % | N/A | ||||
| 1 Restructuring charges of | |||||||
| 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 except Per Share Data) (UNAUDITED) | |||||||||||||||
| Three Months Ended March 31, 2020 | |||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Net Losses on Sales of Businesses1 | Adjusted Results (Non-GAAP) | ||||||||||||
| Operating Income and Adjusted EBITA2 | $ | 75.9 | $ | (21.3) | $ | 97.2 | |||||||||
| Total (Expenses) and Other Income3 | (55.9) | $ | (23.3) | (32.6) | |||||||||||
| Income Before Income Taxes | 20.0 | (21.3) | (23.3) | 64.6 | |||||||||||
| Provision for Income Taxes | 17.2 | 4.2 | 0.9 | 22.3 | |||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.2) | (0.2) | |||||||||||||
| Net Loss Attributable to Noncontrolling Interests | 2.1 | 2.1 | |||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 4.7 | $ | (17.1) | $ | (22.4) | $ | 44.2 | |||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 387.7 | 387.7 | |||||||||||||
| Dilutive effect of stock options and restricted shares | 4.0 | 4.0 | |||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 391.7 | 391.7 | |||||||||||||
| Earnings per Share Available to IPG Common Stockholders4: | |||||||||||||||
| Basic | $ | 0.01 | $ | (0.04) | $ | (0.06) | $ | 0.11 | |||||||
| Diluted | $ | 0.01 | $ | (0.04) | $ | (0.06) | $ | 0.11 | |||||||
| 1 Includes 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 on page 9. | |||||||||||||||
| 3 Consists of non-operating expenses including interest expense, net and other expense, net. | |||||||||||||||
| 4 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. | |||||||||||||||
FAQ
What was Interpublic Group's revenue for Q1 2021?
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What is the expected organic growth for IPG in 2021?
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