STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2023
Revenue of
Adjusted EBITDA of
First Quarter Results in line with Management Expectations
Reaffirms 2023 Full Year Guidance
Announces Share Repurchase Agreement for over 23.3 million Class A Shares in Stagwell Inc.
Aggregate Class A and Class C Shares reduced
FIRST QUARTER RESULTS:
- Revenue and EBITDA in line with management expectations
- Revenue of
, a decrease of$622 million 3% versus the prior year period. - First quarter net revenue of
, a decrease of$522 million 1% versus the prior period. - Organic net revenue decline of
3% , and excluding advocacy of1% , versus the prior year period. - On a two-year growth stack basis, organic net revenue growth of
21% - First quarter net income attributable to Stagwell Inc. Common Shareholders of
versus$0.4 million in the prior year period.$13 million - First quarter Adjusted EBITDA of
, a decrease of$72 million 29% versus the prior year period. - First quarter Adjusted Earnings Per Share for Stagwell Inc. Common Shareholders of
versus$0.13 in the prior year period.$0.22 - Net bew business wins of
in the quarter and$53 million for the trailing twelve months.$212 million
"Stagwell is stronger than ever today with the removal of an overhang on the stock and Q1 results in line with management's expectations, allowing us to reaffirm guidance for another year of significant growth," said Mark Penn, Chairman and CEO of Stagwell Inc. "This quarter is compared to Q1 2022 which had
"We have additionally announced entry into a definitive agreement, approved unanimously by Stagwell's independent and disinterested directors who were advised by outside counsel and advisers, to repurchase approximately 23.3 million shares of Stagwell Inc. Class A Stock from AlpInvest," Penn added. "I believe this purchase will help create value for shareholders in the marketplace given our undervalued stock."
Frank Lanuto, Chief Financial Officer, commented: "Coming off a record Q1 performance in 2022, the Company posted first quarter results in a challenging environment that were in line with management expectations. We are beginning to see positive signs, including strong new business wins, and improving client conditions, which give us confidence about the outlook for the remainder of the year."
Financial Outlook
2023 financial guidance is as follows:
- Organic Net Revenue growth of
7.5% –10% - Organic Net Revenue growth ex-Advocacy of
10% –14% - Adjusted EBITDA of
–$450 million $490 million - Free Cash Flow Conversion of
50% –60% - Adjusted EPS of
–$0.90 $1.05 - Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company's 2023 guidance under the "unreasonable efforts" exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information. |
Stock Repurchase Program
In the first quarter, the Company repurchased approximately 2.6 million shares of Class A Common Stock at an average price of
Stock Repurchase Transaction
On May 9, 2023, Stagwell Inc. agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of
Conference Call
Management will host a video webcast and conference call on Tuesday, May 9, 2023, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months ended March 31, 2023. The video webcast will be accessible at https://stgw.io/Q12023Earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.
A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.
Stagwell Inc.
Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world's most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 13,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.
Contacts
For Investors:
Ben Allanson
Ir@stagwellglobal.com
For Press:
Beth Sidhu
Pr@stagwellglobal.com
Non-GAAP Financial Measures
In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following:
(1) Organic Revenue: "Organic revenue growth" and "organic revenue decline" refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) "non-GAAP acquisitions (dispositions), net". Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.
(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding, (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.
(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.
(6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.
Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.
This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company's representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company's beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as "anticipate," "assume," "believe," "continue," "could," "create," "estimate," "expect," "focus," "forecast," "foresee," "future," "guidance," "intend," "look," "may," "opportunity," "outlook," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.
Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
- risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
- the continued impact of the coronavirus pandemic ("COVID-19"), and evolving strains of COVID-19 on the economy and demand for the Company's services, which may precipitate or exacerbate other risks and uncertainties;
- inflation and actions taken by central banks to counter inflation;
- the Company's ability to attract new clients and retain existing clients;
- the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
- financial failure of the Company's clients;
- the Company's ability to retain and attract key employees;
- the Company's ability to compete in the markets in which it operates;
- the Company's ability to achieve its cost saving initiatives;
- the Company's implementation of strategic initiatives;
- the Company's ability to remain in compliance with its debt agreements and the Company's ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
- the Company's ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company's business capabilities;
- the Company's ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
- an inability to realize expected benefits of the combination of the Company's business with the business of MDC;
- adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in
the United States and disagreements with the tax authorities on the Company's determination of value and computations of its attributes may result in increased tax costs; - the occurrence of material Canadian federal income tax (including material "emigration tax") as a result of the Transactions;
- the Company's unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
- the Company's ability to protect client data from security incidents or cyberattacks;
- economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between
Russia andUkraine ), terrorist activities and natural disasters; - stock price volatility; and
- foreign currency fluctuations.
Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2022 Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on March 6, 2023, and accessible on the SEC's website at www.sec.gov, under the caption "Risk Factors," and in the Company's other SEC filings.
SCHEDULE 1 STAGWELL INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share amounts) | ||||
Three Months Ended March 31, | ||||
2023 | 2022 | |||
Revenue | $ 622,444 | $ 642,903 | ||
Operating Expenses | ||||
Cost of services | 413,898 | 411,970 | ||
Office and general expenses | 158,836 | 144,512 | ||
Depreciation and amortization | 33,477 | 31,204 | ||
Impairment and other losses | — | 557 | ||
606,211 | 588,243 | |||
Operating Income | 16,233 | 54,660 | ||
Other income (expenses): | ||||
Interest expense, net | (18,189) | (18,729) | ||
Foreign exchange, net | (670) | (306) | ||
Other, net | 220 | 156 | ||
(18,639) | (18,879) | |||
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates | (2,406) | 35,781 | ||
Income tax expense | 2,384 | 3,189 | ||
Income (loss) before equity in earnings of non-consolidated affiliates | (4,790) | 32,592 | ||
Equity in income (loss) of non-consolidated affiliates | (227) | 1,030 | ||
Net income (loss) | (5,017) | 33,622 | ||
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests | 5,460 | (20,947) | ||
Net income attributable to Stagwell Inc. common shareholders | $ 443 | $ 12,675 | ||
Income (loss) Per Common Share: | ||||
Basic | $ 0.00 | $ 0.10 | ||
Diluted | $ (0.01) | $ 0.10 | ||
Weighted Average Number of Common Shares Outstanding: | ||||
Basic | 125,199 | 122,285 | ||
Diluted | 289,806 | 297,484 |
SCHEDULE 2 STAGWELL INC. UNAUDITED COMPONENTS OF NET REVENUE CHANGE (amounts in thousands) | |||||||||||||||
Net Revenue - Components of Change | Change | ||||||||||||||
Three | Foreign | Net | Organic | Total Change | Three | Organic | Total | ||||||||
Integrated Agencies Network | $ 303,666 | $ (2,793) | $ 2,465 | $ (10,434) | $ (10,762) | $ 292,904 | (3.4) % | (3.5) % | |||||||
Brand Performance Network | 155,482 | (4,118) | 5,911 | 5,659 | 7,452 | 162,934 | 3.6 % | 4.8 % | |||||||
Communications Network | 64,379 | (281) | 1,069 | $ (12,195) | (11,407) | 52,972 | (18.9) % | (17.7) % | |||||||
All Other | 3,110 | (157) | 9,038 | 861 | 9,742 | 12,852 | 27.7 % | 313.2 % | |||||||
$ 526,637 | $ (7,349) | $ 18,483 | $ (16,109) | $ (4,975) | $ 521,662 | (3.1) % | (0.9) % |
Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments. |
SCHEDULE 3 STAGWELL INC. UNAUDITED SEGMENT OPERATING RESULTS (amounts in thousands) | |||||||||||
For the Three Months Ended March 31, 2023 | |||||||||||
Integrated | Brand | Communications | All Other | Corporate | Total | ||||||
Net Revenue | $ 292,904 | $ 162,934 | $ 52,972 | $ 12,852 | $ — | $ 521,662 | |||||
Billable costs | 36,888 | 50,406 | 13,488 | — | — | 100,782 | |||||
Revenue | 329,792 | 213,340 | 66,460 | 12,852 | — | 622,444 | |||||
Billable costs | 36,888 | 50,406 | 13,488 | — | — | 100,782 | |||||
Staff costs | 187,693 | 104,596 | 40,077 | 10,487 | 6,824 | 349,677 | |||||
Administrative costs | 29,166 | 23,082 | 8,756 | 3,195 | 3,977 | 68,176 | |||||
Unbillable and other costs, net | 16,660 | 11,835 | 126 | 2,975 | (9) | 31,587 | |||||
Adjusted EBITDA (1) | 59,385 | 23,421 | 4,013 | (3,805) | (10,792) | 72,222 | |||||
Stock-based compensation | 8,198 | 657 | 507 | 32 | 2,610 | 12,004 | |||||
Depreciation and amortization | 18,643 | 8,244 | 2,713 | 1,948 | 1,929 | 33,477 | |||||
Deferred acquisition consideration | 5,991 | (1,179) | 539 | (1,263) | — | 4,088 | |||||
Other items, net (1) | 3,025 | 1,992 | 605 | — | 798 | 6,420 | |||||
Operating income (loss) | $ 23,528 | $ 13,707 | $ (351) | $ (4,522) | $ (16,129) | $ 16,233 |
(1) | See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net. |
Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments. |
SCHEDULE 4 STAGWELL INC. UNAUDITED SEGMENT OPERATING RESULTS (amounts in thousands) | |||||||||||
For the Three Months Ended March 31, 2022 | |||||||||||
Integrated | Brand | Communications | All Other | Corporate | Total | ||||||
Net Revenue | $ 303,666 | $ 155,482 | $ 64,379 | $ 3,110 | $ — | $ 526,637 | |||||
Billable costs | 45,085 | 42,305 | 28,876 | — | — | 116,266 | |||||
Revenue | 348,751 | 197,787 | 93,255 | 3,110 | — | 642,903 | |||||
Billable costs | 45,085 | 42,305 | 28,876 | — | — | 116,266 | |||||
Staff costs | 192,096 | 96,024 | 40,826 | 2,536 | 9,156 | 340,638 | |||||
Administrative costs | 25,609 | 17,040 | 7,068 | 695 | 5,882 | 56,294 | |||||
Unbillable and other costs, net | 17,073 | 11,170 | 47 | 3 | — | 28,293 | |||||
Adjusted EBITDA (1) | 68,888 | 31,248 | 16,438 | (124) | (15,038) | 101,412 | |||||
Stock-based compensation | 5,073 | 1,260 | (243) | 8 | 1,923 | 8,021 | |||||
Depreciation and amortization | 18,860 | 8,196 | 2,560 | 501 | 1,087 | 31,204 | |||||
Deferred acquisition consideration | (1,325) | 2,132 | 1,090 | — | — | 1,897 | |||||
Impairment and other losses | — | 557 | — | — | — | 557 | |||||
Other items, net (1) | 764 | 1,061 | 72 | — | 3,176 | 5,073 | |||||
Operating income (loss) | $ 45,516 | $ 18,042 | $ 12,959 | $ (633) | $ (21,224) | $ 54,660 |
(1) | See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net. |
Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments. |
SCHEDULE 5 STAGWELL INC. UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE) (amounts in thousands, except per share amounts) | ||||||
For the Three Months Ended March 31, 2023 | ||||||
GAAP | Adjustments | Non-GAAP | ||||
Net income attributable to Stagwell Inc. common shareholders | $ 443 | $ 18,623 | $ 19,066 | |||
Net income (loss) attributable to Class C shareholders | (3,165) | 23,104 | 19,939 | |||
Net income (loss) - Diluted EPS | (2,722) | 41,727 | 39,005 | |||
Weighted average number of common shares outstanding | 128,897 | 128,897 | ||||
Weighted average number of common Class C shares outstanding | 160,909 | 160,909 | ||||
Weighted average number of shares outstanding | 289,806 | 289,806 | ||||
Diluted EPS and Adjusted Diluted EPS | $ (0.01) | $ 0.13 | ||||
Adjustments to Net Income(1) | ||||||
Pre-Tax | Tax | Net | ||||
Amortization | $ 26,732 | $ (5,346) | $ 21,386 | |||
Stock-based compensation | 12,004 | (2,401) | 9,603 | |||
Deferred acquisition consideration | 4,088 | (818) | 3,270 | |||
Other items, net | 6,420 | (1,283) | 5,137 | |||
Tax adjustments | — | 2,331 | 2,331 | |||
Total add-backs | $ 49,244 | $ (7,517) | $ 41,727 |
(1) | Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. |
SCHEDULE 5 STAGWELL INC. UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE) (amounts in thousands, except per share amounts) | ||||||
For the Three Months Ended, March 31, 2022 | ||||||
GAAP | Adjustments | Non-GAAP | ||||
Net income attributable to Stagwell Inc. common shareholders | $ 12,675 | $ 15,865 | $ 28,540 | |||
Net income attributable to Class C shareholders | 17,721 | 20,100 | 37,821 | |||
Net income - Diluted EPS | 30,396 | 35,965 | 66,361 | |||
Weighted average number of common shares outstanding | 297,484 | 297,484 | ||||
Diluted EPS and Adjusted Diluted EPS | $ 0.10 | $ 0.22 | ||||
Adjustments to Net Income(1) | ||||||
Pre-Tax | Tax | Net | ||||
Amortization | $ 24,904 | $ (4,981) | $ 19,923 | |||
Stock-based compensation | 8,021 | (1,604) | 6,417 | |||
Deferred acquisition consideration | 1,897 | (379) | 1,518 | |||
Other items, net (1) | 5,073 | (985) | 4,088 | |||
Tax adjustments | — | 3,573 | 3,573 | |||
Total add-backs | $ 39,895 | $ (4,376) | $ 35,519 |
(1) | Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. |
SCHEDULE 6 STAGWELL INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (amounts in thousands) | |||
March 31, 2023 | December 31, 2022 | ||
ASSETS | |||
Current Assets | |||
Cash and cash equivalents | $ 138,529 | $ 220,589 | |
Accounts receivable, net | 659,068 | 645,846 | |
Expenditures billable to clients | 97,590 | 93,077 | |
Other current assets | 77,930 | 71,443 | |
Total Current Assets | 973,117 | 1,030,955 | |
Fixed assets, net | 94,839 | 98,878 | |
Right-of-use assets - operating leases | 260,763 | 273,567 | |
Goodwill | 1,569,532 | 1,566,956 | |
Other intangible assets, net | 888,455 | 907,529 | |
Other assets | 114,227 | 115,447 | |
Total Assets | $ 3,900,933 | $ 3,993,332 | |
LIABILITIES, RNCI, AND SHAREHOLDERS' EQUITY | |||
Current Liabilities | |||
Accounts payable | $ 308,759 | $ 357,253 | |
Accrued media | 283,578 | 240,506 | |
Accruals and other liabilities | 152,937 | 248,477 | |
Advance billings | 334,933 | 337,034 | |
Current portion of lease liabilities - operating leases | 75,939 | 76,349 | |
Current portion of deferred acquisition consideration | 94,039 | 90,183 | |
Total Current Liabilities | 1,250,185 | 1,349,802 | |
Long-term debt | 1,235,281 | 1,184,707 | |
Long-term portion of deferred acquisition consideration | 71,645 | 71,140 | |
Long-term lease liabilities - operating leases | 278,978 | 294,049 | |
Deferred tax liabilities, net | 43,023 | 40,109 | |
Other liabilities | 70,371 | 69,780 | |
Total Liabilities | 2,949,483 | 3,009,587 | |
Redeemable Noncontrolling Interests | 32,517 | 39,111 | |
Commitments, Contingencies and Guarantees | |||
Shareholders' Equity | |||
Common shares - Class A & B | 130 | 132 | |
Common shares - Class C | 2 | 2 | |
Paid-in capital | 469,891 | 491,899 | |
Retained earnings | 30,324 | 29,445 | |
Accumulated other comprehensive loss | (13,253) | (38,941) | |
Stagwell Inc. Shareholders' Equity | 487,094 | 482,537 | |
Noncontrolling interests | 431,839 | 462,097 | |
Total Shareholders' Equity | 918,933 | 944,634 | |
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity | $ 3,900,933 | $ 3,993,332 |
SCHEDULE 7 STAGWELL INC. UNAUDITED SUMMARY CASH FLOW DATA (amounts in thousands) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
Cash flows from operating activities: | |||
Net income | $ (5,017) | $ 33,622 | |
Adjustments to reconcile net income to cash used in operating activities: | |||
Stock-based compensation | 12,004 | 8,021 | |
Depreciation and amortization | 33,477 | 31,204 | |
Impairment and other losses | — | 557 | |
Deferred income taxes | 3,809 | (1,350) | |
Adjustment to deferred acquisition consideration | 4,088 | 1,897 | |
Other, net | (1,550) | (2,647) | |
Changes in working capital: | |||
Accounts receivable | (12,425) | (70,039) | |
Expenditures billable to clients | (4,173) | 11,996 | |
Other assets | (5,986) | (6,100) | |
Accounts payable | (51,670) | (32,386) | |
Accrued expenses and other liabilities | (54,684) | (5,592) | |
Advance billings | (2,986) | (17,760) | |
Net cash used in operating activities | (85,113) | (48,577) | |
Cash flows from investing activities: | |||
Capital expenditures | (3,435) | (4,760) | |
Acquisitions, net of cash acquired | (220) | (935) | |
Capitalized software | (6,735) | (1,778) | |
Other | (425) | (816) | |
Net cash used in investing activities | (10,815) | (8,289) | |
Cash flows from financing activities: | |||
Repayment of borrowings under revolving credit facility | (426,500) | (209,500) | |
Proceeds from borrowings under revolving credit facility | 476,500 | 239,000 | |
Shares acquired and cancelled | (8,263) | (14,926) | |
Distributions to noncontrolling interests | (10,948) | (6,464) | |
Payment of deferred consideration | — | (1,581) | |
Repurchase of Common Stock | (17,866) | — | |
Net cash provided by financing activities | 12,923 | 6,529 | |
Effect of exchange rate changes on cash and cash equivalents | 945 | 1,481 | |
Net decrease in cash and cash equivalents | (82,060) | (48,856) | |
Cash and cash equivalents at beginning of period | 220,589 | 184,009 | |
Cash and cash equivalents at end of period | $ 138,529 | $ 135,153 |
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SOURCE Stagwell Inc.