The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group first quarter 2021 conference call. All parties are in a listen only mode until the question and answer portion. At that time, if you would like to ask a question, you may press star 1. This conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Mr. Jerry Lushney, Senior Vice President of Investor Relations. Sir, you may begin.

Thank you. Good morning. We hope you are all well. Thank you for joining us. This morning, we are joined by Talith Krakowski, Interpublic's CEO, and by Ellen Johnson, our CFO. As usual, we have posted our earnings release and our slide presentation on our website, interpublic.com. We will begin our call with prepared remarks to be followed by Q&A and plan to conclude before market open at 930 Eastern. During this call, we will refer to forward-looking statements about our company. These are subject to the uncertainties and the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10Q and other filings with the SEC. We will also refer to certain non-GAAP measures. We believe that these measures 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. At this point, it is my pleasure to turn things over to Philipp Krakowski.

Thank you all for joining us this morning. I'll start with a high-level view of our performance in the quarter. Ellen will then provide additional details, and I'll conclude with updates on the highlights at our agencies to be followed by Q&A. First and foremost, as Jerry said, I hope that you and your families are keeping well. As we all know, around the world, the pandemic is still with us to a significant degree. With all that entails, it bears mention that our people continue to navigate the many challenges, both personal and professional, presented by the health crisis. Their extraordinary resilience and capacity for innovation, as well as their care for one another and their commitment to our clients, are inspiring. Against business conditions that continue to be demanding, our people have driven the solid growth and the high level of first quarter profitability that we are reporting today. Turning to those results, beginning with revenue, we are pleased with our start to the year. First quarter organic net revenue growth was 1.9%. That reflects solid performance in the U.S., an organic decrease of 20 basis points, and strong international growth of 6.3% with increases in every world region. In the U.S., you'll recall that we are comparing to very strong underlying performance in the first quarter of 2020 when we faced headwinds of nearly 4% due to certain 2019 client losses that we previously identified. Domestically, during this year's first quarter, we saw increases in areas such as media, data, services, and technology, and our healthcare specialist agencies. Our international performance was paced by 12.4% growth in continental Europe, where we had strong start to the year by our media, data, and tech offerings, as well as McCann World Group. Worldwide, our healthcare and retail client sectors, which were consistent outperformers last year, were again our growth leaders in the first quarter. From the standpoint of our operating segments, our IAN segment grew 3.2% organically, led by media, data, and technology, and by the healthcare specialty agencies. As expected in comparison to last year's largely pre-pandemic first quarter, global conditions in Q1 continued to weigh most heavily on the events in sports marketing disciplines, and on certain project-driven businesses in both IAM and DEXTRA. Nonetheless, while the environment understandably retains a strong note of caution across our offerings and client sectors, the lows were generally not as low. Clients are finding their footing amid a global economy that's increasingly showing signs of recovery. As better days ahead begin to come into focus, conversations with clients have generally become more positive and constructive. Turning to operating expense and profitability, our teams once again demonstrated outstanding discipline. Given the uncertainty that prevailed in 2020, we made decisions and took a series of actions during the year, necessary but in many cases no less difficult, to ensure the long-term health of the overall business. Our expenses in the quarter reflect much of the benefits of this strategic restructuring executed over the course of last year. most notably in our expenses for base payroll and occupancy. We continue to be highly confident that, over time, we are well positioned to realize the full level of permanent operating expense savings that we've talked about previously, which, as a reminder, annualized at $160 million. Along with a return to growth and the benefits of our restructuring actions, our Q1 results were further helped by variable expense categories that continue to run at very low level, given that many of our activities are still restricted by the pandemic. These include significantly lower expenses for business travel and meetings, as well as their associated costs. Our first quarter net income as reported was $92 million, which includes the expense of certain non-operating items. Our adjusted EBITDA was $266 million, a level which is approximately two and a half times the first quarters of recent years. Our adjusted EBITDA margin was 13.1%. Diluted earnings per share was 23 cents as reported and was 45 cents as adjusted mainly for our loss on the early extinguishment of debt, the disposition of certain small non-strategic agencies, both of which are non-operating expenses, and our expense for the amortization of acquired intangibles. During the quarter, we refinance a portion of our outstanding debt on very favorable terms while extending our debt maturity profile. This level of financial flexibility positions us well in the event there is volatility as the global economy moves through a recovery. We're pleased to be able to share with you this strong set of results, which build on our company's long-term record of industry outperformance and consistent margin expansion. It bears mention that we continue to invest in our people and our capabilities and as a result to further differentiate our offerings in the areas of strongest opportunity and growth. This has been particularly relevant since we are seeing growing client demand for technology and data services and accelerating transformational change in marketing and media. Our ability to create marketing and media solutions that bring together creativity, technology, and data in order to solve for higher order client opportunities are what drove growth in the first quarter. Given the complexity of the media and consumer landscape, marketers are looking for partners who can help them build their businesses through more precise, personalized, and accountable engagements with individuals. With the deprecation of third-party cookies, All businesses are increasingly focused on realizing value from their first party data or finding partners with whom they can pool data assets. As important, this needs to be done in a way that's respectful of people's privacy and anticipates likely regulatory development. We remain well positioned to benefit from those opportunities. Of course, our first quarter is seasonably our smallest and most of the year still remains ahead of us. We also appreciate the heightened degree of business uncertainty as part of the current reality facing all companies. To a business like ours translates into more challenging visibility through the full year. As a result, we're staying very close to our people and our clients, asking our teams for frequent financial updates and continuing to carefully manage expenses. To date, we're seeing cautious optimism from clients and the tone of business has firmed in the last few months. Reopenings, fiscal stimulus, and vaccination programs in a number of our largest markets are providing a tangible lift to economic activity and marketing demand. As we mentioned to you on our last call, we remain confident in those areas we can control, namely the strength and competitiveness of our offerings and the people and talent within our group. We are seeing that the most contemporary services we provide are growing in terms of the receptivity from clients and prospects. Given our strong start to the year and based on the assumption that they'll continue to be a reasonably steady course of public health and global economic recovery, we believe that we can deliver organic growth for the full year in the range of 5 to 6%. With that level of growth, we would expect to achieve 2021 adjusted EBITDA margin of approximately 15.5%. As such, we see this as another year of strong value creation for all our stakeholders. We will, of course, keep you apprised of our progress as the year develops. On that note, I'll hand the call over to Ellen for a more in-depth view on our results.