The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group second 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.

Good morning. Thank you for joining us. We hope you are all well. This morning we are joined by our CEO, Philippe Krakowski, and by Ellen Johnson, our CFO. 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 9.30 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 10-Q 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.

Philipp Krakowski Thanks, Jerry, and thank you all for joining us this morning. As always, 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 key developments at our agencies to be followed by Q&A. I'd like to begin once again by thanking our 53,000 fellow employees around the world for the professionalism and dedication that continue to see us through the many challenges of COVID. These include the transition to work from home, and now are planning for return to office in many parts of the world, as well as the significant personal difficulties presented by the long course of the pandemic. It's due to the efforts of our people, their commitment to their craft, our clients, and to each other that we can share with you today these very strong results. Performance that demonstrates our resilience, represents a remarkable rebound from the impact of the pandemic, and is also the largest second quarter in our company's history. Our strong results in the quarter build on IPG's consistent record of industry outperformance and margin expansion. Our growth across regions, disciplines, and client sectors speaks to more than a recovering global economy. It underscores the elevated value that marketing and media partners can deliver in the integration of creativity, technology, and data at scale amid the significantly increased velocity of digital transformation. At Interpublic, we're confident that we are attuned to the powerful currents that are transforming consumer behavior and are required for business relevance, and that we are increasingly delivering differentiated and higher-end solutions that help our clients win in a world of accelerated technological and societal change. That takes creativity and precision, data and accountability, all of which we're able to bring together in customized teams that draw talent from across our portfolio. Ultimately, our growth speaks to our ability to drive outstanding business results for our clients. Our net organic revenue growth in the second quarter was 19.8 percent. That's against the second quarter of 2020 when, as you will recall, our organic change was negative 9.9%, which, while well ahead of our peer group, did mark our steepest decrease of the recession. It's also important to note that our 7.9 organic increase this quarter relative to the pre-pandemic second quarter of 2019. Compared to last year, our organic growth was at double-digit rates around the world. In the U.S., it was 17.4, growth in our international markets ranged from 14 percent in the Asia-Pacific region to 49 percent in Latin America. We also had a very broad contribution from our operating segments and disciplines. Our IAN segment grew 20.5 percent organically, with increases led by media, data, and technology, and with solid contributions from our global integrated networks. There was also strength across most of our disciplines led by healthcare. In our DEXTRA segment, organic growth was 15.1% with strong increases from last year's heavily impacted Q2 across Octagon Sports and Entertainment and Jack Morton's experiential offerings. Looking at client sectors, the picture is also one of comprehensive acceleration. Each of our eight major sectors had double-digit increases from a year ago. The auto, retail, and other sectors were up more than 20%. Consumer goods, tech and telecom, and healthcare increased in the mid to high teams. Food and beverage and financial services were up in the low double-digit range. Turning to operating expense and profitability, our teams once again demonstrated outstanding discipline. And while remaining focused on appropriate cost control, we're also continuing to invest to support accelerating growth. We continue to see the benefits of cost improvements from strategic restructuring actions taken last year, notably in our payroll expense and our expense for occupancy. We also continue to see the benefits of low variable expenses as a result of the highly restricted global travel environment and from the cost efficiencies of a largely remote workforce. As we look ahead to post-pandemic work life, it's worth noting that we can, of course, expect that expenses for travel, meetings, office utilities, and the like will begin to return in the second half of this year, most notably in Q4 and, of course, into next year. Our second quarter net income was $263.3 million as reported. Adjusted EBITDA was $405.8 million and adjusted EBITDA margin on net revenue was 17.9%. Our results reflect significant operating leverage compared to both last year and the 2019 period on our expense for base payroll and our office and other expenses. We delivered on our expense accrual for our performance-based incentive compensation plans They were operating performance tracking well ahead of planned target. Diluted earnings per share was 66 cents as reported and was 70 cents as adjusted for the after-tax expense of the amortization required intangibles. As we look to the balance of the year, you'll recall that in April, we shared a full-year 2021 performance outlook based on the assumption that there will continue to be a reasonably steady course of public health and global economic recovery. At that time, we outlined our view towards full-year organic growth of 5 to 6 percent and adjusted EBIT margin of approximately 15.5 percent. In light of our very strong second quarter and also having recently refreshed our bottom-up outlook for the second half of the year based on conversations with our clients and operating teams, We believe it's appropriate at the midpoint of this quite unusual year, unprecedented, in fact, to upgrade those expectations. Of course, we do sadly need to recognize that the COVID pandemic and the related risks to the macro environment are not yet behind us. In particular, as we look ahead, we all understand that lagging vaccination rates in many parts of the world and the emergence of new variants may entail a higher COVID risk. That's something we'll watch closely as we enter the second half of the year, especially our seasonally important fourth quarter. But predicated on the continued progress on public health issues, we believe that we can deliver organic growth for the full year of 9 to 10 percent. And with that level of growth, we would expect to achieve 2021 adjusted EBITDA margin of approximately 16 percent. As such, we see this as another year of strong value creation for all of our stakeholders. We'll of course keep you apprised of progress as the year develops, and we look forward to those conversations. On that note, I'd like to hand over the call to Ellen now for a more in-depth view of our results.