The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group third 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 Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

Good morning. Thank you for joining us. This morning, we are joined by Philippe Krakowski, Interpublic's CEO, 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 in 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 Philippe Krakowski.

Thank you, Jerry, and thank you all for joining us this morning. I hope everyone is keeping well. As usual, I'll start with a high-level view of our performance in the quarter. Alan will then provide additional details. I'll conclude with updates on key developments at our agencies, and then we'll follow that with Q&A. We're pleased to share our very strong third quarter performance, but before turning to the numbers, I'd like to begin by recognizing and thanking our people across all of Interpublic who've continued to show a high level of dedication and support to our clients and to one another. They're the principal reason we can report such strong results again this quarter. where people are delivering insight and execution required for the complex integration of creativity, technology, and data at scale that marketers across industry sectors need in order to accelerate their business transformation journeys. This kind of work is helping set a standard for our industry and further build on IPG's record of industry outperformance and margin expansion. As we've moved through September and now into October, It's also been rewarding to begin welcoming our people back to office settings and to see many of our teams together again in the places where creativity, collaboration, and culture are ultimately rooted and regularly renewed. Turning to our results in the quarter, our net organic revenue growth in the third quarter was 15%. That's against the third quarter of 2020, when, as you'll recall, our organic change was negative 3.7% due to the impact of the pandemic. It's also important to note that our two-year organic increase was 10.7% relative to the third quarter of 2019, which is a strong result. Compared to 2020, our growth in the quarter was again broad-based by region of the world, discipline, as well as client sector. Organic growth was 14.7% in the U.S., and it ranged between 11 and 20% in our international regions. Both of our operating segments also grew at double-digit rates. Our IAN segment increased 14.4% organically, with all major agencies contributing high single to double-digit percentage increases. We were led by media, data, and technology, RGA and HUGE, as well as by Mullen Low, McCann, and FCB, highlighted by notable contributions from their healthcare and advertising disciplines. In our DEXRA segment, organic growth was 18.6%, reflecting double-digit increases across each of our DEXRA agencies, and furthering the rebound from the sharp impact of the pandemic last year on our sports and entertainment, as well as experiential businesses. Looking at client sectors, the picture is also one of balanced growth, with nearly every one of our eight major client sectors increasing at a double-digit percentage rate, led by the auto sector, our other sector with government and industrials, and the tech and telecom, retail, and healthcare sectors. Turning to profitability and expenses, our results again demonstrate outstanding focus and execution by our operating teams even as we continue to invest to support areas of accelerating growth and to enhance our offerings. Third quarter net income was $239.9 million as reported. Our adjusted EBITDA was $369.5 million and our margin of adjusted EBITDA before restructuring was 16.3% compared with 16.2% a year ago and 14.7% in the third quarter of 2019. There were several factors worth noting within those comparisons. We had solid operating leverage on our expenses for base payroll as we continue to see the structural benefits of the strategic cost actions taken last year. Those are reflected in our base payroll as well as our occupancy expense. To date, our very strong top line growth is also outpacing the associated hiring. And therefore, our expense for temporary labor increased from a year ago. Our travel and related expenses continued to track at low levels, but still were somewhat higher than last year. As we look ahead, T&E expense will pick up over the remainder of the year. Our expense accrual for employee performance-based incentive compensation, however, increased as a percentage of net revenue, which is a direct result of our strong operating performance. Third quarter diluted earnings per share was 60 cents as reported and was 63 cents as adjusted for the after-tax expense of the amortization of acquired intangibles and other items. In sum, our quarter, as well as our year to date, speak to strong financial performance across the key metrics of growth, EBITDA, and earnings per share. Our growth reflects the cyclical economic recovery as well as the important structural currents that favor the kinds of higher-order expertise with which we're well-resourced. The work we're doing solves for the increasingly complex world faced by our clients in a marketing and media environment that's defined by a very rapid rate of change. This is a validation of our long-term strategic focus on building offerings that help clients integrate brand experience across all consumer touchpoints improve their capacity to apply data in the way their business goes to market, and capitalize on the benefits of technology and digital channels. Going back a number of years, we've anticipated transformational opportunities of this type of environment. Other important drivers of our continued success are our ability to deliver fully integrated solutions through our open architecture model and our emphasis on strong agency brands and best industry talent. so as to deliver breakthrough creative ideas and content. We've also fostered a culture that respects the individual, is transparent with respect to clients, and is accountable when it comes to data privacy and media responsibility. Turning to our outlook with our seasonally important fourth quarter still ahead, we're pleased to increase our financial performance objectives. We now expect that we can deliver organic growth for the year of approximately 11 percent, which is ahead of the 9 to 10 percent range we had previously indicated. With growth at that higher level and given our strong results through the nine months, we would therefore expect to achieve adjusted EBIT margin of approximately 16.8 percent, which is an increase of 80 basis points over the level that we had previously shared with you. Our outlook is based on expectations of a reasonably steady course of public health and global economic recovery. We begin the fourth quarter well-positioned and with strong operating momentum, and the tone of the business remains solid as we head into the year-ending holiday season. As such, we see 2021 as another year of strong value creation for all of our stakeholders. And on that note, I'll now hand over the call to Ellen for a more in-depth view of our results.