The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group first quarter 2022 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. I hope you are all well. This morning we are joined by our CEO, Philippe Krakowski, and by Ellen Johnson, CFO. We have posted our earnings release and our slide presentation on our website, interpublic.com. We plan to begin our call with prepared remarks to be followed by Q&A. We plan to conclude before market open at 9.30 Eastern time. 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 Philippe Krakowski.

Philippe Krakowski Thanks, Jerry, and good morning. As you all know, for two years now, since the onset of the pandemic, we've begun these calls by sharing wishes for our collective health and safety. Yet in the early part of this year, the world dramatically changed again, And the invasion of Ukraine means that people on the ground there are anything but safe. So before getting on with the business of this call, it seems appropriate and actually even necessary to express our support for the Ukrainian people. Across our company, IPG colleagues have been focused on doing their part to help during this crisis. Some of us closer to Ukraine have assisted with transportation near the border. Others have helped with refugees resettlement. and with access to housing and medical services. And several of our agencies in Eastern Europe have opened their doors to displaced colleagues. Of course, we're also making significant donations to humanitarian organizations at all levels of the company and matching employee donations as well. On a related note, we've disengaged from our Russian operations. though having first provided for our associates there, many of whom were individuals with whom we've worked for many decades, to receive a minimum of six-month salary. And amid this ongoing tragedy, all of us continue to hope for a de-escalation of the war and ultimately for peace so as to bring to an end the immense and senseless human suffering that we're witnessing. Turning now to the reason for our call, which is obviously to discuss our business results. I'm going to 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, as Jerry said, by Q&A. We're pleased to report a strong start to the year. First quarter organic net revenue growth was 11.5 percent. That reflects strong performance in both the U.S. with organic growth of 12.2% and in our international markets with organic growth of 10.2% as well as increases in every world region. We're also pleased to share with you strong first quarter growth across each of our new three reportable segments. We indicated in February that operational changes would result in revisions to our segment structure as of the start of the year. Many of you have already seen last week's filing in which we describe our new segments in their recent history of financial performance. Going back nearly two decades, we operated and reported with two segments, IAN and Dextro. Yet during that time period, there have, of course, been significant changes in our business, the needs of our clients, and the workings of consumer and media ecosystems. Those changes were significantly accelerated as a result of the pandemic. And as you know, above all, IPG is a client-centric company. Our offerings and businesses collaborate by design in order to help clients win in an increasingly digital-first fragmented media environment. Our go-to-market strategy, therefore, supports the need to provide integrated multi-agency services that span reportable segments. And that means that our operations will always reflect the strategic reality that marketers should have access to the best capabilities and talent no matter where they sit across IPG. We bring these complementary skill sets together in what we call open architecture teams that drive clients' business success. Concurrently, the speed at which market and client needs are changing, requires a focused and disciplined approach to the way in which, as a company, we operationally manage investments in key areas of our business. This includes the creation of infrastructure and expertise that supports and can be shared by like-with-like assets. You saw an important example of that last year when we created IPG Health, which continues to perform very well for us. Reflecting our evolution and following a recent strategic review of operations, we've therefore realigned our business operations to comprise three reportable segments. They are media, data, and engagement solutions, integrated advertising and creativity-led solutions, and specialized communications and experiential solutions. In the first quarter, each segment grew at a double-digit organic rate, which demonstrates the strength of our offerings across the portfolio. Organic growth was 11.5% at MD&E, 11.2% at IA&C, and 12.5% at SC&E. Our global growth was also highlighted by consistent increases across client sectors. We were paced by double-digit percentage increases in our other sector of leisure, government, and industrial clients, as well as double-digit growth in the retail, tech and telecom, financial services, healthcare, and auto and transportation sectors. Turning to operating expenses and profitability, our teams once again demonstrated outstanding discipline, even as we continued to invest to support our growth. Net income in the quarter was $159.4 million, as reported, and our adjusted EBIT was $273.6 million, which excludes a small charge related to the 2020 restructuring program, resulting in net revenue margin of 12.3 percent in our smallest seasonal quarter. Our margin comparisons to prior first quarters continue to reflect the ins and outs of the pandemic. Compared to a year ago, under very strong revenue growth, headcount has grown approximately 11 percent. Some variable expenses such as travel unrelated and return to office costs are well above the levels of a year ago, though not fully to historic norms. A year ago, comparable first quarter margin was 13.1 percent. And for context, in both 2019 and 2020, our first quarter margins were approximately 5 percent. With our strong margin results in this year's first quarter, we're confident that we continue to see the benefits of the strategic restructuring actions taken in 2020. Diluted earnings per share was 40 cents as reported and was 47 cents as adjusted for intangible amortization and other items. You'll recall that in February, we announced that our board had reauthorized our share repurchase program. And in the first quarter, we repurchased 1.8 million shares using $63 million. We're pleased to be able to share with you this strong set of results, which builds on our long-term record of industry outperformance. As well as our new disclosure, which furthers our long-standing commitment to transparency, in order to assist in your analytical work and assessment of our company. The differentiator of our performance in the quarter and over a period of many years has been our ability to create marketing and media solutions that bring together creativity, technology, and data. This combination is responsive to the evolving needs of our clients and allows us to assist them by delivering higher order client solutions. The growth you're seeing is driven by these highly relevant capabilities in the midst of an expanding set of marketer needs for more precise, personalized, and accountable engagements with their audiences at an individual level. Our first quarter, as I said earlier, is seasonably our smallest quarter, and most of the year remains ahead of us. We understand that we are at a moment of elevated global uncertainty. across multiple dimensions, whether geopolitical, macroeconomic, or in terms of public health. These are part of the current reality facing every company today. However, despite these uncertainties, and having recently refreshed our bottoms-up outlook for the year with key clients and with our operating teams, the tone of the business remains positive. This leads us to believe it's appropriate to update our revenue target for the year. You'll recall that in February, we shared our expectation for approximately 5% organic growth in 2022. We would see that as a strong result given that it compounds IPG's multi-year growth stack, which significantly leads our industry going back a number of years. At this point, we are nonetheless increasing that outlook for the year to approximately 6 percent organic growth, along with our expectation for adjusted EBITDA margin of 16.6 percent. We remain confident in the things we can control, including the quality of our talent, the resources across our portfolio, and our ability to bring them together in collaborative, effective, and impactful client solutions. We are, of course, staying close to our people and our clients and carefully managing expenses, and we'll keep you apprised of our progress as the year develops. Our colleagues' skill and commitment have helped us to start this year on a strong footing. And I'd therefore like to conclude this part of my remarks by once again recognizing and thanking our people for their work on behalf of clients, but also in support of each other. And at this point, I'm going to hand over the call to Ellen for a more in-depth view on our results.