The Interpublic Group of Companies, Inc.

Good morning, and welcome to the Interpublic Group Third 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.

Thank you. Good morning. I 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 plan to begin our call with prepared remarks to be followed by Q&A. We plan to conclude before market open at 930 Eastern Time. We'd like to remind you that during this call, we will 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. To better align with the language in our financial statements, we will use the term revenue before billable expenses, as well as the more familiar net revenue interchangeably. They are identical measures, and there has been no change to the method of calculation. As you will recall, billable expenses in revenue are offset dollar for dollar in our operating expenses and therefore have no effect on our results of operations. We will also 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. At this point, it is my pleasure to turn things over to Philippe Krakowski.

Thank you, Jerry, and thanks for joining us this morning. I hope you're all keeping well. As usual, I'll start out by covering the highlights of our performance in the quarter and the nine months. Ellen will then provide additional details, and I'll conclude with an update on our agencies and the tone of the business to be followed by your questions. We're pleased to report a strong third quarter and nine months. Third quarter organic growth was 5.6%. That's on top of very strong 15% growth a year ago, and it brings our three-year organic growth stack over the period of COVID to 16.9% in the third quarter. Over the first nine months of the year, our organic growth was 8.2% on top of 12% a year ago, which brings three-year growth to 15.7% for the first nine months. Those three-year numbers continue to lead the industry. We once again posted growth across our US and international markets. Domestically, organic growth for the quarter was 4.4% on top of 14.7% in last year's third quarter. and organic growth in our international markets was 7.8%, highlighted by growth in every region of the world, and that was on top of 15.4% growth a year ago. Our growth in the quarter was also broad-based across our portfolio, whether viewed by segments, agencies, or marketing disciplines. Each of our segments compounds double-digit growth a year ago. Our media, data, and engagement solutions segment grew 3.8% organically, which adds to 15.9% growth last year. Performance here was led by double-digit increases at IPG media brands, while two of our digital specialist agencies decreased from a year ago and are weighing significantly on the segment. At our integrated advertising and creative-led segment, organic growth was 6.7% on top of 12.8% growth last year. and we had growth in all of our largest agencies with clear leadership again this quarter by IPG Health, followed by McCann World Group. In our specialized communications and experiential segment, organic growth was 7.8%, highlighted by double-digit growth in our experiential solutions across Jack Morton, Octagon, as well as Momentum, along with solid single-digit increases in the public relations discipline. This result builds on the 18.5% growth in the segment that we saw last year. Across client sectors, our growth in the quarter was led by healthcare, retail, financial services, our other sector of industrial and public sector clients, and our auto sector. Turning to operating expenses and margin, our results again continue to reflect the strong cost discipline exercised by our operating teams. as well as our ongoing investment behind key growth areas. As you know, our comparisons to last year reflect the ins and outs of the pandemic, though we continue to drive margins at levels that are well above seasonally comparable pre-COVID periods. Net income in the quarter was $251.8 million as reported. Our adjusted EBITDA was $356.2 million, resulting in net revenue margin of 15.5%. As expected, that's below last year's third quarter when our growth had accelerated at a rate that was well ahead of hiring and when certain variable expenses were still at low levels due to the effects of the pandemic. Compared to a year ago and under our organic growth of 9.1% over the trailing 12 months, headcount has grown approximately 7%. Variable expenses have recovered to higher levels as well, as we've resumed travel and returned to office in far greater numbers. Our diluted earnings per share in the quarter was 64 cents as reported and 63 cents as adjusted for intangible amortization, restructuring adjustments, and our net dispositions. Under our share repurchase program, reauthorized earlier this year, we repurchased 2.6 million shares in the quarter. We're gratified that our ability to deliver marketing and media solutions, which bring together creativity, technology, and data, continues to drive growth with existing clients as well as new client wins. The growth you're seeing is driven largely by these very relevant capabilities, which can solve for an expanding set of marketer needs for more precise, personalized, and accountable engagements with their audiences at an individual level. The strength of our company is bringing talented people together in our client-centric model to create customized solutions that meet these higher order client needs, whether those engagements are led by one of our powerful agency brands or through a collaborative IPG open architecture team. These strong and relevant offerings are important for our long-term future as well as at this moment of heightened macroeconomic and geopolitical uncertainty. The current environment is making visibility more challenging, but given our strong year-to-date performance, we are upgrading our expectation for organic growth for the full year to 7%. With growth at that level, we expect to achieve adjusted EBITDA margin of 16.6%. Notwithstanding this update to our outlook, we are seeing a more challenging macro environment going forward. On a question following our last call, you'll remember that I mentioned some clients were asking us to help them scenario plan and think about how they might best redeploy media and marketing investment in the event of a downturn. A majority of our clients are now asking us to engage in this kind of contingency planning, prioritization of activity, and a focus on actions that will drive performance and sales. To a lesser degree, we're also seeing some deferrals of digital project work. Historically, we know that marketers that continue to invest through the cycle come out ahead in the long run with measurable gains in market share and growth. These days, that's a conversation that's ongoing with many of our clients who also know that given the duration of past downturns, reductions are generally short-lived. At IPG, Our differentiated resources of creative and marketing talent, data and technology as well as outstanding agency brands along with our diversified and flexible business model and proven management teams position us well. You can expect that we will hold true to our history of managing effectively even in more challenging times while also continuing to invest in and advance our offerings for success in an increasingly digital economy. We are, of course, staying close to our clients and to our people. And on that note, I'd like to close this part of my remarks by recognizing and thanking our people for their focus and their work on behalf of clients in support of each other and also for their engagement on the many vital societal issues that are consistent with our culture and values. So, at this point, I'm going to hand the call over to Ellen now for a more in-depth view of our results.