The Interpublic Group of Companies, Inc.

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

Good morning. Thank you for joining us. 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. We plan to conclude before market open at 9.30 Eastern Time. 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. 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 10-Q and other filings with the SEC. At this point, it is my pleasure to turn things over to Philipp Krakowski.

Philipp Krakowski Thanks, Jerry, and thank you for joining us this morning. As usual, I'll start with a high-level view of our performance in the quarter and the full year and our outlook for the year ahead. Ellen will then provide additional detail And I'll conclude with updates on key developments at our agencies to be followed by Q&A. We're pleased to share another year of strong performance. Before turning to the numbers, I'd like to once again thank our more than 58,000 colleagues around the world whose dedication to our clients and one another are exceptional. Along with their expertise spanning creative marketing services, technology and data management, that's what continues to be at the heart of our performance. Turning to our results for the full-year organic growth was 7 percent, and our adjusted EBITDA margin was 16.6 percent. Both are at the levels we shared with you in our last update in October. It's worth noting that a year ago at this time, we looked ahead to full-year 5 percent organic growth on top of very challenging multi-year comps, and performance throughout the year drove consistent increases to that 7 percent. We grew in every world region and broadly across client sectors. Our three-year organic growth stack therefore stands at 14%, the level of performance that speaks to the strength and relevance of our offerings, particularly in services and sectors demanding precision and accountability. In our fourth quarter, organic net revenue growth was 3.8%, which brings three-year growth performance to 9.7%. That means that, as expected, growth slowed in the fourth quarter, consistent with global macroeconomic and geopolitical crosswinds, which we're all aware of. Notwithstanding slowdowns across the global economy, and with that, a broadly more cautious marketing and media environment, our growth continued in every world region during the fourth quarter. Overall U.S. organic growth was 2.4 percent, despite dilution from certain units in the portfolio. on top of a very strong 12.1 percent a year ago. Organic growth in our international markets was 6.1 percent on top of 11 percent a year ago. By sector, growth in the fourth quarter was led by our clients in the auto and transportation sector, followed by the retail, our other sector of industrials and government, and healthcare. Going the other way, second, telco, which for us is our second largest client sector, began to show the impact of what I guess we could refer as sector-specific issues, which we're forecasting will continue to present headwinds for us for at least the first half of 2023. Also in Q4, we felt the largest quarterly impact of the late 2021 loss of a large food and beverage client, which will finish running off at the end of Q1 this year. HR operating segments grew organically in the quarter. In media data and engagement solutions, organic growth was 5% led by double-digit growth at IPG Media Brands. Decreases at our digital specialists, which we've called out previously, weighed significantly on segment and group-wide growth in the quarter and the year. Our integrated advertising and creativity-led solution segment grew 2.6% paced again by IPG Health, which posted high single-digit growth performance. our segment of specialized communications and experiential solutions grew 3.5% organically with leadership from the full range of our experiential and sports marketing offerings. Turning to profitability and expenses in the quarter, our teams continued their outstanding execution, effectively navigating today's complicated economic environment. This, in turn, led to the strong fourth quarter margin performance we're reporting today. We've been able to deliver this result while continuing to invest in our offerings and to take significant real estate actions in the quarter that will further our structural operating efficiencies going forward. Fourth quarter net income was $297.2 million as reported. Our adjusted EBITDA was $568.4 million, which is before a non-cash charge in the quarter for those real estate actions. Adjusted EBITDA margin in the quarter was 22.3 percent, and that brings full-year adjusted EBITDA to $1.57 billion, and margin on net revenue is 16.6 percent. I think it's worth reflecting that at that margin level, we've successfully consolidated 260 basis points of margin improvement over the last three years, along with that very strong three-year growth stat that I mentioned earlier. Fourth quarter diluted earnings per share with 76 cents as reported and with $1.02 as adjusted for the real estate restructuring charge, intangible amortization, and the disposition of small non-strategic businesses. In sum, our fourth quarter completes a year of strong financial performance across the key performance metrics of growth, adjusted EBITDA, and earnings per share. During the quarter, we also closed on the acquisition of RafterOne, a leading e-commerce implementation partner, which brings additional scale and capability to our offerings in an area of growth and strategic importance. Over the course of 2022, we also returned capital to shareholders in the amount of $777 million between dividends and share repurchases. Given the continuing strength of our operating results and confidence in our strategic trajectory, our board has once again raised IPG's quarterly dividends by 7 percent to 31 cents per share. This marks our 11th consecutive year of higher dividends, which, as you know, continued uninterrupted through the pandemic. Our board also authorized an additional $350 million share repurchase program on top of the $80 million remaining in our previous authorization. Turning the discussion to 2023 and our outlook for the year, It remains meaningful degree of macroeconomic uncertainty. Visibility, therefore, is somewhat challenged. I think it's fair to say that clients are approaching 2023 with equal parts conviction in the need to be in the market as well as an increased level of conservatism. That's not to say that they're any less focused on the need to drive for growth into the new year or to invest in the transformation of their business. It's just that we're seeing budgeting decisions made with more deliberation. And it's also fair to say that there's significant variability within our client portfolio from client to client. We're confident that the strongest growth areas of our business such as consultative media services, healthcare marketing, experiential marketing, commerce, as well as data management and data sales will continue to perform strongly despite the broader economic situation. We're also confident in our operational rigor and flexible cost model. Our actions in the fourth quarter to further reduce our occupied real estate footprint by nearly 7 percent demonstrates our consistent and ongoing focus on identifying and acting on opportunities to rethink our business model and improve efficiency. So bridging all of these moving parts together, we expect organic net revenue growth for 2023 of 2 to 4 percent on top of those industry-leading multi-year comparators, and further expansion of our adjusted EBITDA margins to 16.7 percent for the full year. Our priorities for the year remain consistent. First, to build on IPG's strategic differentiation, which for us means to focus on the people, talent, and capabilities that enable us to solve a broader set of business problems and which further our evolution into a higher-value solutions provider, as well as strong execution when it comes to integrating our agency's expertise through open architecture solutions. Second, to combine those client-focused offerings with operational excellence, which is always important but never more so than in an uncertain economic climate. Delivering on these goals and on our new financial targets, as well as our long-standing commitment to return of capital, should lead to another year of value creation for all of our stakeholders. At this point, I'm going to hand things over to Ellen for a more in-depth view of our results.