The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group fourth quarter and full year 2023 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. 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 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 in the cautionary statement that are included in our earnings release and the slide presentation. These are further detailed in our 10Q, 10K, 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. Thank you all for joining us this morning. As usual, I'm going to start with a high-level view of our performance in the quarter and for the full year, as well as our outlook for the year ahead. Ellen will then provide additional detail and I'll conclude with updates on key developments at the agencies to be followed by Q&A. We're pleased to share a fourth quarter highlighted by our strongest growth of the year which exceeded expectations during our seasonally largest quarter. Organic growth in the quarter was 1.7% on top of 3.8% a year ago. Underneath that number, the quarter continued to reflect the cross currents at work in the economy at large and within our portfolio of services and our client roster. Those include the headwinds that we've called out and discussed throughout the year, most notably the austerity among clients in the tech and telecom sector which was evident across our competitive set and the challenges faced by our digital specialist agencies. These factors continue to weigh significantly on our overall growth. We also call that the impact of the tragic developments in the Middle East. First and foremost, it needs to be said that the war and geopolitical turmoil continue to put huge numbers of people in Israel, Gaza and increasingly across the region in harm's way and that includes many of our colleagues. Understandably, this has also had an impact on economic activity in that part of the world and therefore in our results. Notwithstanding those factors, Our growth in Q4 showed acceleration from earlier in the year. New business wins onboarded in steadily greater size. And here, it's also worth noting sustained strong performance in media, which was our growth leader throughout 2023, and stronger growth in the healthcare sector as well. Our U.S. organic revenue performance improved from Q3 into Q4, and the overall sequential improvement was helped also by our European and Latin American markets and both of those regions compounded strong performance in the fourth quarter a year ago. We saw solid levels of variable year and client investment or the so-called fourth quarter project spend. Given that the macroeconomic backdrop remains somewhat cautious, this seems to have largely been a function of seasonal activity in the quarter. Growth in the fourth quarter brings our organic revenue change for the full year 2023 to a decrease of 10 basis points. That follows on strong 7% growth organically in 2022. Looking at sectors, performance was mixed in Q4. Six of our eight client sectors saw revenue increases. Growth was led by clients in the healthcare sector, as mentioned earlier, followed by the consumer goods and food and beverage sectors, Auto and transportation was down slightly, though against double-digit growth in Q4 2022. Between budget reductions and lost assignments, our tech and telecom sector weighed on our consolidated organic growth by approximately negative 2.5% in the quarter. Each of our operating segments grew organically during the quarter. In media, data and engagement solutions, Organic growth was 1.1% led by continuing very strong growth at IPG Media Brands. Decreases at our digital specialists weighed significantly on the segment. Our integrated advertising and creativity-led solution segment grew 2% organically, paced by strong growth at IPG Health and FCB, partially offset by some of our more traditional offerings. Our segment of specialized communications and experiential solutions grew 2.9% organically in the quarter. We saw balanced growth across the full range of disciplines, including public relations, experiential, and sports marketing. Turning to profitability and expenses in the quarter, our teams continued to excel operationally. We effectively used the levers of our flexible business model to navigate a complicated economic environment and a challenging year, while simultaneously investing in the growth of our most modern and sophisticated capabilities. The result is the strong fourth quarter and full-year margin performance we are reporting today. Adjusted EBITDA margin on net revenue was 24.3% in the quarter, an increase of 200 basis points from a year ago. We drove operating leverage on our expense for base payroll, benefits and tax, our performance-based incentive compensation, and our expense for occupancy. With that performance, full-year margin was 16.7%, which delivers against the target we set at the beginning of 2023 and further consolidates significant margin improvement over the recent past. Fourth quarter net income as reported was $463.2 million, our adjusted EBITDA was $628.5 million, an increase of 11% from a year ago. Fourth quarter diluted earnings per share was $1.21 as reported and $1.18 as adjusted for intangibles, amortization, and the non-operating impact of the disposition of small non-strategic businesses. Full year adjusted diluted EPS was $2.99, And as an important reminder, our EPS in the year's second quarter, both as reported and adjusted, included the benefit of 17 cents per share related to the resolution of routine federal income tax audits of previous years for which we did not adjust. During the quarter, our share repurchases totaled $131 million, which brought our share repurchases in 2023 to $350 million. Over the course of the year, total capital returns to shareholders between dividends and share repurchase were $829 million. As you've seen today, given the continued confidence of our board in our operating strength and financial position, as well as our long-term strategic trajectory, we once again raised IPG's quarterly dividend by 6% to 33 cents per share. This marks our 12th consecutive year of increased dividends and our board also authorized an additional $320 million of share repurchase on top of the $80 million remaining on our previous authorization. Turning our discussion to 2024, we continue to see economic and geopolitical uncertainty inform many of our clients' thinking. Despite signs that the consumer economy is improving, there remains a disparity of views regarding overall macro growth prospects. This is leading to some client conservatism, largely consistent with what we noted over much of the past year. We're seeing a measure of quarter-to-quarter stability in the tech and telco sector. Previously discussed budget reductions in our major technology industry clients have been a consequence of broader enterprise cost-cutting programs within those companies. And while it's still not possible to call the timing of a significant upturn in tech spending and marketing activity, we've noted a more recent stabilization in that spin. However, a return to growth for us in this sector has not been factored into our plan for 2024. With respect to our specialty digital offerings, we've taken several steps to strengthen their performance. This includes new leadership, co-location of global headquarters and a common innovation hub, as well as comprehensively lowering and aligning their operating cost base in line with revenue. We continue to focus on a broad range of strategic as well as market-facing solutions over the near term, and that includes M&A to address the need for greater scale and digital transformation. As we look ahead, we remain confident in the fundamental strengths of our company. We're focused on building on significant new business success during the past year, as well as on our longer-term record of growth. We also anticipate that the strongest and most consistent growth areas of our business, such as our data and tech-driven media offering, healthcare marketing expertise, PR and experiential marketing capabilities, will continue to perform well in the year ahead. In addition, our proven operational discipline will stay in effect. The net of these moving parts, with certain areas of very strong performance within the portfolio, continued client caution, and a focus on addressing challenges in some of our legacy digital specialists, leads us to an expected organic net revenue growth for 2024 in a range of 1 to 2 percent. At that level of growth, we expect 2024 full-year adjusted EBITDA margin of 16.6%. This reflects a number of investments, including in further development of our contemporary addressable capabilities, which is the data-powered tools that inform and drive integration and decision-making across IPG, retail media, artificial intelligence, as well as building new buying models within media brands. We'll also continue to focus on streamlining operations and processes across the group. We're confident that our investment in growth, combined with continued operational excellence on the part of our teams, means that our margins will resume their upward trajectory over the years ahead, consistent with our record in this area. In 2024, Delivering on our goals along with integrating our services in ways that help clients build their business and their brands will be essential in creating value for all of our stakeholders. At this point, I'll hand things over to Ellen for a more in-depth view of our results.