The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group first quarter 2024 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 Alan 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 a.m. Eastern Time. During this call, we will refer to forward-looking statements about our companies These are subject to the uncertainties and the cautionary statement that are included in our earnings release and the slide presentation. These are further detailed in our 10Q 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.

As usual, I'll begin our call with a high-level view of our performance in the quarter, and Alan will then provide additional details. I'll conclude with some highlights at our agencies and key strategic updates to be followed by your Q&A. This morning, we are reporting a solid start to 2024. with Q1 performance fully consistent with the targets for growth and margin that we shared earlier this year. The organic growth of our revenue before billable expenses came in at 1.3%. Regionally, we were paced by strong growth in Europe, followed by growth in LATAM and the U.S. In keeping with our long-term record, we continue to see very strong growth at IPG Media Brands in Q1, FCB's offering of creativity informed by data insights and precision, as well as IPG health, also marked strong quarters of growth. And our public relations discipline, specifically Golan, which posted double-digit organic growth, was a highlight of the first quarter. From the standpoint of clients, we again had growth in six of eight client sectors worldwide. led by double-digit increases among our healthcare and food and beverage clients, followed by solid increases across the consumer goods and retail sectors, as well as our other sector of public sector and diversified industrials. We also continue to see trends within our portfolio that have been a drag on our growth and that we've identified during recent quarters. Those are the underperformance of our digital specialty agencies and our tech and telecom client sector. As we've indicated previously, heading into 2024, most of the weight from the tech and telecom sector will be due to the loss of a large AOR assignment with a telco client late last year. Outside of that item, same client decreases in the sector have largely stabilized. Turning to expenses and margin, The quarter demonstrates that our teams continue to operate with a high degree of focus as we keep investing in the growth areas of the business. Our adjusted EBITDA margin was 9.4 percent, which is in line with expectations for our smallest seasonal quarter. That margin result is despite elevated expense for severance in Q1. Those actions should benefit our expenses for the balance of the year. It's worth noting that we had 110 basis points of operating leverage in the first quarter on our expense for base payroll benefits and tax from a year ago. Our diluted earnings per share in the quarter was 29 cents as reported and 36 cents as adjusted for acquired intangibles amortization and the impact of net business dispositions. During the quarter, we repurchased 1.9 million shares returning $62 million. You'll recall that in February, our board authorized another $320 million share repurchase program and increased our common share dividend by 6%. In terms of our outlook, we continue to expect to achieve full-year organic growth of 1% to 2%. A recent decision by an important ongoing client will adversely impact the balance of this year and likely make achieving the top end of our target more challenging. Within that range of growth, we continue to expect to deliver adjusted EBITDA margin of 16.6% for the full year. As we look ahead, we anticipate that the strongest and most consistent growth areas of our business such as our data and tech-driven media offerings specialist healthcare marketing expertise, PR and experiential marketing capabilities are positioned to continue their strong performance over the long term. Additionally, these higher value offerings which include opportunities for outcome-based performance compensation combined with our proven operational discipline will result in sustained long-term margin improvement. As we move ahead, will continue to enhance our existing offerings, providing holistic solutions that help marketers successfully deal with a media and marketing environment that's increasingly complex and dynamic. This entails further embedding precision and performance into our media offering, as well as integrating the most contemporary technologies, such as generative AI, at the core of our marketing services capabilities. I'll come back with more detail on the evolution of our offerings after Ellen has had a chance to walk you through a more detailed view of our results.