The Interpublic Group of Companies, Inc.

Good morning and welcome to the Interpublic Group third 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 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 companies. These are subject to the uncertainties and the cautionary statement that are included in our earnings release and 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. Thanks, Jerry.

As usual, I'll start the call with a high-level view of our results and the business overall. Ellen will then provide additional detail on the quarter, and I'll conclude with highlights at our agencies and some strategic comments to be followed by your Q&A. To begin, our revenue before billable expenses was unchanged organically in the same period a year ago. In terms of client sectors, the quarter was highlighted by very strong growth in consumer facing industries like food and beverage and consumer goods as well as our other category of diversified and public sector clients. From the standpoint of disciplines, we saw solid growth at IPG Media Brands, Octagon, Axiom, Deutsch and our public relations offerings. However, our growth did slow from this year's first half due mainly to the timing of an account loss that we've discussed previously, which weighed on growth in Q3. During the quarter, we also saw meaningful progress in the strategic actions that we had talked about in July to address underperformance at our digital specialist agencies. Reflecting where we are in that process, those assets became classified as held for sale. Third quarter performance brings our organic growth over the first nine months to 1%. Regionally in the quarter, the U.S. was flat organically. In our international operations, we were paced by continued strong growth in Latin America, along with modest growth in our other markets group in continental Europe. Asia-Pac and the U.K. decreased from a year ago. Looking at our operating segments, IPG Media Brands and Axiom drove growth at our media, data and engagement solutions segment. But that was tempered by results at MRM. We saw an organic decrease in our integrated advertising and creativity segment with mixed performance by agency. And in our segment of specialized communications and experiential solutions, growth in the quarter was driven by Octagon, Weber Shandwick and Golan. From the standpoint of client sector performance, as mentioned, in addition to very significant increases in the food and beverage and consumer goods sector, we had solid growth in our other category and saw more modest increases in the healthcare, retail, and financial services sectors. Decreases in the auto and transportation and tech and telecom sectors were due to account losses in late 2023. Turning to expenses and margin, I should first note that our third quarter included non-cash goodwill impairment expense of $232 million related to our digital specialist agencies and our progress in the sale process of RGA and HUGE. The adjusted operating metrics we'll cover with you today exclude that non-cash item. As you can see, our teams continue to effectively balance cost discipline with ongoing investment in the evolution of our business. Third quarter adjusted EBITDA margin was 17.2%, which matches our strong performance a year ago, and adjusted EBITDA was $385.8 million. Compared to the same period last year, we had leverage on base payroll, temporary labor, and incentives. We also continued to invest at higher levels in technology, business transformation and senior talent, particularly for centralized platform resources, which in turn resulted in increased office and other as well as SG&A expense. Diluted earnings per share in the quarter was $0.05 as reported and $0.70 as adjusted for the write-down of goodwill, acquired intangibles, amortization and the impact of net business dispositions and held for sale. During the quarter, We repurchased 3.2 million shares, returning $100 million to shareholders. Turning to our outlook for the remainder of the year, there are several factors in play. Economic and political uncertainty in the U.S. and in many of the largest international markets remains a significant consideration. This is especially relevant given the relatively high levels of discretionary project spend that characterize Q4 in the holiday season. That said, our recent operating reviews have shown a strong pipeline for project work in 2024, excuse me, project work in Q4 as well as larger ARR assignments that would take effect in the new year. We're focused on capitalizing on those opportunities since we will be facing top line headwinds as we head into 2025 to the news flow we've seen on some recent large account reviews. All in for the balance of this year, we continue to believe we will deliver organic revenue growth of approximately 1%. And at that level of growth, we remain committed to our margin goal for the year of 16.6%. As I just mentioned, we're looking to close the year as strongly as possible. Equally important we have clear line of sight to the structural and market-facing changes that we need to make to improve our growth profile. Many of you have heard me speak before to the need to change our asset mix, which currently leans more heavily to capabilities that have more limited growth rates than the asset mix that one might find in some of our competitors. Also, in media, an area we have always excelled, the recent shift in trading terms that has seen many clients accept and even embrace principal buying has clearly impacted our business. Those are all areas on which we are focused in making progress in transforming the business. Our very strong underlying financial position and our track record of operational delivery give us a solid foundation from which to drive the necessary changes in the composition and capabilities within the portfolio. I'll have more to add on that score a bit later, but for now, I'll turn things over to Ellen for a more detailed view of the quarter.