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10-Q
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-Q on 04/21/2017
Entire Document
 

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Segment Results of Operations – Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016
As discussed in Note 9 to the unaudited Consolidated Financial Statements, we have two reportable segments as of March 31, 2017: IAN and Constituency Management Group ("CMG"). We also report results for the "Corporate and other" group.
IAN
REVENUE
 
 
 
Components of Change
 
 
 
Change
 
Three months ended
March 31, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Three months ended
March 31, 2017
Organic
 
Total
Consolidated
$
1,401.6

 
$
(9.8
)
 
$
(14.9
)
 
$
30.7

 
$
1,407.6

 
2.2
%
 
0.4
 %
Domestic
865.4

 
0.0

 
(8.9
)
 
15.0

 
871.5

 
1.7
%
 
0.7
 %
International
536.2

 
(9.8
)
 
(6.0
)
 
15.7

 
536.1

 
2.9
%
 
0.0
 %
During the first quarter of 2017, IAN revenue increased by $6.0 compared to the first quarter of 2016, comprised of an organic revenue increase of $30.7, partially offset by the effect of net divestitures of $14.9 and an adverse foreign currency rate impact of $9.8. The organic revenue increase was primarily attributable to a combination of net higher spending from existing clients and net client wins, most notably in the healthcare sector, partially offset by decreases in the technology and telecom and consumer goods sectors. The organic revenue increase in our domestic market was primarily driven by growth at our digital specialist agencies and media businesses. The international organic revenue increase was driven by growth at our advertising and media businesses in Continental Europe, led by Germany and Italy, partially offset by declines at our advertising businesses in the Asia Pacific region, primarily in China.
SEGMENT OPERATING INCOME
 
Three months ended
March 31,
 
 
 
2017
 
2016
 
Change
Segment operating income
$
43.8

 
$
41.8

 
4.8
%
Operating margin
3.1
%
 
3.0
%
 
 
 
Operating income increased during the first quarter of 2017 when compared to the first quarter of 2016, due to an increase in revenue of $6.0 and a decrease in office and general expenses of $5.1, partially offset by an increase in salaries and related expenses of $9.1. The increase in salaries and related expenses was primarily due to an increase in base salaries, benefits and tax, primarily attributable to increases in our workforce at businesses and in regions where we had revenue growth or new business wins over the last twelve months. The decrease in office and general expenses was primarily attributable to lower adjustments to contingent acquisition obligations as compared to the prior-year period.
CMG
REVENUE
 
 
 
Components of Change
 
 
 
Change
 
Three months ended
March 31, 2016
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 
Organic
 
Three months ended
March 31, 2017
Organic
 
Total
Consolidated
$
340.4

 
$
(7.3
)
 
$
(2.3
)
 
$
15.5

 
$
346.3

 
4.6
 %
 
1.7
 %
Domestic
225.8

 
0.0

 
(2.1
)
 
16.6

 
240.3

 
7.4
 %
 
6.4
 %
International
114.6

 
(7.3
)
 
(0.2
)
 
(1.1
)
 
106.0

 
(1.0
)%
 
(7.5
)%
During the first quarter of 2017, CMG revenue increased by $5.9 compared to the first quarter of 2016, due to an organic revenue increase of $15.5, partially offset by an adverse foreign currency rate impact of $7.3 and the effect of net divestitures of $2.3. The organic revenue increase in our domestic market was driven by growth across nearly all disciplines, most notably at our events businesses, with additional solid organic growth at our public relations and sports marketing businesses. Organic revenue decreased slightly in our international markets primarily driven by our events businesses in the United Kingdom as a result of certain contracts where we no longer act as principal. All other major disciplines increased organically in our international markets.

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