CONFERENCE CALL TRANSCRIPT
COMPANY PRESENTATION AND REMARKS
Good morning, and welcome to the Interpublic Group third quarter 2017 earnings conference call. . . . I would now like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.
Jerry Leshne, Senior Vice President, Investor Relations:
Good morning. Thank you for joining us.
We have posted our earnings release and our slide presentation on our website, interpublic.com. This morning we are joined by Michael Roth and Frank Mergenthaler. We will begin with prepared remarks, to be followed by Q&A. We plan
to conclude before market open at 9:30 Eastern.
During this call, we will refer to forward-looking statements about our Company. These are subject to the uncertainties in 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. 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 Michael Roth.
Michael Roth, Chairman of the Board and Chief Executive Officer:
Thank you, Jerry, and thank you all for joining us this morning as we review our results for the third quarter and first nine months of 2017. I’ll start out by covering highlights of our performance. Frank will then provide additional detail, and I’ll conclude with an update on our agencies and the tone of business, to be followed by our Q&A.
Our organic growth in the third quarter was 50 basis points, and was 1.5% excluding the impact of lower pass-through revenues. For the first nine months of the year, organic revenue growth was 1.1%, and was 1.6% excluding the impact of lower pass-throughs. As a reminder, our pass-through revenues are offset dollar-for-dollar in expenses. As a result, increases and decreases in pass-through revenues do not change our operating profit.
Operating profit in the quarter grew to $219 million, up 5.3%, which reflects strong Q3 operating margin expansion of 70 basis points to 11.5%. Third-quarter diluted earnings per share was $0.37, and was $0.31 as adjusted for below-the-line items.
We continued to see positive growth momentum in the quarter from a number of key disciplines and agencies, notably our media operations, where we had continued strong growth in both the U.S. and our international markets, from existing clients as well as new business wins. Our creatively driven advertising businesses had solid U.S. growth, in both our larger networks and our domestic independents. This performance, combined with strong new-business trends, lead us to conclude the revenue slowdown we are experiencing is not secular.