UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 28, 2022
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 28, 2022 , The Interpublic Group of Companies, Inc. (i) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein, announcing its results for the first quarter of 2022, (ii) held a conference call to discuss the foregoing results and (iii) posted an investor presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated by reference herein, on its website in connection with the conference call.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1: Press release dated April 28, 2022 (furnished pursuant to Item 2.02)
Exhibit 99.2: Investor presentation dated April 28, 2022 (furnished pursuant to Item 2.02)
Exhibit 104: Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included as Exhibit 101).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE INTERPUBLIC GROUP OF COMPANIES, INC. | |||||
| Date: April 28, 2022 | By: /s/ Andrew Bonzani | ||||
| Name: Andrew Bonzani Title: Executive Vice President and General Counsel | |||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE | New York, NY (April 28, 2022) | |||||||
Interpublic Announces First Quarter 2022 Results
• Reported net revenue of $2.23 billion, an increase of 9.8% from a year ago, with organic net revenue growth of 11.5%
• Net income was $159.4 million as reported
• Adjusted EBITA before restructuring charges was $273.6 million with 12.3% margin on net revenue
• Diluted EPS was $0.40 as reported and was $0.47 as adjusted
• Management highlights strong start to the year and updates expectations for full-year growth
Philippe Krakowsky, CEO of IPG:
“We are pleased to report a strong start to our year, with growth highlighted by increases across a broad range of geographies and client sectors. These results reflect the skill that our colleagues bring to their craft and the commitment they consistently demonstrate to our clients and in support of each other. A differentiator of our performance, in the quarter and over a period of many years, remains our ability to deliver marketing and media solutions that bring together award-winning creativity with best-in-class technology and data infrastructure. This combination is responsive to the evolving needs of modern marketers for more digital, precise, and data-informed thinking, as well as the kind of integrated programs that allow IPG to deliver higher-order business solutions.
"While macro uncertainty is still elevated as a result of geopolitical and public health issues, we recently refreshed our bottom-up outlook for the year with key clients and with our operating teams, and the tone of the business remains positive. As such, we are updating our outlook for the year, from the previously-announced expectation for 5% organic revenue growth in 2022 to approximately 6%, on this key metric. This would be an especially strong result, given that it compounds IPG’s outstanding multi-year growth stack. We are also re-iterating our expectation for adjusted EBITA margin of 16.6% for the full year.
“We will continue to stay close to and support our people and our clients, remain disciplined in managing our operations, and maintain the strength of our balance sheet. Given our great talent, a highly relevant strategy and portfolio of offerings, and our strong commitment to client partners, we are well-positioned to enhance opportunity and value for the full range of our stakeholders.”
Summary
Revenue
•First quarter 2022 net revenue of $2.23 billion increased by 9.8% compared to $2.03 billion in the first quarter of 2021. During the quarter, our organic net revenue increase was 11.5%, which was comprised of an organic net revenue increase of 12.2% in the U.S. and an increase of 10.2% internationally. First quarter 2022 total revenue, which
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
1
includes billable expenses, of $2.57 billion, increased by 13.8% compared to $2.26 billion in 2021.
Operating Results
•Operating income in the first quarter of 2022 was $245.7 million compared to $243.0 million in 2021. Adjusted EBITA before restructuring charges increased to $273.6 million in the first quarter of 2022, compared to adjusted EBITA before restructuring charges of $265.9 million for the same period in 2021. Adjusted EBITA before restructuring charges margin on net revenue decreased to 12.3%, compared to 13.1% in 2021.
•Net Restructuring charges were $6.6 million for the first quarter of 2022 compared to $1.3 million for the same period in 2021.
•Refer to reconciliations on page 8 for further detail.
Net Results
•Income tax provision in the first quarter of 2022 was $49.1 million on income before income taxes of $209.9 million.
•First quarter 2022 net income available to IPG common stockholders was $159.4 million, resulting in earnings of $0.40 per basic and diluted share compared to earnings of $0.23 per basic and diluted share for the same period in 2021. Adjusted earnings were $0.47 per diluted share, compared to adjusted earnings of $0.45 per diluted share a year ago. First quarter 2022 adjusted earnings excludes after-tax amortization of acquired intangibles of $17.1 million, after-tax restructuring charges of $5.0 million and an after-tax loss of $6.4 million on the sales of businesses.
•Refer to reconciliations on pages 7 through 9 for further detail.
Operating Results
Revenue
Net revenue of $2.23 billion in the first quarter of 2022 increased 9.8% compared with the same period in 2021. During the quarter, the effect of foreign currency translation was negative 1.4%, the impact of net dispositions was negative 0.3%, and the resulting organic net revenue increase was 11.5%. Total revenue, which includes billable expenses, increased to $2.57 billion in the first quarter of 2022, compared to $2.26 billion in 2021.
Operating Expenses
For the first quarter of 2022, total operating expenses, excluding billable expenses, increased by 11.0%, compared to the net revenue increase of 9.8% from the same period a year ago.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
2
Staff cost ratio, which is total salaries and related expenses as a percentage of net revenue, increased to 70.2% in the first quarter of 2022 from 68.7% in the same period in 2021. Salaries and related expenses increased 12.3% to $1.56 billion during the first quarter of 2022, compared to $1.39 billion for the same period in 2021. The increase in staff cost ratio as a percentage of net revenue in the first quarter was primarily driven by an increase in base salaries, benefits and payroll tax, which was driven by hiring to support strong revenue growth over the course of 2021 and in the first quarter of 2022.
Office and other direct expenses as a percentage of net revenue increased slightly to 14.5% during the first quarter of 2022, compared to 14.4% a year ago. In the first quarter of 2022, office and other direct expenses were $323.4 million, an increase of 10.4% compared to the same period in 2021. The change for the first quarter was mainly due to increases in travel and entertainment expenses, employee recruitment costs, client services costs, as well as increases in expenses related to company meetings and conferences, and new business development.
Selling, general and administrative expenses as a percentage of net revenue decreased to 0.9% during the first quarter of 2022, compared to 1.4% during the same period in 2021. During the first quarter of 2022, selling, general and administrative expenses were $19.3 million compared to $28.2 million for the same period in 2021. The change for the first quarter was primarily due to decreases in performance-based incentive compensation expense in SG&A and professional consulting fees.
Depreciation and amortization as a percentage of net revenue decreased to 3.0% during the first quarter of 2022, compared to 3.4% a year ago. During the first quarter of 2022, depreciation and amortization was $67.8 million, a decrease of 2.0% compared to the same period in 2021.
Restructuring charges in the first quarter of 2022 were $6.6 million, consisting of adjustments to the Company's restructuring actions taken during 2020. There were no new restructuring actions taken in the first quarter of 2022. Restructuring charges were $1.3 million for the three months ended March 31, 2021, which also consisted of adjustments to the 2020 program.
Non-Operating Results and Tax
Net interest expense decreased by $13.1 million to $29.6 million in the first quarter of 2022 from a year ago.
Other expense, net was $6.2 million in the first quarter of 2022, which primarily consisted of losses on the sales of certain small, non-strategic businesses.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
3
The income tax provision in the first quarter of 2022 was $49.1 million on income before income taxes of $209.9 million. This compares to an income tax provision of $23.8 million for the first quarter of 2021 on income before income taxes of $116.4 million.
Balance Sheet
At March 31, 2022, cash and cash equivalents totaled $2.40 billion, compared to $3.27 billion at December 31, 2021 and $2.02 billion on March 31, 2021. Total debt was $2.97 billion at March 31, 2022, compared to $2.96 billion at December 31, 2021.
Share Repurchase Program
During the first quarter of 2022, the Company repurchased 1.8 million shares of its common stock at an aggregate cost of $63.1 million and an average price of $35.21 per share, including fees.
Common Stock Dividend
During the first quarter of 2022, the Company declared and paid a common stock cash dividend of $0.290 per share, for a total of $118.3 million.
For further information regarding the Company's financial results as well as certain non-GAAP measures including organic net revenue change, adjusted EBITA, adjusted EBITA before restructuring charges and adjusted earnings per diluted share, and the reconciliations thereof, please refer to pages 7 to 9 and our Investor Presentation filed on Form 8-K herewith and available on our website, www.interpublic.com.
# # #
About Interpublic
Interpublic (NYSE: IPG) (www.interpublic.com) is a values-based, data-fueled, and creatively-driven provider of marketing solutions. Home to some of the world’s best-known and most innovative communications specialists, IPG global brands include Acxiom, Craft, FCB, FutureBrand, Golin, Huge, Initiative, IPG Health, Jack Morton, Kinesso, MAGNA, Matterkind, McCann, Mediahub, Momentum, MRM, MullenLowe Group, Octagon, R/GA, UM, Weber Shandwick and more. IPG is an S&P 500 company with net revenue of $9.11 billion in 2021.
# # #
Contact Information
Tom Cunningham
(Press)
(212) 704-1326
Jerry Leshne
(Analysts, Investors)
(212) 704-1439
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
4
Cautionary Statement
This release contains forward-looking statements. Statements in this release that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission ("SEC"). Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
◦the effects of a challenging economy on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;
◦the impacts of the COVID-19 pandemic, including unanticipated developments like the emergence of new coronavirus variants or any shortfalls in vaccination efforts, and associated mitigation measures such as social distancing efforts and restrictions on businesses, social activities and travel on the economy, our clients and demand for our services, which may precipitate or exacerbate other risks and uncertainties;
◦our ability to attract new clients and retain existing clients;
◦our ability to retain and attract key employees;
◦risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a challenging economy;
◦potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
◦risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in interest rates, inflation rates and currency exchange rates;
◦developments from changes in the regulatory and legal environment for advertising and marketing services companies around the world, including laws and regulations related to data protection and consumer privacy;
◦the impact on our operations of general or directed cybersecurity events; and
◦failure to fully realize the anticipated benefits of our 2020 restructuring actions and other cost-savings initiatives.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other SEC filings.
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
5
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS FIRST QUARTER REPORT 2022 AND 2021 (Amounts in Millions except Per Share Data) (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||
| 2022 | 2021 | Fav. (Unfav.) % Variance | ||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Net Revenue | $ | 2,227.2 | $ | 2,027.7 | 9.8 | % | ||||||||||||||
| Billable Expenses | 341.3 | 229.3 | 48.8 | % | ||||||||||||||||
| Total Revenue | 2,568.5 | 2,257.0 | 13.8 | % | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||
| Salaries and Related Expenses | 1,564.4 | 1,393.1 | (12.3) | % | ||||||||||||||||
| Office and Other Direct Expenses | 323.4 | 292.9 | (10.4) | % | ||||||||||||||||
| Billable Expenses | 341.3 | 229.3 | (48.8) | % | ||||||||||||||||
| Cost of Services | 2,229.1 | 1,915.3 | (16.4) | % | ||||||||||||||||
| Selling, General and Administrative Expenses | 19.3 | 28.2 | 31.6 | % | ||||||||||||||||
| Depreciation and Amortization | 67.8 | 69.2 | 2.0 | % | ||||||||||||||||
| Restructuring Charges | 6.6 | 1.3 | >(100)% | |||||||||||||||||
| Total Operating Expenses | 2,322.8 | 2,014.0 | (15.3) | % | ||||||||||||||||
| Operating Income | 245.7 | 243.0 | 1.1 | % | ||||||||||||||||
| Expenses and Other Income: | ||||||||||||||||||||
| Interest Expense | (39.4) | (49.6) | ||||||||||||||||||
| Interest Income | 9.8 | 6.9 | ||||||||||||||||||
| Other Expense, Net | (6.2) | (83.9) | ||||||||||||||||||
| Total (Expenses) and Other Income | (35.8) | (126.6) | ||||||||||||||||||
| Income Before Income Taxes | 209.9 | 116.4 | ||||||||||||||||||
| Provision for Income Taxes | 49.1 | 23.8 | ||||||||||||||||||
| Income of Consolidated Companies | 160.8 | 92.6 | ||||||||||||||||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.1 | (0.2) | ||||||||||||||||||
| Net Income | 160.9 | 92.4 | ||||||||||||||||||
| Net Income Attributable to Non-controlling Interests | (1.5) | (0.7) | ||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 159.4 | $ | 91.7 | ||||||||||||||||
Earnings Per Share Available to IPG Common Stockholders: | ||||||||||||||||||||
Basic | $ | 0.40 | $ | 0.23 | ||||||||||||||||
Diluted | $ | 0.40 | $ | 0.23 | ||||||||||||||||
Weighted-Average Number of Common Shares Outstanding: | ||||||||||||||||||||
Basic | 394.5 | 391.5 | ||||||||||||||||||
Diluted | 398.4 | 396.0 | ||||||||||||||||||
| Dividends Declared Per Common Share | $ | 0.290 | $ | 0.270 | ||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
6
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges1 | Net Losses on Sales of Businesses2 | Adjusted Results (Non-GAAP) | |||||||||||||||||||||||||
Operating Income and Adjusted EBITA before Restructuring Charges3 | $ | 245.7 | $ | (21.3) | $ | (6.6) | $ | 273.6 | |||||||||||||||||||||
Total (Expenses) and Other Income4 | (35.8) | $ | (6.4) | (29.4) | |||||||||||||||||||||||||
| Income Before Income Taxes | 209.9 | (21.3) | (6.6) | (6.4) | 244.2 | ||||||||||||||||||||||||
| Provision for Income Taxes | 49.1 | 4.2 | 1.6 | 0.0 | 54.9 | ||||||||||||||||||||||||
| Equity in Net Income of Unconsolidated Affiliates | 0.1 | 0.1 | |||||||||||||||||||||||||||
| Net Income Attributable to Non-controlling Interests | (1.5) | (1.5) | |||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 159.4 | $ | (17.1) | $ | (5.0) | $ | (6.4) | $ | 187.9 | |||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 394.5 | 394.5 | |||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 3.9 | 3.9 | |||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 398.4 | 398.4 | |||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders5: | |||||||||||||||||||||||||||||
| Basic | $ | 0.40 | $ | (0.04) | $ | (0.01) | $ | (0.02) | $ | 0.48 | |||||||||||||||||||
| Diluted | $ | 0.40 | $ | (0.04) | $ | (0.01) | $ | (0.02) | $ | 0.47 | |||||||||||||||||||
1 Restructuring charges of $6.6 in the first quarter of 2022 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||||||||||||||||||||
2 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||||||||||||||||||||||
3 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 8. | |||||||||||||||||||||||||||||
4 Consists of non-operating expenses including interest expense, interest income and other expense, net. | |||||||||||||||||||||||||||||
5 Earnings per share amounts calculated on an unrounded basis. | |||||||||||||||||||||||||||||
| Note: Management believes the resulting comparisons 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. | |||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
7
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions) (UNAUDITED) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net Revenue | $ | 2,227.2 | $ | 2,027.7 | |||||||
| Non-GAAP Reconciliation: | |||||||||||
| Net Income Available to IPG Common Stockholders | $ | 159.4 | $ | 91.7 | |||||||
| Add Back: | |||||||||||
| Provision for Income Taxes | 49.1 | 23.8 | |||||||||
| Subtract: | |||||||||||
| Total (Expenses) and Other Income | (35.8) | (126.6) | |||||||||
| Equity in Net Income (Loss) of Unconsolidated Affiliates | 0.1 | (0.2) | |||||||||
| Net Income Attributable to Non-controlling Interests | (1.5) | (0.7) | |||||||||
| Operating Income | 245.7 | 243.0 | |||||||||
| Add Back: | |||||||||||
| Amortization of Acquired Intangibles | 21.3 | 21.6 | |||||||||
| Adjusted EBITA | $ | 267.0 | $ | 264.6 | |||||||
| Adjusted EBITA Margin on Net Revenue % | 12.0 | % | 13.0 | % | |||||||
Restructuring Charges1 | 6.6 | 1.3 | |||||||||
| Adjusted EBITA before Restructuring Charges | $ | 273.6 | $ | 265.9 | |||||||
| Adjusted EBITA before Restructuring Charges Margin on Net Revenue % | 12.3 | % | 13.1 | % | |||||||
1 Restructuring charges of $6.6 and $1.3 in the first quarter of 2022 and 2021, respectively, were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||
Note: Management believes the resulting comparisons 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. | |||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
8
| THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES U.S. GAAP RECONCILIATION OF NON-GAAP ADJUSTED RESULTS (Amounts in Millions except Per Share Data) (UNAUDITED) | |||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||
| As Reported | Amortization of Acquired Intangibles | Restructuring Charges1 | Net Losses on Sales of Businesses2 | Loss on Early Extinguishment of Debt3 | Adjusted Results (Non-GAAP) | ||||||||||||||||||||||||||||||
Operating Income and Adjusted EBITA before Restructuring Charges4 | $ | 243.0 | $ | (21.6) | $ | (1.3) | $ | 265.9 | |||||||||||||||||||||||||||
Total (Expenses) and Other Income5 | (126.6) | $ | (12.5) | $ | (74.0) | (40.1) | |||||||||||||||||||||||||||||
| Income Before Income Taxes | 116.4 | (21.6) | (1.3) | (12.5) | (74.0) | 225.8 | |||||||||||||||||||||||||||||
| Provision for Income Taxes | 23.8 | 4.2 | 0.3 | 0.7 | $ | 18.5 | 47.5 | ||||||||||||||||||||||||||||
| Equity in Net Loss of Unconsolidated Affiliates | (0.2) | (0.2) | |||||||||||||||||||||||||||||||||
| Net Income Attributable to Non-controlling Interests | (0.7) | (0.7) | |||||||||||||||||||||||||||||||||
| Net Income Available to IPG Common Stockholders | $ | 91.7 | $ | (17.4) | $ | (1.0) | $ | (11.8) | $ | (55.5) | $ | 177.4 | |||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Basic | 391.5 | 391.5 | |||||||||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted shares | 4.5 | 4.5 | |||||||||||||||||||||||||||||||||
| Weighted-Average Number of Common Shares Outstanding - Diluted | 396.0 | 396.0 | |||||||||||||||||||||||||||||||||
Earnings per Share Available to IPG Common Stockholders6: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.23 | $ | (0.04) | $ | (0.00) | $ | (0.03) | $ | (0.14) | $ | 0.45 | |||||||||||||||||||||||
| Diluted | $ | 0.23 | $ | (0.04) | $ | (0.00) | $ | (0.03) | $ | (0.14) | $ | 0.45 | |||||||||||||||||||||||
1 Restructuring charges of $1.3 in the first quarter of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. | |||||||||||||||||||||||||||||||||||
2 Includes losses on complete dispositions of businesses and the classification of certain assets as held for sale. | |||||||||||||||||||||||||||||||||||
3 Consists of a loss related to the early extinguishment of our 4.000% unsecured senior notes due 2022, 3.750% unsecured senior notes due 2023 and half of our 4.200% unsecured senior notes due 2024. | |||||||||||||||||||||||||||||||||||
4 Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 8. | |||||||||||||||||||||||||||||||||||
5 Consists of non-operating expenses including interest expense, interest income and other expense, net. | |||||||||||||||||||||||||||||||||||
6 Earnings per share amounts calculated on an unrounded basis. | |||||||||||||||||||||||||||||||||||
| Note: Management believes the resulting comparisons 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. | |||||||||||||||||||||||||||||||||||
Interpublic Group 909 Third Avenue New York, NY 10022 212-704-1200 tel 212-704-1201 fax
9
Interpublic Group April 28, 2022 FIRST QUARTER 2022 EARNINGS CONFERENCE CALL
2Interpublic Group of Companies, Inc. • Net revenue growth was +9.8% and organic growth of net revenue was +11.5% ◦ U.S. organic growth was +12.2% ◦ International organic growth was +10.2% ◦ Double-digit percent organic growth in each reportable segment • Net income as reported was $159.4 million • Adjusted EBITA before restructuring charges was $273.6 million, with margin on net revenue of 12.3% • Diluted EPS was $0.40 as reported and was $0.47 as adjusted • Repurchased $63 million under the reauthorized share repurchase program • Pleased with our strong start to the year and tone of business Overview — First Quarter 2022 Organic change of net revenue, adjusted EBITA before Restructuring Charges and adjusted diluted EPS are non-GAAP measures. Management believes these metrics 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. See our non-GAAP reconciliations of organic net revenue change on page 14 and adjusted results on pages 15-18.
3Interpublic Group of Companies, Inc. Three Months Ended March 31, 2022 2021 Net Revenue $ 2,227.2 $ 2,027.7 Billable Expenses 341.3 229.3 Total Revenue 2,568.5 2,257.0 Salaries and Related Expenses 1,564.4 1,393.1 Office and Other Direct Expenses 323.4 292.9 Billable Expenses 341.3 229.3 Cost of Services 2,229.1 1,915.3 Selling, General and Administrative Expenses 19.3 28.2 Depreciation and Amortization 67.8 69.2 Restructuring Charges 6.6 1.3 Total Operating Expenses 2,322.8 2,014.0 Operating Income 245.7 243.0 Interest Expense, net (29.6) (42.7) Other Expense, net (1) (6.2) (83.9) Income Before Income Taxes 209.9 116.4 Provision for Income Taxes 49.1 23.8 Equity in Net Income (Loss) of Unconsolidated Affiliates 0.1 (0.2) Net Income 160.9 92.4 Net Income Attributable to Non-controlling Interests (1.5) (0.7) Net Income Available to IPG Common Stockholders $ 159.4 $ 91.7 Earnings per Share Available to IPG Common Stockholders - Basic $ 0.40 $ 0.23 Earnings per Share Available to IPG Common Stockholders - Diluted $ 0.40 $ 0.23 Weighted-Average Number of Common Shares Outstanding - Basic 394.5 391.5 Weighted-Average Number of Common Shares Outstanding - Diluted 398.4 396.0 Dividends Declared per Common Share $ 0.290 $ 0.270 ($ in Millions, except per share amounts) Operating Performance (1) Includes a loss of $74.0 on early extinguishment of debt for the three months ended March 31, 2021.
4Interpublic Group of Companies, Inc. Three Months Ended $ % Change March 31, 2021 $ 2,027.7 Foreign currency (27.6) (1.4%) Net acquisitions/(divestitures) (6.7) (0.3%) Organic 233.8 11.5% Total change 199.5 9.8% March 31, 2022 $ 2,227.2 Three Months Ended March 31, Change 2022 2021 (1) Organic Total Media, Data & Engagement Solutions $ 932.1 $ 849.8 11.5% 9.7% IPG Mediabrands, Acxiom, and Kinesso, and our digital and commerce specialist agencies, which include MRM, R/GA, and Huge Integrated Advertising & Creativity Led Solutions $ 958.8 $ 875.7 11.2% 9.5% McCann Worldgroup, IPG Health, MullenLowe Group, FCB, and our domestic integrated agencies Specialized Communications & Experiential Solutions $ 336.3 $ 302.2 12.5% 11.3% IPG DXTRA and DXTRA Health, Weber Shandwick, Golin, and our sports, entertainment and experiential agencies (1) Results for the three months ended March 31, 2021 have been recast to reflect our new reportable segments. See reconciliation of segment organic net revenue change on page 14. ($ in Millions) Net Revenue
5Interpublic Group of Companies, Inc. Organic Net Revenue Change by Region “All Other Markets” includes Canada, Africa and the Middle East. Circle proportions represent consolidated net revenue distribution. See reconciliation of organic net revenue change, including total net revenue change, on page 14. Three Months Ended March 31, 2022 +12.2% United States +1.5% United Kingdom +9.4% Continental Europe +21.5% Latin America +9.2% Asia Pacific +10.2% International +11.5% Worldwide +19.9% All Other Markets
6Interpublic Group of Companies, Inc. Operating Expenses % of Net Revenue (1) Excludes amortization of acquired intangibles. Three Months Ended March 31 (1)
7Interpublic Group of Companies, Inc. Three Months Ended March 31, 2022 As Reported Amortization of Acquired Intangibles Restructuring Charges (1) Net Losses on Sales of Businesses Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges (2) $ 245.7 $ (21.3) $ (6.6) $ 273.6 Total (Expenses) and Other Income (3) (35.8) $ (6.4) (29.4) Income Before Income Taxes 209.9 (21.3) (6.6) (6.4) 244.2 Provision for Income Taxes 49.1 4.2 1.6 0.0 54.9 Effective Tax Rate 23.4 % 22.5 % Equity in Net Income of Unconsolidated Affiliates 0.1 0.1 Net Income Attributable to Non-controlling Interests (1.5) (1.5) DILUTED EPS COMPONENTS: Net Income Available to IPG Common Stockholders $ 159.4 $ (17.1) $ (5.0) $ (6.4) $ 187.9 Weighted-Average Number of Common Shares Outstanding 398.4 398.4 Earnings per Share Available to IPG Common Stockholders (4) $ 0.40 $ (0.04) $ (0.01) $ (0.02) $ 0.47 ($ in Millions, except per share amounts) (1) Restructuring charges of $6.6 in the first quarter of 2022 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (2) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 16. (3) Consists of non-operating expenses including interest expense, interest income, and other expense, net. (4) Earnings per share amounts calculated on an unrounded basis. See full non-GAAP reconciliation of adjusted diluted earnings per share on page 15. Adjusted Diluted Earnings Per Share
8Interpublic Group of Companies, Inc. Three Months Ended March 31, 2022 2021 Net Income $ 160.9 $ 92.4 OPERATING ACTIVITIES: Depreciation & amortization 81.0 92.2 Deferred taxes 19.9 18.2 Other non-cash items 12.3 2.4 Net losses on sales of businesses 6.4 12.5 Loss on early extinguishment of debt — 74.0 Change in working capital, net (865.4) (496.9) Change in other non-current assets & liabilities (48.7) (44.6) Net cash used in Operating Activities (633.6) (249.8) INVESTING ACTIVITIES: Capital expenditures (30.7) (28.3) Net proceeds from investments 2.6 28.8 Other investing activities (0.7) (0.3) Net cash (used in) provided by Investing Activities (28.8) 0.2 FINANCING ACTIVITIES: Common stock dividends (118.3) (109.1) Repurchases of common stock (63.1) — Tax payments for employee shares withheld (38.3) (22.4) Distributions to noncontrolling interests (3.1) (3.3) Acquisition-related payments (1.1) (3.4) Proceeds from long-term debt — 998.1 Early extinguishment of long-term debt — (1,066.8) Exercise of stock options — 8.0 Net increase (decrease) in short-term borrowings 13.9 (2.9) Other financing activities (0.1) (10.9) Net cash used in Financing Activities (210.1) (212.7) Currency effect 5.0 (30.4) Net decrease in cash, cash equivalents and restricted cash $ (867.5) $ (492.7) ($ in Millions) Cash Flow
9Interpublic Group of Companies, Inc. March 31, 2022 December 31, 2021 March 31, 2021 CURRENT ASSETS: Cash and cash equivalents $ 2,402.3 $ 3,270.0 $ 2,015.3 Accounts receivable, net 4,179.9 5,177.7 3,440.3 Accounts receivable, billable to clients 2,155.3 2,347.2 1,842.7 Assets held for sale 30.4 8.2 4.5 Other current assets 502.1 428.7 467.4 Total current assets $ 9,270.0 $ 11,231.8 $ 7,770.2 CURRENT LIABILITIES: Accounts payable $ 7,245.3 $ 8,960.0 $ 5,862.0 Accrued liabilities 590.9 918.1 608.9 Contract liabilities 760.0 688.5 689.1 Short-term borrowings 59.1 47.5 43.1 Current portion of long-term debt 0.6 0.7 502.8 Current portion of operating leases 270.3 265.8 268.8 Liabilities held for sale 28.0 9.4 9.8 Total current liabilities $ 8,954.2 $ 10,890.0 $ 7,984.5 ($ in Millions) Balance Sheet — Current Portion
10Interpublic Group of Companies, Inc. Short-Term Debt Senior Notes 4.650% 5.400%2.400%4.200% Total Debt = $3.0 billion ($ in Millions) Debt Maturity Schedule 4.750% 3.375% ... ... (1)
11Interpublic Group of Companies, Inc. Summary • A strong start to the year, with solid tone of business • Continued focus on driving growth Building on our industry-leading foundation ◦ Strong agency brands ◦ Exceptional talent ◦ Data capabilities at scale ◦ Creative and innovative marketing solutions ◦ Integrated digital and digital specialists ◦ "Open architecture" agency collaboration • Effective expense management is an ongoing priority • Flexible business model is positioned to address macro uncertainty • Financial strength is a continued source of value creation
12Interpublic Group of Companies, Inc. Appendix
13Interpublic Group of Companies, Inc. 2022 Q1 Q2 Q3 Q4 YTD 2022 Depreciation and amortization (1) $ 46.5 $ 46.5 Amortization of acquired intangibles 21.3 21.3 Amortization of restricted stock and other non-cash compensation 12.5 12.5 Net amortization of bond discounts and deferred financing costs 0.7 0.7 2021 Q1 Q2 Q3 Q4 FY 2021 Depreciation and amortization (1) $ 47.6 $ 48.5 $ 47.9 $ 53.6 $ 197.6 Amortization of acquired intangibles 21.6 21.6 21.5 21.5 86.2 Amortization of restricted stock and other non-cash compensation 20.3 21.9 15.7 12.2 70.1 Net amortization of bond discounts and deferred financing costs 2.7 1.1 1.0 0.9 5.7 ($ in Millions) (1) Excludes amortization of acquired intangibles. Depreciation and Amortization
14Interpublic Group of Companies, Inc. Components of Change Change Three Months Ended March 31, 2021 Foreign Currency Net Acquisitions / (Divestitures) Organic Three Months Ended March 31, 2022 Organic Total SEGMENT: Media, Data & Engagement Solutions (1) (2) $ 849.8 $ (15.1) $ (0.1) $ 97.5 $ 932.1 11.5% 9.7% Integrated Advertising & Creativity Led Solutions (1) (3) 875.7 (9.5) (5.8) 98.4 958.8 11.2% 9.5% Specialized Communications & Experiential Solutions (1) (4) 302.2 (3.0) (0.8) 37.9 336.3 12.5% 11.3% Total $ 2,027.7 $ (27.6) $ (6.7) $ 233.8 $ 2,227.2 11.5% 9.8% GEOGRAPHIC: United States $ 1,309.8 $ — $ — $ 160.3 $ 1,470.1 12.2% 12.2% International 717.9 (27.6) (6.7) 73.5 757.1 10.2% 5.5% United Kingdom 184.0 (4.3) — 2.7 182.4 1.5% (0.9%) Continental Europe 175.8 (13.0) — 16.5 179.3 9.4% 2.0% Asia Pacific 169.1 (6.7) (3.3) 15.5 174.6 9.2% 3.3% Latin America 75.4 (3.8) (0.1) 16.2 87.7 21.5% 16.3% All Other Markets 113.6 0.2 (3.3) 22.6 133.1 19.9% 17.2% Worldwide $ 2,027.7 $ (27.6) $ (6.7) $ 233.8 $ 2,227.2 11.5% 9.8% ($ in Millions) Reconciliation of Organic Net Revenue (1) Results for three month ended March 31, 2021 have been recast to reflect our new reportable segments. (2) Comprised of IPG Mediabrands, Acxiom, and Kinesso, as well as our digital and commerce specialist agencies, which include MRM, R/GA, and Huge. (3) Comprised of McCann Worldgroup, IPG Health, MullenLowe Group, FCB, and our domestic integrated agencies. (4) Comprised of IPG DXTRA and DXTRA Health, Weber Shandwick, Golin, and our sports, entertainment and experiential agencies.
15Interpublic Group of Companies, Inc. (1) The table reconciles our reported results to our adjusted non-GAAP results. Management believes the resulting comparisons 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. (2) Restructuring charges of $6.6 in the first quarter of 2022 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (3) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 16. (4) Consists of non-operating expenses including interest expense, interest income, and other expense, net. (5) Earnings per share amounts calculated on an unrounded basis. Three Months Ended March 31, 2022 As Reported Amortization of Acquired Intangibles Restructuring Charges (2) Net Losses on Sales of Businesses Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges (3) $ 245.7 $ (21.3) $ (6.6) $ 273.6 Total (Expenses) and Other Income (4) (35.8) $ (6.4) (29.4) Income Before Income Taxes 209.9 (21.3) (6.6) (6.4) 244.2 Provision for Income Taxes 49.1 4.2 1.6 0.0 54.9 Effective Tax Rate 23.4 % 22.5 % Equity in Net Income of Unconsolidated Affiliates 0.1 0.1 Net Income Attributable to Non-controlling Interests (1.5) (1.5) Net Income Available to IPG Common Stockholders $ 159.4 $ (17.1) $ (5.0) $ (6.4) $ 187.9 Weighted-Average Number of Common Shares Outstanding - Basic 394.5 394.5 Dilutive effect of stock options and restricted shares 3.9 3.9 Weighted-Average Number of Common Shares Outstanding - Diluted 398.4 398.4 Earnings per Share Available to IPG Common Stockholders (5): Basic $ 0.40 $ (0.04) $ (0.01) $ (0.02) $ 0.48 Diluted $ 0.40 $ (0.04) $ (0.01) $ (0.02) $ 0.47 Reconciliation of Adjusted Results (1) ($ in Millions, except per share amounts)
16Interpublic Group of Companies, Inc. Reconciliation of Adjusted EBITA Three Months Ended March 31, 2022 2021 Net Revenue $ 2,227.2 $ 2,027.7 Non-GAAP Reconciliation: Net Income Available to IPG Common Stockholders $ 159.4 $ 91.7 Add Back: Provision for Income Taxes 49.1 23.8 Subtract: Total (Expenses) and Other Income (2) (35.8) (126.6) Equity in Net Income (Loss) of Unconsolidated Affiliates 0.1 (0.2) Net Income Attributable to Non-controlling Interests (1.5) (0.7) Operating Income $ 245.7 $ 243.0 Add Back: Amortization of Acquired Intangibles 21.3 21.6 Adjusted EBITA $ 267.0 $ 264.6 Adjusted EBITA Margin on Net Revenue % 12.0 % 13.0 % Restructuring Charges (3) 6.6 1.3 Adjusted EBITA before Restructuring Charges $ 273.6 $ 265.9 Adjusted EBITA before Restructuring Charges Margin on Net Revenue % 12.3 % 13.1 % (1) (1) The table reconciles our reported results to our adjusted non-GAAP results. Management believes the resulting comparisons 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. (2) Includes a loss of $74.0 on early extinguishment of debt in the first quarter of 2021. (3) Restructuring charges of $6.6 and $1.3 in the first quarter of 2022 and 2021, respectively, were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. ($ in Millions)
17Interpublic Group of Companies, Inc. Media, Data & Engagement Solutions (2) Integrated Advertising & Creativity Led Solutions (3) Specialized Communications & Experiential Solutions (4) Corporate and Other (5) IPG Consolidated (1) Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, 2022 2021 (6) 2022 2021 (6) 2022 2021 (6) 2022 2021 (6) 2022 2021 (6) Net Revenue $ 932.1 $ 849.8 $ 958.8 $ 875.7 $ 336.3 $ 302.2 $ 2,227.2 $ 2,027.7 Segment/Adjusted EBITA $ 101.4 $ 135.8 $ 130.5 $ 118.1 $ 56.0 $ 40.8 $ (20.9) $ (30.1) $ 267.0 $ 264.6 Restructuring Charges — — 6.1 0.4 0.4 0.9 0.1 — 6.6 1.3 Segment/Adjusted EBITA before Restructuring Charges $ 101.4 $ 135.8 $ 136.6 $ 118.5 $ 56.4 $ 41.7 $ (20.8) $ (30.1) $ 273.6 $ 265.9 Margin (%) of net revenue 10.9 % 16.0 % 14.2 % 13.5 % 16.8 % 13.8 % 12.3 % 13.1 % ($ in Millions) (1) Adjusted EBITA before restructuring charges is calculated as net income available to IPG common stockholders before provision for (benefit of) incomes taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, net income attributable to non-controlling interests, amortization of acquired intangibles and restructuring charges. (2) Comprised of IPG Mediabrands, Acxiom, and Kinesso, as well as our digital and commerce specialist agencies, which include MRM, R/GA, and Huge. (3) Comprised of McCann Worldgroup, IPG Health, MullenLowe Group, FCB, and our domestic integrated agencies. (4) Comprised of IPG DXTRA and DXTRA Health, Weber Shandwick, Golin, and our sports, entertainment and experiential agencies. (5) Corporate and Other is primarily comprised of selling, general and administrative expenses including corporate office expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions. (6) Results for the three months ended March 31, 2021 have been recast to reflect our new reportable segments. Adjusted EBITA before Restructuring Charges by Segment (1)
18Interpublic Group of Companies, Inc. Three Months Ended March 31, 2021 As Reported Amortization of Acquired Intangibles Restructuring Charges (2) Net Losses on Sales of Businesses Loss on Early Extinguishment of Debt (3) Adjusted Results (Non-GAAP) Operating Income and Adjusted EBITA before Restructuring Charges (4) $ 243.0 $ (21.6) $ (1.3) $ 265.9 Total (Expenses) and Other Income (5) (126.6) $ (12.5) $ (74.0) (40.1) Income Before Income Taxes 116.4 (21.6) (1.3) (12.5) (74.0) 225.8 Provision for Income Taxes 23.8 4.2 0.3 0.7 18.5 47.5 Effective Tax Rate 20.4 % 21.0 % Equity in Net Loss of Unconsolidated Affiliates (0.2) (0.2) Net Income Attributable to Non-controlling Interests (0.7) (0.7) Net Income Available to IPG Common Stockholders $ 91.7 $ (17.4) $ (1.0) $ (11.8) $ (55.5) $ 177.4 Weighted-Average Number of Common Shares Outstanding - Basic 391.5 391.5 Dilutive effect of stock options and restricted shares 4.5 4.5 Weighted-Average Number of Common Shares Outstanding - Diluted 396.0 396.0 Earnings per Share Available to IPG Common Stockholders (6): Basic $ 0.23 $ (0.04) $ 0.00 $ (0.03) $ (0.14) $ 0.45 Diluted $ 0.23 $ (0.04) $ 0.00 $ (0.03) $ (0.14) $ 0.45 ($ in Millions, except per share amounts) (1) The table reconciles our reported results to our adjusted non-GAAP results. Management believes the resulting comparisons 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. (2) Restructuring charges of $1.3 in the first quarter of 2021 were related to adjustments to our restructuring actions taken in 2020, which were designed to reduce our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business. (3) Consists of a loss related to the early extinguishment of our 4.000% unsecured senior notes due 2022, 3.750% unsecured senior notes due 2023 and half of our 4.200% unsecured senior notes due 2024. (4) Refer to non-GAAP reconciliation of Adjusted EBITA before Restructuring Charges on page 16. (5) Consists of non-operating expenses including interest expense, interest income, and other expense, net. (6) Earnings per share amounts calculated on an unrounded basis. Reconciliation of Adjusted Results (1)
19Interpublic Group of Companies, Inc. Metrics Update
20Interpublic Group of Companies, Inc. Metrics Update CATEGORY: SALARIES & RELATED OFFICE & OTHER DIRECT FINANCIAL (% of net revenue) (% of net revenue) METRIC: Trailing Twelve Months Trailing Twelve Months Available Liquidity Base, Benefits & Tax Occupancy Expense Credit Facility Covenant Incentive Expense All Other Office and Other Direct Expenses Severance Expense Temporary Help
21Interpublic Group of Companies, Inc. Salaries & Related Expenses % of Net Revenue, Trailing Twelve Months
22Interpublic Group of Companies, Inc. Salaries & Related Expenses (% of Net Revenue) “All Other Salaries & Related,” not shown, was 1.0% and 1.4% for the three months ended March 31, 2022 and 2021, respectively. Three Months Ended March 31 2022 2021
23Interpublic Group of Companies, Inc. Office & Other Direct Expenses % of Net Revenue, Trailing Twelve Months
24Interpublic Group of Companies, Inc. Office & Other Direct Expenses (% of Net Revenue) “All Other” primarily includes client service costs, non-pass through production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses. Three Months Ended March 31 2022 2021
25Interpublic Group of Companies, Inc. ($ in Millions) Available Liquidity Cash, Cash Equivalents + Available Committed Credit Facilities Available Committed Credit FacilityCash and Cash Equivalents
26Interpublic Group of Companies, Inc. Financial Covenant Four Quarters Ended March 31, 2022 Leverage Ratio (not greater than) (2) 3.50x Actual Leverage Ratio 1.65x CREDIT AGREEMENT EBITDA RECONCILIATION: Four Quarters Ended March 31, 2022 Net Income Available to IPG Common Stockholders $ 1,020.5 + Non-Operating Adjustments (3) 418.4 Operating Income $ 1,438.9 + Depreciation and Amortization 349.1 + Other Non-cash Charges Reducing Operating Income 14.7 Credit Agreement EBITDA (2): $ 1,802.7 ($ in Millions) Credit Facility Covenant (1) (1) The leverage ratio financial covenant applies to our committed corporate credit facility, amended and restated as of November 1, 2021 ( the "Credit Agreement"). (2) The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement) for the four quarters then ended. (3) Includes adjustments of the following items from our consolidated statement of operations: provision for income taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, and net (income) loss attributable to non-controlling interests.
27Interpublic Group of Companies, Inc. Cautionary Statement This investor presentation contains forward-looking statements. Statements in this investor presentation that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other filings with the Securities and Exchange Commission ("SEC"). Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following: ▪ the effects of a challenging economy on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition; ▪ the impacts of COVID-19 pandemic, including unanticipated developments like the emergence of new coronavirus variants or any shortfalls in vaccination efforts, and associated mitigation measures such as social distancing efforts and restrictions on businesses, social activities and travel, any failure to realize anticipated benefits from the rollout of COVID-19 vaccination campaigns and the resulting impact on the economy, our clients and demand for our services, which may precipitate or exacerbate other risks and uncertainties; ▪ our ability to attract new clients and retain existing clients; ▪ our ability to retain and attract key employees; ▪ risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a challenging economy; ▪ potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments; ▪ risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in interest rates, inflation rates and currency exchange rates; ▪ developments from changes in the regulatory and legal environment for advertising and marketing services companies around the world, including laws and regulations related to data protection and consumer privacy; ▪ the impact on our operations of general or directed cybersecurity events; and ▪ failure to fully realize the anticipated benefits of our 2020 restructuring actions and other cost-saving initiatives. Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q and our other SEC filings.