IPG - Earnings call transcript Q1 2018 | The Interpublic Group of Companies, Inc.

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Operator

Good morning, and welcome to The Interpublic Group First Quarter 2018 Conference Call. All parties are in a listen-only mode, until the question-and-answer portion. [Operator Instructions] This conference is being recorded.

If you have any objections, you may disconnect at this time. I would like to introduce Mr. President Relations. Vice Senior Leshne, of Investor Jerry Sir, begin. you may you. Thank

Jerome Leshne

joining Thank Thank morning. for us. you. Good you

We have are earnings website, Roth posted our Frank interpublic.com. on slide and This our presentation morning, we Mergenthaler. joined Michael release by and our

be with to We market at to before Eastern. by X:XX Q&A. We will A.M. remarks followed begin open prepared plan conclude

earnings in other this release our included are subject These call, our about Company. is presentation slide we During the the XX-Q that the and will the uncertainties and statements in in statement refer our filings to forward-looking detailed SEC. cautionary to further with and

greater refer We in our of and that, also to these not to the measures operating measures. useful financial this point, over things performance. to pleasure will Michael for We my while believe Roth. GAAP that it transparency certain non-GAAP turn for is a review data supplemental substitute At provide allow measures,

Michael Roth

morning you, additional pleased Jerry. our on review and performance. to I'll thank for agencies, for you will our of growth. all Thank with an We're us conclude by And and our be quarter. to provide start solid then Q&A. highlights report by as profit quarter another of Frank followed results our covering operating we detail, the I'll update this joining revenue

growth X.X%, international a XX% Our LatAm. in net while revenue in organic X.X%, the strong growth the QX, strong and year-ago. results Growth from at and was was income exceeded paced in operating UK X.X% U.S. by notably was

agencies. of across million creative-led an events expenses. our portfolio effectiveness year, QX disciplines, specialists, to growth last ongoing compared encouraging a which and $XX with underscore driven media, operating disciplines profit the and were of year. both the reflects was our topline around $XX integrated million our and This is our and offerings the to the and our start by of strength increases agencies Our continues competitiveness our including sports marketing range digital wide

our distributed through seasonally revenue, our year. progress evenly to indicative said, fairly the full-year from Returning That in you know, Mediabrands, financial targets. business spend. Octagon, topline, our solid Deutsch. new FCB, costs We notably range client terms McCann, is Huge, Jack of is our first of growth increases Group, most quarter the from MullenLowe Morton a of existing As our agencies, toward performance wide small wins contributions are while and reflects saw and total our both

by the In services, terms of led client transportation. healthcare were we financial increases in auto and sectors, and

creation. continued source structure value to a be of Our capital

marking our February, As Board increased of the announced in by year dividend double-digit our increases. XX%, sixth percentage consecutive

remaining to these delivery top-tier The transformation of our Earlier and digital we Outstanding grounded BBB+, We and repurchase media, targeted continue creative, industry-leading services, of toward hallmarks recognizing marketing. front media million needs us upgraded this creativity business efficient for across evolving the strongly also Company's share debt our Board our become our and into and IPG precisely keeping turn, have all be we sets This, X.X in analytics, in of We're XXX Fitch us. customized, to of all people. integrated, differentiators have our and always agencies. excellence in skill Investor portfolio world the performance open-architecture of month, our and reflect marketing communications center, further By combine strong and positions Services capabilities the senior used solutions. credit million the clients' pleased the quarter, announced $XX shares continues consumer and ratings profile. in first authorizations. to we our that million $XXX data have insights authorized to had million another repurchase We the repurchase. that in outstanding February on credit

expansion and of as a our strong margin focused highly discipline, combination on invest well our always The continuing winning to as We with are capital clients on operating coupled in for strength alike. drive returns further offerings, shareholders capitalizing is to businesses. growth and

As remains in have uncertainty to the as our XX for performance margin targets forward confident growth his with on year. provide business, contend of is tone At which the there and the is of to full-year, us, we end I'll results. current on from business that to for But has macro and know, a the on on small of date expansion update after move we and for operating restated to the QX you additional outlined are track remarks, to stage, growth through X% be Frank seasonally of this organic I'll and us Q&A. XXXX the our results. high income to deliver X% our XX it And to points our followed tone by over detail and basis turn back agencies we

Frank Mergenthaler

A Thank means with referring standard, you, to reporting XXXX for accompanies ASC reminder year webcast. restate In accounting on directly are the Michael. that standard adopting we the recognition, new accounting morning. Good our QX we're new I'll elected to this This standard. that same XXXX. quarter XXX. slide a comparing revenue the revenue our to we presentation be first

cash or to we value XXXX, no operating for the is With our And XXX, last no there change in which is conference target change priorities our creation. of adoption on is flow. also for unchanged. call our in February, to outlined income management There

total results. services of format. than X% from the Secondly, this week expenses Expenses XXXX along earlier the strictly XXXX. functional no cost our clients matter has is reflects furnished quarter presentation. recorded by operating X-K, of income and reclassifying in to expense a on with an SG&A Form to explanatory less a of restatement and preliminary in We our to XXX, our SG&A This are now provided statement operating impact

the summary the in presentation. today's of of a included also of impact have earnings We XXX appendix

X.X% operating strong in losses business of was for revenue mainly on X.X% was last first you'll XX% was Moving $X.XX in X, an the in were international QX the the X.X% of of quarter, our our Growth growth million, at quarter. profit markets. see increase was was Adjusted EPS diluted an to a of to non-cash, per Slide share. overview $X.XX. sales Diluted U.S. compared results the our $XX of year. earnings and loss quarter. Organic net in in

high And quarter rate tax small expect given adjusted pretax region. seasonally rate not in Our a by unusual, our the due rate was mix XX% continue quarter of first effective the is of to full-year. for our in level income. we the profitability our tax to Volatility tax

slides detail see quarter. Turning the follow. P&L to our operating in revenue cover that for the I'll X, and you'll expenses Slide in

noting office Here, three of expenses, services, expenses breakout line other, billable billable expenses. net and our Further, and related, under is the comprise worth operating salaries and and of it items cost revenue. the first

for and general expense closely Our tracks to administrative our selling, segment corporate expense.

the We amortization expense is face Further are on income of down income, and had reflects which worth of sales the in quarter, also it out non-cash. QX, the the $XX businesses on expense of noting below also statement. breaking other million losses P&L, operating depreciation mainly we that in

a while of to organic which The were X%, in X.X% was detail QX Net The of increase was was the revenue Slide impact on change an quarter, was net rates X. Turning revenue resulting XX on negative dispositions positive from exchange X.X%. on increase the basis $X.XX XXXX. billion more net points.

Morton Integrated Network Jack the net by slide, We from as contributions disciplines agencies. organic sports half revenue marketing was events Agency growth CMG experiential as at bottom a the Octagon X.X% of segment. On and and points had range IAN grew led XX this across well basis of our all organically, FutureBrand. and

McCann, Group region. by Again, U.S. Huge X.X%. Slide FCB, Octagon. advances across Moving agencies, disciplines organic Digital, revenue by on Mediabrands, and growth broadly to and shared were X, was notably and MullenLowe

were services, client CPG, we sectors, U.S. and led terms healthcare the and financial transportation. of in In auto by

organic at in Growth of basis which some Pac, Spain losses, international posted Turning offset another Europe, along organically. the was notably with MullenLowe grew our reflecting points organically. XX net of a quarter of Japan. region, and we France In had across with In an by the from and Huge increased, in account LatAm UK, spending X.X%. UK, Germany the number strong while largest decreased partially clients to Italy the strong XX.X% again our we X.X%, in Among decreased and growth Continental most Asia Mediabrands, the along markets, revenue decrease Group. McCann quarter. markets, grew lower

organically, continue We ongoing Argentina the strong growth very in led in headwinds macro revenue X.X% and in Mexico, to Net than more grew have growth Canada. by increased Colombia, - offset Brazil. other markets in while

Moving on XX basis grew net QX to to expenses. operating revenue operating Slide points margin X.X%. on X

temporary for which to Our Total salaries increased flat The compared XX% approximately net expense increase from approximately as as expense well XX,XXX, to of and was was related to at year-ago. headcount a XX.X% year-ago. due expenses revenue a severance higher was ratio quarter-end is labor.

revenue other compared quarter. year-ago. XX by the operating X.X% from SG&A including and costs. points, leveraged improvement direct expenses XX XX.X% office basis our We Our points to year, expenses generated of leverage were last of in points basis of basis on XX net occupancy was which X% We a

X with D&A Our net a increased Slide and of share, of as per loss is year-ago to year-ago. income was the from X.X% expense per net revenue to $X.XX share adjusted. bridge for diluted million our $X.XX, diluted X.X% compared as $X from reported, a

flow. There related includes adjusted of was diluted million sale Slide results QX to pretax share, that to cash million X, earnings small operations of year-ago. share. loss of agencies. tax Cash loss we The million compared Xp diluted our per see, was in a used essentially can in with turn impact was per no $XXX you net On in As a resulting a $XXX against of $X.XX benefit below-the-line loss. non-strategic the $XX

seasonal. operating is As cash flow you know, highly our

working typically quarter. business fourth uses in and Our first cash significant generates in quarter the from cash the capital

in follows this $XX generated capital This fourth in large million. year's million repurchases. cash in mainly and During quarter we our to seasonal $XX program. for Financing dividend activities when short-term first million. build provided Investing utilized quarter, for million common used last in our $XX activities increase was We our in commercial for year's net paper CapEx. stock $XXX used million borrowings, due $XXX share quarter million $XXX working the an used cash

$XXX Our the for was quarter decrease net million. cash in

our equivalents. portion Slide to We on current $XXX cash balance with in million quarter and the sheet Turning first the X. of ended

seen lower you've tends as year-end is Our this at at past year. total the Slide XX, seasonal, right, XX year decrease peak XX our we show the over debt first at at the quarter. cash during On years, and over March to last and, position the year-end and level levels far years and our

debt. commercial and more We term are utilizing short-term less paper

in performance been Slide previously. represents over In with of debt are objectives and me turn been had than has the achieving revenue that, to full-year. Michael. in a good variable which growth on our As quarter, pleased result, start our the back summary, terms recent it we it profit With more quarters total over XX, solid let financial for a

Michael Roth

are a pleased of as an in important Thank solid last well performance with of This growth metric. our believe year, Building we you, would of with which certainly on encouraging strong marketers QX Frank. a clients cross-section from as as the our be us we evidence growth as mode, agencies. positive on range very And notably for indicator came well of returning seeing clearly that and to revenue sector. we're the our organic domestic results quarter, broad a

the continue is Concurrently, that in company win and to development. which as leader PR. which performance over to to are talent still of our we relates that brands holding the in business recognition well an publications, representation our from well values. agencies in built of advertising, makes are to are both creative, leaders delivering in data we that that on and also as the talent vital advertising such culture innovation. as business This that inclusion it of a significant economic While we an highest our collaboration key to know ensure nurturing technology. clients believe to our forward important, a companies, us add in we the is in a healthcare a track leader as clearly recruiting on to when Up DNA. that to fundamentals we strategy is priority the as we long-standing a uncertainty, industry-leading we're success consistently can gratifying incorporates Time's well one have employer areas terms That's future there across for open awards behind open right core decade, one that macro of our the in portfolio invested and as track Diversity value led past and our has of post why we U.S. women agenda. each full and we've respective It's and as organic diversity. so work we in on we digital, culture if of part sound, architecture Equally we're The significant further report competitions choice a range continue digital leaders top a invest their see top Those the initiative of our to Interpublic architecture recently pharma this XX dimensions world's a a significant to of as time in do know for see and is key discipline. from the When especially agencies in commitment top industry we're with the basic new which This way solutions talent in capabilities, have in number move agencies some of business proud is are been us their of done to value. right is now,

becomes the of teams widest these perspectives complex, well importance to ensure to As more increasingly important. of In the engaging as content possible and becomes our order range that as and media insights in backgrounds, need experiences. powerful of the world excel we and life areas, represent marketing consumer

engage committed standards full also as and holding with issues corporate to and conduct. initiatives, remain to responsibility. range keep on we'll sustainability we our will personal a D&I we So of major will our to just the continue And stakeholders people highest around of ourselves

On IPG focus expertise business pace With particularly agnostic the capitalize the of well-positioned chain of us. technology as on marketers meaningful is across needs, a value our the and which believe creates still media a on represent digital as the clients' totally challenges the for change like that we opportunity subject marketplace. complexity, impacting to and speed a company evolving at well for is that consumers

key Let's the move on again at agency the were the progress now developments strong led level on which Mediabrands, to posted from by performance. the once in very Highlights across performance quarter and review group.

India, safety not our Honest wins in new with consistent leadership key brand such see to We digital Federal our counsel with area Mutual ad provide Company that demonstrates position with clients' UM Africa our South can interest is as winning in and to unbiased Vietnam the like inventory industry's and so keeping Spotify. that officer. of a well This first continued initiative and Liberty markets strength focus business clients. and also UM the to The positions in Australian as as the Government chief and foremost adding take media fully ecosystem. It's we appointed first long-standing

made During CEO. news the quarter, global programmatic the Cadreon, platform, Schmidt by Erica our naming as Company's

AMP, This Mediabrands coveted housed digital will audience McCann Nielsen recognition. Cannes marketing within technology our all also Magic its MRM//McCann being We Agency the At with levels the by of year secured In capabilities. saw also TV during is quarter insights. millions at Quadrant continued compelling, among by agency Worldgroup, with behavior and announced Year high Grand March, performance industry viewing a as global followed IDs named designation the deep by of partnership was and important match Gartner MRM, the ability as AdAge well last first-ever This Prix very leader solid to by an the creative named combining the QX. Business-to-Business of with agencies. within purchase first-of-its-kind Nielsen. platform, technology as well extensive give as consumer strategic data us management

At win this McCann well the global Health in real McCann's the the in most late in is FCB, impact standout Combining council. the growing we just which of two bright agency's of tap and a win on well launching with include first also scientists helping which creative GE to month industry's success Another running other the of and as the by agency such what Innovations offering have FCB industry. is institutions Europe as our was and our as reach in Appliance Worldgroup on an of Cannes. Agency results the competitive and can the in the are government clients. as also the A in Health, agencies, businesses. Francisco organizations, network is BMW made will healthcare science Canada. as XX, FCB network, on exceptional across and this the This Area with real this healthcare since by at as McCann one and community evidence-based best-in-class Mini that important elevate group Health, interest San Hotwire West news scientific of Ad into most make in of Chicago's very specialist and which win Spain, dynamic powerful the very admired News is medical Year. the their of agency global firepower U.S. of leading of a recognized our the such the year creative McCann sectors addition Other of the sharing years by network its office earlier family, Med clients' of MRM spots of across agency most review, in further builds as pharma recent

in the business globally. launched significant win full-service agency's the also agency U.K., such new a Mediahub, the performer. China, standout a FCB During also tips Road where with announced quarter, winning the been the Year Professional its Schick and and Global recently expanded and And division India, had MullenLowe in on PG markets also Paints and agencies. in this earlier Lufthansa is MediaPost Entertainment as week, and brand. built bundled agency Mediahub strong quarter network and Wyndham new a The Hotel respected largest named by on Agency and range brand office. Creative Tesco network a And Unilever's in major of will number MullenLowe a added of will York accounts, AkzoNobel's Edgewell was the a the that fronts. won Malaysia in including of based New quarter, significant of global serve media content a the offering, the agency most clients has business marketing be had The global the one Group. streak

launched analytic cognitive recently and in decision agency called the the and based the year, region, as businesses, front, APAC project in we progressed. year transformation of scientists out would digital the a in include Tokyo. which science data excellence for particularly On be challenging center environment Last the

with the At introducing to in CMG, implementation a new devoted And sports During agency saw including marked position were female Cannes, other been has capabilities Huge this as we're will which opportunity. in technology And a activity to R/GA, is number and new office. among consulting reinvesting made Huge well was in marketing launched team at seeing founders. significant of at for new every look ago. Results new major expertise, named we out design. helped it assignment to and and the which area. leader LOT transitioned accelerators, the of agencies. increased much we year's At its first a of in in next step a by appointments also won London also digital we and further new digital in areas, in global marketing, Quadrant leader of number an R/GA improved, stage and agency to Angeles. improvement that business the development. and Gartner quarter, a from tech Los this and leadership Tokyo transformation Shiseido forward one it the years evolution consulting startups in senior built pioneer a program its Magic its all

As and PR in we Shandwick awarded previously business. the called Golin Weber among are the highly out, most agencies

significant They PR from sustainability. to marketing social in a segment growth were We CMG, performance, the Morton, are corporate consecutive quarter. for the especially At consistently of we're and, with standout up, that At for and digital the Jack been XXXX at more proud Week's company. recently domestically ahead Golin game pleased post had And good FutureBrand's the Year we and with quarter. clients a Exxon Jack the closed from good continue Octagon, Weber across here, in Also healthcare to recently, as of the and of regions, all especially entertainment consolidation have also year. that while clients expertise, as Weber internationally won Octagon identify we won contributions analytics. global assignments the win Morton brand recently data Shandwick in building unable science existing from a a Cisco's with important honor fourth Agency and well strong and was talent. in coming saw architecture are

of combine a services out Our round architecture range offering open the of U.S. solutions. can our These also clients independents our portfolio. the rest deliver agencies to and with on integrated their IPG collaborative

quarter, within will just products the Frontier win win categories, a a of During which win Brands, introduce with and personal with and consumer highlights Sling agency TV. Martin household and Diamonds; the Holliday's this Carmichael between including Communications; Hill group Deutsch range care; in to The Starco with and Lynch's work Agency's partnership see last included Helzberg week,

named say what Officer, talent Karen our the makes first-ever marketplace. item fair the to Creative in that and us the note It's female is its agencies was Martin Chief that at Costello. competitive Another base quality agency of of announcement had our the

remain seeing deliver has business our new average consistently to of pick this We revenue that net agencies on all to the begun that for ability the business Our bears opportunities. year, a past we're growth new And invited XX range industry out. as activity of organic positive months. of up is ahead

to invest it stack, our profitability the for us. will us to agencies has the allow One over costs, right the great long-term. sit it top and continue when you make us it of comes to plug purposes. that the and clients can and agencies to such connect both is In strides messaging planning our and managing the all become data on time, allowed should enhancing This targeted inform company's our our accountable to to for will audiences. highly priority expect data asset can disciplined media developing we Of of which remain course, buying we consumer also products in to place the channels what in is use the also an with activate our that a remains into further

first most The and smallest ahead us. we quarter still is solid But today our [QX] you've have tone business seasonally of seen as in XXXX our quarter, the is of of results.

Our client discussions conversations clients are constructive environment. plans and that investment and These with respect table the media in value for reflect bring to complex brand the navigate their we to consumer consumer helping engagement. the

their Our gives set on we to of continue resources seek bring can can experience to that and as to role innovate grow. confidence that marketers play bear we important unique in us an the behalf

IPG. to balance enhanced capital potential at of financial value earlier see we targets indicative we results deliver start we today that the X% high when XX points return, year, well-positioned strength we comes basis significant Combined proven restated to organic from value, means remain forward, it shareholder there commitment and to with operating outlined We expansion to are results. XX our the that the that and believe points basis and Looking XXXX and as this that creation end sharing of delivery margin X% of sheet solid our value XXXX. to growth of remains our a the

ultimate thank it success. With our are up open our clients of and drivers that, it's people appropriate for to who I'll always, As questions. our the

Operator

Alexia [Operator Instructions] will Our JPMorgan. from first Quadrani question of come

is line Your open.

Alexia Quadrani

much. Hi, you thank so

couple Just a questions. of

organic The quarter. first impressive the one, in U.S. on improvement in growth, particularly that in the you the saw

was one I segments heard drivers I if sector. or that with packaged influenced said with I are elaborate is of pulled spending hugely wins. more if bit of was that you clients now clients I rereleasing sort maybe guess would year, the digital last could question And there, the also the QX, new consumer or the quarter. more I - existing was doing sort color think, A I in business that better it feel notably of picked of any one had I that same be by goods sort comfortable market. a think think that the maybe in guess, you think you guys and starting it of the helpful. you was back up

Michael Roth

Great. our of What did see you way, goods, net questions, And in Good on performance up consumer business particularly we picked quarter the always. that by both - in reflective the the wins. seen clients in by U.S. this new spend consumer Glad the additional and Alexia, and is as by we've side. existing

and goods actually, however, the On and consumer U.S. U.S., reflective goods flat. was the business spend was in new So XX%, was client a basis, basically up that in additional of consumer wins some global

U.S. obviously, offset continuing some, results see the did we was respect but that by So the positive our Europe in cuts in with to some of consumer goods clients,

see results those in refer side, types quarter, large, a pickup in effect Huge, and indicated, digital had last our I business projects repeat, project-based adverse new I we when did an a had year, in and and win didn't combination. particularly businesses businesses Huge lot as for at discuss in project-based to, that these we and that the I On XXXX. was the first example, MRM of What of

So accounts that the for increase digital our businesses the U.S. in in

Cadreon also of our particularly Reprise. and pickup positive a Mediabrands, on the We digital saw at good at businesses side

Alexia Quadrani

that, the you. to at change then doesn't that dollars, for obviously, by given, profit are exact get The target clarify in guidance And you've and we the e-mails. just some accounting impacted Thank all really, the that given you've that same getting statement? because your

Michael Roth

for we out well there said - is because correct. I the put I expect this When there. be might I on this That's know to as year we the high When said the question what had end be. we we to impact X%, knowing, at set of knew, to good X% at this for year to restatement X% the going when we a least targets our or was X%, shot target

the a So and some result in can movement other real as statement, remains you result the of But words, the of properly conclude growth as X%, set Similarly, basis another fundamental a to the businesses. target XX our high basis accounting intact, to that the part when of points, earnings of X% converts XX points to of year, is closer that's some a the X% movement change remember, change. the if compare particularly from expansion. we that margin, to end, the the you in it it of you of at XX the points into because that to number basis margin of the restated

with margin to our basis to now Did at our point that So goal when right? X% equivalent XX do and X% expansion, the is year to XX last X% I and points. target set end we apples-to-apples X% that's XX I of X% basis set when the high of

Alexia Quadrani

very That's helpful. perfect. That's

Operator

comes Our of Ben Stanley. next from question Morgan Swinburne

open. is line Your

Benjamin Swinburne

Good this really debate these address I they a really just up struggling. consumer, on wanted I about. should P&G or pick but a less morning, you the are been think to line. And guys. at struggling and the there's lot that to on invest comment Colgate I of market When and we the morning, little they've businesses certainly talking in bit it's their look consumer the more look that analyst, - a if top whether across interesting a think and a reported Michael, results, like trend you're I'm - of not

think pick it's you up dangerous seeing of react one to we're always It's think they're former And unit about too have But quarter. their thinking numbers look your, know one trends? quarter. on to there's wondering you're know defending I Do to brands in how think Obviously, the short-termism. it in these used that. a that spending when one change growth much peers I I marketing. and guess, pricing. are I pretty those of tough some running if the you around right of a one companies you results call people perspective move what's at their on are topline I or

Michael Roth

have Ben. I answer an to that,

Benjamin Swinburne

sets I curious topline managing you're all-time tough think and to guess, you change open I'm an in at reacting spend a high. But their brand really Amazon Yes. scenario they're how this to if seeing as

Michael Roth

last don't a the dollars, to months, And correct marketing to all, fact CEOs, believe is Look, brands have you're true build the been And said, that can the obviously, in of with we is I of I have one In CEOs not first don't brands, the our and clients. - of a meeting asked or not global couple have, marketing top it's obviously, the loyalty. the an and you think basis let's my the mention those assume in in you quality. our be The game, investing to product have same during to discussions, those view, grow as you other else quality e-commerce product, It's one, I is dollars. spend bashful but fact, building order number period. specifically CEOs that in how brand compete if of on questions. of that you because

platform. You on fact, that the or, compete imperative to in have to And the market recognition maintain build CEOs growth. recognize for them brand e-commerce to revenue that's an share gain

spend So dollars. that marketing the The these have tone answer is clients we yes. to is from

to away make on want marketing they money the their other sure side, throwing that dollars. they're On not

where insights, to the right actually fought out right Not of the help that's and a affiliation now. battle come help the we is come creative picture. with that's to loyalty, to with up and creative being the big allocation So media them idea we platform with move needle. the only brand combine and into that we brand And come where have do

allocations. you talking isn't talking media applicable So our to about our that's us investing content. you to about It's hear how just in why data That's data me analytics. analytics hear also why applicable creative

our of and buildup. brand all with insights this view clients a the is provide those of loyalty to needs meeting So towards

talking they're it. So about

number you all about fact, was this a in And and they talking listening increasing companies, marketing clearly, yesterday to were spend. of earnings In environment, have that. on the do I call to

Benjamin Swinburne

that? XXX impact timing Yes. I And on about than Or meant? think shifts year. I just any a the Is year quarterly question to apologize. I different think Frank basis XXX for the color on think us QX what Actually, your the it a help for got rabbit on you on down for just hole, the much impact

Frank Mergenthaler

you prior restate year, decision what, made a apples-to-apples. know it's to we Do complete right, Ben, the so

that's comparability to X-K the So issue it we And around accounting released restated the on show as relates each should why in no quarter. there the Monday be XXXX. to

Michael Roth

our focusing operating relevant think on the the conversation income, reason that's is our I because number.

and operating you If business real reflected look have our of that's those at at real and you you numbers. our income, revenue, expenses tone growth look it's if in

Benjamin Swinburne

you. Thank Okay.

Michael Roth

You are welcome.

Operator

Joyce question comes of David from next Our Evercore.

Your line is now open.

David Joyce

Thank you.

that accounts? one to be with media Given more? the another. terms starting seems about together in they emerge a on are see a of into be help and how there's at you. on underway, those were agencies level been Thank And appears that heightened industry, can Do holdco that would creative there year? project to the of think reviews some It reviews revenue consolidating like us this you agency the trends in these coming underway playing trends you buying

Michael Roth

procurement Look, view, of mandatory big these when as number from are timeframe either a three-year point the reviews of a the a companies, of have result a typically review.

it we're other the look one holding solution. a come our the to coming healthy for complexity of that to the comes marketplace, you it The with put are way at you how them RFPs at their all what changes on is looking with of back and together. Every work issue into needs, in the offerings a can all of it's getting resources company and and

industry each Now that. the different have in ways of of approaching us

are side data that the bringing more we from pitch, show we has of focused approaching other best our the analytics been pitches most on out that are that our about basis resources going win that all and of And these capability is see you've to news want how not there. the an them maybe from the is good where Our way on reading in may what's to XX it together have. open and be for pitches offer. in creative the creative Clients it, works. IPG where a or to on it bring been insights clients. the on doing to it, years, integrated And bring we've to And that's medium we architecture, capabilities

them That account well, the nice years. for going your opportunities. So as still had are that we've which okay? we clients, to next question us have said, obviously, is a your Army, XX be, And we is view for what

Army, is one. We're mandatory the both hope Finally, review. hope. media it's a in year, of stages and and the final that, that's this creative. and trusted we to that's a partner for obviously, that it of working was hear we're And McCann and But from them,

And participating. the We And the U.S. are in that see have do which and for reviews Dunkin' we at announced are work we we're that out major public in review us rest just those there, Donuts have up of where the media was Volkswagen recently course, you opportunities creative Deutsch. that the there. are

Michael Roth

you Thank question the have and please. next we

Operator

Our Jefferies. next from John from question Janedis comes

line is Your now open.

John Janedis

do this with there's some or your I they making because on looks bit I based for the take when budget. IPG share talked going a tax Michael, peer at year? lead of some maybe of know thinking And to flowing talent follow-up, side, peers, delayed at on the uncertainty sense about a Thanks. the group any are it to of of you're maybe who money you've opportunity was stability an the here business But in? looking Or some like marketers reform and decisions? organic

Michael Roth

make lends Mediapalooza, a where helps interest in approach if go client IPG. dealing a agnostic had do it first. you the think we I to our given we're is market. like it. given those to Look, IPG white we new for most hat, They've new hope And And did us - I for and on said considerably. which we all to statement transparency last clients. don't it's as And to I to in a consultants itself view think that some wearing think is with credibility the that media, I pitches and had the in fact of been the directly stability, the way jinx sort year And but of pitches, you the we with quite that this we've the opportunities we remember are heard those of always allocation looked of things, I things well us. I how the time in to well reputation the these of certainly that and history our And that in great know leaders

Volkswagen the the the are They're they been Volkswagen Deutsch very Deutsch. work consolidation. one, for happy has We do doing. with U.S. On that global with looking

we're it's are other can they agencies that obviously than and believe kinds going competitive, clients agency And has of we're company best but and put are one, very holding that for that offerings. our So to opportunities. that, foot and stability these like obviously, that forward marketplace, I'd that all those and this looking on And trust. to in people

John Janedis

margin I know ticking But one investing been look that analytics. Frank, Maybe outlook. Okay. up, in for about I and people with was severance you've thinking the

more So revenue line fair assume going some you'll the be it to in and start would base benefits to the see given leverage forward, outlook?

Frank Mergenthaler

John. Yes,

first The profitability-wise. is our smallest quarter quarter

model seems nothing for - that guidance. our the year, into X.X% We full baked of high. and metric the X% severance was there's still So

through leverage start should see line. to the incremental we So salary

John Janedis

Great, thanks guys.

Frank Mergenthaler

Thank you.

Operator

Our Securities. next question Wells Peter will come Stabler of Fargo from

open. is line Your

Peter Stabler

ancient for XXXX Thanks all can is agree think I questions. morning. Michael, taking Good history. the we

Michael Roth

you. Thank

Peter Stabler

stop talking So about stability.

a framework? pretty macro, U.S., can offer generally U.S. GDP could international into dynamic you couple, And the the basis macro is times. allowed uncertainty kind guidance. a about macro the that fit if you strong the fact uncertainty? of a pockets about do year? about just Are are talked talking secondly, pick you regional outperform you given Where does up outlook you decent, more you little So see sectors? client think to color. you're wondering more you referenced still couple a U.S. this of of on talking Or that But I then all know given the And in your start that

Michael Roth

is the used were money. meet we is the what I example, to put have to tax. tone because whether prove can't terms those frankly, raised in have global which strain. any is is continues. had to disregard But I issues on is All changes impact and and their Right drive positive, increase coming we to revenue But marketing hope into and of in not marketing tone dollars being the and because if dollars pressures very the when One of And that into is think good. they're it dollars. cut frankly, let on conversations goods tax particularly our that mean, we might frankly, issue environment. question stability the yes, there spend with both. was clients, were they tax is macro the which where economics. that right, can margin. macroeconomic. years now, the is to see issues margin. some ago, clients unfortunately, are I And ties that capital there it, and real But you I But where tax therefore, spend, always the U.S., and their it. as look, to which who constraints us. know none cutbacks do some for increase we this caveat did our consumer back you at goods significant to about for that it's beneficial expenses in under time, realizing there. put out there of that impact, without I right when that it were I we they marketing now, consumer questions, using question we indicated tax positive, had Davos, clients And we have that activists, investment dollars, will And are spend John's did there on out the that about, them the revenue the didn't relevant one the sectors time to is But for return in for have marketing to just money some his first have but can't the macroeconomic hard you're me are continue guy, ties that subject former macroeconomic spend be dollars well, I saw very go clients, answer and - one they'll of And The talking law a in the always

X.X% to And down, So the continues some feels consumer long that's believe that it environment and opportunity of at comfortable in to way. in clients whether And cuts we've bleeding is it organic stopped. and revenue cases, somewhat have growth, that which out that good in growth, it some margin. - I again spending shown put marketing that the be macroeconomic net an slowing us. is positive, obviously, organic and more UK, Europe, there I'll goods it UK as the in will as that I'll particularly the for on like feel converting be I'm to performance put dollars And it

Peter Stabler

outgrow international? U.S. Did

Michael Roth

that. Well that we'll it. - look, the XX% of take our in right? And you And kind we of if And is, it look quarter outperforming. is if important you fourth business continue and it's performance you quarter, know at way is U.S., the our look therefore, U.S. first that's at what, the the

Peter Stabler

Thank you, guys.

Operator

Nollen of comes question Macquarie. next Our Tim from

line open. Your is

Timothy Nollen

about question data My and regulation. is Thanks. privacy

agencies, like guys years and your many, that actually very are well. have strong doing and many now Huge for very and MRM said You R/GA,

can talk client first confident organization reactions GDPR. you much secondly, you you're relatively the about business just think in or corner if data i.e., Europe, you that. Thanks. with spending I small Europe data draw GDPR, few and And fear away stack that - your of on a I your have and now? there it's level up for a applies in using still. now off, You around investing potential European but about, With any today your GDPR agencies could weeks all that's if any and in really in the obviously, initiative to a it wonder talk your geographically, right across slowdown mentioned compliance to with if of about

Michael Roth

correct. - comes end a of Yes, month, at is the now, GDPR the Right it into issue you're European because effect.

global comfortable very comes we And have we to that's is the of we're for when I sneak our the And let of right? time providers whatever frankly, what So at it, will privacy be coming. clients. this think under appropriate it appropriate Now play. we in lot be pass we've and issues able and closely when company with well May, that our up you're we've in environment. it a in come deal teams we end this to ready third-party frankly, And didn't providers us knew been of this as up for expertise very do. transparency both because clients. a a us, - and when on our to issues will that and basis third-party was forefront totally where with to into relevant the come working all be global centralized these as the me with we And set And to dealing way tackled you it's

they're we well. us clients to seen compliant working So as with sure have make

meet our calls we're comfortable a So look, we this. we Directors of And very And had of recently out. to Board to needs regulations this. coming this. just the how are - on had are on positioned the We've presentation where

Some haven't solve third-parties ethics it and And XXX% one within our then IPG and for is meet very is structure comfortable to consumers those going us we'll with to we're our our that we're The able right. of going closely, is this come come out look, to yet, get No and of relationship but - monitoring and a any we appropriate the needs. to regulations. data but have evolve. priority be issues that out top it clients, these

Timothy Nollen

last anxieties maybe or And will is there spend, clients continue to minute there?

Michael Roth

haven't third-party let long with we out a that on the major working be haven't just will well. information, Client on has clients okay. any and are they pullbacks as well, own make continue question, data concern. Look, to the sure follow-up are appropriate And that We're light me permissions using Look, Facebook that realize add, as that's horizon clients it's Facebook, of spend. data their there seen seen think I was to this issues a any necessary. no, to Yes, in as that pullbacks. seems as the are Facebook because we probably

and So to every to is with day it. coming there deal out with Facebook are solutions ways this, new

ultimately, get pulling back all that, think we'll not clients I date this are a So as right, to but result.

Timothy Nollen

lot. a Thanks

Operator

Bazinet question Jason comes next of from Citi. Our

Your line is open.

Jason Bazinet

a on quick had Thanks. taxes. I just question

there And a of XX% GAAP a Thanks. earlier, your tax lower given to rate that that business high is down something get such road? that us how at that do U.S.-based, is tax years be rate two, it might could lead XX%? we asked but I three believe think it the GAAP was unusual

Michael Roth

the that of And of if first had is disposition the tax in real $XX so if were tax is we obviously, of for our benefit when million ask should write-offs. don't why the will, we first talking rate some-odd all, We the rate losses the question. tax benefit. recall, Frank the assets, losses revenue which Look, that high its had you - small you quarter. that, the in to. Funny referring of don't about you some reason And we have countries, get write-offs the foreign we was

on That So an we our impact is first rate use. should effective XX% said, quarter. the you had what that in tax believe still tax XX% full-year abnormal to for the a rate

that in the first quarter losses of rate nothing, tax the high. that than caused other was benefit there getting the So of to so not some be

Jason Bazinet

Oh, low XXs XX% - have quarter. for and not get XXs use reverse at the no, have I sort in is just if we a rate, I if and was of don't profitability rest. first I'm focused something the U.S. on all then the it, But sort region. you engineer you obviously to tax by high of the

about go if XXXX worried the ahead. to I'm so more - XXXX just And

Michael Roth

in actually. We this in Yes. the said February, call

XX%. book you our rate, our be tax it's we're number have looked statutory we is is our new the at if rate on in law, unrepatriated tax is reason tax under different the cash So to taxed like more And tax than rate, the to going which earnings, cash earnings. XX% higher

in So And our tax on rate the for cash U.S. the the XX% earnings that's for reflects built taxes the lower full-year full-year. into the our

range So that's of law of a the million why comfortable in $XX benefit and overall, net-net on you effect XX% U.S. should we're should in for in add, full-year. I rate, to a use might us the tax book tax basis new the the that number, cash for tax XX% And XX% the

Frank Mergenthaler

is projected taxes profitability, includes built And by Jason, bottoms-up that and U.S. it rate and state market projected in the also

the So we it's a top-down and bottoms-up, have thinking not best that's it's now. number,

Jason Bazinet

good. very Okay, you. Thank

Frank Mergenthaler

You're welcome.

Operator

Capital Our question will Salmon BMO come next Markets. from of Dan

Your line open. is

Daniel Salmon

to busy some changes. a evolving one improving to important What elements especially Michael, do morning, changes year, divestitures, last portfolio to of trying Good of that most take it for everyone. we'll always you're your people where optimize Instead, as it think and have But conversations seems the weakness. making management you some with, particularly notable like sign you're are it the like and investors understand? Sometimes, it. a portfolio. it felt

And you playing happy on little issue just want are as changes that And that it, touch - how see out a year? I bit of Thanks. a so to the then and follow to made where more. with traction on you've this that the you

Michael Roth

it's Yes, fair question. know a I

we XXX within And over You like IPG. look, to to have units stability. see XX units

not world right making something's if So in or because somewhere is not something done wrong, okay, changes, we're could better. going the be

company made have. case, actually in, strategies consistent we we delighted and look context. the track. a make in we was very changes They're looking. we're either I'm and at that portfolio to And positive unfortunately it And constantly Agency. the management The standards had back change, make we that obviously and reposition the with Either particular there whenever that in it's Agency, with make with Martin that which The one sure to to that in an opportunity changes deal on a pattern, were year in put we difficult the we - fact And quickly. the Martin had So we go-to-market to this

Agency, well-received very there. happy won some well-received. going we we see positive and we're excited Martin what at indicated, at pretty to I we're and also results made that. Huge the new The I'm changes very of And business. As about very were very been has Kristen with The

in In our one first the fact, quarter. top of was Huge performers

after candidly, every That's every make our sense. And money every we As look at operate market When which at businesses go we assets. be look underperforming, these the what That's particular to year, are these we resources. right, all that delivering business operate that weren't our the we efficiently. every we that In if underperforming so are quarterly came and operating business operating the we company the they're if to capital And aren't. And they which don't days, in underperforming they have And that, we making it So they're that are. and strategic we we don't paying business we weren't a with do were does, allocates not holding our old were to not as regions, to and attention dilutive, of portfolio. see what our reviews, those not doing way, and had agency. would to reviews far businesses by removing, are take clients should objectives a our business. our have we? we way to the and why and you businesses why reason regions businesses year, good way think

in should and comfortable, capabilities growing terms that changing, we be more do parts to this we've the additions recognizing very you because market particular we in made our comfortable the and made. talent I'm the I'm have of that's able have changes be challenges. that to And talent fastest to with that and with see So meet indicative of business. is the us to us those continue in of

Daniel Salmon

Okay, thank you.

Michael Roth

You're welcome.

Frank Mergenthaler

welcome. You're

Operator

thoughts? This our concludes call. Any final

Michael Roth

of we come, Well, first call. to look we're to about we all excited next but got quarter, the so much. very our thank a forward lot the you Obviously, years

Operator

call. disconnect. again participation. you concludes Thank All your for This our participants may

The Interpublic Group of Companies, Inc. (IPG) 29 Apr 182018 Q1 Earnings call transcript