IPG - Earnings call transcript Q3 2019 | The Interpublic Group of Companies, Inc.

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Operator

Good morning and welcome to the Interpublic Group Third Quarter 2019 Conference Call. All lines 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 now like to introduce Mr. President Relations. Vice Senior Leshne, of Investor Jerry Sir, begin. you may

Jerry Leshne

you joining morning. Good for us. Thank

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

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

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

for We will review of transparency financial these that that supplemental in performance also believe our data performance. and to allow refer while not measures. for greater We provide substitute useful non-GAAP the measures a operational certain measures GAAP

this things it turn At over to my to is Roth. point, pleasure Michael

Michael Roth

us, our and Thank for all you, as joining months third quarter morning, and the review thank Jerry, first XXXX. for this we of nine you results

As highlights will of our an be usual by on and details, our our covering conclude update I'll followed the by provide additional Frank agencies then Q&A. performance, to start out I'll with

varied this in national another organic and by in organic Europe performance our growth to of PAC The Continental the growth over international the in brings in continues X.X% our slowed quarter financial pleased challenging nine markets. growth to year solid the Canada. be Asia X.X%. year to ago, of by of a X.X% at report our We're UK quarter, Growth that's with Organic revenue continue and as net be which driven headwinds, performance performance. markets to X.X% of quarter strong LatAm, was top revenue of the on as months well first

as with year, calls. we've agencies These last This our demonstrates account net our performance, US expected, points US negative in along but change highly our the industry and comes this across new includes the QX US competitive right year. talked underlying towards from of result with organic headwinds the on account remains from last against which the many last about the the growth of of disciplines, previous into X% on resulted business the positive XX that activity in also basis reflects our growth X.X% a In losses headwinds quarter. leading in year, year-over-year track. and Overall taking headwind business and year, end

The by Networks our Weber operating and FutureBrand. FCB our segment growth based Agency Health. the our at CMG IAN headwinds Octagon Shandwick, is primarily segments. in felt Mediabrands segments, X.X% impact Looking at quarter Organic by was organically X.X% third grew the of led Integrated and the in

terms range healthcare, verticals. transportation mainly sector clients services, telecom tech of includes last continued consumer and and headwinds. sectors, global retail, broad That very decreased In due of a increases we The across saw goods. financial auto and to

continue X.X%. growth the continue remains that units in our made business well to around total we changes, non-strategic acquisitions we be on performance. to as track expectations Within and dispositions. growth small, handful of world. with quarter new as in with organic growth, debt margin It's Acxiom worth and which a QX our accretive the we the respect noting year-over-year actions revenue with The of plus dispositions with our currency That was as impact net includes growth pleased the that of of

and of expenses last increase adjusted EBITDA. reported. for income income and business EBITDA quarter as Turning was in was X.X% and XXX.X million, XXX disposition Operating adjusted as per $X.XX from third to intangibles acquired year's share million. Diluted of EBITDA was the amortization quarter, operating earnings was an $X.XX

and X.X%, adjusted CMG was Looking XX XXXX, our IAN EBITDA our expansion of margin with for months segments, the first growth driving organic nine basis both at of contributions points.

growth Mediabrands, McCann the networks also was IPG led is Octagon by creatively Shandwick, FutureBrand. Weber led and IAN by MullenLowe. led agency was growth highlighted FCB by of and and CMG Our our global

be distinctively continues and open the continue apart structure, unique our and to to agencies, decisions These our clear include talent, in our digital of data enterprise set agency our sustained to by of industry that level and in serve brands, transparency, our investment well execution strong operators industry. in strategic a It capabilities. and best architecture us our commitment our management all to competencies foundation our clients

which date, business offerings, important into our our the the year. we That XX us growth, is is our heading and targets of to margin performance inclusive basis expansion financial points last end current positioned bringing XX.X% organic the to year's to X% two and of tone us margin XX%. headwinds of XX over of achieve to for well to the strength our have Therefore, of fourth quarter, that high remain confident to

performance, things our on then return over business. for an Frank our turn and to of pleasure additional my is with point to this and highlight update I'll At detail

Frank Mergenthaler

Thank you, good Michael morning. and

presentation to webcast. I a the be As will that our reminder, accompanies slide referring

On summary X, you'll see Slide a of results. our

revenue X.X%. growth X.X% with was net growth was of growth X.X%, basis decreased to while impact of US international the quarter Organic points XX headwinds. the Third

connectivity US, QX. are and growth quarter by US together the media, FCA Volkswagen the fourth previously, X.X% last described which results have namely on the weighed of we headwinds in the year negative Army US As of in

was XXX.X increase year QX of EBITDA of XXX to million ago, adjusted EBITDA the an compared a X.X%. million

non-strategic of to per The the share certain exclude the For of earnings and small the amortization exclude adjusted adjustments losses acquired intangibles quarter was diluting disposition agencies. $X.XX. non-operating due

Turning I'll the less and in added revenue follow. for was The X Slide in X.X%, the QX resulting the X.X% divestitures expenses was to On cover the with detail P&L nine of Acxiom for acquisitions and billion see slides which of operating 'XX, compared X, quarter. impact impact exchange our revenue, net X.X%. X.XX regions. QX and the rates and dispositions. Net at change that dollar increase all negative organic includes of the quarter net acquisitions the our a was to and revenue months smaller International our stronger you'll Slide in

a reminder revenue bottom of our the Acxiom's As a our the will At break growth in operating organic the segments. component slide, become out fourth of revenue we quarter change. beginning

grew Group. offerings, see, you X.X% Underneath result that our IAN our can global McCann and in World FCB IPG As and segment organically. Mediabrands, integrated health by was led creatively growth led media notably

Acxiom, public Shandwick Growth relations. in at marketing entertainment dispositions Octagon the specialist reflects XX.X%, branding acquisitions CMG Total and changes. by was driven Revenue sports organic concurrency FutureBrand, X.X% was growth our including segment our At IAN which and and Weber quarter

region, the Slide Lynch. segment, by net our we third through. MullenLowe continue and was impact X, quarter working basis Carmichael and of to that in we're decrease the IAN FCB from last to see dispositions. down revenue by less XX a against US at change In and solid including led organic offerings our weighed our headwinds impact Acxiom X% on worth points year's was that global growth to Moving growth total integrated creatively of US noting acquisitions, It's from the due of XX.X%

of growth X.X%. Shandwick growth with had in another which international on Weber In and the X.X% our quarter. markets, top a X.X%, UK, growth of organic was ago. quarter year we lead our the organic is Mediabrands strong In

Italy. quarter UK. and very normal While in variability Continental our by the strong of three X.X% in due the the Germany, This three on Europe of third in projects, slowed increases or highlighted years continued it France growth growth year a in organic growth first period ago. to strong In follows top at months X.X% was

had In growth net results in the led we was solid the strong India. region Among Asia In PAC organic But markets organic in by QX. markets, decreased Brazil. and In organically, Japan basis growth XX% XX China organic Australia. all led X.X% that by was other again XX% points revenue in Canada. and set grew was our the in largest LatAm Organic first by region group our growth nine across we with over months. growth soft

the Moving improvement quarter? salaries points XXX year of again well to the on solid that improvement for Acxiom. the expense and and benefit comp, which A benefits of The a the basis tax and expense growth labor, from revenue Underneath in our related expenses incentive the leverage operating payroll from was temporary with our of expenses, controlled were in on X discipline Slide base an XX.X%, reflects ratio all to and total salaries and ago. and organic expenses. operating our consolidation of related

headcount approximately quarter ago, addition XX,XXX, end was a an At mainly Acxiom. from of total to of due year X.X% the increase

which investment more quarter is expenses basis other, relatively by direct and other ago. expenses That overall of with XX.X% points in the and office XX.X% than our leverage consolidating data net Office and technical. by of year ago. revenue XX margins, year for while addition Acxiom, occupancy was Within our more third a offset was accretive a we to from Our compared

net as is which Our SG&A 'XX. expense the expenses after ago was XX basis of QX revenue, a QX same for in adjustments deal year points

expense and amortization this Our the of consolidation to due increased year. depreciation Acxiom for

reported X, a diluted better the and the quarter on to our side and EBITDA on adjusted and through On to reported hand detail income left steps results This comparable results transparency adjustments to of order an on Slide picture with EPS. provide present in we a performance. from operating begins our

reported foot disposition At to between X.X we of acquired million million either operating share. the quarter adjustments. adjusted this other of the XXX Our the slide, for related of resulting lost tax of small the million. The XX.X They diluted impact in share agencies. $X.XX. of a these intangibles $X.XX the non-strategic $X.XX per few can two see after expense amortization expense was and of net Below difference EPS diluted you expense in and in

brings adjustments QX of months. On impact in our the charge Slide from we tax and elements show This also X, the first for from results nine the to second the restructuring quarter. similar

$X.XX is share $X.XX can between you this XXXX. which a compares last diluted line, on bridge see $X.XX to As and per in share the per

XX the related quarter compared activities typical XXX in use Within million X, of working was seasonality year XX Slide 'XX. a with cash On used third business, a XXX of flow XX operations turn quarter. Cash million in capital level QX compared given ago. we primarily a the used net the in Investing the that our CapEx. million a million to to million from

and in stock short million the our financing increase XX.X note Our ago the in used our during the acquisition and repayment quarter term flow a term anticipation offset closing toward of million long in XXX issuance debt our quarter net our of term XX for of dividend, by a including cash borrowings. year common reflects Acxiom. activities million Financing another million XXX of

million. for quarter in Our XX net decrease cash was the

our cash and portion million XXX quarter of XX sheet. equivalents. the Slide is cash ended with balance the current We

issued to year Slide right a the of decrease end total balance XXX cash our slide Our debt, of Acxiom of proceeds X.X on debt acquisition. finance maturities is during far the billion, outstanding the the quarter ago, quarter. of depicts million a a at includes XX with of debt which

our XX, year Slide we as on on nine growth fourth and head our summary have to our important over margin the targets In positioned us quarter. well into of very the expansion financial deliver months first

well. Our to execute teams very continue

Our value balance source creation. strong to of meaningful continues sheet be a and

turn that, With over I'll back it to Michael.

Michael Roth

you, Thank Frank.

of clients, financial quarter XXXX net investment us to year. new we're to signal which a targets. add despite clear and headwinds comps are services. to And we've an mode and in remain a reflect agencies solid financial results continue out that growth positive clients our comes achieve existing is revenue our and that this why The business position sought challenging posted our new performance value our is organic it Our by when

quarter innovative in our agency of from strong came clients a people. regions sectors, and a agencies, offerings Growth the range demonstrating of and talented our brands, depth IPG the

series value investment steps consistent this and strength on leadership for and teams, years IPG. long programs build in would Our individual for talent continued customized strategic, We industry And great have in agency early a taken success. cultures to win term is of over deployed at the that We due talent market IPG. top vibrant the have digital be clients. in to share we IPG creative and recognized market to many essential strategic and brands brought add and top that

of and clients offerings brands agnostic to clients the all architecture largest invested approach centric reap client consumer landscape. also address of We architecture benefits enabling clients across into pioneered their deployed the a best media them all which is the agency currently is open in digital our consumer many worldwide. that IPG's of of expertise fragmented help environment. the of in demands brands. way the We embedding modern global and that moves solutions This assets; to a across offerings Open model, brings our customized

Marketers that architecture clients recognize data more the value now that people That first table other to party sets To seamless prominent a coupled of data, Ultimately, looking because are What driven. the seeking for top marketing open to at create seat that scale PII is partner. means clients. future with first data our own their with high is are a media is party we note connected to has and and Acxiom increasingly and data managing leverage scale. is experiences expertise indispensable services achieve at in marketing at based marketing. strategic consumer

level we collection, from will feel As elevated an accountable all ethical held management. we expertise the be that clients. deployment including parties. company is and makes a for and very more of and and increasingly world. set is a of meet capability That sources, in our It third such, owning what partner like today's the responsibilities significant strategic why demands highest That data business necessary data sourcing, to is of strongly in for ours is curation worth compliant differentiator

there Kinesso to together getting increasingly true with execution martech as powering technology media allow is launched with experts are omni further us involved forward, addressable from media, cases the Acxiom's will to this and we ecommerce are which Mediabrands that top well ad data quarter, which of channel many more other and why tech Looking data assets, capabilities. we as ways and brings leverage talent use ranging

creative to build our will our companies, new through will efficient, marketing service technology better marketing deliver enable to ethics. marketing is outcomes offerings of their media faster, the commitment precision and our with data informed conscious to combined with Kinesso agencies. our products more all clients help clients, within agencies software our by that layer and drive a capabilities This for of along

sense highlight succession planning leadership orderly our the in Agency and Network, the IPG opportunity Mediabrands strong very agencies at you led new strong feel powerful to highlights lies and of the quarter, a the that performance. our we of CEO be delivering get growth UM. These exciting In posting how of and for Integrated to clients, in organization. The from quarter a ideas our Turning our are results for ahead Mediabrands Operating we elevated the as groups term the in at of elevated to Chief other changes to our and fill Mediabrands the executives saw place long roles Officer have changes the company. CEO internal our we

the this UM, to the Aetna in of They've part CVS with agency the the these clients expertise quarter. Speaking media as The continued that win. and won review. retained media also particularly relationship played grow FCB Levi's important of the agency West, an significant wins, creative America in and third health supported by existing account, Acxiom talent of both role CVS agency. Aetna

agency very both Avengers good work of and plan posted winners. AdWeek recently One Canada were of recognized named world media New awarded picked If in, UM IPG other far markets. quarter. up delivery the leaves in media year a duties the FDA agencies UM also eight holding of media the four plan and All Initiative all with year surpassing York company. LEGO global awards, plans the Year for and were any media most

new and year announced of new health showing its a in strong Awards, Medical offering Show. the had third Clio for quarter FCB at in XX Marketing FCB Recently, at the the year with for several with America collaboration. promote agency interagency category, network silver that and Media business will organic and structure winning the expansion clients North its the Clios gold's. capabilities had Best titanium unlocks new assignments and North and The data operations. network and several its and from in Awards, the large also the taking FCB/SIX American new the of dominant health in grand grew home growth agency gold greater best creative

World was of World agency XXXX named Latin quarter. was week, at globally, LatAm network year last during McCann Awards. especially European continued the growth Effie Group named the European year American saw of Awards the just McCann And network it at Effie in where Groups the

brought the UK the year the Lloyds new new taking Clio On McCann number of the of on agency a of New McCann, Pharmacy. At business front business including globally named saw and wins, number York Fujifilm home a awards, Clios. grand was

saw of bring its plan Mediahub the of new category. Group The Tax particularly twitch Federal Act. collaborated the streaming agency's the also a wins. in OTT the Union. best MullenLowe year Credit balance strength from and and US in MullenLowe media selected was named won new Navy integrated for to of in media and the Humana number media was work MullenLowe business use arm business

its are of for scale most and billions them has designs data with expertise and clients with value in the world's Celebrating first and year from that consumer to in they company many ways that privacy. handling Acxiom which The safely continues respectful a most its that the comfort the at role with our expand getting working the are agencies. company runs clients deep Acxiom marketers. sophisticated ethics operate gives our management, infrastructure data they of records of and client

model a streamlined continues buying business key car and offering. its third Brooklyn elevated as in leadership and quarter, number strengthen new agency business the as wins also product based its unveiled ecommerce RumbleOn. Huge AccuWeather roles and to a saw innovation agency grow of The and platform US including well. the operating new The capabilities agency

new in including growth and as as existing with well included with quarter the growth at Airbnb Highlights Flex, R/GA clients clients.

during presented building participating a based the Studio Oregon this month, quarter. Ventures blockchain companies announced Enterprise scalable demo day R/GA at Venture ecosystem. a The Blockchain aimed Additionally, its six

full services and collaborative Carmichael Subaru from group marketing came They of and our XL this out strong round integrated open on Lynch, their independent solutions. notable the the Highlighted Our agencies with the at growth to in deliver clients portfolio. rest such delivered Energy. quarter of suite also of combined the the US offerings clients, within architecture which

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communications CMG, to Turning Buy agency by client leading Facebook, in roster. Best recently and agency house Canada its HSBC, Peet's most US Weber the Jack our new Morton and admired brand and AAA report. to Google work MillerCoors, added including marketing was brands PR Coffee. agency for The experiential Shandwick named the homes released among debuted

season, current the for environments major five broadcast the created For the networks. NFL agency

the Championship, a had it adding major also athletes in also strong victories Biles Bianca celebrated Gymnastics Simone the quarter and Soccer Andreescu's Octagon as win LinkedIn well National the represents, US historic new Open League including Championship. at performance Women's corporate as Women's World clients and from

fueled digital IPG and data the our succeeding a of is that in formula. client and model norms. to architecture and is that It in through industry continues offering focus right modern head open months, we're total pleased shows investment In a perform our that nine centric on people

range. our to our of the growth organic and confident date, we're track Turning assets that to our to performance outlook, at X% X% growth deliver end high to

EBITDA to expansion year's our basis In shareholder as our adjusted continue addition, value. margin performance with continue to last significant current comfortable will strategy the term to target of points factors view XX.X%. We long for XX over we XX be and that enhance

remain reduction to share grow to a as balance returning in as debt As in well always, time continuing to repurchases. significant we strong our sheet, and dividend committed

With call question. that I'll to you. up your the open Thank

Operator

Quadrani Instructions] And with formal We session. coming question JPMorgan. will the our now is question-and-answer [Operator first from begin Alexia

Alexia Quadrani

Thanks so much.

clients Just Are start a between of in color the of first a Wall can us few know if on of a world it's perspective. guess one from I'm of of a I I little been wondering talking incrementally the so couple there's advertising think questions, year, you and early, I how next Street an always you a about they kind disconnect are budgets viewing weeks color about but Main your curious or nervous for bit a a Street that? is bit the just and any economy? give

Michael Roth

Thank you, Alexia.

such what – there's The continue see look, everyone market to will, And what's clients think them didn't they You was their last offerings definitely what's happening the and you I is they happening at between have and performance obviously just needle. brands, the partners world, in if as that the in going disconnect our to come you're look to what's you not need ask now our there. and said, business Yeah, move me week a performance, help continues uncertainty in we [indiscernible]. if terms the helpful. That global look to to of invest of it. as and in stock

we the that environment oriented, They're why a is that needle. go that which data right analytics message. ready willing with seeing the we focused consumers the the we're move said, long works. what to move on how the The money as between very help in that the them conversations is offerings, important at are on can here have the what now needle. very do have help I money think to we on we But the stronger and that very it's is would move really they're we IPG that. they're it return is actually and have spend say offerings building difference and the And project process so focused which we as right investment, to on And through the I proves needle? help were spend. – appropriate They reach to them willing

they but competitive to everyone like that a we out works world else, have It's to build they their concerned, and they're actually very dollars what do brands. spend realize So there.

offerings before, by a which marketplace, bringing As out exactly by in I've chasing by work focusing we creative is using differentiate important for very and our ourselves us of it's the there digital on there revenue. and experiential lot sitting at do what PR same Acxiom, same the architecture, to our all said in capabilities, the table. And open are our

So if that have I is think the prove those a strong spend offering can to clients works, we we dollars answer the if they're needle. willing still move to

Alexia Quadrani

if what softening Just your at that suggest added some guess given I just your in wondering your you're full there work more some uncertainty, your QX end headwinds based looking that work, at some and and the some given project just in guide or incremental guidance your does conservatism you level higher of can just pinpoint? I'm you more had project full is building some

Michael Roth

when right? and quarter quarter from had full this be go it'll year in guidance, we it year. bit it'll the at of to headwinds we We on we bottoms going said, We in And, start quarter we adjust as as still of do fourth the similar the it our we're the basis. first and set That into little and it through frankly, year, and magnitude, a the quarter do year. we beginning up. second have next of Well, a roll

Look, in the What And will in end are provide? marketplace. on takes completing that result of the our clients. us. dependent in of is upon the we our growth contracts into with to our important fourth for the guidance the pipeline dependent high what proposals existing seeing what this, projects consideration you think a we projects. It's operators know have So quarter It's quarter? organic we is X%, upon our our very have number

wouldn't best we'll year. there's in to deliver our it's that looking able conservatism for the So I be at what we I would shot there, at say say think

Alexia Quadrani

still new or you And those to that just business beginning next this of to the a perspective, have net know but new is losses? given you've challenge great bit position wins of and for headwinds some think it you are some business, the the are Do have on year. XXXX, you going now through where looking year, a had still some I a you circle of lastly full guess year be I a to positive you previous in from

Michael Roth

headwinds we and to I second business for but in a rest year-to-date the quarter, net are said the first Well, we I like the of will and positive hope finish we're have new year. way going that

new willing spend. our But for I long So, we that's existing our strong this. here but take clients it I are [ph] clients now. to right And the a solid to growth that would for out how think me – I do you're have headwinds wondering go, was right and reflect very organic wins point number a our our economy there where

business performance. posting these industry through we're decent, our And organic I growth, headwinds, cycle we'll think positioned be as given we good, new I well leading So hope.

Alexia Quadrani

Thank you so much.

Operator

Salmon, is question from Dan Markets. coming next BMO The Capital

Dan Salmon

made I bigger mentioned obviously, adding right new follow decade, guess And but And the Good to normal of in maybe not you it but having you, I'd it October a go and particular? about since wanted you X. we've or up your years, organic this just can the that this – if deals some the has your go then won't either specifically, traditionally a for of been number sort side love And yourselves comment on is be maybe new much for bit little thank trimming. just sort few does generally up a more the it Frank give negative well morning, particular, to seeing expectations, the hear US still as of high know little a Acxiom just just a divestitures this the seen in of days, number worse? the here? the group October ones Was I different potential business. was over there? organic industry can it bit think one anything but you And also with or seen the September it Do organic about sort included. what of quarter a was that's performing in the assets on glide couple how taking number line maybe, back past it level. the consistently So been over was that XX from headed of it's past But as of in If far little early for you. into yourselves quarter, in been consistent holding it has a normal of I the IPG on boost Is for there that better the you it it companies a we oriented we're little is, time. the on path a I guess, over to Mike, everybody. X? comments quarter this it into and sort so so in color as

Michael Roth

All okay. of that

say knew Acxiom in for of First in in the when of into to say, what consistent that's deliver, let the And on anticipating expected my the was Acxiom, our in we me numbers I as built that continuous be rest same quarter. fourth that terms year, going We with our to acquisition. numbers. I comment I our said remarks, the

So is all inclusive. number that

is hope one specific clients business. talk added don't some added well, lead I perform working has I and that's Acxiom, new real to But which media clients, new they've class part our think thirds important clients adding great. various but is on business two some to with to that Acxiom best management think I of existing which business new logos. of point the of the a And part Acxiom and been They've of the data number of about retention for their wins. will particularly important frankly, the side. value that We reasons, in logos, continues our they're existing is

of know Acxiom I So pleased absorb Acxiom industry, been the integration frankly, our we're has very can questions of our first in companies was Basically, – whether into this. IPG that integrated that of we into way all And one done. like the is the business.

add that So we've us. they I value and to to think can proven we continue

if series go we business partnerships. was they're world. particularly which countries us but were time, stand have There had locations bunch operate you agencies a lot alone. all to actually take the over doesn't global agreements agencies great world the the supporting MullenLowe them, we in of one, back roll management that way of anymore. had money. a some They dispositions We example. joint of up of history and a ventures. over for that, these standalone are question There clients, the frankly, to The And need interesting of an all had ups. holding had with losing And is companies, there were the were world all the that Unilever,

without it's have in there's our diluted markets those business maximize we margin. look So whether doing maximize to our ways at margin expansion, to having agencies. To returns standalone our and other of

markets. clients. if on the answer that's in that's to in are and whether management look That's growth And suspect to contractual we what ask when a we true, for local fine So for on need global can have this in focus reflects. the our the interesting relationship do global It's local with we agencies, markets when is necessary makes bigger you're for And provide this the at that I seeing companies. us. you the an market, the And can that ask, agency investment markets. the return excels those And all no. holding you services then to these clients sense

to So industry. something you're I throughout think it's see the going

today. we're acquisition. we are focusing US, look not efficiencies It's X.X% a the us hard referenced of And and you to on the in to the And why that disposition. those the we're taking adding the we right business with that on I respect the markets. It's do continue most in position back the the think should offerings how see us – that's world right what with of the in are you've headwinds the the we but headwinds, we how In markets for we've cutting seen at US, in to US.

actually it's Again, pretty to headwinds a I So due organic headwinds, you had US. out and we're in the the it's time all the we're can the well first negative that going in the quarter growth pull if we've remember, that doing through.

– clients. home a that, these replace in remember headwinds. business client United job to market it's And find which these of we and US we're why those of days to But the in is in business and of good new our singles at as of So our doubles a healthy States. a that opposed other pretty the positive it's XX% more go the and a is is reality It's doing a you we're business new the big again, have net And bunch to fair that US. is amount don't have run.

Dan Salmon

you, thorough. Thank Michael. Very

Michael Roth

Thank you.

Operator

Morgan The coming from next Ben question Swinburne, is Stanley.

Ben Swinburne

the think announcement, meaningful? out is just point on you're way to of then QX, organization how think an is of Thanks, team reorganizations. sort that's morning. sort you integrated you but you place peak is the to account loss the that the into that as headwind I that And organization, that fit on want got into the in is is wins a flesh organization you're the if Does Acxiom I Acxiom And that just X.X%? you've think of guys. of if know specific? gave the how us you headwind this Michael, headwinds Kinesso There's facing was does we something to maybe number help QX, sort more market? of quarter that more I sort guys that to Good into is, of goes I from – the perspective, us offset quarter. peak this internally satisfied? this able don't to Or just that say which the is given a some start pretty lot number think be not in nice that and an would move

Michael Roth

Look, that. but first to of headwinds. we magnitude. not into I they're what spill that in Yeah, quarter, the second well, they I do said similar third the had And quarter. and fourth the certainly said in the – just quarter,

we're new and net business positive are we But Okay. working our way through that.

yeah, As was an when the our far say to I plan of proposed - acquisition very we think have We Acxiom, place. in specific integration as Acxiom. had board when we

I they've tremendous a and done job. think teams have We

cultures reasons and is One of IPG the we've of been Acxiom do are so this to the similar. able

comps and the things hard Acxiom. shape like So systems good integrating parts in of legacy in the we're terms were that. were And even – incentive

say into So integration IPG. moved we're moving I planned to bits help which still some pieces. We've actually there, we're people the has better and and there's would within talk about actually of that pretty I'll Acxiom much maybe XXX% Kinesso people there, than we're gone that. But XX%

has right pleased of So been we're added data value all Acxiom Acxiom very at Kinesso Remember integrated that party see. has with is not core how managing management, we changed its first business and data. and the Acxiom

the and So in in Why questions lot Acxiom? put put them of don't Kinesso? just didn't a this take we why are we Acxiom

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is top through the it as are think technology And Kinesso So assets with of services on add of integration like then Cadreon of you available other creative itself that the the creative which arm. a our that, part to – it, company and agencies.

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Ben Swinburne

Michael. Thanks,

Michael Roth

you. Thank

Operator

Wells from The next Fargo. Cahall, coming question is Steven

Steven Cahall

Thanks, maybe Acxiom. first on follow up

you its said think it's I is track growth accretive. on and

I about digits. growing think previously talked it around you've mid-single

to plus of one with connections you're that can maybe the speak So I to been. IPG? what in Acxiom rest IPG or And three one if seeing wondering terms that get to for any kind was the also maybe new business equals just either you growth has of organic of

Michael Roth

We and assume plan, great, I for will what a it's to said say from. can into that Acxiom. our look consistent when business you we plan, said we in about X% that's Acxiom Yeah, growth is coming its business continues deliver where with

UM yeah, the out Acxiom a media of side of media business rest break propositions the on obviously, use you IPG, terms it's of teams as that separately, Acxiom the the that the don't growth said, are And of we number. been very of the in but terms the So integration using can I as value active of Initiatives. and both in

Acxiom have Kinesso helpful And they've global to haven't respect them used So our some on unique the of some on yet very of we yet the assistance. and strength with that's lining networks, we been asking horizon. other – but and although for cases up

pitch pitch. this going And the Acxiom pitch. is can And today, and our a conversation Kinesso I with involved have team is how creative one agencies think of right to they're In a in they in fact, the help now. see a to

do to happy it open model. a very our happening. all it's part exceptionally we're And well And the So global of part see It's resonates our marketplace. core with of in we clients. that architecture what

open number table you Shandwick, R/GA, you have clients Weber sitting, you have Mediabrands I've meetings you global the Acxiom. and had team me sitting have actually are at have of you McCann and FCB, have our is a you out with great. architecture calling the have to which that And

that we that focusing show we those on people exactly what demands of what a the on all want see. And put to these and that's no You clients bringing extent there's And basis, And we work relationship single them anyone a can indestructible client. correctly. on the need our room together clients can a business all to for market the is else. resources together, works client use as to partner develop together when to

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within very Our of of the those of brands we're – talent, class. is The creative proud brands. brands world the each retention are capability our

we those would break why And up.

room in All these put and out it. people of of it and comes is have all do a work is magic accounting together and to you

to that know our that's performing So IPG table. the rest us whole that. And And go coming the market clients been the clients. we're but strategy. bringing bit in into starting little clients of question the still well. relationship, of doing way that's we've longer frankly, It Acxiom and And they're the IPG terms already as we have takes Acxiom that why kind Acxiom, asking have a of opportunity we to for on of the

are us in the meet positioned to So I and front opportunities are those as company of think good a that demands. we're

We have will make to have we talent, tools, we the the it we have the the resources and have happen.

and terms how in we ourselves can the what I'm kind bring in of So of optimistic marketplace the differentiate and marketplace encouraged to we

Steven Cahall

to you us And think before buying back lastly, I might remind debt you stock times you markets your then transition first maybe can just your in mentioned, to commitment then X.X Wall Journal talked the the the about you've And had now follow might recent just successor promotions line. there. C-suite had about some quick the says is again. Because at leverage, what ups. any Street that two can thoughts bit the to you on speak I'd Michael, time know, left maybe in you love IPG? little your And be a Maybe

can great? Thanks. So on that, you that'd comment if be

Michael Roth

we leverage, million. The have any guidelines. down in we leverage What the you I already – XXX We've paid was question? saw first Look, know. quarter, your don't as

strong it's we could our to into a to retain we as commitment commit down far balance have balance our sure won't on that is figure the yet date. as to happen, to back asked get potential strong want that about we we investment to talks And want that make before to of into one's large No out still do dividends. the about we maintain But had when have increase it. we a we agencies factors strong can bring share horizon, meet how sheet make still regularly balance these that any in rating, transactions. everyone like the we'll so it the rating continues want horizon. sheet buybacks, to is something our We it's make should dividends, event, we a be. though on That We a place recession. we be all to said, grade Our but Frankly, paying believe we're determination. no go need that sheet, to sure we've

the just what I see talent. either are discipline acquisition or or geographic and on very think side are you'll that strategic smaller transactions

So there's need capital no internally. for excess our

be that So go at obviously, objective is can and to we our in – us. rate shares. until reasonable that we back to dividend paramount returning our accomplish market a so place we'll shareholders the levels get to And to that buying continue a the at look

on decision, We're Officer, that recognition turnaround strong IPG. succession. role when and the Operating Obviously, positions of his team throughout On played a very myself it contributions way of in made Philippe as Philippe in Chief the and of board whole with his very that's coming a in senior management the of the it. board obviously, proud promotions, terms

at all Deutsch, and place. these promotions, it Eileen Daryl Kim Will We have within. go our a be don't promoting the it's internal in the from of cases need Mediabrands, for I we outside promotions, plan talents. about strength succession in most at love to are What And all and whether or are these

responsibility is of place, that job, there's clear my a we board a pretty we make not a so company, which talent but is and within on. why to our terms plan in as and plan as the for job do just reviews, leadership So everybody's sure have I steps a succession and think for in next

outside. to very We And from we're have go I positioned. So decisions, when to to us competition. our that's the factor it distinguishes that another comes don't making believe those well

front place working board that this IPG can't is I happens, my goes, everything's as when nine far And with team. as doing what back in to I opposed And nine. that the to on happen. I'm keep sure as the to forever. And that the at our timing my As said, obviously and make responsibility will committed I that's

Steven Cahall

Great, thank you.

Michael Roth

Okay.

Operator

question from Macquarie. Nollen, next is coming Tim The

open. is line Your

Tim Nollen

short Thanks. on you go at Acxiom buying, in continuing with California much elaborate and of in privacy I'd internet coming those at like I can itself, looking not big with but data looking of the of are wonder CCTP back on Could you challenging role you two about precepts, companies. companies at Acxiom, concerns We've a so programmatic this. to maybe out the the guess looking got on I Act are think internet lot Europe is here. how this the order. discussions touch and on privacy just you've role I actually and advertising maybe us some can please? help perhaps tell general then before points, data what on there said GDPR US to

Michael Roth

don't secret. we places. I With it well, GDPR sure, a already Yeah, think in it's see

covers it's adopted not mean, for had to have that different I clients things. it, Roundtable do of by we going it's requirements think well which why, it's additional and states similar of federal as January, state a Business is the GDPR. it's require work cause on state if issue. to by easy our the support federal it and we I And great are legislation us. California states in in important basis, And going as the therefore, our other each on position way, a a to an deal

it's the area And stay. important. it's is. this the to is think more legislation, in it better pretty clear unified regulation I And that here that

So Roundtable the we Business endorse statement.

One is of in the expertise its things privacy. about Acxiom

regarded this has of the data companies management it's and of a that is highly us that. most critical piece privacy For one five stars,

to an clients of found privacy going our of we ways part with critical Acxiom the Acxiom And us important that's of acquisition So as we are for rules reason another GDPR again, deal to looking and expertise the general. as view for a in be differentiator forward.

clients. have that it's help our face. to the yes, we the And most have So, with implement to capabilities issues yes, of we one important

Tim Nollen

Thanks.

Operator

David is ISI. question Evercore coming Joyce, next The from

David Joyce

you to platforms since seeing on of about of you you in addressable budget business Are addressable wanted ask the flip with the model. ROI, a lot the array promises met across by with and we your the you, players how impact client Thank addressable? complex think about services, different side but that impact of growth. any allocations very perhaps just investment a it's less wondering for of budget on media your yet that does some that advertising environment greater how less in of change towards are evolution And of

Michael Roth

the Yeah, important it's reasons Acxiom you couple uses we Cadreon that is Kinesso markets. capabilities there of key and what's one Cadreon have I factor. addressable of of if data the of Kinesso very mean, with offerings a Frankly, and that's the one addresses

TV the pass digital a And in that's to linear reasons terms of to be total created terms that see of there's clients. position in from in We therefore, digital. so Kinesso a with having work we yeah, and TV one And moving to of TV spend. our shift

groups the So, aspects all can value looking in of it this think terms is and on we right individuals, basis. clients of bought of people to for just we Kinesso why in frankly, finding isolated certain Acxiom cleanse addressable, that that as why the of our so a and we individuals not proposition bring of and

issues value the it's add yeah, up. come happening in So those I And think when marketplace. we

be significantly. that's ask when to it, showing it relationship enhances clients front for of the because our good in if capabilities So clients us we our about can

David Joyce

Right, thank you.

Michael Roth

Okay.

Operator

Citi. last coming the Jason And from is of question Bazinet

open? line Your is

Jason Bazinet

go whatever, question. recessions 'XX you of will most guys And expenses been certainly just non-typical. and sort wasn't two compression XX say reasonable a we argue a and model 'XX, can come macro one, though, there's out? If I one line the enter test variety the If over in you was years, of had your sort last, that to could the through recent is typical. stress I recession almost terms it you look garden back of Would it? top

Michael Roth

it's XXXX and people – mean, whole And 'XX if look, dropped a we XXXX of right recession, I I are lot signs was Well, marketing a to in dollars a about whatever it there's 'XX even recession means. recession a any talking talk of don't that it the light, a different was was with be now. hope. and there going and world. no But capital. Yeah. see

like That's expense I we think why able you're we've position taken that expand we're margins already. seeing the revenue match is and carefully. to very

in strong add countries that they our has have that of Well, we're that efficiencies itself very we're be event P&L All fact that a the agencies disciplines on be comes. all margin expansion, revenue. with those leads dispositions and protecting before it recession to necessary not the associated our headcount, to doing in to the

So unnecessary. the it's to what of learned 'XX variable one thing because SRS. at we've 'XX and model, have, since would And every And cost take look part manage look that at the actions we you a how is headcount business review and we expenses. we're a

all levels. predetermined of line those have with of all to governors that in we so And our make sure incentive on comp calculations are

that well we margin. get that we we're we're light comfortable So where a event organic point in a to positioned. the do recession expand And need growth we're frankly, at

to there's to talked doing growth if lower a organic the if to it's margin be no I But able question by quarter hard we're and things able in to going that organic there's just there's about. been So show we've just think growth still I that no margin, this expand expand

Jason Bazinet

you Thank very Understood. much.

Michael Roth

we next Okay, thank regarding well, I forward look to year final our our Thank conversation results. for participating and you all you.

Operator

this conclude conference. today's disconnect parties All time. We may at

The Interpublic Group of Companies, Inc. (IPG) 22 Oct 192019 Q3 Earnings call transcript