IPG - Earnings call transcript Q4 2019 | The Interpublic Group of Companies, Inc.

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Operator

Good morning and welcome to the Interpublic Group Fourth Quarter and Full Year 2019 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 now like to introduce Mr. President Relations. Vice Senior Leshne, of Investor Jerry Sir, begin. you may

Jerry Leshne

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

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

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

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

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

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

Michael Roth

of quarter we to morning on results CFO, Thank highlights for joining us by call morning I’ll be you, this Ellen fourth by XXXX. the details thank Ellen for our I’ll as our Johnson. additional Jerry start as an then performance, the to New covering by Year. our outlook will with review conclude our you and joined our this and our provide well as agencies I’m update for and our Q&A. the be pleased followed

At the quarter, challenging X.X% our of the targeted report again, performance was full year which quarter That of brings strong the full range XXXX. for for at growth to high forefront places top to fourth count our the us on pleased the exceeds year. and highlights, quarter the X.X% of builds industry. for We’re fourth the of organic net in both year financial X.X% which the in growth our end revenue and organic

prior X.X%, in organic worth have prior the year. we growth fourth that quarter fourth US quarter. top in our X.X% of the calls, is growth in growth US organic by was includes of the US dragged the growth spite noting the the X.X%, that quarter in which which US on on Regionally, in It’s described is quarter this of headwinds also

on and a also CMG International strong participation net increases X% at organically across organic Globally, East top with disciplines. sole segments, We year the our of the Europe, solid exception. a ago, which which grew we represents performance. LatAm, broad growth Middle X.X%, was across IAN continued UK, the Continental Asia-Pac, agencies very and growth saw Canada, our both reflects QX

and growth by was data led media, services Our tech.

We also entertainment saw by contributions led from fourth quarter and growth based experiential and global our integrated Among specialists, service marketing marketing. was our creatively networks. marketing sports

client beverage. performing services top sectors telecom, retail, were food healthcare, financial tech Our and and and

auto, noting that it’s than other year, For client worth we the sector are our every where contending with grew headwinds.

Turning with was income to operating million margin million ago. income was of EBITA and QX, adjusted year fourth a $XXX EBITA, EBTIA of $XXX EBITA million. compared XX.X%. in our was quarter operating $XXX

XX.X%. a year, adjusted $X.X was For billion, of increase the full EBITA an

ago, Our was high margin the adjusted from points of end increase basis an target year. for year attaining EBITA XX%, the range XX of our the

$X.XX share adjusted $X.XX $X.XX comparable ago. and reported his which a was per diluted year was to year Full earnings as share per

quality of a has over improvement Our growth and demonstrate produced offerings of that our people, organic client-centric, the strength of many leading results for combination year the the our integrated years. our further period and margin

of in continued our us capabilities industry, change leading-edge significant talent with level keep in We’re dynamic proud strong outstanding in we of amidst of the industry. and have our that on and performance, tools achievements our which the environment in Along across our are all a and agencies consistent investments operating. we our

digital, like services areas true data This analytics, key strategy and creative. and is especially in

strength raise eighth to to marks dividend pleased Board’s IPG’s announce results the of dividend morning by decision quarter this these consecutive in On year our we’re This per confidence the our share. prospects, increases. and future X% our of to $X.XXX

our quadrupled. per However, dividend share is quarterly more time which than

to high our outlook XXXX, turn resourced with framework capabilities extremely foundation accretive that our so to growth in collaborating future competitive do the agencies, Further, fundamental highly we well profits open at As for are science margin data with order we rates. architecture offerings. converting a revenue and of effectively we’re operating of to

allocation continue sheet and morning, to balance our our to we capital transactions business, shareholders. following investment as this capital in be Acxiom demonstrated standpoint, focused in returning on to the on growth a our action From maintain deleveraging organic leadership on

priorities All value. our commitment of driving shareholder these further to

worldwide it’s apparent made in clients business through yearend. of results, tone solid the were our our among As

While the required developments, political there expansion, continued attention, the New economic down of international nonetheless are including backdrop trade macro sustainability that of the state as we the enter Year. and global issues appears

travel own we wellbeing we and want global all the we from suppliers. China. clients and partners, are support employees companies, focused coronavirus of of China and of restrictions. as X,XXX more people, the convey Most home, deepest have and our like people and people outbreak to working our thousands safety China are the subject our in in commitments Greater we are to on to and concerned about addition, are Naturally, In

it place easier have to for people in work remotely. that our makes We technology

safeguard situation XXXX. for the monitoring closely opportunities people. see and continue we’ll we are take solid growth to every necessary We our Nonetheless, in precaution to

year. growth we contend Even again, first industry-leading revenue and the as with we’ll comparing are of against in headwinds to continue once rates half the

outcycled growth of we’re distinctive go-to-market we positioned high a by And offerings, XXXX, world-class through unique strategy large and value added a For resources. organic X%, with well headwinds midyear. we targeting are

for upcoming our years. also XXXX, of we to continue to the EBITA margin margin to hedge Turning record to expansion in expect longstanding

We’re expansions points EBITA bring XXXX in targeting EBITA basis which XX would XX.X% margin us our adjusted margin, over of to XXXX.

on the during year quarter our As review calls. perspective always, the unfolds, year regularly we as our will

we the that expansion believe Interpublic summary, In margin and enter shareholder work resources, New creation Year. as are our people to of growth, all a will revenue they share value dividends, we well the and of quality drivers in continue

stage, I’ll this and and update for additional our then of to an Ellen? over Ellen, I’ll detail performance our At things highlights return businesses. on with turn

Ellen Johnson

Thank you, morning. good and Michael

was slide was the accompanies organic summary reflect reminder, As [technical X, results. our and remarks a growth US top Fourth a on presentation difficulty]. year our was website organic the see growth X.X%. of that my strong international On of quarter Slide organic you’ll ago. growth X.X% growth X.X%,

EBITA organic For XX.X%. net revenue the our on was was X.X%. full EBITA year, and million was margin $XXX QX

EBITA X.X to XX%. points year, XX adjusted billion the basis our For margin full expanded margin adjusted EBITA was and

earnings For year diluted $X.XX. the our was $X.XX. share adjusted Full quarter, was EPS per adjusted diluted

leverage Gross yearend Over XXXX was EBITA we’d course of times, as amount in our defined X.X XXXX, the and debt of $XXX in adjusted the credit retired at million. agreement.

dividend. morning to Board common share Michael has raised share X% we our increase this again As mentioned, approved $X.XXX per that once our They’ve a announced quarterly.

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

of was in the organic was Fourth in $X.XX XXXX, resulting Turning to the impact X. impact X.X%. rate X%. a change net to increase revenue compared of debt billion revenue And on exchange Slide position revenue net was was X.X%. QX the negative negative The quarter

a with the in a beginning year acquisitions while from less negative revenue included currency for of change, was growth first positive the Acxiom the the net nine X.X% months, year were for our was was of the growth Acxiom’s X.X%, non-strategic quarter. organic small revenue Net Net X.X%. and agency. full acquisitions organic over consisting impact cheaply fourth X.X% certain growth

growth organic Kinesso, MullenLowe IPG in As of FCB, Acxiom, slide, you McCann and integrated segment IAN FCB on network Huge. X.X%. the offerings, including by can Worldgroup, bottom see, QX notably was of led a for range half agency was Mediabrands Health, and the growth our

and performance At our quarter, year Octagon organic CMG. X.X% at Morton segments, and and entertainment at driven growth our Jack Full strong by by in in X.X% marketing IAN, experiential. growth group the organic was X.X% at CMG sports was

X, revenue previously. that in quarter, growth Slide out basis we’ve regions. In was of includes revenue XXX points organic to US, by on a called headwind the X.X% the which Moving

both Our MullenLowe and domestic by led of services technology creatively led services, was our other growth notably and and healthcare range Lynch. Carmichael at FCB offerings, media, and a and McCann

US growth a was headwinds headwinds year X.X% essentially get be will and in that’s of on are full cycled again, the of X.X% top includes organic diminished year, and impact ago the QX of the For X.X%. midyear. at And

we X.X% in at had organic on markets, strong XXXX. Looking with international our growth, of UK, top the recall from you’ll X% QX another that’s quarter

to see Notably, IPG Mediabrands, contributions our the Morton We to across continue Huge. number offerings of Jack agencies. and in growth

most organic this X.X% Asia-Pac, of the XXXX. was Spain, Michael of continents. QX of increase growth as solid growth In France. our year cast is Germany was X.X%, our by year, by largest and safety increases highlighted mentioned in against Europe, was earlier, markets, growth UK a organic national the For affected and organic wellbeing X.X%, X.X% the all on namely in our outstanding coronavirus. well growth the colleagues, primary full Continental as those as an concern In

results regions. Looking the at in our

Our with decreased, Revenue largest and mixed regional performance our quarters, in and Consistent organic continue markets. Japan China the in quarter revenue recent increased. well decrease in was Australia was flat India X%. we see to

for change year. in full Our region points basis XX negative the organic was the

XX.X% in was on top organically LatAm of XX.X% QX ago. was which a year

Mexico, were group, regions powered our growth Middle other offerings both growth XX.X%. growth Full new East and see with our was client In Brazil organic to led continue quarter, the in led was growth by Full X.X% organic by X.X%. We revenue existing the and was in year Canada. and growth in increases the wins by year organic clients. across markets

you focus quarter drivers look year. and the expense year. our of the in I on remarks margin if X, will Slide the full expansion my a at

of the improvement expense tax, XXX was improved an basis temporary performance revenue is we salaries expense in major based related labor Underneath all severances. of ratio These total payroll, ratio and and XX.X%, benefits for to full compensation, and that, categories. net which points. incentive, Our year

was is approximately At a of XX,XXX, than an X% increase which less yearend, our companywide from year ago. headcount

XX.X% net a full and year in was other and direct technology. the more due office a relatively compared of year ago. for consolidation to data investments was which full mainly The Our revenue expense year increase XX.X% and has the the is Acxiom for

as decreased SG&A from or reported XXXX. X.X% to expense in a X.X% XXXX

ratio the The greater a expense was the lower expenses incentives full from allocation XXXX in X.X%. deal and the SG&A Acxiom change year Acxiom SG&A. agencies that expense including reflects mainly to for to in performance-based XXXX, our and compensation Excluding for

in that’s depreciation The intangibles Our in was to amortization acquired was increase an XX of XXXX. – compared for XXXX, X% revenue of our X.X% of X.X% depreciation net XXXX, basis expense points. in

consolidation due and to XXXX. compared for the depreciation increases full only the of to quarter amortization, the both fourth XXXX, in Acxiom year For in

fourth and reported our picture begins to for results income adjustments on results and better of transparency performances. our detail comparable in you present side and order with our operating we left-hand to through quarter EBITA the steps a diluted X, Slide adjusted EPS. to Turning give reported This on

Our loss in million. a amortization operating few resulting acquired to million, non-strategic in for related the other quarter disposition million intangibles was small $XX.X On businesses. in expense, of expense, EBITA our of $XX the had a $XXX.X we expense of

quarter In the valuation we backed provision, in here. our tax million have which $XX.X reversal we out benefit allowance settling net recorded a from

$X.XX share reversal At can an $X.XX share impacts of the The tax the reflects based slide in diluted adjustments. adjusting between total improved related after fundamentally allowance per diluted performance markets. adjusted. you the this as difference the While the EPS operating and for was item, see reported $X.XX part

similar full QX. charge Again, brings year. restructuring X in this impact for continuity Slide also and adjustments comparability the of the from to depicts the

million. course million. dispositions was $XX $XX million Business resulted a QX restructuring year [ph] XXXX the in of expense and of $XX amortization [$X] over charges Our loss the were

low forecast $X.XX. The year was our was rate from of diluted rate is adjusted was for the our XXXX, to direct XX% tax of for normalized XX% effective unchanged the which impact effective at benefit results In XX%. at targeted at of our XX.X% tax million. end year our a The to is Note adjusted full range. XX% as discrete full items tax $XX EPS

which to in full capital On generated from the cash compared $XXX was compared for was $XXX million $X.X a XXXX. capital, we in flow with Cash $XXX with comparison turn used working operations billion Slide X, working from The million year year. ago.

have volatile As pointed be can capital previous working we calls, on from year-to-year. out

includes The of the variation only the in Investing Acxiom CapEx timing in to XXXX payments collections million. of for benefit resulted evened late activities and million timing year, our by both was $XXX a few in a days. Due a us of XXXX a acquisition. reflecting in to XXXX. $XXX percentage

issuance Our $XXX to stock long-term the for financing our for In long-term debt was the activities used $XXX proceeds mainly million $XXX and from million, acquisitions. dividend. XXXX, of common million which debt Acxiom repayment related

increase in was $XXX net Our million. cash

current our year Slide and portion XX cash sheet. balance the of equivalents. billion $X.X is the We in ended with

million, $XXX in X.X% Our liability. current year mature this and October under senior notes reflected is

the a depicts October $X.X schedules million debt the Acxiom year Total at maturity $XXX XX from of outstanding XXXX. Slide of since our financing is a billion, yearend debt. million which $XXX and in approximately reduction ago was

summary In we are in XX, the and year. the performance on with our pleased Slide quarter

spite Our achieving expense of well, teams in very significant maintaining headwinds, revenue discipline. executed while strong growth

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

entering announced actions As well evidenced today. us positioned leaves XXXX. Board main by our That

it I’ll Michael. turn to that, With back

Michael Roth

of once results the has topped our each holding strong Thank that highlighted differentiated you, past This we five again, rate continued were model. revenue for by the average. XXXX, leads talent, speaks Ellen. Well organic outperformance to In to offerings our growth company the years, a industry and sector. growth have achieved pleased

For brands, some they for so time, our key that great we’ve strong as role continue produce seen clients. supporting to advertising can agency and our nurturing

challenges, have in that place never the these an of the media marketing, and and future. we’ve disposition evolving landscape we IPG To Simultaneously, areas taking disruption for key communications. a create invested sight in lost address

help embedded IPG consumers preeminent solutions, edge digital relevant brands us have of company. leading included open a a have position our across fill These and reach data the media Today, which to and highly capabilities in expertise facing efficient in portfolio, helped future is way. and all architecture

sets with combination growth of valued by brand. and and a have tomorrow’s creativity, for company deliver craft where and data accountability collaboration. and a unite consumers and through help And technology, can to conscience that Our leaders can regarding respect holding advertising privacy, the culture company brand of IPG is standard we valuable created integrity We with find for transparency, safety. modern the business

over data calls, As power the enhancing absolutely we the in value their and to ability prior us customer it’s on and years, of companies before helping its well Acxiom. own many IPG clients have the been of the business is data reach the and understanding noted first-party help experience acquired Today’s for and essential we our has optimize priority goals. service their

the with omnichannel and power there strategy, increasingly which many are are ranging execution used involved long-term of our and more for we cases from Thanks ecommerce media. to

meets and – to is Sometimes work help determine party and the most hold company sourced new third and the to standards. insights the rigorous, in data regular is they put data if innovation. second been a job Other has a the regulatory first, challenge times way ethical drive to that to

faster and that our technology tech To bear Acxiom skills new activations and Kinesso, further and therefore, major our enhance our media capabilities leverages the brought we effective. provide and being more where adjacency to most are media Kinesso on offerings, last partnership Mediabrands, great services marketing and a and clients was all quarter the Kinesso launched company was that data data with business science currently opportunities. in close marketers working services make to there help opportunity.

financial have strong and during We stated disciplined ability these against strategic management. recent coupled to financial with we demonstrated XXXX, to moves cost our Consistent years, remain goals. on with deliver our

of. improvement record very is are Our we margin proud sustained long-term something is

the as to continued dividend our well increase to commitment today decision prospects. Board’s in value future to return shareholders Our shows confidence the as

in in more the allocation programs. to share our ratios, levels will our historical capital as including addition, return future, In debt we we return buybacks to

by At integrated the strong closed to progress Energizer. developments Armor now network, with provide our level let’s Mediabrands with year and All, a To the client agency retains key a of the UM our the during performance acquired the added agency the quarter. performance. within very report turn on portfolio, GoPro relationship existing recently

year. end And and At The best of again work identifying relevant it Lab products innovations and was XXXX. most to has the guided in named exciting IPG the good a and a our win clients. [indiscernible]. UM, posted place CES, quarter a notable for very convention the saw providing floor, with Media just agency experiences on also in Initiative

FCB by from grew for Healthcare consecutive Global year performance of of named in its was the New quarter, XX the Area Year Global XXXX the Network third Health Year FCB Agency also Festivals at Year operations. Awards. of the driven strong named the health and and Agency Regional our the Global York

the as well Global by and McCann accolades, Epica notably growth important Adweek Agency Awards. Worldgroup an awarded globally, Network at the of saw of as Year Year the industry

been one Coach featuring of Superbowl for addition, the has broadcast rankings. wildly female major NFL first in and the the as Microsoft, herald work In history, the best McCann’s topping it of openly

a business MullenLowe in roster. and duties Partner they named won budget media hub of Hawaiian Group MullenLowe’s closed number Airlines both us Agency group’s arm, wins, of gave the the added including interest. to media year for Bayer with Global with MediaHub media created Collaborating MullenLowe integrated also the for TaxAct US and the new being group headed

After a in adding and table, data to new solutions with expand the its role seat Acxiom clients. both agencies. clients year Today, to value our existing with the IPG, and our and now have continues at a tech

in addressable mentioned and technology furthers powered engine data as by a by marketing Kinesso As together launched science fourth intelligence IPG’s experts. IPG in bringing Acxiom. talent brands’ the top quarter, Kinesso, media vision trusted early with partner data

of in and [indiscernible]. The new wins Shandwick launched naming CMG robotics. time Lego, business companies a consultancy leadership offerings in from of suite Golin a quarter the Weber Turning Twitter risk agency organizations. time within also help access years, Meso restructured CEO the expanded Minds cultural – trio had first Global to its for and Shandwick their including fourth United Report the the new Weber Agency and a to six the Holmes for Year,

also coming announcing Octagon in game, multiple solid wins at new a the many is sporting it Miami. activations several three where represented agency off and a The had business players quarter, managed clients Superbowl successful in conferences. the corporate

creative at have campaign month, combined. in Awards, brands. other Last on IPG awards that the business IPG many All by Year clients vibrant holding as leadership, agency to excellence continues performance. swept judged Agency in home unique These more taking the and and of and level, inaugural industry’s US of most companies are are the recognized all People which Agencies they the

also We’ve but how XXXX differentiated company culture Business by should our offerings company a well. Roundtable at Setting and the is new a model the our inclusion a creating to our as focused and operate. redefining on that just by not holding commitment IPG diversity and standard purpose a of corporation. joined

As for we long-term continue to transparency value responsibility. corporate innovation, generate through and stakeholders,

our continues part to addition, In focus on our of a business priority. be ESG

company to ranking, XXX According the employee responsibility industry from corporate as Developed of one through in best effectiveness was only a companies the by the Drucker Wall ranked engagement, and strength. management XXXX the advertising Street makes social customer financial top IPG ranking the the managed and Journal, Institute the lists. satisfaction, included innovation, and of the

after want named was list, company advertising top the most-sought in the sector their the the develop and IPG company highest most Additionally, and XX by work was which companies careers. to where ranked compile people work to the for LinkedIn on

It as Our metric are and our to organic company highly we foundational remain with crowded in marketers goes the media and saying differentiated environment. to results the been performance the for strength we positioned long-term operations. shows our the and future, evolving well on demonstrate focused of IPG strong. in our performance increasingly our this relevant growth without are culture offerings. how remains an have reasons complex Notably key that our that But strategy competitiveness

traditional we collaborative And today. tone opportunities business positioned to clients that existing ensures well create of well strength Fitch from to the is Looking business our us as solid, work a portfolio see with forward. the arena positions remain the profit of sound, modern we as participate grow to have from that opportunity our activity greatest hard of company the new may outside forward, our going as come in highly

would we a XX improved that Along X% light of of therefore In margin in growth to organic see targeting we expect by with growth revenue we growth, an and factors, further should basis EBITA additional\ these XX.X% continue we bring us believe XXXX. points XXXX. which this are to for of level

that enhanced On value and the top our for company. long-term recent of over feel remains it significant value creation potential our success, shareholder for we

And As we people our first updating always, of we thank success. who at our progress, quarter have the to been forward foundation call. on our clients, our our look long-term

up questions. you. With open Thank that, it I’ll to

Operator

session. Instructions] And you. from our begin Alexia first J.P. question-and-answer now We’ll Morgan. question Thank comes Quadrani [Operator our from

is line Your now open.

Alexia Quadrani

questions. very Thank much. of thank you Hi, A you. couple

more one the First in the a to spend was add environment area the there strong down one then sort get of do optimism? guys And as with and ad the upside? in maybe really follow-up? surprised momentum I’ll speak secondly, you into outperformed so XXXX wondering healthy you. business And that the your across clients you or continue general particular like that a I’m then you see sense Board Thank quarter when of in was sort of if

Michael Roth

Octagon it strong Jack came obviously Thank you, and strong well and units Well mentioned came came across in Health our quarter fourth our Morton the obviously Mediabrands, performed the all frankly, and FCB pretty quarter. as much and Dater, integrated strong network was fourth I in Board, in the Alexia. in Acxiom

in. rise the our came in So the that growth and that headwinds to notwithstanding we strong gave quarter fourth

And tone as a continue it target it which is industry, pace When the good mean very to for sets I XXXX. we still have thing for we we to comps set difficult a X% set for continue XXXX, the of of the – X% top year-on-year, in XXXX, reflects on year the those we through when XXXX was indicated, we still of that. that the a headwinds for goal so cycling of full are headwinds. half still first of set have Ellen goals setting we

clients indicate to to our needs. well value and moves that offering bodes our the that our the that the feel continues to to with of So architectural our that clients and we our meeting with obviously be to proposition we compensations solid open respect approach tone needle continue are business clients’

cards out the the to Now course coronavirus, there, going know there are question is how is impact know, you us? of I that wild

total it’s – that of X% roughly – but because revenue is remains not which will it’s be us, this total is and important seen China chain revenue, have is, impact on out our but respect the other significant, there, clients our the supply and what our certainly are the to to what on suppliers the would chain into when tone what quarter. – US But with companies move it’s as that companies. continues and global impact be XXXX, have wildcards solid there still there we to first some to

Alexia Quadrani

new a on still just follow-up of on headwind see half our that we the and you data year. the first the there And quick from business mentioned is

you’ve tailwinds neutral look So or from happened be some of there you’re to to the recently actual terms at back fall? more or going do see you more today, the last when you that the find been you think wins in what’s half had sort can in announced of

Michael Roth

of thank have America stream in win But that coming with should year. that were all of business If that of – tail the business forecasting on we’re some organic – recent we growth, tailwind. have But X% hope if do you. losses that you Yeah, we a we the we project of we have some the part Bank offset second that that. should know had the new off

business into and that potential that take we the we wins, we at wins business we’ve losses as we look – into consideration a when look pipeline So have well target, as realized. at in

into margin So all that target factored both organic the expansion. as of as get the growth well

Alexia Quadrani

much. Thank very you

Michael Roth

Thank you.

Operator

Morgan Swinburne next Stanley. Ben our comes from And you. Thank question from

is now line Your open.

Ben Swinburne

could an asset and you you had us I’m all the integration, synergies on flow those you about better for a have talked Hey, into obviously prepared revenue I your if tying morning into in time, of the update revenue numbers the of give Kinesso that’s if Acxiom you everyone. how some just know just but remarks? or sort any phrase starting you’re wondering opportunities Acxiom for Michael a the good to see has just now which X% actually mentioned lack bump,

up – some maybe leverage for revenue quarter you for there, incentive then base a had comp remind us think when I sort nice strong as year? just how bonus And you where of Thanks. shows a offsetting day – that year your the guys fourth and last accrual P&L as the can was have percent you of you that got up in you down works did just process was Ellen, in

Michael Roth

a Yeah, I’ll what – look compensation. you’re what go seeing – is performance-based

business didn’t and our exceeded higher deliver we their last some this remember targets, year performed Some much than units well, on year. goals

it. incentive exactly the those So reflected be that comp is supposed working were is – working that to those and didn’t outperformed compensated, as it’s that units

and reflected our the year because So a in up you full in number on a basis, comp final numbers. we had incentive that also see catch the fourth quarter, we do it

comp respect performance. pay for with incentive it worked expected exactly the So, we to, to as

more physical and The all, all terms the as the different that call, know goes, of table importantly, to all the that potential respect Kinesso you business well, and part real, pitches as of at major IPG clients. clients has and existing new they with a seat the from accounts with, As first in and is far going. with last integration as Acxiom point of view the said need I’ve we’re have table at how legacy well with and as a in all Acxiom and our to along, mechanical business our plans comp necessary offerings much all the be the very integration the pretty Acxiom seat happy done of the of integration is done, you but know, integration as with things is our

if was look that that indicated, Acxiom we management one versus at solid. business to data, the continue as be of of first-party you you so okay, know, So the,

third terms quarter, in acquisition. of our performing the consistent in case it’s business said we As with

the think I management X% that that data business and the a well we’re of very perform used Acxiom. for growth difficulty] with we like business, core [technical happy first-party continues and to it

where Cadreon data but Kinesso, the on technology Acxiom have base. pleased adtech, is On And the top the how the respect really we and there of business activation. to have putting working provides business obviously and both of we service the the of pitches that in then new existing attention we’re our Kinesso martech the that and well client backbone, with formation together which the with in with proposition focus is of getting that part

we in we in into the the a X% a do for we of the Then continue we So which performance Kinesso said place new Kinesso part to together. synergies in agencies pickup solid what performance them Kinesso, initially to offering, focus XXXX, products was, Mediabrands, roll as year start through introducing eventually it what and creative growth because we Acxiom, well. course for the logical terms because particular, the the we that said XXXX, the going that’s Mediabrands have on with the for will solid organic number between to we’ll bake of to out last last our of reflects value-based for in and were Acxiom come time

how Acxiom is So we’re very performing. pleased with

they was of we’re really stuff integrated when seen respect that. and clients, decision offering audiences very of that the was on creates doing dealing mean future an about think for because it’s immediate the clear Kinesso I I in Acxiom, with high and value it with it and creates, a the full pleased acquire impression offering the right to haven’t that open gives excited type us us the architecture. competitive with value – it advantage frankly to us to focusing that that and

Ben Swinburne

Michael. Thanks,

Michael Roth

Thank you, Ben.

Operator

from And BMO next from Capital question our Solomon comes Dan Markets.

open. now line is Your

Dan Salmon

you and everyone. morning, Ellen. for one one for Thanks, good Michael, and

plenty contributor I – Over of it the out huge over but just an think so out your on that year, covered hear agency Bob Greenberg, I an Kinesso, about could over a the that’s love agency, a last that’s of transition such how the to been to decade last maybe update It’s the lot has it want going? so, never with played there. He’s there’s there or Acxiom ask ask Ben or I year – see but legend. you I about last easy I R/GA. industry to to growth

executing the the then, point. intention share are timeline flow watching, are reiterated the the you us us for overall? the for things to to just that won’t check milestones company at to Thanks. think what get comments, And your maybe balance on press you on Michael’s before give your cash release that. What want generation the buyback you’re the think with that you’re sheet But box know Ellen, again? a back about I I you remind some in

Michael Roth

and That’s topic unfortunately heart. Yeah, very take close the – have me, Believe – that we all to finance I’ll Ellen entire one too. a the team my

Dan Salmon

And the – board

Michael Roth

debt. issue very to down my And We our pay In you carefully. commented the board. for continue to this know XXXX is addressed remarks, I that goal

we year We that sometime that terms form in the another. And the we those have one levels. you tower our investment next cash pay million that maintaining levels given we to or and at, there $XXX frankly, in see be down when flows a looked of we’ve should were reposition reaching to grade, previously get

in I to things So Board agencies, talk that we’ll the buying the conditions. to important requires be to, back want market next take and us to that approval. happening is shares it reasonable rating we very we the consideration would which into way We’ll could sometime be them overall year, think obviously market think all

one certainly cash continue to we distributed of had paid is mix mix, Acxiom of value it’s the us $X.X our type very creation to good and of debt, opportunities we we it. between pleased buybacks until shareholder But to you know, up with that we dividends, a we’re believe terms in already for investors strongly return and billion that

the we saw did buybacks, and share and focus year shareholders to believe we’ll the is we that opportunity. increases, our mix we as we to can the this better back for So dividend get between on sooner continue

Thank you for asking R/GA. about

You know, individuals beefed Lyons. Sean CEO, some organization. strategy basis. up of a looking go-to-market team, repositioned global new within he’s your They’re we a the the at have his He’s on

side that what entire in the organization CEO, should offerings is for and strong traction area. they’re the business have, they good look and sowing what new any in particularly markets opportunity is them. a that As a of in making be at of terms Sean investments taking very They’re the consulting they in,

R/GA. be So we about excited to continue

of in together strategy, business. is of really But Greenberg. the Bob a course, under fact the continues of frankly in putting go-to-market real and the team legends excited terms Of Greenberg part forever. Sean about – And legend. I’m There true legend, R/GA aren’t Bob and many the be will what expertise he his the he strong in leveraging base leadership traditional,

the contributor So will IPG. strong to R/GA performance overall to be of continue a

Dan Salmon

Thanks, Michael. Great.

Michael Roth

you. Thank

Operator

next Macquire. question our Thank Nollen, Tim from you. comes And

now line open. Your is

Tim Nollen

concern a the okay. Acxiom’s well want Well, thanks. with could first us do if have Acxiom with question, actually just cookies. ask to give changes work Google’s about as privacy as to days of rundown about much so you that’s these third-party amongst and market I another data cookies, just I

might out about data seller. Acxiom think a a I there is there be third-party misunderstanding just

to if And first-party of the us actual is I know about then versus how business. the importance work you think terms very Thanks. the your from – just in first-party could – is just you sort data know, minority of – that’s comes just very, sense a the of terms third-party? a vast I the management? you of sales, that of the more of much wanted doing much a in give

Michael Roth

to sales, do and – is that you it of managing management of don’t that we best-in-class. is light business data Remember, Well just managing. approximately data, two-thirds, their want two-thirds say Acxiom just first-party call first-party and

rating. of a known privacy. star are data. It’s manager in the of terms five well it gives trusted first-party their Forrester expertise They in

know regulations regulators type and rules and when you of role, with and UK they inviting working an Acxiom those GDPR, executing the in clients. the fact, introduced In played important

third-party of core And a we has the make competency added consistent first-party this performance the management Acxiom year, people. our we as the said, overwhelming logos, terms roll to vice else. that acquisition. in data sure first-party very of it true of Everyone when has bought part Acxiom, their is they’ve which of with plan Acxiom be, business of I the So But been, everyone part new is business. to focused offerings. their And data. very misunderstood InfoBase, of on business frankly sort to the and we that’s management having know out the Acxiom we’re without anywhere that versa. And in on And the that you the a frankly, this clients that scratching terms data you IPG wanted well see even basis surface access don’t core

gem demand throughout the a even their see United will true fact well us it States, more core So rules for now as with privacy is a we business be frankly, expertise And data buttresses forward. that the and more California just privacy we first-party the and changer in the rules and it’s respected. this move game

to the data Acxiom. critical of So is success the first-party

distinguishes you their data, And up the know, have questions uses of amped from sources it use over And come that’s know, third-party competition. the The is, third-party to Acxiom, the from we which globe. one all source, data. together puts data Mediabrands don’t other you InfoBase. has own the frankly

they’re respect client. with third-party So if one it’s and at Acxiom to the with make data value-based for to being the our to have very is Kinesso tools used of terms demand, it’s clients up But proposition we all certainly resources you and the our which in to will effectively bringing and together suited sure them. and best

this the is. And hunting? the thing candidly, one of you is, questions it And is is, yes, know, answer

Mediabrands with they as terms is of have Acxiom that when role to are of at the clients, table looking a the mean, the of we had in made where particularly number the side, our kind of existing positioning. top and top sit I clients sitting them this open table for. stuff and know, media And architecture the a at Kinesso we working the of wins, have pitch, plus well a had You success on client strength the as together with they difference

cookies, about and environment with and cookies We’ve the now the around about up worried for been work writing I we’re With it. know regulatory building Google to everyone’s it. years, to ways to respect respect

solution of to we’re that of have And to the that that we and happens. the and Kinesso resources we’re working other Acxiom sure all and confident providers was issue. that highly fact address with make But purposes We’re buying tools that as working well. Google us a we that Acxiom one the have, closely place will other with and in in

but sauce When changes terms So excited and I team that’s think to about Kinesso, we activation have of open to offerings positioned in I the think creative the of we’re is fact, bring PR, of that on of together it’s we’re so a the the need propositions, capabilities you the And in capability, than the why clients not the a just that capability, and the see growth. table, environment IPG. expertise offering. our more really all in ever the secret which coming. we in comes compelling terms well put at value out experiential, the And media Kinesso the results organic the in very an you architecture, Acxiom

Tim Nollen

great. what invest and about cost sort give of quick maybe is Yeah, Acxiom? Michael. quick in it also impacts? on in us follow-up, Thanks, that’s a Can maintain side, Acxiom and the a lines the just of what And to review which I cost slip run is cost

Michael Roth

Well, that? How’s one, Ellen. this let I’ll

Ellen Johnson

business the But SG&A. line than line great bottom office But general you both more line. is and from very and a that bit numbers at. bottom heavy we’re account top a little in both Their is top forecast. great Acxiom see weighted Listen, a pleased it’s into the taken and – that’s and the on mix business, all business the

Michael Roth

And one Acxiom business. other the actually different incidentally, we little different a of is have Yeah, plan. differences in it’s incentive than a traditionally has our

different profiles. a different, because reflected cost in incentive is of plans numbers the and comp whether is that’s incentive the in have So O&G up, little also of the they do whether some a terms

Tim Nollen

That’s very great. Thanks much.

Michael Roth

Sure.

Operator

next our MoffettNathanson. question from Michael you. Thank Nathanson comes from And

now is line Your open.

Michael Nathanson

one you. I thank and one expecting on Hey, Ellen. Acxiom two, have for

as data, we in non-IPG marketing first-party on be because would was maybe So Acxiom got the an just a Michael, think being IPG about two-thirds client. concerned vertical heard one with of I managing business same, competitor, they’d let’s that know, you the leave we people’s the say of to early clients concerns tend

that are So clients clients? non-IPG the seeing type of, That’s you from any client you one. know, pushback are Acxiom

swing capital had. that a Ellen, implies, big working for about the benefit talk what then you bit you And

you Our kind capital know, improvement improving quarter, in bit, a fourth media huge underlying does anything of quarter? the that in huge working the deal a spend terms, the for so imply

Michael Roth

– look part diligence. question. our services But did part – of which sometimes the fact, That of When you one are due address with by, where existing adds worried Acxiom, you if not hard to financial an financial service zero the probably our me And pretty on conflict. see a Let of this. clients financial diligence If And their top it where example, trusted. expertise, you service the don’t test we if if you right? it’s that’s in the client. have the any due onboarding conflict, we significant is a they’re only that. to was of And new business, first-party at legitimate we in that relationships, potential see come were for the about we had expertise for in see how client due to Acxiom own sector data we tested to new tested, diligence the clients’ they reaction most sector, manages Acxiom companies, and a we much is

the it’s with mean for working an not data you conflict. a let Ellen. Acxiom, I totally know, first-party opportunity capital, and And, So us the I’ll question of conflict

Ellen Johnson

Thank you.

Michael Roth

is working first Ellen This capital. call Ellen’s I’ll so let answer the

Ellen Johnson

it’s but manage So working closely, capital those. is part very something that of we

that yearned changed we’re we but in the get way of remember So, a XXXX, and the can really collections working things nothing capital, working capital around had that a time, that or in and cause in vary manage from time the you the was to back benefit. And you terms. days use it underlying disbursements bigger seeing then volatility, we the XXXX, either has and if

Michael Nathanson

Ellen. Thanks thanks Okay, Michael.

Michael Roth

have questions our business, competitive of And just have because in are significant me creative pretty the world. agencies be, okay. let well. advantage to of know and a is we the the providing I make doing should another we the business point. the it Acxiom mean, know, in on is rest all marketplace. our You leading But us rest Acxiom I

know a them luxury our networks our of you strategies. basis And we sector. in put that picking look people FCB, for together in global and you look Independents, at have McCann, we the the architecture. and best put at look at example, on open MullenLowe of client go-to-market Hill in our We And that When is business can table, the we have open you it’s sauce different Acxiom expertise these great. at the each yes, look to together puts that the agencies you together. world-class all the And Holidays, you Agency, bring Martin it’s are when to – overall creatives our and secret it this you and But percentage of look at we business, we the seamless lose don’t PR our have businesses want have other as of architecture, have sight choosing the if that know, business within our a of and you portfolio. all the

we is just not agencies architecture the country this It’s best-in-class. say, open all XYZ go-to-market business. have open us in to the I mean, we’re kind that strength of is for ability not of of of year in I architecture, our one see architecture businesses side is other. the capabilities. these our well, versus look you time, all in those engagements healthcare the it had of this the performing a we that the to the pull results And clients mean, candidly, it’s and an Acxiom. lot you real ability having with strategy open under this a if the in problem a it’s model expertise at And room, using put compelling the when them has and one been, replace And together our the when

expertise between on these McCann capabilities, results. We world all and they FCB that all And basis. of are and architecture – specific being class, bring an and our together can have focus MedEd, and able diseases these and what’s have Health Health, that’s with to the luxury the we open driving on resources

Jeff? want one have So question, sight everyone to of I with time part don’t Do of it. more I that lose

Operator

comes from the have – You Jason final from our Bazinet question next Citi.

open. now is line Your

Jason Bazinet

in towards million. drag $XXX there reduction any we back of And the provide can sometimes all ask $XXX the cadence the sometimes guys, terms sort pivot be the for Is that as But capital I year? buybacks. But fourth I low inflow know of know you working go as on big I hate debt figure million, your of outflows a for and and can this? you can back as to just side? and in on color the of look try you the you quarter. had do and it working on out QX capital expectations

Michael Roth

a mean, this back and quarter. if first strong on normal. year last Yeah, the look negative basis, were I is I year-to-year in we were we think you

in that pay and grade take to amounts that we’ll reasonable rating debt that down generated at year up expected at of a particular. debt, flow When grade. a terms at flows, year look our we from significant of be investment look basis, timing where and getting it’s to it’s in should back a side media solid paying we’re basis. into to it’s be a a So to based hard we out on our ratings end. on business and all strong of getting we we by look assume all end full cash our on full When will a And investment position cash it’s going yearend year our think buybacks in where continue maintaining the to look to they and I just so strong

look a we on at So basis. year full

anomalies and is positive. the with has lot business, a were media of side of on You that’s very know, us there so quarter-to-quarter, for the a which do it robust to

Jason Bazinet

right. All

Michael Roth

That’s manage it. how we

Jason Bazinet

they forward when Well buybacks right. All the to come. look

Michael Roth

I Yes, know. Okay.

we look Okay support we Thank and well thank you very much. first the our call. quarter all appreciate And to again, you. forward

Operator

concludes conference. you. this And Thank today’s

this at may time. You disconnect

The Interpublic Group of Companies, Inc. (IPG) 12 Feb 202019 Q4 Earnings call transcript