The Interpublic Group of Companies, Inc. (NYSE:IPG) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 08:30 am ET


The Interpublic Group of Companies, Inc. (NYSE:IPG) Q4 2018 Earnings Conference Call Transcript


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Good morning, and welcome to the Interpublic Group Fourth Quarter and Full Year 2018 Conference Call. (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. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

Jerome J. Leshne

Good morning. Thank you for joining us. We have posted our earnings release and our slide presentation on our website This morning, we are joined by Michael Roth and Frank Mergenthaler. We will begin with prepared remarks to be followed by Q&A. We plan to conclude before market open at 9:30 Eastern.

During this call, we will refer to forward-looking statements about our Company. These are subject to the uncertainties in the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10-K and other filings with the SEC. We will also refer to certain non-GAAP measures. We believe that these measures provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance.

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

Michael I. Roth

Thank you, Jerry and thank you all for joining us this morning as we review our results for the fourth quarter and 2018. As usual, I'll start out by covering the highlights of our performance as well as our outlook for the new year. Frank will then provide additional details and I'll conclude with an update on our agencies, to be followed by our Q&A. We are very pleased to report strong performance for both the quarter and full year.

At on top of our financial highlights, organic net revenue growth was 7.1% in the fourth quarter. That brings organic growth for the full year to 5.5%, which exceeds our latest 4.5% growth target. These are outstanding results.

Regionally, fourth quarter US organic growth was 6.3% and international growth was 8%. We grew organically in every region of the world. During the quarter as well as the full year, we saw very broad participation across agencies, disciplines, and client sectors: FCB, Mediabrands, Huge, McCann and R/GA were all notably strong in the fourth quarter. Top performing client sectors were consumer goods, healthcare, retail, and auto.

In the quarter, the total growth of our net revenue was 13.3%, which reflects both our organic increase and the revenue of Acxiom. This is our first report with the consolidated results of Acxiom having completed our acquisition on October 1. We were pleased with Acxiom's fourth quarter performance, which was fully on track with our expectations. But to be clear, Acxiom's growth is not included in our organic growth of 7.1% and will not be until the fourth quarter of 2019.

Turning to our operating income and adjusted EBITA. Fourth quarter operating income was $459 million, which includes deal expenses for the Acxiom acquisition, as well as acquisition-related amortization expense. Excluding those