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Interpublic (IPG) Surpasses Q3 Earnings & Revenue Estimates (Revised)

Zacks Equity Research

The Interpublic Group of Companies, Inc. IPG reported solid third-quarter 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of 49 cents per share beat the consensus mark by a penny and improved on a year-over-year basis. Total revenues of $2.44 billion beat the consensus estimate by $366.3 million and increased 6.1% on a year-over-year basis. The top line benefited from organic revenue growth of 1.4% and positive impact from acquisitions of 8.6%, which were, however, partially offset by a negative impact of 1.3% due to foreign currency movement.

Net revenues of $2.06 billion increased 8.7% year over year.

Quarterly results were driven by solid performance across the company’s media, healthcare marketing, public relations, and sports & entertainment offerings. It witnessed contributions from a wide range of client sectors, which include healthcare, financial services, retail, tech and telecom, and consumer goods. While international markets remained strong, the company is fixing out the impact of certain account-specific headwinds in the United States.

So far this year, shares of Interpublic have gained 0.8% compared with 5.3% decline of the industry it belongs to and 19.1% rise of the Zacks S&P 500 composite.

 

Let’s check out the numbers in detail.

Operating Results

Operating income in third-quarter 2019 came in at $280.3 million compared with $261.7 million in the prior-year quarter. Operating margin on net revenues declined to 13.6% from 13.8% in the year-ago quarter due to increased amortization expenses related to the acquisition of Acxiom. Operating margin on total revenues rose to 11.5% from 11.4% in the year-ago quarter.

Adjusted EBITA came in at $302 million compared with $277.8 million at the end of prior-year quarter. Adjusted EBITA margin on net revenues came in at 14.7%, flat year over year. Adjusted EBITA margin on total revenues rose to 12.4% from 12.1% in the year-ago quarter.

Total operating expenses of $2.16 billion declined 6% year over year.

Balance Sheet

As of Sep 30, 2019, Interpublic had cash and cash equivalents of $520.5 million compared with $614 million at the end of the prior quarter. Total debt was $3.62 billion compared with $3.77 billion at the end of the prior quarter.

Dividend Payout

During the reported quarter, the company declared and paid out a cash dividend of 23.5 cents per share amounting to $90.8 million.

2019 Outlook

Interpublic reaffirmed its full-year 2019 guidance. The company continues to expect organic revenue growth of 2-3% and adjusted EBITA margin expansion of 40-50 basis points.

Zacks Rank & Upcoming Releases

Currently, Interpublic carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Clean Harbors CLH, Aptiv APTV and Republic Services RSG, each scheduled to release results on Oct 30.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)


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