The Interpublic Group of Companies (IPG) reported third-quarter 2013 net income of $45.4 million or 11 cents per share versus net income of $68.7 million or 15 cents per share in the year-ago quarter.
The company’s quarterly earnings suffered due to pre-tax charge of $45.2 million related to early redemption of its 10.00% Senior Notes due 2017. The company reported adjusted net income of $76.6 million or 17 cents per share, missing the Zacks Consensus Estimate by a penny.
Revenues increased 1.8% year over year to $1,700.4 million in the reported quarter. The quarterly revenues missed the Zacks Consensus Estimate of $1,711 million.
Organic revenues increased 2.8% year over year in the reported quarter, while the inorganic revenues were up 0.4%. However, foreign currency translations had a negative impact of 1.4%.
Operating income in the reported quarter was $141.5 million versus $131.4 million in the year-ago quarter. Operating margin in the quarter rose 40 basis points (bps) to 8.3% and operating expenses fell 1.3% to $1,558.9 million compared to the year-earlier quarter.
As of Sep 30, 2013, the company’s cash and cash equivalents and marketable securities totaled $1 billion, compared with $2.59 billion as of Dec 31, 2012. Total debt at quarter-end aggregated $1.67 billion, down from $2.45 billion at year-end 2012
During the reported quarter, the company redeemed $600 million of its 10.0% senior notes due 2017.
Share Repurchase Program/ Dividend
During third-quarter 2013, the company repurchased 6.2 million shares for $100.2 million, bringing its tally for first nine months of the year to 19.9 million shares for an aggregate cost of $280.8 million. Dividends paid during the quarter aggregated 7.5 cents per share, totaling $31.4 million.
Interpublic aims to boost top-line performance with a consistent focus on organic and inorganic growth. It also aims to return significant cash to shareholders through share repurchases and dividend payouts. Moreover, its commitment toward controlling costs is likely to drive further growth in the coming years. The company reaffirms its organic revenue growth target of 2%–3%, with margin improvement of 50 bps in 2013. Specialist and digital capabilities across Interpublic’s portfolio are expected to be strong, given the company’s growing presence in high-growth emerging markets at all major networks.
Interpublic currently carries a Zacks Rank #3 (Hold). Some better-placed stocks in the same industry worth considering include Clear Channel Outdoor Holdings Inc. (CCO), WPP plc (WPPGY) and Huron Consulting Group Inc. (HURN). While Clear Channel and WPP both carry a Zacks Rank #2 (Buy), Huron Consulting has a Zacks Rank #1 (Strong Buy).