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Interpublic (IPG) Surpasses Q1 Earnings & Revenue Estimates

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

Adjusted earnings of 11 cents per share beat the Zacks Consensus Estimate by 5 cents and improved on a year-over-year basis. Net revenues of $2.00 billion beat the consensus estimate by $48 million and increased 13% on a year-over-year basis. The top line benefited from organic revenue growth of 6.4% and positive impact of 9.4% from acquisitions, which were, however, partially offset by a negative impact of 2.8% from foreign currency movement.

In the reported quarter, the company witnessed organic net revenue growth of 5.7% in the United States and 7.7% in international markets, driven by a combination of net client wins and net higher spending from existing clients. Total revenues of $2.36 billion increased 8.9% year over year.

So far this year, shares of Interpublic have gained 8% compared with 7% rise of the industry it belongs to and 16.3% rise of the Zacks S&P 500 Composite.


Let’s check out the numbers in detail.

Operating Results

Operating income in first-quarter 2019 came in at $50.2 million compared with $38.8 million in the prior-year quarter. Operating margin on net revenues increased to 2.5% from 2.2% in the year-ago quarter. Operating margin on total revenues rose to 2.1% from 1.8% in the year-ago quarter.

Adjusted EBITA came in at $103.6 million compared with $44.1 million at the end of prior-year quarter. Adjusted EBITA margin on net revenues rose to 5.2% from 2.5% in the year-ago quarter.

Total operating expenses of $2.31 billion decreased 8.5% year over year.

Balance Sheet

As of Mar 31, 2019, Interpublic had cash and cash equivalents of $630.5 million compared with $673.4 million at the end of the prior quarter. Total debt was $3.94 billion compared with $3.73 billion at the end of the prior quarter.

Dividend Payment

During the reported quarter, the company declared and paid a cash dividend of 23.5 cents per share for a total of $90.6 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 in 2019.

Zacks Rank & Upcoming Releases

Currently, Interpublic carries a Zacks Rank #2 (Buy). 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 first-quarter 2019 earnings reports of key players like Avis Budget CAR, Clean Harbors CLH and IQVIA Holdings IQV. All of them are slated to report on May 1.

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