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IPG reports organic revenue increase of 5.7% in first quarter of 2015

27-April-2015
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IPG reports organic revenue increase of 5.7% in first quarter of 2015

IPG has announced first quarter 2015 results:

It reported organic revenue increase of 5.7% and reported revenue increase of 2.4%.
• It announced first quarter operating income of $7.8 million, compared to an operating loss of $11.7 million a year ago, in seasonally small first quarter as well as break-even first quarter earnings per share, compared to a loss per share of $0.05 in the prior-year period.

Summary

Revenue

• First quarter 2015 revenue was $1.68 billion, compared to $1.64 billion in the first quarter of 2014, with an organic revenue increase of 5.7% compared to the prior-year period. This was comprised of an organic increase of 6.1% in the U.S. and 5.1% internationally.

Operating Results

• Operating income in the first quarter of 2015 was $7.8 million, compared to an operating loss of $11.7 million in 2014.

• Operating margin was 0.5% for the first quarter of 2015, compared to (0.7)% in 2014.

Net Results

• First quarter 2015 net loss available to IPG common stockholders was $1.8 million, resulting in break-even earnings per basic and diluted share. This compares to net loss available to IPG common stockholders a year ago of $20.9 million, resulting in a loss of $0.05 per basic and diluted share.

“We are pleased to report first quarter results that feature strong organic growth, as well as progress in terms of operating profit. We continue to see the benefits of our long-term investments in talent and our commitment to embedding digital capabilities and expertisethroughout our portfolio,” said Michael I. Roth, Interpublic’s Chairman and CEO. “We believe this approach is consistent with the changing dynamics of media usage and consumer behavior. This strategy places our integrated marketing solutions, led by our outstanding strategic and creative capabilities, at the center of a connected world. During the quarter, we saw solid contributions to our performance from across our agency portfolio, with particular strength in the US, as well as significant growth in Asia and the UK. Our capital structure will continue to be a source of value creation. Looking forward, we believe that we remain well positioned to achieve our 2015 targets of 3-4% organic revenue growth and 80-100 basis points of improvement in operating margin, thereby further enhancing shareholder value.”

Operating Results

Revenue

Revenue of $1.68 billion in the first quarter of 2015 increased 2.4% compared with the same period in 2014. During the quarter, the effect of foreign currency translation was negative 4.4%, the impact of net acquisitions was positive 1.1%, and the resulting organic revenue increase was 5.7%.

Operating Expenses

During the first quarter of 2015, salaries and related expenses were $1.22 billion, an increase of 2.2% compared to the same period in 2014. After adjusting for currency effects and the impact of net acquisitions, salaries and related expenses increased 5.7% organically.

Staff cost ratio, which is total salaries and related expenses as a percentage of total revenue, was 72.5% in the first quarter of 2015 compared to 72.6% in the same period in 2014.

During the first quarter of 2015, office and general expenses were $453.0 million, a decrease of 1.7% compared to the same period in 2014. After adjusting for currency effects and the impact of net acquisitions, office and general expenses increased 2.1% organically.

Non-Operating Results and Tax

Net interest expense of $13.7 million decreased by $0.3 million, or 2.1%, in the first quarter of 2015 compared to the same period in 2014.

The income tax benefit in the first quarter of 2015 was $1.4 million on loss before income taxes of $5.6 million, compared to a benefit of $1.7 million on loss before income taxes of $24.0 million in the same period in 2014. The effective income tax rate for the first quarter of 2015 was 25.0%, compared to 7.1% for the same period in 2014. Interpublic Group 1114 Avenue of the Americas New York, NY 10036 212-704-1200 tel 212-704-1201 fax

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