Interpublic Beats Q1 Revs, Narrows Loss - Analyst Blog

The Interpublic Group of Companies, Inc. (IPG) reported first quarter 2014 net loss of $20.9 million or loss of 5 cents per share versus a net  loss of $59.2 million or loss of 14 cents per share in the year-ago quarter. The quarterly results were impacted by higher operating expenses. The reported loss was narrower than the Zacks Consensus Estimate of a loss per share of 9 cents.

Revenues

Revenue increased 6.1% year over year to $1,637.5 million in the reported quarter. The increase in revenues was driven by organic growth, partially offset by foreign currency translations. The quarterly revenues beat the Zacks Consensus Estimate of $1,601 million.  

Organic revenues increased 6.6% year over year in the reported quarter, while the impact of net acquisitions was up 0.9%. However, foreign currency translations had a negative impact of 1.4%.

Margin

Operating loss in the reported quarter was $11.7 million compared to an operating loss of $42.4 million in the year-ago quarter. The results were driven by higher salaries and higher office and general expenses. Total operating expense in the quarter stood at $1,649.2 million versus $1585.4 million in the prior-year quarter.

Balance Sheet

As of Mar 31, 2014, cash, cash equivalents and marketable securities totaled $777.0 million versus $1.64 billion as of Dec 31, 2013. Total debt was $1.66 billion as of Mar 31, 2014, unchanged from year-end 2013.

Share Repurchase Program/Dividend

During the first quarter of 2014, the company repurchased 2.6 million shares for $44.9 million at an average price of $17.17 per share. Dividends paid during the quarter were $40.2 million.

Subsequent to the end of the quarter, the company issued $500 million of 4.20% senior notes due 2024. The net proceeds will be utilized towards the redemption of $350 million of its 6.25% senior unsecured notes due 2014.

Outlook

Interpublic aims to boost its top-line performance with a consistent focus on organic and inorganic growth. The company also aims to return significant cash to shareholders through share repurchases and dividend payouts. The company expects its organic revenue growth target of 3%–4%, with 10.3% operating margin in 2014.

Share prices dipped in pre-market trading as investors probably expected a more positive outlook from the company.

Interpublic currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth considering now include Lamar Advertising Co.  (LAMR), MDC Partners Inc. (MDCA) and Publicis Groupe SA (PUBGY), each carrying a Zacks Rank #2 (Buy).