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Interpublic's Q2 Adjusted Earnings In Line, Revenues Beat

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The Interpublic Group of Companies, Inc (IPG - Free Report) reported second quarter 2014 net income of $99.4 million or 23 cents per share versus a net income of $79.9 million or 18 cents per share in the year-ago quarter. The quarterly results were driven by higher revenues.

Excluding one time items, earnings per share in the reported quarter stood at 25 cents. Adjusted earnings were in-line with the Zacks Consensus Estimate of 25 cents per share.




Revenue increased 5.4% year over year to $1,851.4 million in the reported quarter. The increase in revenues was driven by organic growth and acquisitions, partially offset by foreign currency translations. Quarterly revenues beat the Zacks Consensus Estimate of $1,848 million.  

Organic revenues increased 4.7% year over year in the reported quarter, while the impact of net acquisitions was up 1.2%. However, foreign currency translations had a negative impact of 0.5%.


Operating income in the reported quarter was $195.8 million compared with $174.8 million in the prior-year quarter. Operating margin was 10.6% in the second quarter of 2014 compared with 10.0% in the prior year.

Total operating expense in the quarter stood at $1,655.6 million versus $1581.4 million in the prior-year quarter.

Balance Sheet

As of Jun 30, 2014, cash, cash equivalents and marketable securities totaled $901.4 million versus $1.64 billion as of Dec 31, 2013. Total debt was $1.76 billion as of Jun 30, 2014 versus $1.66 billion at Dec 31, 2013.

Share Repurchase Program/ Dividend

During the second quarter of 2014, the company repurchased 3.0 million shares for $52.4 million at an average price of $17.81 per share. Dividends paid during the quarter amounted to $39.9 million.

During the quarter, the company issued $500 million of 4.20% senior notes due 2024. The net proceeds will be utilized toward the redemption of $350 million of its 6.25% senior unsecured notes.


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 projects organic growth in a range of 3%–4% and 10.3% operating margin in 2014.

The market reacted positively as share price increased in pre-market trading.

Interpublic currently has a Zacks Rank #3 (Hold). However, better-ranked stocks that are worth a look include National CineMedia, Inc. (NCMI - Free Report) , Omnicom Group Inc (OMC - Free Report) and Stantec Inc. (STN - Free Report) , each carrying a Zacks Rank #2 (Buy).

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