Q3 YoY Revenue Growth of 15%, With 25%
Growth in Digital Transformation
Q3 YoY Net Revenue Growth of 8%, Organic
Net Revenue Growth of 8%, Digital Transformation Net Revenue Growth
of 18%
Q3 Net Income Attributable to Stagwell Inc.
Common Shareholders of $3 million
Q3 Adjusted EBITDA of $111 million;
Adjusted EBITDA Margin of 19%
Q3 EPS of $0.03; Adjusted EPS of $0.22
Seventh Consecutive Quarter of Record LTM
Net New Business
Net New Business of $101 million in
Q3; LTM Net New Business of $345 million
Reaffirm Guidance for 2024 of Organic Net
Revenue Growth of 5% to 7%; Adjusted EBITDA of $400 million to $450
million; Free Cash Flow Conversion of ~50%
Company Announces $125 Million Increase in Stock Repurchase
Program
NEW
YORK, Nov. 7, 2024 /PRNewswire/ --
(NASDAQ: STGW) – Stagwell Inc. ("Stagwell") today announced
financial results for the three and nine months ended September 30, 2024.
THIRD QUARTER RESULTS:
- Q3 Revenue of $711 million, an increase of 15% versus the
prior year period; YTD Revenue of $2.1
billion, an increase of 10% versus the prior year
period
- Q3 Net Revenue of $580 million, an increase of 8% versus
the prior year period; YTD Net Revenue of $1.7 billion, an increase of 4% versus the prior
year period
- Q3 Organic Net Revenue increased 8% versus the prior year
period; YTD Organic Net Revenue increased 4% versus the prior year
period
- Q3 Net Income attributable to Stagwell Inc. Common Shareholders
of $3 million versus $1 million in the prior year period;
YTD Net Loss attributable to Stagwell Inc. Common Shareholders of
$1 million versus $1 million in the prior year period
- Q3 Adjusted EBITDA of $111 million, an increase of 9%
versus the prior year period; YTD Adjusted EBITDA of $288 million, an increase of 8% versus the prior
year period
- Q3 Adjusted EBITDA Margin of 19% on net revenue; YTD Adjusted
EBITDA Margin of 17% on net revenue
- Q3 Earnings Per Share Attributable to Stagwell Inc. Common
Shareholders of $0.03 versus
$0.00 in the prior year period; YTD
Earnings Per Share Attributable to Stagwell Inc. Common
Shareholders of $(0.01) versus
$(0.01) in the prior year period
- Q3 Adjusted Earnings Per Share attributable to Stagwell Inc.
Common Shareholders of $0.22 versus
$0.18 in the prior year period; YTD
Adjusted Earnings Per Share attributable to Stagwell Inc. Common
Shareholders of $0.52 versus
$0.45 in the prior year period
- Net new business of $101 million in the third quarter,
last twelve-month net new business of $345 million
|
See "Non-GAAP Financial
Measures" below for explanations and reconciliations of the
Company's non-GAAP financial measures.
|
Mark Penn, Chairman and CEO,
said, "Stagwell delivered 15% year-over-year revenue growth in the
third quarter, led by a return to double-digit growth from our
Digital Transformation capability as AI has required companies to
rethink the ways they engage with consumers. On the heels of our
single largest deal to date with Adobe and expanded relationships
with leading brands like United and Microsoft, net new business of
over $100 million in the third
quarter brings our last twelve-month net new business figure to
$345 million, another record for
Stagwell.
"New business momentum, robust performance from Digital
Transformation, and the culmination of a political season that
broke fundraising records, gives us confidence that our vision is
resonating with customers, and sets the stage for a strong close to
H2," added Penn.
Frank Lanuto, Chief Financial
Officer, commented: "Stagwell posted growth across all our
principal capabilities in the third quarter, as the inflection we
anticipated played out. Driven by double-digit growth in both
Digital Transformation and the Stagwell Marketing Cloud, we
delivered third quarter revenue of $711
million. Simultaneously, we grew our adjusted EBITDA to
$111 million, representing a 19%
margin on net revenue, an improvement of approximately 15 bps over
the prior year. These results give us confidence to reiterate our
full-year guidance."
Financial Outlook
2024 financial guidance is reiterated as follows:
- Organic Net Revenue growth of 5% to 7%
- Organic Net Revenue excluding Advocacy growth of 4% to 5%
- Adjusted EBITDA of $400 million
to $450 million
- Free Cash Flow Conversion of approximately 50%
- Adjusted EPS of $0.75 -
$0.88
- Guidance assumes no impact from foreign exchange, acquisitions
or dispositions.
|
* The Company has
excluded a quantitative reconciliation with respect to the
Company's 2024 guidance under the "unreasonable efforts" exception
in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial
Measures" below for additional information.
|
Stock Repurchase Program
On November 6, 2024, the Board of
Directors authorized an extension and a $125,000,000 increase in the size of Stagwell's
previously approved stock repurchase program (the "Repurchase
Program"). Under the Repurchase Program, as amended, Stagwell may
repurchase up to an aggregate of $375,000,000 of shares of its outstanding Class A
common stock, with any previous purchases under the Repurchase
Program continuing to count against that limit. The Repurchase
Program will expire on November 6,
2027.
Video Webcast
Management will host a video webcast on Thursday,
November 7, 2024, at 8:30 a.m.
(ET) to discuss results for Stagwell Inc. for the three and
nine months ended September 30, 2024.
The video webcast will be accessible at https://stgw.io/Earnings.
An investor presentation has been posted on our website at
www.stagwellglobal.com and may be referred to during the
webcast.
A recording of the webcast will be accessible one hour after the
webcast and available for ninety days at
www.stagwellglobal.com.
Stagwell Inc.
Stagwell is the challenger network built to transform marketing.
We deliver scaled creative performance for the world's most
ambitious brands, connecting culture-moving creativity with
leading-edge technology to harmonize the art and science of
marketing. Led by entrepreneurs, our specialists in 34+ countries
are unified under a single purpose: to drive effectiveness and
improve business results for their clients. Join us at
www.stagwellglobal.com.
Contacts
For Investors:
Ben
Allanson
IR@stagwellglobal.com
For Press:
Beth
Sidhu
PR@stagwellglobal.com
Non-GAAP Financial Measures
In addition to its reported results, Stagwell Inc. has included
in this earnings release certain financial results that the
Securities and Exchange Commission (SEC) defines as "non-GAAP
Financial Measures." Management believes that such non-GAAP
financial measures, when read in conjunction with the Company's
reported results, can provide useful supplemental information for
investors analyzing period to period comparisons of the Company's
results. Such non-GAAP financial measures include the
following:
(1) Organic Net Revenue: "Organic net revenue growth" and
"Organic net revenue decline" reflects the year-over-year change in
the Company's reported net revenue attributable to the Company's
management of the entities it owns. We calculate organic net
revenue growth (decline) by subtracting the net impact of
acquisitions (divestitures) and the impact of foreign currency
exchange fluctuations from the aggregate year-over-year increase or
decrease in the Company's reported net revenue. The net impact of
acquisitions (divestitures) reflects the year-over-year change in
the Company's reported net revenue attributable to the impact of
all individual entities that were acquired or divested in the
current and prior year. We calculate impact of an acquisition as
follows: (a) for an entity acquired during the current year, we
present the entity's prior year net revenue for the same period
during which we owned it in the current year as impact of the
acquisition in the current year; and (b) for an entity acquired in
the prior year, we present the entity's prior year net revenue for
the period during which we did not own the entity in the prior year
as impact of the acquisition in the current year. We calculate
impact of a divestiture as follows: (a) for a divestiture in the
current year, we present the entity's prior year net revenue for
the same period during which we no longer owned it in the current
year as impact of the divestiture in the current year; and (b) for
a divestiture in the prior year, we present the entity's prior year
net revenue for the period during which we owned it in the prior
year as impact of the divestiture in the current year. We calculate
the impact of any acquisition or divestiture without adjusting for
foreign currency exchange fluctuations. The impact of foreign
currency exchange fluctuations reflects the year-over-year change
in the Company's reported net revenue attributable to changes in
foreign currency exchange rates. We calculate the impact of foreign
currency exchange fluctuations for the portion of the reporting
period in which we recognized revenue from a foreign entity in both
the current year and the prior year. The impact is calculated as
the difference between (1) reported prior period net revenue
(converted to U.S. dollars at historical foreign currency exchange
rates) and (2) prior period net revenue converted to U.S. dollars
at current period foreign exchange rates.
(2) Net New Business: Estimate of annualized revenue for new
wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: defined as Net income excluding
non-operating income or expense to achieve operating income, plus
depreciation and amortization, stock-based compensation, deferred
acquisition consideration adjustments, and other items. Other items
include restructuring costs, acquisition-related expenses, and
non-recurring items.
(4) Adjusted Diluted EPS is defined as (i) Net income (loss)
attributable to Stagwell Inc. common shareholders, plus net income
attributable to Class C shareholders, excluding amortization
expense, impairment and other losses, stock-based compensation,
deferred acquisition consideration adjustments, discrete tax items,
and other items, divided by (ii) (a) the per weighted average
number of common shares outstanding plus (b) the weighted average
number of Class C shares outstanding, (if dilutive). Other items
includes restructuring costs, acquisition-related expenses, and
non-recurring items, and subject to the anti-dilution rules.
(5) Free Cash Flow: defined as Adjusted EBITDA less capital
expenditures, change in net working capital, cash taxes, interest,
and distributions to minority interests, but excludes contingent
M&A payments. Free Cash Flow Conversion is the percentage of
adjusted EBITDA.
Included in this earnings release are tables reconciling
reported Stagwell Inc. results to arrive at certain of these
non-GAAP financial measures.
This document contains forward-looking statements. within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The Company's
representatives may also make forward-looking statements orally or
in writing from time to time. Statements in this document that are
not historical facts, including, statements about the Company's
beliefs and expectations, future financial performance, growth, and
future prospects, the Company's strategy, business and economic
trends and growth, technological leadership and differentiation,
potential and completed acquisitions, anticipated operating
efficiencies and synergies and estimates of amounts for redeemable
noncontrolling interests and deferred acquisition consideration,
constitute forward-looking statements. Forward-looking statements,
which are generally denoted by words such as "aim," "anticipate,"
"assume," "believe," "continue," "could," "create," "develop,"
"estimate," "expect," "focus," "forecast," "foresee," "future,"
"goal," "guidance," "in development," "intend," "likely," "look,"
"maintain," "may," "ongoing," "opportunity," "outlook," "plan,"
"possible," "potential," "predict," "probable," "project,"
"should," "target," "will," "would" or the negative of such terms
or other variations thereof and terms of similar substance used in
connection with any discussion of current plans, estimates and
projections are subject to change based on a number of factors,
including those outlined in this section.
Forward-looking statements in this document are based on
certain key expectations and assumptions made by the Company.
Although the management of the Company believes that the
expectations and assumptions on which such forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because the Company can
give no assurance that they will prove to be correct. The material
assumptions upon which such forward-looking statements are based
include, among others, assumptions with respect to general
business, economic and market conditions, the competitive
environment, anticipated and unanticipated tax consequences and
anticipated and unanticipated costs. These forward-looking
statements are based on current plans, estimates and projections,
and are subject to change based on a number of factors, including
those outlined in this section. These forward-looking statements
are subject to various risks and uncertainties, many of which are
outside the Company's control. Therefore, you should not place
undue reliance on such statements. Forward-looking statements speak
only as of the date they are made, and the Company undertakes no
obligation to update publicly any of them in light of new
information or future events, if any.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those contained in any
forward-looking statements. Such risk factors include, but are not
limited to, the following:
- risks associated with international, national and regional
unfavorable economic conditions that could affect the Company or
its clients;
- demand for the Company's services, which may precipitate or
exacerbate other risks and uncertainties;
- inflation and actions taken by central banks to counter
inflation;
- the Company's ability to attract new clients and retain
existing clients;
- the impact of a reduction in client spending and changes in
client advertising, marketing and corporate communications
requirements;
- financial failure of the Company's clients;
- the Company's ability to retain and attract key employees;
- the Company's ability to compete in the markets in which it
operates;
- the Company's ability to achieve its cost saving
initiatives;
- the Company's implementation of strategic initiatives;
- the Company's ability to remain in compliance with its debt
agreements and the Company's ability to finance its contingent
payment obligations when due and payable, including but not limited
to those relating to redeemable noncontrolling interests and
deferred acquisition consideration;
- the Company's ability to manage its growth effectively;
- the Company's ability to identify, complete and integrate
acquisitions that complement and expand the Company's business
capabilities and realize cost savings, synergies or other
anticipated benefits of newly acquired businesses, or that even if
realized, such benefits may take longer to realize than
expected;
- the Company's ability to identify and complete divestitures and
to achieve the anticipated benefits therefrom;
- the Company's ability to develop products incorporating new
technologies, including augmented reality, artificial intelligence,
and virtual reality, and realize benefits from such products;
- the Company's use of artificial intelligence, including
generative artificial intelligence;
- adverse tax consequences for the Company, its operations and
its stockholders, that may differ from the expectations of the
Company, including that future changes in tax laws, potential
increases to corporate tax rates in the
United States and disagreements with tax authorities on the
Company's determinations that may result in increased tax
costs;
- adverse tax consequences in connection with the Transactions,
including the incurrence of material Canadian federal income tax
(including material "emigration tax");
- the Company's unremediated material weaknesses in internal
control over financial reporting and its ability to establish and
maintain an effective system of internal control over financial
reporting, including the risk that the Company's internal controls
will fail to detect misstatements in its financial statements;
- the Company's ability to accurately forecast its future
financial performance and provide accurate guidance;
- the Company's ability to protect client data from security
incidents or cyberattacks;
- economic disruptions resulting from war and other geopolitical
tensions (such as the ongoing military conflicts between
Russia and Ukraine and in the Middle East), terrorist activities and natural
disasters;
- stock price volatility; and
- foreign currency fluctuations.
Investors should carefully consider these risk factors, other
risk factors described herein, and the additional risk factors
outlined in more detail in our 2023 Form 10-K, filed with the
Securities and Exchange Commission (the "SEC") on March 11, 2024, and accessible on the SEC's
website at www.sec.gov, under the caption "Risk Factors," and in
the Company's other SEC filings.
|
SCHEDULE
1
|
|
STAGWELL INC.
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(amounts in thousands,
except per share amounts)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenue
|
$
711,281
|
|
$
617,573
|
|
$ 2,052,508
|
|
$ 1,872,282
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Cost of
services
|
457,018
|
|
384,980
|
|
1,340,456
|
|
1,201,309
|
|
Office and general
expenses
|
176,440
|
|
160,021
|
|
507,916
|
|
481,379
|
|
Depreciation and
amortization
|
36,044
|
|
38,830
|
|
112,881
|
|
107,795
|
|
Impairment and other
losses
|
—
|
|
—
|
|
1,715
|
|
10,562
|
|
669,502
|
|
583,831
|
|
1,962,968
|
|
1,801,045
|
|
Operating Income
(Loss)
|
41,779
|
|
33,742
|
|
89,540
|
|
71,237
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(23,781)
|
|
(25,886)
|
|
(68,279)
|
|
(67,755)
|
|
Foreign exchange,
net
|
1,312
|
|
(140)
|
|
(2,301)
|
|
(2,288)
|
|
Other, net
|
249
|
|
(271)
|
|
(825)
|
|
(467)
|
|
(22,220)
|
|
(26,297)
|
|
(71,405)
|
|
(70,510)
|
|
Income before income
taxes and equity in earnings of non-consolidated
affiliates
|
19,559
|
|
7,445
|
|
18,135
|
|
727
|
|
Income tax
expense
|
5,691
|
|
4,324
|
|
9,441
|
|
4,997
|
|
Income (loss) before
equity in earnings of non-consolidated affiliates
|
13,868
|
|
3,121
|
|
8,694
|
|
(4,270)
|
|
Equity in income (loss)
of non-consolidated affiliates
|
(4)
|
|
(4)
|
|
503
|
|
(447)
|
|
Net income
(loss)
|
13,864
|
|
3,117
|
|
9,197
|
|
(4,717)
|
|
Net (income) loss
attributable to noncontrolling and redeemable noncontrolling
interests
|
(10,593)
|
|
(2,464)
|
|
(10,173)
|
|
3,565
|
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
$
3,271
|
|
$
653
|
|
$
(976)
|
|
$
(1,152)
|
|
Earnings (Loss) Per
Common Share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
$
0.01
|
|
$
(0.01)
|
|
$
(0.01)
|
|
Diluted
|
$
0.03
|
|
$
—
|
|
$
(0.01)
|
|
$
(0.01)
|
|
Weighted Average Number
of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
108,198
|
|
110,787
|
|
111,436
|
|
118,772
|
|
Diluted
|
112,190
|
|
265,006
|
|
111,436
|
|
274,864
|
|
SCHEDULE
2
|
|
STAGWELL INC.
|
|
UNAUDITED COMPONENTS
OF NET REVENUE CHANGE
|
|
(amounts in
thousands)
|
|
|
|
|
Net Revenue -
Components of Change
|
|
|
|
|
|
Change
|
|
Three Months
Ended
September 30,
2023
|
|
Foreign
Currency
|
|
Net
Acquisitions
(Divestitures)
|
|
Organic
|
|
Total Change
|
|
Three Months
Ended
September
30, 2024
|
|
Organic
|
|
Total
|
|
|
|
|
|
|
|
Integrated Agencies
Network
|
$
306,327
|
|
$
217
|
|
$
906
|
|
$
16,294
|
|
$
17,417
|
|
$
323,744
|
|
5.3 %
|
|
5.7 %
|
|
Brand Performance
Network
|
153,169
|
|
767
|
|
—
|
|
2,984
|
|
3,751
|
|
156,920
|
|
1.9 %
|
|
2.4 %
|
|
Communications
Network
|
62,416
|
|
79
|
|
2,970
|
|
20,755
|
|
23,804
|
|
86,220
|
|
33.3 %
|
|
38.1 %
|
|
All Other
|
12,952
|
|
(253)
|
|
(263)
|
|
873
|
|
357
|
|
13,309
|
|
6.7 %
|
|
2.8 %
|
|
$
534,864
|
|
$
810
|
|
$
3,613
|
|
$
40,906
|
|
$
45,329
|
|
$
580,193
|
|
7.6 %
|
|
8.5 %
|
|
|
|
Net Revenue -
Components of Change
|
|
|
|
|
|
Change
|
|
Nine Months
Ended
September 30,
2023
|
|
Foreign
Currency
|
|
Net
Acquisitions
(Divestitures)
|
|
Organic
|
|
Total Change
|
|
Nine Months
Ended
September
30, 2024
|
|
Organic
|
|
Total
|
|
|
|
|
|
|
|
Integrated Agencies
Network
|
$
930,660
|
|
$
200
|
|
$
2,408
|
|
$
5,118
|
|
$
7,726
|
|
$
938,386
|
|
0.5 %
|
|
0.8 %
|
|
Brand Performance
Network
|
459,291
|
|
2,145
|
|
2,252
|
|
12,902
|
|
$
17,299
|
|
476,590
|
|
2.8 %
|
|
3.8 %
|
|
Communications
Network
|
177,032
|
|
(70)
|
|
6,421
|
|
$
42,718
|
|
$
49,069
|
|
226,101
|
|
24.1 %
|
|
27.7 %
|
|
All Other
|
34,404
|
|
(822)
|
|
(3,559)
|
|
(4,061)
|
|
(8,442)
|
|
25,962
|
|
(11.8) %
|
|
(24.5) %
|
|
$ 1,601,387
|
|
$
1,453
|
|
$
7,522
|
|
$
56,677
|
|
$
65,652
|
|
$
1,667,039
|
|
3.5 %
|
|
4.1 %
|
|
|
(1) See
Non-GAAP Financial Measures section above for the definition of
Adjusted EBITDA and Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2024, resulting in a change to its reportable
segments (Networks). Specifically, certain agencies previously
within the Brand Performance Network are now in the Integrated
Agencies Network. Periods presented prior to the first quarter of
2024 have been recast to reflect the reclassification of certain
reporting units (Brands) between operating segments.
|
|
SCHEDULE
3
|
|
STAGWELL INC.
|
|
UNAUDITED SEGMENT
OPERATING RESULTS
|
|
(amounts in
thousands)
|
|
|
For the Three Months
Ended September 30, 2024
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
|
Net Revenue
|
$ 323,744
|
|
$
156,920
|
|
$
86,220
|
|
$
13,309
|
|
$
—
|
|
$
580,193
|
|
Billable
costs
|
65,924
|
|
15,429
|
|
49,760
|
|
(25)
|
|
—
|
|
131,088
|
|
Revenue
|
389,668
|
|
172,349
|
|
135,980
|
|
13,284
|
|
—
|
|
711,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
65,924
|
|
15,429
|
|
49,760
|
|
(25)
|
|
—
|
|
131,088
|
|
Staff costs
|
198,252
|
|
98,716
|
|
42,644
|
|
9,207
|
|
13,160
|
|
361,979
|
|
Administrative
costs
|
31,593
|
|
22,600
|
|
9,034
|
|
3,978
|
|
2,351
|
|
69,556
|
|
Unbillable and other
costs, net
|
15,993
|
|
16,498
|
|
424
|
|
4,574
|
|
—
|
|
37,489
|
|
Adjusted EBITDA
(1)
|
77,906
|
|
19,106
|
|
34,118
|
|
(4,450)
|
|
(15,511)
|
|
111,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
11,000
|
|
1,500
|
|
855
|
|
379
|
|
3,201
|
|
16,935
|
|
Depreciation and
amortization
|
19,878
|
|
7,295
|
|
3,023
|
|
2,573
|
|
3,275
|
|
36,044
|
|
Deferred acquisition
consideration
|
1,114
|
|
(6,949)
|
|
6,778
|
|
(383)
|
|
—
|
|
560
|
|
Other items, net
(1)
|
3,664
|
|
8,076
|
|
1,432
|
|
98
|
|
2,581
|
|
15,851
|
|
Operating income
(loss)
|
$
42,250
|
|
$
9,184
|
|
$
22,030
|
|
$
(7,117)
|
|
$ (24,568)
|
|
$ 41,779
|
|
|
(1) See
Non-GAAP Financial Measures section above for the definition of
Adjusted EBITDA and Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2024, resulting in a change to its reportable
segments (Networks). Specifically, certain agencies previously
within the Brand Performance Network are now in the Integrated
Agencies Network. Periods presented prior to the first quarter of
2024 have been recast to reflect the reclassification of certain
reporting units (Brands) between operating segments.
|
|
SCHEDULE
4
|
|
STAGWELL INC.
|
|
UNAUDITED SEGMENT
OPERATING RESULTS
|
|
(amounts in
thousands)
|
|
|
For the Nine Months
Ended September 30, 2024
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
|
Net Revenue
|
$
938,386
|
|
$
476,590
|
|
$
226,101
|
|
$
25,962
|
|
$
—
|
|
$ 1,667,039
|
|
Billable
costs
|
189,134
|
|
86,966
|
|
109,195
|
|
174
|
|
—
|
|
385,469
|
|
Revenue
|
1,127,520
|
|
563,556
|
|
335,296
|
|
26,136
|
|
—
|
|
2,052,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
189,134
|
|
86,966
|
|
109,195
|
|
174
|
|
—
|
|
385,469
|
|
Staff costs
|
579,979
|
|
296,411
|
|
123,039
|
|
24,635
|
|
35,421
|
|
1,059,485
|
|
Administrative
costs
|
96,097
|
|
69,196
|
|
26,117
|
|
3,447
|
|
11,396
|
|
206,253
|
|
Unbillable and other
costs, net
|
56,301
|
|
46,677
|
|
1,270
|
|
9,465
|
|
—
|
|
113,713
|
|
Adjusted EBITDA
(1)
|
206,009
|
|
64,306
|
|
75,675
|
|
(11,585)
|
|
(46,817)
|
|
287,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
25,170
|
|
4,988
|
|
2,731
|
|
729
|
|
5,308
|
|
38,926
|
|
Depreciation and
amortization
|
58,731
|
|
26,524
|
|
9,007
|
|
9,938
|
|
8,681
|
|
112,881
|
|
Deferred acquisition
consideration
|
5,690
|
|
(6,454)
|
|
9,097
|
|
(383)
|
|
—
|
|
7,950
|
|
Impairment and other
losses
|
1,500
|
|
—
|
|
—
|
|
—
|
|
215
|
|
1,715
|
|
Other items, net
(1)
|
13,204
|
|
16,363
|
|
2,104
|
|
702
|
|
4,203
|
|
36,576
|
|
Operating income
(loss)
|
$
101,714
|
|
$
22,885
|
|
$
52,736
|
|
$
(22,571)
|
|
$
(65,224)
|
|
$
89,540
|
|
|
(1) See
Non-GAAP Financial Measures section above for the definition of
Adjusted EBITDA and Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2024, resulting in a change to its reportable
segments (Networks). Specifically, certain agencies previously
within the Brand Performance Network are now in the Integrated
Agencies Network. Periods presented prior to the first quarter of
2024 have been recast to reflect the reclassification of certain
reporting units (Brands) between operating segments.
|
|
SCHEDULE
5
|
|
STAGWELL INC.
|
|
UNAUDITED SEGMENT
OPERATING RESULTS
|
|
(amounts in
thousands)
|
|
|
For the Three Months
Ended September 30, 2023
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
|
Net Revenue
|
$
306,327
|
|
$
153,169
|
|
$
62,416
|
|
$
12,952
|
|
$
—
|
|
$
534,864
|
|
Billable
costs
|
51,742
|
|
10,904
|
|
20,089
|
|
(26)
|
|
—
|
|
82,709
|
|
Revenue
|
358,069
|
|
164,073
|
|
82,505
|
|
12,926
|
|
—
|
|
617,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
51,742
|
|
10,904
|
|
20,089
|
|
(26)
|
|
—
|
|
82,709
|
|
Staff costs
|
185,034
|
|
95,488
|
|
37,412
|
|
10,391
|
|
10,589
|
|
338,914
|
|
Administrative
costs
|
30,983
|
|
20,580
|
|
7,626
|
|
1,849
|
|
1,301
|
|
62,339
|
|
Unbillable and other
costs, net
|
14,173
|
|
12,868
|
|
84
|
|
4,717
|
|
—
|
|
31,842
|
|
Adjusted EBITDA
(1)
|
76,137
|
|
24,233
|
|
17,294
|
|
(4,005)
|
|
(11,890)
|
|
101,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
6,051
|
|
2,399
|
|
1,252
|
|
268
|
|
2,095
|
|
12,065
|
|
Depreciation and
amortization
|
22,817
|
|
8,971
|
|
2,784
|
|
2,138
|
|
2,120
|
|
38,830
|
|
Deferred acquisition
consideration
|
1,018
|
|
2,130
|
|
3,757
|
|
(504)
|
|
—
|
|
6,401
|
|
Other items, net
(1)
|
6,047
|
|
3,337
|
|
244
|
|
292
|
|
811
|
|
10,731
|
|
Operating income
(loss)
|
$ 40,204
|
|
$
7,396
|
|
$
9,257
|
|
$
(6,199)
|
|
$
(16,916)
|
|
$ 33,742
|
|
|
(1) See
Non-GAAP Financial Measures section above for the definition of
Adjusted EBITDA and Other items.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2024, resulting in a change to its reportable
segments (Networks). Specifically, certain agencies previously
within the Brand Performance Network are now in the Integrated
Agencies Network. Periods presented prior to the first quarter of
2024 have been recast to reflect the reclassification of certain
reporting units (Brands) between operating segments.
|
|
SCHEDULE
6
|
|
STAGWELL INC.
|
|
UNAUDITED SEGMENT
OPERATING RESULTS
|
|
(amounts in
thousands)
|
|
|
For the Nine Months
Ended September 30, 2023
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
|
Net Revenue
|
$
930,660
|
|
$
459,291
|
|
$
177,032
|
|
$
34,404
|
|
$
—
|
|
$ 1,601,387
|
|
Billable
costs
|
134,249
|
|
83,443
|
|
53,229
|
|
(26)
|
|
—
|
|
270,895
|
|
Revenue
|
1,064,909
|
|
542,734
|
|
230,261
|
|
34,378
|
|
—
|
|
1,872,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
134,249
|
|
83,443
|
|
53,229
|
|
(26)
|
|
—
|
|
270,895
|
|
Staff costs
|
572,893
|
|
288,932
|
|
115,846
|
|
31,124
|
|
25,850
|
|
1,034,645
|
|
Administrative
costs
|
93,000
|
|
64,163
|
|
25,096
|
|
1,244
|
|
13,343
|
|
196,846
|
|
Unbillable and other
costs, net
|
53,665
|
|
38,534
|
|
336
|
|
12,202
|
|
—
|
|
104,737
|
|
Adjusted EBITDA
(1)
|
211,102
|
|
67,662
|
|
35,754
|
|
(10,166)
|
|
(39,193)
|
|
265,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
15,470
|
|
3,840
|
|
2,177
|
|
427
|
|
12,701
|
|
34,615
|
|
Depreciation and
amortization
|
62,277
|
|
25,160
|
|
8,216
|
|
6,152
|
|
5,990
|
|
107,795
|
|
Deferred acquisition
consideration
|
8,118
|
|
1,112
|
|
3,403
|
|
(1,752)
|
|
—
|
|
10,881
|
|
Impairment and other
losses
|
10,562
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,562
|
|
Other items, net
(1)
|
13,822
|
|
8,493
|
|
1,337
|
|
1,079
|
|
5,338
|
|
30,069
|
|
Operating income
(loss)
|
$
100,853
|
|
$
29,057
|
|
$
20,621
|
|
$
(16,072)
|
|
$
(63,222)
|
|
$
71,237
|
|
|
(1) See
Non-GAAP Financial Measures section above for the definition of
Adjusted EBITDA and Other items, net.
|
|
|
Note: The Company made
changes to its internal management and reporting structure in the
first quarter of 2024, resulting in a change to its reportable
segments (Networks). Specifically, certain agencies previously
within the Brand Performance Network are now in the Integrated
Agencies Network. Periods presented prior to the first quarter of
2024 have been recast to reflect the reclassification of certain
reporting units (Brands) between operating segments.
|
|
SCHEDULE
7
|
|
STAGWELL INC.
|
|
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
|
|
(amounts in thousands,
except per share amounts)
|
|
|
For the Three Months
Ended September 30, 2024
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
3,271
|
|
$
19,762
|
|
$
23,033
|
|
Net income attributable
to Class C shareholders
|
|
—
|
|
36,060
|
|
36,060
|
|
Net income attributable
to Stagwell Inc. and Class C shareholders and adjusted net
income
|
|
$
3,271
|
|
$
55,822
|
|
$
59,093
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
112,190
|
|
1,497
|
|
113,687
|
|
Weighted average number
of common Class C shares outstanding
|
|
—
|
|
151,649
|
|
151,649
|
|
Weighted average
number of shares outstanding
|
|
112,190
|
|
153,146
|
|
265,336
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
0.03
|
|
|
|
$
0.22
|
|
|
|
|
|
|
|
|
Adjustments to Net
income (1)
|
|
Amortization
|
|
|
|
$
28,659
|
|
|
|
Stock-based
compensation
|
|
|
|
16,935
|
|
|
|
Deferred acquisition
consideration
|
|
|
|
560
|
|
|
|
Other items,
net
|
|
|
|
15,851
|
|
|
|
|
|
|
62,005
|
|
|
|
Adjusted tax
expense
|
|
|
|
(15,615)
|
|
|
|
|
|
|
46,390
|
|
|
|
Net loss attributable
to Class C shareholders
|
|
|
|
9,432
|
|
|
|
|
|
|
$
55,822
|
|
|
|
|
|
|
|
|
|
|
Allocation of
adjustments to Net income
|
|
|
|
|
|
|
|
Net income attributable
to Stagwell Inc. common shareholders - add-backs
|
|
|
|
$
19,762
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Class C shareholders - add-backs
|
|
|
|
26,628
|
|
|
|
Net income attributable
to Class C shareholders
|
|
|
|
9,432
|
|
|
|
|
|
|
36,060
|
|
|
|
|
|
|
$
55,822
|
|
|
|
|
(1) Adjusted
Diluted EPS is defined within the Non-GAAP Financial Measures
section of the Executive Summary.
|
|
SCHEDULE
8
|
|
STAGWELL INC.
|
|
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
|
|
(amounts in thousands,
except per share amounts)
|
|
|
For the Nine Months
Ended September 30, 2024
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
|
$
(976)
|
|
$
58,177
|
|
$
57,201
|
|
Net income attributable
to Class C shareholders
|
|
—
|
|
83,442
|
|
83,442
|
|
Net income (loss)
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
$
(976)
|
|
$
141,619
|
|
$
140,643
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
111,436
|
|
5,780
|
|
117,216
|
|
Weighted average number
of common Class C shares outstanding
|
|
—
|
|
151,649
|
|
151,649
|
|
Weighted average
number of shares outstanding
|
|
111,436
|
|
157,429
|
|
268,865
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
(0.01)
|
|
|
|
$
0.52
|
|
|
|
|
|
|
|
|
Adjustments to Net
Income (loss) (1)
|
|
Amortization
|
|
|
|
$
91,870
|
|
|
|
Impairment and other
losses
|
|
|
|
1,715
|
|
|
|
Stock-based
compensation
|
|
|
|
38,926
|
|
|
|
Deferred acquisition
consideration
|
|
|
|
7,950
|
|
|
|
Other items,
net
|
|
|
|
36,576
|
|
|
|
|
|
|
177,037
|
|
|
|
Adjusted tax
expense
|
|
|
|
(41,268)
|
|
|
|
|
|
|
135,769
|
|
|
|
Net loss attributable
to Class C shareholders
|
|
|
|
5,850
|
|
|
|
|
|
|
$
141,619
|
|
|
|
|
|
|
|
|
|
|
Allocation of
adjustments to net income (loss) 1
|
|
Net income attributable
to Stagwell Inc. common shareholders - add-backs
|
|
|
|
$
58,177
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Class C shareholders - add-backs
|
|
|
|
77,592
|
|
|
|
Net income attributable
to Class C shareholders
|
|
|
|
5,850
|
|
|
|
|
|
|
83,442
|
|
|
|
|
|
|
$
141,619
|
|
|
|
|
(1) Adjusted
Diluted EPS is defined within the Non-GAAP Financial Measures
section of the Executive Summary.
|
|
SCHEDULE
9
|
|
STAGWELL INC.
|
|
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
|
|
(amounts in thousands,
except per share amounts)
|
|
|
For the Three Months
Ended September 30, 2023
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
653
|
|
$
20,844
|
|
$
21,497
|
|
Net income attributable
to Class C shareholders
|
|
33
|
|
26,530
|
|
26,563
|
|
Net income
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
$
686
|
|
$
47,374
|
|
$
48,060
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
113,357
|
|
5,663
|
|
119,020
|
|
Weighted average number
of common Class C shares outstanding
|
|
151,649
|
|
—
|
|
151,649
|
|
Weighted average
number of shares outstanding
|
|
265,006
|
|
5,663
|
|
270,669
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
—
|
|
|
|
$
0.18
|
|
|
|
|
|
|
|
|
Adjustments to Net
income (1)
|
|
Amortization
|
|
|
|
$
31,182
|
|
|
|
Stock-based
compensation
|
|
|
|
12,065
|
|
|
|
Deferred acquisition
consideration
|
|
|
|
6,401
|
|
|
|
Other items,
net
|
|
|
|
10,731
|
|
|
|
|
|
|
60,379
|
|
|
|
Adjusted tax
expense
|
|
|
|
(13,005)
|
|
|
|
|
|
|
$
47,374
|
|
|
|
|
(1) Adjusted
Diluted EPS is defined within the Non-GAAP Financial Measures
section of the Executive Summary.
|
|
SCHEDULE
10
|
|
STAGWELL INC.
|
|
UNAUDITED
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP
MEASURE)
|
|
(amounts in thousands,
except per share amounts)
|
|
|
For the Nine Months
Ended September 30, 2023
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
|
$
(1,152)
|
|
$
57,927
|
|
$
56,775
|
|
Net income attributable
to Class C shareholders
|
|
(2,702)
|
|
73,725
|
|
71,023
|
|
Net income (loss)
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
$
(3,854)
|
|
$
131,652
|
|
$
127,798
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
118,772
|
|
10,736
|
|
129,508
|
|
Weighted average number
of common Class C shares outstanding
|
|
156,092
|
|
—
|
|
156,092
|
|
Weighted average
number of shares outstanding
|
|
274,864
|
|
10,736
|
|
285,600
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
(0.01)
|
|
|
|
$
0.45
|
|
|
|
|
|
|
|
|
Adjustments to Net
income (loss) (1)
|
|
Amortization
|
|
|
|
$
86,605
|
|
|
|
Impairment and other
losses
|
|
|
|
10,562
|
|
|
|
Stock-based
compensation
|
|
|
|
34,615
|
|
|
|
Deferred acquisition
consideration
|
|
|
|
10,881
|
|
|
|
Other items,
net
|
|
|
|
30,069
|
|
|
|
|
|
|
172,732
|
|
|
|
Adjusted tax
expense
|
|
|
|
(41,080)
|
|
|
|
|
|
|
$
131,652
|
|
|
|
|
(1) Adjusted
Diluted EPS is defined within the Non-GAAP Financial Measures
section of the Executive Summary.
|
|
SCHEDULE
11
|
|
STAGWELL INC.
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|
(amounts in
thousands)
|
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
145,807
|
|
$
119,737
|
|
Accounts receivable,
net
|
716,394
|
|
697,178
|
|
Expenditures billable
to clients
|
137,443
|
|
114,097
|
|
Other current
assets
|
108,187
|
|
94,054
|
|
Total Current
Assets
|
1,107,831
|
|
1,025,066
|
|
Fixed assets,
net
|
77,766
|
|
77,825
|
|
Right-of-use assets -
operating leases
|
223,194
|
|
254,278
|
|
Goodwill
|
1,521,005
|
|
1,498,815
|
|
Other intangible
assets, net
|
769,596
|
|
818,220
|
|
Other assets
|
97,425
|
|
92,843
|
|
Total Assets
|
$
3,796,817
|
|
$
3,767,047
|
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS ("RNCI"), AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
338,649
|
|
$
414,980
|
|
Accrued
media
|
206,512
|
|
291,777
|
|
Accruals and other
liabilities
|
210,146
|
|
233,046
|
|
Advance
billings
|
338,789
|
|
301,674
|
|
Current portion of
lease liabilities - operating leases
|
61,897
|
|
65,899
|
|
Current portion of
deferred acquisition consideration
|
8,618
|
|
66,953
|
|
Total Current
Liabilities
|
1,164,611
|
|
1,374,329
|
|
Long-term
debt
|
1,463,925
|
|
1,145,828
|
|
Long-term portion of
deferred acquisition consideration
|
53,055
|
|
34,105
|
|
Long-term lease
liabilities - operating leases
|
250,388
|
|
281,307
|
|
Deferred tax
liabilities, net
|
41,728
|
|
40,509
|
|
Other
liabilities
|
60,220
|
|
54,905
|
|
Total
Liabilities
|
3,033,927
|
|
2,930,983
|
|
Redeemable
Noncontrolling Interests
|
18,618
|
|
10,792
|
|
Commitments,
Contingencies and Guarantees
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common shares - Class
A & B
|
110
|
|
118
|
|
Common shares - Class
C
|
2
|
|
2
|
|
Paid-in
capital
|
287,941
|
|
348,494
|
|
Retained
earnings
|
11,416
|
|
21,148
|
|
Accumulated other
comprehensive loss
|
(13,057)
|
|
(13,067)
|
|
Stagwell Inc.
Shareholders' Equity
|
286,412
|
|
356,695
|
|
Noncontrolling
interests
|
457,860
|
|
468,577
|
|
Total Shareholders'
Equity
|
744,272
|
|
825,272
|
|
Total Liabilities,
Redeemable Noncontrolling Interests and Shareholders'
Equity
|
$
3,796,817
|
|
$
3,767,047
|
|
SCHEDULE
12
|
|
STAGWELL INC.
|
|
UNAUDITED SUMMARY
CASH FLOW DATA
|
|
(amounts in
thousands)
|
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
9,197
|
|
$
(4,717)
|
|
Adjustments to
reconcile net income to cash used in operating
activities:
|
|
|
|
|
Stock-based
compensation
|
38,926
|
|
34,615
|
|
Depreciation and
amortization
|
112,881
|
|
107,795
|
|
Amortization of
right-of-use lease assets and lease liability interest
|
58,052
|
|
57,583
|
|
Impairment and other
losses
|
1,715
|
|
10,562
|
|
Deferred income
taxes
|
(3,446)
|
|
(5,635)
|
|
Adjustment to deferred
acquisition consideration
|
7,950
|
|
10,881
|
|
Other, net
|
6,371
|
|
(4,248)
|
|
Changes in working
capital:
|
|
|
|
|
Accounts
receivable
|
(6,212)
|
|
(25,405)
|
|
Expenditures billable
to clients
|
(15,705)
|
|
(36,217)
|
|
Other assets
|
(9,068)
|
|
6,539
|
|
Accounts
payable
|
(94,160)
|
|
(49,204)
|
|
Accrued expenses and
other liabilities
|
(121,647)
|
|
(152,216)
|
|
Advance
billings
|
23,984
|
|
(1,759)
|
|
Current portion of
lease liabilities - operating leases
|
(63,956)
|
|
(67,095)
|
|
Deferred acquisition
related payments
|
(14,112)
|
|
(9,021)
|
|
Net cash used in
operating activities
|
(69,230)
|
|
(127,542)
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(16,728)
|
|
(12,205)
|
|
Acquisitions, net of
cash acquired
|
(23,781)
|
|
(6,678)
|
|
Capitalized
software
|
(19,320)
|
|
(19,026)
|
|
Other
|
(6,656)
|
|
(6,939)
|
|
Net cash used in
investing activities
|
(66,485)
|
|
(44,848)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repayment of borrowings
under revolving credit facility
|
(1,176,000)
|
|
(1,250,500)
|
|
Proceeds from
borrowings under revolving credit facility
|
1,492,000
|
|
1,562,500
|
|
Shares repurchased and
cancelled
|
(101,249)
|
|
(203,958)
|
|
Distributions to
noncontrolling interests
|
(23,583)
|
|
(24,538)
|
|
Payment of deferred
consideration
|
(28,721)
|
|
(31,666)
|
|
Purchase of
noncontrolling interest
|
(3,316)
|
|
—
|
|
Debt issuance
costs
|
—
|
|
(150)
|
|
Net cash provided by
financing activities
|
159,131
|
|
51,688
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
2,654
|
|
(1,182)
|
|
Net increase (decrease)
in cash and cash equivalents
|
26,070
|
|
(121,884)
|
|
Cash and cash
equivalents at beginning of period
|
119,737
|
|
220,589
|
|
Cash and cash
equivalents at end of period
|
$
145,807
|
|
$
98,705
|
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SOURCE Stagwell Inc.