IPG(IPG) - 2025 Q1 - Quarterly Report

Financial Performance - Revenue before billable expenses for Q1 2025 was $1,996.3 million, a decrease of 8.5$2,182.9 million in Q1 2024[153]. - Total revenue for Q1 2025 was $2,322.6 million, down 6.9$2,495.9 million in Q1 2024[153]. - Adjusted EBITA for Q1 2025 was $(21.6) million, a decline of 110.5$204.9 million in Q1 2024[153]. - Net loss available to IPG common stockholders for Q1 2025 was $(85.4) million, compared to a net income of$110.4 million in Q1 2024[153]. - Organic change in revenue before billable expenses was down 3.6% in Q1 2025, compared to an increase of 1.3% in Q1 2024[153]. - Total revenue decreased by 6.9% in Q1 2025, with organic revenue before billable expenses down 3.6% compared to a 1.3% increase in Q1 2024[155]. - Adjusted EBITA margin on revenue before billable expenses fell to (1.1)% from 9.4% in the prior-year period, impacted by increased operating expenses[155]. - Net losses on sales of businesses amounted to $36.4 million in Q1 2025, primarily related to the sale of unprofitable digital agencies[176]. - For the three months ended March 31, 2025, the basic and diluted loss per share for IPG common stockholders was$0.23, a decrease from basic earnings per share of 0.29 for the same period in 2024[179]. - Revenue before billable expenses for the Media, Data & Engagement Solutions segment decreased to 888.8 million in Q1 2025, down 7.5% organically compared to 961.3 million in Q1 2024[183]. - The Integrated Advertising & Creativity Led Solutions segment reported a revenue decrease to 780.6 million in Q1 2025, reflecting a 10.3% organic decline from 881.4 million in Q1 2024[186]. - The Specialized Communications & Experiential Solutions segment's revenue before billable expenses fell to 326.9 million in Q1 2025, a 3.9% organic decrease from 340.2 million in Q1 2024[190]. - Segment EBITA for the Media, Data & Engagement Solutions segment was 75.6 million in Q1 2025, down 18.9% from $93.2 million in Q1 2024, with a margin decrease to 8.5$1.5 million in Q1 2025, compared to a profit of $107.9 million in Q1 2024, marking a 101.4$74.1 million to $114.2 million in Q1 2025, primarily due to higher selling, general and administrative expenses and restructuring charges[195]. - The company reported a net loss of$(85.3) million for Q1 2025, compared to a net income of $113.6 million in Q1 2024[197]. Restructuring and Charges - Restructuring charges for Q1 2025 totaled$203.3 million, affecting Adjusted EBITA margin by (10.2)%[156]. - The company expects total restructuring charges related to 2025 actions to be approximately $300 -$350 million, with completion anticipated by the end of 2025[168]. - The planned workforce reduction will affect approximately 1,500 employees across various departments[169]. - Restructuring charges amounted to $203.3 million in Q1 2025, compared to$0.6 million in Q1 2024, highlighting a significant increase in restructuring costs[230]. - The company incurred $4.8 million in deal costs related to the planned acquisition by Omnicom during Q1 2025[231]. Cash Flow and Financing - Net cash used in operating activities was$(37.0) million for Q1 2025, an improvement from $(157.4) million in Q1 2024[197]. - Net cash used in operating activities in Q1 2025 was$37.0 million, a decrease of $120.4 million from$157.4 million in Q1 2024, primarily due to a decrease in working capital usage of $254.2 million[202]. - Net cash used in investing activities in Q1 2025 was$58.2 million, an increase of $8.2 million compared to Q1 2024, driven by cash used for acquisitions of$48.4 million and a decrease in capital expenditures from $35.1 million to$21.5 million[203]. - Net cash used in financing activities in Q1 2025 was $248.0 million, up from$227.1 million in Q1 2024, mainly due to common stock dividends of $125.3 million and stock repurchases of$90.0 million[204]. - The effect of foreign exchange rate changes resulted in a net increase of $23.4 million in cash during Q1 2025, attributed to a weaker U.S. Dollar against several foreign currencies[205]. - The company expects cash flow from operations and existing cash to meet anticipated operating requirements for at least the next twelve months, supported by a commercial paper program and a committed corporate credit facility[206]. - As of March 31, 2025, the company had outstanding short-term borrowings of$34.0 million from uncommitted lines of credit, with an average outstanding amount of $44.1 million at a weighted-average interest rate of approximately 7.2$0.330 per share in Q1 2025, totaling $125.3 million, with an expected annual payout of approximately$489.0 million assuming no significant change in outstanding shares[213]. - The company maintains a committed corporate credit facility with a total lending limit of $1,500.0 million, with no borrowings under the facility as of March 31, 2025[214]. - As of April 17, 2025, the company's debt credit ratings were Baa2+ from Moody's, BBB+ from S&P, and BBB+ from Fitch, with a positive outlook from Moody's and S&P[221]. - Approximately 99% of the company's debt obligations bore fixed interest rates as of March 31, 2025, indicating a stable interest rate exposure[233]. - There has been no significant change in the company's exposure to market risk during the first quarter of 2025[233]. Merger and Strategic Initiatives - The company entered into a merger agreement with Omnicom Group Inc. on December 8, 2024, with IPG becoming a wholly owned subsidiary of Omnicom[138]. - Following the merger, Omnicom shareholders will own 60.6% of the combined company, while IPG shareholders will own 39.4% on a fully diluted basis[140]. - The merger is subject to customary closing conditions, including regulatory approvals, and has faced scrutiny from the U.S. Federal Trade Commission[142][144]. - The company continues to invest in strategic areas such as digital commerce, artificial intelligence, and audience resolution to adapt to a rapidly evolving market[134]. - The global macroeconomic environment remains complex, with risks including economic slowdowns and inflation impacting client spending[145][146].