Expects 2024 Organic Net Revenue Growth of
5% to 7%; Adjusted EBITDA of $400
million to $450 million; Free
Cash Flow Conversion of ~50%
Net Revenue Growth of 31% from Stagwell
Marketing Cloud Group in FY23
Growth of 13% in International Net Revenue
in FY23, Led by 17% Growth in EMEA
$65 million
of net new business in Q4; LTM net new business exceeds
$270 million
FY Revenue of $2,527
million; FY Net revenue of $2,147
million
FY Net Income of $42
million; FY Adjusted EBITDA of $360
million
NEW
YORK, Feb. 27, 2024 /PRNewswire/ -- (NASDAQ:
STGW) – Stagwell Inc. ("Stagwell") today announced financial
results for the year ended December 31,
2023.
2024 promises to be a year of growth as
Stagwell enters the political season and its AI and AR products
come to market.
Mark Penn, Chairman and CEO,
said, "Despite a challenging year for marketing services and
digital transformation—accentuated by our client mix—Stagwell grew
share with some of our largest customers in 2023, took prudent
steps to manage our costs, and invested in digital innovation to
stay ahead of the future of marketing. In Q4 we returned to
sequential net revenue growth, sold a non-core asset for
significantly above our initial investment, and saw our tech
company clients begin to re-engage."
"2024 promises to be a year of growth and expanded margin as we
go into the political season and our AI and AR products come to
market – including inclusion of ARound into Major League Baseball's
native Ballpark app. We will be helping our clients transform
with the three E's of AI – enabling stronger operations, adding
efficiency to marketing and helping revolutionize their engagement
with consumers."
Frank Lanuto, Chief Financial
Officer, commented: "Management faced ongoing macroeconomic
headwinds during the fourth quarter and responded with decisive
actions to align costs with revenues, resulting in an adjusted
EBITDA margin of 17 percent. Through the end of fiscal 2023, we
have delivered – ahead of schedule – the $30
million in synergies that we promised at the time of our
merger in 2021 and are now well underway with our goal of achieving
the incremental $35 million of cost
savings we announced earlier this year. Our sale of ConcentricLife
during the quarter resulted in a significant gain which drove net
income, reduced our debt and lowered leverage at year
end."
Financial Outlook
2024 financial guidance is 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.
|
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS:
- Completed the sale of ConcentricLife to Accenture in Q4 for
gross proceeds of $245 million,
resulting in a taxable gain of $175
million
- Q4 net new business of $65
million; FY23 net new business of more than $270 million
- Q4 revenue of $655 million; FY23
revenue of $2,527 million, a decrease
of 6% versus the prior year period
- Q4 net revenue of $551 million;
FY23 net revenue of $2,147 million, a
decrease of 3% versus the prior year period
- Q4 organic net revenue declined 7% versus the prior year period
and 5% ex-Advocacy; FY23 organic net revenue declined 6% versus the
prior year period and 4% ex-Advocacy
- Q4 net revenue from international increased 3%, led by an
increase of 19% in the United
Kingdom; FY23 net revenue from international increased 13%,
led by increases of 17% in EMEA, and 5% in APAC
- Q4 net income of $46 million
versus net loss of $43 million in the
prior year period; FY23 net income of $42
million versus net income of $50
million in the prior year period
- Q4 Adjusted EBITDA of $95
million; FY23 Adjusted EBITDA of $360
million, a decrease of 20% versus the prior year period
- Q4 Adjusted EBITDA Margin of 17% on net revenue; FY23 Adjusted
EBITDA Margin of 17% on net revenue
- Q4 earnings per share attributable to Stagwell Inc. common
shareholders of $0.00; FY23 earnings
per share attributable to Stagwell Inc. common shareholders of
$0.00
- Q4 Adjusted earnings per share attributable to Stagwell Inc.
common shareholders of $0.12; FY23
Adjusted earnings per share of $0.57
2022 Revised Consolidated Financial Statements
In connection with the preparation of the consolidated financial
statements during 2023, the Company identified errors in the areas
of income taxes as well as accumulated other comprehensive loss in
its previously filed 2022 annual consolidated financial statements.
As a result, the 2022 financial statements included herein have
been revised to reflect the correction of the errors. The primary
change to the 2022 income statement was an increase in tax expense
of approximately $18 million compared
to the previously filed 2022 financial statements. The Company's
2023 Form 10-K will include disclosure providing further details of
the revision.
Video Webcast
Management will host a video webcast on Tuesday,
February 27, 2024, at 8:30 a.m.
(ET) to discuss results for Stagwell Inc. for the year ended
December 31, 2023. 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 Revenue: "Organic revenue growth" and "Organic
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.
(6) Financial Guidance: The Company provides guidance on a
non-GAAP basis as it cannot predict certain elements which are
included in reported GAAP results.
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 and future
prospects, business and economic trends, potential acquisitions,
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 "anticipate," "assume," "believe," "continue,"
"could," "create," "estimate," "expect," "focus," "forecast,"
"foresee," "future," "guidance," "intend," "look," "may,"
"opportunity," "outlook," "plan," "possible," "potential,"
"predict," "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;
- and 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,
including the successful completion and integration of acquisitions
that complement and expand the Company's business
capabilities;
- the Company's ability to develop products incorporating new
technologies, including augmented reality, artificial intelligence,
and virtual reality, and realize benefits from such
products;
- 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 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;
- 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 Israel and Gaza), 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 2022 Form 10-K, filed with the
Securities and Exchange Commission (the "SEC") on March 6, 2023, 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
December 31,
|
|
Year Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
654,895
|
|
$
708,185
|
|
$ 2,527,177
|
|
$ 2,687,792
|
Operating
Expenses
|
|
|
|
|
|
|
|
Cost of
services
|
419,865
|
|
419,811
|
|
1,621,174
|
|
1,673,576
|
Office and general
expenses
|
179,871
|
|
172,415
|
|
661,250
|
|
601,536
|
Depreciation and
amortization
|
35,036
|
|
35,631
|
|
142,831
|
|
131,273
|
Impairment and other
losses
|
833
|
|
94,145
|
|
11,395
|
|
122,179
|
|
635,605
|
|
722,002
|
|
2,436,650
|
|
2,528,564
|
Operating Income
(Loss)
|
19,290
|
|
(13,817)
|
|
90,527
|
|
159,228
|
Other income
(expenses):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(22,889)
|
|
(19,510)
|
|
(90,644)
|
|
(76,062)
|
Foreign exchange,
net
|
(672)
|
|
1,557
|
|
(2,960)
|
|
(2,606)
|
Gain on sale of
business
|
94,505
|
|
—
|
|
94,505
|
|
—
|
Other, net
|
108
|
|
(5,157)
|
|
(359)
|
|
(4,975)
|
|
71,052
|
|
(23,110)
|
|
542
|
|
(83,643)
|
Income (loss) before
income taxes and equity in earnings of non-consolidated
affiliates
|
90,342
|
|
(36,927)
|
|
91,069
|
|
75,585
|
Income tax
expense
|
35,560
|
|
5,312
|
|
40,557
|
|
25,462
|
Income (loss) before
equity in earnings of non-consolidated affiliates
|
54,782
|
|
(42,239)
|
|
50,512
|
|
50,123
|
Equity in (loss) of
non-consolidated affiliates
|
(8,423)
|
|
(1,132)
|
|
(8,870)
|
|
(79)
|
Net income
(loss)
|
46,359
|
|
(43,371)
|
|
41,642
|
|
50,044
|
Net (income) loss
attributable to noncontrolling and redeemable noncontrolling
interests
|
(45,073)
|
|
29,543
|
|
(41,508)
|
|
(30,125)
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
$
1,286
|
|
$
(13,828)
|
|
$
134
|
|
$
19,919
|
Earnings (Loss) Per
Common Share:
|
|
|
|
|
|
|
|
Basic
|
$
0.01
|
|
$
(0.11)
|
|
$
—
|
|
$
0.16
|
Diluted
|
$
—
|
|
$
(0.11)
|
|
$
—
|
|
$
0.12
|
Weighted Average Number
of Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
112,769
|
|
122,927
|
|
117,259
|
|
124,262
|
Diluted
|
117,205
|
|
122,927
|
|
117,259
|
|
296,596
|
SCHEDULE
2 STAGWELL INC. UNAUDITED COMPONENTS OF NET
REVENUE CHANGE (amounts in thousands)
|
|
|
|
|
Net Revenue -
Components of Change
|
|
|
|
|
|
Change
|
|
Three Months
Ended
December 31,
2022
|
|
Foreign
Currency
|
|
Net
Acquisitions
(Divestitures)
|
|
Organic
|
|
Total Change
|
|
Three Months
Ended
December 31,
2023
|
|
Organic
|
|
Total
|
|
|
|
|
|
|
Integrated Agencies
Network
|
$
311,432
|
|
$
907
|
|
$
368
|
|
$
(19,129)
|
|
$
(17,854)
|
|
$
293,578
|
|
(6.1) %
|
|
(5.7) %
|
Brand Performance
Network
|
180,053
|
|
3,313
|
|
2,078
|
|
(8,367)
|
|
(2,976)
|
|
177,077
|
|
(4.6) %
|
|
(1.7) %
|
Communications
Network
|
81,224
|
|
113
|
|
—
|
|
(13,109)
|
|
(12,996)
|
|
68,228
|
|
(16.1) %
|
|
(16.0) %
|
All Other
|
10,737
|
|
(184)
|
|
—
|
|
1,628
|
|
1,444
|
|
12,181
|
|
15.2 %
|
|
13.4 %
|
|
$
583,446
|
|
$
4,149
|
|
$
2,446
|
|
$
(38,977)
|
|
$
(32,382)
|
|
$
551,064
|
|
(6.7) %
|
|
(5.6) %
|
|
|
|
|
Net Revenue -
Components of Change
|
|
|
|
|
|
Change
|
|
Year Ended
December 31,
2022
|
|
Foreign
Currency
|
|
Net
Acquisitions
(Divestitures)
|
|
Organic
|
|
Total Change
|
|
Year Ended
December 31,
2023
|
|
Organic
|
|
Total
|
|
|
|
|
|
|
Integrated Agencies
Network
|
$ 1,240,465
|
|
$
(2,266)
|
|
$
6,677
|
|
$
(58,172)
|
|
$
(53,761)
|
|
$
1,186,704
|
|
(4.7) %
|
|
(4.3) %
|
Brand Performance
Network
|
667,882
|
|
848
|
|
13,377
|
|
(14,005)
|
|
220
|
|
668,102
|
|
(2.1) %
|
|
— %
|
Communications
Network
|
293,844
|
|
(169)
|
|
1,918
|
|
$
(50,333)
|
|
(48,584)
|
|
245,260
|
|
(17.1) %
|
|
(16.5) %
|
All Other
|
19,962
|
|
(354)
|
|
35,135
|
|
(8,157)
|
|
26,624
|
|
46,586
|
|
(40.9) %
|
|
133.4 %
|
|
$ 2,222,153
|
|
$
(1,941)
|
|
$
57,107
|
|
$ (130,667)
|
|
$
(75,501)
|
|
$
2,146,652
|
|
(5.9) %
|
|
(3.4) %
|
|
(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 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 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 December 31, 2023
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$ 293,578
|
|
$
177,078
|
|
$
68,229
|
|
$
12,181
|
|
$
—
|
|
$
551,066
|
Billable
costs
|
51,617
|
|
16,969
|
|
35,217
|
|
26
|
|
—
|
|
103,829
|
Revenue
|
345,195
|
|
194,047
|
|
103,446
|
|
12,207
|
|
—
|
|
654,895
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
51,617
|
|
16,969
|
|
35,217
|
|
26
|
|
—
|
|
103,829
|
Staff costs
|
187,986
|
|
105,838
|
|
43,319
|
|
6,292
|
|
11,088
|
|
354,523
|
Administrative
costs
|
27,918
|
|
24,874
|
|
8,568
|
|
3,445
|
|
(1,871)
|
|
62,934
|
Unbillable and other
costs, net
|
17,729
|
|
17,738
|
|
277
|
|
2,885
|
|
—
|
|
38,629
|
Adjusted EBITDA
(1)
|
59,945
|
|
28,628
|
|
16,065
|
|
(441)
|
|
(9,217)
|
|
94,980
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
11,861
|
|
2,518
|
|
1,157
|
|
91
|
|
6,937
|
|
22,564
|
Depreciation and
amortization
|
19,448
|
|
8,322
|
|
2,800
|
|
2,238
|
|
2,228
|
|
35,036
|
Deferred acquisition
consideration
|
3,813
|
|
1,739
|
|
(3,373)
|
|
—
|
|
—
|
|
2,179
|
Impairment and other
losses
|
737
|
|
96
|
|
—
|
|
—
|
|
—
|
|
833
|
Other items,
net (1)
|
6,147
|
|
3,969
|
|
198
|
|
95
|
|
4,669
|
|
15,078
|
Operating income
(loss)
|
$
17,939
|
|
$
11,984
|
|
$
15,283
|
|
$
(2,865)
|
|
$ (23,051)
|
|
$ 19,290
|
|
(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 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 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 Year Ended
December 31, 2023
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$ 1,186,705
|
|
$
668,101
|
|
$
245,261
|
|
$
46,585
|
|
$
—
|
|
$ 2,146,652
|
Billable
costs
|
191,404
|
|
100,675
|
|
88,446
|
|
—
|
|
—
|
|
380,525
|
Revenue
|
1,378,109
|
|
768,776
|
|
333,707
|
|
46,585
|
|
—
|
|
2,527,177
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
191,404
|
|
100,675
|
|
88,446
|
|
—
|
|
—
|
|
380,525
|
Staff costs
|
735,998
|
|
419,651
|
|
159,165
|
|
37,416
|
|
36,938
|
|
1,389,168
|
Administrative
costs
|
114,118
|
|
95,837
|
|
33,664
|
|
4,689
|
|
11,472
|
|
259,780
|
Unbillable and other
costs, net
|
65,267
|
|
56,598
|
|
613
|
|
15,087
|
|
—
|
|
137,565
|
Adjusted EBITDA
(1)
|
271,322
|
|
96,015
|
|
51,819
|
|
(10,607)
|
|
(48,410)
|
|
360,139
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
27,806
|
|
5,883
|
|
3,334
|
|
518
|
|
19,638
|
|
57,179
|
Depreciation and
amortization
|
80,864
|
|
34,343
|
|
11,016
|
|
8,390
|
|
8,218
|
|
142,831
|
Deferred acquisition
consideration
|
11,931
|
|
2,851
|
|
30
|
|
(1,752)
|
|
—
|
|
13,060
|
Impairment and other
losses
|
9,912
|
|
1,483
|
|
—
|
|
—
|
|
—
|
|
11,395
|
Other items,
net (1)
|
19,225
|
|
13,206
|
|
1,535
|
|
1,174
|
|
10,007
|
|
45,147
|
Operating income
(loss)
|
$
121,584
|
|
$
38,249
|
|
$
35,904
|
|
$
(18,937)
|
|
$
(86,273)
|
|
$
90,527
|
|
(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 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 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 December 31, 2022
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$
311,432
|
|
$
180,053
|
|
$
81,224
|
|
$
10,737
|
|
$
—
|
|
$
583,446
|
Billable
costs
|
71,174
|
|
13,609
|
|
39,956
|
|
—
|
|
—
|
|
124,739
|
Revenue
|
382,606
|
|
193,662
|
|
121,180
|
|
10,737
|
|
—
|
|
708,185
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
71,174
|
|
13,609
|
|
39,956
|
|
—
|
|
—
|
|
124,739
|
Staff costs
|
186,373
|
|
111,725
|
|
43,814
|
|
6,044
|
|
6,244
|
|
354,200
|
Administrative
costs
|
29,722
|
|
29,037
|
|
9,312
|
|
1,691
|
|
1,852
|
|
71,614
|
Unbillable and other
costs, net
|
18,506
|
|
12,715
|
|
155
|
|
2,961
|
|
—
|
|
34,337
|
Adjusted EBITDA
(1)
|
76,831
|
|
26,576
|
|
27,943
|
|
41
|
|
(8,096)
|
|
123,295
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(1,270)
|
|
(3,322)
|
|
720
|
|
26
|
|
3,588
|
|
(258)
|
Depreciation and
amortization
|
19,356
|
|
8,630
|
|
3,161
|
|
2,776
|
|
1,708
|
|
35,631
|
Deferred acquisition
consideration
|
3,460
|
|
(5,613)
|
|
3,168
|
|
—
|
|
—
|
|
1,015
|
Impairment and other
losses
|
49,841
|
|
42,727
|
|
—
|
|
1,577
|
|
—
|
|
94,145
|
Other items,
net (1)
|
1,770
|
|
4,453
|
|
326
|
|
1
|
|
29
|
|
6,579
|
Operating income
(loss)
|
$
3,674
|
|
$
(20,299)
|
|
$
20,568
|
|
$
(4,339)
|
|
$
(13,421)
|
|
$
(13,817)
|
|
(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 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 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 Year Ended
December 31, 2022
|
|
|
Integrated
Agencies
Network
|
|
Brand
Performance
Network
|
|
Communications
Network
|
|
All
Other
|
|
Corporate
|
|
Total
|
Net Revenue
|
$ 1,240,465
|
|
$
667,882
|
|
$
293,844
|
|
$
19,962
|
|
$
—
|
|
$ 2,222,153
|
Billable
costs
|
234,505
|
|
89,326
|
|
141,808
|
|
—
|
|
—
|
|
465,639
|
Revenue
|
1,474,970
|
|
757,208
|
|
435,652
|
|
19,962
|
|
—
|
|
2,687,792
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable
costs
|
234,505
|
|
89,326
|
|
141,808
|
|
—
|
|
—
|
|
465,639
|
Staff costs
|
762,332
|
|
408,968
|
|
172,598
|
|
13,963
|
|
36,456
|
|
1,394,317
|
Administrative
costs
|
115,724
|
|
94,867
|
|
33,787
|
|
3,940
|
|
6,655
|
|
254,973
|
Unbillable and other
costs, net
|
70,116
|
|
48,212
|
|
427
|
|
2,990
|
|
—
|
|
121,745
|
Adjusted EBITDA
(1)
|
292,293
|
|
115,835
|
|
87,032
|
|
(931)
|
|
(43,111)
|
|
451,118
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
13,774
|
|
5,830
|
|
1,797
|
|
41
|
|
11,710
|
|
33,152
|
Depreciation and
amortization
|
74,492
|
|
33,674
|
|
10,948
|
|
5,234
|
|
6,925
|
|
131,273
|
Deferred acquisition
consideration
|
9,157
|
|
1,736
|
|
(24,298)
|
|
—
|
|
—
|
|
(13,405)
|
Impairment and other
losses
|
52,360
|
|
50,778
|
|
—
|
|
19,041
|
|
—
|
|
122,179
|
Other items,
net (1)
|
4,345
|
|
8,129
|
|
883
|
|
22
|
|
5,312
|
|
18,691
|
Operating income
(loss)
|
$
138,165
|
|
$
15,688
|
|
$
97,702
|
|
$
(25,269)
|
|
$
(67,058)
|
|
$ 159,228
|
|
(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 2023, resulting in an update to our reportable
segments (Networks). The change in reportable segments was that
Mono, previously in the Integrated Agencies Network, is now within
Allison & Partners in the Communications Network, and Storyline
(a Brand specializing in research and survey generation),
previously in the Communications Network, is now within
Constellation in the Integrated Agencies Network. Periods presented
prior to the first quarter of 2023 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 December 31, 2023
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
|
$
127
|
|
$
(4,705)
|
|
$
(4,578)
|
Net income attributable
to Class C shareholders
|
|
—
|
|
35,780
|
|
35,780
|
Net income
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
$
127
|
|
$
31,075
|
|
$
31,202
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
117,205
|
|
2,416
|
|
119,621
|
Weighted average number
of common Class C shares outstanding
|
|
—
|
|
151,649
|
|
151,649
|
Weighted average
number of shares outstanding
|
|
117,205
|
|
154,065
|
|
271,270
|
|
|
|
|
|
|
|
Dilutive EPS and
Adjusted Diluted EPS
|
|
$
0.00
|
|
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net
income (loss) (1)
|
Amortization
|
|
|
|
$
27,231
|
|
|
Impairment and other
losses
|
|
|
|
833
|
|
|
Stock-based
compensation
|
|
|
|
22,564
|
|
|
Deferred acquisition
consideration
|
|
|
|
3,338
|
|
|
Gain on sale of
business
|
|
|
|
(94,505)
|
|
|
Other items,
net
|
|
|
|
15,078
|
|
|
|
|
|
|
$
(25,461)
|
|
|
Adjusted tax
expense
|
|
|
|
14,768
|
|
|
|
|
|
|
$
(10,693)
|
|
|
Net loss attributable
to Class C shareholders
|
|
|
|
41,768
|
|
|
|
|
|
|
$
31,075
|
|
|
|
|
|
|
|
|
|
Allocation of
adjustments to Net income (loss)
|
Net loss attributable
to Stagwell Inc. common shareholders - add-backs
|
|
|
|
$
(4,705)
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Class C shareholders - add-backs
|
|
|
|
(5,988)
|
|
|
Net income attributable
to Class C shareholders
|
|
|
|
41,768
|
|
|
|
|
|
|
35,780
|
|
|
|
|
|
|
$
31,075
|
|
|
|
(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 Year Ended
December 31, 2023
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
134
|
|
$
52,712
|
|
$
52,846
|
Net income attributable
to Class C shareholders
|
|
—
|
|
106,153
|
|
106,153
|
Net income
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
134
|
|
158,865
|
|
158,999
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
117,259
|
|
8,539
|
|
125,798
|
Weighted average number
of common Class C shares outstanding
|
|
—
|
|
154,972
|
|
154,972
|
Weighted average
number of shares outstanding
|
|
117,259
|
|
163,511
|
|
280,770
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
0.00
|
|
|
|
$
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net
Income (loss) (1)
|
Amortization
|
|
|
|
$
113,835
|
|
|
Impairment and other
losses
|
|
|
|
11,395
|
|
|
Stock-based
compensation
|
|
|
|
57,179
|
|
|
Deferred acquisition
consideration
|
|
|
|
13,060
|
|
|
Gain on sale of
business
|
|
|
|
(94,505)
|
|
|
Other items,
net
|
|
|
|
45,147
|
|
|
|
|
|
|
146,111
|
|
|
Adjusted tax
expense
|
|
|
|
(26,312)
|
|
|
|
|
|
|
119,799
|
|
|
Net loss attributable
to Class C shareholders
|
|
|
|
39,066
|
|
|
|
|
|
|
$
158,865
|
|
|
|
|
|
|
|
|
|
Allocation of
adjustments to net income
|
Net income attributable
to Stagwell Inc. common shareholders - add-backs
|
|
|
|
$
52,712
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Class C shareholders - add-backs
|
|
|
|
67,087
|
|
|
Net income attributable
to Class C shareholders
|
|
|
|
39,066
|
|
|
|
|
|
|
106,153
|
|
|
|
|
|
|
$
158,865
|
|
|
|
(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 December 31, 2022
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income (loss)
attributable to Stagwell Inc. common shareholders
|
|
$
(13,828)
|
|
$
49,461
|
|
$
35,633
|
Net income attributable
to Class C shareholders
|
|
—
|
|
27,696
|
|
27,696
|
Net income (loss)
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
(13,828)
|
|
77,157
|
|
63,329
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
122,927
|
|
5,666
|
|
128,593
|
Weighted average number
of common Class C shares outstanding
|
|
—
|
|
164,376
|
|
164,376
|
Weighted average
number of shares outstanding
|
|
122,927
|
|
170,042
|
|
292,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
(0.11)
|
|
|
|
$
0.22
|
|
|
|
|
|
|
|
Adjustments to Net
income (loss) (1)
|
Amortization
|
|
|
|
$
28,886
|
|
|
Impairment and other
losses
|
|
|
|
94,145
|
|
|
Stock-based
compensation
|
|
|
|
(258)
|
|
|
Deferred acquisition
consideration
|
|
|
|
1,015
|
|
|
Other items,
net
|
|
|
|
6,579
|
|
|
|
|
|
|
130,367
|
|
|
Adjusted tax
expense
|
|
|
|
(18,186)
|
|
|
|
|
|
|
$
112,181
|
|
|
Less: Net income
attributable to Class C shareholders
|
|
|
|
(35,024)
|
|
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
|
|
$
77,157
|
|
|
|
|
|
|
|
|
|
Allocation of
add-backs
|
Net income attributable
to Stagwell Inc. common shareholders - add-backs
|
|
|
|
$
49,461
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Class C shareholders - add-backs
|
|
|
|
62,720
|
|
|
Net income attributable
to Class C shareholders
|
|
|
|
(35,024)
|
|
|
|
|
|
|
27,696
|
|
|
|
|
|
|
$
77,157
|
|
|
|
(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 Year Ended
December 31, 2022
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
Net income attributable
to Stagwell Inc. common shareholders
|
|
$
19,919
|
|
$
102,123
|
|
$
122,042
|
Net income attributable
to Class C shareholders
|
|
16,004
|
|
129,500
|
|
145,504
|
Net income
attributable to Stagwell Inc. and Class C and adjusted net
income
|
|
35,923
|
|
231,623
|
|
267,546
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
130,625
|
|
—
|
|
130,625
|
Weighted average number
of common Class C shares outstanding
|
|
165,971
|
|
—
|
|
165,971
|
Weighted average
number of shares outstanding
|
|
296,596
|
|
—
|
|
296,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS and
Adjusted Diluted EPS
|
|
$
0.12
|
|
|
|
$
0.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net
income (loss) (1)
|
|
|
Pre-Tax
|
|
Tax
|
|
Net
|
Amortization
|
|
|
|
$
104,763
|
|
|
Impairment and other
losses
|
|
|
|
122,179
|
|
|
Stock-based
compensation
|
|
|
|
33,152
|
|
|
Deferred acquisition
consideration
|
|
|
|
(13,405)
|
|
|
Other items,
net
|
|
|
|
18,691
|
|
|
|
|
|
|
265,380
|
|
|
Adjusted tax
expense
|
|
|
|
(33,757)
|
|
|
|
|
|
|
$
231,623
|
|
|
|
(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)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
equivalents
|
$
119,737
|
|
$
220,589
|
Accounts receivable,
net
|
697,178
|
|
645,846
|
Expenditures billable
to clients
|
120,088
|
|
93,077
|
Other current
assets
|
94,054
|
|
71,443
|
Total Current
Assets
|
1,031,057
|
|
1,030,955
|
Fixed assets,
net
|
77,825
|
|
98,878
|
Right-of-use assets -
operating leases
|
254,278
|
|
273,567
|
Goodwill
|
1,498,815
|
|
1,566,956
|
Other intangible
assets, net
|
818,220
|
|
907,529
|
Other assets
|
97,830
|
|
118,706
|
Total Assets
|
$
3,778,025
|
|
$
3,996,591
|
LIABILITIES, RNCI,
AND SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
414,980
|
|
$
357,253
|
Accrued
media
|
291,777
|
|
240,506
|
Accruals and other
liabilities
|
233,046
|
|
268,871
|
Advance
billings
|
307,665
|
|
337,034
|
Current portion of
lease liabilities - operating leases
|
65,899
|
|
76,349
|
Current portion of
deferred acquisition consideration
|
66,953
|
|
90,183
|
Total Current
Liabilities
|
1,380,320
|
|
1,370,196
|
Long-term
debt
|
1,145,828
|
|
1,184,707
|
Long-term portion of
deferred acquisition consideration
|
34,105
|
|
71,140
|
Long-term lease
liabilities - operating leases
|
281,307
|
|
294,049
|
Deferred tax
liabilities, net
|
45,495
|
|
40,879
|
Other
liabilities
|
54,906
|
|
67,695
|
Total
Liabilities
|
2,941,961
|
|
3,028,666
|
Redeemable
Noncontrolling Interests
|
10,792
|
|
39,111
|
Commitments,
Contingencies and Guarantees
|
|
|
|
Shareholders'
Equity
|
|
|
|
Common shares - Class
A & B
|
118
|
|
132
|
Common shares - Class
C
|
2
|
|
2
|
Paid-in
capital
|
348,494
|
|
491,899
|
Retained
earnings
|
21,148
|
|
22,095
|
Accumulated other
comprehensive loss
|
(13,067)
|
|
(15,478)
|
Stagwell Inc.
Shareholders' Equity
|
356,695
|
|
498,650
|
Noncontrolling
interests
|
468,577
|
|
430,164
|
Total Shareholders'
Equity
|
825,272
|
|
928,814
|
Total Liabilities,
Redeemable Noncontrolling Interests and Shareholders'
Equity
|
$
3,778,025
|
|
$
3,996,591
|
SCHEDULE
12 STAGWELL INC. UNAUDITED SUMMARY CASH FLOW
DATA (amounts in thousands)
|
|
|
|
Year Ended December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
41,642
|
|
$
50,044
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Stock-based
compensation
|
57,179
|
|
33,152
|
Depreciation and
amortization
|
142,831
|
|
131,273
|
Amortization of
right-of-use lease assets
|
76,728
|
|
77,368
|
Impairment and other
losses
|
11,395
|
|
122,179
|
Deferred income
taxes
|
19,443
|
|
(18,241)
|
Adjustment to deferred
acquisition consideration
|
13,060
|
|
(13,405)
|
Gain on sale of
business
|
(94,505)
|
|
—
|
Other, net
|
10,882
|
|
(2,848)
|
Changes in working
capital:
|
|
|
|
Accounts
receivable
|
(58,704)
|
|
37,780
|
Expenditures billable
to clients
|
(27,468)
|
|
(32,366)
|
Other assets
|
(1,415)
|
|
1,179
|
Accounts
payable
|
52,837
|
|
108,028
|
Accrued expenses and
other liabilities
|
(24,723)
|
|
(22,177)
|
Advance
billings
|
(35,146)
|
|
(27,062)
|
Current portion of
lease liabilities - operating leases
|
(87,629)
|
|
(86,525)
|
Deferred acquisition
related payments
|
(15,400)
|
|
(10,793)
|
Net cash provided by
operating activities
|
81,007
|
|
347,586
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(14,238)
|
|
(22,663)
|
Acquisitions, net of
cash acquired
|
(23,339)
|
|
(74,234)
|
Capitalized
software
|
(28,175)
|
|
(12,774)
|
Proceeds from sale of
business, net
|
229,484
|
|
—
|
Other
|
(7,781)
|
|
(6,604)
|
Net cash provided by
(used in) investing activities
|
155,951
|
|
(116,275)
|
Cash flows from
financing activities:
|
|
|
|
Repayment of borrowings
under revolving credit facility
|
1,945,500
|
|
(1,266,000)
|
Proceeds from
borrowings under revolving credit facility
|
(1,986,500)
|
|
1,255,500
|
Shares repurchased and
cancelled
|
(223,835)
|
|
(70,269)
|
Distributions to
noncontrolling interests
|
(24,964)
|
|
(39,197)
|
Payment of deferred
consideration
|
(49,221)
|
|
(63,170)
|
Purchase of
noncontrolling interest
|
—
|
|
(3,600)
|
Debt issuance
costs
|
(844)
|
|
—
|
Net cash used in
financing activities
|
(339,864)
|
|
(186,736)
|
Effect of exchange rate
changes on cash and cash equivalents
|
2,054
|
|
(7,995)
|
Net decrease in cash
and cash equivalents
|
(100,852)
|
|
36,580
|
Cash and cash
equivalents at beginning of period
|
220,589
|
|
184,009
|
Cash and cash
equivalents at end of period
|
$
119,737
|
|
$
220,589
|
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SOURCE Stagwell Inc.