The Interpublic Group of Companies, Inc (IPG) reported fourth quarter 2013 net income of $193.1 million or 44 cents per share versus a net income of $313.3 million or 68 cents per share in the year-ago quarter. The quarterly results were impacted by a pre-tax charge of $60.6 million for restructuring, primarily related to continental Europe.
Excluding one-time items, earnings per share were 56 cents in the reported quarter, flat from the year-ago quarter. The quarterly adjusted earnings missed the Zacks Consensus Estimate of 59 cents.
For full year 2013, net income was $259.2 million or 61 cents per share versus a net income of $435.1 million or 94 cents per share in the year-ago quarter.
Excluding one-time items, earnings per share were 78 cents in 2013 compared to 82 cents in the prior-year period. The yearly adjusted earnings missed the Zacks Consensus Estimate of 82 cents
Revenues
Revenue increased 2.9% year over year to $2,122.7 million in the reported quarter. The increase in revenues was driven by organic growth, partially offset by foreign currency translations. The quarterly revenues beat the Zacks Consensus Estimate of $2,117 million.
Organic revenues increased 3.7% year over year in the reported quarter, while the impact of net acquisitions was up 0.5%. However, foreign currency translations had a negative impact of 1.3%.
Revenues increased 2.4% year over year to $7,122.3 million in 2013. The yearly revenues beat the Zacks Consensus Estimate of $7,119 million.
Organic revenues increased 2.8% year over year in the reported quarter, while the impact of net acquisitions was up 0.7%. However, foreign currency translations had a negative impact of 1.1%.
Margin
Operating income in the reported quarter was $324.4 million compared to an operating income of $409.9 million in the year-ago quarter. These results include a pre-tax restructuring charge of $60.6 million. Inclusive of the charge, operating margin was 15.3% in the reported quarter compared to 19.9% in the year-ago quarter. Excluding the charge, operating margin was 18.1% in the reported quarter compared to 19.9% in the year-ago quarter.
Total operating expense in the quarter stood at $1,798.3 million versus $1653.4 million in the prior-year quarter.
Balance Sheet
As of December 31, 2013, cash, cash equivalents and marketable securities totaled $1.64 billion versus $2.59 billion in the prior-year period. Total debt was $1.66 billion as of Dec 31, 2013 versus $2.45 billion in the prior-year period.
Share Repurchase Program/Dividend
During the fourth quarter of 2013, the company repurchased 11.9 million shares for $201.0 million at an average price of $16.93 per share. For full year 2013, the company repurchased 31.8 million shares for $481.8 million at an average price of $15.17 per share.
Additionally, the company approved a 27% increase in quarterly dividend and an additional $300 million towards share repurchase program. Dividends paid during the year aggregated to 30 cents per share, totaling $126.0 million
Outlook
Interpublic aims to boost top-line performance with a consistent focus on organic and inorganic growth. It also aims to return significant cash to shareholders through share repurchases and dividend payouts. The company expects its organic revenue growth target of 3%–4%, with 10.3% operating margin in 2014. Going forward, the strength of its agencies and competitiveness on the new business front position the company favorably for improved growth.
The market reacted positively as share price increased by 0.17 or 1.00 % in pre market trading.
Interpublic currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Marin Software Inc. (MRIN), Huron Consulting Group Inc. (HURN) and Millennial Media Inc. (MM), each carrying a Zacks Rank #2 (Buy).
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