STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2024
PRNewswire 27-Feb-2025 7:15 AM
Q4 YoY Revenue Growth of 20%, With 22% Growth in Digital Transformation
Q4 YoY Net Revenue Growth of 14%, Organic Net Revenue Growth of 10%, Digital Transformation Net Revenue Growth of 15%
Q4 Net Income Attributable to Stagwell Inc. Common Shareholders of $3 million
Q4 Adjusted EBITDA of $123 million; Adjusted EBITDA Margin of 20%
Q4 EPS of $0.03; Adjusted EPS of $0.24
Eighth Consecutive Quarter of Record LTM Net New Business
Net New Business of $102 million in Q4; LTM Net New Business of $382 million
Introduce Guidance for 2025 of Total Net Revenue Growth of ~8%; Adjusted EBITDA of $410 million to $460 million; Free Cash Flow Conversion in excess of 45%
Stagwell To Host Investor Day on April 2nd 2025
NEW YORK, Feb. 27, 2025 /PRNewswire/ -- (NASDAQ:STGW) – Stagwell Inc. ("Stagwell") today announced financial results for the quarter and year ended December 31, 2024.
STGW) REPORTS RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2024" alt="STAGWELL INC. (NASDAQ:STGW) REPORTS RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2024">
FOURTH QUARTER RESULTS:
- Q4 Revenue of $789 million, an increase of 20% versus the prior year period; Full Year Revenue of $2.8 billion, an increase of 12% versus the prior year
- Q4 Net Revenue of $630 million, an increase of 14% versus the prior year period; Full Year Net Revenue of $2.3 billion, an increase of 7% versus the prior year
- Q4 Organic Net Revenue increased 10% versus the prior year period; Full Year Organic Net Revenue increased 5% versus the prior year
- Q4 Net Income attributable to Stagwell Inc. Common Shareholders of $3 million versus $1 million in the prior year period; Full Year Net Income attributable to Stagwell Inc. Common Shareholders of $2 million versus $0.1 million in the prior year
- Q4 Adjusted EBITDA of $123 million, an increase of 30% versus the prior year period; Full Year Adjusted EBITDA of $411 million, an increase of 14% versus the prior year
- Q4 Adjusted EBITDA Margin of 20% on net revenue; Full Year Adjusted EBITDA Margin of 18% on net revenue
- Q4 Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $0.03 versus $0.00 in the prior year period; Full Year Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $0.02 versus $0.00 in the prior year
- Q4 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.24 versus $0.12 in the prior year period; Full Year Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.77 versus $0.57 in the prior year
- Net new business of $102 million in the fourth quarter, last twelve-month net new business of $382 million
See "Non-GAAP Financial Measures" below for explanations and reconciliations of the Company's non-GAAP financial measures.
Mark Penn, Chairman and CEO of Stagwell, said, "2024 was a breakthrough year for Stagwell and has fueled a strong start to 2025. We re-established ourselves as the fastest growing business in the industry, accelerated rapidly in Digital Transformation, took advantage of an unprecedented U.S. election cycle, and made strategic investments to expand our capabilities and geographical reach. I'm looking forward to a strong 2025."
Frank Lanuto, Chief Financial Officer, commented: "Stagwell posted strong results in the fourth quarter with double-digit revenue growth in 4 of our 5 principal capabilities. We delivered fourth quarter revenue of $789 million. Simultaneously, we grew our adjusted EBITDA to $123 million, representing a 20% margin on net revenue, an improvement of approximately 230 bps over the prior year period, as we lowered our comp to revenue ratio to 57.5%, a company record. These results give us confidence in the year ahead."
Financial Outlook
2025 financial guidance is announced as follows:
- Total Net Revenue growth of approximately 8%
- Adjusted EBITDA of $410 million to $460 million
- Free Cash Flow Conversion in excess of 45%
- Adjusted EPS of $0.75 - $0.88
- Guidance includes anticipated impact from acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company's 2025 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.
|
Video Webcast
Management will host a video webcast on Thursday, February 27, 2025, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the quarter and year ended December 31, 2024. The video webcast will be accessible at https://bit.ly/3EVAIAk. 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 40+ 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 and actual 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 "ability," "aim," "anticipate," "assume," "believe," "build," "consider," "continue," "could," "create," "develop," "drive," "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 and complete acquisitions or other strategic transactions that complement and expand the Company's business capabilities and successfully integrate newly acquired businesses into the Company's operations, retain key employees, and realize expected cost savings, synergies and other related anticipated benefits within the expected time period;
- 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 business combination that formed the Company in August 2021, including the incurrence of material Canadian federal income tax (including material "emigration tax");
- the Company's 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, natural disasters, and public health events;
- 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
December 31,
|
| Year Ended
December 31,
|
| 2024
|
| 2023
|
| 2024
|
| 2023
|
Revenue
| $ 788,708
|
| $ 654,895
|
| $ 2,841,216
|
| $ 2,527,177
|
Operating Expenses
|
|
|
|
|
|
|
|
Cost of services
| 502,522
|
| 419,865
|
| 1,842,978
|
| 1,621,174
|
Office and general expenses
| 203,887
|
| 179,871
|
| 711,803
|
| 661,250
|
Depreciation and amortization
| 38,771
|
| 35,036
|
| 151,652
|
| 142,831
|
Impairment and other losses
| —
|
| 833
|
| 1,715
|
| 11,395
|
| 745,180
|
| 635,605
|
| 2,708,148
|
| 2,436,650
|
Operating Income
| 43,528
|
| 19,290
|
| 133,068
|
| 90,527
|
Other income (expenses):
|
|
|
|
|
|
|
|
Interest expense, net
| (24,038)
|
| (22,889)
|
| (92,317)
|
| (90,644)
|
Foreign exchange, net
| 645
|
| (672)
|
| (1,656)
|
| (2,960)
|
Gain on sale of business
| —
|
| 94,505
|
| —
|
| 94,505
|
Other, net
| (547)
|
| 108
|
| (1,372)
|
| (359)
|
| (23,940)
|
| 71,052
|
| (95,345)
|
| 542
|
Income before income taxes and equity in earnings of non-consolidated affiliates
| 19,588
|
| 90,342
|
| 37,723
|
| 91,069
|
Income tax expense
| 3,741
|
| 35,560
|
| 13,182
|
| 40,557
|
Income before equity in earnings of non-consolidated affiliates
| 15,847
|
| 54,782
|
| 24,541
|
| 50,512
|
Equity in income (loss) of non-consolidated affiliates
| —
|
| (8,423)
|
| 503
|
| (8,870)
|
Net income
| 15,847
|
| 46,359
|
| 25,044
|
| 41,642
|
Net income attributable to noncontrolling and redeemable noncontrolling interests
| (12,612)
|
| (45,073)
|
| (22,785)
|
| (41,508)
|
Net income attributable to Stagwell Inc. common shareholders
| $ 3,235
|
| $ 1,286
|
| $ 2,259
|
| $ 134
|
Earnings Per Common Share:
|
|
|
|
|
|
|
|
Basic
| $ 0.03
|
| $ 0.01
|
| $ 0.02
|
| $ —
|
Diluted
| $ 0.03
|
| $ —
|
| $ 0.02
|
| $ —
|
Weighted Average Number of Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
| 109,266
|
| 112,769
|
| 110,890
|
| 117,259
|
Diluted
| 115,147
|
| 119,621
|
| 115,752
|
| 122,170
|
|
|
|
|
|
|
|
|
SCHEDULE 2
|
STAGWELL INC.
|
UNAUDITED COMPONENTS OF NET REVENUE CHANGE
|
(amounts in thousands)
|
|
|
|
| Net Revenue - Components of Change
|
|
|
|
|
| Change
|
| Three Months
Ended
December 31,
2023
|
| Foreign
Currency
|
| Net
Acquisitions
(Divestitures)
|
| Organic
|
| Total Change
|
| Three Months
Ended
December 31,
2024
|
| Organic
|
| Total
|
|
|
|
|
|
|
Integrated Agencies Network
| $ 302,137
|
| $ 25
|
| $ 4,800
|
| $ 27,405
|
| $ 32,230
|
| $ 334,367
|
| 9.1 %
|
| 10.7 %
|
Brand Performance Network
| 168,519
|
| 75
|
| —
|
| 6,046
|
| 6,121
|
| 174,640
|
| 3.6 %
|
| 3.6 %
|
Communications Network
| 68,229
|
| 42
|
| 15,757
|
| 23,666
|
| 39,465
|
| 107,694
|
| 34.7 %
|
| 57.8 %
|
All Other
| 12,181
|
| (161)
|
| 2,950
|
| (2,048)
|
| 741
|
| 12,922
|
| (16.8) %
|
| 6.1 %
|
| $ 551,066
|
| $ (19)
|
| $ 23,507
|
| $ 55,069
|
| $ 78,557
|
| $ 629,623
|
| 10.0 %
|
| 14.3 %
|
|
|
|
|
|
|
|
|
| Net Revenue - Components of Change
|
|
|
|
|
| Change
|
| Year Ended
December 31,
2023
|
| Foreign
Currency
|
| Net
Acquisitions
(Divestitures)
|
| Organic
|
| Total Change
|
| Year Ended
December 31,
2024
|
| Organic
|
| Total
|
|
|
|
|
|
|
Integrated Agencies Network
| $ 1,232,798
|
| $ 226
|
| $ 7,208
|
| $ 32,521
|
| $ 39,955
|
| $ 1,272,753
|
| 2.6 %
|
| 3.2 %
|
Brand Performance Network
| 627,810
|
| 2,220
|
| 2,252
|
| 18,948
|
| $ 23,420
|
| 651,230
|
| 3.0 %
|
| 3.7 %
|
Communications Network
| 245,261
|
| (28)
|
| 22,177
|
| $ 66,385
|
| $ 88,534
|
| 333,795
|
| 27.1 %
|
| 36.1 %
|
All Other
| 46,585
|
| (984)
|
| (609)
|
| (6,108)
|
| (7,701)
|
| 38,884
|
| (13.1) %
|
| (16.5) %
|
| $ 2,152,454
|
| $ 1,434
|
| $ 31,028
|
| $ 111,746
|
| $ 144,208
|
| $ 2,296,662
|
| 5.2 %
|
| 6.7 %
|
(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 December 31, 2024
|
|
| Integrated
Agencies
Network
|
| Brand
Performance
Network
|
| Communications
Network
|
| All Other
|
| Corporate
|
| Total
|
Net Revenue
| $ 334,367
|
| $ 174,640
|
| $ 107,694
|
| $ 12,922
|
| $ —
|
| $ 629,623
|
Billable costs
| 73,558
|
| 13,688
|
| 72,150
|
| (311)
|
| —
|
| 159,085
|
Revenue
| 407,925
|
| 188,328
|
| 179,844
|
| 12,611
|
| —
|
| 788,708
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable costs
| 73,558
|
| 13,688
|
| 72,150
|
| (311)
|
| —
|
| 159,085
|
Staff costs
| 212,062
|
| 100,890
|
| 54,590
|
| 10,364
|
| 12,315
|
| 390,221
|
Administrative costs
| 32,857
|
| 23,959
|
| 10,940
|
| 2,692
|
| 5,006
|
| 75,454
|
Unbillable and other costs, net
| 16,455
|
| 19,224
|
| 965
|
| 4,105
|
| —
|
| 40,749
|
Adjusted EBITDA (1)
| 72,993
|
| 30,567
|
| 41,199
|
| (4,239)
|
| (17,321)
|
| 123,199
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
| 2,083
|
| 1,989
|
| 643
|
| 175
|
| 8,345
|
| 13,235
|
Depreciation and amortization
| 19,345
|
| 8,071
|
| 5,119
|
| 2,780
|
| 3,456
|
| 38,771
|
Deferred acquisition consideration
| 7,600
|
| (1,290)
|
| 9,673
|
| (938)
|
| —
|
| 15,045
|
Other items, net (1)
| 7,388
|
| 3,173
|
| 1,146
|
| 185
|
| 728
|
| 12,620
|
Operating income (loss)
| $ 36,577
|
| $ 18,624
|
| $ 24,618
|
| $ (6,441)
|
| $ (29,850)
|
| $ 43,528
|
|
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.
|
SCHEDULE 4
|
STAGWELL INC.
|
UNAUDITED SEGMENT OPERATING RESULTS
|
(amounts in thousands)
|
|
For the Year Ended December 31, 2024
|
|
| Integrated
Agencies
Network
|
| Brand
Performance
Network
|
| Communications
Network
|
| All Other
|
| Corporate
|
| Total
|
Net Revenue
| $ 1,272,753
|
| $ 651,230
|
| $ 333,795
|
| $ 38,884
|
| $ —
|
| $ 2,296,662
|
Billable costs
| 262,692
|
| 100,654
|
| 181,345
|
| (137)
|
| —
|
| 544,554
|
Revenue
| 1,535,445
|
| 751,884
|
| 515,140
|
| 38,747
|
| —
|
| 2,841,216
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable costs
| 262,692
|
| 100,654
|
| 181,345
|
| (137)
|
| —
|
| 544,554
|
Staff costs
| 792,041
|
| 397,301
|
| 177,629
|
| 34,999
|
| 47,736
|
| 1,449,706
|
Administrative costs
| 128,954
|
| 93,155
|
| 37,057
|
| 6,139
|
| 16,402
|
| 281,707
|
Unbillable and other costs, net
| 72,756
|
| 65,901
|
| 2,235
|
| 13,570
|
| —
|
| 154,462
|
Adjusted EBITDA (1)
| 279,002
|
| 94,873
|
| 116,874
|
| (15,824)
|
| (64,138)
|
| 410,787
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
| 27,253
|
| 6,977
|
| 3,374
|
| 904
|
| 13,653
|
| 52,161
|
Depreciation and amortization
| 78,076
|
| 34,595
|
| 14,126
|
| 12,718
|
| 12,137
|
| 151,652
|
Deferred acquisition consideration
| 13,290
|
| (7,744)
|
| 18,770
|
| (1,321)
|
| —
|
| 22,995
|
Impairment and other losses
| 1,500
|
| —
|
| —
|
| —
|
| 215
|
| 1,715
|
Other items, net (1)
| 20,592
|
| 19,536
|
| 3,250
|
| 887
|
| 4,931
|
| 49,196
|
Operating income (loss)
| $ 138,291
|
| $ 41,509
|
| $ 77,354
|
| $ (29,012)
|
| $ (95,074)
|
| $ 133,068
|
|
(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.
|
SCHEDULE 5
|
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
| $ 302,137
|
| $ 168,519
|
| $ 68,229
|
| $ 12,181
|
| $ —
|
| $ 551,066
|
Billable costs
| 51,665
|
| 16,921
|
| 35,217
|
| 26
|
| —
|
| 103,829
|
Revenue
| 353,802
|
| 185,440
|
| 103,446
|
| 12,207
|
| —
|
| 654,895
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable costs
| 51,665
|
| 16,921
|
| 35,217
|
| 26
|
| —
|
| 103,829
|
Staff costs
| 195,953
|
| 97,871
|
| 43,319
|
| 6,292
|
| 11,088
|
| 354,523
|
Administrative costs
| 29,618
|
| 23,174
|
| 8,568
|
| 3,445
|
| (1,871)
|
| 62,934
|
Unbillable and other costs, net
| 18,111
|
| 17,357
|
| 277
|
| 2,885
|
| —
|
| 38,630
|
Adjusted EBITDA (1)
| 58,456
|
| 30,117
|
| 16,065
|
| (441)
|
| (9,217)
|
| 94,980
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
| 12,015
|
| 2,364
|
| 1,157
|
| 91
|
| 6,937
|
| 22,564
|
Depreciation and amortization
| 19,680
|
| 8,090
|
| 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)
| 6,403
|
| 3,713
|
| 198
|
| 95
|
| 4,669
|
| 15,078
|
Operating income (loss)
| $ 15,808
|
| $ 14,115
|
| $ 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.
|
|
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 Year Ended December 31, 2023
|
|
| Integrated
Agencies
Network
|
| Brand
Performance
Network
|
| Communications
Network
|
| All Other
|
| Corporate
|
| Total
|
Net Revenue
| $ 1,232,798
|
| $ 627,810
|
| $ 245,261
|
| $ 46,585
|
| $ —
|
| $ 2,152,454
|
Billable costs
| 185,913
|
| 100,364
|
| 88,446
|
| —
|
| —
|
| 374,723
|
Revenue
| 1,418,711
|
| 728,174
|
| 333,707
|
| 46,585
|
| —
|
| 2,527,177
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable costs
| 185,913
|
| 100,364
|
| 88,446
|
| —
|
| —
|
| 374,723
|
Staff costs
| 768,846
|
| 386,803
|
| 159,165
|
| 37,416
|
| 36,938
|
| 1,389,168
|
Administrative costs
| 122,618
|
| 87,337
|
| 33,664
|
| 4,689
|
| 11,472
|
| 259,780
|
Unbillable and other costs, net
| 71,776
|
| 55,891
|
| 613
|
| 15,087
|
| —
|
| 143,367
|
Adjusted EBITDA (1)
| 269,558
|
| 97,779
|
| 51,819
|
| (10,607)
|
| (48,410)
|
| 360,139
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
| 27,485
|
| 6,204
|
| 3,334
|
| 518
|
| 19,638
|
| 57,179
|
Depreciation and amortization
| 81,957
|
| 33,250
|
| 11,016
|
| 8,390
|
| 8,218
|
| 142,831
|
Deferred acquisition consideration
| 11,931
|
| 2,851
|
| 30
|
| (1,752)
|
| —
|
| 13,060
|
Impairment and other losses
| 11,299
|
| 96
|
| —
|
| —
|
| —
|
| 11,395
|
Other items, net (1)
| 20,225
|
| 12,206
|
| 1,535
|
| 1,174
|
| 10,007
|
| 45,147
|
Operating income (loss)
| $ 116,661
|
| $ 43,172
|
| $ 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 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 December 31, 2024
|
|
|
| GAAP
|
| Adjustments
|
| Non-GAAP
|
Net income attributable to Stagwell Inc. common shareholders
|
| $ 3,235
|
| $ 22,226
|
| $ 25,461
|
Net income attributable to Class C shareholders
|
| —
|
| 40,500
|
| 40,500
|
Net income attributable to Stagwell Inc. and Class C shareholders and adjusted net income
|
| $ 3,235
|
| $ 62,726
|
| $ 65,961
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
| 115,147
|
| 2,567
|
| 117,714
|
Weighted average number of common Class C shares outstanding
|
| —
|
| 151,649
|
| 151,649
|
Weighted average number of shares outstanding
|
| 115,147
|
| 154,216
|
| 269,363
|
|
|
|
|
|
|
|
Diluted EPS and Adjusted Diluted EPS (1)
|
| $ 0.03
|
|
|
| $ 0.24
|
|
|
|
|
|
|
|
Adjustments to Net income
|
Amortization
|
|
|
| $ 30,572
|
|
|
Stock-based compensation
|
|
|
| 13,235
|
|
|
Deferred acquisition consideration
|
|
|
| 15,045
|
|
|
Other items, net
|
|
|
| 12,620
|
|
|
|
|
|
| 71,472
|
|
|
Adjusted tax expense
|
|
|
| (20,040)
|
|
|
|
|
|
| 51,432
|
|
|
Net income attributable to Class C shareholders
|
|
|
| 11,294
|
|
|
|
|
|
| $ 62,726
|
|
|
|
|
|
|
|
|
|
Allocation of adjustments to Net income
|
|
|
|
|
|
|
Net income attributable to Stagwell Inc. common shareholders - add-backs
|
|
|
| $ 22,226
|
|
|
|
|
|
|
|
|
|
Net income attributable to Class C shareholders - add-backs
|
|
|
| 29,206
|
|
|
Net income attributable to Class C shareholders
|
|
|
| 11,294
|
|
|
|
|
|
| 40,500
|
|
|
|
|
|
| $ 62,726
|
|
|
|
(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, 2024
|
|
|
| GAAP
|
| Adjustments
|
| Non-GAAP
|
Net income attributable to Stagwell Inc. common shareholders
|
| $ 2,259
|
| $ 80,403
|
| $ 82,662
|
Net income attributable to Class C shareholders
|
| —
|
| 123,942
|
| 123,942
|
Net income attributable to Stagwell Inc. and Class C and adjusted net income
|
| $ 2,259
|
| $ 204,345
|
| $ 206,604
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
| 115,752
|
| 2,234
|
| 117,986
|
Weighted average number of common Class C shares outstanding
|
| —
|
| 151,649
|
| 151,649
|
Weighted average number of shares outstanding
|
| 115,752
|
| 153,883
|
| 269,635
|
|
|
|
|
|
|
|
Diluted EPS and Adjusted Diluted EPS (1)
|
| $ 0.02
|
|
|
| $ 0.77
|
|
|
|
|
|
|
|
Adjustments to Net Income
|
Amortization
|
|
|
| $ 122,442
|
|
|
Impairment and other losses
|
|
|
| 1,715
|
|
|
Stock-based compensation
|
|
|
| 52,161
|
|
|
Deferred acquisition consideration
|
|
|
| 22,995
|
|
|
Other items, net
|
|
|
| 49,196
|
|
|
|
|
|
| 248,509
|
|
|
Adjusted tax expense
|
|
|
| (61,308)
|
|
|
|
|
|
| 187,201
|
|
|
Net income attributable to Class C shareholders
|
|
|
| 17,144
|
|
|
|
|
|
| $ 204,345
|
|
|
|
|
|
|
|
|
|
Allocation of adjustments to Net income
|
Net income attributable to Stagwell Inc. common shareholders - add-backs
|
|
|
| $ 80,403
|
|
|
|
|
|
|
|
|
|
Net income attributable to Class C shareholders - add-backs
|
|
|
| 106,798
|
|
|
Net income attributable to Class C shareholders
|
|
|
| 17,144
|
|
|
|
|
|
| 123,942
|
|
|
|
|
|
| $ 204,345
|
|
|
|
(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, 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
|
| 119,621
|
| —
|
| 119,621
|
Weighted average number of common Class C shares outstanding
|
| —
|
| 151,649
|
| 151,649
|
Weighted average number of shares outstanding
|
| 119,621
|
| 151,649
|
| 271,270
|
|
|
|
|
|
|
|
Diluted EPS and Adjusted Diluted EPS (1)
|
| $ —
|
|
|
| $ 0.12
|
|
|
|
|
|
|
|
Adjustments to Net income (loss)
|
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 income 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 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, 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
|
| 122,170
|
| 3,628
|
| 125,798
|
Weighted average number of common Class C shares outstanding
|
| —
|
| 154,972
|
| 154,972
|
Weighted average number of shares outstanding
|
| 122,170
|
| 158,600
|
| 280,770
|
|
|
|
|
|
|
|
Diluted EPS and Adjusted Diluted EPS (1)
|
| $ —
|
|
|
| $ 0.57
|
|
|
|
|
|
|
|
Adjustments to Net income
|
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 income attributable to Class C shareholders
|
|
|
| 39,066
|
|
|
|
|
|
| $ 158,865
|
|
|
|
|
|
|
|
|
|
Allocation of adjustments to Net income
|
|
|
|
|
|
|
Net income attributable to Stagwell Inc. common shareholders
|
|
|
| $ 52,712
|
|
|
|
|
|
|
|
|
|
Net income to 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 11
|
STAGWELL INC.
|
UNAUDITED CONSOLIDATED BALANCE SHEETS
|
(amounts in thousands)
|
|
| December 31, 2024
|
| December 31, 2023
|
|
|
|
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
| $ 131,339
|
| $ 119,737
|
Accounts receivable, net
| 716,415
|
| 697,178
|
Expenditures billable to clients
| 173,194
|
| 114,097
|
Other current assets
| 114,200
|
| 94,054
|
Total Current Assets
| 1,135,148
|
| 1,025,066
|
Fixed assets, net
| 72,706
|
| 77,825
|
Right-of-use assets - operating leases
| 219,400
|
| 254,278
|
Goodwill
| 1,554,146
|
| 1,498,815
|
Other intangible assets, net
| 836,783
|
| 818,220
|
Other assets
| 90,038
|
| 92,843
|
Total Assets
| $ 3,908,221
|
| $ 3,767,047
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS ("RNCI"), AND SHAREHOLDERS' EQUITY
|
|
|
|
Current Liabilities
|
|
|
|
Accounts payable
| $ 449,347
|
| $ 414,980
|
Accrued media
| 245,883
|
| 291,777
|
Accruals and other liabilities
| 265,356
|
| 233,046
|
Advance billings
| 294,609
|
| 301,674
|
Current portion of lease liabilities - operating leases
| 60,195
|
| 65,899
|
Current portion of deferred acquisition consideration
| 51,906
|
| 66,953
|
Total Current Liabilities
| 1,367,296
|
| 1,374,329
|
Long-term debt
| 1,353,624
|
| 1,145,828
|
Long-term portion of deferred acquisition consideration
| 50,209
|
| 34,105
|
Long-term lease liabilities - operating leases
| 245,397
|
| 281,307
|
Deferred tax liabilities, net
| 47,239
|
| 40,509
|
Other liabilities
| 59,139
|
| 54,905
|
Total Liabilities
| 3,122,904
|
| 2,930,983
|
Redeemable Noncontrolling Interests
| 8,412
|
| 10,792
|
Commitments, Contingencies and Guarantees
|
|
|
|
Shareholders' Equity
|
|
|
|
Common shares - Class A & B
| 115
|
| 118
|
Common shares - Class C
| 2
|
| 2
|
Paid-in capital
| 343,647
|
| 348,494
|
Retained earnings
| 11,740
|
| 21,148
|
Accumulated other comprehensive loss
| (23,773)
|
| (13,067)
|
Stagwell Inc. Shareholders' Equity
| 331,731
|
| 356,695
|
Noncontrolling interests
| 445,174
|
| 468,577
|
Total Shareholders' Equity
| 776,905
|
| 825,272
|
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity
| $ 3,908,221
|
| $ 3,767,047
|
SCHEDULE 12
|
STAGWELL INC.
|
UNAUDITED SUMMARY CASH FLOW DATA
|
(amounts in thousands)
|
|
| Year Ended December 31,
|
| 2024
|
| 2023
|
Cash flows from operating activities:
|
|
|
|
Net income
| $ 25,044
|
| $ 41,642
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
Stock-based compensation
| 52,161
|
| 57,179
|
Depreciation and amortization
| 151,652
|
| 142,831
|
Amortization of right-of-use lease assets and lease liability interest
| 75,117
|
| 76,653
|
Impairment and other losses
| 1,715
|
| 11,395
|
Deferred income taxes
| (10,686)
|
| 19,443
|
Adjustment to deferred acquisition consideration
| 23,005
|
| 13,060
|
Gain on sale of business
| —
|
| (94,505)
|
Other, net
| 7,622
|
| 8,313
|
Changes in working capital:
|
|
|
|
Accounts receivable
| 8,465
|
| (58,704)
|
Expenditures billable to clients
| (54,350)
|
| (21,477)
|
Other assets
| (6,200)
|
| 1,153
|
Accounts payable
| 24,438
|
| 52,837
|
Accrued expenses and other liabilities
| (28,658)
|
| (24,647)
|
Advance billings
| (22,651)
|
| (41,137)
|
Current portion of lease liabilities - operating leases
| (83,905)
|
| (87,629)
|
Deferred acquisition related payments
| (19,910)
|
| (15,400)
|
Net cash provided by operating activities
| 142,859
|
| 81,007
|
Cash flows from investing activities:
|
|
|
|
Capital expenditures
| (18,912)
|
| (14,238)
|
Acquisitions, net of cash acquired
| (103,254)
|
| (23,339)
|
Capitalized software
| (35,094)
|
| (28,175)
|
Proceeds from sale of business, net
| —
|
| 229,484
|
Other
| (5,212)
|
| (7,781)
|
Net cash (used in) provided by investing activities
| (162,472)
|
| 155,951
|
Cash flows from financing activities:
|
|
|
|
Repayment of borrowings under revolving credit facility
| (1,755,000)
|
| (1,986,500)
|
Proceeds from borrowings under revolving credit facility
| 1,960,000
|
| 1,945,500
|
Shares repurchased and cancelled
| (108,249)
|
| (223,835)
|
Distributions to noncontrolling interests
| (26,723)
|
| (24,964)
|
Payment of deferred consideration
| (29,774)
|
| (49,221)
|
Purchase of noncontrolling interest
| (3,316)
|
| —
|
Debt issuance costs
| —
|
| (844)
|
Net cash provided by (used in) financing activities
| 36,938
|
| (339,864)
|
Effect of exchange rate changes on cash and cash equivalents
| (5,723)
|
| 2,054
|
Net increase (decrease) in cash and cash equivalents
| 11,602
|
| (100,852)
|
Cash and cash equivalents at beginning of period
| 119,737
|
| 220,589
|
Cash and cash equivalents at end of period
| $ 131,339
|
| $ 119,737
|
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SOURCE Stagwell Inc.
