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STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Q3 YoY Revenue Growth of 15%, With 25% Growth in Digital Transformation

Q3 YoY Net Revenue Growth of 8%, Organic Net Revenue Growth of 8%, Digital Transformation Net Revenue Growth of 18%

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Q3 Net Income Attributable to Stagwell Inc. Common Shareholders of $3 million

Q3 Adjusted EBITDA of $111 million; Adjusted EBITDA Margin of 19%

Q3 EPS of $0.03; Adjusted EPS of $0.22

Seventh Consecutive Quarter of Record LTM Net New Business

Net New Business of $101 million in Q3; LTM Net New Business of $345 million

Reaffirm Guidance for 2024 of Organic Net Revenue Growth of 5% to 7%; Adjusted EBITDA of $400 million to $450 million; Free Cash Flow Conversion of ~50%

Company Announces $125 Million Increase in Stock Repurchase Program

NEW YORK, Nov. 7, 2024  /PRNewswire/ — (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three and nine months ended September 30, 2024.

THIRD QUARTER RESULTS:

  • Q3 Revenue of $711 million, an increase of 15% versus the prior year period; YTD Revenue of $2.1 billion, an increase of 10% versus the prior year period
  • Q3 Net Revenue of $580 million, an increase of 8% versus the prior year period; YTD Net Revenue of $1.7 billion, an increase of 4% versus the prior year period
  • Q3 Organic Net Revenue increased 8% versus the prior year period; YTD Organic Net Revenue increased 4% versus the prior year period
  • Q3 Net Income attributable to Stagwell Inc. Common Shareholders of $3 million versus $1 million in the prior year period; YTD Net Loss attributable to Stagwell Inc. Common Shareholders of $1 million versus $1 million in the prior year period
  • Q3 Adjusted EBITDA of $111 million, an increase of 9% versus the prior year period; YTD Adjusted EBITDA of $288 million, an increase of 8% versus the prior year period
  • Q3 Adjusted EBITDA Margin of 19% on net revenue; YTD Adjusted EBITDA Margin of 17% on net revenue
  • Q3 Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $0.03 versus $0.00 in the prior year period; YTD Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $(0.01) versus $(0.01) in the prior year period
  • Q3 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.22 versus $0.18 in the prior year period; YTD Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.52 versus $0.45 in the prior year period
  • Net new business of $101 million in the third quarter, last twelve-month net new business of $345 million

 

See “Non-GAAP Financial Measures” below for explanations and reconciliations of the Company’s non-GAAP financial measures.

Mark Penn, Chairman and CEO, said, “Stagwell delivered 15% year-over-year revenue growth in the third quarter, led by a return to double-digit growth from our Digital Transformation capability as AI has required companies to rethink the ways they engage with consumers. On the heels of our single largest deal to date with Adobe and expanded relationships with leading brands like United and Microsoft, net new business of over $100 million in the third quarter brings our last twelve-month net new business figure to $345 million, another record for Stagwell.

“New business momentum, robust performance from Digital Transformation, and the culmination of a political season that broke fundraising records, gives us confidence that our vision is resonating with customers, and sets the stage for a strong close to H2,” added Penn. 

Frank Lanuto, Chief Financial Officer, commented: “Stagwell posted growth across all our principal capabilities in the third quarter, as the inflection we anticipated played out. Driven by double-digit growth in both Digital Transformation and the Stagwell Marketing Cloud, we delivered third quarter revenue of $711 million. Simultaneously, we grew our adjusted EBITDA to $111 million, representing a 19% margin on net revenue, an improvement of approximately 15 bps over the prior year. These results give us confidence to reiterate our full-year guidance.”

Financial Outlook

2024 financial guidance is reiterated as follows:

  • Organic Net Revenue growth of 5% to 7%
  • Organic Net Revenue excluding Advocacy growth of 4% to 5%
  • Adjusted EBITDA of $400 million to $450 million
  • Free Cash Flow Conversion of approximately 50%
  • Adjusted EPS of $0.75 – $0.88
  • Guidance assumes no impact from foreign exchange, acquisitions or dispositions.

 

* The Company has excluded a quantitative reconciliation with respect to the Company’s 2024 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See “Non-GAAP Financial Measures” below for additional information.

Stock Repurchase Program

On November 6, 2024, the Board of Directors authorized an extension and a $125,000,000 increase in the size of Stagwell’s previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, Stagwell may repurchase up to an aggregate of $375,000,000 of shares of its outstanding Class A common stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on November 6, 2027.

Video Webcast

Management will host a video webcast on Thursday, November 7, 2024, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and nine months ended September 30, 2024. The video webcast will be accessible at https://stgw.io/Earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the webcast.

A recording of the webcast will be accessible one hour after the webcast and available for ninety days at www.stagwellglobal.com. 

Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com. 

Contacts

For Investors: 
Ben Allanson
IR@stagwellglobal.com 

For Press:
Beth Sidhu
PR@stagwellglobal.com 

Non-GAAP Financial Measures

In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as “non-GAAP Financial Measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results. Such non-GAAP financial measures include the following:

(1) Organic Net Revenue: “Organic net revenue growth” and “Organic net revenue decline” reflects the year-over-year change in the Company’s reported net revenue attributable to the Company’s management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company’s reported net revenue. The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company’s reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. We calculate impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity’s prior year net revenue for the same period during which we owned it in the current year as impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present the entity’s prior year net revenue for the period during which we did not own the entity in the prior year as impact of the acquisition in the current year. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity’s prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity’s prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations. The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company’s reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.

(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.

(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding, (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.

(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments. Free Cash Flow Conversion is the percentage of adjusted EBITDA.

Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.

This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance, growth, and future prospects, the Company’s strategy, business and economic trends and growth, technological leadership and differentiation, potential and completed acquisitions, anticipated operating efficiencies and synergies and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “develop,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “goal,” “guidance,” “in development,” “intend,” “likely,” “look,” “maintain,” “may,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “probable,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. 

Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

  • risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
  • demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
  • inflation and actions taken by central banks to counter inflation;
  • the Company’s ability to attract new clients and retain existing clients; 
  • the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
  • financial failure of the Company’s clients;
  • the Company’s ability to retain and attract key employees;
  • the Company’s ability to compete in the markets in which it operates;
  • the Company’s ability to achieve its cost saving initiatives;
  • the Company’s implementation of strategic initiatives;
  • the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
  • the Company’s ability to manage its growth effectively;
  • the Company’s ability to identify, complete and integrate acquisitions that complement and expand the Company’s business capabilities and realize cost savings, synergies or other anticipated benefits of newly acquired businesses, or that even if realized, such benefits may take longer to realize than expected;
  • the Company’s ability to identify and complete divestitures and to achieve the anticipated benefits therefrom;
  • the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
  • the Company’s use of artificial intelligence, including generative artificial intelligence;
  • adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that future changes in tax laws, potential increases to corporate tax rates in the United States and disagreements with tax authorities on the Company’s determinations that may result in increased tax costs;
  • adverse tax consequences in connection with the Transactions, including the incurrence of material Canadian federal income tax (including material “emigration tax”);
  • the Company’s unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting, including the risk that the Company’s internal controls will fail to detect misstatements in its financial statements;
  • the Company’s ability to accurately forecast its future financial performance and provide accurate guidance;
  • the Company’s ability to protect client data from security incidents or cyberattacks;
  • economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflicts between Russia and Ukraine and in the Middle East), terrorist activities and natural disasters;
  • stock price volatility; and
  • foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2023 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2024, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

 

SCHEDULE 1

STAGWELL INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

Revenue

$    711,281

$    617,573

$ 2,052,508

$ 1,872,282

Operating Expenses

Cost of services

457,018

384,980

1,340,456

1,201,309

Office and general expenses

176,440

160,021

507,916

481,379

Depreciation and amortization

36,044

38,830

112,881

107,795

Impairment and other losses

—

—

1,715

10,562

669,502

583,831

1,962,968

1,801,045

Operating Income (Loss)

41,779

33,742

89,540

71,237

Other income (expenses):

Interest expense, net

(23,781)

(25,886)

(68,279)

(67,755)

Foreign exchange, net

1,312

(140)

(2,301)

(2,288)

Other, net

249

(271)

(825)

(467)

(22,220)

(26,297)

(71,405)

(70,510)

Income before income taxes and equity in earnings of non-consolidated affiliates

19,559

7,445

18,135

727

Income tax expense

5,691

4,324

9,441

4,997

Income (loss) before equity in earnings of non-consolidated affiliates

13,868

3,121

8,694

(4,270)

Equity in income (loss) of non-consolidated affiliates

(4)

(4)

503

(447)

Net income (loss)

13,864

3,117

9,197

(4,717)

Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests

(10,593)

(2,464)

(10,173)

3,565

Net income (loss) attributable to Stagwell Inc. common shareholders

$         3,271

$            653

$          (976)

$       (1,152)

Earnings (Loss) Per Common Share:

   Basic

$           0.03

$           0.01

$         (0.01)

$         (0.01)

   Diluted

$           0.03

$              —

$         (0.01)

$         (0.01)

Weighted Average Number of Common Shares Outstanding:

   Basic

108,198

110,787

111,436

118,772

   Diluted

112,190

265,006

111,436

274,864

 

SCHEDULE 2

STAGWELL INC.

UNAUDITED COMPONENTS OF NET REVENUE CHANGE

(amounts in thousands)

Net Revenue – Components of Change

Change

Three Months
Ended
September 30,
2023

Foreign
Currency

Net
Acquisitions
(Divestitures)

Organic

Total Change

Three Months
Ended
September
30, 2024

Organic

Total

Integrated Agencies Network

$        306,327

$               217

$               906

$         16,294

$         17,417

$       323,744

5.3 %

5.7 %

Brand Performance Network

153,169

767

—

2,984

3,751

156,920

1.9 %

2.4 %

Communications Network

62,416

79

2,970

20,755

23,804

86,220

33.3 %

38.1 %

All Other

12,952

(253)

(263)

873

357

13,309

6.7 %

2.8 %

$        534,864

$               810

$           3,613

$         40,906

$         45,329

$       580,193

7.6 %

8.5 %

 

Net Revenue – Components of Change

Change

Nine Months
Ended
September 30,
2023

Foreign
Currency

Net
Acquisitions
(Divestitures)

Organic

Total Change

Nine Months
Ended
September
30, 2024

Organic

Total

Integrated Agencies Network

$        930,660

$               200

$           2,408

$           5,118

$           7,726

$       938,386

0.5 %

0.8 %

Brand Performance Network

459,291

2,145

2,252

12,902

$         17,299

476,590

2.8 %

3.8 %

Communications Network

177,032

(70)

6,421

$         42,718

$         49,069

226,101

24.1 %

27.7 %

All Other

34,404

(822)

(3,559)

(4,061)

(8,442)

25,962

(11.8) %

(24.5) %

$     1,601,387

$           1,453

$           7,522

$         56,677

$         65,652

$    1,667,039

3.5 %

4.1 %

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 3

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)

For the Three Months Ended September 30, 2024

Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$     323,744

$        156,920

$                 86,220

$       13,309

$               —

$    580,193

Billable costs

65,924

15,429

49,760

(25)

—

131,088

Revenue

389,668

172,349

135,980

13,284

—

711,281

Billable costs

65,924

15,429

49,760

(25)

—

131,088

Staff costs

198,252

98,716

42,644

9,207

13,160

361,979

Administrative costs

31,593

22,600

9,034

3,978

2,351

69,556

Unbillable and other costs, net

15,993

16,498

424

4,574

—

37,489

Adjusted EBITDA (1)

77,906

19,106

34,118

(4,450)

(15,511)

111,169

Stock-based compensation

11,000

1,500

855

379

3,201

16,935

Depreciation and amortization

19,878

7,295

3,023

2,573

3,275

36,044

Deferred acquisition consideration

1,114

(6,949)

6,778

(383)

—

560

Other items, net (1)

3,664

8,076

1,432

98

2,581

15,851

Operating income (loss)

$       42,250

$            9,184

$                 22,030

$       (7,117)

$     (24,568)

$      41,779

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 4

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)

For the Nine Months Ended September 30, 2024

Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    938,386

$        476,590

$               226,101

$    25,962

$              —

$ 1,667,039

Billable costs

189,134

86,966

109,195

174

—

385,469

Revenue

1,127,520

563,556

335,296

26,136

—

2,052,508

Billable costs

189,134

86,966

109,195

174

—

385,469

Staff costs

579,979

296,411

123,039

24,635

35,421

1,059,485

Administrative costs

96,097

69,196

26,117

3,447

11,396

206,253

Unbillable and other costs, net

56,301

46,677

1,270

9,465

—

113,713

Adjusted EBITDA (1)

206,009

64,306

75,675

(11,585)

(46,817)

287,588

Stock-based compensation

25,170

4,988

2,731

729

5,308

38,926

Depreciation and amortization

58,731

26,524

9,007

9,938

8,681

112,881

Deferred acquisition consideration

5,690

(6,454)

9,097

(383)

—

7,950

Impairment and other losses

1,500

—

—

—

215

1,715

Other items, net (1)

13,204

16,363

2,104

702

4,203

36,576

Operating income (loss)

$    101,714

$          22,885

$                 52,736

$  (22,571)

$    (65,224)

$       89,540

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 5

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)

For the Three Months Ended September 30, 2023

Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    306,327

$         153,169

$                   62,416

$    12,952

$              —

$    534,864

Billable costs

51,742

10,904

20,089

(26)

—

82,709

Revenue

358,069

164,073

82,505

12,926

—

617,573

Billable costs

51,742

10,904

20,089

(26)

—

82,709

Staff costs

185,034

95,488

37,412

10,391

10,589

338,914

Administrative costs

30,983

20,580

7,626

1,849

1,301

62,339

Unbillable and other costs, net

14,173

12,868

84

4,717

—

31,842

Adjusted EBITDA (1)

76,137

24,233

17,294

(4,005)

(11,890)

101,769

Stock-based compensation

6,051

2,399

1,252

268

2,095

12,065

Depreciation and amortization

22,817

8,971

2,784

2,138

2,120

38,830

Deferred acquisition consideration

1,018

2,130

3,757

(504)

—

6,401

Other items, net (1)

6,047

3,337

244

292

811

10,731

Operating income (loss)

$      40,204

$             7,396

$                      9,257

$    (6,199)

$    (16,916)

$      33,742

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 6

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)

For the Nine Months Ended September 30, 2023

Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    930,660

$        459,291

$                177,032

$    34,404

$              —

$ 1,601,387

Billable costs

134,249

83,443

53,229

(26)

—

270,895

Revenue

1,064,909

542,734

230,261

34,378

—

1,872,282

Billable costs

134,249

83,443

53,229

(26)

—

270,895

Staff costs

572,893

288,932

115,846

31,124

25,850

1,034,645

Administrative costs

93,000

64,163

25,096

1,244

13,343

196,846

Unbillable and other costs, net

53,665

38,534

336

12,202

—

104,737

Adjusted EBITDA (1)

211,102

67,662

35,754

(10,166)

(39,193)

265,159

Stock-based compensation

15,470

3,840

2,177

427

12,701

34,615

Depreciation and amortization

62,277

25,160

8,216

6,152

5,990

107,795

Deferred acquisition consideration

8,118

1,112

3,403

(1,752)

—

10,881

Impairment and other losses

10,562

—

—

—

—

10,562

Other items, net (1)

13,822

8,493

1,337

1,079

5,338

30,069

Operating income (loss)

$    100,853

$          29,057

$                  20,621

$  (16,072)

$    (63,222)

$       71,237

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 7

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)

For the Three Months Ended September 30, 2024

GAAP

Adjustments

Non-GAAP

Net income attributable to Stagwell Inc. common shareholders

$              3,271

$            19,762

$            23,033

Net income attributable to Class C shareholders

—

36,060

36,060

Net income attributable to Stagwell Inc. and Class C shareholders and adjusted net income

$              3,271

$            55,822

$            59,093

Weighted average number of common shares outstanding

112,190

1,497

113,687

Weighted average number of common Class C shares outstanding

—

151,649

151,649

Weighted average number of shares outstanding

112,190

153,146

265,336

Diluted EPS and Adjusted Diluted EPS

$                0.03

$                0.22

Adjustments to Net income (1)

Amortization

$            28,659

Stock-based compensation

16,935

Deferred acquisition consideration

560

Other items, net

15,851

62,005

Adjusted tax expense

(15,615)

46,390

Net loss attributable to Class C shareholders

9,432

$            55,822

Allocation of adjustments to Net income

Net income attributable to Stagwell Inc. common shareholders – add-backs

$            19,762

Net income attributable to Class C shareholders – add-backs

26,628

Net income attributable to Class C shareholders

9,432

36,060

$            55,822

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 8

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)

For the Nine Months Ended September 30, 2024

GAAP

Adjustments

Non-GAAP

Net income (loss) attributable to Stagwell Inc. common shareholders

$               (976)

$            58,177

$            57,201

Net income attributable to Class C shareholders

—

83,442

83,442

Net income (loss) attributable to Stagwell Inc. and Class C and adjusted net income 

$               (976)

$          141,619

$          140,643

Weighted average number of common shares outstanding

111,436

5,780

117,216

Weighted average number of common Class C shares outstanding

—

151,649

151,649

Weighted average number of shares outstanding

111,436

157,429

268,865

Diluted EPS and Adjusted Diluted EPS

$              (0.01)

$                0.52

Adjustments to Net Income (loss) (1)

Amortization

$            91,870

Impairment and other losses

1,715

Stock-based compensation

38,926

Deferred acquisition consideration

7,950

Other items, net

36,576

177,037

Adjusted tax expense

(41,268)

135,769

Net loss attributable to Class C shareholders

5,850

$          141,619

Allocation of adjustments to net income (loss) 1

Net income attributable to Stagwell Inc. common shareholders – add-backs

$            58,177

Net income attributable to Class C shareholders – add-backs

77,592

Net income attributable to Class C shareholders

5,850

83,442

$          141,619

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 9

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)

For the Three Months Ended September 30, 2023

GAAP

Adjustments

Non-GAAP

Net income attributable to Stagwell Inc. common shareholders

$                 653

$            20,844

$            21,497

Net income attributable to Class C shareholders

33

26,530

26,563

Net income attributable to Stagwell Inc. and Class C and adjusted net income

$                 686

$            47,374

$            48,060

Weighted average number of common shares outstanding

113,357

5,663

119,020

Weighted average number of common Class C shares outstanding

151,649

—

151,649

Weighted average number of shares outstanding

265,006

5,663

270,669

Diluted EPS and Adjusted Diluted EPS

$                    —

$                0.18

Adjustments to Net income (1)

Amortization

$            31,182

Stock-based compensation

12,065

Deferred acquisition consideration

6,401

Other items, net

10,731

60,379

Adjusted tax expense

(13,005)

$            47,374

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 10

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)

For the Nine Months Ended September 30, 2023

GAAP

Adjustments

Non-GAAP

Net income (loss) attributable to Stagwell Inc. common shareholders

$            (1,152)

$            57,927

$            56,775

Net income attributable to Class C shareholders

(2,702)

73,725

71,023

Net income (loss) attributable to Stagwell Inc. and Class C and adjusted net income 

$            (3,854)

$          131,652

$          127,798

Weighted average number of common shares outstanding

118,772

10,736

129,508

Weighted average number of common Class C shares outstanding

156,092

—

156,092

Weighted average number of shares outstanding

274,864

10,736

285,600

Diluted EPS and Adjusted Diluted EPS

$              (0.01)

$                0.45

Adjustments to Net income (loss) (1)

Amortization

$            86,605

Impairment and other losses

10,562

Stock-based compensation

34,615

Deferred acquisition consideration

10,881

Other items, net

30,069

172,732

Adjusted tax expense

(41,080)

$          131,652

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 11

STAGWELL INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

September 30, 2024

December 31, 2023

ASSETS

Current Assets

Cash and cash equivalents

$                  145,807

$                  119,737

Accounts receivable, net

716,394

697,178

Expenditures billable to clients

137,443

114,097

Other current assets

108,187

94,054

Total Current Assets

1,107,831

1,025,066

Fixed assets, net

77,766

77,825

Right-of-use assets – operating leases

223,194

254,278

Goodwill

1,521,005

1,498,815

Other intangible assets, net

769,596

818,220

Other assets

97,425

92,843

Total Assets

$               3,796,817

$               3,767,047

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”), AND SHAREHOLDERS’ EQUITY

Current Liabilities

Accounts payable

$                  338,649

$                  414,980

Accrued media

206,512

291,777

Accruals and other liabilities

210,146

233,046

Advance billings

338,789

301,674

Current portion of lease liabilities – operating leases

61,897

65,899

Current portion of deferred acquisition consideration

8,618

66,953

Total Current Liabilities

1,164,611

1,374,329

Long-term debt

1,463,925

1,145,828

Long-term portion of deferred acquisition consideration

53,055

34,105

Long-term lease liabilities – operating leases

250,388

281,307

Deferred tax liabilities, net

41,728

40,509

Other liabilities

60,220

54,905

Total Liabilities

3,033,927

2,930,983

Redeemable Noncontrolling Interests

18,618

10,792

Commitments, Contingencies and Guarantees

Shareholders’ Equity

Common shares – Class A & B

110

118

Common shares – Class C

2

2

Paid-in capital

287,941

348,494

Retained earnings

11,416

21,148

Accumulated other comprehensive loss

(13,057)

(13,067)

Stagwell Inc. Shareholders’ Equity

286,412

356,695

Noncontrolling interests

457,860

468,577

Total Shareholders’ Equity

744,272

825,272

Total Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity

$               3,796,817

$               3,767,047

 

SCHEDULE 12

STAGWELL INC.

UNAUDITED SUMMARY CASH FLOW DATA

(amounts in thousands)

Nine Months Ended September 30,

2024

2023

Cash flows from operating activities:

Net income

$                     9,197

$                   (4,717)

Adjustments to reconcile net income to cash used in operating activities:

Stock-based compensation

38,926

34,615

Depreciation and amortization

112,881

107,795

Amortization of right-of-use lease assets and lease liability interest

58,052

57,583

Impairment and other losses

1,715

10,562

Deferred income taxes

(3,446)

(5,635)

Adjustment to deferred acquisition consideration

7,950

10,881

Other, net

6,371

(4,248)

Changes in working capital:

Accounts receivable

(6,212)

(25,405)

Expenditures billable to clients

(15,705)

(36,217)

Other assets

(9,068)

6,539

Accounts payable

(94,160)

(49,204)

Accrued expenses and other liabilities

(121,647)

(152,216)

Advance billings

23,984

(1,759)

Current portion of lease liabilities – operating leases

(63,956)

(67,095)

Deferred acquisition related payments

(14,112)

(9,021)

Net cash used in operating activities

(69,230)

(127,542)

Cash flows from investing activities:

Capital expenditures

(16,728)

(12,205)

Acquisitions, net of cash acquired

(23,781)

(6,678)

Capitalized software

(19,320)

(19,026)

Other

(6,656)

(6,939)

Net cash used in investing activities

(66,485)

(44,848)

Cash flows from financing activities:

Repayment of borrowings under revolving credit facility

(1,176,000)

(1,250,500)

Proceeds from borrowings under revolving credit facility

1,492,000

1,562,500

Shares repurchased and cancelled

(101,249)

(203,958)

Distributions to noncontrolling interests

(23,583)

(24,538)

Payment of deferred consideration

(28,721)

(31,666)

Purchase of noncontrolling interest

(3,316)

—

Debt issuance costs

—

(150)

Net cash provided by financing activities

159,131

51,688

Effect of exchange rate changes on cash and cash equivalents

2,654

(1,182)

Net increase (decrease) in cash and cash equivalents

26,070

(121,884)

Cash and cash equivalents at beginning of period

119,737

220,589

Cash and cash equivalents at end of period

$                 145,807

$                   98,705

 

 

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